ThZeal - The Zeal

wfc-20230630

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, 2023


☐			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)

Delaware

No.

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 Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $1-2/3	WFC	New York Stock Exchange (NYSE)
7.5% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L	WFC.PRL	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of 5.85% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series Q	WFC.PRQ	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of 6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series R	WFC.PRR	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Y	WFC.PRY	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Z	WFC.PRZ	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series AA	WFC.PRA	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series CC	WFC.PRC	NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series DD	WFC.PRD	NYSE
Guarantee of Medium-Term Notes, Series A, due October 30, 2028 of Wells Fargo Finance LLC	WFC/28A	NYSE

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨

Non-accelerated filer ¨ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


						Shares Outstanding
						July 21, 2023
Common stock, $1-2/3 par value						1,823,028,137


FORM 10-Q
CROSS-REFERENCE INDEX
PART I	Financial Information
Item 1.	Financial Statements			Page
	Consolidated Statement of Income			59
	Consolidated Statement of Comprehensive Income			60
	Consolidated Balance Sheet			61
	Consolidated Statement of Changes in Equity			62
	Consolidated Statement of Cash Flows			64
	Notes to Financial Statements
	1	—	Summary of Significant Accounting Policies	65
	2	—	Trading Activities	68
	3	—	Available-for-Sale and Held-to-Maturity Debt Securities	69
	4	—	Equity Securities	75
	5	—	Loans and Related Allowance for Credit Losses	77
	6	—	Mortgage Banking Activities	91
	7	—	Intangible Assets and Other Assets	93
	8	—	Leasing Activity	94
	9	—	Preferred Stock	95
	10	—	Legal Actions	96
	11	—	Derivatives	98
	12	—	Fair Values of Assets and Liabilities	107
	13	—	Securitizations and Variable Interest Entities	115
	14	—	Guarantees and Other Commitments	120
	15	—	Pledged Assets and Collateral	122
	16	—	Operating Segments	125
	17	—	Revenue and Expenses	128
	18	—	Employee Benefits	130
	19	—	Earnings and Dividends Per Common Share	131
	20	—	Other Comprehensive Income	132
	21	—	Regulatory Capital Requirements and Other Restrictions	134
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
	Summary Financial Data			2
	Overview			3
	Earnings Performance			6
	Balance Sheet Analysis			25
	Off-Balance Sheet Arrangements			27
	Risk Management			28
	Capital Management			45
	Regulatory Matters			51
	Critical Accounting Policies			53
	Current Accounting Developments			54
	Forward-Looking Statements			55
	Risk Factors			57
	Glossary of Acronyms			136
Item 3.	Quantitative and Qualitative Disclosures About Market Risk			39
Item 4.	Controls and Procedures			58

PART II	Other Information
Item 1.	Legal Proceedings			137
Item 1A.	Risk Factors			137
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			137
Item 5.	Other Information			137
Item 6.	Exhibits			138

Signature				139


			Wells Fargo & Company			1

FINANCIAL REVIEW


Summary Financial Data (1)
	Quarter ended					Jun 30, 2023 % Change from			Six months ended
($ in millions, except per share amounts)	Jun 30, 2023			Mar 31, 2023	Jun 30, 2022	Mar 31, 2023		Jun 30, 2022	Jun 30, 2023			Jun 30, 2022	% Change
Selected Income Statement Data
Total revenue	$	20,533		20,729	17,040	(1)	%	20	$	41,262		34,768	19	%
Noninterest expense	12,987			13,676	12,862	(5)		1	26,663			26,713	—
Pre-tax pre-provision profit (PTPP) (2)	7,546			7,053	4,178	7		81	14,599			8,055	81
Provision for credit losses (3)	1,713			1,207	580	42		195	2,920			(207)	NM
Wells Fargo net income	4,938			4,991	3,142	(1)		57	9,929			6,930	43
Wells Fargo net income applicable to common stock	4,659			4,713	2,863	(1)		63	9,372			6,372	47
Common Share Data
Diluted earnings per common share	1.25			1.23	0.75	2		67	2.48			1.66	49
Dividends declared per common share	0.30			0.30	0.25	—		20	0.60			0.50	20
Common shares outstanding	3,667.7			3,763.2	3,793.0	(3)		(3)
Average common shares outstanding	3,699.9			3,785.6	3,793.8	(2)		(2)	3,742.6			3,812.3	(2)
Diluted average common shares outstanding	3,724.9			3,818.7	3,819.6	(2)		(2)	3,772.4			3,845.0	(2)
Book value per common share (4)	$	43.87		43.02	41.72	2		5
Tangible book value per common share (4)(5)	36.53			35.87	34.66	2		5
Selected Equity Data (period-end)
Total equity	181,952			183,220	179,798	(1)		1
Common stockholders’ equity	160,916			161,893	158,260	(1)		2
Tangible common equity (5)	133,990			134,992	131,464	(1)		2
Performance Ratios
Return on average assets (ROA) (6)	1.05		%	1.09	0.66				1.07		%	0.73
Return on average equity (ROE) (7)	11.4			11.7	7.2				11.6			7.9
Return on average tangible common equity (ROTCE) (5)	13.7			14.0	8.7				13.9			9.5
Efficiency ratio (8)	63			66	75				65			77
Net interest margin on a taxable-equivalent basis	3.09			3.20	2.39				3.14			2.27
Selected Balance Sheet Data (average)
Loans	$	945,906		948,651	926,567	—		2	$	947,271		912,365	4
Assets	1,878,253			1,863,676	1,902,571	1		(1)	1,871,005			1,910,938	(2)
Deposits	1,347,449			1,356,694	1,445,793	(1)		(7)	1,352,046			1,454,882	(7)
Selected Balance Sheet Data (period-end)
Debt securities	503,468			511,597	516,772	(2)		(3)
Loans	947,960			947,991	943,734	—		—
Allowance for credit losses for loans	14,786			13,705	12,884	8		15
Equity securities	67,471			60,610	61,774	11		9
Assets	1,876,320			1,886,400	1,881,141	(1)		—
Deposits	1,344,584			1,362,629	1,425,153	(1)		(6)

Headcount (#) (period-end)	233,834			235,591	243,674	(1)		(4)
Capital and Other Metrics
Risk-based capital ratios and components (9):
Standardized Approach:
Common equity Tier 1 (CET1)	10.73		%	10.81	10.38
Tier 1 capital	12.25			12.34	11.89
Total capital	15.00			15.09	14.65
Risk-weighted assets (RWAs) (in billions)	$	1,250.7		1,243.8	1,253.6	1		—
Advanced Approach:
Common equity Tier 1 (CET1)	12.00		%	12.03	11.60
Tier 1 capital	13.70			13.73	13.30
Total capital	15.82			15.92	15.58
Risk-weighted assets (RWAs) (in billions)	$	1,118.4		1,117.9	1,121.6	—		—
Tier 1 leverage ratio	8.28		%	8.36	7.96
Supplementary Leverage Ratio (SLR)	6.91			6.96	6.63
Total Loss Absorbing Capacity (TLAC) Ratio (10)	23.12			23.34	22.72
Liquidity Coverage Ratio (LCR) (11)	123			122	121

NM – Not meaningful

(1)In first quarter 2023, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. We adopted ASU 2018-12 with retrospective application, which required revision of prior period financial statements. 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 the adoption of ASU 2018-12, see 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)Includes provision for credit losses for loans, debt securities, and interest-earning deposits with banks.

(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 investments in consolidated portfolio companies, 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 divided by average assets.

(7)Represents Wells Fargo net income 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)For additional information, see the “Capital Management” section and Note 21 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report.

(10)Represents TLAC divided by RWAs, which is our binding TLAC ratio, determined by using the greater of RWAs under the Standardized and Advanced Approaches.

(11)Represents average high-quality liquid assets divided by average projected net cash outflows, as each is defined under the LCR rule.


2			Wells 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, 2022 (2022 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 a 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. 47 on Fortune’s 2023 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, 2023.

Wells Fargo’s top priority remains building a risk and control infrastructure appropriate for its size and complexity. 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 are likely to continue to experience issues or delays along the way in satisfying their requirements. We are also likely to continue to identify more issues as we implement our risk and control infrastructure, which may result in additional regulatory actions. Issues or delays with one regulatory action could affect our progress on others, and regulators have indicated the potential for escalating consequences for banks that do not timely resolve open issues. Failure to satisfy the requirements of a regulatory action on a timely basis could result in additional penalties, business restrictions, limitations on subsidiary capital distributions, increased capital or liquidity requirements, enforcement actions, and other negative consequences, which could be significant. While we still have significant work to do and have not yet satisfied certain aspects of these regulatory actions, 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. 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. On September 9, 2021, the OCC assessed a $250 million civil money penalty against the Company related to insufficient progress in addressing requirements under the OCC’s April 2018 consent order and loss mitigation activities in the Company’s Home Lending business. On December 20, 2022, the CFPB modified its consent order to clarify how it would terminate.


			Wells Fargo & Company			3

Overview (continued)

Consent Order with the OCC Regarding Loss Mitigation Activities

On September 9, 2021, the Company entered into a consent order with the OCC requiring the Company to improve the execution, risk management, and oversight of loss mitigation activities in its Home Lending business. In addition, the consent order restricts the Company from acquiring certain third-party residential mortgage servicing and limits transfers of certain mortgage loans requiring customer remediation out of the Company’s mortgage servicing portfolio until remediation is provided.

Consent Order with the CFPB Regarding Automobile Lending, Consumer Deposit Accounts, and Mortgage Lending

On December 20, 2022, the Company entered into a consent order with the CFPB requiring the Company to provide customer remediation for multiple matters related to automobile lending, consumer deposit accounts, and mortgage lending; maintain practices designed to ensure auto lending customers receive refunds for the unused portion of certain guaranteed automobile protection agreements; comply with certain business practice requirements related to consumer deposit accounts; and pay a $1.7 billion civil penalty to the CFPB. The required actions related to many of these matters were already substantially complete at the time we entered into the consent order, and the consent order lays out a path to termination after the Company completes the remainder of the required actions.

Retail Sales Practices Matters

In September 2016, we announced settlements with the CFPB, the OCC, and the Office of the Los Angeles City Attorney, and entered into related consent orders with the CFPB and the OCC, in connection with allegations that some of our retail customers received products and services they did not request. As a result, it remains a 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. On September 8, 2021, the CFPB consent order regarding retail sales practices expired.

For additional information regarding retail sales practices matters, including related legal and regulatory risk, see the “Risk Factors” section in our 2022 Form 10-K.

Customer Remediation Activities

Our priority of rebuilding trust has included an effort to identify 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 accrued for the probable and estimable costs related to our customer remediation activities, 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 and as we continue to strengthen our risk and control infrastructure, we have identified and may in the future 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. We have previously disclosed key areas of focus as part of these activities.

For additional information regarding these activities, including related legal and regulatory risk, see the “Risk Factors” section in our 2022 Form 10-K.

Recent Developments

Federal Deposit Insurance Corporation Special Assessment

In May 2023, the Federal Deposit Insurance Corporation (FDIC) proposed a rule to recover by special assessment losses to the FDIC deposit insurance fund as a result of recent bank failures. Under the proposed rule, the FDIC would collect a special assessment based on a calculation using an insured depository institution’s estimated amount of uninsured deposits. As currently proposed, the amount of our special assessment may be up to $1.8 billion (pre-tax), and we expect to expense the entire amount upon the FDIC’s finalization of the rule. The proposed rule may be changed prior to finalization and any changes may affect the timing or amount of the special assessment.

LIBOR Transition

The London Interbank Offered Rate (LIBOR) was a widely referenced benchmark rate that sought to estimate the cost at which banks could borrow on an unsecured basis from other banks. On March 5, 2021, the United Kingdom’s Financial Conduct Authority and ICE Benchmark Administration, the administrator of LIBOR, announced that certain settings of LIBOR would no longer be published on a representative basis after December 31, 2021, and the most commonly used U.S. dollar (USD) LIBOR settings would no longer be published on a representative basis after June 30, 2023.

In first quarter 2022, the Adjustable Interest Rate (LIBOR) Act (the LIBOR Act) was enacted into U.S. federal law to provide a statutory framework to replace LIBOR with a benchmark rate based on the Secured Overnight Financing Rate (SOFR) in U.S. law contracts that do not have fallback provisions or that have fallback provisions resulting in a replacement rate based on LIBOR. The FRB adopted a final rule implementing the LIBOR Act on December 16, 2022, which became effective on February 27, 2023.

We no longer offer new contracts referencing LIBOR and legacy contracts indexed to USD LIBOR have transitioned to SOFR-based or other alternative reference rates in accordance with existing fallback provisions or the LIBOR Act.

For additional 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 2022 Form 10-K.

Capital Matters

In June 2023, the Company completed the annual Comprehensive Capital Analysis and Review (CCAR) stress test process. On July 27, 2023, the FRB confirmed that our stress capital buffer for the period October 1, 2023, through September 30, 2024, will be 2.90%, which is lower than our current stress capital buffer of 3.20%.

On July 25, 2023, the Board approved an increase to the Company's third quarter 2023 common stock dividend to $0.35 per share and the Company announced that the Board authorized a new common stock repurchase program of up to $30 billion.


4			Wells Fargo & Company

increase in its risk-weighted assets and a net increase in its capital requirements based on a preliminary assessment of the proposed rule. The Company is considering a range of potential actions to address the impact of the proposed rule, including balance sheet and capital optimization strategies.

In July 2023, we issued $1.725 billion of our Preferred Stock, Series EE.

For additional information about capital planning, see the “Capital Management – Capital Planning and Stress Testing” section in this Report.

Financial Performance

Adoption of Accounting Standards Update 2018-12

In first quarter 2023, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2018-12 –

Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts.

We adopted this ASU with retrospective application, which required revision of prior period financial statements. 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 the adoption of ASU 2018-12, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


Consolidated Financial Highlights
	Quarter ended June 30,						Six months ended June 30,
($ in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected income statement data
Net interest income	$	13,163	10,198	2,965	29	%	$	26,499	19,419	7,080	36	%
Noninterest income	7,370		6,842	528	8		14,763		15,349	(586)	(4)
Total revenue	20,533		17,040	3,493	20		41,262		34,768	6,494	19
Net charge-offs	764		345	419	121		1,328		650	678	104
Change in the allowance for credit losses	949		235	714	304		1,592		(857)	2,449	286
Provision for credit losses (1)	1,713		580	1,133	195		2,920		(207)	3,127	NM
Noninterest expense	12,987		12,862	125	1		26,663		26,713	(50)	—
Income tax expense	930		622	308	50		1,896		1,368	528	39
Wells Fargo net income	4,938		3,142	1,796	57		9,929		6,930	2,999	43
Wells Fargo net income applicable to common stock	4,659		2,863	1,796	63		9,372		6,372	3,000	47

NM – Not meaningful

(1)Includes provision for credit losses for loans, debt securities, and interest-earning deposits with banks.

In second quarter 2023, we generated $4.9 billion of net income and diluted earnings per common share (EPS) of $1.25, compared with $3.1 billion of net income and diluted EPS of $0.75 in the same period a year ago. Financial performance for second quarter 2023, compared with the same period a year ago, included the following:

•total revenue increased due to higher net interest income and higher noninterest income;

•provision for credit losses reflected increases for commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances;

•noninterest expense increased due to higher personnel, technology and equipment, and advertising expense, partially offset by lower operating losses;

•average loans increased driven by loan growth across both our commercial and consumer loan portfolios; and

•average deposits decreased driven by reductions in all operating segments, partially offset by growth in Corporate.

In the first half of 2023, we generated $9.9 billion of net income and diluted EPS of $2.48, compared with $6.9 billion of net income and diluted EPS of $1.66 in the same period a year ago. Financial performance for the first half of 2023, compared with the same period a year ago, included the following:

•total revenue increased due to higher net interest income, partially offset by lower noninterest income;

•provision for credit losses reflected increases for commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances;

•noninterest expense decreased due to lower operating losses, partially offset by higher personnel, technology and equipment, and advertising expense;

•average loans increased driven by loan growth across both our commercial and consumer loan portfolios; and

•average deposits decreased driven by reductions in all operating segments, partially offset by growth in Corporate.

Capital and Liquidity

We maintained a strong capital position in the first half of 2023, with total equity of $182.0 billion at June 30, 2023, compared with $182.2 billion at December 31, 2022. In addition, capital and liquidity at June 30, 2023, included the following:

•our Common Equity Tier 1 (CET1) ratio was 10.73% under the Standardized Approach (our binding ratio), which continued to exceed the regulatory minimum and buffers of 9.20%;

•our total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 23.12%, compared with the regulatory minimum of 21.50%; and

•our liquidity coverage ratio (LCR) was 123%, which continued to exceed the regulatory minimum of 100%.

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.


			Wells Fargo & Company			5

Overview (continued)

Credit Quality

Credit quality reflected the following:

•The allowance for credit losses (ACL) for loans of $14.8 billion at June 30, 2023, increased $1.2 billion from December 31, 2022.

•Our provision for credit losses for loans was $3.0 billion in the first half of 2023, compared with $(197) million in the same period a year ago. The ACL for loans and the provision for credit losses for loans reflected increases for commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances.

•The allowance coverage for total loans was 1.56% at June 30, 2023, compared with 1.42% at December 31, 2022.

•Commercial portfolio net loan charge-offs were $200 million, or 15 basis points of average commercial loans, in second quarter 2023, compared with net loan charge-offs of $23 million, or 2 basis points, in the same period a year ago, driven by higher losses across all commercial portfolios.

•Consumer portfolio net loan charge-offs were $564 million, or 58 basis points of average consumer loans, in second quarter 2023, compared with net loan charge-offs of $321 million, or 33 basis points, in the same period a year ago, driven by higher losses in all consumer portfolios, primarily in our credit card portfolio.

•Nonperforming assets (NPAs) of $7.0 billion at June 30, 2023, increased $1.3 billion, or 22%, from December 31, 2022, driven by higher commercial real estate nonaccrual loans, predominantly within the office property type, partially offset by lower residential mortgage nonaccrual loans. NPAs represented 0.74% of total loans at June 30, 2023.

•Criticized loans in the commercial portfolio were $29.0 billion at June 30, 2023, compared with $25.0 billion at December 31, 2022, primarily driven by an increase in criticized commercial real estate loans in the office property type.


Earnings Performance

Wells Fargo net income for second quarter 2023 was $4.9 billion ($1.25 diluted EPS), compared with $3.1 billion ($0.75 diluted EPS) in the same period a year ago. Net income increased in second quarter 2023, compared with the same period a year ago, predominantly due to a $3.0 billion increase in net interest income, partially offset by a $1.1 billion increase in provision for credit losses.

Net income for the first half of 2023 was $9.9 billion ($2.48 diluted EPS), compared with $6.9 billion ($1.66 diluted EPS) in the same period a year ago. Net income increased in the first half of 2023, compared with the same period a year ago, predominantly due to a $7.1 billion increase in net interest income, partially offset by a $3.1 billion increase in provision for credit losses and a $586 million decrease in noninterest income.

Net Interest Income

Net interest income and net interest margin increased in both the second quarter and first half of 2023, compared with the same periods a year ago, due to the impact of higher interest rates on earning assets and higher loan balances, partially offset by higher expenses for interest bearing deposits and long-term debt.

Table 1 presents the individual components of net interest income and 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, 2023 and 2022.

For additional information about net interest income and net interest margin, see the “Earnings Performance – Net Interest Income” section in our 2022 Form 10-K.


6			Wells Fargo & Company

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


	Quarter ended June 30,
	2023						2022
(in millions)	Average balance		Interest income/ expense		Interest rates		Average balance		Interest income/ expense		Interest rates
Assets
Interest-earning deposits with banks	$	129,236	1,450		4.50	%	$	146,271	321		0.88	%
Federal funds sold and securities purchased under resale agreements	69,505		820		4.73		60,450		72		0.47
Debt securities:
Trading debt securities	102,605		898		3.50		89,258		557		2.50
Available-for-sale debt securities	149,320		1,388		3.72		147,138		701		1.91
Held-to-maturity debt securities	279,093		1,829		2.62		298,101		1,536		2.06
Total debt securities	531,018		4,115		3.10		534,497		2,794		2.09
Loans held for sale (2)	6,031		94		6.22		14,828		126		3.41
Loans:
Commercial and industrial – U.S.	307,858		5,156		6.72		288,831		2,179		3.02
Commercial and industrial – Non-U.S.	75,503		1,249		6.64		81,784		521		2.56
Commercial real estate mortgage	130,222		2,076		6.39		131,128		980		3.00
Commercial real estate construction	24,438		468		7.68		21,328		191		3.59
Lease financing	15,010		178		4.76		14,445		153		4.24
Total commercial loans	553,031		9,127		6.62		537,516		4,024		3.00
Residential mortgage – first lien	253,797		2,109		3.32		248,879		1,943		3.12
Residential mortgage – junior lien	12,331		210		6.83		14,998		168		4.48
Credit card	46,762		1,511		12.96		39,614		1,100		11.13
Auto	51,880		603		4.67		56,262		586		4.18
Other consumer	28,105		582		8.29		29,298		311		4.26
Total consumer loans	392,875		5,015		5.11		389,051		4,108		4.23
Total loans (2)	945,906		14,142		5.99		926,567		8,132		3.52
Equity securities	27,891		194		2.79		30,770		193		2.51
Other	10,118		120		4.76		16,085		26		0.65
Total interest-earning assets	$	1,719,705	20,935		4.88	%	$	1,729,468	11,664		2.70	%
Cash and due from banks	27,344		—				26,018		—
Goodwill	25,175		—				25,179		—
Other	106,029		—				121,906		—
Total noninterest-earning assets	$	158,548	—				173,103		—
Total assets	$	1,878,253	20,935				1,902,571		11,664
Liabilities
Deposits:
Demand deposits	$	415,886	1,667		1.61	%	$	439,983	90		0.08	%
Savings deposits	386,831		734		0.76		440,478		32		0.03
Time deposits	115,025		1,260		4.40		25,381		26		0.41
Deposits in non-U.S. offices	19,144		144		3.02		18,684		10		0.22
Total interest-bearing deposits	936,886		3,805		1.63		924,526		158		0.07
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	66,568		811		4.89		22,593		33		0.58
Other short-term borrowings	16,491		150		3.65		12,998		(2)		(0.07)
Total short-term borrowings	83,059		961		4.64		35,591		31		0.34
Long-term debt	170,843		2,693		6.31		151,230		1,011		2.67
Other liabilities	34,496		208		2.41		35,583		158		1.78
Total interest-bearing liabilities	$	1,225,284	7,667		2.51	%	$	1,146,930	1,358		0.47	%
Noninterest-bearing demand deposits	410,563		—				521,267		—
Other noninterest-bearing liabilities	57,963		—				53,448		—
Total noninterest-bearing liabilities	$	468,526	—				574,715		—
Total liabilities	$	1,693,810	7,667				1,721,645		1,358
Total equity	184,443		—				180,926		—
Total liabilities and equity	$	1,878,253	7,667				1,902,571		1,358

Interest rate spread on a taxable-equivalent basis (3)					2.37	%					2.23	%
Net interest income and net interest margin on a taxable-equivalent basis (3)			$	13,268	3.09	%			$	10,306	2.39	%

(continued on following page)


			Wells Fargo & Company			7

Earnings Performance (continued)

(continued from previous page)



	Six months ended June 30,
					2023						2022
(in millions)	Average balance		Interest income/ expense		Interest rates		Average balance		Interest income/ expense		Interest rates
Assets
Interest-earning deposits with banks	$	122,087	2,617		4.32	%	$	162,570	417		0.52	%
Federal funds sold and securities purchased under resale agreements	69,071		1,516		4.43		62,636		63		0.20
Debt securities:
Trading debt securities	99,522		1,699		3.42		89,964		1,110		2.47
Available-for-sale debt securities	147,616		2,670		3.63		158,032		1,424		1.81
Held-to-maturity debt securities	279,522		3,609		2.59		288,725		2,915		2.02
Total debt securities	526,660		7,978		3.04		536,721		5,449		2.03
Loans held for sale (2)	6,320		191		6.05		17,158		266		3.10
Loans:
Commercial and industrial – U.S.	307,519		9,928		6.51		282,485		3,879		2.77
Commercial and industrial – Non-U.S.	75,800		2,383		6.34		79,782		924		2.34
Commercial real estate mortgage	130,532		4,025		6.22		129,306		1,813		2.83
Commercial real estate construction	24,333		906		7.51		20,797		356		3.46
Lease financing	14,922		350		4.69		14,516		308		4.24
Total commercial loans	553,106		17,592		6.41		526,886		7,280		2.78
Residential mortgage – first lien	254,404		4,197		3.30		245,898		3,850		3.13
Residential mortgage – junior lien	12,647		420		6.68		15,505		333		4.32
Credit card	46,304		2,951		12.85		38,893		2,165		11.22
Auto	52,470		1,200		4.61		56,480		1,170		4.18
Other consumer	28,340		1,127		8.02		28,703		567		3.98
Total consumer loans	394,165		9,895		5.04		385,479		8,085		4.21
Total loans (2)	947,271		27,487		5.84		912,365		15,365		3.39
Equity securities	28,269		364		2.59		32,019		363		2.27
Other	10,578		245		4.67		13,804		29		0.43
Total interest-earning assets	$	1,710,256	40,398		4.75	%	$	1,737,273	21,952		2.54	%
Cash and due from banks	27,743		—				25,500		—
Goodwill	25,174		—				25,180		—
Other	107,832		—				122,985		—
Total noninterest-earning assets	$	160,749	—				173,665		—
Total assets	$	1,871,005	40,398				1,910,938		21,952
Liabilities
Deposits:
Demand deposits	$	418,347	3,046		1.47	%	$	447,624	128		0.06	%
Savings deposits	394,515		1,281		0.66		440,579		56		0.03
Time deposits	97,045		1,985		4.12		26,608		45		0.34
Deposits in non-U.S. offices	18,695		254		2.74		20,062		12		0.12
Total interest-bearing deposits	928,602		6,566		1.43		934,873		241		0.05
Short-term borrowings:
Federal funds purchased and securities sold under agreements to repurchase	52,977		1,227		4.67		21,518		30		0.28
Other short-term borrowings	17,868		304		3.43		12,664		(13)		(0.21)
Total short-term borrowings	70,845		1,531		4.36		34,182		17		0.10
Long-term debt	171,700		5,204		6.07		152,509		1,772		2.32
Other liabilities	33,964		386		2.29		33,350		288		1.74
Total interest-bearing liabilities	$	1,205,111	13,687		2.28	%	$	1,154,914	2,318		0.40	%
Noninterest-bearing demand deposits	423,444		—				520,009		—
Other noninterest-bearing liabilities	58,079		—				52,508		—
Total noninterest-bearing liabilities	$	481,523	—				572,517		—
Total liabilities	$	1,686,634	13,687				1,727,431		2,318
Total equity	184,371		—				183,507		—
Total liabilities and equity	$	1,871,005	13,687				1,910,938		2,318

Interest rate spread on a taxable-equivalent basis (3)					2.47	%					2.14	%
Net interest margin and net interest income on a taxable-equivalent basis (3)			$	26,711	3.14	%			$	19,634	2.27	%

(1)The average balance amounts represent amortized costs, except for certain held-to-maturity (HTM) debt securities, which exclude unamortized basis adjustments related to the transfer of those securities from available-for-sale (AFS) debt securities. The interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

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

(3)Includes taxable-equivalent adjustments of $105 million and $108 million for the quarters ended June 30, 2023 and 2022, respectively, and $212 million and $215 million for the first half of 2023 and 2022, respectively, predominantly related to tax-exempt income on certain loans and securities.


8			Wells Fargo & Company

Noninterest Income

Table 2: Noninterest Income



	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Deposit-related fees	$	1,165	1,376	(211)	(15)	%	$	2,313	2,849	(536)	(19)	%
Lending-related fees	352		353	(1)	—		708		695	13	2
Investment advisory and other asset-based fees	2,163		2,346	(183)	(8)		4,277		4,844	(567)	(12)
Commissions and brokerage services fees	570		542	28	5		1,189		1,079	110	10
Investment banking fees	376		286	90	31		702		733	(31)	(4)
Card fees	1,098		1,112	(14)	(1)		2,131		2,141	(10)	—
Net servicing income	100		125	(25)	(20)		212		279	(67)	(24)
Net gains on mortgage loan originations/sales	102		162	(60)	(37)		222		701	(479)	(68)
Mortgage banking	202		287	(85)	(30)		434		980	(546)	(56)
Net gains from trading activities	1,122		446	676	152		2,464		664	1,800	271
Net gains from debt securities	4		143	(139)	(97)		4		145	(141)	(97)
Net losses from equity securities	(94)		(615)	521	85		(451)		(39)	(412)	NM
Lease income	307		333	(26)	(8)		654		660	(6)	(1)
Other	105		233	(128)	(55)		338		598	(260)	(43)
Total	$	7,370	6,842	528	8		$	14,763	15,349	(586)	(4)

NM – Not meaningful

Second quarter 2023 vs. second quarter 2022

Deposit-related fees decreased reflecting:

•our efforts to help customers avoid overdraft fees; and

•lower fees on commercial accounts driven by higher earnings credit rates due to an increase in interest rates.

Investment advisory and other asset-based fees decreased reflecting lower average market valuations.

Fees from the majority of Wealth and Investment Management (WIM) advisory assets are based on a percentage of the market value of the assets at the beginning of the quarter. For additional information on certain client investment assets, see the “Earnings Performance – Operating Segment Results – Wealth and Investment Management – WIM Advisory Assets” section in this Report.

Investment banking fees increased due to a $107 million write-down on unfunded leveraged finance commitments in second quarter 2022.

Net servicing income decreased driven by:

•lower servicing fees due to a lower balance of mortgage loans serviced for others, including the impact of mortgage servicing right (MSR) sales;

partially offset by:

•higher income from net favorable hedge results related to MSR valuations.

Net gains on mortgage loan originations/sales decreased

due to lower residential mortgage origination volumes.

For additional information on servicing income and net gains on mortgage loan originations/sales, see Note 6 (Mortgage Banking Activities) to Financial Statements in this Report.

Net gains from trading activities increased driven by higher trading revenue in equities, structured products, credit products, rates, and foreign exchange.

Net gains from debt securities decreased due to lower gains on sales of asset-based securities and municipal bonds in our investment portfolio as a result of decreased sales volumes.

Net losses from equity securities decreased reflecting:

•lower impairment of equity securities; and

•higher unrealized gains on marketable equity securities;

partially offset by:

•lower unrealized gains on nonmarketable equity securities driven by our affiliated venture capital and private equity businesses.

Other income decreased driven by:

•higher amortization due to growth in renewable energy investments (offset by benefits and credits in income tax expense); and

•higher valuation losses related to the retained litigation risk associated with shares of Visa B common stock that we previously sold.

First half of 2023 vs. first half of 2022

Deposit-related fees decreased reflecting:

•the elimination of non-sufficient funds fees and our efforts to help customers avoid overdraft fees; and

•lower fees on commercial accounts driven by higher earnings credit rates due to an increase in interest rates.

Investment advisory and other asset-based fees decreased reflecting lower average market valuations.

Fees from the majority of WIM advisory assets are based on a percentage of the market value of the assets at the beginning of the quarter. For additional information on certain client investment assets, see the “Earnings Performance – Operating Segment Results – Wealth and Investment Management – WIM Advisory Assets” section in this Report.

Commissions and brokerage services fees increased due to higher service fee rates.


			Wells Fargo & Company			9

Earnings Performance (continued)

Net servicing income decreased driven by:

•lower servicing fees due to a lower balance of mortgage loans serviced for others, including the impact of MSR sales;

partially offset by:

•higher income from net favorable hedge results related to MSR valuations.

Net gains on mortgage loan originations/sales decreased

driven by:

•lower residential mortgage origination volumes; and

•lower gains related to the resecuritization of loans we purchased from Government National Mortgage Association (GNMA) loan securitization pools.

For additional information on servicing income and net gains on mortgage loan originations/sales, see Note 6 (Mortgage Banking Activities) to Financial Statements in this Report.

Net gains from trading activities increased driven by higher trading results across all asset classes.

Net gains from debt securities decreased due to lower gains on sales of asset-based securities and municipal bonds in our investment portfolio as a result of decreased sales volumes.

Net losses from equity securities increased reflecting:

•lower unrealized and realized gains on nonmarketable equity securities driven by our affiliated venture capital and private equity businesses;

partially offset by:

•lower impairment of equity securities; and

•higher unrealized gains on marketable equity securities.

Other income decreased driven by the change in fair value of liabilities associated with our reinsurance business, which was recognized as a result of our adoption of ASU 2018-12 in first quarter 2023. For additional information on our adoption of ASU 2018-12, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


10			Wells Fargo & Company

Noninterest Expense

Table 3: Noninterest Expense



	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Personnel	$	8,606	8,442	164	2	%	$	18,021	17,713	308	2	%
Technology, telecommunications and equipment	947		799	148	19		1,869		1,675	194	12
Occupancy	707		705	2	—		1,420		1,427	(7)	—
Operating losses	232		576	(344)	(60)		499		1,249	(750)	(60)
Professional and outside services	1,304		1,310	(6)	—		2,533		2,596	(63)	(2)
Leases (1)	180		185	(5)	(3)		357		373	(16)	(4)
Advertising and promotion	184		102	82	80		338		201	137	68
Restructuring charges	—		—	—	—		—		5	(5)	(100)
Other	827		743	84	11		1,626		1,474	152	10
Total	$	12,987	12,862	125	1		$	26,663	26,713	(50)	—

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

Second quarter 2023 vs. second quarter 2022

Personnel expense increased driven by:

•higher salaries expense, including higher severance expense;

partially offset by:

•the impact of efficiency initiatives.

Technology, telecommunications and equipment expense increased due to higher expense for the amortization of internally developed software and higher expense for technology contracts.

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

As previously disclosed, we have outstanding litigation, regulatory, and customer remediation matters that could impact operating losses in the coming quarters.

Advertising and promotion expense increased due to higher marketing and brand campaign volumes.

Other expense increased due to higher Federal Deposit Insurance Corporation (FDIC) deposit assessment expense driven by a higher assessment rate.

First half of 2023 vs. first half of 2022

Personnel expense increased driven by:

•higher salaries expense, including higher severance expense;

partially offset by:

•lower incentive compensation expense; and

•the impact of efficiency initiatives.

Technology, telecommunications and equipment expense increased due to higher expense for the amortization of internally developed software and higher expense for technology contracts.

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

As previously disclosed, we have outstanding litigation, regulatory, and customer remediation matters that could impact operating losses in the coming quarters.

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

Advertising and promotion expense increased due to higher marketing and brand campaign volumes.

Other expense increased due to higher FDIC deposit assessment expense driven by a higher assessment rate.

We expect our FDIC deposit assessment expense will increase significantly as a result of the FDIC's proposed rule to charge a special assessment.

Income Tax Expense

Table 4: Income Tax Expense



	Quarter ended June 30,							Six months ended June 30,
(in millions)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income before income tax expense	$	5,833		3,598	2,235	62	%	$	11,679		8,262	3,417	41	%
Income tax expense	930			622	308	50		1,896			1,368	528	39
Effective income tax rate (1)	15.8		%	16.5				16.0		%	16.5

(1)Represents Income tax expense (benefit) divided by Income (loss) before income tax expense (benefit) less Net income (loss) from noncontrolling interests.

For additional information on income taxes, see Note 22 (Income Taxes) to Financial Statements in our 2022 Form 10-K.


			Wells Fargo & Company			11

Earnings Performance (continued)

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 5. 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 with our Chief Executive Officer and relevant senior management. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenue 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.

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. Effective January 1, 2023, management modified its capital allocation methodology to improve alignment of allocated capital with the binding regulatory constraints of the Company. 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 5: Management Reporting Structure

Wells Fargo & Company

Consumer Banking and Lending

Commercial Banking

Corporate and Investment Banking

Wealth and Investment Management

Corporate

• Consumer and Small Business Banking

• Home Lending

• Credit Card

• Auto

• Personal Lending

• Middle Market Banking

• Asset-Based Lending and Leasing

• Banking

• Commercial Real Estate

• Markets

• Wells Fargo Advisors

• The Private
Bank

• Corporate Treasury

• Enterprise Functions

• Investment Portfolio

• Affiliated venture capital and private equity businesses

• Non-strategic businesses


12			Wells Fargo & Company

Table 6 and the following discussion present our results by reportable operating segment. For additional information, see Note 16 (Operating Segments) to Financial Statements in this Report.

Table 6: Operating Segment Results – Highlights



(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
Quarter ended June 30, 2023
Net interest income	$	7,490	2,501	2,359	1,009	(91)	(105)	13,163
Noninterest income	1,965		868	2,272	2,639	121	(495)	7,370
Total revenue	9,455		3,369	4,631	3,648	30	(600)	20,533
Provision for credit losses	874		26	933	24	(144)	—	1,713
Noninterest expense	6,027		1,630	2,087	2,974	269	—	12,987
Income (loss) before income tax expense (benefit)	2,554		1,713	1,611	650	(95)	(600)	5,833
Income tax expense (benefit)	640		429	401	163	(103)	(600)	930
Net income before noncontrolling interests	1,914		1,284	1,210	487	8	—	4,903
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(38)	—	(35)
Net income	$	1,914	1,281	1,210	487	46	—	4,938
Quarter ended June 30, 2022
Net interest income	$	6,372	1,580	2,057	916	(619)	(108)	10,198
Noninterest income	2,135		912	1,516	2,789	(102)	(408)	6,842
Total revenue	8,507		2,492	3,573	3,705	(721)	(516)	17,040
Provision for credit losses	613		21	(62)	(7)	15	—	580
Noninterest expense	6,036		1,478	1,840	2,911	597	—	12,862
Income (loss) before income tax expense (benefit)	1,858		993	1,795	801	(1,333)	(516)	3,598
Income tax expense (benefit)	465		249	459	198	(233)	(516)	622
Net income (loss) before noncontrolling interests	1,393		744	1,336	603	(1,100)	—	2,976
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(169)	—	(166)
Net income (loss)	$	1,393	741	1,336	603	(931)	—	3,142

Six months ended June 30, 2023
Net interest income	$	14,923	4,990	4,820	2,053	(75)	(212)	26,499
Noninterest income	3,896		1,686	4,713	5,276	126	(934)	14,763
Total revenue	18,819		6,676	9,533	7,329	51	(1,146)	41,262
Provision for credit losses	1,741		(17)	1,185	35	(24)	—	2,920
Noninterest expense	12,065		3,382	4,304	6,035	877	—	26,663
Income (loss) before income tax expense (benefit)	5,013		3,311	4,044	1,259	(802)	(1,146)	11,679
Income tax expense (benefit)	1,258		828	1,016	315	(375)	(1,146)	1,896
Net income (loss) before noncontrolling interests	3,755		2,483	3,028	944	(427)	—	9,783
Less: Net income (loss) from noncontrolling interests	—		6	—	—	(152)	—	(146)
Net income (loss)	$	3,755	2,477	3,028	944	(275)	—	9,929
Six months ended June 30, 2022
Net interest income	$	12,368	2,941	4,047	1,715	(1,437)	(215)	19,419
Noninterest income	4,702		1,878	2,996	5,747	840	(814)	15,349
Total revenue	17,070		4,819	7,043	7,462	(597)	(1,029)	34,768
Provision for credit losses	423		(323)	(258)	(44)	(5)	—	(207)
Noninterest expense	12,431		3,009	3,823	6,086	1,364	—	26,713
Income (loss) before income tax expense (benefit)	4,216		2,133	3,478	1,420	(1,956)	(1,029)	8,262
Income tax expense (benefit)	1,053		529	884	352	(421)	(1,029)	1,368
Net income (loss) before noncontrolling interests	3,163		1,604	2,594	1,068	(1,535)	—	6,894
Less: Net income (loss) from noncontrolling interests	—		6	—	—	(42)	—	(36)
Net income (loss)	$	3,163	1,598	2,594	1,068	(1,493)	—	6,930

(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.

(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.


			Wells Fargo & Company			13

Earnings Performance (continued)

Consumer Banking and Lending offers diversified financial products and services for consumers and small businesses with annual sales generally up to $10 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 6a and Table 6b provide additional information for Consumer Banking and Lending.

Table 6a: Consumer Banking and Lending – Income Statement and Selected Metrics


	Quarter ended June 30,							Six months ended June 30,
($ in millions, unless otherwise noted)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income Statement
Net interest income	$	7,490		6,372	1,118	18	%	$	14,923		12,368	2,555	21	%
Noninterest income:
Deposit-related fees	666			779	(113)	(15)		1,338			1,624	(286)	(18)
Card fees	1,022			1,038	(16)	(2)		1,980			1,999	(19)	(1)
Mortgage banking	132			211	(79)	(37)		292			865	(573)	(66)
Other	145			107	38	36		286			214	72	34
Total noninterest income	1,965			2,135	(170)	(8)		3,896			4,702	(806)	(17)
Total revenue	9,455			8,507	948	11		18,819			17,070	1,749	10
Net charge-offs	621			358	263	73		1,210			733	477	65
Change in the allowance for credit losses	253			255	(2)	(1)		531			(310)	841	271
Provision for credit losses	874			613	261	43		1,741			423	1,318	312
Noninterest expense	6,027			6,036	(9)	—		12,065			12,431	(366)	(3)
Income before income tax expense	2,554			1,858	696	37		5,013			4,216	797	19
Income tax expense	640			465	175	38		1,258			1,053	205	19
Net income	$	1,914		1,393	521	37		$	3,755		3,163	592	19
Revenue by Line of Business
Consumer and Small Business Banking	$	6,576		5,510	1,066	19		$	13,062		10,581	2,481	23
Consumer Lending:
Home Lending	847			972	(125)	(13)		1,710			2,462	(752)	(31)
Credit Card	1,321			1,304	17	1		2,626			2,569	57	2
Auto	378			436	(58)	(13)		770			880	(110)	(13)
Personal Lending	333			285	48	17		651			578	73	13
Total revenue	$	9,455		8,507	948	11		$	18,819		17,070	1,749	10

Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)	16.9		%	11.1				16.7		%	12.7
Efficiency ratio (2)	64			71				64			73

Retail bank branches (#)	4,455			4,660		(4)		4,455			4,660		(4)
Digital active customers (# in millions) (3)	34.2			33.4		2		34.2			33.4		2
Mobile active customers (# in millions) (3)	29.1			28.0		4		29.1			28.0		4

Consumer and Small Business Banking:
Deposit spread (4)	2.6		%	1.7				2.6		%	1.7
Debit card purchase volume ($ in billions) (5)	$	124.9		125.2	(0.3)	—		$	242.2		240.2	2.0	1
Debit card purchase transactions (# in millions) (5)	2,535			2,517		1		4,904			4,855		1

(continued on following page)


14			Wells Fargo & Company

(continued from previous page)


	Quarter ended June 30,							Six months ended June 30,
($ in millions, unless otherwise noted)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Home Lending:
Mortgage banking:
Net servicing income	$	62		77	(15)	(19)	%	$	146		193	(47)	(24)	%
Net gains on mortgage loan originations/sales	70			134	(64)	(48)		146			672	(526)	(78)
Total mortgage banking	$	132		211	(79)	(37)		$	292		865	(573)	(66)

Originations ($ in billions):
Retail	$	7.7		19.6	(11.9)	(61)		$	13.3		43.7	(30.4)	(70)
Correspondent	0.1			14.5	(14.4)	(99)		1.1			28.3	(27.2)	(96)
Total originations	$	7.8		34.1	(26.3)	(77)		$	14.4		72.0	(57.6)	(80)

% of originations held for sale (HFS)	45.3		%	46.1				46.0		%	48.9
Third-party mortgage loans serviced (period-end) ($ in billions) (6)	$	609.1		696.9	(87.8)	(13)		$	609.1		696.9	(87.8)	(13)
Mortgage servicing rights (MSR) carrying value (period-end)	8,251			9,163	(912)	(10)		8,251			9,163	(912)	(10)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) (6)	1.35		%	1.31				1.35		%	1.31
Home lending loans 30+ days delinquency rate (7)(8)	0.25			0.28				0.25			0.28


Credit Card:
Point of sale (POS) volume ($ in billions)	$	34.0		30.1	3.9	13		$	64.1		56.1	8.0	14
New accounts (# in thousands)	611			524		17		1,178			1,008		17
Credit card loans 30+ days delinquency rate	2.39		%	1.54				2.39		%	1.54
Credit card loans 90+ days delinquency rate	1.17			0.74				1.17			0.74

Auto:
Auto originations ($ in billions)	$	4.8		5.4	(0.6)	(11)		$	9.8		12.7	(2.9)	(23)
Auto loans 30+ days delinquency rate (8)	2.55		%	1.95				2.55		%	1.95


Personal Lending:
New volume ($ in billions)	$	3.3		3.3	—	—		$	6.2		5.9	0.3	5

(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)Excludes nonaccrual loans.

Second quarter 2023 vs. second quarter 2022

Revenue increased driven by:

•higher net interest income driven by higher interest rates and deposit spreads, partially offset by lower deposit balances;

partially offset by:

•lower deposit-related fees reflecting our efforts to help customers avoid overdraft fees; and

•lower mortgage banking noninterest income due to lower residential mortgage origination volumes.

Provision for credit losses increased due to higher net charge-offs driven by credit card loans.

Noninterest expense was stable, reflecting:

•lower personnel expense driven by lower revenue-related incentive compensation in Home Lending due to lower production, and the impact of efficiency initiatives; and

•lower operating losses reflecting lower expense for customer remediation and litigation matters;

partially offset by:

•higher operating costs, advertising expense, and FDIC assessments.

First half of 2023 vs. first half of 2022

Revenue increased driven by:

•higher net interest income driven by higher interest rates and deposit spreads, partially offset by lower deposit balances;

partially offset by:

•lower mortgage banking noninterest income due to lower residential mortgage origination volumes and lower revenue related to the resecuritization of loans we purchased from GNMA loan securitization pools; and

•lower deposit-related fees reflecting the elimination of non-sufficient funds fees and our efforts to help customers avoid overdraft fees.

Provision for credit losses included a $841 million increase in the allowance for credit losses reflecting a less favorable economic


			Wells Fargo & Company			15

Earnings Performance (continued)

outlook and portfolio credit normalization, as well as higher net charge-offs driven by credit card loans.

Noninterest expense decreased driven by:

•lower operating losses reflecting lower expense for customer remediation and litigation matters; and

•lower personnel expense driven by lower revenue-related incentive compensation in Home Lending due to lower production, and the impact of efficiency initiatives;

partially offset by:

•higher operating costs, advertising expense, and FDIC assessments.

Table 6b: Consumer Banking and Lending – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected Balance Sheet Data (average)
Loans by Line of Business:
Consumer and Small Business Banking	$	9,215	10,453	(1,238)	(12)	%	$	9,289	10,529	(1,240)	(12)	%
Consumer Lending:
Home Lending	220,641		218,371	2,270	1		221,596		216,055	5,541	3
Credit Card	39,225		32,825	6,400	19		38,710		32,168	6,542	20
Auto	52,476		56,813	(4,337)	(8)		53,073		57,044	(3,971)	(7)
Personal Lending	14,794		12,397	2,397	19		14,657		12,177	2,480	20
Total loans	$	336,351	330,859	5,492	2		$	337,325	327,973	9,352	3
Total deposits	823,339		898,650	(75,311)	(8)		832,252		890,042	(57,790)	(6)
Allocated capital	44,000		48,000	(4,000)	(8)		44,000		48,000	(4,000)	(8)

Selected Balance Sheet Data (period-end)
Loans by Line of Business:
Consumer and Small Business Banking	$	9,299	10,400	(1,101)	(11)		$	9,299	10,400	(1,101)	(11)
Consumer Lending:
Home Lending	219,595		222,088	(2,493)	(1)		219,595		222,088	(2,493)	(1)
Credit Card	40,053		34,075	5,978	18		40,053		34,075	5,978	18
Auto	52,175		56,224	(4,049)	(7)		52,175		56,224	(4,049)	(7)
Personal Lending	15,095		12,945	2,150	17		15,095		12,945	2,150	17
Total loans	$	336,217	335,732	485	—		$	336,217	335,732	485	—
Total deposits	820,495		892,373	(71,878)	(8)		820,495		892,373	(71,878)	(8)

Second quarter 2023 vs. second quarter 2022

Total loans (average and period-end) increased driven by:

•higher point of sale volume and the impact of new product launches in our Credit Card business; and

•higher loan balances in our Personal Lending business due to higher origination volumes and slower payment rates;

partially offset by:

•a decline in loan balances in our Auto business due to lower origination volumes reflecting credit tightening actions and rising interest rates; and

•a decline in Paycheck Protection Program loans in Consumer and Small Business Banking.

Total deposits (average and period-end) decreased due to consumer deposit outflows on consumer spending, as well as customer migration to higher yielding alternatives.

First half of 2023 vs. first half of 2022

Total loans (average) increased driven by:

•higher point of sale volume and the impact of new product launches in our Credit Card business;

•higher loan balances in Home Lending; and

•higher loan balances in our Personal Lending business due to higher origination volumes and slower payment rates;

partially offset by:

•a decline in loan balances in our Auto business due to lower origination volumes reflecting credit tightening actions and rising interest rates; and

•a decline in Paycheck Protection Program loans in Consumer and Small Business Banking.

Total deposits (average) decreased due to consumer deposit outflows on consumer spending, as well as customer migration to higher yielding alternatives.


16			Wells Fargo & Company

Commercial Banking provides financial solutions to private, family owned and certain public companies. Products and services include banking and credit products across multiple

industry sectors and municipalities, secured lending and lease products, and treasury management. Table 6c and Table 6d provide additional information for Commercial Banking.

Table 6c: Commercial Banking – Income Statement and Selected Metrics


	Quarter ended June 30,							Six months ended June 30,
($ in millions)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income Statement
Net interest income	$	2,501		1,580	921	58	%	$	4,990		2,941	2,049	70	%
Noninterest income:
Deposit-related fees	248			310	(62)	(20)		484			638	(154)	(24)
Lending-related fees	131			122	9	7		260			243	17	7
Lease income	167			179	(12)	(7)		336			358	(22)	(6)
Other	322			301	21	7		606			639	(33)	(5)
Total noninterest income	868			912	(44)	(5)		1,686			1,878	(192)	(10)
Total revenue	3,369			2,492	877	35		6,676			4,819	1,857	39
Net charge-offs	63			4	59	NM		24			(25)	49	196
Change in the allowance for credit losses	(37)			17	(54)	NM		(41)			(298)	257	86
Provision for credit losses	26			21	5	24		(17)			(323)	306	95
Noninterest expense	1,630			1,478	152	10		3,382			3,009	373	12
Income before income tax expense	1,713			993	720	73		3,311			2,133	1,178	55
Income tax expense	429			249	180	72		828			529	299	57
Less: Net income from noncontrolling interests	3			3	—	—		6			6	—	—
Net income	$	1,281		741	540	73		$	2,477		1,598	879	55

Revenue by Line of Business
Middle Market Banking	$	2,199		1,459	740	51		$	4,354		2,705	1,649	61
Asset-Based Lending and Leasing	1,170			1,033	137	13		2,322			2,114	208	10
Total revenue	$	3,369		2,492	877	35		$	6,676		4,819	1,857	39

Revenue by Product
Lending and leasing	$	1,332		1,308	24	2		$	2,656		2,563	93	4
Treasury management and payments	1,584			943	641	68		3,146			1,722	1,424	83
Other	453			241	212	88		874			534	340	64
Total revenue	$	3,369		2,492	877	35		$	6,676		4,819	1,857	39

Selected Metrics
Return on allocated capital	19.3		%	14.3				18.7		%	15.6
Efficiency ratio	48			59				51			62

NM – Not meaningful

Second quarter 2023 vs. second quarter 2022

Revenue increased driven by:

•higher net interest income reflecting higher interest rates and deposit spreads as well as higher loan balances;

partially offset by:

•lower deposit-related fees driven by the impact of higher earnings credit rates, which result in lower fees for commercial customers.

Provision for credit losses increased reflecting higher net charge-offs driven by a small number of borrowers, with little signs of systemic weakness across the portfolio, partially offset by a $54 million decrease in the allowance for credit losses.

Noninterest expense increased primarily due to higher personnel expense and operating costs, partially offset by the impact of efficiency initiatives.

First half of 2023 vs. first half of 2022

Revenue increased driven by:

•higher net interest income reflecting higher interest rates and deposit spreads as well as higher loan balances;

partially offset by:

•lower deposit-related fees driven by the impact of higher earnings credit rates, which result in lower fees for commercial customers.

Provision for credit losses reflected loan growth.

Noninterest expense increased driven by higher operating costs and personnel expense, partially offset by the impact of efficiency initiatives.


			Wells Fargo & Company			17

Earnings Performance (continued)

Table 6d: Commercial Banking – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	165,980	143,833	22,147	15	%	$	164,603	139,835	24,768	18	%
Commercial real estate	45,855		44,790	1,065	2		45,858		44,921	937	2
Lease financing and other	13,989		13,396	593	4		13,872		13,472	400	3
Total loans	$	225,824	202,019	23,805	12		$	224,333	198,228	26,105	13
Loans by Line of Business:
Middle Market Banking	$	122,204	113,033	9,171	8		$	121,916	110,820	11,096	10
Asset-Based Lending and Leasing	103,620		88,986	14,634	16		102,417		87,408	15,009	17
Total loans	$	225,824	202,019	23,805	12		$	224,333	198,228	26,105	13
Total deposits	166,747		188,286	(21,539)	(11)		168,597		194,458	(25,861)	(13)
Allocated capital	25,500		19,500	6,000	31		25,500		19,500	6,000	31

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	168,492	146,656	21,836	15		$	168,492	146,656	21,836	15
Commercial real estate	45,784		44,992	792	2		45,784		44,992	792	2
Lease financing and other	14,435		13,593	842	6		14,435		13,593	842	6
Total loans	$	228,711	205,241	23,470	11		$	228,711	205,241	23,470	11
Loans by Line of Business:
Middle Market Banking	$	122,104	116,064	6,040	5		$	122,104	116,064	6,040	5
Asset-Based Lending and Leasing	106,607		89,177	17,430	20		106,607		89,177	17,430	20
Total loans	$	228,711	205,241	23,470	11		$	228,711	205,241	23,470	11
Total deposits	164,764		183,145	(18,381)	(10)		164,764		183,145	(18,381)	(10)

Second quarter 2023 vs. second quarter 2022

Total loans (average and period-end) increased driven by new customer growth and higher line utilization.

Total deposits (average and period-end) decreased due to customer migration to higher yielding alternatives, partially offset by additions of deposits from new and existing customers.

First half of 2023 vs. first half of 2022

Total loans (average) increased driven by new customer growth and higher line utilization.

Total deposits (average) decreased due to customer migration to higher yielding alternatives, partially offset by additions of deposits from new and existing customers.


18			Wells Fargo & Company

Corporate and Investment Banking delivers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government and institutional clients globally. Products and services include corporate banking, investment banking, treasury management, commercial real

estate lending and servicing, equity and fixed income solutions as well as sales, trading, and research capabilities. Table 6e and Table 6f provide additional information for Corporate and Investment Banking.

Table 6e: Corporate and Investment Banking – Income Statement and Selected Metrics


	Quarter ended June 30,							Six months ended June 30,
($ in millions)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income Statement
Net interest income	$	2,359		2,057	302	15	%	$	4,820		4,047	773	19	%
Noninterest income:
Deposit-related fees	247			280	(33)	(12)		483			573	(90)	(16)
Lending-related fees	191			195	(4)	(2)		385			380	5	1
Investment banking fees	390			307	83	27		704			769	(65)	(8)
Net gains from trading activities	1,081			378	703	186		2,338			606	1,732	286
Other	363			356	7	2		803			668	135	20
Total noninterest income	2,272			1,516	756	50		4,713			2,996	1,717	57
Total revenue	4,631			3,573	1,058	30		9,533			7,043	2,490	35
Net charge-offs	83			(11)	94	855		100			(42)	142	338
Change in the allowance for credit losses	850			(51)	901	NM		1,085			(216)	1,301	602
Provision for credit losses	933			(62)	995	NM		1,185			(258)	1,443	559
Noninterest expense	2,087			1,840	247	13		4,304			3,823	481	13
Income before income tax expense	1,611			1,795	(184)	(10)		4,044			3,478	566	16
Income tax expense	401			459	(58)	(13)		1,016			884	132	15

Net income	$	1,210		1,336	(126)	(9)		$	3,028		2,594	434	17

Revenue by Line of Business
Banking:
Lending	$	685		528	157	30		$	1,377		1,049	328	31
Treasury Management and Payments	762			529	233	44		1,547			961	586	61
Investment Banking	311			222	89	40		591			553	38	7
Total Banking	1,758			1,279	479	37		3,515			2,563	952	37
Commercial Real Estate	1,333			1,060	273	26		2,644			2,055	589	29
Markets:
Fixed Income, Currencies, and Commodities (FICC)	1,133			934	199	21		2,418			1,811	607	34
Equities	397			253	144	57		834			520	314	60
Credit Adjustment (CVA/DVA) and Other	14			13	1	8		85			38	47	124
Total Markets	1,544			1,200	344	29		3,337			2,369	968	41
Other	(4)			34	(38)	NM		37			56	(19)	(34)
Total revenue	$	4,631		3,573	1,058	30		$	9,533		7,043	2,490	35

Selected Metrics
Return on allocated capital	10.2		%	13.8				13.0		%	13.5
Efficiency ratio	45			51				45			54

NM – Not meaningful

Second quarter 2023 vs. second quarter 2022

Revenue increased driven by:

•higher net gains from trading activities driven by higher trading revenue in equities, structured products, credit products, rates, and foreign exchange;

•higher net interest income reflecting higher interest rates; and

•higher investment banking fees, as second quarter 2022 included a $107 million write-down on unfunded leveraged finance commitments.

Provision for credit losses increased reflecting a $901 million increase in the allowance for credit losses driven by commercial real estate loans, primarily office loans, as well as higher net charge-offs.

Noninterest expense increased driven by higher operating costs and personnel expense, partially offset by the impact of efficiency initiatives.


			Wells Fargo & Company			19

Earnings Performance (continued)

First half of 2023 vs. first half of 2022

Revenue increased driven by:

•higher net gains from trading activities driven by higher trading results across all asset classes; and

•higher net interest income reflecting higher interest rates;

partially offset by:

•lower deposit-related fees driven by the impact of higher earnings credit rates, which result in lower fees for corporate banking customers; and

•lower investment banking fees due to lower market activity.

Provision for credit losses increased reflecting a $1.3 billion increase in the allowance for credit losses driven by commercial real estate loans, primarily office loans, as well as higher net charge-offs.

Noninterest expense increased driven by higher operating costs and personnel expense, partially offset by the impact of efficiency initiatives.

Table 6f: Corporate and Investment Banking – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial	$	190,529	200,527	(9,998)	(5)	%	$	192,141	195,865	(3,724)	(2)	%
Commercial real estate	100,941		98,167	2,774	3		100,956		95,770	5,186	5
Total loans	$	291,470	298,694	(7,224)	(2)		$	293,097	291,635	1,462	1
Loans by Line of Business:
Banking	$	95,413	109,123	(13,710)	(13)		$	97,235	105,822	(8,587)	(8)
Commercial Real Estate	136,473		133,212	3,261	2		136,639		129,749	6,890	5
Markets	59,584		56,359	3,225	6		59,223		56,064	3,159	6
Total loans	$	291,470	298,694	(7,224)	(2)		$	293,097	291,635	1,462	1
Trading-related assets:
Trading account securities	$	118,462	110,499	7,963	7		$	115,561	113,079	2,482	2
Reverse repurchase agreements/securities borrowed	60,164		48,909	11,255	23		58,997		51,854	7,143	14
Derivative assets	17,522		30,845	(13,323)	(43)		17,724		28,557	(10,833)	(38)
Total trading-related assets	$	196,148	190,253	5,895	3		$	192,282	193,490	(1,208)	(1)
Total assets	550,091		564,306	(14,215)	(3)		549,453		557,891	(8,438)	(2)
Total deposits	160,251		164,860	(4,609)	(3)		158,908		167,009	(8,101)	(5)
Allocated capital	44,000		36,000	8,000	22		44,000		36,000	8,000	22

Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial	$	190,317	207,414	(17,097)	(8)		$	190,317	207,414	(17,097)	(8)
Commercial real estate	101,028		100,872	156	—		101,028		100,872	156	—
Total loans	$	291,345	308,286	(16,941)	(5)		$	291,345	308,286	(16,941)	(5)
Loans by Line of Business:
Banking	$	93,596	111,639	(18,043)	(16)		$	93,596	111,639	(18,043)	(16)
Commercial Real Estate	136,257		137,083	(826)	(1)		136,257		137,083	(826)	(1)
Markets	61,492		59,564	1,928	3		61,492		59,564	1,928	3
Total loans	$	291,345	308,286	(16,941)	(5)		$	291,345	308,286	(16,941)	(5)
Trading-related assets:
Trading account securities	$	130,008	109,634	20,374	19		$	130,008	109,634	20,374	19
Reverse repurchase agreements/securities borrowed	59,020		42,696	16,324	38		59,020		42,696	16,324	38
Derivative assets	17,804		24,540	(6,736)	(27)		17,804		24,540	(6,736)	(27)
Total trading-related assets	$	206,832	176,870	29,962	17		$	206,832	176,870	29,962	17
Total assets	559,520		567,733	(8,213)	(1)		559,520		567,733	(8,213)	(1)
Total deposits	158,770		162,439	(3,669)	(2)		158,770		162,439	(3,669)	(2)

Second quarter 2023 vs. second quarter 2022

Total assets (average and period-end) decreased reflecting:

•lower loan balances driven by lower originations; and

•lower trading-related derivative assets due to declines in derivative balances for commodities and equities;

partially offset by:

•increased volume of reverse repurchase agreements; and

•higher trading account securities driven by higher mortgage-backed securities, equity, and bond trading balances.

Total deposits (average and period-end) decreased due to customer migration to higher yielding alternatives, partially offset by additions of deposits from new and existing customers.


20			Wells Fargo & Company

First half of 2023 vs. first half of 2022

Total assets (average) decreased driven by lower trading-related derivative assets due to declines in derivative balances for commodities and equities.

Total deposits (average) decreased due to customer migration to higher yielding alternatives, partially offset by additions of deposits from new and existing customers.

Wealth and Investment Management provides personalized wealth management, brokerage, financial planning, lending, private banking, trust and fiduciary products and services to affluent, high-net worth and ultra-high-net worth clients. We operate through financial advisors in our brokerage and wealth offices, consumer bank branches, independent offices, and digitally through WellsTrade® and Intuitive Investor®. Table 6g and Table 6h provide additional information for Wealth and Investment Management (WIM).

Table 6g: Wealth and Investment Management


	Quarter ended June 30,							Six months ended June 30,
($ in millions, unless otherwise noted)	2023			2022	$ Change	% Change		2023			2022	$ Change	% Change
Income Statement
Net interest income	$	1,009		916	93	10	%	$	2,053		1,715	338	20	%
Noninterest income:
Investment advisory and other asset-based fees	2,110			2,306	(196)	(8)		4,171			4,782	(611)	(13)
Commissions and brokerage services fees	494			459	35	8		1,035			913	122	13
Other	35			24	11	46		70			52	18	35
Total noninterest income	2,639			2,789	(150)	(5)		5,276			5,747	(471)	(8)
Total revenue	3,648			3,705	(57)	(2)		7,329			7,462	(133)	(2)
Net charge-offs	(1)			—	(1)	(100)		(2)			(4)	2	50
Change in the allowance for credit losses	25			(7)	32	457		37			(40)	77	193
Provision for credit losses	24			(7)	31	443		35			(44)	79	180
Noninterest expense	2,974			2,911	63	2		6,035			6,086	(51)	(1)
Income before income tax expense	650			801	(151)	(19)		1,259			1,420	(161)	(11)
Income tax expense	163			198	(35)	(18)		315			352	(37)	(11)

Net income	$	487		603	(116)	(19)		$	944		1,068	(124)	(12)

Selected Metrics
Return on allocated capital	30.5		%	27.1				29.7		%	24.1
Efficiency ratio	82			79				82			82

Client assets ($ in billions, period-end):
Advisory assets	$	850		800	50	6		$	850		800	50	6
Other brokerage assets and deposits	1,148			1,035	113	11		1,148			1,035	113	11
Total client assets	$	1,998		1,835	163	9		$	1,998		1,835	163	9



Selected Balance Sheet Data (average)
Total loans	$	83,045		85,912	(2,867)	(3)		$	83,331		85,342	(2,011)	(2)
Total deposits	112,360			173,670	(61,310)	(35)		119,443			179,708	(60,265)	(34)
Allocated capital	6,250			8,750	(2,500)	(29)		6,250			8,750	(2,500)	(29)

Selected Balance Sheet Data (period-end)
Total loans	$	82,456		85,342	(2,886)	(3)		$	82,456		85,342	(2,886)	(3)
Total deposits	108,532			165,633	(57,101)	(34)		108,532			165,633	(57,101)	(34)

Second quarter 2023 vs. second quarter 2022

Revenue decreased driven by:

•lower investment advisory and other asset-based fees due to lower average market valuations and net outflows of advisory assets;

partially offset by:

•higher net interest income reflecting higher interest rates, partially offset by lower deposit balances.

Noninterest expense increased driven by:

•higher operating costs;

partially offset by:

•lower personnel expense driven by lower revenue-related incentive compensation; and

•the impact of efficiency initiatives.

Total deposits (average and period-end) decreased due to customer migration to higher yielding alternatives.


			Wells Fargo & Company			21

Earnings Performance (continued)

First half of 2023 vs. first half of 2022

Revenue decreased driven by:

•lower investment advisory and other asset-based fees due to lower average market valuations and net outflows of advisory assets;

partially offset by:

•higher net interest income reflecting higher interest rates, partially offset by lower deposit balances; and

•higher commissions and brokerage services fees due to higher service fee rates.

Provision for credit losses included a $77 million increase in the allowance for credit losses reflecting a less favorable economic outlook and portfolio credit normalization.

Noninterest expense decreased driven by:

•lower personnel expense driven by lower revenue-related incentive compensation; and

•the impact of efficiency initiatives;

partially offset by:

•higher operating costs.

Total deposits (average) decreased due to customer migration to higher yielding alternatives.

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 6h presents advisory assets activity by WIM line of business. 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 both second quarter 2023 and 2022, the average fee rate by account type ranged from 50 to 120 basis points.

Table 6h: WIM Advisory Assets


	Quarter ended						Six months ended
(in billions)	Balance, beginning of period		Inflows (1)	Outflows (2)	Market impact (3)	Balance, end of period	Balance, beginning of period		Inflows (1)	Outflows (2)	Market impact (3)	Balance, end of period
June 30, 2023
Client-directed (4)	$	171.9	8.2	(9.1)	6.4	177.4	$	165.2	16.4	(17.5)	13.3	177.4
Financial advisor-directed (5)	233.1		9.5	(10.1)	11.2	243.7	222.9		18.9	(19.3)	21.2	243.7
Separate accounts (6)	182.7		5.8	(6.8)	6.8	188.5	176.5		11.7	(12.9)	13.2	188.5
Mutual fund advisory (7)	80.6		1.8	(3.1)	2.6	81.9	78.6		3.8	(6.2)	5.7	81.9
Total Wells Fargo Advisors	$	668.3	25.3	(29.1)	27.0	691.5	$	643.2	50.8	(55.9)	53.4	691.5
The Private Bank (8)	156.8		6.1	(8.9)	4.0	158.0	153.6		13.4	(18.2)	9.2	158.0
Total WIM advisory assets	$	825.1	31.4	(38.0)	31.0	849.5	$	796.8	64.2	(74.1)	62.6	849.5
June 30, 2022
Client-directed (4)	$	193.7	7.5	(10.0)	(24.2)	167.0	$	205.6	16.3	(20.2)	(34.7)	167.0
Financial advisor-directed (5)	247.2		9.8	(11.3)	(27.1)	218.6	255.5		22.4	(21.2)	(38.1)	218.6
Separate accounts (6)	192.8		6.1	(7.2)	(20.1)	171.6	203.3		13.6	(14.2)	(31.1)	171.6
Mutual fund advisory (7)	95.1		2.1	(4.0)	(11.0)	82.2	102.1		5.3	(8.0)	(17.2)	82.2
Total Wells Fargo Advisors	$	728.8	25.5	(32.5)	(82.4)	639.4	$	766.5	57.6	(63.6)	(121.1)	639.4
The Private Bank (8)	183.6		7.1	(13.5)	(16.8)	160.4	198.0		14.5	(25.2)	(26.9)	160.4
Total WIM advisory assets	$	912.4	32.6	(46.0)	(99.2)	799.8	$	964.5	72.1	(88.8)	(148.0)	799.8

(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 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.


22			Wells Fargo & Company

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. Table 6i and Table 6j provide additional information for Corporate.

Table 6i: Corporate – Income Statement


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Income Statement
Net interest income	$	(91)	(619)	528	85	%	$	(75)	(1,437)	1,362	95	%
Noninterest income	121		(102)	223	219		126		840	(714)	(85)
Total revenue	30		(721)	751	104		51		(597)	648	109
Net charge-offs	(2)		(6)	4	67		(4)		(12)	8	67
Change in the allowance for credit losses	(142)		21	(163)	NM		(20)		7	(27)	NM
Provision for credit losses	(144)		15	(159)	NM		(24)		(5)	(19)	NM
Noninterest expense	269		597	(328)	(55)		877		1,364	(487)	(36)
Loss before income tax benefit	(95)		(1,333)	1,238	93		(802)		(1,956)	1,154	59
Income tax benefit	(103)		(233)	130	56		(375)		(421)	46	11
Less: Net loss from noncontrolling interests (1)	(38)		(169)	131	78		(152)		(42)	(110)	NM
Net income (loss)	$	46	(931)	977	105		$	(275)	(1,493)	1,218	82

NM – Not meaningful

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

Second quarter 2023 vs. second quarter 2022

Revenue increased driven by:

•higher net interest income reflecting higher interest rates; and

•lower impairments of equity securities and higher unrealized gains on marketable equity securities, partially offset by lower unrealized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses;

partially offset by:

•lower gains on the sales of debt securities in our investment portfolio.

Provision for credit losses reflected a decrease in allowance for credit losses.

Noninterest expense decreased driven by lower operating losses.

First half of 2023 vs. first half of 2022

Revenue increased driven by:

•higher net interest income reflecting higher interest rates;

partially offset by:

•lower unrealized and realized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses, partially offset by lower impairment of equity securities and higher unrealized gains on marketable equity securities.

Noninterest expense decreased driven by:

•the impact of divestitures; and

•lower operating losses.


			Wells Fargo & Company			23

Earnings Performance (continued)

Corporate includes our rail car leasing business, which had long-lived operating lease assets, net of accumulated depreciation, of $4.5 billion and $4.7 billion as of June 30, 2023, and December 31, 2022, respectively. The average age of our rail cars is 22 years and the rail cars are typically leased to customers under short-term leases of 3 to 5 years. Our four largest concentrations, which represented 67% of our rail car fleet as of June 30, 2023, were rail cars used for the transportation of cement/sand, agricultural grain, plastics, and coal products. We

may incur impairment charges 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) and Note 8 (Leasing Activity) to Financial Statements in our 2022 Form 10-K.

Table 6j: Corporate – Balance Sheet


	Quarter ended June 30,						Six months ended June 30,
(in millions)	2023		2022	$ Change	% Change		2023		2022	$ Change	% Change
Selected Balance Sheet Data (average)
Cash and due from banks, and interest-earning deposits with banks	$	132,505	145,637	(13,132)	(9)	%	$	125,004	162,101	(37,097)	(23)	%
Available-for-sale debt securities (1)	130,496		127,997	2,499	2		129,638		142,297	(12,659)	(9)
Held-to-maturity debt securities (1)	270,999		291,710	(20,711)	(7)		271,854		283,655	(11,801)	(4)
Equity securities	15,327		15,681	(354)	(2)		15,422		15,720	(298)	(2)
Total loans	9,216		9,083	133	1		9,185		9,187	(2)	—
Total assets	610,417		642,606	(32,189)	(5)		603,293		664,853	(61,560)	(9)
Total deposits	84,752		20,327	64,425	317		72,846		23,665	49,181	208

Selected Balance Sheet Data (period-end)
Cash and due from banks, and interest-earning deposits with banks	$	128,077	123,872	4,205	3		$	128,077	123,872	4,205	3
Available-for-sale debt securities (1)	123,169		114,469	8,700	8		123,169		114,469	8,700	8
Held-to-maturity debt securities (1)	269,414		298,895	(29,481)	(10)		269,414		298,895	(29,481)	(10)
Equity securities	15,097		15,004	93	1		15,097		15,004	93	1
Total loans	9,231		9,133	98	1		9,231		9,133	98	1
Total assets	593,597		611,657	(18,060)	(3)		593,597		611,657	(18,060)	(3)
Total deposits	92,023		21,563	70,460	327		92,023		21,563	70,460	327

(1)In first quarter 2023, we reclassified HTM debt securities with a fair value of $23.2 billion to AFS debt securities in connection with the adoption of ASU 2022-01 – Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Second quarter 2023 vs. second quarter 2022

Total assets (average and period-end) decreased reflecting:

•a decrease in average cash and due from banks, and interest-earning deposits with banks that are managed by corporate treasury as a result of a decrease in deposits in the operating segments and an increase in loans originated in the operating segments; and

•sales of and net unrealized losses on AFS debt securities.

Total deposits (average and period-end) increased driven by issuances of certificates of deposit (CDs).

First half of 2023 vs. first half of 2022

Total assets (average) decreased reflecting:

•a decrease in cash and due from banks, and interest-earning deposits with banks that are managed by corporate treasury as a result of a decrease in deposits in the operating segments and an increase in loans originated in the operating segments; and

•sales of and net unrealized losses on AFS debt securities.

Total deposits (average) increased driven by issuances of CDs.


24			Wells Fargo & Company


Balance Sheet Analysis

At June 30, 2023, our assets totaled $1.88 trillion, down $4.7 billion from December 31, 2022.

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


	June 30, 2023					December 31, 2022
($ in millions)	Amortized cost, net (1)		Net unrealized gains (losses)	Fair value	Weighted average expected maturity (yrs)	Amortized cost, net (1)		Net unrealized gains (losses)	Fair value	Weighted average expected maturity (yrs)

Available-for-sale (2)	$	142,283	(8,032)	134,251	4.9	$	121,725	(8,131)	113,594	5.4
Held-to-maturity (3)	272,360		(38,524)	233,836	8.2	297,059		(41,538)	255,521	8.1
Total	$	414,643	(46,556)	368,087	n/a	$	418,784	(49,669)	369,115	n/a

(1)Represents amortized cost of the securities, net of the allowance for credit losses of $7 million and $6 million related to available-for-sale debt securities and $76 million and $85 million related to held-to-maturity debt securities at June 30, 2023, and December 31, 2022, respectively.

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

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

Table 7 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 2022 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 amortized cost, net of the allowance for credit losses, of AFS and HTM debt securities decreased from December 31, 2022. Purchases of AFS and HTM debt securities were more than offset by portfolio runoff and sales of AFS debt securities.

In addition, we transferred AFS debt securities with a fair value of $3.7 billion to HTM debt securities in the first half of 2023 due to actions taken to reposition the overall portfolio for capital management purposes. Debt securities transferred from AFS to HTM in the first half of 2023 had $320 million of pre-tax unrealized losses at the time of the transfers.

Additionally, in first quarter 2023, we also reclassified HTM debt securities with an aggregate fair value of $23.2 billion and amortized cost of $23.9 billion to AFS debt securities in connection with the adoption of ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. For additional information on our adoption of ASU 2022-01, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

The total net unrealized losses on AFS and HTM debt securities decreased from December 31, 2022 due to changes in interest rates.

At June 30, 2023, 99% 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. 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.


			Wells Fargo & Company			25

Balance Sheet Analysis (continued)

Loan Portfolios

Table 8 provides a summary of total outstanding loans by portfolio segment. Commercial loans decreased from December 31, 2022, predominantly due to a decrease in the commercial real estate loan portfolio as paydowns exceeded

originations and advances. Consumer loans decreased from December 31, 2022, as increases in the credit card portfolio were more than offset by decreases in all other consumer loan portfolios, primarily the residential mortgage loan portfolio.

Table 8: Loan Portfolios


($ in millions)	Jun 30, 2023		Dec 31, 2022	$ Change	% Change
Commercial	$	555,621	557,516	(1,895)	—	%
Consumer	392,339		398,355	(6,016)	(2)
Total loans	$	947,960	955,871	(7,911)	(1)

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

See the “Balance Sheet Analysis – Loan Portfolios” section in our 2022 Form 10-K for additional information regarding contractual loan maturities and the distribution of loans to changes in interest rates.

Deposits

Deposits decreased from December 31, 2022, reflecting:

•customer migration to higher yielding alternatives; and

•consumer deposit outflows on consumer spending;

partially offset by:

•higher time deposits driven by issuances of certificates of deposit (CDs).

Table 9 provides additional information regarding deposit balances. 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. In response to higher interest rates, our average deposit cost in second quarter 2023 increased to 1.13%, compared with 0.46% in fourth quarter 2022.

Table 9: Deposits


($ in millions)	Jun 30, 2023		% of total deposits		Dec 31, 2022		% of total deposits		$ Change		% Change
Noninterest-bearing demand deposits	$	402,322	30	%	$	458,010	33	%	$	(55,688)	(12)	%
Interest-bearing demand deposits	417,159		31		428,877		31		(11,718)		(3)
Savings deposits	376,538		28		410,139		30		(33,601)		(8)
Time deposits	126,387		9		66,197		5		60,190		91
Interest-bearing deposits in non-U.S. offices	22,178		2		20,762		1		1,416		7
Total deposits	$	1,344,584	100	%	$	1,383,985	100	%	$	(39,401)	(3)


26			Wells Fargo & Company


Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial transactions that are not recorded on our consolidated balance sheet, or may be recorded on our consolidated balance sheet in amounts that are different from the full contract or notional amount of the transaction. Our off-balance sheet arrangements include unfunded credit commitments, transactions with unconsolidated entities, guarantees, commitments to purchase debt and equity securities, 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.

Unfunded Credit Commitments

Unfunded credit commitments are legally binding agreements to lend to customers with terms covering usage of funds, contractual interest rates, expiration dates, and any required collateral. The maximum credit risk for these commitments will generally be lower than the contractual amount because these commitments may expire without being used or may be cancelled at the customer’s request. Our credit risk monitoring activities include managing the amount of commitments, both to individual customers and in total, and the size and maturity structure of these commitments. For additional information, see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Transactions with Unconsolidated Entities

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 14 (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 14 (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 our 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 our 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 11 (Derivatives) to Financial Statements in this Report.


			Wells Fargo & Company			27


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 2022 Form 10-K. The discussion that follows supplements our discussion of the management of certain risks contained in the “Risk Management” section in our 2022 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 the Company’s 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, Corporate Credit Risk, which is part of Independent Risk Management, has oversight responsibility for credit risk. Corporate Credit Risk reports to the Chief Risk Officer 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 10 presents our total loans outstanding by portfolio segment and class of financing receivable.

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


(in millions)	Jun 30, 2023		Dec 31, 2022
Commercial and industrial	$	386,011	386,806


Commercial real estate	154,276		155,802
Lease financing	15,334		14,908
Total commercial	555,621		557,516


Residential mortgage	265,085		269,117
Credit card	47,717		46,293
Auto	51,587		53,669
Other consumer	27,950		29,276
Total consumer	392,339		398,355
Total loans	$	947,960	955,871

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.

In addition, the Company will continue to integrate climate considerations into its credit risk management activities.

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 Table 11 provides credit quality trends.

Table 11: Credit Quality Overview


($ in millions)	Jun 30, 2023			Dec 31, 2022
Nonaccrual loans
Commercial loans	$	3,429		1,823
Consumer loans	3,457			3,803
Total nonaccrual loans	$	6,886		5,626
Nonaccrual loans as a % of total loans	0.73		%	0.59





Allowance for credit losses (ACL) for loans	$	14,786		13,609
ACL for loans as a % of total loans	1.56		%	1.42

	Quarter ended June 30,
	2023			2022
Net loan charge-offs as a % of:
Average commercial loans	0.15		%	0.02
Average consumer loans	0.58			0.33

	Six months ended June 30,
	2023			2022
Average commercial loans	0.10		%	—
Average consumer loans	0.57			0.34

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

Significant Loan Portfolio Reviews Our credit risk monitoring process is designed to enable early identification of developing risk and to support our determination of an appropriate allowance for credit losses. The following discussion provides additional characteristics and analysis of our significant portfolios. See Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report for more analysis and credit metric information for each of the following portfolios.

COMMERCIAL AND INDUSTRIAL LOANS AND LEASE FINANCING

For purposes of portfolio risk management, we aggregate commercial and industrial loans and lease financing according to market segmentation and standard industry codes. We generally subject commercial and industrial loans and lease financing to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to regulatory definitions of pass and criticized categories with criticized segmented among special mention, substandard, doubtful and loss categories.


28			Wells Fargo & Company

We had $13.0 billion of the commercial and industrial loans and lease financing portfolio internally classified as criticized in accordance with regulatory guidance at June 30, 2023, compared with $12.6 billion at December 31, 2022.

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

the operating cash flows of customers, with the collateral securing this portfolio representing a secondary source of repayment.

The portfolio was stable at June 30, 2023, compared with December 31, 2022. Table 12 provides our commercial and industrial loans and lease financing by industry. The industry categories are based on the North American Industry Classification System.

Table 12: Commercial and Industrial Loans and Lease Financing by Industry


	June 30, 2023							December 31, 2022
($ in millions)	Nonaccrual loans		Loans outstanding balance	% of total loans		Total commitments (1)		Nonaccrual loans	Loans outstanding balance	% of total loans		Total commitments (1)
Financials except banks	$	10	148,643	16	%	$	232,177	44	147,171	15	%	$	229,822
Technology, telecom and media	43		27,186	3		65,437		31	27,767	3		66,340
Real estate and construction	61		25,180	3		55,929		73	24,478	3		56,393
Retail	83		20,658	2		50,233		47	19,487	2		49,334
Equipment, machinery and parts manufacturing	187		26,032	3		48,614		83	23,675	2		47,507
Materials and commodities	185		16,073	2		40,820		86	16,610	2		39,667
Food and beverage manufacturing	3		16,161	2		33,081		17	17,393	2		33,951
Oil, gas and pipelines	32		10,456	1		32,157		55	9,991	1		31,077
Health care and pharmaceuticals	19		14,996	2		30,655		21	14,861	2		30,294
Auto related	8		13,888	1		28,264		10	13,168	1		27,451
Commercial services	57		11,206	1		26,355		50	11,418	1		26,693
Utilities	1		7,709	*		24,736		18	9,457	*		26,899
Diversified or miscellaneous	2		8,069	*		20,156		2	8,161	*		21,498
Entertainment and recreation	25		12,935	1		19,273		28	13,085	1		18,741
Transportation services	147		8,993	*		16,057		237	8,389	*		16,064
Insurance and fiduciaries	1		5,016	*		15,347		1	4,691	*		15,592
Government and education	27		6,168	*		12,320		25	6,482	*		12,590
Banks	—		11,080	1		11,984		—	14,403	2		16,537
Agribusiness	6		6,107	*		11,510		24	6,180	*		11,457
Other (2)	25		4,789	*		12,187		13	4,847	*		12,301
Total	$	922	401,345	42	%	$	787,292	865	401,714	42	%	$	790,208

*Less than 1%.

(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit. Effective first quarter 2023, unfunded credit commitments exclude discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase. Prior period balances have been revised to conform with the current period presentation. For additional information on issued letters of credit, see Note 14 (Guarantees and Other Commitments) to Financial Statements in this Report.

(2)No other single industry had total loans in excess of $2.8 billion at June 30, 2023, and $3.4 billion at December 31, 2022, respectively.


			Wells Fargo & Company			29

Risk Management – Credit Risk Management (continued)

Table 12a provides further loan segmentation for our largest industry category, financials except banks. This category includes loans to investment firms, financial vehicles, nonbank creditors, rental and leasing companies, securities firms, and investment banks. These loans are generally secured and have features to

help manage credit risk, such as structural credit enhancements, collateral eligibility requirements, contractual re-margining of collateral supporting the loans, and loan amounts limited to a percentage of the value of the underlying assets considering underlying credit risk, asset duration, and ongoing performance.

Table 12a: Financials Except Banks Industry Category


	June 30, 2023							December 31, 2022
($ in millions)	Nonaccrual loans		Loans outstanding balance	% of total loans		Total commitments (1)		Nonaccrual loans	Loans outstanding balance	% of total loans		Total commitments (1)
Asset managers and funds (2)	$	—	51,525	5	%	$	96,166	1	52,254	5	%	$	97,998
Commercial finance (3)	2		55,057	6		79,987		31	53,269	5		76,016
Consumer finance (4)	—		17,639	2		28,854		4	17,028	2		29,047
Real estate finance (5)	8		24,422	3		27,170		8	24,620	3		26,761
Total	$	10	148,643	16	%	$	232,177	44	147,171	15	%	$	229,822

(1)Total commitments consist of loans outstanding plus unfunded credit commitments. Effective first quarter 2023, unfunded credit commitments exclude discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase. Prior period balances have been revised to conform with the current period presentation. For additional information on issued letters of credit, see Note 14 (Guarantees and Other Commitments) to Financial Statements in this Report.

(2)Includes loans for subscription or capital calls and loans to prime brokerage customers and securities firms.

(3)Includes asset-based lending and leasing, including loans to special purpose entities, loans to commercial leasing entities, structured lending facilities to commercial loan managers, and also includes collateralized loan obligations (CLOs) in loan form, all of which were rated AA or above, of $7.7 billion and $7.8 billion at June 30, 2023, and December 31, 2022, respectively.

(4)Includes originators or servicers of financial assets collateralized by consumer loans such as auto loans and leases, and credit cards.

(5)Includes originators or servicers of financial assets collateralized by commercial or residential real estate loans.

Our commercial and industrial loans and lease financing portfolio included non-U.S. loans of $75.8 billion and $79.7 billion at June 30, 2023, and December 31, 2022, respectively. Significant industry concentrations of non-U.S. loans at June 30, 2023, and December 31, 2022, respectively, included:

•$43.5 billion and $45.7 billion in the financials except banks industry;

•$11.1 billion and $14.1 billion in the banks industry; and

•$1.5 billion and $1.2 billion in the oil, gas and pipelines industry.


30			Wells Fargo & Company

COMMERCIAL REAL ESTATE (CRE) Our CRE loan portfolio is comprised of CRE mortgage and CRE construction loans. The total CRE loan portfolio decreased $1.5 billion from December 31, 2022, as paydowns exceeded originations and advances. The portfolio is diversified both geographically and by property type. The largest geographic concentrations of CRE loans are in California, New York, Texas, and Florida, which represented a combined 48% of the total CRE portfolio. The largest property type concentrations are apartments at 26% and office at 21% of the portfolio. Unfunded credit commitments were $8.7 billion and $8.8 billion at June 30, 2023, and December 31, 2022, respectively, for CRE mortgage loans and $16.6 billion and $20.7 billion, respectively, for CRE construction loans.

We generally subject CRE loans to individual risk assessment using our internal borrower and collateral quality ratings. We had

$14.9 billion of CRE mortgage loans classified as criticized at June 30, 2023, compared with $11.3 billion at December 31, 2022, and $1.1 billion of CRE construction loans classified as criticized at both June 30, 2023, and December 31, 2022. The increase in criticized CRE loans was primarily driven by the office property type. The credit quality of the office property type continued to be adversely affected as weakened demand for office space continued to drive higher vacancy rates and deteriorating operating performance. We continue to closely monitor this portfolio. At June 30, 2023, nearly one-third of the CRE loans in the office property type had recourse to a guarantor, typically through a repayment guarantee, in addition to the related collateral. Loans in California and New York represented approximately 40% of the office property type at June 30, 2023.

Table 13 provides our CRE loans by state and property type.

Table 13: CRE Loans by State and Property Type


									June 30, 2023							December 31, 2022
		Real estate mortgage				Real estate construction			Total commercial real estate							Total commercial real estate
($ in millions)	Nonaccrual loans	Loans outstanding balance			Nonaccrual loans	Loans outstanding balance		Nonaccrual loans	Loans outstanding balance	Loans as % of total loans	Total commitments (1)				Loans outstanding balance	Total commitments (1)
By state:
California		$	740	28,465		1	4,300		741	32,765	3%		$	37,556		34,285	39,594
New York		319		14,121		—	2,476		319	16,597	2		18,358			17,294	19,360
Texas		20		11,509		—	1,393		20	12,902	1		14,815			12,807	14,941
Florida		65		9,714		—	2,091		65	11,805	1		14,417			11,418	14,690
Georgia		90		4,862		—	932		90	5,794	*		7,288			5,428	6,651
Washington		349		4,218		—	1,520		349	5,738	*		6,753			5,603	6,868
North Carolina		4		4,302		—	1,179		4	5,481	*		6,700			5,227	6,650
Arizona		16		4,600		—	601		16	5,201	*		6,107			5,302	6,288
New Jersey		6		2,745		—	1,490		6	4,235	*		5,346			4,119	5,660
Massachusetts		4		2,763		41	1,311		45	4,074	*		5,187			4,094	5,324
Other (2)		851		42,256		1	7,428		852	49,684	5		57,097			50,225	59,294
Total		$	2,464	129,555		43	24,721		2,507	154,276	16%		$	179,624		155,802	185,320
By property:
Apartments		$	9	30,513		—	10,239		9	40,752	4%		$	50,699		39,743	51,567
Office (3)		1,517		29,437		—	3,652		1,517	33,089	3		36,757			36,144	40,827
Industrial/warehouse		38		19,654		—	4,246		38	23,900	3		27,802			20,634	24,546
Hotel/motel		149		11,911		—	1,012		149	12,923	1		13,910			12,751	13,758
Retail (excl shopping center)		355		11,301		2	111		357	11,412	1		12,334			11,753	12,486
Shopping center		193		8,848		—	401		193	9,249	*		9,816			9,534	10,131
Institutional		118		4,160		—	1,939		118	6,099	*		6,906			7,725	9,178
Mixed use properties		72		4,440		41	903		113	5,343	*		6,330			5,887	7,139
Collateral pool		—		2,987		—	44		—	3,031	*		3,410			3,062	3,662
Storage facility		—		2,819		—	164		—	2,983	*		3,299			2,929	3,201
Other		13		3,485		—	2,010		13	5,495	*		8,361			5,640	8,825
Total		$	2,464	129,555		43	24,721		2,507	154,276	16	%	$	179,624		155,802	185,320

* Less than 1%.

(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit. For additional information on issued letters of credit, see Note 14 (Guarantees and Other Commitments) to Financial Statements in this Report.

(2)Includes 40 states and non-U.S. loans. No state in Other had loans in excess of $4.1 billion at both June 30, 2023, and December 31, 2022. Non-U.S. loans were $7.5 billion and $7.6 billion at June 30, 2023, and December 31, 2022, respectively.

(3)In second quarter 2023, we reclassified certain CRE loans to better align with regulatory reporting guidance, which resulted in a decrease in loans outstanding of approximately $2.0 billion to the office property type.


			Wells Fargo & Company			31

Risk Management – Credit Risk Management (continued)

NON-U.S. LOANS Our classification of non-U.S. loans is based on whether the borrower’s primary address is outside of the United States. At June 30, 2023, non-U.S. loans totaled $83.5 billion, representing approximately 9% of our total consolidated loans outstanding, compared with $87.5 billion, or approximately 9% of our total consolidated loans outstanding, at December 31, 2022. Non-U.S. loans were approximately 4% and 5% of our total consolidated assets at June 30, 2023, and December 31, 2022, respectively.

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

which gives consideration for allowable transfers of risk, such as guarantees and collateral, and may be different from the reporting based on a borrower’s primary address.

Our largest single country exposure outside the U.S. at June 30, 2023, was the United Kingdom, which totaled

$28.6 billion, or approximately 2% of our total assets, and included $3.2 billion of sovereign claims. Our United Kingdom sovereign claims arise from deposits we have placed with the Bank of England pursuant to regulatory requirements in support of our London branch.

Table 14 provides information regarding our top 20 exposures by country (excluding the U.S.), based on our assessment of risk, which gives consideration to the country of any guarantors and/or underlying collateral. With respect to Table 14:

•Lending and deposits exposure includes outstanding loans, unfunded credit commitments (excluding discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase), and deposits with non-U.S. banks. These balances are presented prior to the deduction of allowance for credit losses or collateral received under the terms of the credit agreements, if any.

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

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

Table 14: Select Country Exposures


	June 30, 2023
	Lending and deposits			Securities		Derivatives and other		Total exposure
($ in millions)	Sovereign		Non-sovereign	Sovereign	Non-sovereign	Sovereign	Non-sovereign	Sovereign	Non-sovereign (1)	Total
Top 20 country exposures:
United Kingdom	$	3,184	23,434	—	599	—	1,372	3,184	25,405	28,589
Canada	9		16,658	382	447	96	175	487	17,280	17,767
Cayman Islands	—		8,089	—	—	—	336	—	8,425	8,425
Japan	6,058		737	—	383	—	178	6,058	1,298	7,356
Luxembourg	—		6,608	—	(1)	—	281	—	6,888	6,888
France	107		3,893	540	239	644	61	1,291	4,193	5,484
Ireland	6		4,733	—	141	—	233	6	5,107	5,113
Bermuda	—		3,407	—	34	—	57	—	3,498	3,498
Germany	—		3,000	—	19	—	242	—	3,261	3,261
Guernsey	—		3,078	—	—	—	9	—	3,087	3,087
Netherlands	—		2,644	—	146	—	102	—	2,892	2,892
South Korea	—		1,989	3	336	1	2	4	2,327	2,331
Australia	—		1,669	—	254	—	16	—	1,939	1,939
Chile	—		1,639	—	242	—	1	—	1,882	1,882
China	12		1,221	(23)	323	25	35	14	1,579	1,593
Brazil	—		1,415	—	(7)	—	3	—	1,411	1,411
Switzerland	—		1,155	—	(12)	—	145	—	1,288	1,288
Belgium	—		1,057	—	(4)	—	1	—	1,054	1,054
Norway	—		776	—	220	1	22	1	1,018	1,019
Spain	—		643	—	144	—	172	—	959	959
Total top 20 country exposures	$	9,376	87,845	902	3,503	767	3,443	11,045	94,791	105,836

(1)Total non-sovereign exposure comprised $45.6 billion exposure to financial institutions and $49.2 billion to non-financial corporations at June 30, 2023.

RESIDENTIAL MORTGAGE LOANS Our residential mortgage loan portfolio is comprised of 1–4 family first and junior lien mortgage loans. Residential mortgage – first lien loans comprised 95% of the total residential mortgage loan portfolio at both June 30, 2023, and December 31, 2022.

The residential mortgage loan portfolio includes loans with adjustable-rate features. We monitor the risk of default as a result of interest rate increases on adjustable-rate mortgage (ARM) loans, which may be mitigated by product features that limit the amount of the increase in the contractual interest rate. The default risk of these loans is considered in our ACL for loans.

ARM loans were 7% of total loans at both June 30, 2023, and December 31, 2022, with an initial reset date in 2025 or later for the majority of this portfolio at June 30, 2023. We do not offer option ARM products, nor do we offer variable-rate mortgage products with fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans.

The residential mortgage – junior lien portfolio consists of residential mortgage lines of credit and loans that are subordinate in rights to an existing lien on the same property. These lines and loans may have draw periods, interest-only


32			Wells Fargo & Company

payments, balloon payments, adjustable rates and similar features. The outstanding balance of residential mortgage lines of credit was $16.4 billion at June 30, 2023, compared with $18.3 billion at December 31, 2022. The unfunded credit commitments for these lines of credit totaled $31.9 billion at June 30, 2023, compared with $35.5 billion at December 31, 2022. For additional information on our residential loan portfolio, see the “Risk Management – Credit Risk Management – Residential Mortgage Loans” section in our 2022 Form 10-K.

We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our residential mortgage portfolio as part of our credit risk management process. Our periodic review of this portfolio includes original appraisals adjusted for the change in Home Price Index (HPI) or estimates from automated valuation models (AVMs) to support property values. For additional information about our use of appraisals and AVMs, see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report and the “Risk Management – Credit Risk Management – Residential Mortgage Loans” section in our 2022 Form 10-K.

Part of our credit monitoring includes tracking delinquency, current Fair Isaac Corporation (FICO) credit scores and loan/

combined loan to collateral values (LTV/CLTV) on the entire residential mortgage loan portfolio. CLTV represents the ratio of the total loan balance of first and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. For additional information regarding credit quality indicators, see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

We continue to modify residential mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For additional information on loan modifications, see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report and the “Risk Management – Credit Risk Management – Residential Mortgage Loans” section in our 2022 Form 10-K.

Residential Mortgage – First Lien Portfolio Our residential mortgage – first lien portfolio decreased $2.8 billion from

December 31, 2022, due to loan paydowns, partially offset by originations.

Table 15 shows certain delinquency and loss information for the residential mortgage – first lien portfolio and lists the top five states by outstanding balance.

Table 15: Residential Mortgage – First Lien Portfolio Performance


	Outstanding balance			% of total loans			% of loans 30 days or more past due		Net loan charge-off rate quarter ended (1)
($ in millions)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	Jun 30, 2023	Dec 31, 2022




California (2)	$	110,513	110,877	11.66	%	11.60	0.36	0.45	(0.01)	—
New York	31,569		31,753	3.33		3.32	0.65	0.80	(0.01)	(0.02)
Washington	10,688		10,523	1.13		1.10	0.23	0.30	(0.01)	0.02
Florida	10,307		10,535	1.09		1.10	0.96	1.13	(0.05)	(0.14)
New Jersey	10,292		10,416	1.09		1.09	1.05	1.24	0.01	(0.01)
Other (3)	71,619		72,843	7.56		7.62	0.73	0.93	(0.02)	—
Total	244,988		246,947	25.86		25.83	0.55	0.69	(0.01)	(0.01)
Government insured/guaranteed loans (4)	8,067		8,860	0.85		0.93
Total first lien mortgage portfolio	$	253,055	255,807	26.71	%	26.76

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

(2)Our residential mortgage loans to borrowers in California are located predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 4% of total loans.

(3)Consists of 45 states; no state in Other had loans in excess of $7.6 billion and $7.7 billion at June 30, 2023, and December 31, 2022, respectively.

(4)Represents loans, substantially all of which were purchased from GNMA loan securitization pools, where the repayment of the loans is predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). For additional information on GNMA loan securitization pools, see the “Risk Management – Credit Risk Management – Mortgage Banking Activities” section in this Report.


			Wells Fargo & Company			33

Risk Management – Credit Risk Management (continued)

Residential Mortgage – Junior Lien Portfolio Our residential mortgage – junior lien portfolio decreased $1.3 billion from December 31, 2022, driven by loan paydowns.

Table 16 shows certain delinquency and loss information for the residential mortgage – junior lien portfolio and lists the top five states by outstanding balance.

Table 16: Residential Mortgage – Junior Lien Portfolio Performance


	Outstanding balance			% of total loans			% of loans 30 days or more past due		Net loan charge-off rate quarter ended (1)
($ in millions)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	Jun 30, 2023	Dec 31, 2022




California	$	3,268	3,550	0.34	%	0.37	1.78	2.02	(0.07)	(0.16)
New Jersey	1,236		1,383	0.13		0.14	2.71	2.76	—	0.21
Florida	1,025		1,165	0.11		0.12	2.52	2.69	(0.35)	(0.92)
Pennsylvania	744		832	0.08		0.09	2.80	2.76	0.03	(0.01)
New York	721		794	0.08		0.08	2.67	2.86	0.36	0.05
Other (2)	5,036		5,586	0.53		0.58	2.02	2.05	(0.31)	(0.36)
Total junior lien mortgage portfolio	$	12,030	13,310	1.27	%	1.38	2.16	2.27	(0.16)	(0.25)

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

(2)Consists of 45 states; no state in Other had loans in excess of $710 million and $790 million at June 30, 2023, and December 31, 2022, respectively.

CREDIT CARD, AUTO, AND OTHER CONSUMER LOANS Table 17 shows the outstanding balance of our credit card, auto, and other consumer loan portfolios. For information regarding credit quality indicators for these portfolios, see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Table 17: Credit Card, Auto, and Other Consumer Loans


	June 30, 2023				December 31, 2022
($ in millions)	Outstanding balance		% of total loans		Outstanding balance		% of total loans
Credit card	$	47,717	5.03	%	$	46,293	4.84	%
Auto	51,587		5.44		53,669		5.61
Other consumer (1)	27,950		2.95		29,276		3.06
Total	$	127,254	13.42	%	$	129,238	13.51	%

(1)Includes $17.9 billion and $19.4 billion at June 30, 2023, and December 31, 2022, respectively, of commercial and consumer securities-based loans originated by the WIM operating segment.

Credit Card The increase in the outstanding balance at June 30, 2023, compared with December 31, 2022, was due to higher purchase volume driven by new account growth.

Auto The decrease in the outstanding balance at June 30, 2023, compared with December 31, 2022, was due to lower origination volumes reflecting credit tightening actions and continued price competition due to rising interest rates.

Other Consumer The decrease in the outstanding balance at June 30, 2023, compared with December 31, 2022, was due to a decline in securities-based lending.


34			Wells Fargo & Company

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS) For information about when we generally place loans on nonaccrual status, see Note 1 (Summary of Significant

Accounting Policies) to Financial Statements in our 2022 Form 10-K. Table 18 summarizes nonperforming assets (NPAs).

Table 18: Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)



($ in millions)	Jun 30, 2023			Dec 31, 2022
Nonaccrual loans:
Commercial and industrial	$	845		746


Commercial real estate	2,507			958
Lease financing	77			119
Total commercial	3,429			1,823


Residential mortgage (1)	3,289			3,611
Auto	135			153
Other consumer	33			39
Total consumer	3,457			3,803
Total nonaccrual loans	$	6,886		5,626
As a percentage of total loans	0.73		%	0.59
Foreclosed assets:
Government insured/guaranteed (2)	$	16		22
Non-government insured/guaranteed	117			115
Total foreclosed assets	133			137
Total nonperforming assets	$	7,019		5,763
As a percentage of total loans	0.74		%	0.60

(1)Residential mortgage loans predominantly insured by the FHA or guaranteed by the VA are not placed on nonaccrual status because they are insured or guaranteed.

(2)Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. Both principal and interest related to these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA. Receivables related to the foreclosure of certain government guaranteed real estate mortgage loans are excluded from this table and included in Accounts receivable in Other Assets. For additional information on the classification of certain government-guaranteed mortgage loans upon foreclosure, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K.

Commercial nonaccrual loans increased $1.6 billion from December 31, 2022, driven by an increase in commercial real estate nonaccrual loans, predominantly within the office property type. For additional information on commercial nonaccrual loans, see the “Risk Management – Credit Risk Management – Commercial and Industrial Loans and Lease Financing” and “Risk Management – Credit Risk Management – Commercial Real Estate” sections in this Report.

Consumer nonaccrual loans decreased $346 million from December 31, 2022, due to lower residential mortgage nonaccrual loans.


			Wells Fargo & Company			35

Risk Management – Credit Risk Management (continued)

Table 19 provides an analysis of the changes in nonaccrual loans. Typically, changes to nonaccrual loans period-over-period represent inflows for loans that are placed on nonaccrual status in accordance with our policies, offset by reductions for loans

that are paid down, charged off, sold, foreclosed, or are no longer classified as nonaccrual as a result of continued performance and an improvement in the borrower’s financial condition and loan repayment capabilities.

Table 19: Analysis of Changes in Nonaccrual Loans


	Quarter ended June 30,			Six months ended June 30,


(in millions)	2023		2022	2023		2022
Commercial nonaccrual loans
Balance, beginning of period	$	2,275	1,953	$	1,823	2,376
Inflows	1,761		165	2,807		356
Outflows:
Returned to accruing	(61)		(88)	(207)		(282)
Foreclosures	—		—	—		(19)
Charge-offs	(215)		(56)	(330)		(91)
Payments, sales and other	(331)		(255)	(664)		(621)
Total outflows	(607)		(399)	(1,201)		(1,013)
Balance, end of period	3,429		1,719	3,429		1,719
Consumer nonaccrual loans
Balance, beginning of period	3,735		4,918	3,803		4,836
Inflows	336		408	683		1,002
Outflows:
Returned to accruing	(266)		(729)	(458)		(915)
Foreclosures	(25)		(17)	(51)		(35)
Charge-offs	(44)		(70)	(82)		(144)
Payments, sales and other	(279)		(236)	(438)		(470)
Total outflows	(614)		(1,052)	(1,029)		(1,564)
Balance, end of period	3,457		4,274	3,457		4,274
Total nonaccrual loans	$	6,886	5,993	$	6,886	5,993

We considered the risk of losses on nonaccrual loans in developing our allowance for loan losses. We believe exposure to losses on nonaccrual loans is mitigated by the following factors at June 30, 2023:

•98% of total commercial nonaccrual loans are secured, the majority of which are secured by real estate.

•84% of commercial nonaccrual loans were current on interest and 67% of commercial nonaccrual loans were current on both principal and interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain.

•99% of total consumer nonaccrual loans are secured, of which 95% are secured by real estate and 98% have a CLTV ratio of 80% or less.

•$533 million of the $676 million of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, were current.

Table 20 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

Table 20: Foreclosed Assets


(in millions)				Jun 30, 2023		Dec 31, 2022



Summary by loan segment
Government insured/guaranteed				$	16	22
Commercial				70		65
Consumer				47		50
Total foreclosed assets				$	133	137
(in millions)	Quarter ended June 30,			Six months ended June 30,
	2023		2022	2023		2022
Analysis of changes in foreclosed assets
Balance, beginning of period	$	132	130	$	137	112
Net change in government insured/guaranteed (1)	(2)		3	(6)		3
Additions to foreclosed assets (2)	135		99	258		201
Reductions from sales and write-downs	(132)		(102)	(256)		(186)
Balance, end of period	$	133	130	$	133	130

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

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


36			Wells Fargo & Company

At December 31, 2022, TDRs totaled $9.2 billion. The amount of our TDRs for COVID-related loan modification programs would have otherwise been higher without the TDR relief provided by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with

Customers Affected by the Coronavirus (Revised) (Interagency Statement). Customers who are unable to resume making their contractual loan payments upon exiting from these programs may require further assistance and may receive or be eligible to receive modifications. For additional information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K.

NET CHARGE-OFFS Table 21 presents net loan charge-offs.

Table 21: Net Loan Charge-offs


		Quarter ended June 30,								Six months ended June 30,
		2023				2022				2023				2022
($ in millions)		Net loan charge- offs		% of avg. loans (1)		Net loan charge- offs		% of avg. loans (1)		Net loan charge- offs		% of avg. loans (1)		Net loan charge- offs		% of avg. loans (1)




Commercial and industrial		$	119	0.12	%	$	27	0.03	%	$	162	0.09	%	$	4	—	%


Commercial real estate		79		0.21		(4)		(0.01)		96		0.13		(9)		(0.01)
Lease financing		2		0.05		—		—		5		0.06		(1)		(0.02)
	Total commercial	200		0.15		23		0.02		263		0.10		(6)		—


Residential mortgage		(12)		(0.02)		(16)		(0.03)		(23)		(0.02)		(37)		(0.03)
Credit card		396		3.39		199		2.02		740		3.22		375		1.94
Auto		89		0.68		68		0.49		210		0.81		164		0.24
Other consumer		91		1.31		70		0.98		178		1.26		153		1.08
	Total consumer	564		0.58		321		0.33		1,105		0.57		655		0.34
	Total	$	764	0.32	%	$	344	0.15	%	$	1,368	0.29	%	$	649	0.14	%

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

The increase in commercial net loan charge-offs in second quarter 2023, compared with the same period a year ago, was driven by higher losses across all commercial portfolios.

The increase in consumer net loan charge-offs in second quarter 2023, compared with the same period a year ago, was driven by higher losses in all consumer portfolios, primarily in our credit card portfolio.

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

The process for establishing the ACL for loans takes into consideration many factors, including historical and forecasted loss trends, loan-level credit quality ratings and loan grade-specific characteristics. The process involves subjective and complex judgments. In addition, we review a variety of credit metrics and trends. These credit metrics and trends, however, do not solely determine the amount of the allowance as we use several analytical tools. For additional information on our ACL, see the “Critical Accounting Policies – Allowance for Credit Losses” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K. For additional information on our ACL for loans, see Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report, and for additional information on our ACL for debt securities, see Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.

Table 22 presents the allocation of the ACL for loans by loan portfolio segment and class.


			Wells Fargo & Company			37

Risk Management – Credit Risk Management (continued)

Table 22: Allocation of the ACL for Loans


	Jun 30, 2023							Dec 31, 2022
($ in millions)	ACL		ACL as % of loan class		Loans as % of total loans			ACL		ACL as % of loan class		Loans as % of total loans
Commercial and industrial	$	4,266	1.11	%	41			$	4,507	1.17	%	40


Commercial real estate	3,618		2.35		16			2,231		1.43		16
Lease financing	197		1.28		1			218		1.46		2
Total commercial	8,081		1.45		58			6,956		1.25		58


Residential mortgage (1)	734		0.28		28			1,096		0.41		28
Credit card	3,865		8.10		5			3,567		7.71		5
Auto	1,408		2.73		6			1,380		2.57		6
Other consumer	698		2.50		3			610		2.08		3
Total consumer	6,705		1.71		42			6,653		1.67		42
Total	$	14,786	1.56	%	100			$	13,609	1.42	%	100

Components:
Allowance for loan losses					$	14,258						12,985
Allowance for unfunded credit commitments					528							624
Allowance for credit losses					$	14,786						13,609

Ratio of allowance for loan losses to total net loan charge-offs (2)					4.65x							8.08
Ratio of allowance for loan losses to total nonaccrual loans					2.07							2.31
Allowance for loan losses as a percentage of total loans					1.50		%					1.36

(1)Includes negative allowance for expected recoveries of amounts previously charged off.

(2)Total net loan charge-offs are annualized for the quarter ended June 30, 2023.

The ratios for the allowance for loan losses and the ACL for loans presented in Table 22 may fluctuate from period to period due to such factors as the mix of loan types in the portfolio, borrower credit strength, and the value and marketability of collateral.

The ACL for loans increased $1.2 billion, or 9%, from December 31, 2022, reflecting increases for commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances, partially offset by a decrease for residential mortgage loans related to the adoption of ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information on ASU 2022-02, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report. The detail of the changes in the ACL for loans by portfolio segment (including charge-offs and recoveries by loan class) is included in Note 5 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

We consider multiple economic scenarios to develop our estimate of the ACL for loans, which generally include a base scenario, along with an optimistic (upside) and one or more pessimistic (downside) scenarios. We weighted the base scenario and the downside scenarios in our estimate of the ACL for loans at June 30, 2023. The base scenario assumed elevated inflation and economic contraction in the near term, reflecting declining property values and increased unemployment rates from historically low levels. The downside scenarios assumed a more substantial economic contraction due to declining property values, high inflation, and lower business and consumer confidence.

Additionally, we consider qualitative factors that represent the risk of limitations inherent in our processes and assumptions such as economic environmental factors, modeling assumptions and performance, and other subjective factors, including industry trends and emerging risk assessments.

The forecasted key economic variables used in our estimate of the ACL for loans at June 30, 2023, and March 31, 2023, are presented in Table 23.

Table 23: Forecasted Key Economic Variables


	4Q 2023		2Q 2024	4Q 2024
Weighted blend of economic scenarios:
U.S. unemployment rate (1):


June 30, 2023	4.2	%	5.2	5.9
March 31, 2023	4.7		5.6	6.0

U.S. real GDP (2):


June 30, 2023	(1.5)		(0.8)	1.0
March 31, 2023	(0.3)		0.5	1.4

Home price index (3):


June 30, 2023	(4.3)		(5.9)	(6.4)
March 31, 2023	(5.5)		(7.7)	(6.6)

Commercial real estate asset prices (3):


June 30, 2023	(12.4)		(12.6)	(7.2)
March 31, 2023	(5.2)		(8.0)	(8.1)

(1)Quarterly average.

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

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

Future amounts of the ACL for loans will be based on a variety of factors, including loan balance changes, portfolio credit quality and mix changes, and changes in general economic conditions and expectations (including for unemployment and real GDP), among other factors.


38			Wells Fargo & Company

We believe the ACL for loans of $14.8 billion at June 30, 2023, was appropriate to cover expected credit losses, including unfunded credit commitments, at that date. The entire allowance is available to absorb credit losses from the total loan portfolio. The ACL for loans is subject to change and reflects existing factors as of the date of determination, including economic or market conditions and ongoing internal and external examination processes. Due to the sensitivity of the ACL for loans to changes in the economic and business environment, it is possible that we will incur incremental credit losses not anticipated as of the balance sheet date. Our process for determining the ACL is discussed in the “Critical Accounting Policies – Allowance for Credit Losses” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K.

MORTGAGE BANKING ACTIVITIES We sell residential and commercial mortgage loans to various parties. In connection with our sales and securitization of residential mortgage loans, we have established a mortgage repurchase liability. For information on our repurchase liability, see the “Risk Management – Credit Risk Management – Mortgage Banking Activities” section in our 2022 Form 10-K.

In addition to servicing loans in our portfolio, we act as servicer and/or master servicer of residential and commercial mortgage loans included in GSE-guaranteed mortgage securitizations, GNMA-guaranteed mortgage securitizations of FHA-insured/VA-guaranteed mortgages and private label mortgage securitizations, as well as for unsecuritized loans owned by institutional investors.

As a servicer, we are required to advance certain delinquent payments of principal and interest on mortgage loans we service. The amount and timing of reimbursement for advances of delinquent payments vary by investor and the applicable servicing agreements. See Note 6 (Mortgage Banking Activities) to Financial Statements in this Report for additional information about residential and commercial servicing rights, servicer advances and servicing fees.

In accordance with applicable servicing guidelines, upon transfer as servicer, we retain the option to repurchase loans from GNMA loan securitization pools, which generally becomes exercisable when three scheduled loan payments remain unpaid by the borrower. We may repurchase these loans for cash and as a result, our total consolidated assets do not change. Repurchased loans that regain current status or are otherwise modified in accordance with applicable servicing guidelines may be included in future GNMA loan securitization pools. At June 30, 2023, and December 31, 2022, these loans, which we have repurchased or have the option to repurchase, were $8.5 billion and $9.8 billion, respectively, which included $7.8 billion and $8.6 billion, respectively, in loans held for investment, with the remainder in loans held for sale. See Note 13 (Securitizations and Variable Interest Entities) to Financial Statements in this Report for additional information about our involvement with mortgage loan securitizations.

For additional information about the risks related to our servicing activities, see the “Risk Management – Credit Risk Management – Mortgage Banking Activities” section in our 2022 Form 10-K. For additional information on mortgage banking activities, see Note 6 (Mortgage Banking Activities) to Financial Statements in this Report.

Asset/Liability Management

Asset/liability management involves evaluating, monitoring and managing interest rate risk, market risk, liquidity and funding. For information on our oversight of asset/liability risks, see the “Risk Management – Asset/Liability Management” section in our 2022 Form 10-K.

INTEREST RATE RISK Interest rate risk is the risk that market fluctuations in interest rates, credit spreads, or foreign exchange can cause a loss of the Company’s earnings and capital stemming from mismatches in the Company’s asset and liability cash flows primarily arising from customer-related activities such as lending and deposit-taking. We are subject to interest rate risk because:

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

•assets and liabilities may reprice at the same time but by different amounts;

•short-term and long-term market interest rates may change by different amounts. For example, the shape of the yield curve may affect yield for new loans and funding costs differently;

•the remaining maturity for various assets or liabilities may shorten or lengthen as interest rates change. For example, if long-term mortgage interest rates increase sharply, mortgage-related products may pay down at a slower rate than anticipated, which could impact portfolio income; or

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

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

Our most recent simulations, as presented in Table 24, estimate net interest income sensitivity over the next 12 months using instantaneous movements across the yield curve with both lower and higher interest rates relative to our base scenario. Steeper and flatter scenarios measure non-parallel changes in the yield curve, with long-term interest rates defined as all tenors three years and longer and short-term interest rates defined as all tenors less than three years. Where applicable, U.S. dollar interest rates are floored at 0.00%. The following describes the simulation assumptions for the scenarios presented in Table 24:

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

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

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


			Wells Fargo & Company			39

Risk Management – Asset/Liability Management (continued)

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

•The interest rate sensitivity of deposits is modeled using the historical behavior of our deposits portfolio and reflects the expectations of deposit products repricing as market interest rates change (referred to as deposit betas). Our actual experience in base and alternative scenarios may differ from expectations due to the lag or acceleration of deposit repricing, changes in consumer behavior, and other factors.

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

Table 24: Net Interest Income Sensitivity Over the Next 12 Months Using Instantaneous Movements


($ in billions)	Jun 30, 2023		Dec 31, 2022
Parallel shift:
+100 bps shift in interest rates	$	1.8	2.3
-100 bps shift in interest rates	(2.1)		(1.7)

Steeper yield curve:
+100 bps shift in long-term interest rates	1.0		0.8
-100 bps shift in short-term interest rates	(1.1)		(1.0)



Flatter yield curve:
+100 bps shift in short-term interest rates	0.8		1.5
-100 bps shift in long-term interest rates	(1.0)		(0.7)

The changes in our interest rate sensitivity from December 31, 2022, to June 30, 2023, in Table 24 reflected updates to our base scenario, including expectations for balance sheet composition and interest rates. Our interest rate sensitivity indicates that we would expect to benefit from higher interest rates as our assets would reprice faster and to a greater degree than our liabilities, while in the case of lower interest rates, our assets would reprice downward and to a greater degree than our liabilities resulting in lower net interest income.

The sensitivity results above do not capture noninterest income or expense impacts. Our interest rate sensitive noninterest income and expense are impacted by mortgage banking activities that may have sensitivity impacts that move in the opposite direction of our net interest income. See the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in our 2022 Form 10-K for additional information.

Interest rate sensitive noninterest income is also impacted by changes in earnings credit for noninterest-bearing deposits that reduce treasury management deposit-related service fees on commercial accounts, and by trading assets. In addition, the impact to net interest income does not include the fair value changes of trading securities, which, along with the effects of related economic hedges, are recorded in noninterest income. In addition to changes in interest rates, net interest income and noninterest income from trading securities may be impacted by the actual composition of the trading portfolio. For additional information on our trading assets and liabilities, see Note 2 (Trading Activities) to Financial Statements in this Report.

We use the debt securities portfolio and exchange-traded and over-the-counter (OTC) interest rate derivatives to manage our interest rate exposures. As interest rates increase, changes in

the fair value of AFS debt securities may negatively affect accumulated other comprehensive income (AOCI), which lowers the amount of our regulatory capital. AOCI also includes unrealized gains or losses related to the transfer of debt securities from AFS to HTM, which are subsequently amortized into earnings over the life of the security with no further impact from interest rate changes. See Note 1 (Summary of Significant Accounting Policies) and Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report for additional information on the debt securities portfolios. We use derivatives for asset/liability management in the following main ways:

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

•to reduce AOCI sensitivity of our AFS debt securities portfolio; and

•to economically hedge our mortgage origination pipeline, funded mortgage loans, and MSRs.

Derivatives used to hedge our interest rate risk exposures are presented in Note 11 (Derivatives) to Financial Statements in this Report.

MORTGAGE BANKING INTEREST RATE AND MARKET RISK We originate, fund and service mortgage loans, which subjects us to various risks, including market, interest rate, credit, and liquidity risks that can be substantial. Based on market conditions and other factors, we reduce credit and liquidity risks by selling or securitizing mortgage loans. We determine whether mortgage loans will be held for investment or held for sale at the time of commitment, but may change our intent to hold loans for investment or sale as part of our corporate asset/liability management activities. We may also retain securities in our investment portfolio at the time we securitize mortgage loans.

Changes in interest rates may impact mortgage banking noninterest income, including origination and servicing fees, and the fair value of our residential MSRs, LHFS, and derivative loan commitments (interest rate “locks”) extended to mortgage applicants. Interest rate changes will generally impact our mortgage banking noninterest income on a lagging basis due to the time it takes for the market to reflect a shift in customer demand, as well as the time required for processing a new application, providing the commitment, and securitizing and selling the loan. The amount and timing of the impact will depend on the magnitude, speed and duration of the changes in interest rates. For additional information on mortgage banking, including key assumptions and the sensitivity of the fair value of MSRs, see the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section and Note 6 (Mortgage Banking Activities), Note 14 (Derivatives), and Note 15 (Fair Values of Assets and Liabilities) to Financial Statements in our 2022 Form 10-K.

MARKET RISK Market risk is the risk of possible economic loss from adverse changes in market risk factors such as interest rates, credit spreads, foreign exchange rates, equity and commodity prices, and the risk of possible loss due to counterparty exposure. This applies to implied volatility risk, basis risk, and market liquidity risk. It includes price risk in the trading book, mortgage servicing rights and the hedge effectiveness risk associated with mortgage loans held at fair value, and impairment of private equity investments. For


40			Wells Fargo & Company

information on our oversight of market risk, see the “Risk Management – Asset/Liability Management – Market Risk” section in our 2022 Form 10-K.

MARKET RISK – TRADING ACTIVITIES We engage in trading activities to accommodate the investment and risk management activities of our customers and to execute economic hedging to manage certain balance sheet risks. These trading activities predominantly occur within our CIB businesses and, to a lesser extent, other businesses of the Company. Debt securities held for trading, equity securities held for trading, trading loans and trading derivatives are financial instruments used in our trading activities, and all are carried at fair value. Income earned on the financial instruments used in our trading activities include net interest income, changes in fair value and realized gains and losses. Net interest income earned from our trading activities is reflected in the interest income and interest expense components of our consolidated statement of income. Changes in fair value of the financial instruments used in our trading activities are reflected in net gains from trading activities. For additional information on the financial instruments used in our trading activities and the income from these trading activities,

see Note 2 (Trading Activities) to Financial Statements in this Report.

Value-at-risk (VaR) is a statistical risk measure used to estimate the potential loss from adverse moves in the financial markets. The Company uses VaR metrics complemented with sensitivity analysis and stress testing in measuring and monitoring market risk. For additional information on our monitoring activities, sensitivity analysis and stress testing, see the “Risk Management – Asset/Liability Management – Market Risk – Trading Activities” section in our 2022 Form 10-K.

Trading VaR is the measure used to provide insight into the market risk exhibited by the Company’s trading positions. The Company calculates Trading VaR for risk management purposes to establish and monitor line of business and Company-wide risk limits. Trading VaR is calculated based on all trading positions on our consolidated balance sheet.

Table 25 shows the Company’s Trading General VaR by risk category. The increase in average Company Trading General VaR for the quarter ended June 30, 2023, compared with the same period a year ago, was primarily driven by changes in portfolio composition.

Table 25: Trading 1-Day 99% General VaR by Risk Category


	Quarter ended
	June 30, 2023					March 31, 2023				June 30, 2022
(in millions)	Period end		Average	Low	High	Period end	Average	Low	High		Period end	Average	Low	High
Company Trading General VaR Risk Categories
Credit	50		39	21	51	34	27	20	37		28	31	21	40
Interest rate	42		44	29	65	40	32	19	48		26	23	11	35
Equity	19		19	13	24	24	24	19	31		20	24	17	36
Commodity	4		4	3	6	3	4	3	8		5	5	4	7
Foreign exchange	1		1	0	4	0	1	0	3		1	1	0	1
Diversification benefit (1)	(78)		(72)			(67)	(49)				(44)	(52)
Company Trading General VaR	$	38	35			34	39				36	32

(1)The period-end VaR was less than the sum of the VaR components described above, which is due to portfolio diversification. The diversification effect arises because the risks are not perfectly correlated causing a portfolio of positions to usually be less risky than the sum of the risks of the positions alone. The diversification benefit is not meaningful for low and high metrics since they may occur on different days.

MARKET RISK – EQUITY SECURITIES We are directly and indirectly affected by changes in the equity markets. We make and manage direct investments in start-up businesses, emerging growth companies, management buy-outs, acquisitions and corporate recapitalizations. We also invest in non-affiliated funds that make similar private equity investments. For additional information, see the “Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section in our 2022 Form 10-K.

We also have marketable equity securities that include investments relating to our venture capital activities. The fair value changes in these marketable equity securities are recognized in net income. For additional information, see Note 4 (Equity Securities) to Financial Statements in this Report.

Changes in equity market prices may also indirectly affect our net income by (1) the value of third-party assets under management and, hence, fee income, (2) borrowers whose ability to repay principal and/or interest may be affected by the stock market, or (3) brokerage activity, related commission income and other business activities. Each business line monitors and manages these indirect risks.

LIQUIDITY RISK AND FUNDING Liquidity risk is the risk arising from the inability of the Company to meet obligations when they

come due, or roll over funds at a reasonable cost, without incurring heightened costs. In the ordinary course of business, we enter into contractual obligations that may require future cash payments, including funding for customer loan requests, customer deposit maturities and withdrawals, debt service, leases for premises and equipment, and other cash commitments. Liquidity risk also considers the stability of deposits, including the risk of losing uninsured or non-operational deposits. The objective of effective liquidity management is to ensure that we can meet our contractual obligations and other cash commitments efficiently under both normal operating conditions and under periods of Wells Fargo-specific and/or market stress.

To help achieve this objective, the Board establishes liquidity guidelines that require sufficient asset-based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. These guidelines are monitored on a monthly basis by the management-level Corporate Asset/Liability Committee and on a quarterly basis by the Board. These guidelines are established and monitored for both the Company and the Parent on a stand-alone basis so that the Parent is a source of strength for its banking subsidiaries. For additional information on liquidity risk and funding management,


			Wells Fargo & Company			41

Risk Management – Asset/Liability Management (continued)

see the “Risk Management – Liquidity Risk and Funding” section in our 2022 Form 10-K.

Liquidity Standards We are subject to a rule issued by the FRB, OCC and FDIC that establishes a quantitative minimum liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision (BCBS). The rule requires a covered banking organization to hold high-quality liquid assets (HQLA) in an amount equal to or greater than its projected net cash outflows during a 30-day stress period. Our HQLA under the rule predominantly consists of central bank deposits, government debt securities, and mortgage-backed securities of federal agencies. The LCR applies to the Company and to our insured depository institutions (IDIs) with total assets of $10 billion or more. In addition, rules issued by the FRB impose enhanced liquidity risk management standards on large bank holding companies (BHCs), such as Wells Fargo.

We are also subject to a rule issued by the FRB, OCC and FDIC that establishes a stable funding requirement, known as the

net stable funding ratio (NSFR), which requires a covered banking organization, such as Wells Fargo, to maintain a minimum amount of stable funding, including common equity, long-term debt and most types of deposits, in relation to its assets, derivative exposures and commitments over a one-year horizon period. The NSFR applies to the Company and to our IDIs with total assets of $10 billion or more. As of June 30, 2023, we were compliant with the NSFR requirement.

Liquidity Coverage Ratio As of June 30, 2023, the Company, Wells Fargo Bank, N.A., and Wells Fargo National Bank West exceeded the minimum LCR requirement of 100%.

Table 26 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements. The LCR represents average HQLA divided by average projected net cash outflows, as each is defined under the LCR rule.

Table 26: Liquidity Coverage Ratio


	Average for quarter ended
(in millions, except ratio)	Jun 30, 2023			Mar 31, 2023	Jun 30, 2022
HQLA (1):
Eligible cash	$	121,126		108,725	137,147
Eligible securities (2)	227,955			239,123	232,815
Total HQLA	349,081			347,848	369,962
Projected net cash outflows (3)	283,609			284,290	305,212
LCR	123		%	122	121

(1)Excludes excess HQLA at certain subsidiaries that are not transferable to other Wells Fargo entities.

(2)Net of applicable haircuts required under the LCR rule.

(3)Projected net cash outflows are calculated by applying a standardized set of outflow and inflow assumptions, defined by the LCR rule, to various exposures and liability types, such as deposits and unfunded loan commitments, which are prescribed based on a number of factors, including the type of customer and the nature of the account.

Liquidity Sources We maintain liquidity in the form of cash, interest-earning deposits with banks, and unencumbered high-quality, liquid debt securities. These assets make up our primary sources of liquidity. Our primary sources of liquidity are substantially the same in composition as HQLA under the LCR rule; however, our primary sources of liquidity will generally

exceed HQLA calculated under the LCR rule due to the applicable haircuts to HQLA and the exclusion of excess HQLA at our subsidiary IDIs required under the LCR rule. Our primary sources of liquidity are presented in Table 27 at fair value, which also includes encumbered securities that are not included as available HQLA in the calculation of the LCR.

Table 27: Primary Sources of Liquidity


	June 30, 2023				December 31, 2022
(in millions)	Total		Encumbered	Unencumbered	Total	Encumbered	Unencumbered
Interest-earning deposits with banks (1)	$	122,503	—	122,503	124,561	—	124,561
Debt securities of U.S. Treasury and federal agencies	49,267		11,549	37,718	59,570	12,080	47,490
Federal agency mortgage-backed securities (2)	241,250		24,523	216,727	230,881	34,151	196,730
Total	$	413,020	36,072	376,948	415,012	46,231	368,781

(1)Excludes time deposits, which are included in interest-earning deposits with banks in our consolidated balance sheet.

(2)Encumbered securities at June 30, 2023, included securities with a fair value of $1.5 billion which were purchased in June 2023, but settled in July 2023.

Our interest-earning deposits with banks are mainly on deposit with the Federal Reserve. We believe the debt securities included in Table 27 provide quick and reliable sources of liquidity through sales or by pledging to obtain financing, regardless of market conditions. Debt securities within our HTM portfolio are not intended for sale but may be pledged to obtain financing.

As of June 30, 2023, we had approximately $438.1 billion of available borrowing capacity at various Federal Home Loan Banks and the Federal Reserve Discount Window, based on collateral pledged. Although available, we do not view this borrowing capacity as a primary source of liquidity.

In addition, liquidity is also available through the sale or financing of other debt securities, including trading and/or AFS debt securities, as well as through the sale, securitization, or financing of loans, to the extent such debt securities and loans are not encumbered.

Funding Sources The Parent acts as a source of funding for the Company through the issuance of long-term debt and equity. WFC Holdings, LLC (the “IHC”) is an intermediate holding company and subsidiary of the Parent, which provides funding support for the ongoing operational requirements of the Parent and certain of its direct and indirect subsidiaries. For additional


42			Wells Fargo & Company

information on the IHC, see the “Regulatory Matters – ‘Living Will’ Requirements and Related Matters” section in this Report. Additional subsidiary funding is provided by deposits, short-term borrowings and long-term debt.

Deposits have historically provided a sizable source of relatively low-cost funds. Deposits were 142% and 145% of total loans at June 30, 2023, and December 31, 2022, respectively.

Table 28 presents a summary of our short-term borrowings, which generally mature in less than 30 days. The balances of federal funds purchased and securities sold under agreements to

repurchase may vary over time due to client activity, our own demand for financing, and our overall mix of liabilities. For additional information on the classification of our short-term borrowings, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K. We pledge certain financial instruments that we own to collateralize repurchase agreements and other securities financings. For additional information, see the “Pledged Assets” section of Note 15 (Pledged Assets and Collateral) to Financial Statements in this Report.

Table 28: Short-Term Borrowings


(in millions)	Jun 30, 2023		Dec 31, 2022
Federal funds purchased and securities sold under agreements to repurchase	$	67,602	30,623

Other short-term borrowings (1)	16,653		20,522
Total	$	84,255	51,145

(1)Includes $2.0 billion and $7.0 billion of Federal Home Loan Bank (FHLB) advances at June 30, 2023, and December 31, 2022, respectively.

We access domestic and international capital markets for long-term funding through issuances of registered debt securities, private placements and asset-backed secured funding. We issue long-term debt in a variety of maturities and currencies to achieve cost-efficient funding and to maintain an appropriate maturity profile. Proceeds from securities issued were used for general corporate purposes unless otherwise specified in the applicable prospectus or prospectus supplement, and we expect the proceeds from securities issued in the future will be used for

the same purposes. Depending on market conditions and our liquidity position, we may redeem or repurchase, and subsequently retire, our outstanding debt securities in privately negotiated or open market transactions, by tender offer, or otherwise. We issued $8.5 billion of long-term debt in July 2023. Table 29 provides the aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the remainder of 2023 and the following years thereafter, as of June 30, 2023.

Table 29: Maturity of Long-Term Debt


	June 30, 2023
(in millions)	Remaining 2023		2024	2025	2026	2027	Thereafter	Total
Wells Fargo & Company (Parent Only)
Senior notes	$	2,099	8,536	14,185	23,463	7,510	56,341	112,134
Subordinated notes	1,568		710	959	2,611	2,329	12,110	20,287
Junior subordinated notes	—		—	—	—	349	821	1,170
Total long-term debt – Parent	3,667		9,246	15,144	26,074	10,188	69,272	133,591
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes (1)	5,002		17,513	1,173	79	3	132	23,902
Subordinated notes	949		—	148	—	27	3,226	4,350
Junior subordinated notes	—		—	—	—	407	—	407
Other bank debt (2)	1,835		1,790	858	479	418	2,184	7,564
Total long-term debt – Bank	7,786		19,303	2,179	558	855	5,542	36,223
Other consolidated subsidiaries
Senior notes	11		82	410	220	—	95	818


Total long-term debt – Other consolidated subsidiaries	11		82	410	220	—	95	818
Total long-term debt	$	11,464	28,631	17,733	26,852	11,043	74,909	170,632

(1)Includes $23.0 billion of FHLB advances.

(2)Primarily relates to unfunded commitments for low-income housing tax credit (LIHTC) investments. For additional information, see Note 16 (Securitizations and Variable Interest Entities) to Financial Statements in our 2022 Form 10-K.


			Wells Fargo & Company			43

Risk Management – Asset/Liability Management (continued)

Credit Ratings Investors in the long-term capital markets, as well as other market participants, generally will consider, among other factors, a company’s debt rating in making investment decisions. Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix, the level and quality of earnings, and rating agency assumptions regarding the probability and extent of federal financial assistance or support for certain large financial institutions. Adverse changes in these factors could result in a reduction of our credit rating; however, our debt securities do not contain credit rating covenants.

On May 18, 2023, DBRS Morningstar affirmed the Company’s ratings and maintained the stable trend. On June 1, 2023, Fitch Ratings affirmed the Company’s ratings and retained

the stable ratings outlook. There were no other actions undertaken by the rating agencies with regard to our credit ratings during second quarter 2023.

See the “Risk Factors” section in our 2022 Form 10-K for additional information regarding our credit ratings and the potential impact a credit rating downgrade would have on our liquidity and operations as well as Note 11 (Derivatives) to Financial Statements in this Report for information regarding additional collateral and funding obligations required for certain derivative instruments in the event our credit ratings were to fall below investment grade.

The credit ratings of the Parent and Wells Fargo Bank, N.A., as of June 30, 2023, are presented in Table 30.

Table 30: Credit Ratings as of June 30, 2023

Wells Fargo & Company

Wells Fargo Bank, N.A.

Senior debt

Short-term

borrowings

Long-term

deposits

Short-term

borrowings

Moody’s

P-1

Aa1

P-1

S&P Global Ratings

BBB+

A-2

A+

A-1

Fitch Ratings

A+

F1+

DBRS Morningstar

AA (low)

R-1 (middle)

R-1 (high)


44			Wells Fargo & Company


Capital Management

We have an active program for managing capital through a comprehensive process for assessing the Company’s overall capital adequacy. Our objective is to maintain capital at an amount commensurate with our risk profile and risk tolerance objectives, and to meet both regulatory and market expectations. We primarily fund our capital needs through the retention of earnings net of both dividends and share repurchases, as well as through the issuance of preferred stock and long- and short-term debt. Retained earnings at June 30, 2023, increased $7.2 billion from December 31, 2022, predominantly as a result of $9.9 billion of Wells Fargo net income, partially offset by $2.9 billion of common and preferred stock dividends. During the first half of 2023, we issued $860 million of common stock, substantially all of which was issued in connection with employee compensation and benefits. In the first half of 2023, we repurchased 187 million shares of common stock at a cost of $8.1 billion. For additional information about capital planning, see the “Capital Planning and Stress Testing” section below.

In July 2023, we issued $1.725 billion of our Preferred Stock, Series EE.

Regulatory Capital Requirements

The Company and each of our IDIs are subject to various regulatory capital adequacy requirements administered by the FRB and the OCC. Risk-based capital rules establish risk-adjusted ratios relating regulatory capital to different categories of assets and off-balance sheet exposures as discussed below.

RISK-BASED CAPITAL AND RISK-WEIGHTED ASSETS The Company is subject to rules issued by federal banking regulators to implement Basel III capital requirements for U.S. banking organizations. The rules contain two frameworks for calculating capital requirements, a Standardized Approach and an Advanced Approach applicable to certain institutions, including Wells Fargo, and we must calculate our risk-based capital ratios under both approaches. The Company is required to satisfy the risk-based capital ratio requirements to avoid restrictions on capital distributions and discretionary bonus payments.

On July 27, 2023, federal banking regulators issued a proposed rule that would impact the way in which risk-based capital requirements are determined for certain banks. The proposed rule would eliminate the current Advanced Approach and replace it with a new expanded risk-based approach for the measurement of risk-weighted assets, including more granular risk weights for credit risk, a new market risk framework, and a new standardized approach for measuring operational risk. The new requirements would be phased in over a three-year period beginning July 1, 2025. The Company expects a significant increase in its risk-weighted assets and a net increase in its capital requirements based on a preliminary assessment of the proposed rule. The Company is considering a range of potential actions to address the impact of the proposed rule, including balance sheet and capital optimization strategies.

Table 31 and Table 32 present the risk-based capital requirements applicable to the Company under the Standardized Approach and Advanced Approach, respectively, as of June 30, 2023.

Table 31: Risk-Based Capital Requirements – Standardized Approach

Table 32: Risk-Based Capital Requirements – Advanced Approach

In addition to the risk-based capital requirements described in Table 31 and Table 32, if the FRB determines that a period of excessive credit growth is contributing to an increase in systemic risk, a countercyclical buffer of up to 2.50% could be added to the risk-based capital ratio requirements under federal banking regulations. The countercyclical buffer in effect at June 30, 2023, was 0.00%.

The capital conservation buffer is applicable to certain institutions, including Wells Fargo, under the Advanced Approach and is intended to absorb losses during times of economic or financial stress.


			Wells Fargo & Company			45

Capital Management (continued)

The stress capital buffer is calculated based on the decrease in a BHC’s risk-based capital ratios under the severely adverse scenario in the FRB’s annual supervisory stress test and related Comprehensive Capital Analysis and Review (CCAR), plus four quarters of planned common stock dividends. Because the stress capital buffer is calculated annually based on data that can differ over time, our stress capital buffer, and thus our risk-based capital ratio requirements under the Standardized Approach, are subject to change in future periods. Our stress capital buffer for the period October 1, 2022, through September 30, 2023, is 3.20%. On July 27, 2023, the FRB confirmed that the Company’s stress capital buffer for the period October 1, 2023, through September 30, 2024, will be 2.90%.

As a global systemically important bank (G-SIB), we are also subject to the FRB’s rule implementing an additional capital surcharge between 1.00-4.50% on the risk-based capital ratio requirements of G-SIBs. Under the rule, we must annually calculate our surcharge under two methods and use the higher

of the two surcharges. The first method (method one) considers our size, interconnectedness, cross-jurisdictional activity, substitutability, and complexity, consistent with the methodology developed by the BCBS and the Financial Stability Board (FSB). The second method (method two) uses similar inputs, but replaces substitutability with use of short-term

wholesale funding and will generally result in higher surcharges than under method one. Because the G-SIB capital surcharge is calculated annually based on data that can differ over time, the amount of the surcharge is subject to change in future years. If our annual calculation results in a decrease to our G-SIB capital surcharge, the decrease takes effect the next calendar year. If our annual calculation results in an increase to our G-SIB capital surcharge, the increase takes effect in two calendar years. Our G-SIB capital surcharge will continue to be 1.50% in 2023. On July 27, 2023, the FRB issued a proposed rule that would impact the methodology used to calculate the G-SIB capital surcharge.

Under the risk-based capital rules, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets (RWAs).

The tables that follow provide information about our risk-based capital and related ratios as calculated under Basel III capital rules. Table 33 summarizes our CET1, Tier 1 capital, total capital, RWAs and capital ratios.

Table 33: Capital Components and Ratios


		Standardized Approach						Advanced Approach
($ in millions)		Required Capital Ratios (1)		Jun 30, 2023			Dec 31, 2022	Required Capital Ratios (1)	Jun 30, 2023	Dec 31, 2022
Common Equity Tier 1	(A)			$	134,221		133,527		134,221	133,527
Tier 1 capital	(B)			153,201			152,567		153,201	152,567
Total capital	(C)			187,563			186,747		176,926	177,258
Risk-weighted assets	(D)			1,250,690			1,259,889		1,118,379	1,112,307
Common Equity Tier 1 capital ratio	(A)/(D)	9.20	%	10.73		*	10.60	8.50	12.00	12.00
Tier 1 capital ratio	(B)/(D)	10.70		12.25		*	12.11	10.00	13.70	13.72
Total capital ratio	(C)/(D)	12.70		15.00		*	14.82	12.00	15.82	15.94

*Denotes the binding ratio under the Standardized and Advanced Approaches at June 30, 2023.

(1)Represents the minimum ratios required to avoid restrictions on capital distributions and discretionary bonus payments at June 30, 2023.


46			Wells Fargo & Company

Table 34 provides information regarding the calculation and composition of our risk-based capital under the Standardized and Advanced Approaches.

Table 34: Risk-Based Capital Calculation and Components


(in millions)		Jun 30, 2023		Dec 31, 2022
Total equity (1)		$	181,952	182,213
Effect of accounting policy change (1)		—		338
Total equity (as reported)		181,952		181,875
Adjustments:
Preferred stock		(19,448)		(19,448)
Additional paid-in capital on preferred stock		173		173

Noncontrolling interests		(1,761)		(1,986)
Total common stockholders’ equity		$	160,916	160,614
Adjustments:
Goodwill		(25,175)		(25,173)
Certain identifiable intangible assets (other than MSRs)		(145)		(152)
Goodwill and other intangibles on investments in consolidated portfolio companies (included in other assets)		(2,511)		(2,427)
Applicable deferred taxes related to goodwill and other intangible assets (2)		905		890
CECL transition provision (3)		120		180
Other		111		(405)
Common Equity Tier 1 under the Standardized and Advanced Approaches		$	134,221	133,527
Preferred stock		19,448		19,448
Additional paid-in capital on preferred stock		(173)		(173)

Other		(295)		(235)
Total Tier 1 capital under the Standardized and Advanced Approaches	(A)	$	153,201	152,567

Long-term debt and other instruments qualifying as Tier 2		19,681		20,503
Qualifying allowance for credit losses (4)		15,110		13,959
Other		(429)		(282)
Total Tier 2 capital under the Standardized Approach	(B)	$	34,362	34,180
Total qualifying capital under the Standardized Approach	(A)+(B)	$	187,563	186,747

Long-term debt and other instruments qualifying as Tier 2		19,681		20,503
Qualifying allowance for credit losses (4)		4,473		4,470
Other		(429)		(282)
Total Tier 2 capital under the Advanced Approach	(C)	$	23,725	24,691
Total qualifying capital under the Advanced Approach	(A)+(C)	$	176,926	177,258

(1)In first quarter 2023, we adopted ASU 2018-12. We adopted this ASU with retrospective application, which required revision of prior period financial statements. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

(2)Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at period-end.

(3)In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators related to the impact of the current expected credit loss accounting standard (CECL) on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses (ACL) under CECL for each period until December 31, 2021, followed by a three-year phase-out period in which the benefit is reduced by 25% in year one, 50% in year two and 75% in year three.

(4)Differences between the approaches are driven by the qualifying amounts of ACL includable in Tier 2 capital. Under the Advanced Approach, eligible credit reserves represented by the amount of qualifying ACL in excess of expected credit losses (using regulatory definitions) is limited to 0.60% of Advanced credit RWAs, whereas the Standardized Approach includes ACL in Tier 2 capital up to 1.25% of Standardized credit RWAs. Under both approaches, any excess ACL is deducted from the respective total RWAs.

Table 35 provides the composition of our RWAs under the Standardized and Advanced Approaches.

Table 35: Risk-Weighted Assets


	Standardized Approach			Advanced Approach (1)
(in millions)	Jun 30, 2023		Dec 31, 2022		Jun 30, 2023	Dec 31, 2022
Risk-weighted assets (RWAs):
Credit risk	$	1,210,424	1,218,006		757,013	757,436
Market risk	40,266		41,883		40,266	41,883
Operational risk	—		—		321,100	312,988
Total RWAs	$	1,250,690	1,259,889		1,118,379	1,112,307

(1)RWAs calculated under the Advanced Approach utilize a risk-sensitive methodology, which relies upon the use of internal credit models based upon our experience with internal rating grades. Advanced Approach also includes an operational risk component, which reflects the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.


			Wells Fargo & Company			47

Capital Management (continued)

Table 36 provides an analysis of changes in CET1.

Table 36: Analysis of Changes in Common Equity Tier 1


(in millions)
Common Equity Tier 1 at December 31, 2022	$	133,527
Cumulative effect from change in accounting policy (1)	323
Net income applicable to common stock	9,372
Common stock dividends	(2,253)
Common stock issued, repurchased, and stock compensation-related items	(7,400)
Changes in accumulated other comprehensive income (loss)	(79)
Goodwill	(2)
Certain identifiable intangible assets (other than MSRs)	7
Goodwill and other intangibles on investments in consolidated portfolio companies (included in other assets)	(84)
Applicable deferred taxes related to goodwill and other intangible assets (2)	15
CECL transition provision (3)	(60)
Other (4)	855
Change in Common Equity Tier 1	694
Common Equity Tier 1 at June 30, 2023	$	134,221

(1)Effective January 1, 2023, we adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

(3)In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators related to the impact of CECL on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses (ACL) under CECL for each period until December 31, 2021, followed by a three-year phase-out period in which the benefit is reduced by 25% in year one, 50% in year two and 75% in year three.

(4)Includes $338 million related to our first quarter 2023 adoption of ASU 2018-12. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Table 37 presents net changes in the components of RWAs under the Standardized and Advanced Approaches.

Table 37: Analysis of Changes in RWAs


(in millions)	Standardized Approach		Advanced Approach
Risk-weighted assets (RWAs) at December 31, 2022	$	1,259,889	1,112,307
Net change in credit risk RWAs	(7,582)		(423)
Net change in market risk RWAs	(1,617)		(1,617)
Net change in operational risk RWAs	—		8,112
Total change in RWAs	(9,199)		6,072
RWAs at June 30, 2023	$	1,250,690	1,118,379


48			Wells Fargo & Company

TANGIBLE COMMON EQUITY We also evaluate our business based on certain ratios that utilize tangible common equity. Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than MSRs) and goodwill and other intangibles on investments in consolidated portfolio companies, net of applicable deferred taxes. The ratios are (i) tangible book value per common share, which represents tangible common equity divided by common shares outstanding; and (ii) return on average tangible common

equity (ROTCE), which represents our annualized earnings as a percentage of tangible common equity. The methodology of determining tangible common equity may differ among companies. Management believes that tangible book value per common share and return on average tangible common equity, which utilize tangible common equity, are useful financial measures because they enable management, investors, and others to assess the Company’s use of equity.

Table 38 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table 38: Tangible Common Equity


		Balance at period-end				Average balance
		Quarter ended				Quarter ended						Six months ended
(in millions, except ratios)		Jun 30, 2023		Mar 31, 2023	Jun 30, 2022		Jun 30, 2023			Mar 31, 2023	Jun 30, 2022		Jun 30, 2023			Jun 30, 2022
Total equity		$	181,952	183,220	179,798		184,443			184,297	180,926		184,371			183,507
Adjustments:
Preferred stock (1)		(19,448)		(19,448)	(20,057)		(19,448)			(19,448)	(20,057)		(19,448)			(20,057)
Additional paid-in capital on preferred stock (1)		173		173	135		173			173	135		173			135
Unearned ESOP shares (1)		—		—	646		—			—	646		—			646
Noncontrolling interests		(1,761)		(2,052)	(2,262)		(1,924)			(2,019)	(2,386)		(1,971)			(2,427)
Total common stockholders’ equity	(A)	160,916		161,893	158,260		163,244			163,003	159,264		163,125			161,804
Adjustments:
Goodwill		(25,175)		(25,173)	(25,178)		(25,175)			(25,173)	(25,179)		(25,174)			(25,180)
Certain identifiable intangible assets (other than MSRs)		(145)		(139)	(191)		(140)			(145)	(200)		(142)			(209)
Goodwill and other intangibles on investments in consolidated portfolio companies (included in other assets)		(2,511)		(2,486)	(2,307)		(2,487)			(2,440)	(2,304)		(2,464)			(2,349)
Applicable deferred taxes related to goodwill and other intangible assets (2)		905		897	880		903			895	877		899			840
Tangible common equity	(B)	$	133,990	134,992	131,464		136,345			136,140	132,458		136,244			134,906
Common shares outstanding	(C)	3,667.7		3,763.2	3,793.0		N/A			N/A	N/A		N/A			N/A
Net income applicable to common stock	(D)	N/A		N/A	N/A		$	4,659		4,713	2,863		$	9,372		6,372
Book value per common share	(A)/(C)	$	43.87	43.02	41.72		N/A			N/A	N/A		N/A			N/A
Tangible book value per common share	(B)/(C)	36.53		35.87	34.66		N/A			N/A	N/A		N/A			N/A
Return on average common stockholders’ equity (ROE)	(D)/(A)	N/A		N/A	N/A		11.45		%	11.73	7.21		11.59		%	7.94
Return on average tangible common equity (ROTCE)	(D)/(B)	N/A		N/A	N/A		13.71			14.04	8.67		13.87			9.52

(1)In fourth quarter 2022, we redeemed all outstanding shares of our Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock in exchange for shares of the Company's common stock. For additional information, see Note 11 (Preferred Stock) to Financial Statements in our 2022 Form 10-K.

LEVERAGE REQUIREMENTS As a BHC, we are required to maintain a supplementary leverage ratio (SLR) to avoid restrictions on capital distributions and discretionary bonus payments and maintain a minimum Tier 1 leverage ratio. Table 39 presents the leverage requirements applicable to the Company as of June 30, 2023.

Table 39: Leverage Requirements Applicable to the Company

In addition, our IDIs are required to maintain an SLR of at least 6.00% to be considered well capitalized under applicable regulatory capital adequacy rules and maintain a minimum Tier 1 leverage ratio of 4.00%.

The FRB and OCC have proposed amendments to the SLR rules. For information regarding the proposed amendments to the SLR rules, see the “Capital Management – Leverage Requirements” section in our 2022 Form 10-K.


			Wells Fargo & Company			49

Capital Management (continued)

Table 40 presents information regarding the calculation and components of the Company’s SLR and Tier 1 leverage ratio. At June 30, 2023, each of our IDIs exceeded their applicable SLR requirements.

Table 40: Leverage Ratios for the Company


($ in millions)		Quarter ended June 30, 2023
Tier 1 capital	(A)	$	153,201
Total average assets		1,878,373
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)		28,289
Total adjusted average assets		1,850,084
Plus adjustments for off-balance sheet exposures:
Derivatives (1)		57,430
Repo-style transactions (2)		4,023
Other (3)		306,038
Total off-balance sheet exposures		367,491
Total leverage exposure	(B)	$	2,217,575
Supplementary leverage ratio	(A)/(B)	6.91		%

Tier 1 leverage ratio (4)		8.28		%

(1)Adjustment represents derivatives and collateral netting exposures as defined for supplementary leverage ratio determination purposes.

(2)Adjustment represents counterparty credit risk for repo-style transactions where Wells Fargo & Company is the principal counterparty facing the client.

(3)Adjustment represents credit equivalent amounts of other off-balance sheet exposures not already included as derivatives and repo-style transactions exposures.

(4)The Tier 1 leverage ratio consists of Tier 1 capital divided by total average assets, excluding goodwill and certain other items as determined under the rule.

TOTAL LOSS ABSORBING CAPACITY As a G-SIB, we are required to have a minimum amount of equity and unsecured long-term debt for purposes of resolvability and resiliency, often referred to as Total Loss Absorbing Capacity (TLAC). U.S. G-SIBs are required to have a minimum amount of TLAC (consisting of CET1 capital and additional Tier 1 capital issued directly by the top-tier or covered BHC plus eligible external long-term debt) to avoid restrictions on capital distributions and discretionary bonus payments as well as a minimum amount of eligible unsecured long-term debt. The components used to calculate our minimum TLAC and eligible unsecured long-term debt requirements as of June 30, 2023, are presented in Table 41.

Table 41: Components Used to Calculate TLAC and Eligible Unsecured Long-Term Debt Requirements

TLAC requirement

Greater of:

18.00% of RWAs

7.50% of total leverage exposure
(the denominator of the SLR calculation)

TLAC buffer (equal to 2.50% of RWAs + method one G-SIB capital surcharge + any countercyclical buffer)

External TLAC leverage buffer
(equal to 2.00% of total leverage exposure)

Minimum amount of eligible unsecured long-term debt

Greater of:

6.00% of RWAs

4.50% of total leverage exposure

Greater of method one and method two G-SIB capital surcharge

The FRB and OCC have proposed amendments to the TLAC

and eligible unsecured long-term debt requirements. For information regarding these proposed amendments, see the

“Capital Management – Total Loss Absorbing Capacity” section in our 2022 Form 10-K.

Table 42 provides our TLAC and eligible unsecured long-term debt and related ratios.

Table 42: TLAC and Eligible Unsecured Long-Term Debt


June 30, 2023
($ in millions)	TLAC (1)			Regulatory Minimum (2)	Eligible Unsecured Long-term Debt	Regulatory Minimum
Total eligible amount	$	289,125			130,576

Percentage of RWAs (3)	23.12		%	21.50	10.44	7.50
Percentage of total leverage exposure	13.04			9.50	5.89	4.50

(1)TLAC ratios are calculated using the CECL transition provision issued by federal banking regulators.

(2)Represents the minimum required to avoid restrictions on capital distributions and discretionary bonus payments.

(3)Our minimum TLAC and eligible unsecured long-term debt requirements are calculated based on the greater of RWAs determined under the Standardized and Advanced Approaches.

OTHER REGULATORY CAPITAL AND LIQUIDITY MATTERS For information regarding the U.S. implementation of the Basel III LCR and NSFR, see the “Risk Management – Asset/ Liability Management – Liquidity Risk and Funding – Liquidity Standards” section in this Report.

Our principal U.S. broker-dealer subsidiaries, Wells Fargo Securities, LLC, and Wells Fargo Clearing Services, LLC, are subject to regulations to maintain minimum net capital requirements. As of June 30, 2023, these broker-dealer subsidiaries were in compliance with their respective regulatory minimum net capital requirements.

Capital Planning and Stress Testing

Our planned long-term capital structure is designed to meet regulatory and market expectations. We believe that our long-term targeted capital structure enables us to invest in and grow our business, satisfy our customers’ financial needs in varying environments, access markets, and maintain flexibility to return capital to our shareholders. Our long-term targeted capital structure also considers capital levels sufficient to exceed capital requirements, including the G-SIB capital surcharge and the stress capital buffer, as well as potential changes to regulatory requirements for our capital ratios, planned capital actions, changes in our risk profile and other factors. Accordingly, our long-term target capital levels are set above their respective regulatory minimums plus buffers.

The FRB capital plan rule establishes capital planning and other requirements that govern capital distributions, including dividends and share repurchases, by certain BHCs, including Wells Fargo. The FRB assesses, among other things, the overall financial condition, risk profile, and capital adequacy of BHCs when evaluating their capital plans.

As part of the annual Comprehensive Capital Analysis and Review, the FRB generates a supervisory stress test. The FRB reviews the supervisory stress test results as required under the Dodd-Frank Act using a common set of capital actions for all large BHCs and also reviews the Company’s proposed capital actions. The FRB published its supervisory stress test results on June 28, 2023.

On July 25, 2023, the Board approved an increase to the Company's third quarter 2023 common stock dividend to $0.35 per share.

Federal banking regulators also require large BHCs and banks to conduct their own stress tests to evaluate whether the


50			Wells Fargo & Company

institution has sufficient capital to continue to operate during periods of adverse economic and financial conditions.

Securities Repurchases

From time to time the Board authorizes the Company to repurchase shares of our common stock. Although we announce when the Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Various factors determine the amount of our share repurchases, including our capital requirements, the number of shares we expect to issue for employee benefit plans and any acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations, including under the FRB’s capital plan rule. Due to the various factors that may impact the amount of our share repurchases and the fact that we tend to be

in the market regularly to satisfy repurchase considerations under our capital plan, our share repurchases occur at various price levels. We may suspend share repurchase activity at any time.

At June 30, 2023, we had remaining Board authority to repurchase approximately 64 million shares, subject to regulatory and legal conditions. The Company publicly announced on July 25, 2023, that the Board authorized a new common stock repurchase program of up to $30 billion. Unless modified or revoked by the Board, this authorization does not expire and supersedes the prior share repurchase authority approved by the Board.

For additional information about share repurchases during second quarter 2023, see Part II, Item 2 in this Report.


Regulatory Matters

The U.S. financial services industry is subject to significant regulation and regulatory oversight initiatives. This regulation and oversight may continue to impact how U.S. financial services companies conduct business and may continue to result in increased regulatory compliance costs.

For a discussion of certain consent orders applicable to the Company, see the “Overview” section in this Report. The following supplements our discussion of other significant regulations and regulatory oversight initiatives that have affected or may affect our business contained in the “Regulatory Matters” and “Risk Factors” sections in our 2022 Form 10-K.

“Living Will” Requirements and Related Matters

Rules adopted by the FRB and the FDIC under the Dodd-Frank Act require large financial institutions, including Wells Fargo, to prepare and periodically submit resolution plans, also known as “living wills,” that would facilitate their rapid and orderly resolution in the event of material financial distress or failure. Under the rules, rapid and orderly resolution means a reorganization or liquidation of the covered company under the U.S. Bankruptcy Code that can be accomplished in a reasonable period of time and in a manner that substantially mitigates the risk that failure would have serious adverse effects on the financial stability of the United States. In addition to the Company’s resolution plan, our national bank subsidiary, Wells Fargo Bank, N.A. (the “Bank”), is also required to prepare and periodically submit a resolution plan. If the FRB and/or FDIC determine that our resolution plan has deficiencies, they may impose more stringent capital, leverage or liquidity requirements on us or restrict our growth, activities or operations until we adequately remedy the deficiencies. If the FRB and/or FDIC ultimately determine that we have been unable to remedy any deficiencies, they could require us to divest certain assets or operations. On June 27, 2023, we submitted our most recent resolution plan to the FRB and FDIC.

If Wells Fargo were to fail, it may be resolved in a bankruptcy proceeding or, if certain conditions are met, under the resolution regime created by the Dodd-Frank Act known as the “orderly liquidation authority.” The orderly liquidation authority allows for the appointment of the FDIC as receiver for a systemically important financial institution that is in default or in danger of default if, among other things, the resolution of the institution under the U.S. Bankruptcy Code would have serious adverse effects on financial stability in the United States. If the FDIC is appointed as receiver for the Parent, then the orderly liquidation authority, rather than the U.S. Bankruptcy Code, would

determine the powers of the receiver and the rights and obligations of our security holders. The FDIC’s orderly liquidation authority requires that security holders of a company in receivership bear all losses before U.S. taxpayers are exposed to any losses. There are substantial differences in the rights of creditors between the orderly liquidation authority and the U.S. Bankruptcy Code, including the right of the FDIC to disregard the strict priority of creditor claims under the U.S. Bankruptcy Code in certain circumstances and the use of an administrative claims procedure instead of a judicial procedure to determine creditors’ claims.

The strategy described in our most recent resolution plan is a single point of entry strategy, in which the Parent would be the only material legal entity to enter resolution proceedings. However, the strategy described in our resolution plan is not binding in the event of an actual resolution of Wells Fargo, whether conducted under the U.S. Bankruptcy Code or by the FDIC under the orderly liquidation authority. The FDIC has announced that a single point of entry strategy may be a desirable strategy under its implementation of the orderly liquidation authority, but not all aspects of how the FDIC might exercise this authority are known and additional rulemaking is possible.

To facilitate the orderly resolution of systemically important financial institutions in case of material distress or failure, federal banking regulations require that institutions, such as Wells Fargo, maintain a minimum amount of equity and unsecured debt to absorb losses and recapitalize operating subsidiaries. Federal banking regulators have also required measures to facilitate the continued operation of operating subsidiaries notwithstanding the failure of their parent companies, such as limitations on parent guarantees, and have issued guidance encouraging institutions to take legally binding measures to provide capital and liquidity resources to certain subsidiaries to facilitate an orderly resolution. In response to the regulators’ guidance and to facilitate the orderly resolution of the Company, on June 28, 2017, the Parent entered into a support agreement, as amended and restated on June 26, 2019 (the “Support Agreement”), with WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), the Bank, Wells Fargo Securities, LLC (“WFS”), Wells Fargo Clearing Services, LLC (“WFCS”), and certain other subsidiaries of the Parent designated from time to time as material entities for resolution planning purposes (the “Covered Entities”) or identified from time to time as related support entities in our resolution plan (the “Related Support Entities”). Pursuant to the Support Agreement, the


			Wells Fargo & Company			51

Regulatory Matters (continued)

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

In addition to our resolution plans, we must also prepare and periodically submit to the FRB a recovery plan that identifies a range of options that we may consider during times of idiosyncratic or systemic economic stress to remedy any financial weaknesses and restore market confidence without extraordinary government support. Recovery options include the possible sale, transfer or disposal of assets, securities, loan portfolios or businesses. The Bank must also prepare and periodically submit to the OCC a recovery plan that sets forth the Bank’s plan to remain a going concern when the Bank is experiencing considerable financial or operational stress, but has not yet deteriorated to the point where liquidation or resolution is imminent. If either the FRB or the OCC determines that our recovery plan is deficient, they may impose fines, restrictions on our business or ultimately require us to divest assets.


52			Wells Fargo & Company


Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K) are fundamental to understanding our results of operations and financial condition because they require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. Six of these policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. These policies govern:

•the allowance for credit losses;

•the valuation of residential MSRs;

•the fair value of financial instruments;

•income taxes;

•liability for contingent litigation losses; and

•goodwill impairment.

Management has discussed these critical accounting policies and the related estimates and judgments with the Board’s Audit Committee. For additional information on these policies, see the “Critical Accounting Policies” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2022 Form 10-K and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.


			Wells Fargo & Company			53


Current Accounting Developments

Table 43 provides the significant accounting updates applicable to us that have been issued by the Financial Accounting Standards Board (FASB) but are not yet effective.

Table 43: Current Accounting Developments – Issued Standards


Description and Effective Date						Financial statement impact
Accounting Standards Update (ASU) 2023-02 – Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method
The Update, effective January 1, 2024 (with early adoption permitted), permits entities to elect to account for additional tax credit investments using the proportional amortization method. The Update requires a separate accounting policy election for each tax credit program. For any tax credit program where the proportional amortization method is elected, all investments within that program that meet eligibility criteria are required to apply the proportional amortization method. The Update also requires additional disclosures for any tax credit program where the proportional amortization method is elected.						The Update eliminates the low-income housing tax credit (LIHTC)-only scope limitation of the proportional amortization method and permits entities to account for all tax credit investments made primarily for the purpose of receiving income tax credits and income tax benefits using a consistent accounting method. Under the proportional amortization method, tax credit investments are carried at amortized cost and amortized in proportion to the income tax credits and income tax benefits received. The amortization of the investment and the related income tax credits and income tax benefits are recorded in income tax expense. The Update may be adopted on either a full retrospective or modified retrospective basis and early adoption is permitted. Upon adoption of the Update, we will identify our tax credit programs and make a separate accounting policy election as to whether to apply the proportional amortization method for each program. For any investments that will apply the proportional amortization method upon adoption of the Update, the cumulative effect of the difference between the current carrying value and the carrying value under the proportional amortization method will be recorded as an adjustment to the opening balance of retained earnings, the period of which is dependent upon which transition method is selected. We are currently evaluating the impact of the Update on our consolidated financial statements.

Other Accounting Developments

The following Update is applicable to us but is not expected to have a material impact on our consolidated financial statements:

•ASU 2022-03 – Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions


54			Wells Fargo & Company


Forward-Looking Statements

This document contains forward-looking statements. In addition, we may make forward-looking statements in our other documents filed or furnished with the Securities and Exchange Commission, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our expectations regarding noninterest expense and our efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses, our allowance for credit losses, and the economic scenarios considered to develop the allowance; (iv) our expectations regarding net interest income and net interest margin; (v) loan growth or the reduction or mitigation of risk in our loan portfolios; (vi) future capital or liquidity levels, ratios or targets; (vii) our expectations regarding our mortgage business and any related commitments or exposures; (viii) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (ix) future common stock dividends, common share repurchases and other uses of capital; (x) our targeted range for return on assets, return on equity, and return on tangible common equity; (xi) expectations regarding our effective income tax rate; (xii) the outcome of contingencies, such as legal proceedings; (xiii) environmental, social and governance related goals or commitments; and (xiv) the Company’s plans, objectives and strategies.

Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

•current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, declines in commercial real estate prices, U.S. fiscal debt, budget and tax matters, geopolitical matters (including the conflict in Ukraine), and any slowdown in global economic growth;

•the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions;

•our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

•current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including rules and regulations relating to bank products and financial services;

•developments in our mortgage banking business, including any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and any changes in industry standards, regulatory or judicial requirements, or our strategic plans for the business;

•our ability to realize any efficiency ratio or expense target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;

•the effect of the current interest rate environment or changes in interest rates or in the level or composition of our assets or liabilities on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgage loans held for sale;

•significant turbulence or a disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of impairments of securities held in our debt securities and equity securities portfolios;

•the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage and wealth management businesses;

•negative effects from the retail banking sales practices matter and from instances where customers may have experienced financial harm, including on our legal, operational and compliance costs, our ability to engage in certain business activities or offer certain products or services, our ability to keep and attract customers, our ability to attract and retain qualified employees, and our reputation;

•regulatory matters, including the failure to resolve outstanding matters on a timely basis and the potential impact of new matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;

•a failure in or breach of our operational or security systems or infrastructure, or those of our third-party vendors or other service providers, including as a result of cyber attacks;

•the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;

•fiscal and monetary policies of the Federal Reserve Board;

•changes to U.S. tax guidance and regulations as well as the effect of discrete items on our effective income tax rate;

•our ability to develop and execute effective business plans and strategies; and

•the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022.


			Wells Fargo & Company			55

Forward-Looking Statements (continued)

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company, and may be subject to regulatory approval or conditions.

For additional information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.1

Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.


1 We do not control this website. Wells Fargo has provided this link for your convenience, but does not endorse and is not responsible for the content, links, privacy policy, or security policy of this website.

Forward-looking Non-GAAP Financial Measures. From time to time management may discuss forward-looking non-GAAP financial measures, such as forward-looking estimates or targets for return on average tangible common equity. We are unable to provide a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures because we are unable to provide, without unreasonable effort, a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results.


56			Wells Fargo & Company


Risk Factors

An investment in the Company involves risk, including the possibility that the value of the investment could fall substantially and that dividends or other distributions on the investment could be reduced or eliminated. For a discussion of risk factors that could adversely affect our financial results and condition, and the value of, and return on, an investment in the Company, we refer you to the “Risk Factors” section in our 2022 Form 10-K.


			Wells Fargo & Company			57


Controls and Procedures


Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of June 30, 2023, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2023.


Internal Control Over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP) and includes those policies and procedures that:

•pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company;

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during second quarter 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


58			Wells Fargo & Company

Financial Statements


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income (Unaudited)
	Quarter ended June 30,			Six months ended June 30,
(in millions, except per share amounts)	2023		2022	2023		2022
Interest income
Debt securities	$	4,037	2,702	$	7,820	5,265
Loans held for sale	94		126	191		266
Loans	14,115		8,116	27,433		15,334
Equity securities	194		193	364		363
Other interest income	2,390		419	4,378		509
Total interest income	20,830		11,556	40,186		21,737
Interest expense
Deposits	3,805		158	6,566		241
Short-term borrowings	961		31	1,531		17
Long-term debt	2,693		1,011	5,204		1,772
Other interest expense	208		158	386		288
Total interest expense	7,667		1,358	13,687		2,318
Net interest income	13,163		10,198	26,499		19,419
Noninterest income
Deposit and lending-related fees	1,517		1,729	3,021		3,544
Investment advisory and other asset-based fees	2,163		2,346	4,277		4,844
Commissions and brokerage services fees	570		542	1,189		1,079
Investment banking fees	376		286	702		733
Card fees	1,098		1,112	2,131		2,141
Mortgage banking	202		287	434		980
Net gains (losses) from trading and securities	1,032		(26)	2,017		770
Other (1)	412		566	992		1,258
Total noninterest income	7,370		6,842	14,763		15,349
Total revenue	20,533		17,040	41,262		34,768
Provision for credit losses	1,713		580	2,920		(207)
Noninterest expense
Personnel	8,606		8,442	18,021		17,713
Technology, telecommunications and equipment	947		799	1,869		1,675
Occupancy	707		705	1,420		1,427
Operating losses	232		576	499		1,249
Professional and outside services	1,304		1,310	2,533		2,596
Advertising and promotion	184		102	338		201
Restructuring charges	—		—	—		5
Other (1)	1,007		928	1,983		1,847
Total noninterest expense	12,987		12,862	26,663		26,713
Income before income tax expense	5,833		3,598	11,679		8,262
Income tax expense (1)	930		622	1,896		1,368
Net income before noncontrolling interests	4,903		2,976	9,783		6,894
Less: Net loss from noncontrolling interests	(35)		(166)	(146)		(36)
Wells Fargo net income (1)	$	4,938	3,142	$	9,929	6,930
Less: Preferred stock dividends and other	279		279	557		558
Wells Fargo net income applicable to common stock	$	4,659	2,863	$	9,372	6,372
Per share information
Earnings per common share	$	1.26	0.75	$	2.50	1.67
Diluted earnings per common share	1.25		0.75	2.48		1.66
Average common shares outstanding	3,699.9		3,793.8	3,742.6		3,812.3
Diluted average common shares outstanding	3,724.9		3,819.6	3,772.4		3,845.0

(1)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			59


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
	Quarter ended June 30,			Six months ended June 30,

(in millions)	2023		2022	2023	2022
Net income before noncontrolling interests (1)	$	4,903	2,976	9,783	6,894
Other comprehensive income (loss), after tax:
Net change in debt securities	(308)		(3,620)	54	(8,768)
Net change in derivatives and hedging activities	(610)		(83)	(232)	(63)
Defined benefit plans adjustments	21		(22)	42	50

Other (1)	29		(44)	57	(40)
Other comprehensive loss, after tax	(868)		(3,769)	(79)	(8,821)
Total comprehensive income (loss) before noncontrolling interests	4,035		(793)	9,704	(1,927)
Less: Other comprehensive income from noncontrolling interests	1		—	—	1
Less: Net loss from noncontrolling interests	(35)		(166)	(146)	(36)
Wells Fargo comprehensive income (loss)	$	4,069	(627)	9,850	(1,892)

The accompanying notes are an integral part of these statements.


60			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet (Unaudited)
(in millions, except shares)	Jun 30, 2023		Dec 31, 2022
Assets
Cash and due from banks	$	31,915	34,596
Interest-earning deposits with banks	123,418		124,561

Federal funds sold and securities purchased under resale agreements	66,500		68,036
Debt securities:
Trading, at fair value (includes assets pledged as collateral of $50,474 and $26,932)	96,857		86,155
Available-for-sale, at fair value (amortized cost of $142,283 and $121,725, net of allowance for credit losses)	134,251		113,594
Held-to-maturity, at amortized cost, net of allowance for credit losses (fair value $233,836 and $255,521)	272,360		297,059
Loans held for sale (includes $2,974 and $4,220 carried at fair value)	6,029		7,104
Loans	947,960		955,871
Allowance for loan losses	(14,258)		(12,985)
Net loans	933,702		942,886
Mortgage servicing rights (includes $8,251 and $9,310 carried at fair value)	9,345		10,480
Premises and equipment, net	8,392		8,350
Goodwill	25,175		25,173
Derivative assets	17,990		22,774
Equity securities (includes $31,609 and $28,383 carried at fair value; and assets pledged as collateral of $1,515 and $747)	67,471		64,414
Other assets (1)	82,915		75,838
Total assets (2)	$	1,876,320	1,881,020
Liabilities
Noninterest-bearing deposits	$	402,322	458,010
Interest-bearing deposits	942,262		925,975
Total deposits	1,344,584		1,383,985
Short-term borrowings (includes $201 and $181 carried at fair value)	84,255		51,145
Derivative liabilities (1)	21,431		20,067
Accrued expenses and other liabilities (includes $27,604 and $20,290 carried at fair value) (1)	73,466		68,740
Long-term debt (includes $1,600 and $1,346 carried at fair value)	170,632		174,870
Total liabilities (3)	1,694,368		1,698,807
Equity
Wells Fargo stockholders’ equity:
Preferred stock – aggregate liquidation preference of $20,216 and $20,216	19,448		19,448
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares	9,136		9,136
Additional paid-in capital	60,173		60,319
Retained earnings (1)	195,164		187,968
Accumulated other comprehensive loss (1)	(13,441)		(13,362)
Treasury stock, at cost – 1,814,145,600 shares and 1,648,007,022 shares	(89,860)		(82,853)
Unearned ESOP shares	(429)		(429)
Total Wells Fargo stockholders’ equity	180,191		180,227
Noncontrolling interests	1,761		1,986
Total equity	181,952		182,213
Total liabilities and equity	$	1,876,320	1,881,020

(2)Our consolidated assets at June 30, 2023, and December 31, 2022, include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Debt securities, $71 million and $71 million; Loans, $4.9 billion and $4.8 billion; All other assets, $205 million and $191 million; and Total assets, $5.2 billion and $5.1 billion, respectively.

(3)Our consolidated liabilities at June 30, 2023, and December 31, 2022, include $208 million and $201 million, respectively, of VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo.

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			61


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)
	Wells Fargo stockholders’ equity
	Preferred stock			Common stock
($ and shares in millions)	Shares	Amount		Shares	Amount		Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Unearned ESOP shares	Noncontrolling interests	Total equity
Balance March 31, 2023	4.7	$	19,448	3,763.2	$	9,136	59,946	191,688	(12,572)	(86,049)	(429)	2,052	183,220



Net income (loss)								4,938				(35)	4,903
Other comprehensive income (loss), net of tax									(869)			1	(868)
Noncontrolling interests												(257)	(257)
Common stock issued				4.7				(50)		234			184
Common stock repurchased				(100.2)						(4,043)			(4,043)






Common stock dividends							18	(1,133)					(1,115)
Preferred stock dividends								(279)					(279)
Stock-based compensation							237						237
Net change in deferred compensation and related plans							(28)			(2)			(30)
Net change	—	—		(95.5)	—		227	3,476	(869)	(3,811)	—	(291)	(1,268)
Balance June 30, 2023	4.7	$	19,448	3,667.7	$	9,136	60,173	195,164	(13,441)	(89,860)	(429)	1,761	181,952


Balance March 31, 2022 (1)	5.3	$	20,057	3,789.9	$	9,136	59,899	182,563	(6,799)	(85,059)	(646)	2,446	181,597

Net income (loss) (1)								3,142				(166)	2,976
Other comprehensive loss, net of tax (1)									(3,769)			—	(3,769)
Noncontrolling interests												(18)	(18)
Common stock issued				3.2				(26)		162			136
Common stock repurchased				(0.1)						(4)			(4)






Common stock dividends							13	(961)					(948)
Preferred stock dividends								(279)					(279)
Stock-based compensation							152						152
Net change in deferred compensation and related plans							(40)			(5)			(45)
Net change	—	—		3.1	—		125	1,876	(3,769)	153	—	(184)	(1,799)
Balance June 30, 2022	5.3	$	20,057	3,793.0	$	9,136	60,024	184,439	(10,568)	(84,906)	(646)	2,262	179,798

The accompanying notes are an integral part of these statements.


62			Wells Fargo & Company


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity (Unaudited)
	Wells Fargo stockholders’ equity
	Preferred stock			Common stock
($ and shares in millions)	Shares	Amount		Shares	Amount		Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Unearned ESOP shares	Noncontrolling interests	Total equity
Balance December 31, 2022 (1)	4.7	$	19,448	3,833.8	$	9,136	60,319	187,968	(13,362)	(82,853)	(429)	1,986	182,213
Cumulative effect from change in accounting policy (2)								323					323
Balance January 1, 2023	4.7	19,448		3,833.8	9,136		60,319	188,291	(13,362)	(82,853)	(429)	1,986	182,536

Net income (loss)								9,929				(146)	9,783
Other comprehensive loss, net of tax									(79)			—	(79)
Noncontrolling interests												(79)	(79)
Common stock issued				20.5			—	(204)		1,064			860
Common stock repurchased				(186.6)						(8,092)			(8,092)






Common stock dividends							42	(2,295)					(2,253)
Preferred stock dividends								(557)					(557)
Stock-based compensation							711						711
Net change in deferred compensation and related plans							(899)			21			(878)
Net change	—	—		(166.1)	—		(146)	6,873	(79)	(7,007)	—	(225)	(584)
Balance June 30, 2023	4.7	$	19,448	3,667.7	$	9,136	60,173	195,164	(13,441)	(89,860)	(429)	1,761	181,952
Balance December 31, 2021	5.3	$	20,057	3,885.8	$	9,136	60,196	180,322	(1,702)	(79,757)	(646)	2,504	190,110
Cumulative effect from change in accounting policy (1)								(176)	(44)			(1)	(221)
Balance January 1, 2022	5.3	20,057		3,885.8	9,136		60,196	180,146	(1,746)	(79,757)	(646)	2,503	189,889

Net income (loss) (1)								6,930				(36)	6,894
Other comprehensive income (loss), net of tax (1)									(8,822)			1	(8,821)
Noncontrolling interests												(206)	(206)
Common stock issued				17.4			—	(143)		859			716
Common stock repurchased				(110.2)						(6,022)			(6,022)






Common stock dividends							29	(1,936)					(1,907)
Preferred stock dividends								(558)					(558)
Stock-based compensation							646						646
Net change in deferred compensation and related plans							(847)			14			(833)
Net change	—	—		(92.8)	—		(172)	4,293	(8,822)	(5,149)	—	(241)	(10,091)
Balance June 30, 2022	5.3	$	20,057	3,793.0	$	9,136	60,024	184,439	(10,568)	(84,906)	(646)	2,262	179,798

(2)Effective January 1, 2023, we adopted ASU 2022-02 – Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information, see Note 1 (Summary of Significant Accounting Policies).

The accompanying notes are an integral part of these statements.


			Wells Fargo & Company			63


Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
	Six months ended June 30,
(in millions)	2023		2022
Cash flows from operating activities:
Net income before noncontrolling interests (1)	$	9,783	6,894
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	2,920		(207)
Changes in fair value of MSRs and LHFS carried at fair value	403		(1,236)
Depreciation, amortization and accretion	3,180		3,563
Deferred income tax expense (benefit) (1)	732		(244)
Other, net	3,270		(12,071)
Originations and purchases of loans held for sale	(16,312)		(43,271)
Proceeds from sales of and paydowns on loans originally classified as held for sale	13,385		41,623
Net change in:
Debt and equity securities, held for trading	(10,426)		20,943
Derivative assets and liabilities (1)	6,129		3,658
Other assets	(8,433)		(13,763)
Other accrued expenses and liabilities (1)	2,020		1,898
Net cash provided by operating activities	6,651		7,787
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements	1,227		10,677
Available-for-sale debt securities:
Proceeds from sales	9,906		15,330
Paydowns and maturities	7,326		11,850
Purchases	(16,759)		(31,292)
Held-to-maturity debt securities:
Paydowns and maturities	8,712		15,966
Purchases	(4,225)		(2,360)
Equity securities, not held for trading:
Proceeds from sales and capital returns	1,269		3,090
Purchases	(1,637)		(2,744)
Loans:
Loans originated by banking subsidiaries, net of principal collected	4,169		(56,839)
Proceeds from sales of loans originally classified as held for investment	2,615		8,171
Purchases of loans	(908)		(376)
Principal collected on nonbank entities’ loans	3,240		2,705
Loans originated by nonbank entities	(1,893)		(2,244)
Other, net	(396)		597
Net cash provided (used) by investing activities	12,646		(27,469)
Cash flows from financing activities:
Net change in:
Deposits	(39,401)		(57,326)
Short-term borrowings	33,110		2,494
Long-term debt:
Proceeds from issuance	5,624		16,378
Repayment	(12,212)		(11,978)
Preferred stock:


Cash dividends paid	(557)		(558)
Common stock:
Repurchased	(8,021)		(6,022)
Cash dividends paid	(2,249)		(1,904)
Other, net	(330)		(492)
Net cash used by financing activities	(24,036)		(59,408)
Net change in cash, cash equivalents, and restricted cash	(4,739)		(79,090)
Cash, cash equivalents, and restricted cash at beginning of period (2)	159,157		234,230
Cash, cash equivalents, and restricted cash at end of period (2)	$	154,418	155,140
Supplemental cash flow disclosures:
Cash paid for interest	$	12,848	2,240
Net cash paid (refunded) for income taxes	(1,984)		3,817

(2)Includes Cash and due from banks and Interest-earning deposits with banks on our consolidated balance sheet and excludes time deposits, which are included in Interest-earning deposits with banks.

The accompanying notes are an integral part of these statements. See Note 1 (Summary of Significant Accounting Policies) for noncash activities.


64			Wells Fargo & Company

Notes to Financial Statements

-See the “Glossary of Acronyms“ at the end of this Report for terms used throughout the Financial Statements and related Notes.


Note 1: Summary of Significant Accounting Policies

Wells Fargo & Company is a diversified financial services company. We provide banking, investment and mortgage products and services, as well as consumer and commercial finance, through banking locations and offices, the internet and other distribution channels to individuals, businesses and institutions in all 50 states, the District of Columbia, and in countries outside the U.S. When we refer to “Wells Fargo,” “the Company,” “we,” “our” or “us,” we mean Wells Fargo & Company and Subsidiaries (consolidated). Wells Fargo & Company (the Parent) is a financial holding company and a bank holding company. We also hold a majority interest in a real estate investment trust, which has publicly traded preferred stock outstanding.

Our accounting and reporting policies conform with U.S. generally accepted accounting principles (GAAP) and practices in the financial services industry. For discussion of our significant accounting policies, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2022 (2022 Form 10-K). There were no material changes to these policies in the first half of 2023.

To prepare the financial statements in conformity with GAAP, management must make estimates based on assumptions about future economic and market conditions (for example, unemployment, market liquidity, real estate prices, etc.) that affect the reported amounts of assets and liabilities at the date of the financial statements, income and expenses during the reporting period and the related disclosures. Although our estimates contemplate current conditions and how we expect them to change in the future, it is reasonably possible that actual conditions could be worse than anticipated in those estimates, which could materially affect our results of operations and financial condition. Management has made significant estimates in several areas, including:

•allowance for credit losses (Note 5 (Loans and Related Allowance for Credit Losses));

•valuations of residential mortgage servicing rights (MSRs) (Note 6 (Mortgage Banking Activities) and Note 13 (Securitizations and Variable Interest Entities));

•valuations of financial instruments (Note 12 (Fair Values of Assets and Liabilities));

•liabilities for contingent litigation losses (Note 10 (Legal Actions));

•income taxes; and

•goodwill impairment (Note 7 (Intangible Assets and Other Assets)).

Actual results could differ from those estimates.

These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The results of operations in the interim financial statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with our 2022 Form 10-K.

Accounting Standards Adopted in 2023

In 2023, we adopted the following new accounting guidance:

•Accounting Standards Update (ASU) 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

•ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method

•ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

•ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts and subsequent related updates

ASU 2022-02 eliminates the accounting and reporting for troubled debt restructurings (TDRs) by creditors and introduces new required disclosures for loan modifications made to borrowers experiencing financial difficulty. The new required disclosures include information about modifications granted to borrowers experiencing financial difficulty in the form of principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions, or a combination of these modifications. The ASU also requires new disclosures for the financial effects of these modifications and for loan performance in the twelve months following the modification. The Update also amends the guidance for vintage disclosures to require disclosure of current period gross charge-offs by year of origination. See Note 5 (Loans and Related Allowance for Credit Losses) for additional information related to the new disclosures for loan modifications to borrowers experiencing financial difficulty and for gross charge-offs by year of origination, which are provided on a prospective basis.

The Update eliminates the requirement to use a discounted cash flow (DCF) approach to measure the allowance for credit losses (ACL) for TDRs and instead allows for the use of a current expected credit loss approach for all loans. Under a current expected credit loss approach, the impact of loan modifications and the subsequent performance of modified loans, including defaults, is reflected in the historical loss data used to calculate expected lifetime credit losses. Upon adoption on January 1, 2023, we discontinued utilizing a DCF approach to measure credit impairment for consumer loans and certain commercial loans previously modified in a TDR and we removed the interest concession component recognized in the ACL. We elected to apply the modified-retrospective transition approach method, resulting in a cumulative effect adjustment to retained earnings upon adoption, which reflects the difference between the pre-modification and post-modification effective interest rates that would have been recognized over the remaining life of the loans as interest income. Upon adoption, we recognized a decrease in our ACL of $429 million, pre-tax, and an increase to our retained earnings of $323 million, after tax. We continue to use a DCF approach for certain non-accruing, non-collateral dependent commercial loans.

ASU 2022-01 establishes the portfolio layer method, which expands an entity's ability to achieve fair value hedge accounting for interest rate risk hedges of closed portfolios of financial assets. The Update also provides guidance on the accounting for hedged item basis adjustments under the portfolio layer method.


			Wells Fargo & Company			65

Note 1: Summary of Significant Accounting Policies (continued)

We adopted ASU 2022-01 on January 1, 2023 on a prospective basis. No cumulative effect adjustment to the opening balance of stockholders’ equity was required upon adoption, as impacts to us were reflected prospectively. The portfolio layer method improves our ability to use derivatives to hedge interest rate risk exposures associated with portfolios of financial assets, such as fixed-rate available-for-sale (AFS) debt securities and loans. The Update allows us to hedge a larger proportion of these portfolios by expanding the number and type of derivatives permitted as eligible hedges, as well as by increasing the scope of eligible hedged items to include both prepayable and nonprepayable assets. Unlike other fair value hedging relationships where basis adjustments adjust the carrying amount of the individual hedged item, basis adjustments related to active portfolio layer method hedges are maintained at a portfolio level and not allocated to the individual assets in the portfolio.

Upon adoption, any election to designate portfolio layer method hedges is applied prospectively. Additionally, the Update permits a one-time reclassification of debt securities from held-to-maturity (HTM) to AFS classification as long as the securities are designated in a portfolio layer method hedge no later than 30 days after the adoption date.

In January 2023, we reclassified fixed-rate debt securities with an aggregate fair value of $23.2 billion and amortized cost of $23.9 billion from HTM to AFS and designated interest rate swaps with notional amounts of $20.1 billion as fair value hedges using the portfolio layer method. The transfer of debt securities was recorded at fair value and resulted in approximately $566 million of unrealized losses associated with AFS debt securities being recorded to other comprehensive income, net of deferred taxes.

See Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) for additional information about the Company's portfolio layer method hedge basis adjustments and HTM to AFS transfers in connection with adoption of the Update and Note 11 (Derivatives) for disclosures regarding our portfolio layer method hedging relationships.

ASU 2021-08 amends Accounting Standards Codification (ASC) 805 – Business Combinations to require entities to recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC 606 – Revenue Recognition. Prior to ASU 2021-08, there was diversity in practice related to recognition treatment, and acquirers generally measured such items at acquisition date fair value. We adopted this Update prospectively on January 1, 2023. This Update did not have a material impact to our consolidated financial statements.

ASU 2018-12 changes the accounting for long-duration insurance contracts or contract features that provide benefits to the policyholder in addition to the policyholder’s account value. These features, which the ASU defines as market risk benefits, protect the policyholder to some degree from capital markets risk and expose the insurer or reinsurer to that risk. The ASU requires all market risk benefits to be measured at fair value through earnings with changes in fair value attributable to our own credit risk recognized in other comprehensive income. We reinsure certain variable annuity products for a limited number of insurance clients with guaranteed minimum benefits which are accounted for as market risk benefits under the ASU. Our reinsurance business is no longer entering into new contracts.

We utilize a discounted cash flow model to value our market risk benefits. Market risk benefits are level 3 fair value liabilities because they are valued using significant unobservable inputs. The fair value of our market risk benefits is sensitive to changes in fixed income and equity markets, as well as policyholder behavior (e.g., withdrawals, lapses, utilization rate) and changes in mortality assumptions. Beginning first quarter 2023, we use derivative instruments, where feasible, to economically hedge the interest rate and equity markets volatility. The fair value of market risk benefits is measured at the contract level and is recognized in accrued expenses and other liabilities. We recognize changes in fair value for our market risk benefits, excluding the change in fair value related to our own credit risk, in noninterest income along with the changes in fair value of economic hedges. Changes in fair value attributable to our own credit risk are recorded in other comprehensive income. Upon adoption on January 1, 2023, as required under the ASU, we implemented the accounting changes for market risk benefits retrospectively, to the earliest period presented, which resulted in an after-tax cumulative effect adjustment to reduce retained earnings and accumulated other comprehensive income by $176 million and $44 million, respectively, as of January 1, 2022.

The ASU also requires more frequent updates for insurance assumptions, mandates the use of a standardized discount rate for traditional long-duration contracts, and simplifies the amortization of deferred acquisition costs. The accounting changes for the liability of future policyholder benefits for traditional long-duration contracts (included in accrued expenses and other liabilities) and deferred acquisition costs (included in other assets) did not have a material impact upon adoption.

Table 1.1 presents the impact of adoption to prior period financial statement line items within our consolidated statement of income and consolidated balance sheet for the three and six months ended June 30, 2022, and as of December 31, 2022. These adjustments are also reflected in our consolidated statement of changes in equity and consolidated statement of cash flows.


66			Wells Fargo & Company

Table 1.1: Impact of Adoption of ASU 2018-12


	Quarter ended June 30, 2022				Six months ended June 30, 2022
($ in millions, except per share amounts)	As reported		Effect of adoption	As revised	As reported		Effect of adoption	As revised
Selected Income Statement Data
Noninterest income	$	6,830	12	6,842	$	15,201	148	15,349
Noninterest expense	12,883		(21)	12,862	26,753		(40)	26,713
Income tax expense	613		9	622	1,320		48	1,368
Net income	3,119		23	3,142	6,790		140	6,930
Diluted earnings per common share	0.74		0.01	0.75	1.62		0.04	1.66

					At December 31, 2022
					As reported		Effect of adoption	As revised
Selected Balance Sheet Data
Other assets					75,834		4	75,838
Derivative liabilities					20,085		(18)	20,067
Accrued expenses and other liabilities					69,056		(316)	68,740
Retained earnings					187,649		319	187,968
Accumulated other comprehensive income (loss)					(13,381)		19	(13,362)

Table 1.2 presents the transition adjustments required upon the adoption of ASU 2018-12 as of January 1, 2021.

Table 1.2: Transition Adjustment of ASU 2018-12


	Dec 31, 2020		Transition adjustment upon adoption	Jan 1, 2021
Selected Balance Sheet Data
Other assets	$	87,337	159	87,496
Derivative liabilities	16,509		(27)	16,482
Accrued expenses and other liabilities	74,360		903	75,263
Retained earnings	162,683		(738)	161,945
Accumulated other comprehensive income	194		20	214

Supplemental Cash Flow Information

Significant noncash activities are presented in Table 1.3.

Table 1.3: Supplemental Cash Flow Information


	Six months ended June 30,
(in millions)	2023		2022
Available-for-sale debt securities purchased from securitization of LHFS	$	—	1,506
Held-to-maturity debt securities purchased from securitization of LHFS	48		693
Transfers from loans to LHFS	850		4,970
Transfers from available-for-sale debt securities to held-to-maturity debt securities	3,687		43,041
Transfers from held-to-maturity debt securities to available-for-sale debt securities (1)	23,919		—

(1)In first quarter 2023, we reclassified HTM debt securities to AFS debt securities in connection with the adoption of ASU 2022-01.

Subsequent Events

We have evaluated the effects of events that have occurred subsequent to June 30, 2023, and except as disclosed in Note 9 (Preferred Stock), there have been no material events that would require recognition in our second quarter 2023 consolidated financial statements or disclosure in the Notes to the consolidated financial statements.


			Wells Fargo & Company			67


Note 2: Trading Activities

Table 2.1 presents a summary of our trading assets and liabilities measured at fair value through earnings.

Table 2.1: Trading Assets and Liabilities


(in millions)	Jun 30, 2023		Dec 31, 2022
Trading assets:
Debt securities	$	96,857	86,155
Equity securities	30,327		26,910
Loans held for sale	1,402		1,466
Gross trading derivative assets	67,120		77,148
Netting (1)	(49,435)		(54,922)
Total trading derivative assets	17,685		22,226
Total trading assets	146,271		136,757
Trading liabilities:
Short sale and other liabilities	27,705		20,304
Long-term debt	1,600		1,346
Gross trading derivative liabilities	73,667		77,698
Netting (1)	(53,292)		(59,232)
Total trading derivative liabilities	20,375		18,466
Total trading liabilities	$	49,680	40,116

(1)Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.

Table 2.2 provides a summary of the net interest income earned from trading securities, and net gains and losses due to the realized and unrealized gains and losses from trading activities.

Net interest income also includes dividend income on trading securities and dividend expense on trading securities we have sold, but not yet purchased.

Table 2.2: Net Interest Income and Net Gains (Losses) from Trading Activities


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Interest income:
Debt securities	$	894	549	$	1,691	1,097
Equity securities	111		139	205		259
Loans held for sale	22		9	41		20
Total interest income	1,027		697	1,937		1,376
Less: Interest expense	161		158	304		290
Net interest income	866		539	1,633		1,086
Net gains (losses) from trading activities (1):
Debt securities	(569)		(3,103)	902		(6,751)
Equity securities	1,650		(3,606)	3,339		(4,430)
Loans held for sale	13		1	25		10

Long-term debt	9		11	(21)		23
Derivatives (2)	19		7,143	(1,781)		11,812
Total net gains from trading activities	1,122		446	2,464		664
Total trading-related net interest and noninterest income	$	1,988	985	$	4,097	1,750

(1)Represents realized gains (losses) from our trading activities and unrealized gains (losses) due to changes in fair value of our trading positions.

(2)Excludes economic hedging of mortgage banking and asset/liability management activities, for which hedge results (realized and unrealized) are reported with the respective hedged activities.


68			Wells Fargo & Company


Note 3: Available-for-Sale and Held-to-Maturity Debt Securities

Table 3.1 provides the amortized cost, net of the allowance for credit losses (ACL) for debt securities, and fair value by major categories of available-for-sale (AFS) debt securities, which are carried at fair value, and held-to-maturity (HTM) debt securities, which are carried at amortized cost, net of the ACL. The net unrealized gains (losses) for AFS debt securities are reported as a component of accumulated other comprehensive income (AOCI), net of the ACL and applicable income taxes. Information on debt securities held for trading is included in Note 2 (Trading Activities).

Outstanding balances exclude accrued interest receivable on AFS and HTM debt securities, which are included in other assets. See Note 7 (Intangible Assets and Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. The interest income reversed in the second quarter and first half of both 2023 and 2022 was insignificant.

Table 3.1: Available-for-Sale and Held-to-Maturity Debt Securities Outstanding


(in millions)	Amortized cost, net (1)		Gross unrealized gains	Gross unrealized losses	Net unrealized gains (losses)	Fair value
June 30, 2023
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	49,200	7	(2,311)	(2,304)	46,896
Non-U.S. government securities	163		—	(1)	(1)	162
Securities of U.S. states and political subdivisions (2)	22,163		30	(819)	(789)	21,374
Federal agency mortgage-backed securities	61,974		3	(4,996)	(4,993)	56,981
Non-agency mortgage-backed securities (3)	3,183		—	(134)	(134)	3,049
Collateralized loan obligations	3,778		—	(53)	(53)	3,725
Other debt securities	2,046		54	(36)	18	2,064
Total available-for-sale debt securities, excluding portfolio level basis adjustments	142,507		94	(8,350)	(8,256)	134,251
Portfolio level basis adjustments (4)	(224)				224	—
Total available-for-sale debt securities	142,283		94	(8,350)	(8,032)	134,251
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	3,789		—	(1,418)	(1,418)	2,371
Securities of U.S. states and political subdivisions	18,986		2	(3,351)	(3,349)	15,637
Federal agency mortgage-backed securities	217,322		71	(33,124)	(33,053)	184,269
Non-agency mortgage-backed securities (3)	1,266		2	(154)	(152)	1,114
Collateralized loan obligations	29,272		5	(435)	(430)	28,842
Other debt securities	1,725		—	(122)	(122)	1,603
Total held-to-maturity debt securities	272,360		80	(38,604)	(38,524)	233,836
Total	$	414,643	174	(46,954)	(46,556)	368,087
December 31, 2022
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	47,536	9	(2,260)	(2,251)	45,285
Non-U.S. government securities	162		—	—	—	162
Securities of U.S. states and political subdivisions (2)	10,958		20	(533)	(513)	10,445
Federal agency mortgage-backed securities	53,302		2	(5,167)	(5,165)	48,137
Non-agency mortgage-backed securities (3)	3,423		1	(140)	(139)	3,284
Collateralized loan obligations	4,071		—	(90)	(90)	3,981
Other debt securities	2,273		75	(48)	27	2,300
Total available-for-sale debt securities	121,725		107	(8,238)	(8,131)	113,594
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies	16,202		—	(1,917)	(1,917)	14,285
Securities of U.S. states and political subdivisions	30,985		8	(4,385)	(4,377)	26,608
Federal agency mortgage-backed securities	216,966		30	(34,252)	(34,222)	182,744
Non-agency mortgage-backed securities (3)	1,253		—	(147)	(147)	1,106
Collateralized loan obligations	29,926		1	(727)	(726)	29,200
Other debt securities	1,727		—	(149)	(149)	1,578
Total held-to-maturity debt securities	297,059		39	(41,577)	(41,538)	255,521
Total	$	418,784	146	(49,815)	(49,669)	369,115

(1)Represents amortized cost of the securities, net of the ACL of $7 million and $6 million related to AFS debt securities at June 30, 2023, and December 31, 2022, respectively, and $76 million and $85 million related to HTM debt securities at June 30, 2023, and December 31, 2022, respectively.

(2)Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The amortized cost, net of the ACL, and fair value of these types of securities, was $4.9 billion at June 30, 2023, and $5.1 billion at December 31, 2022.

(3)Predominantly consists of commercial mortgage-backed securities at both June 30, 2023, and December 31, 2022.

(4)Represents fair value hedge basis adjustments related to active portfolio layer method hedges of AFS debt securities, which are not allocated to individual securities in the portfolio. For additional information, see Note 11 (Derivatives).


			Wells Fargo & Company			69

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Table 3.2 details the breakout of purchases of and transfers to HTM debt securities by major category of security. The table excludes the transfer of HTM debt securities with a fair value of $23.2 billion to AFS debt securities in first quarter 2023 in

connection with the adoption of ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. For additional information, see Note 1 (Summary of Significant Accounting Policies).

Table 3.2: Held-to-Maturity Debt Securities Purchases and Transfers


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Purchases of held-to-maturity debt securities (1):

Securities of U.S. states and political subdivisions	$	—	9	$	—	843
Federal agency mortgage-backed securities	—		—	4,225		2,051
Non-agency mortgage-backed securities	22		55	48		159


Total purchases of held-to-maturity debt securities	22		64	4,273		3,053
Transfers from available-for-sale debt securities to held-to-maturity debt securities (2):


Federal agency mortgage-backed securities	—		28,390	3,687		43,041



Total transfers from available-for-sale debt securities to held-to-maturity debt securities	$	—	28,390	$	3,687	43,041

(1)Inclusive of securities purchased but not yet settled and noncash purchases from securitization of loans held for sale (LHFS).

(2)Represents fair value as of the date of the transfers. Debt securities transferred from available-for-sale to held-to-maturity had pre-tax unrealized losses recorded in AOCI of $0 and $320 million in the second quarter and first half of 2023, respectively, and $3.5 billion and $3.9 billion in the second quarter and first half of 2022, respectively, at the time of the transfers.

Table 3.3 shows the composition of interest income, provision for credit losses, and gross realized gains and losses

from sales and impairment write-downs included in earnings related to AFS and HTM debt securities (pre-tax).

Table 3.3: Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Interest income (1):
Available-for-sale	$	1,346	683	$	2,586	1,385
Held-to-maturity	1,797		1,470	3,543		2,783
Total interest income	3,143		2,153	6,129		4,168
Provision for credit losses:
Available-for-sale	—		3	(39)		4
Held-to-maturity	(1)		(1)	(9)		(14)
Total provision for credit losses	(1)		2	(48)		(10)
Realized gains and losses (2):
Gross realized gains	6		247	6		249
Gross realized losses	(2)		(104)	(2)		(104)



Net realized gains	$	4	143	$	4	145

(1)Excludes interest income from trading debt securities, which is disclosed in Note 2 (Trading Activities).

(2)Realized gains and losses relate to AFS debt securities. There were no realized gains or losses from HTM debt securities in all periods presented.

Credit Quality

We monitor credit quality of debt securities by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the ACL for debt securities. The credit quality indicators that we most closely monitor include credit ratings and delinquency status and are based on information as of our financial statement date.

CREDIT RATINGS Credit ratings express opinions about the credit quality of a debt security. We determine the credit rating of a security according to the lowest credit rating made available by national recognized statistical rating organizations (NRSROs). Debt securities rated investment grade, that is those with ratings similar to BBB-/Baa3 or above, as defined by NRSROs, are generally considered by the rating agencies and market

participants to be low credit risk. Conversely, debt securities rated below investment grade, labeled as “speculative grade” by the rating agencies, are considered to be distinctively higher credit risk than investment grade debt securities. For debt securities not rated by NRSROs, we determine an internal credit grade of the debt securities (used for credit risk management purposes) equivalent to the credit ratings assigned by major credit agencies. Substantially all of our debt securities were rated by NRSROs at June 30, 2023, and December 31, 2022.

Table 3.4 shows the percentage of fair value of AFS debt securities and amortized cost of HTM debt securities determined to be rated investment grade, inclusive of securities rated based on internal credit grades.


70			Wells Fargo & Company

Table 3.4: Investment Grade Debt Securities


	Available-for-Sale				Held-to-Maturity
($ in millions)	Fair value		% investment grade		Amortized cost		% investment grade
June 30, 2023
Total portfolio (1)	$	134,251	99	%	$	272,436	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	103,877	100	%	$	221,110	100	%
Securities of U.S. states and political subdivisions	21,374		99		18,997		100
Collateralized loan obligations (3)	3,725		100		29,307		100
All other debt securities (4)	5,275		90		3,022		61
December 31, 2022
Total portfolio (1)	$	113,594	99	%	$	297,144	99	%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)	$	93,422	100	%	$	233,169	100	%
Securities of U.S. states and political subdivisions	10,445		99		31,000		100
Collateralized loan obligations (3)	3,981		100		29,972		100
All other debt securities (4)	5,746		89		3,003		63

(1)99% were rated AA- and above at both June 30, 2023, and December 31, 2022.

(2)Includes federal agency mortgage-backed securities.

(3)100% were rated AA- and above at both June 30, 2023, and December 31, 2022.

(4)Includes non-U.S. government, non-agency mortgage-backed, and all other debt securities.

DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIES Debt security issuers that are delinquent in payment of amounts due under contractual debt agreements have a higher probability of recognition of credit losses. As such, as part of our monitoring of the credit quality of the debt security portfolio, we consider whether debt securities we own are past due in payment of principal or interest payments and whether any securities have been placed into nonaccrual status.

Debt securities that are past due and still accruing or in nonaccrual status were insignificant at both June 30, 2023, and December 31, 2022. Net charge-offs on debt securities were insignificant in the second quarter and first half of both 2023 and 2022.

Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current. PCD securities were insignificant in the second quarter and first half of both 2023 and 2022.


			Wells Fargo & Company			71

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Unrealized Losses of Available-for-Sale Debt Securities

Table 3.5 shows the gross unrealized losses and fair value of AFS debt securities by length of time those individual securities in each category have been in a continuous loss position. Debt securities on which we have recorded credit impairment are

categorized as being “less than 12 months” or “12 months or more” in a continuous loss position based on the point in time that the fair value declined to below the amortized cost basis, net of allowance for credit losses.

Table 3.5: Gross Unrealized Losses and Fair Value – Available-for-Sale Debt Securities


	Less than 12 months			12 months or more		Total
(in millions)	Gross unrealized losses (1)		Fair value	Gross unrealized losses (1)	Fair value	Gross unrealized losses (1)	Fair value
June 30, 2023
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(449)	13,243	(1,862)	32,037	(2,311)	45,280
Non-U.S. government securities	—		—	(1)	83	(1)	83
Securities of U.S. states and political subdivisions	(368)		10,972	(451)	3,117	(819)	14,089
Federal agency mortgage-backed securities	(667)		22,760	(4,329)	33,923	(4,996)	56,683
Non-agency mortgage-backed securities	(4)		166	(130)	2,862	(134)	3,028
Collateralized loan obligations	—		—	(53)	3,699	(53)	3,699
Other debt securities	(2)		155	(34)	1,310	(36)	1,465
Total available-for-sale debt securities	$	(1,490)	47,296	(6,860)	77,031	(8,350)	124,327
December 31, 2022
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	$	(291)	9,870	(1,969)	27,899	(2,260)	37,769

Securities of U.S. states and political subdivisions	(72)		2,154	(461)	2,382	(533)	4,536
Federal agency mortgage-backed securities	(3,580)		39,563	(1,587)	8,481	(5,167)	48,044
Non-agency mortgage-backed securities	(43)		1,194	(97)	2,068	(140)	3,262
Collateralized loan obligations	(65)		3,195	(25)	786	(90)	3,981
Other debt securities	(31)		1,591	(17)	471	(48)	2,062
Total available-for-sale debt securities	$	(4,082)	57,567	(4,156)	42,087	(8,238)	99,654

(1)Excludes portfolio level basis adjustments.

We have assessed each debt security with gross unrealized losses included in the previous table for credit impairment. As part of that assessment we evaluated and concluded that we do not intend to sell any of the debt securities, and that it is more likely than not that we will not be required to sell, prior to recovery of the amortized cost basis. We evaluate, where necessary, whether credit impairment exists by comparing the present value of the expected cash flows to the debt securities’ amortized cost basis. Credit impairment is recorded as an ACL for debt securities.

For descriptions of the factors we consider when analyzing debt securities for impairment as well as methodology and significant inputs used to measure credit losses, see Note 1 (Summary of Significant Accounting Policies) in our 2022 Form 10-K.


72			Wells Fargo & Company

Contractual Maturities

Table 3.6 and Table 3.7 show the remaining contractual maturities, amortized cost, net of the ACL, fair value and weighted average effective yields of AFS and HTM debt securities, respectively. The remaining contractual principal

maturities for mortgage-backed securities (MBS) do not consider prepayments. Remaining expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature.

Table 3.6: Contractual Maturities – Available-for-Sale Debt Securities


By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
June 30, 2023
Available-for-sale debt securities (1)(2):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	49,200		9,180	28,345	10,168	1,507
Fair value	46,896			8,935	27,075	9,421	1,465
Weighted average yield	1.61		%	1.47	1.67	1.58	1.44
Non-U.S. government securities
Amortized cost, net	$	163		2	137	24	—
Fair value	162			2	136	24	—
Weighted average yield	4.48		%	5.15	4.39	4.91	—
Securities of U.S. states and political subdivisions
Amortized cost, net	$	22,163		2,473	4,838	5,066	9,786
Fair value	21,374			2,467	4,798	4,727	9,382
Weighted average yield	2.89		%	2.94	3.46	2.99	2.55
Federal agency mortgage-backed securities
Amortized cost, net	$	61,974		—	218	808	60,948
Fair value	56,981			—	208	748	56,025
Weighted average yield	3.62		%	—	1.96	2.55	3.64
Non-agency mortgage-backed securities
Amortized cost, net	$	3,183		—	—	58	3,125
Fair value	3,049			—	—	43	3,006
Weighted average yield	5.11		%	—	—	3.38	5.14
Collateralized loan obligations
Amortized cost, net	$	3,778		—	4	3,349	425
Fair value	3,725			—	4	3,306	415
Weighted average yield	6.57		%	—	6.70	6.57	6.59
Other debt securities
Amortized cost, net	$	2,046		37	183	789	1,037
Fair value	2,064			36	178	788	1,062
Weighted average yield	6.20		%	6.42	6.77	5.54	6.59
Total available-for-sale debt securities
Amortized cost, net	$	142,507		11,692	33,725	20,262	76,828
Fair value	134,251			11,440	32,399	19,057	71,355
Weighted average yield	2.96		%	1.80	1.95	2.95	3.58

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost without effect for any related hedging derivatives and are shown pre-tax.

(2)Amortized cost, net excludes portfolio level basis adjustments of $(224) million.


			Wells Fargo & Company			73

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities (continued)

Table 3.7: Contractual Maturities – Held-to-Maturity Debt Securities


By remaining contractual maturity ($ in millions)	Total			Within one year	After one year through five years	After five years through ten years	After ten years
June 30, 2023
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net	$	3,789		—	—	—	3,789
Fair value	2,371			—	—	—	2,371
Weighted average yield	1.58		%	—	—	—	1.58
Securities of U.S. states and political subdivisions
Amortized cost, net	$	18,986		128	551	802	17,505
Fair value	15,637			127	532	785	14,193
Weighted average yield	2.36		%	0.36	1.73	2.96	2.37
Federal agency mortgage-backed securities
Amortized cost, net	$	217,322		—	—	—	217,322
Fair value	184,269			—	—	—	184,269
Weighted average yield	2.36		%	—	—	—	2.36
Non-agency mortgage-backed securities
Amortized cost, net	$	1,266		4	22	54	1,186
Fair value	1,114			5	22	51	1,036
Weighted average yield	3.19		%	3.01	3.99	4.19	3.13
Collateralized loan obligations
Amortized cost, net	$	29,272		—	53	14,947	14,272
Fair value	28,842			—	54	14,807	13,981
Weighted average yield	6.67		%	—	6.94	6.77	6.57
Other debt securities
Amortized cost, net	$	1,725		—	755	970	—
Fair value	1,603			—	719	884	—
Weighted average yield	4.47		%	—	4.10	4.75	—
Total held-to-maturity debt securities
Amortized cost, net	$	272,360		132	1,381	16,773	254,074
Fair value	233,836			132	1,327	16,527	215,850
Weighted average yield	2.83		%	0.45	3.27	6.46	2.59

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost, excluding unamortized basis adjustments related to the transfer of certain debt securities from AFS to HTM, and are shown pre-tax.


74			Wells Fargo & Company


Note 4: Equity Securities

Table 4.1 provides a summary of our equity securities by business purpose and accounting method.

Table 4.1: Equity Securities


(in millions)	Jun 30, 2023		Dec 31, 2022
Held for trading at fair value:
Marketable equity securities	$	19,253	17,180
Nonmarketable equity securities (1)	11,074		9,730
Total equity securities held for trading (2)	30,327		26,910
Not held for trading:
Fair value:
Marketable equity securities	1,259		1,436
Nonmarketable equity securities	23		37
Total equity securities not held for trading at fair value	1,282		1,473
Equity method:
Private equity	3,144		2,836
Tax-advantaged renewable energy (3)	6,133		6,535
New market tax credit and other	300		298
Total equity method	9,577		9,669
Other methods:
Low-income housing tax credit (LIHTC) investments (3)	12,821		12,186
Private equity (4)	8,912		9,276
Federal Reserve Bank stock and other at cost (5)	4,552		4,900
Total equity securities not held for trading	37,144		37,504
Total equity securities	$	67,471	64,414

(1)Represents securities economically hedged with equity derivatives.

(2)Represents securities held as part of our customer accommodation trading activities. For additional information on these activities, see Note 2 (Trading Activities).

(3)See Note 13 (Securitizations and Variable Interest Entities) for information about tax credit investments.

(4)Represents nonmarketable equity securities accounted for under the measurement alternative, which were predominantly securities associated with our affiliated venture capital business.

(5)Includes $3.5 billion of investments in Federal Reserve Bank stock at both June 30, 2023, and December 31, 2022, and $1.0 billion and $1.4 billion of investments in Federal Home Loan Bank stock at June 30, 2023, and December 31, 2022, respectively.

Net Gains and Losses Not Held for Trading

Table 4.2 provides a summary of the net gains and losses from equity securities not held for trading, which excludes equity method adjustments for our share of the investee’s earnings or

losses that are recognized in other noninterest income. Gains and losses for securities held for trading are reported in net gains from trading and securities.

Table 4.2: Net Gains (Losses) from Equity Securities Not Held for Trading



	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities	$	63	(226)	$	26	(228)
Nonmarketable equity securities	(15)		(16)	(16)		(38)
Total equity securities carried at fair value	48		(242)	10		(266)
Net gains (losses) from nonmarketable equity securities not carried at fair value (1):
Impairment write-downs	(175)		(576)	(665)		(1,014)
Net unrealized gains (losses) (2)	(12)		144	139		834
Net realized gains from sale	45		59	65		407

Total nonmarketable equity securities not carried at fair value	(142)		(373)	(461)		227

Total net losses from equity securities not held for trading	$	(94)	(615)	$	(451)	(39)

(1)Includes amounts related to private equity and venture capital investments in consolidated portfolio companies, which are not reported in equity securities on our consolidated balance sheet.

(2)Includes unrealized gains (losses) due to observable price changes from equity securities accounted for under the measurement alternative.


			Wells Fargo & Company			75

Note 4: Equity Securities (continued)

Measurement Alternative

Table 4.3 provides additional information about the impairment write-downs and observable price changes from nonmarketable

equity securities accounted for under the measurement alternative. Gains and losses related to these adjustments are also included in Table 4.2.

Table 4.3: Net Gains (Losses) from Measurement Alternative Equity Securities



	Quarter ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains from observable price changes	$	7	144		$	168	834
Gross unrealized losses from observable price changes	(19)		—		(29)		—
Impairment write-downs	(172)		(549)		(654)		(944)
Net realized gains from sale	24		45		36		78
Total net losses recognized during the period	$	(160)	$	(360)	$	(479)	(32)

Table 4.4 presents cumulative carrying value adjustments to nonmarketable equity securities accounted for under the measurement alternative that were still held at the end of each reporting period presented.

Table 4.4: Measurement Alternative Cumulative Gains (Losses)



(in millions)	Jun 30, 2023		Dec 31, 2022

Cumulative gains (losses):
Gross unrealized gains from observable price changes	$	7,225	7,141
Gross unrealized losses from observable price changes	(44)		(14)
Impairment write-downs	(3,435)		(2,896)


76			Wells Fargo & Company


Note 5: Loans and Related Allowance for Credit Losses

Table 5.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less

than 1% of our total loans outstanding at both June 30, 2023, and December 31, 2022.

Outstanding balances exclude accrued interest receivable on loans, except for certain revolving loans, such as credit card loans.

See Note 7 (Intangible Assets and Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During the first half of 2023, we reversed accrued interest receivable of $19 million for our commercial portfolio segment and $118 million for our consumer portfolio segment, compared with $20 million and $65 million, respectively, for the same period a year ago.

Table 5.1: Loans Outstanding


(in millions)	Jun 30, 2023		Dec 31, 2022



Commercial and industrial	$	386,011	386,806


Commercial real estate	154,276		155,802
Lease financing	15,334		14,908
Total commercial	555,621		557,516


Residential mortgage	265,085		269,117
Credit card	47,717		46,293
Auto	51,587		53,669
Other consumer	27,950		29,276
Total consumer	392,339		398,355
Total loans	$	947,960	955,871

Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. Table 5.2 presents

total non-U.S. commercial loans outstanding by class of financing receivable.

Table 5.2: Non-U.S. Commercial Loans Outstanding


(in millions)	Jun 30, 2023		Dec 31, 2022




Commercial and industrial	$	75,081	78,981


Commercial real estate	7,539		7,619
Lease financing	710		670
Total non-U.S. commercial loans	$	83,330	87,270


			Wells Fargo & Company			77

Note 5: Loans and Related Allowance for Credit Losses (continued)

Loan Purchases, Sales, and Transfers

Table 5.3 presents the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale. The table excludes loans for

which we have elected the fair value option and government insured/guaranteed residential mortgage – first lien loans because their loan activity normally does not impact the ACL.

Table 5.3: Loan Purchases, Sales, and Transfers



	2023				2022
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended June 30,
Purchases	$	195	301	496	276	2	278
Sales and net transfers (to)/from LHFS	(568)		(99)	(667)	(751)	(14)	(765)
Six months ended June 30,
Purchases	$	611	304	915	376	2	378
Sales and net transfers (to)/from LHFS	(1,683)		(100)	(1,783)	(1,312)	(23)	(1,335)

Unfunded Credit Commitments

Unfunded credit commitments are legally binding agreements to lend to customers with terms covering usage of funds, contractual interest rates, expiration dates, and any required collateral. Our commercial lending commitments include, but are not limited to, (i) commitments for working capital and general corporate purposes, (ii) financing to customers who warehouse financial assets secured by real estate, consumer, or corporate loans, (iii) financing that is expected to be syndicated or replaced with other forms of long-term financing, and (iv) commercial real estate lending. We also originate multipurpose lending commitments under which commercial customers have the option to draw on the facility in one of several forms, including the issuance of letters of credit, which reduces the unfunded commitment amounts of the facility.

The maximum credit risk for these commitments will generally be lower than the contractual amount because these commitments may expire without being used or may be cancelled at the customer’s request. We may reduce or cancel lines of credit in accordance with the contracts and applicable law. Our credit risk monitoring activities include managing the amount of commitments, both to individual customers and in total, and the size and maturity structure of these commitments. We do not recognize an ACL for commitments that are unconditionally cancellable at our discretion.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At June 30, 2023, and December 31, 2022, we had $1.2 billion and $1.8 billion, respectively, of outstanding issued commercial letters of credit. See Note 14 (Guarantees and Other Commitments) for additional information on issued standby letters of credit.

We may be a fronting bank, whereby we act as a representative for other lenders, and advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss.

The contractual amount of our unfunded credit commitments, including unissued letters of credit, is summarized in Table 5.4. The table is presented net of commitments syndicated to others, including the fronting arrangements described above, and excludes issued letters of credit and discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase.

Table 5.4: Unfunded Credit Commitments


(in millions)	Jun 30, 2023		Dec 31, 2022
Commercial and industrial (1)	$	385,949	388,504


Commercial real estate	25,348		29,518

Total commercial	411,297		418,022


Residential mortgage (2)	34,668		39,155
Credit card	157,271		145,526
Other consumer (3)	78,032		69,244
Total consumer	269,971		253,925
Total unfunded credit commitments	$	681,268	671,947

(1)Effective first quarter 2023, unfunded credit commitments exclude discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase. Prior period balances have been revised to conform with the current period presentation.

(2)Includes lines of credit totaling $31.9 billion and $35.5 billion as of June 30, 2023, and December 31, 2022, respectively.

(3)Predominantly includes securities-based lines of credit.


78			Wells Fargo & Company

Allowance for Credit Losses

Table 5.5 presents the allowance for credit losses (ACL) for loans, which consists of the allowance for loan losses and the allowance for unfunded credit commitments. The ACL for loans increased $1.2 billion from December 31, 2022, reflecting increases for

commercial real estate loans, primarily office loans, as well as for increases in credit card loan balances, partially offset by a decrease for residential mortgage loans related to the adoption of ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.

Table 5.5: Allowance for Credit Losses for Loans


	Quarter ended June 30,				Six months ended June 30,
($ in millions)	2023			2022	2023			2022
Balance, beginning of period	$	13,705		12,681	$	13,609		13,788
Cumulative effect from change in accounting policy (1)	—			—	(429)			—
Balance, beginning of period, adjusted	13,705			12,681	13,180			13,788
Provision for credit losses	1,839			578	2,968			(197)
Interest income on certain loans (2)	—			(27)	—			(56)
Loan charge-offs:
Commercial and industrial	(147)			(68)	(248)			(124)


Commercial real estate	(81)			(3)	(108)			(3)
Lease financing	(6)			(5)	(13)			(9)
Total commercial	(234)			(76)	(369)			(136)


Residential mortgage	(32)			(46)	(60)			(93)
Credit card	(480)			(287)	(904)			(554)
Auto	(183)			(151)	(400)			(316)
Other consumer	(110)			(94)	(215)			(202)
Total consumer	(805)			(578)	(1,579)			(1,165)
Total loan charge-offs	(1,039)			(654)	(1,948)			(1,301)
Loan recoveries:
Commercial and industrial	28			41	86			120


Commercial real estate	2			7	12			12
Lease financing	4			5	8			10
Total commercial	34			53	106			142


Residential mortgage	44			62	83			130
Credit card	84			88	164			179
Auto	94			83	190			152
Other consumer	19			24	37			49
Total consumer	241			257	474			510
Total loan recoveries	275			310	580			652
Net loan charge-offs	(764)			(344)	(1,368)			(649)
Other	6			(4)	6			(2)
Balance, end of period	$	14,786		12,884	$	14,786		12,884
Components:
Allowance for loan losses	$	14,258		11,786	$	14,258		11,786
Allowance for unfunded credit commitments	528			1,098	528			1,098
Allowance for credit losses	$	14,786		12,884	$	14,786		12,884

Net loan charge-offs (annualized) as a percentage of average total loans	0.32		%	0.15	0.29		%	0.14
Allowance for loan losses as a percentage of total loans	1.50			1.25	1.50			1.25
Allowance for credit losses for loans as a percentage of total loans	1.56			1.37	1.56			1.37

(1)Represents the change in our allowance for credit losses for loans as a result of our adoption of ASU 2022–02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, on January 1, 2023. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)Prior to the adoption of ASU 2022–02, loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognized changes in allowance attributable to the passage of time as interest income.


			Wells Fargo & Company			79

Note 5: Loans and Related Allowance for Credit Losses (continued)

Table 5.6 summarizes the activity in the ACL by our commercial and consumer portfolio segments.

Table 5.6: Allowance for Credit Losses for Loans Activity by Portfolio Segment



	2023				2022
(in millions)	Commercial		Consumer	Total	Commercial	Consumer	Total
Quarter ended June 30,


Balance, beginning of period	$	7,224	6,481	13,705	7,148	5,533	12,681
Provision for credit losses	1,056		783	1,839	(32)	610	578
Interest income on certain loans (2)	—		—	—	(7)	(20)	(27)
Loan charge-offs	(234)		(805)	(1,039)	(76)	(578)	(654)
Loan recoveries	34		241	275	53	257	310
Net loan charge-offs	(200)		(564)	(764)	(23)	(321)	(344)
Other	1		5	6	(4)	—	(4)
Balance, end of period	$	8,081	6,705	14,786	7,082	5,802	12,884
Six months ended June 30,
Balance, beginning of period	$	6,956	6,653	13,609	7,791	5,997	13,788
Cumulative effect from change in accounting policy (1)	27		(456)	(429)	—	—	—
Balance, beginning of period, adjusted	6,983		6,197	13,180	7,791	5,997	13,788
Provision for credit losses	1,360		1,608	2,968	(697)	500	(197)
Interest income on certain loans (2)	—		—	—	(16)	(40)	(56)
Loan charge-offs	(369)		(1,579)	(1,948)	(136)	(1,165)	(1,301)
Loan recoveries	106		474	580	142	510	652
Net loan charge-offs	(263)		(1,105)	(1,368)	6	(655)	(649)
Other	1		5	6	(2)	—	(2)
Balance, end of period	$	8,081	6,705	14,786	7,082	5,802	12,884

Credit Quality

We monitor credit quality by evaluating various attributes and utilize such information in our evaluation of the appropriateness of the ACL for loans. The following sections provide the credit quality indicators we most closely monitor. The credit quality indicators are generally based on information as of our financial statement date.

COMMERCIAL CREDIT QUALITY INDICATORS We manage a consistent process for assessing commercial loan credit quality. Commercial loans are generally subject to individual risk assessment using our internal borrower and collateral quality ratings, which is our primary credit quality indicator. Our ratings are aligned to regulatory definitions of pass and criticized categories with the criticized segmented among special mention, substandard, doubtful and loss categories.

Table 5.7 provides the outstanding balances of our commercial loan portfolio by risk category and credit quality information by origination year for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified for a borrower experiencing financial difficulty. At June 30, 2023, we had $526.6 billion and $29.0 billion of pass and criticized commercial loans, respectively. Gross charge-offs by loan class are included in the following table for the six months ended June 30, 2023, which we monitor as part of our credit risk management practices; however, charge-offs are not a primary credit quality indicator for our loan portfolio.


80			Wells Fargo & Company

Table 5.7: Commercial Loan Categories by Risk Categories and Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2023		2022	2021	2020	2019	Prior
June 30, 2023
Commercial and industrial
Pass	$	23,104	46,411	26,818	9,572	13,184	6,280	248,358	442	374,169
Criticized	475		932	1,347	599	337	793	7,359	—	11,842
Total commercial and industrial	23,579		47,343	28,165	10,171	13,521	7,073	255,717	442	386,011
Gross charge-offs (1)	46		14	19	3	5	3	158	—	248










Commercial real estate
Pass	8,771		36,283	36,258	14,186	14,228	22,240	6,103	224	138,293
Criticized	1,298		3,223	3,773	1,623	2,672	3,056	338	—	15,983
Total commercial real estate	10,069		39,506	40,031	15,809	16,900	25,296	6,441	224	154,276
Gross charge-offs	—		32	—	—	36	40	—	—	108
Lease financing
Pass	2,439		4,390	2,851	1,523	1,071	1,878	—	—	14,152
Criticized	172		335	252	174	138	111	—	—	1,182
Total lease financing	2,611		4,725	3,103	1,697	1,209	1,989	—	—	15,334
Gross charge-offs	—		3	4	3	2	1	—	—	13
Total commercial loans	$	36,259	91,574	71,299	27,677	31,630	34,358	262,158	666	555,621
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
	2022		2021	2020	2019	2018	Prior
December 31, 2022
Commercial and industrial
Pass	$	61,646	31,376	11,128	13,656	3,285	5,739	247,594	842	375,266
Criticized	872		1,244	478	505	665	532	7,244	—	11,540
Total commercial and industrial	62,518		32,620	11,606	14,161	3,950	6,271	254,838	842	386,806











Commercial real estate
Pass	38,022		38,709	16,564	16,409	10,587	16,159	6,765	150	143,365
Criticized	2,785		2,794	965	2,958	1,088	1,688	159	—	12,437
Total commercial real estate	40,807		41,503	17,529	19,367	11,675	17,847	6,924	150	155,802

Lease financing
Pass	4,543		3,336	1,990	1,427	765	1,752	—	—	13,813
Criticized	330		275	190	169	94	37	—	—	1,095
Total lease financing	4,873		3,611	2,180	1,596	859	1,789	—	—	14,908

Total commercial loans	$	108,198	77,734	31,315	35,124	16,484	25,907	261,762	992	557,516

(1) Includes charge-offs on overdrafts, which are generally charged-off at 60 days past due.


			Wells Fargo & Company			81

Note 5: Loans and Related Allowance for Credit Losses (continued)

Table 5.8 provides days past due (DPD) information for commercial loans, which we monitor as part of our credit risk

management practices; however, delinquency is not a primary credit quality indicator for commercial loans.

Table 5.8: Commercial Loan Categories by Delinquency Status


	Still accruing				Nonaccrual loans	Total commercial loans
(in millions)	Current-29 DPD		30-89 DPD	90+ DPD
June 30, 2023
Commercial and industrial	$	384,568	489	109	845	386,011


Commercial real estate	151,314		446	9	2,507	154,276
Lease financing	15,118		139	—	77	15,334
Total commercial loans	$	551,000	1,074	118	3,429	555,621
December 31, 2022
Commercial and industrial	$	384,164	1,313	583	746	386,806


Commercial real estate	153,877		833	134	958	155,802
Lease financing	14,623		166	—	119	14,908
Total commercial loans	$	552,664	2,312	717	1,823	557,516

CONSUMER CREDIT QUALITY INDICATORS We have various classes of consumer loans that present unique credit risks. Loan delinquency, Fair Isaac Corporation (FICO) credit scores and loan-to-value (LTV) for residential mortgage loans are the primary credit quality indicators that we monitor and utilize in our evaluation of the appropriateness of the ACL for the consumer loan portfolio segment. Gross charge-offs by loan class are included in the following tables for the six months ended June 30, 2023, which we monitor as part of our credit risk management practices; however, charge-offs are not a primary credit quality indicator for our loan portfolio.

Many of our loss estimation techniques used for the ACL for loans rely on delinquency-based models; therefore, delinquency is an important indicator of credit quality in the establishment of our ACL for consumer loans. Credit quality information is provided with the year of origination for term loans. Revolving loans may convert to term loans as a result of a contractual provision in the original loan agreement or if modified for a borrower experiencing financial difficulty.

We obtain FICO scores at loan origination and the scores

are generally updated at least quarterly, except in limited circumstances, including compliance with the Fair Credit Reporting Act (FCRA). FICO scores are not available for certain loan types or may not be required if we deem it unnecessary due to strong collateral and other borrower attributes.

Table 5.9 provides the outstanding balances of our residential mortgage loans by our primary credit quality indicators.

LTV refers to the ratio comparing the loan’s outstanding balance to the property’s collateral value. Combined LTV (CLTV) refers to the combination of first lien mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. We obtain LTVs and CLTVs using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties. Generally, we obtain available LTVs and CLTVs on a quarterly basis. Certain loans do not have an LTV or CLTV due to a lack of industry data availability and portfolios acquired from or serviced by other institutions.


82			Wells Fargo & Company

Table 5.9: Credit Quality Indicators for Residential Mortgage Loans by Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2023		2022	2021	2020	2019	Prior			Total
June 30, 2023
By delinquency status:
Current-29 DPD	$	7,563	47,273	64,124	36,178	20,093	64,105	9,133	6,933	255,402
30-89 DPD	5		33	47	28	24	595	44	140	916
90+ DPD	—		15	14	10	17	376	28	240	700
Government insured/guaranteed loans (1)	—		13	52	110	128	7,764	—	—	8,067
Total residential mortgage	$	7,568	47,334	64,237	36,326	20,262	72,840	9,205	7,313	265,085
By FICO:
740+	$	6,986	43,178	60,223	34,287	18,713	54,060	7,235	4,191	228,873
700-739	461		2,553	2,598	1,254	845	4,706	988	1,008	14,413
660-699	90		852	797	408	339	2,418	479	638	6,021
620-659	14		219	197	97	90	1,082	173	332	2,204
<620	2		84	74	59	47	1,206	189	452	2,113
No FICO available	15		435	296	111	100	1,604	141	692	3,394
Government insured/guaranteed loans (1)	—		13	52	110	128	7,764	—	—	8,067
Total residential mortgage	$	7,568	47,334	64,237	36,326	20,262	72,840	9,205	7,313	265,085
By LTV/CLTV:
0-80%	$	7,487	36,290	62,637	35,948	19,871	64,653	9,024	7,113	243,023
80.01-100%	70		10,770	1,462	197	193	212	140	141	13,185
>100% (2)	—		177	28	11	13	32	25	30	316
No LTV available	11		84	58	60	57	179	16	29	494
Government insured/guaranteed loans (1)	—		13	52	110	128	7,764	—	—	8,067
Total residential mortgage	$	7,568	47,334	64,237	36,326	20,262	72,840	9,205	7,313	265,085
Gross charge-offs	$	—	—	—	—	—	28	2	30	60
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2022		2021	2020	2019	2018	Prior
December 31, 2022
By delinquency status:
Current-29 DPD	$	48,581	65,705	37,289	20,851	6,190	61,680	11,031	6,913	258,240
30-89 DPD	65		66	32	33	21	683	58	159	1,117
90+ DPD	6		17	15	25	15	530	32	260	900
Government insured/guaranteed loans (1)	9		59	133	148	200	8,311	—	—	8,860
Total residential mortgage	$	48,661	65,847	37,469	21,057	6,426	71,204	11,121	7,332	269,117
By FICO:
740+	$	43,976	61,450	35,221	19,437	5,610	51,551	8,664	4,139	230,048
700-739	3,245		2,999	1,419	941	314	4,740	1,159	1,021	15,838
660-699	1,060		851	438	306	169	2,388	567	656	6,435
620-659	211		248	106	82	50	1,225	223	349	2,494
<620	59		81	44	46	28	1,323	227	466	2,274
No FICO available	101		159	108	97	55	1,666	281	701	3,168
Government insured/guaranteed loans (1)	9		59	133	148	200	8,311	—	—	8,860
Total residential mortgage	$	48,661	65,847	37,469	21,057	6,426	71,204	11,121	7,332	269,117
By LTV/CLTV:
0-80%	$	40,869	64,613	37,145	20,744	6,155	62,593	10,923	7,188	250,230
80.01-100%	7,670		1,058	112	97	30	107	109	97	9,280
>100% (2)	48		20	13	6	3	23	28	16	157
No LTV available	65		97	66	62	38	170	61	31	590
Government insured/guaranteed loans (1)	9		59	133	148	200	8,311	—	—	8,860
Total residential mortgage	$	48,661	65,847	37,469	21,057	6,426	71,204	11,121	7,332	269,117

(1)Government insured or guaranteed loans represent loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $2.8 billion and $3.2 billion at June 30, 2023, and December 31, 2022, respectively.

(2)Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.


			Wells Fargo & Company			83

Note 5: Loans and Related Allowance for Credit Losses (continued)

Table 5.10 provides the outstanding balances of our credit card loan portfolio by primary credit quality indicators.

The revolving loans converted to term loans in the credit card loan category represent credit card loans with modified terms that require payment over a specific term.

For the six months ended June 30, 2023, we had gross charge-offs in the credit card portfolio of $861 million for revolving loans and $43 million for revolving loans converted to term loans.

Table 5.10: Credit Quality Indicators for Credit Card Loans


	June 30, 2023				December 31, 2022
	Revolving loans		Revolving loans converted to term loans		Revolving loans	Revolving loans converted to term loans
(in millions)				Total			Total
By delinquency status:
Current-29 DPD	$	46,343	285	46,628	45,131	223	45,354
30-89 DPD	524		34	558	457	27	484
90+ DPD	513		18	531	441	14	455
Total credit cards	$	47,380	337	47,717	46,029	264	46,293
By FICO:
740+	$	17,730	21	17,751	16,681	19	16,700
700-739	10,894		44	10,938	10,640	37	10,677
660-699	9,653		69	9,722	9,573	55	9,628
620-659	4,826		59	4,885	4,885	45	4,930
<620	4,168		143	4,311	4,071	107	4,178
No FICO available	109		1	110	179	1	180
Total credit cards	$	47,380	337	47,717	46,029	264	46,293

Table 5.11 provides the outstanding balances of our Auto loan portfolio by primary credit quality indicators.

Table 5.11: Credit Quality Indicators for Auto Loans by Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2023		2022	2021	2020	2019	Prior			Total
June 30, 2023
By delinquency status:

Current-29 DPD	$	8,891	15,767	15,507	5,790	3,254	979	—	—	50,188
30-89 DPD	15		297	563	217	129	67	—	—	1,288
90+ DPD	1		28	52	16	9	5	—	—	111
Total auto	$	8,907	16,092	16,122	6,023	3,392	1,051	—	—	51,587





By FICO:

740+	$	5,979	7,901	6,879	2,505	1,509	421	—	—	25,194
700-739	1,426		2,480	2,416	971	540	157	—	—	7,990
660-699	917		2,223	2,249	863	444	129	—	—	6,825
620-659	368		1,531	1,613	575	289	94	—	—	4,470
<620	217		1,953	2,935	1,084	582	229	—	—	7,000
No FICO available	—		4	30	25	28	21	—	—	108
Total auto	$	8,907	16,092	16,122	6,023	3,392	1,051	—	—	51,587











Gross charge-offs	$	1	118	195	51	29	6	—	—	400
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2022		2021	2020	2019	2018	Prior			Total
December 31, 2022
By delinquency status:
Current-29 DPD	$	19,101	19,126	7,507	4,610	1,445	421	—	—	52,210
30-89 DPD	218		585	253	167	69	45	—	—	1,337
90+ DPD	23		56	22	13	4	4	—	—	122
Total auto	$	19,342	19,767	7,782	4,790	1,518	470	—	—	53,669
By FICO:
740+	$	9,361	8,233	3,193	2,146	664	166	—	—	23,763
700-739	3,090		3,033	1,287	788	238	64	—	—	8,500
660-699	2,789		2,926	1,163	641	192	58	—	—	7,769
620-659	2,021		2,156	796	421	130	47	—	—	5,571
<620	2,062		3,389	1,316	756	263	126	—	—	7,912
No FICO available	19		30	27	38	31	9	—	—	154
Total auto	$	19,342	19,767	7,782	4,790	1,518	470	—	—	53,669


84			Wells Fargo & Company

Table 5.12 provides the outstanding balances of our Other consumer loans portfolio by primary credit quality indicators.

Table 5.12: Credit Quality Indicators for Other Consumer Loans by Vintage


	Term loans by origination year							Revolving loans	Revolving loans converted to term loans
(in millions)	2023		2022	2021	2020	2019	Prior			Total
June 30, 2023
By delinquency status:
Current-29 DPD	$	2,195	2,825	870	242	151	85	21,352	117	27,837
30-89 DPD	6		28	10	2	2	3	14	5	70
90+ DPD	1		10	4	1	1	1	13	12	43
Total other consumer	$	2,202	2,863	884	245	154	89	21,379	134	27,950
By FICO:
740+	$	1,317	1,354	390	117	67	38	1,347	34	4,664
700-739	440		540	154	44	26	15	510	17	1,746
660-699	262		443	126	22	20	12	401	15	1,301
620-659	64		188	60	9	9	8	154	14	506
<620	20		131	56	10	11	8	142	17	395


No FICO available (1)	99		207	98	43	21	8	18,825	37	19,338
Total other consumer	$	2,202	2,863	884	245	154	89	21,379	134	27,950
Gross charge-offs (2)	$	54	83	28	5	5	3	30	7	215
	Term loans by origination year							Revolving loans	Revolving loans converted to term loans	Total
(in millions)	2022		2021	2020	2019	2018	Prior
December 31, 2022
By delinquency status:
Current-29 DPD	$	3,718	1,184	341	240	63	83	23,431	117	29,177
30-89 DPD	17		12	2	3	1	2	14	8	59
90+ DPD	5		5	1	1	—	1	13	14	40
Total other consumer	$	3,740	1,201	344	244	64	86	23,458	139	29,276
By FICO:
740+	$	1,908	546	174	112	21	50	1,660	43	4,514
700-739	726		216	62	44	10	13	568	18	1,657
660-699	527		177	34	33	9	8	449	19	1,256
620-659	204		81	13	14	4	5	181	11	513
<620	89		64	14	16	5	5	154	18	365


No FICO available (1)	286		117	47	25	15	5	20,446	30	20,971
Total other consumer	$	3,740	1,201	344	244	64	86	23,458	139	29,276

(1)Substantially all loans do not require a FICO score and are revolving securities-based loans originated by the Wealth and Investment Management operating segment.

(2)Includes charge-offs on overdrafts, which are generally charged-off at 60 days past due.


			Wells Fargo & Company			85

Note 5: Loans and Related Allowance for Credit Losses (continued)

NONACCRUAL LOANS Table 5.13 provides loans on nonaccrual status. Nonaccrual loans may have an ACL or a negative

allowance for credit losses from expected recoveries of amounts previously written off.

Table 5.13: Nonaccrual Loans


	Amortized cost					Recognized interest income
	Nonaccrual loans			Nonaccrual loans without related allowance for credit losses (1)		Six months ended June 30,
(in millions)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	2023	2022
Commercial and industrial	$	845	746	241	174	12	41


Commercial real estate	2,507		958	97	134	14	28
Lease financing	77		119	5	5	—	—
Total commercial	3,429		1,823	343	313	26	69


Residential mortgage	3,289		3,611	2,197	2,316	98	111
Auto	135		153	—	—	10	14
Other consumer	33		39	—	—	2	2
Total consumer	3,457		3,803	2,197	2,316	110	127
Total nonaccrual loans	$	6,886	5,626	2,540	2,629	136	196

(1)Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given the related collateral value.

LOANS IN PROCESS OF FORECLOSURE Our recorded investment in consumer mortgage loans collateralized by residential real estate property that are in process of foreclosure was $883 million and $1.0 billion at June 30, 2023, and December 31, 2022, respectively, which included $656 million and $771 million, respectively, of loans that are government insured/guaranteed. Under the Consumer Financial Protection Bureau guidelines, we do not commence the foreclosure process on residential mortgage loans until after the loan is 120 days delinquent. Foreclosure procedures and timelines vary depending on whether the property address resides in a judicial or non-judicial state. Judicial states require the foreclosure to be processed through the state’s courts while non-judicial states are processed without court intervention. Foreclosure timelines vary according to state law.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Certain loans 90 days or more past due are still accruing, because they are (1) well-secured and in the process of collection or (2) residential mortgage or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due.

Table 5.14 shows loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table 5.14: Loans 90 Days or More Past Due and Still Accruing


(in millions)	Jun 30, 2023		Dec 31, 2022
Total:	$	3,485	4,340
Less: FHA insured/VA guaranteed (1)	2,686		3,005

Total, not government insured/guaranteed	$	799	1,335
By segment and class, not government insured/guaranteed:
Commercial and industrial	$	109	583


Commercial real estate	9		134
Total commercial	118		717


Residential mortgage	25		28
Credit card	531		455
Auto	96		111
Other consumer	29		24
Total consumer	681		618
Total, not government insured/guaranteed	$	799	1,335

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


86			Wells Fargo & Company

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL DIFFICULTY We may agree to modify the contractual terms of a loan to a borrower experiencing financial difficulty.

Our commercial loan modifications may include principal forgiveness, interest rate reductions, payment delays, term extensions, or a combination of these modifications. Commercial loan term extensions have terms that vary based on the borrower’s request and are evaluated by our credit teams on an individual basis.

Our consumer loan modifications vary based upon the loan product and the modification program offered to the borrower, and may include interest rate reductions, payment delays, term extensions, principal forbearance or forgiveness, or a combination of these modifications. Generally, our consumer loan modification programs modify the loan terms to achieve payment terms that are more affordable to the borrower and, as a result, increase the likelihood of full repayment of principal and interest.

Our residential mortgage loan modification programs may offer a short-term payment deferral based upon the borrower's demonstrated hardship, up to 12 months. If additional assistance is needed after 12 months, the borrower may request another loan modification. Modifications may also include a trial payment period of three months to determine if the borrower can perform in accordance with the proposed permanent loan modification terms. Loans in a trial payment period continue to advance through delinquency status and accrue interest according to their original terms. Loans in a trial payment period are excluded from our loan modification disclosures until the borrower has successfully completed the trial period and the loan modification is formally executed. Residential mortgage loans in a trial payment period totaled $132 million at June 30, 2023.

Credit card loan modifications result in a reduction in the credit card interest rate and may be offered on a short-term or long-term basis. A short-term interest rate reduction program reduces the borrower’s interest rate for 12 months. A long-term interest rate reduction program provides a reduction of the interest rate over a fixed five-year term. During the modification period, the borrower’s revolving charge privileges are revoked.

Auto loan modifications generally include insignificant (e.g., three months or less) payment deferrals over the loan term.

The following disclosures provide information on loan modifications granted to borrowers experiencing financial difficulty in the form of principal forgiveness, interest rate reductions, other-than-insignificant (e.g., greater than three months) payment delays, term extensions or a combination of these modifications, as well as the financial effects of these modifications, and loan performance in the twelve months following the modification. Loans that both modify and are paid off or charged-off during the period, resulting in an amortized cost balance of zero at the end of the period, are not included in the disclosures below. Additionally, where amortized cost balances are presented below, accrued interest receivable is excluded. See Note 7 (Intangible Assets and Other Assets) for additional information on accrued interest receivable. Borrowers experiencing financial difficulty with modified terms mandated by a bankruptcy court are considered contractually modified loans and are included in these disclosures. These disclosures do not include loans discharged by a bankruptcy court as the only concession, which were insignificant for the second quarter and first half of 2023.

Table 5.15 presents the amortized cost of modified commercial loans by class of financing receivable and by modification type.

Table 5.15: Commercial Loan Modifications


	Modification type (1)							Modifications as a % of loan class
($ in millions)	Interest rate reduction		Payment delay	Term extension	Term extension & payment delay	All other modifications and combinations	Total
Quarter ended June 30, 2023
Commercial and industrial	$	5	21	199	4	—	229	0.06	%
Commercial real estate	—		—	148	—	1	149	0.10
Total commercial	$	5	21	347	4	1	378	0.07




Six months ended June 30, 2023
Commercial and industrial	$	9	23	226	5	1	264	0.07	%
Commercial real estate	7		1	190	—	2	200	0.13
Total commercial	$	16	24	416	5	3	464	0.09

(1)There were no principal forgiveness modifications for the quarter and six months ended June 30, 2023.

Table 5.15a presents the financial effects of modifications made to commercial loans presented by class of financing receivable.

Table 5.15a: Financial Effects of Commercial Loan Modifications



	Weighted average interest rate reduction		Weighted average payments deferred (months)	Weighted average term extension (months)
Quarter ended June 30, 2023
Commercial and industrial	13.86	%	10	6
Commercial real estate	0.71		34	7

Six months ended June 30, 2023
Commercial and industrial	12.62	%	9	7
Commercial real estate	3.47		15	10


			Wells Fargo & Company			87

Note 5: Loans and Related Allowance for Credit Losses (continued)

Commercial loans that received a modification during the second quarter and first half of 2023, and subsequently defaulted were insignificant. Defaults that occur on commercial modifications are reported based on a payment default definition of 90 days past due.

Table 5.15b provides past due information for modified commercial loans. For loan modifications that include a payment

deferral, payment performance is not included in the table below until the loan exits the deferral period and payments resume. The table also includes the amount of gross charge-offs that occurred during the second quarter and first half of 2023, inclusive of charge-offs to loans with no amortized cost remaining at period end.

Table 5.15b: Payment Performance of Commercial Loan Modifications


	By delinquency status					Gross charge-offs
(in millions)	Current-29 days past due (DPD)		30-89 DPD	90+ DPD	Total	Quarter ended	Six months ended
June 30, 2023
Commercial and industrial	$	235	3	1	239	5	15
Commercial real estate	124		76	—	200	—	—
Total commercial	$	359	79	1	439	5	15

Table 5.16 presents the amortized cost of modified consumer loans by class of financing receivable and by modification type.

Table 5.16: Consumer Loan Modifications


	Modification type
($ in millions)	Interest rate reduction		Payment delay (1)	Term extension	Interest rate reduction & term extension	Term extension & payment delay	Interest rate reduction, term extension & payment delay	All other modifications and combinations (2)	Total	Modifications as a % of loan class
Quarter ended June 30, 2023
Residential mortgage	$	3	213	17	10	25	22	1	291	0.11	%
Credit card	126		—	—	—	—	—	—	126	0.26
Auto	1		9	—	—	—	—	—	10	0.02
Other consumer	3		1	—	8	—	—	—	12	0.04
Total consumer	$	133	223	17	18	25	22	1	439	0.11






Six months ended June 30, 2023
Residential mortgage	$	7	461	41	23	54	53	3	642	0.24	%
Credit card	230		—	—	—	—	—	—	230	0.48
Auto	2		13	—	—	—	—	—	15	0.03
Other consumer	6		2	—	13	—	—	—	21	0.08
Total consumer	$	245	476	41	36	54	53	3	908	0.23

(1)Includes residential mortgage loan modifications that defer a set amount of principal to the end of the loan term.

(2)Includes principal forgiveness and other combinations of modifications.

Table 5.16a presents the financial effects of modifications made to consumer loans by class of financing receivable.

Table 5.16a: Financial Effects of Consumer Loan Modifications (1)


	Weighted average interest rate reduction		Weighted average payments deferred (months)	Weighted average term extension (years)
Quarter ended June 30, 2023
Residential mortgage (2)	1.55	%	4	9.4
Credit card	22.17		N/A	N/A
Auto	3.86		6	N/A
Other consumer	12.15		3	10.9

Six months ended June 30, 2023
Residential mortgage (2)	1.57	%	4	9.8
Credit card	21.92		N/A	N/A
Auto	3.94		6	N/A
Other consumer	11.69		4	2.7

(1)Principal forgiven was insignificant for the quarter and six months ended June 30, 2023.

(2)Excludes the financial effects of residential mortgage loans with a set amount of principal deferred to the end of the loan term. The weighted average period of principal deferred was 26.8 years for the quarter ended June 30, 2023, and 27.0 years for the six months ended June 30, 2023.


88			Wells Fargo & Company

Consumer loans that received a modification during the second quarter and first half of 2023, and subsequently defaulted during the respective period totaled $141 million and $158 million, respectively, and predominantly related to payment delay modifications in the residential mortgage loan portfolio. Defaults that occur on consumer modifications are reported based on a payment default definition of 60 days past due.

Table 5.16b provides past due information for modified consumer loans. For loan modifications that include a payment delay, payment performance is not included in the table below until the loan exits the deferral period and payments resume. The table also includes the amount of gross charge-offs that occurred during the second quarter and first half of 2023, inclusive of charge-offs to loans with no amortized cost remaining at period end.

Table 5.16b: Payment Performance of Consumer Loan Modifications


	By delinquency status					Gross charge-offs
(in millions)	Current-29 days past due (DPD)		30-89 DPD	90+ DPD	Total	Quarter ended	Six months ended
June 30, 2023
Residential mortgage (1)	$	283	45	139	467	2	3
Credit card (2)	167		36	27	230	16	20
Auto	14		1	—	15	—	—
Other consumer	18		2	1	21	1	1
Total	$	482	84	167	733	19	24

(1)Includes loans that were past due prior to entering a payment delay modification. Delinquency advancement is paused during the deferral period and resumes upon exit.

(2)Credit card loans that are past due at the time of the modification do not become current until they have three months of consecutive payment performance.

Commitments to lend additional funds on commercial loans that were modified during the six months ended June 30, 2023, were $82 million, substantially all of which were in the commercial and industrial portfolio. Commitments to lend additional funds on consumer loans that were modified during the six months ended June 30, 2023, were insignificant.

TROUBLED DEBT RESTRUCTURINGS (TDRs) In January 2023, we adopted ASU 2022-02, which eliminated the accounting and reporting guidance for TDRs. For additional information, see Note 1 (Summary of Significant Accounting Policies). The following disclosures present TDR information for the periods ended December 31, 2022, and June 30, 2022. When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR, the balance of which totaled $9.2 billion at December 31, 2022. We do not consider loan resolutions such as foreclosure or short sale to be a TDR. In addition, COVID-19-related modifications are generally not classified as TDRs due to the relief under the CARES Act and the Interagency Statement. For additional information on the TDR relief, see Note 1 (Summary of Significant Accounting Policies) in our 2022 Form 10-K.

We may require some consumer borrowers experiencing financial difficulty to make trial payments, generally for a period of three to four months, according to the terms of a planned permanent modification, to determine if they can perform according to those terms. These arrangements represent trial modifications, which we classified and accounted for as TDRs through December 31, 2022, prior to the adoption of ASU 2022-02. While loans are in trial payment programs, their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms.

Commitments to lend additional funds on loans whose terms have been modified in a TDR amounted to $434 million at December 31, 2022.

Table 5.17 summarizes our TDR modifications by primary modification type and includes the financial effects of these modifications. For those loans that modify more than once, the table reflects each modification that occurred during the period. Loans that both modify and are paid off or written-off within the period, as well as changes in recorded investment during the period for loans modified in prior periods, are not included in the table.


			Wells Fargo & Company			89

Note 5: Loans and Related Allowance for Credit Losses (continued)

Table 5.17: TDR Modifications


	Primary modification type (1)					Financial effects of modifications
($ in millions)	Principal forgiveness		Interest rate reduction	Other concessions (2)	Total	Charge- offs (3)	Weighted average interest rate reduction		Recorded investment related to interest rate reduction (4)
















Quarter ended June 30, 2022
Commercial and industrial	$	—	8	75	83	—	7.09	%	$	8


Commercial real estate	—		5	38	43	—	0.62		5
Lease financing	—		—	1	1	—	—		—
Total commercial	—		13	114	127	—	4.38		13


Residential mortgage	—		127	350	477	2	1.54		127
Credit card	—		63	—	63	—	19.23		63
Auto	—		1	8	9	2	4.02		1
Other consumer	—		4	—	4	—	11.01		4
Trial modifications (5)	—		—	41	41	—	—		—
Total consumer	—		195	399	594	4	7.47		195
Total	$	—	208	513	721	4	7.28		$	208
Six months ended June 30, 2022
Commercial and industrial	$	—	14	148	162	—	8.37	%	$	14


Commercial real estate	—		10	65	75	—	0.99		10
Lease financing	—		—	1	1	—	—		—
Total commercial	—		24	214	238	—	5.27		24


Residential mortgage	1		195	686	882	3	1.58		195
Credit card	—		133	—	133	—	19.17		133
Auto	1		4	48	53	11	4.64		4
Other consumer	—		7	1	8	—	11.31		7
Trial modifications (5)	—		—	252	252	—	—		—
Total consumer	2		339	987	1,328	14	8.73		339
Total	$	2	363	1,201	1,566	14	8.50	%	$	363

(1)Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of $132 million for the quarter ended June 30, 2022, and $250 million for the first half of 2022.

(2)Other concessions include loans with payment (principal and/or interest) deferral, loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate. The reported amounts include loans that are new TDRs that may have COVID-19-related payment deferrals and exclude COVID-19-related payment deferrals on loans previously reported as TDRs given limited current financial effects other than payment deferral.

(3)Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification.

(4)Recorded investment related to interest rate reduction reflects the effect of reduced interest rates on loans with an interest rate concession as one of their concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

(5)Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the current period.

Table 5.18 summarizes permanent modification TDRs that defaulted during the period presented within 12 months of their permanent modification date. We are reporting these defaulted TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.

Table 5.18: Defaulted TDRs


	Recorded investment of defaults
		June 30, 2022
(in millions)		Quarter ended		Six months ended
Commercial and industrial		$	3	52


Commercial real estate		8		10
Lease financing		—		—
Total commercial		11		62


Residential mortgage		51		58
Credit card		8		13
Auto		7		13
Other consumer		1		1
Total consumer		67		85
Total		$	78	147


90			Wells Fargo & Company


Note 6: Mortgage Banking Activities

Mortgage banking activities consist of residential and commercial mortgage originations, sales and servicing.

We apply the amortization method to commercial MSRs and apply the fair value method to residential MSRs. The amortized

cost of commercial MSRs was $1.1 billion and $1.2 billion, with an estimated fair value of $1.9 billion and $2.1 billion, at June 30, 2023 and 2022, respectively. Table 6.1 presents the changes in MSRs measured using the fair value method.

Table 6.1: Analysis of Changes in Fair Value MSRs


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Fair value, beginning of period	$	8,819	8,511	$	9,310	6,920
Originations/purchases	47		322	95		664
Sales and other (1)	(606)		(251)	(599)		(250)
Net additions	(559)		71	(504)		414
Changes in fair value:
Due to valuation inputs or assumptions:
Market interest rates (2)	318		949	137		2,648
Servicing and foreclosure costs (3)	1		(9)	2		(12)
Discount rates	—		31	(25)		86
Prepayment estimates and other (4)	(3)		(103)	(23)		(249)
Net changes in valuation inputs or assumptions	316		868	91		2,473
Changes due to collection/realization of expected cash flows (5)	(325)		(287)	(646)		(644)
Total changes in fair value	(9)		581	(555)		1,829
Fair value, end of period	$	8,251	9,163	$	8,251	9,163

(1)In second quarter 2022, MSRs decreased $244 million due to the sale of interest-only strips related to excess servicing cash flows from agency residential mortgage-backed securitizations.

(2)Includes prepayment rate changes as well as other valuation changes due to changes in market interest rates. To reduce exposure to changes in interest rates, MSRs are economically hedged with derivative instruments.

(3)Includes costs to service and unreimbursed foreclosure costs.

(4)Represents other changes in valuation model inputs or assumptions, including prepayment rate estimation changes that are independent of mortgage interest rate changes.

(5)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

Table 6.2 provides key weighted-average assumptions used in the valuation of residential MSRs and sensitivity of the current fair value of residential MSRs to immediate adverse changes in those assumptions. Amounts for residential MSRs include

purchased servicing rights as well as servicing rights resulting from the transfer of loans. See Note 12 (Fair Values of Assets and Liabilities) for additional information on key assumptions for residential MSRs.

Table 6.2: Assumptions and Sensitivity of Residential MSRs


($ in millions, except cost to service amounts)	Jun 30, 2023			Dec 31, 2022
Fair value of interests held	$	8,251		9,310
Expected weighted-average life (in years)	6.2			6.3

Key assumptions:
Prepayment rate assumption (1)	9.2		%	9.4
Impact on fair value from 10% adverse change	$	249		288
Impact on fair value from 25% adverse change	595			688

Discount rate assumption	9.2		%	9.1
Impact on fair value from 100 basis point increase	$	316		368
Impact on fair value from 200 basis point increase	608			707

Cost to service assumption ($ per loan)	102			102
Impact on fair value from 10% adverse change	159			171
Impact on fair value from 25% adverse change	397			427

(1)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

The sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may

result in changes in others, which might magnify or counteract the sensitivities.


			Wells Fargo & Company			91

Note 6: Mortgage Banking Activities (continued)

We present the components of our managed servicing portfolio in Table 6.3 at unpaid principal balance for loans serviced and subserviced for others and at carrying value for owned loans serviced.

Table 6.3: Managed Servicing Portfolio


(in billions)	Jun 30, 2023			Dec 31, 2022
Residential mortgage servicing:
Serviced and subserviced for others	$	637		681
Owned loans serviced	267			273
Total residential servicing	904			954
Commercial mortgage servicing:
Serviced and subserviced for others	562			577
Owned loans serviced	131			133
Total commercial servicing	693			710
Total managed servicing portfolio	$	1,597		1,664
Total serviced for others, excluding subserviced for others	$	1,162		1,246
MSRs as a percentage of loans serviced for others	0.80		%	0.84
Weighted average note rate (mortgage loans serviced for others)	4.44			4.30

At June 30, 2023, and December 31, 2022, we had servicer advances, net of an allowance for uncollectible amounts, of $2.1 billion and $2.5 billion, respectively. As the servicer of loans for others, we advance certain payments of principal, interest, taxes, insurance, and default-related expenses which are generally reimbursed within a short timeframe from cash flows from the trust, government-sponsored entities (GSEs), insurer or borrower.

The credit risk related to these advances is limited since the reimbursement is generally senior to cash payments to investors. We also advance payments of taxes and insurance for our owned

loans which are collectible from the borrower. We maintain an allowance for uncollectible amounts for advances on loans serviced for others that may not be reimbursed if the payments were not made in accordance with applicable servicing agreements or if the insurance or servicing agreements contain limitations on reimbursements. Servicing advances on owned loans are written-off when deemed uncollectible.

Table 6.4 presents the components of mortgage banking noninterest income.

Table 6.4: Mortgage Banking Noninterest Income


		Quarter ended June 30,			Six months ended June 30,
(in millions)		2023		2022	2023		2022

Contractually specified servicing fees, late charges and ancillary fees		$	547	645	$	1,114	1,280
Unreimbursed servicing costs (1)		(45)		(57)	(78)		(81)

Amortization for commercial MSRs		(62)		(64)	(123)		(123)
Changes due to collection/realization of expected cash flows (2)	(A)	(325)		(287)	(646)		(644)
Net servicing fees		115		237	267		432
Changes in fair value of MSRs due to valuation inputs or assumptions (3)	(B)	316		868	91		2,473
Net derivative gains (losses) from economic hedges (4)		(331)		(980)	(146)		(2,626)
Market-related valuation changes to MSRs, net of hedge results		(15)		(112)	(55)		(153)

Total net servicing income		100		125	212		279
Net gains on mortgage loan originations/sales (5)		102		162	222		701
Total mortgage banking noninterest income		$	202	287	$	434	980
Total changes in fair value of MSRs carried at fair value	(A)+(B)	$	(9)	581	$	(555)	1,829

(1)Includes costs associated with foreclosures, unreimbursed interest advances to investors, other interest costs and transaction costs associated with sales of MSRs.

(2)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

(3)Refer to the analysis of changes in fair value MSRs presented in Table 6.1 in this Note for more detail.

(4)See Note 11 (Derivatives) for additional information on economic hedges.

(5)Includes net gains (losses) of $89 million and $50 million in the second quarter and first half of 2023, respectively, and $710 million and $2.0 billion in the second quarter and first half of 2022, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.


92			Wells Fargo & Company


Note 7: Intangible Assets and Other Assets

Table 7.1 presents the gross carrying value of intangible assets and accumulated amortization.

Table 7.1: Intangible Assets


	June 30, 2023				December 31, 2022
(in millions)	Gross carrying value		Accumulated amortization	Net carrying value	Gross carrying value	Accumulated amortization	Net carrying value
Amortized intangible assets:
MSRs	$	4,989	(3,895)	1,094	4,942	(3,772)	1,170
Customer relationship and other intangibles	773		(628)	145	754	(602)	152
Total amortized intangible assets	$	5,762	(4,523)	1,239	5,696	(4,374)	1,322
Unamortized intangible assets:
MSRs (carried at fair value)	$	8,251			9,310
Goodwill	25,175				25,173

Table 7.2 provides the current year and estimated future amortization expense for amortized intangible assets. We based our projections of amortization expense shown below on existing

asset balances at June 30, 2023. Future amortization expense may vary from these projections.

Table 7.2: Amortization Expense for Intangible Assets


(in millions)	Amortized MSRs		Customer relationship and other intangibles	Total
Six months ended June 30, 2023 (actual)	$	123	26	149


Estimate for the remainder of 2023	$	117	26	143


Estimate for year ended December 31,
2024	213		43	256
2025	184		35	219
2026	148		29	177
2027	117		2	119
2028	97		2	99

Table 7.3 shows the allocation of goodwill to our reportable operating segments.

Table 7.3: Goodwill


(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Consolidated Company




December 31, 2022	$	16,418	2,931	5,375	344	105	25,173

Foreign currency translation	—		2	—	—	—	2


June 30, 2023	$	16,418	2,933	5,375	344	105	25,175

Table 7.4 presents the components of other assets.

Table 7.4: Other Assets


(in millions)	Jun 30, 2023		Dec 31, 2022
Corporate/bank-owned life insurance (1)	$	20,889	20,807
Accounts receivable (2)	30,599		23,646
Interest receivable:
AFS and HTM debt securities	1,667		1,572
Loans	3,638		3,470
Trading and other	829		767
Operating lease assets (lessor)	5,510		5,790
Operating lease ROU assets (lessee)	3,659		3,837
Other (3)(4)	16,124		15,949
Total other assets	$	82,915	75,838

(1)Corporate/bank-owned life insurance is recorded at cash surrender value.

(2)Primarily includes derivatives clearinghouse receivables, trade date receivables, and servicer advances, which are recorded at amortized cost.

(3)Primarily includes income tax receivables, prepaid expenses, foreclosed assets, and private equity and venture capital investments in consolidated portfolio companies.

(4)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).


			Wells Fargo & Company			93


Note 8: Leasing Activity

The information below provides a summary of our leasing activities as a lessor and lessee. See Note 8 (Leasing Activity) in our 2022 Form 10-K for additional information about our leasing activities.

As a Lessor

Noninterest income on leases, included in Table 8.1, is included in other noninterest income on our consolidated statement of income. Lease expense, included in other noninterest expense on our consolidated statement of income, was $180 million and $185 million for the quarters ended June 30, 2023 and 2022, respectively, and $357 million and $373 million for the first half of 2023 and 2022, respectively.

Table 8.1: Leasing Revenue


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Interest income on lease financing	$	176	152	$	345	304
Other lease revenue:
Variable revenue on lease financing	24		27	49		57
Fixed revenue on operating leases	245		242	494		487
Variable revenue on operating leases	13		14	24		29
Other lease-related revenue (1)	25		50	87		87
Noninterest income on leases	307		333	654		660
Total leasing revenue	$	483	485	$	999	964

(1) Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.

As a Lessee

Substantially all of our leases are operating leases. Table 8.2 presents balances for our operating leases.

Table 8.2: Operating Lease Right-of-Use (ROU) Assets and Lease Liabilities


(in millions)	Jun 30, 2023		Dec 31, 2022
ROU assets	$	3,659	3,837
Lease liabilities	4,262		4,465

Table 8.3 provides the composition of our lease costs, which are predominantly included in net occupancy expense.

Table 8.3: Lease Costs


	Quarter ended June 30,			Six months ended June 30,
(in millions)	2023		2022	2023		2022
Fixed lease expense – operating leases	$	248	253	$	499	506
Variable lease expense	70		70	141		143
Other (1)	(10)		(8)	(26)		(18)
Total lease costs	$	308	315	$	614	631

(1)Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.


94			Wells Fargo & Company


Note 9: Preferred Stock

We are authorized to issue 20 million shares of preferred stock, without par value. Outstanding preferred shares rank senior to common shares both as to the payment of dividends and liquidation preferences but have no general voting rights. All outstanding preferred stock with a liquidation preference value, except for Series L Preferred Stock, may be redeemed for the liquidation preference value, plus any accrued but unpaid dividends, on any dividend payment date on or after the earliest redemption date for that series. Additionally, these same series of preferred stock may be redeemed following a “regulatory capital treatment event”, as described in the terms of each series.

Capital actions, including redemptions of our preferred stock, may be subject to regulatory approval or conditions.

In addition, we are authorized to issue 4 million shares of preference stock, without par value. We have not issued any preference shares under this authorization. If issued, preference shares would be limited to one vote per share.

In July 2023, we issued $1.725 billion of our Preferred Stock, Series EE.

Table 9.1 summarizes information about our preferred stock.

Table 9.1: Preferred Stock


		June 30, 2023					December 31, 2022
(in millions, except shares)	Earliest redemption date	Shares authorized and designated	Shares issued and outstanding	Liquidation preference value		Carrying value	Shares authorized and designated	Shares issued and outstanding	Liquidation preference value		Carrying value
DEP Shares
Dividend Equalization Preferred Shares (DEP)	Currently redeemable	97,000	96,546	$	—	—	97,000	96,546	$	—	—
Preferred Stock:
Series L (1)
7.50% Non-Cumulative Perpetual Convertible Class A	—	4,025,000	3,967,981	3,968		3,200	4,025,000	3,967,986	3,968		3,200
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A	9/15/2023	69,000	69,000	1,725		1,725	69,000	69,000	1,725		1,725
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A	3/15/2024	34,500	33,600	840		840	34,500	33,600	840		840
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A	6/15/2024	80,000	80,000	2,000		2,000	80,000	80,000	2,000		2,000
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A	6/15/2025	80,000	80,000	2,000		2,000	80,000	80,000	2,000		2,000
Series Y
5.625% Non-Cumulative Perpetual Class A	Currently redeemable	27,600	27,600	690		690	27,600	27,600	690		690
Series Z
4.75% Non-Cumulative Perpetual Class A	3/15/2025	80,500	80,500	2,013		2,013	80,500	80,500	2,013		2,013
Series AA
4.70% Non-Cumulative Perpetual Class A	12/15/2025	46,800	46,800	1,170		1,170	46,800	46,800	1,170		1,170
Series BB
3.90% Fixed-Reset Non-Cumulative Perpetual Class A	3/15/2026	140,400	140,400	3,510		3,510	140,400	140,400	3,510		3,510
Series CC
4.375% Non-Cumulative Perpetual Class A	3/15/2026	46,000	42,000	1,050		1,050	46,000	42,000	1,050		1,050
Series DD
4.25% Non-Cumulative Perpetual Class A	9/15/2026	50,000	50,000	1,250		1,250	50,000	50,000	1,250		1,250
Total		4,776,800	4,714,427	$	20,216	19,448	4,776,800	4,714,432	$	20,216	19,448

(1)At the option of the holder, each share of Series L Preferred Stock may be converted at any time into 6.3814 shares of common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments. If converted within 30 days of certain liquidation or change of control events, the holder may receive up to 16.5916 additional shares, or, at our option, receive an equivalent amount of cash in lieu of common stock. We may convert some or all of the Series L Preferred Stock into shares of common stock if the closing price of our common stock exceeds 130 percent of the conversion price of the Series L Preferred Stock for 20 trading days during any period of 30 consecutive trading days. We declared dividends of $74 million on Series L Preferred Stock for both quarters ended June 30, 2023, and June 30, 2022.


			Wells Fargo & Company			95


Note 10: Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory, governmental, arbitration, and other proceedings or investigations concerning matters arising from the conduct of our business activities, and many of those proceedings and investigations expose Wells Fargo to potential financial loss or other adverse consequences. These proceedings and investigations include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate-related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information to or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

We establish accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. For such accruals, we record the amount we consider to be the best estimate within a range of potential losses that are both probable and estimable; however, if we cannot determine a best estimate, then we record the low end of the range of those potential losses. There can be no assurance as to the ultimate outcome of legal actions, including the matters described below, and the actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.

AUTOMOBILE LENDING MATTERS On April 20, 2018, the Company entered into consent orders with the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) to resolve, among other things, investigations by the agencies into the Company’s compliance risk management program and its past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. Shareholders filed a putative securities fraud class action against the Company and its executive officers alleging material misstatements and omissions of CPI-related information in the Company’s public disclosures. In January 2020, the court dismissed this action as to all defendants except the Company and a former executive officer and limited the action to two alleged misstatements. On May 1, 2023, the court granted preliminary approval of an agreement pursuant to which the Company agreed to pay $300 million to resolve this action. Additionally, a number of other lawsuits were filed by non-governmental parties seeking damages or other remedies related to these CPI policies and related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements. As previously disclosed, the Company entered into various settlements to resolve these lawsuits, while others were dismissed. In addition, federal and state government agencies, including the CFPB, have undertaken formal or informal inquiries, investigations, or examinations regarding these and other issues related to the origination, servicing, and collection of consumer auto loans, including related insurance products. On December 20, 2022, the Company entered into a consent order with the CFPB to resolve the CFPB’s investigations related to automobile lending, consumer deposit accounts, and mortgage lending. The consent order requires, among other things, remediation to customers and the payment of a $1.7 billion civil penalty to the CFPB. As previously disclosed, the Company entered into an agreement to resolve investigations by state attorneys general.

COMPANY 401(K) PLAN MATTERS Federal government agencies, including the United States Department of Labor (Department of Labor), have undertaken reviews of certain transactions associated with the Employee Stock Ownership Plan feature of the Company’s 401(k) plan, including the manner in which the 401(k) plan purchased certain securities used in connection with the Company’s contributions to the 401(k) plan. As previously disclosed, the Company entered into an agreement to resolve the Department of Labor’s review. On September 26, 2022, participants in the Company’s 401(k) plan filed a putative class action in the United States District Court for the District of Minnesota alleging that the Company violated the Employee Retirement Income Security Act of 1974 in connection with certain of these transactions.

CONSENT ORDER DISCLOSURE LITIGATION Wells Fargo shareholders have brought a putative securities fraud class action in the United States District Court for the Southern District of New York alleging that the Company and certain of its current and former executive officers and directors made false or misleading statements regarding the Company’s efforts to comply with the February 2018 consent order with the Federal Reserve Board and the April 2018 consent orders with the CFPB and OCC. On May 16, 2023, the court granted preliminary approval of an agreement pursuant to which the Company agreed to pay $1.0 billion to resolve this action. Allegations related to the Company’s efforts to comply with these three consent orders are also among the subjects of shareholder derivative lawsuits filed in California state and federal court.

HIRING PRACTICES MATTERS Government agencies, including the United States Department of Justice and the United States Securities and Exchange Commission, have undertaken formal or informal inquiries or investigations regarding the Company’s hiring practices related to diversity. A putative securities fraud class action has also been filed in the United States District Court for the Northern District of California alleging that the Company and certain of its executive officers made false or misleading statements about the Company’s hiring practices related to diversity. Allegations related to the Company’s hiring practices related to diversity are also among the subjects of shareholder derivative lawsuits filed in the United States District Court for the Northern District of California and in California state court.

INTERCHANGE LITIGATION Plaintiffs representing a class of merchants have filed putative class actions, and individual merchants have filed individual actions, against Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A., and Wachovia Corporation regarding the interchange fees associated with Visa and MasterCard payment card transactions. Visa, MasterCard, and several other banks and bank holding companies are also named as defendants in these actions. These actions have been consolidated in the United States District Court for the Eastern District of New York. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard, and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other


96			Wells Fargo & Company

defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard, and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class action and reached a separate settlement in principle of the consolidated individual actions. The settlement payments to be made by all defendants in the consolidated class and individual actions totaled approximately $6.6 billion before reductions applicable to certain merchants opting out of the settlement. The class settlement also provided for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The district court granted final approval of the settlement, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Other merchants opted out of the settlement and are pursuing several individual actions. On June 30, 2016, the Second Circuit vacated the settlement agreement and reversed and remanded the consolidated action to the United States District Court for the Eastern District of New York for further proceedings. On November 23, 2016, prior class counsel filed a petition to the United States Supreme Court, seeking review of the reversal of the settlement by the Second Circuit, and the Supreme Court denied the petition on March 27, 2017. On November 30, 2016, the district court appointed lead class counsel for a damages class and an equitable relief class. The parties have entered into a settlement agreement to resolve the damages class claims pursuant to which defendants will pay a total of approximately $6.2 billion, which includes approximately $5.3 billion of funds remaining from the 2012 settlement and $900 million in additional funding. The Company’s allocated responsibility for the additional funding is approximately $94.5 million. The court granted final approval of the settlement on December 13, 2019, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. On March 15, 2023, the Second Circuit affirmed the damages class settlement. Settlement objector merchants filed a petition for a rehearing by the Second Circuit en banc, which was denied. On September 27, 2021, the district court granted the plaintiffs’ motion for class certification in the equitable relief case. Several of the opt-out and direct action litigations have been settled while others remain pending.

RECORD-KEEPING INVESTIGATIONS The United States Securities and Exchange Commission and the United States Commodity Futures Trading Commission have undertaken investigations regarding the Company’s compliance with records retention requirements relating to business communications sent over unapproved electronic messaging channels. The Company is in resolution discussions with these agencies, although there can be no assurance as to the outcome of these discussions.

RMBS TRUSTEE LITIGATION In December 2014, Phoenix Light SF Limited (Phoenix Light) and certain related entities filed a complaint in the United States District Court for the Southern District of New York alleging claims against Wells Fargo Bank, N.A., in its capacity as trustee for a number of residential mortgage-backed securities (RMBS) trusts. Complaints raising similar allegations have been filed by Commerzbank AG in the Southern District of New York, IKB International and IKB Deutsche Industriebank in New York state court, and Park Royal I LLC and Park Royal II LLC in New York state court. In each case, the plaintiffs allege that Wells Fargo Bank, N.A., as trustee,

caused losses to investors, and plaintiffs assert causes of action based upon, among other things, the trustee’s alleged failure to notify and enforce repurchase obligations of mortgage loan sellers for purported breaches of representations and warranties, notify investors of alleged events of default, and abide by appropriate standards of care following alleged events of default. In July 2022, the district court dismissed Phoenix Light’s claims and certain of the claims asserted by Commerzbank AG, and subsequently entered judgment in each case in favor of Wells Fargo Bank, N.A. In August 2022, Phoenix Light and Commerzbank AG each appealed the district court’s decision to the United States Court of Appeals for the Second Circuit. Phoenix Light dismissed its appeal in May 2023, terminating its case. The Company previously settled two class actions filed by institutional investors and an action filed by the National Credit Union Administration with similar allegations.

SEMINOLE TRIBE TRUSTEE LITIGATION The Seminole Tribe of Florida filed a complaint in Florida state court alleging that Wells Fargo, as trustee, charged excess fees in connection with the administration of a minor’s trust and failed to invest the assets of the trust prudently. The complaint was later amended to include three individual current and former beneficiaries as plaintiffs and to remove the Tribe as a party to the case.

OUTLOOK As described above, the Company establishes accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. The high end of the range of reasonably possible losses in excess of the Company’s accrual for probable and estimable losses was approximately $1.5 billion as of June 30, 2023. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established accrual or the range of reasonably possible loss. Based on information currently available, advice of counsel, available insurance coverage, and established reserves, Wells Fargo believes that the eventual outcome of the actions against Wells Fargo and/or its subsidiaries will not, individually or in the aggregate, have a material adverse effect on Wells Fargo’s consolidated financial condition. However, it is possible that the ultimate resolution of a matter, if unfavorable, may be material to Wells Fargo’s results of operations for any particular period.


			Wells Fargo & Company			97


Note 11: Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. We designate certain derivatives as hedging instruments in qualifying hedge accounting relationships (fair value or cash flow hedges). Our remaining derivatives consist of economic hedges that do not qualify for hedge accounting and derivatives held for customer accommodation trading or other purposes. For additional information on our derivatives activities, see Note 14 (Derivatives) in our 2022 Form 10-K.

Table 11.1 presents the total notional or contractual amounts and fair values for our derivatives. Derivative transactions can be measured in terms of the notional amount, but this amount is not recorded on our consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. The notional amount is generally not exchanged, but is used only as the basis on which derivative cash flows are determined.

Table 11.1: Notional or Contractual Amounts and Fair Values of Derivatives


	June 30, 2023					December 31, 2022
	Notional or contractual amount		Fair value			Notional or contractual amount	Fair value
			Derivative assets		Derivative liabilities		Derivative assets	Derivative liabilities
(in millions)
Derivatives designated as hedging instruments
Interest rate contracts	$	313,176	615		562	263,876	670	579
Commodity contracts	4,629		58		39	1,681	9	25
Foreign exchange contracts	4,875		71		485	15,544	161	1,015
Total derivatives designated as qualifying hedging instruments			744		1,086		840	1,619
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts	64,868		348		204	65,727	410	253
Equity contracts (1)	4,856		149		45	3,326	—	242
Foreign exchange contracts	33,940		177		410	38,139	490	968
Credit contracts	360		16		—	290	14	—
Subtotal			690		659		914	1,463
Customer accommodation trading and other derivatives:
Interest rate contracts	13,385,477		35,103		41,032	10,156,300	40,006	42,641
Commodity contracts	85,438		3,110		2,565	96,001	5,991	3,420
Equity contracts	402,439		12,632		13,288	390,427	9,573	8,012
Foreign exchange contracts	1,681,353		16,244		17,797	1,475,224	21,562	24,703
Credit contracts	53,003		63		25	45,359	52	36

Subtotal			67,152		74,707		77,184	78,812
Total derivatives not designated as hedging instruments			67,842		75,366		78,098	80,275
Total derivatives before netting			68,586		76,452		78,938	81,894
Netting			(50,596)		(55,021)		(56,164)	(61,827)
Total			$	17,990	21,431		22,774	20,067

(1) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

Balance Sheet Offsetting

We execute substantially all of our derivative transactions under master netting arrangements. Where legally enforceable, these master netting arrangements give the ability, in the event of default by the counterparty, to liquidate securities held as collateral and to offset receivables and payables with the same counterparty. We reflect all derivative balances and related cash collateral subject to enforceable master netting arrangements on a net basis on our consolidated balance sheet. We do not net non-cash collateral that we receive or pledge against derivative balances on our consolidated balance sheet.

For disclosure purposes, we present “Total Derivatives, net” which represents the aggregate of our net exposure to each counterparty after considering the balance sheet netting

adjustments and any non-cash collateral. We manage derivative exposure by monitoring the credit risk associated with each counterparty using counterparty-specific credit risk limits, using master netting arrangements and obtaining collateral.

Table 11.2 provides information on the fair values of derivative assets and liabilities subject to enforceable master netting arrangements, the balance sheet netting adjustments and the resulting net fair value amount recorded on our consolidated balance sheet, as well as the non-cash collateral associated with such arrangements. In addition to the netting amounts included in the table, we also have balance sheet netting related to resale and repurchase agreements that are disclosed within Note 15 (Pledged Assets and Collateral).


98			Wells Fargo & Company

Table 11.2: Offsetting of Derivative Assets and Liabilities


	June 30, 2023			December 31, 2022
(in millions)	Derivative Assets		Derivative Liabilities	Derivative Assets	Derivative Liabilities
Interest rate contracts
Over-the-counter (OTC)	$	34,048	37,461	37,000	37,598
OTC cleared	389		497	649	845
Exchange traded	255		283	262	193
Total interest rate contracts	34,692		38,241	37,911	38,636
Commodity contracts
OTC	2,379		1,967	4,833	2,010
Exchange traded	588		501	876	1,134
Total commodity contracts	2,967		2,468	5,709	3,144
Equity contracts
OTC	6,130		8,739	4,269	4,475
Exchange traded	3,731		2,939	3,742	2,409
Total equity contracts	9,861		11,678	8,011	6,884
Foreign exchange contracts
OTC	16,316		17,756	21,537	26,127

Total foreign exchange contracts	16,316		17,756	21,537	26,127
Credit contracts
OTC	54		16	39	22

Total credit contracts	54		16	39	22
Total derivatives subject to enforceable master netting arrangements, gross	63,890		70,159	73,207	74,813
Less: Gross amounts offset
Counterparty netting (1)	(45,600)		(45,611)	(49,115)	(49,073)
Cash collateral netting	(4,996)		(9,410)	(7,049)	(12,754)
Total derivatives subject to enforceable master netting arrangements, net	13,294		15,138	17,043	12,986
Derivatives not subject to enforceable master netting arrangements (2)	4,696		6,293	5,731	7,081
Total derivatives recognized in consolidated balance sheet, net	17,990		21,431	22,774	20,067
Non-cash collateral	(2,369)		(3,502)	(3,517)	(582)
Total Derivatives, net	$	15,621	17,929	19,257	19,485

(1)Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in our consolidated balance sheet, including portfolio level counterparty valuation adjustments related to customer accommodation and other trading derivatives. Counterparty valuation adjustments related to derivative assets were $305 million and $372 million and debit valuation adjustments related to derivative liabilities were $316 million and $331 million as of June 30, 2023, and December 31, 2022, respectively, and were primarily related to interest rate contracts.

(2)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

Fair Value and Cash Flow Hedges

For fair value hedges, we use interest rate swaps to convert certain of our fixed-rate long-term debt and time certificates of deposit to floating rates to hedge our exposure to interest rate risk. We also enter into cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge our exposure to foreign currency risk and interest rate risk associated with the issuance of non-U.S. dollar denominated long-term debt. We also enter into futures contracts, forward contracts, and swap contracts to hedge our exposure to the price risk of physical commodities included in Other Assets. In addition, we use interest rate swaps, cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge against changes in fair value of certain investments in available-for-sale (AFS) debt securities due to changes in interest rates, foreign currency rates, or both. For certain fair value hedges of interest rate risk, we use the portfolio layer method to hedge stated amounts of closed portfolios of AFS debt securities. For certain fair value hedges of foreign currency risk, changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income

(OCI). See Note 20 (Other Comprehensive Income) for the amounts recognized in other comprehensive income.

For cash flow hedges, we use interest rate swaps to hedge the variability in interest payments received on certain interest-earning deposits with banks and certain floating-rate commercial loans, and interest paid on certain floating-rate debt due to changes in the contractually specified interest rate. We also use cross-currency swaps to hedge variability in interest payments on fixed-rate foreign currency-denominated long-term debt due to changes in foreign exchange rates.

We estimate $947 million pre-tax of deferred net losses related to cash flow hedges in OCI at June 30, 2023, will be reclassified into net interest income during the next twelve months. For cash flow hedges as of June 30, 2023, we are hedging our interest rate and foreign currency exposure to the variability of future cash flows for all forecasted transactions for a maximum of 9 years. For additional information on our accounting hedges, see Note 1 (Summary of Significant Accounting Policies) in our 2022 Form 10-K.

Table 11.3 and Table 11.4 show the net gains (losses) related to derivatives in cash flow and fair value hedging relationships, respectively.


			Wells Fargo & Company			99

Note 11: Derivatives (continued)

Table 11.3: Gains (Losses) Recognized on Cash Flow Hedging Relationships


	Net interest income				Total recorded in net income	Total recorded in OCI
(in millions)	Loans		Other interest income	Long-term debt	Derivative gains (losses)	Derivative gains (losses)
Quarter ended June 30, 2023
Total amounts presented in the consolidated statement of income and other comprehensive income	$	14,115	2,390	(2,693)	N/A	(811)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(68)		(115)	—	(183)	183
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(1,000)
Total gains (losses) (pre-tax) on interest rate contracts	(68)		(115)	—	(183)	(817)
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—		—	(2)	(2)	2
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(1)
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(2)	(2)	1
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(68)	(115)	(2)	(185)	(816)
Quarter ended June 30, 2022
Total amounts presented in the consolidated statement of income and other comprehensive income	$	8,116	419	(1,011)	N/A	(111)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	11		34	—	45	(45)
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(101)
Total gains (losses) (pre-tax) on interest rate contracts	11		34	—	45	(146)
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—		—	(2)	(2)	2
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(13)
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(2)	(2)	(11)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	11	34	(2)	43	(157)

Six months ended June 30, 2023
Total amounts presented in the consolidated statement of income and other comprehensive income	$	27,433	4,378	(5,204)	N/A	(308)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(121)		(173)	—	(294)	294
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(617)
Total gains (losses) (pre-tax) on interest rate contracts	(121)		(173)	—	(294)	(323)
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—		—	(4)	(4)	4
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	—
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(4)	(4)	4
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(121)	(173)	(4)	(298)	(319)

Six months ended June 30, 2022
Total amounts presented in the consolidated statement of income and other comprehensive income	$	15,334	509	(1,772)	N/A	(84)
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	(5)		38	—	33	(33)
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(149)
Total gains (losses) (pre-tax) on interest rate contracts	(5)		38	—	33	(182)
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income	—		—	(4)	(4)	4
Net unrealized gains (losses) (pre-tax) recognized in OCI	N/A		N/A	N/A	N/A	(16)
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(4)	(4)	(12)
Total gains (losses) (pre-tax) recognized on cash flow hedges	$	(5)	38	(4)	29	(194)


100			Wells Fargo & Company

Table 11.4: Gains (Losses) Recognized on Fair Value Hedging Relationships


	Net interest income				Noninterest income		Total recorded in net income		Total recorded in OCI
(in millions)	Debt securities		Deposits	Long-term debt		Other		Derivative gains (losses)		Derivative gains (losses)
Quarter ended June 30, 2023
Total amounts presented in the consolidated statement of income and other comprehensive income	$	4,037	(3,805)	(2,693)		412		N/A		(811)
Interest contracts
Amounts related to cash flows on derivatives	331		(82)	(850)		—		(601)		N/A
Recognized on derivatives	937		(276)	(2,587)		—		(1,926)		—
Recognized on hedged items	(937)		278	2,575		—		1,916		N/A
Total gains (losses) (pre-tax) on interest rate contracts	331		(80)	(862)		—		(611)		—
Foreign exchange contracts
Amounts related to cash flows on derivatives	—		—	(48)		—		(48)		N/A
Recognized on derivatives	—		—	(18)		(8)		(26)		5
Recognized on hedged items	—		—	14		8		22		N/A
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(52)		—		(52)		5
Commodity contracts
Recognized on derivatives	—		—	—		109		109		—
Recognized on hedged items	—		—	—		(90)		(90)		N/A
Total gains (losses) (pre-tax) on commodity contracts	—		—	—		19		19		—
Total gains (losses) (pre-tax) recognized on fair value hedges	$	331	(80)	(914)		19		(644)		5
Quarter ended June 30, 2022
Total amounts presented in the consolidated statement of income and other comprehensive income	$	2,702	(158)	(1,011)		566		N/A		(111)
Interest contracts
Amounts related to cash flows on derivatives	(45)		23	336		—		314		N/A
Recognized on derivatives	768		(70)	(5,202)		—		(4,504)		—
Recognized on hedged items	(753)		68	5,128		—		4,443		N/A
Total gains (losses) (pre-tax) on interest rate contracts	(30)		21	262		—		253		—
Foreign exchange contracts
Amounts related to cash flows on derivatives	—		—	(21)		—		(21)		N/A
Recognized on derivatives	—		—	(315)		(929)		(1,244)		46
Recognized on hedged items	—		—	333		898		1,231		N/A
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(3)		(31)		(34)		46
Commodity contracts
Recognized on derivatives	—		—	—		228		228		—
Recognized on hedged items	—		—	—		(217)		(217)		N/A
Total gains (losses) (pre-tax) on commodity contracts	—		—	—		11		11		—
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(30)	21	259		(20)		230		46

(continued on following page)


			Wells Fargo & Company			101

Note 11: Derivatives (continued)

(continued from previous page)


	Net interest income				Noninterest income		Total recorded in net income		Total recorded in OCI
(in millions)	Debt securities		Deposits	Long-term debt		Other		Derivative gains (losses)		Derivative gains (losses)
Six months ended June 30, 2023

Total amounts presented in the consolidated statement of income and other comprehensive income	$	7,820	(6,566)	(5,204)		992		N/A		(308)
Interest contracts
Amounts related to cash flows on derivatives	600		(112)	(1,532)		—		(1,044)		N/A
Recognized on derivatives	237		(171)	(229)		—		(163)		—
Recognized on hedged items	(245)		170	215		—		140		N/A
Total gains (losses) (pre-tax) on interest rate contracts	592		(113)	(1,546)		—		(1,067)		—
Foreign exchange contracts
Amounts related to cash flows on derivatives	—		—	(151)		—		(151)		N/A
Recognized on derivatives	—		—	34		27		61		11
Recognized on hedged items	—		—	(46)		(21)		(67)		N/A
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(163)		6		(157)		11
Commodity contracts
Recognized on derivatives	—		—	—		97		97		—
Recognized on hedged items	—		—	—		(65)		(65)		N/A
Total gains (losses) (pre-tax) on commodity contracts	—		—	—		32		32		—
Total gains (losses) (pre-tax) recognized on fair value hedges	$	592	(113)	(1,709)		38		(1,192)		11
Six months ended June 30, 2022

Total amounts presented in the consolidated statement of income and other comprehensive income	$	5,265	(241)	(1,772)		1,258		N/A		(84)
Interest contracts
Amounts related to cash flows on derivatives	(86)		64	817		—		795		N/A
Recognized on derivatives	2,030		(215)	(12,071)		—		(10,256)		—
Recognized on hedged items	(2,001)		211	11,941		—		10,151		N/A
Total gains (losses) (pre-tax) on interest rate contracts	(57)		60	687		—		690		—
Foreign exchange contracts
Amounts related to cash flows on derivatives	—		—	(17)		—		(17)		N/A
Recognized on derivatives	—		—	(771)		(1,171)		(1,942)		110
Recognized on hedged items	—		—	778		1,139		1,917		N/A
Total gains (losses) (pre-tax) on foreign exchange contracts	—		—	(10)		(32)		(42)		110
Commodity contracts
Recognized on derivatives	—		—	—		136		136		—
Recognized on hedged items	—		—	—		(130)		(130)		N/A
Total gains (losses) (pre-tax) on commodity contracts	—		—	—		6		6		—
Total gains (losses) (pre-tax) recognized on fair value hedges	$	(57)	60	677		(26)		654		110


102			Wells Fargo & Company

Table 11.5 shows the carrying amount and associated cumulative basis adjustment related to the application of hedge accounting that is included in the carrying amount of hedged assets and liabilities in fair value hedging relationships.

Table 11.5: Hedged Items in Fair Value Hedging Relationships


	Hedged items currently designated			Hedged items no longer designated
(in millions)	Carrying amount of assets/(liabilities) (1)(2)		Hedge accounting basis adjustment assets/(liabilities) (3)	Carrying amount of assets/(liabilities) (2)	Hedge accounting basis adjustment assets/(liabilities)
June 30, 2023
Available-for-sale debt securities (4)(5)	$	52,703	(3,186)	15,113	602
Other assets	2,013		(49)	—	—
Deposits	(65,415)		374	(10)	—
Long-term debt	(129,708)		13,970	(34)	3
December 31, 2022
Available-for-sale debt securities (4)	$	39,423	(3,859)	16,100	722
Other assets	1,663		38	—	—
Deposits	(41,687)		205	(10)	—
Long-term debt	(130,997)		13,862	(5)	—

(1)Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded $673 million and $739 million for available-for-sale debt securities as of June 30, 2023, and December 31, 2022, respectively. There was no carrying amount related to long-term debt at both June 30, 2023, and December 31, 2022.

(2)Represents the full carrying amount of the hedged asset or liability item as of the balance sheet date, except for circumstances in which only a portion of the asset or liability was designated as the hedged item in which case only the portion designated is presented.

(3)The balance includes $35 million and $802 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of June 30, 2023, and $39 million and $334 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of December 31, 2022, on terminated hedges whereby the hedged items have subsequently been re-designated into existing hedges.

(4)Carrying amount represents the amortized cost.

(5)The balance includes cumulative basis adjustments of $(224) million for hedged items currently designated as of June 30, 2023, related to certain AFS debt securities designated as the hedged item in a fair value hedge using the portfolio layer method. At June 30, 2023, the aggregated designated hedged items using the portfolio layer method had a carrying amount of $23.0 billion from closed portfolios of financial assets totaling $26.1 billion.

Derivatives Not Designated as Hedging Instruments

Derivatives not designated as hedging instruments include economic hedges and derivatives entered into for customer accommodation trading purposes.

We use economic hedge derivatives to manage our exposure to interest rate risk, equity price risk, foreign currency risk, and credit risk. We also use economic hedge derivatives to mitigate the periodic earnings volatility caused by mismatches between the changes in fair value of the hedged item and hedging instrument recognized on our fair value accounting hedges.

Changes in the fair values of derivatives used to economically hedge the deferred compensation plan are reported in personnel expense.

For additional information on our derivatives activities, see Note 14 (Derivatives) in our 2022 Form 10-K.


			Wells Fargo & Company			103

Note 11: Derivatives (continued)

Table 11.6 shows the net gains (losses), recognized by income statement lines, related to derivatives not designated as hedging instruments.

Table 11.6: Gains (Losses) on Derivatives Not Designated as Hedging Instruments


	Noninterest income					Noninterest expense
(in millions)	Mortgage banking		Net gains (losses) on trading and securities	Other	Total		Personnel expense
Quarter ended June 30, 2023
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(242)	—	(98)	(340)		—
Equity contracts	—		—	(81)	(81)		(172)
Foreign exchange contracts	—		—	(327)	(327)		—
Credit contracts	—		—	—	—		—
Subtotal	(242)		—	(506)	(748)		(172)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	(9)		499	—	490		—
Commodity contracts	—		87	—	87		—
Equity contracts	—		(1,440)	(119)	(1,559)		—
Foreign exchange contracts	—		893	—	893		—
Credit contracts	—		(20)	—	(20)		—
Subtotal	(9)		19	(119)	(109)		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(251)	19	(625)	(857)		(172)
Quarter ended June 30, 2022
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(270)	—	(26)	(296)		—
Equity contracts (2)	—		—	11	11		577
Foreign exchange contracts	—		—	838	838		—
Credit contracts	—		—	2	2		—
Subtotal	(270)		—	825	555		577
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	(314)		2,791	—	2,477		—
Commodity contracts	—		104	—	104		—
Equity contracts	—		3,901	(76)	3,825		—
Foreign exchange contracts	—		318	—	318		—
Credit contracts	—		29	—	29		—
Subtotal	(314)		7,143	(76)	6,753		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(584)	7,143	749	7,308		577

(continued on following page)


104			Wells Fargo & Company

(continued from previous page)


	Noninterest income					Noninterest expense
(in millions)	Mortgage banking		Net gains (losses) from trading and securities	Other	Total		Personnel expense
Six months ended June 30, 2023

Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(96)	—	(50)	(146)		—
Equity contracts	—		—	(161)	(161)		(363)
Foreign exchange contracts	—		—	(693)	(693)		—
Credit contracts	—		—	(1)	(1)		—
Subtotal	(96)		—	(905)	(1,001)		(363)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	(11)		163	—	152		—
Commodity contracts	—		199	—	199		—
Equity contracts	—		(2,910)	(183)	(3,093)		—
Foreign exchange contracts	—		794	—	794		—
Credit contracts	—		(27)	—	(27)		—
Subtotal	(11)		(1,781)	(183)	(1,975)		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(107)	(1,781)	(1,088)	(2,976)		(363)
Six months ended June 30, 2022

Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)	$	(638)	—	(52)	(690)		—
Equity contracts (2)	—		—	16	16		843
Foreign exchange contracts	—		—	1,069	1,069		—
Credit contracts	—		—	7	7		—
Subtotal	(638)		—	1,040	402		843
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts	(812)		6,005	—	5,193		—
Commodity contracts	—		217	—	217		—
Equity contracts	—		4,904	(114)	4,790		—
Foreign exchange contracts	—		645	—	645		—
Credit contracts	—		41	—	41		—
Subtotal	(812)		11,812	(114)	10,886		—
Net gains (losses) recognized related to derivatives not designated as hedging instruments	$	(1,450)	11,812	926	11,288		843

(1)Mortgage banking amounts for the second quarter and first half of 2023 are comprised of gains (losses) of $(331) million and $(146) million, respectively, related to derivatives used as economic hedges of MSRs measured at fair value offset by gains (losses) of $89 million and $50 million, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments. The corresponding amounts for the second quarter and first half of 2022 are comprised of gain (losses) of $(980) million and $(2.6) billion, respectively, offset by gains (losses) of $710 million and $2.0 billion, respectively.


			Wells Fargo & Company			105

Note 11: Derivatives (continued)

Credit Derivatives

Credit derivative contracts are arrangements whose value is derived from the transfer of credit risk of a reference asset or entity from one party (the purchaser of credit protection) to another party (the seller of credit protection). We generally use credit derivatives to assist customers with their risk management objectives by purchasing and selling credit protection on corporate debt obligations through the use of credit default swaps or through risk participation swaps to help manage counterparty exposure. We would be required to perform under the credit derivatives we sold in the event of default by the referenced obligors. Events of default include events such as bankruptcy, capital restructuring or lack of principal and/or interest payment.

Table 11.7 provides details of sold credit derivatives.

Table 11.7: Sold Credit Derivatives


	Notional amount
(in millions)	Protection sold		Protection sold – non-investment grade
June 30, 2023
Credit default swaps	$	14,273	1,677
Risk participation swaps	6,460		6,250
Total credit derivatives	$	20,733	7,927
December 31, 2022
Credit default swaps	$	12,733	1,860
Risk participation swaps	6,728		6,518
Total credit derivatives	$	19,461	8,378

Protection sold represents the estimated maximum exposure to loss that would be incurred if, upon an event of default, the value of our interests and any associated collateral declined to zero, and does not take into consideration any of recovery value from the referenced obligation or offset from collateral held or any economic hedges.

The amounts under non-investment grade represent the notional amounts of those credit derivatives on which we have a higher risk of being required to perform under the terms of the credit derivative and are a function of the underlying assets.

We consider the credit risk to be low if the underlying assets under the credit derivative have an external rating that is investment grade. If an external rating is not available, we classify the credit derivative as non-investment grade.

Our maximum exposure to sold credit derivatives is managed through posted collateral and purchased credit derivatives with identical or similar reference positions in order to achieve our desired credit risk profile. The credit risk management is designed to provide an ability to recover a significant portion of any amounts that would be paid under sold credit derivatives.

Credit-Risk Contingent Features

Certain of our derivative contracts contain provisions whereby if the credit rating of our debt were to be downgraded by certain major credit rating agencies, the counterparty could demand additional collateral or require termination or replacement of derivative instruments in a net liability position. Table 11.8 illustrates our exposure to OTC bilateral derivative contracts with credit-risk contingent features, collateral we have posted, and the additional collateral we would be required to post if the credit rating of our debt was downgraded below investment grade.

Table 11.8: Credit-Risk Contingent Features


(in billions)	Jun 30, 2023		Dec 31, 2022
Net derivative liabilities with credit-risk contingent features	$	23.2	20.7
Collateral posted	20.0		17.4
Additional collateral to be posted upon a below investment grade credit rating (1)	3.2		3.3

(1)Any credit rating below investment grade requires us to post the maximum amount of collateral.


106			Wells Fargo & Company


Note 12: Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to fulfill fair value disclosure requirements. Assets and liabilities recorded at fair value on a recurring basis, such as derivatives, residential MSRs, and trading or AFS debt securities, are presented in Table 12.1 in this Note. Additionally, from time to time, we record fair value adjustments on a nonrecurring basis. These nonrecurring adjustments typically involve application of lower of cost or fair value (LOCOM) accounting, write-downs of individual assets or application of the measurement alternative for nonmarketable equity securities. Assets recorded at fair value on a nonrecurring basis are presented in Table 12.4 in this Note. We provide in Table 12.9 estimates of fair value for financial instruments that are not recorded at fair value, such as loans and debt liabilities carried at amortized cost.

See Note 1 (Summary of Significant Accounting Policies) in our 2022 Form 10-K for discussion of how we determine fair value. For descriptions of the valuation methodologies we use for assets and liabilities recorded at fair value on a recurring or nonrecurring basis, see Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K.

FAIR VALUE HIERARCHY We classify our assets and liabilities recorded at fair value as either Level 1, 2, or 3 in the fair value hierarchy. The highest priority (Level 1) is assigned to valuations based on unadjusted quoted prices in active markets and the lowest priority (Level 3) is assigned to valuations based on significant unobservable inputs. See Note 1 (Summary of Significant Accounting Policies) in our 2022 Form 10-K for a detailed description of the fair value hierarchy.

In the determination of the classification of financial instruments in Level 2 or Level 3 of the fair value hierarchy, we consider all available information, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs used. This determination is ultimately based upon the specific facts and circumstances of each instrument or instrument category and judgments are made regarding the significance of the unobservable inputs to the instruments’ fair value measurement in its entirety. If unobservable inputs are considered significant, the instrument is classified as Level 3.

We do not classify nonmarketable equity securities in the fair value hierarchy if we use the non-published net asset value (NAV) per share (or its equivalent) as a practical expedient to measure fair value. Marketable equity securities with published NAVs are classified in the fair value hierarchy.


			Wells Fargo & Company			107

Note 12: Fair Values of Assets and Liabilities (continued)

Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table 12.1 presents the balances of assets and liabilities recorded at fair value on a recurring basis.

Table 12.1: Fair Value on a Recurring Basis


	June 30, 2023							December 31, 2022
(in millions)	Level 1		Level 2		Level 3	Total		Level 1	Level 2	Level 3	Total
Trading debt securities:
Securities of U.S. Treasury and federal agencies	$	31,084	2,818		—	33,902		28,844	4,530	—	33,374
Collateralized loan obligations	—		624		64	688		—	540	150	690
Corporate debt securities	—		13,499		62	13,561		—	10,344	23	10,367
Federal agency mortgage-backed securities	—		39,235		—	39,235		—	34,447	—	34,447
Non-agency mortgage-backed securities	—		1,317		5	1,322		—	1,243	12	1,255
Other debt securities	—		8,148		1	8,149		—	6,022	—	6,022
Total trading debt securities	31,084		65,641		132	96,857		28,844	57,126	185	86,155
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies	46,896		—		—	46,896		45,285	—	—	45,285
Non-U.S. government securities	—		162		—	162		—	162	—	162
Securities of U.S. states and political subdivisions	—		21,295		79	21,374		—	10,332	113	10,445
Federal agency mortgage-backed securities	—		56,981		—	56,981		—	48,137	—	48,137
Non-agency mortgage-backed securities	—		3,049		—	3,049		—	3,284	—	3,284
Collateralized loan obligations	—		3,725		—	3,725		—	3,981	—	3,981
Other debt securities	—		1,913		151	2,064		—	2,137	163	2,300
Total available-for-sale debt securities	46,896		87,125		230	134,251		45,285	68,033	276	113,594
Loans held for sale	—		2,488		486	2,974		—	3,427	793	4,220
Mortgage servicing rights (residential)	—		—		8,251	8,251		—	—	9,310	9,310
Derivative assets (gross):
Interest rate contracts	258		35,353		455	36,066		262	40,503	321	41,086
Commodity contracts	—		3,136		32	3,168		—	5,866	134	6,000
Equity contracts	178		12,335		268	12,781		112	9,051	410	9,573
Foreign exchange contracts	30		16,445		17	16,492		27	22,175	11	22,213
Credit contracts	—		55		24	79		—	44	22	66

Total derivative assets (gross)	466		67,324		796	68,586		401	77,639	898	78,938
Equity securities:
Marketable	20,348		159		5	20,512		18,527	86	3	18,616
Nonmarketable	—		11,075		22	11,097		—	9,750	17	9,767
Total equity securities	20,348		11,234		27	31,609		18,527	9,836	20	28,383
Total assets prior to derivative netting	$	98,794	233,812		9,922	342,528		93,057	216,061	11,482	320,600
Derivative netting (1)						(50,596)					(56,164)
Total assets after derivative netting						$	291,932				264,436
Derivative liabilities (gross):
Interest rate contracts	$	(287)	(35,418)		(6,093)	(41,798)		(193)	(40,377)	(2,903)	(43,473)
Commodity contracts	—		(2,556)		(48)	(2,604)		—	(3,325)	(120)	(3,445)
Equity contracts (2)	(161)		(11,523)		(1,649)	(13,333)		(118)	(6,502)	(1,634)	(8,254)
Foreign exchange contracts	(38)		(18,630)		(24)	(18,692)		(29)	(26,622)	(35)	(26,686)
Credit contracts	—		(23)		(2)	(25)		—	(33)	(3)	(36)

Total derivative liabilities (gross)	(486)		(68,150)		(7,816)	(76,452)		(340)	(76,859)	(4,695)	(81,894)






Short-sale and other liabilities (2)	(22,966)		(4,739)		(58)	(27,763)		(14,791)	(5,513)	(167)	(20,471)
Long-term debt	—		(1,600)		—	(1,600)		—	(1,346)	—	(1,346)
Total liabilities prior to derivative netting	$	(23,452)	$	(74,489)	(7,874)	(105,815)		(15,131)	(83,718)	(4,862)	(103,711)
Derivative netting (1)						55,021					61,827
Total liabilities after derivative netting						$	(50,794)				(41,884)

(1)Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 11 (Derivatives) for additional information.


108			Wells Fargo & Company

Level 3 Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table 12.2 presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis.

Table 12.2: Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis


										Net unrealized gains (losses) related to assets and liabilities held at period end
(in millions)	Balance, beginning of period		Net gains/(losses) (1)	Purchases (2)	Sales	Settlements	Transfers into Level 3 (3)	Transfers out of Level 3 (4)	Balance, end of period		(5)
Quarter ended June 30, 2023
Trading debt securities	$	132	(8)	31	(36)	(3)	55	(39)	132	(8)	(6)
Available-for-sale debt securities	505		(4)	7	—	(4)	22	(296)	230	(3)	(6)
Loans held for sale	564		(10)	94	(180)	(26)	49	(5)	486	(30)	(7)
Mortgage servicing rights (residential) (8)	8,819		(9)	47	(606)	—	—	—	8,251	316	(7)
Net derivative assets and liabilities:
Interest rate contracts	(2,752)		(2,870)	1	(1)	668	(684)	—	(5,638)	(2,258)
Equity contracts	(1,278)		(160)	—	—	49	(17)	25	(1,381)	(131)
Other derivative contracts	(10)		(8)	4	(1)	14	—	—	(1)	4
Total derivative contracts	(4,040)		(3,038)	5	(2)	731	(701)	25	(7,020)	(2,385)	(9)
Equity securities	32		(15)	4	(3)	—	9	—	27	(15)	(6)
Other liabilities	(193)		135	—	—	—	—	—	(58)	135	(10)
Quarter ended June 30, 2022
Trading debt securities	$	201	(22)	46	(78)	29	—	(7)	169	(28)	(6)
Available-for-sale debt securities	338		(5)	2	(25)	(5)	—	(138)	167	(1)	(6)
Loans held for sale	1,019		(61)	116	(27)	(57)	84	(2)	1,072	(61)	(7)
Mortgage servicing rights (residential) (8)	8,511		581	322	(251)	—	—	—	9,163	868	(7)
Net derivative assets and liabilities:
Interest rate contracts	(176)		(381)	—	—	371	(385)	—	(571)	(133)
Equity contracts	(1,416)		202	—	—	280	(516)	(34)	(1,484)	403
Other derivative contracts	27		88	—	—	28	—	(6)	137	89
Total derivative contracts	(1,565)		(91)	—	—	679	(901)	(40)	(1,918)	359	(9)
Equity securities	26		5	—	(2)	—	3	(1)	31	5	(6)
Other liabilities (11)	(638)		89	—	—	—	—	—	(549)	89	(10)
Six months ended June 30, 2023
Trading debt securities	$	185	(7)	107	(148)	(4)	55	(56)	132	(11)	(6)
Available-for-sale debt securities	276		(24)	76	—	(10)	255	(343)	230	(22)	(6)
Loans held for sale	793		—	167	(229)	(65)	65	(245)	486	(23)	(7)
Mortgage servicing rights (residential) (8)	9,310		(555)	95	(599)	—	—	—	8,251	91	(7)
Net derivative assets and liabilities:
Interest rate contracts	(2,582)		(2,575)	1	(1)	935	(1,430)	14	(5,638)	(1,755)
Equity contracts	(1,224)		(463)	—	—	334	(55)	27	(1,381)	(125)
Other derivative contracts	9		(63)	6	(2)	51	(2)	—	(1)	(36)
Total derivative contracts	(3,797)		(3,101)	7	(3)	1,320	(1,487)	41	(7,020)	(1,916)	(9)
Equity securities	20		(16)	4	(3)	—	22	—	27	(16)	(6)

Other liabilities	(167)		109	—	—	—	—	—	(58)	109	(10)
Six months ended June 30, 2022
Trading debt securities	$	241	(37)	93	(92)	(6)	5	(35)	169	(40)	(6)
Available-for-sale debt securities	186		(26)	54	(25)	(10)	126	(138)	167	(1)	(6)
Loans held for sale	1,033		(118)	179	(70)	(130)	186	(8)	1,072	(115)	(7)
Mortgage servicing rights (residential) (8)	6,920		1,829	664	(250)	—	—	—	9,163	2,473	(7)
Net derivative assets and liabilities:
Interest rate contracts	127		(959)	—	—	646	(385)	—	(571)	(241)
Equity contracts (11)	(417)		(14)	—	—	869	(596)	(1,326)	(1,484)	610
Other derivative contracts	5		66	—	—	72	—	(6)	137	110
Total derivative contracts	(285)		(907)	—	—	1,587	(981)	(1,332)	(1,918)	479	(9)
Equity securities	8,910		4	—	(2)	—	5	(8,886)	31	4	(6)
Other liabilities (11)	(791)		242	—	—	—	—	—	(549)	242	(10)

(1)All amounts represent net gains (losses) included in net income except for AFS debt securities and other liabilities which also included net gains (losses) in other comprehensive income. Net gains (losses) included in other comprehensive income for AFS debt securities were $(3) million and $(19) million for the second quarter and first half of 2023, respectively, and $(6) million and $(27) million for the second quarter and first half of 2022, respectively. Net gains (losses) included in other comprehensive income for other liabilities were $5 million for both the second quarter and first half of 2023, and $87 million and $101 million for the second quarter and first half of 2022, respectively.

(2)Includes originations of mortgage servicing rights and loans held for sale.

(3)All assets and liabilities transferred into Level 3 were previously classified within Level 2.

(4)All assets and liabilities transferred out of Level 3 are classified as Level 2. During first quarter 2022, we transferred $8.9 billion of non-marketable equity securities and $1.4 billion of related economic hedging derivative assets (equity contracts) out of Level 3 due to our election to measure fair value of these instruments as a portfolio. Under this election, the unit of valuation is the portfolio-level, rather than each individual instrument. The unobservable inputs previously significant to the valuation of the instruments individually are no longer significant, as those unobservable inputs offset under the portfolio election.

(5)All amounts represent net unrealized gains (losses) related to assets and liabilities held at period end included in net income except for AFS debt securities and other liabilities which also included net unrealized gains (losses) related to assets and liabilities held at period end in other comprehensive income. Net unrealized gains (losses) included in other comprehensive income for AFS debt securities were $(2) million and $(17) million for the second quarter and first half of 2023, respectively, and $0 for both the second quarter and first half of 2022. Net unrealized gains (losses) included in other comprehensive income for other liabilities were $5 million for both the second quarter and first half of 2023, and $87 million and $101 million for the second quarter and first half of 2022, respectively.

(6)Included in net gains from trading and securities on our consolidated statement of income.

(7)Included in mortgage banking income on our consolidated statement of income.

(8)For additional information on the changes in mortgage servicing rights, see Note 6 (Mortgage Banking Activities).

(9)Included in mortgage banking income, net gains from trading and securities, and other noninterest income on our consolidated statement of income.

(10)Included in other noninterest income on our consolidated statement of income.

(11)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).


			Wells Fargo & Company			109

Note 12: Fair Values of Assets and Liabilities (continued)

Table 12.3 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of our Level 3 assets and liabilities measured at fair value on a recurring basis.

The significant unobservable inputs for Level 3 assets inherent in the fair values obtained from third-party vendors are not included in the table, as the specific inputs applied are not

provided by the vendor (for additional information on vendor-developed valuations, see Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K).

Weighted averages of inputs are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.

Table 12.3: Valuation Techniques – Recurring Basis


($ in millions, except cost to service amounts)	Fair Value Level 3			Valuation Technique	Significant Unobservable Input	Range of Inputs					Weighted Average
June 30, 2023
Trading and available-for-sale debt securities	$	125		Discounted cash flow	Discount rate	3.0		-	12.5	%	6.4

	132			Market comparable pricing	Comparability adjustment	(46.3)		-	48.3		(16.1)
	105			Market comparable pricing	Multiples	1.4x		-	7.4x		3.7x
Loans held for sale	486			Discounted cash flow	Default rate	0.0		-	28.8	%	1.0
					Discount rate	2.9		-	15.0		9.8
					Loss severity	0.0		-	54.9		17.1
					Prepayment rate	4.3		-	15.5		10.5
Mortgage servicing rights (residential)	8,251			Discounted cash flow	Cost to service per loan (1)	$	52	-	518		102
					Discount rate	8.8		-	13.8	%	9.2
					Prepayment rate (2)	7.8		-	23.4		9.2
Net derivative assets and (liabilities):
Interest rate contracts	(5,518)			Discounted cash flow	Discount rate	3.2		-	5.4		4.6
	(61)			Discounted cash flow	Default rate	0.4		-	5.0		1.6
					Loss severity	50.0		-	50.0		50.0
					Prepayment rate	2.8		-	22.0		16.0
Interest rate contracts: derivative loan commitments	(59)			Discounted cash flow	Fall-out factor	1.0		-	99.0		28.8
					Initial-value servicing	(43.9)		-	141.0	bps	(14.5)
Equity contracts	(976)			Discounted cash flow	Conversion factor	(7.4)		-	0.0	%	(6.6)
					Weighted average life	0.5		-	1.5	yrs	1.1
	(405)			Option model	Correlation factor	(77.0)		-	99.0	%	63.6
					Volatility factor	6.5		-	98.0		34.4
Insignificant Level 3 liabilities, net of assets (3)	(32)
Total Level 3 assets, net of liabilities	$	2,048	(4)
December 31, 2022
Trading and available-for-sale debt securities	$	157		Discounted cash flow	Discount rate	2.7		-	12.5	%	6.4
	185			Market comparable pricing	Comparability adjustment	(33.6)		-	14.1		(4.8)

	119			Market comparable pricing	Multiples	1.1x		-	7.4x		4.0x
Loans held for sale	793			Discounted cash flow	Default rate	0.0		-	25.0	%	0.7
					Discount rate	2.9		-	13.4		9.5
					Loss severity	0.0		-	53.6		15.7
					Prepayment rate	3.5		-	14.2		10.7
Mortgage servicing rights (residential)	9,310			Discounted cash flow	Cost to service per loan (1)	$	52	-	550		102
					Discount rate	8.7		-	14.1	%	9.1
					Prepayment rate (2)	8.1		-	21.9		9.4
Net derivative assets and (liabilities):
Interest rate contracts	(2,411)			Discounted cash flow	Discount rate	3.2		-	4.9		4.2
	(63)			Discounted cash flow	Default rate	0.4		-	5.0		2.3
					Loss severity	50.0		-	50.0		50.0
					Prepayment rate	2.8		-	22.0		18.7
Interest rate contracts: derivative loan commitments	(108)			Discounted cash flow	Fall-out factor	1.0		-	99.0		41.0
					Initial-value servicing	(9.3)		-	141.0	bps	11.5
Equity contracts (3)	(1,000)			Discounted cash flow	Conversion factor	(12.2)		-	0.0	%	(9.9)
					Weighted average life	0.5		-	1.5	yrs	0.8
	(224)			Option model	Correlation factor	(77.0)		-	99.0	%	49.5
					Volatility factor	6.5		-	96.5		37.3






Insignificant Level 3 liabilities, net of assets (3)	(138)
Total Level 3 assets, net of liabilities	$	6,620	(4)

(1)The high end of the range of inputs is for servicing modified loans. For non-modified loans, the range is $52 - $175 at June 30, 2023, and $52 - $178 at December 31, 2022.

(2)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

(3)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(4)Consists of total Level 3 assets of $9.9 billion and $11.5 billion and total Level 3 liabilities of $7.9 billion and $4.9 billion, before netting of derivative balances, at June 30, 2023, and December 31, 2022, respectively.

For additional information on the valuation techniques and significant unobservable inputs used in the valuation of our Level 3 assets and liabilities, including how changes in these

inputs affect fair value estimates, see Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K.


110			Wells Fargo & Company

Assets and Liabilities Recorded at Fair Value on a Nonrecurring Basis

We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of LOCOM accounting, write-downs of individual assets, or application of the measurement alternative for certain nonmarketable equity securities.

Table 12.4 provides the fair value hierarchy and fair value at the date of the nonrecurring fair value adjustment for all assets that were still held as of June 30, 2023, and December 31, 2022, and for which a nonrecurring fair value adjustment was recorded during the six months ended June 30, 2023, and the year ended December 31, 2022.

Table 12.4: Fair Value on a Nonrecurring Basis


	June 30, 2023				December 31, 2022
(in millions)	Level 2		Level 3	Total	Level 2	Level 3	Total
Loans held for sale (1)	$	1,268	315	1,583	838	554	1,392
Loans:
Commercial	645		—	645	285	—	285
Consumer	68		—	68	512	—	512
Total loans	713		—	713	797	—	797
Mortgage servicing rights (commercial)	—		—	—	—	75	75
Nonmarketable equity securities	606		1,483	2,089	1,926	2,818	4,744
Other assets	2,063		49	2,112	1,862	296	2,158
Total assets at fair value on a nonrecurring basis	$	4,650	1,847	6,497	5,423	3,743	9,166

(1)Consists of commercial mortgages and residential mortgage – first lien loans.

Table 12.5 presents the gains (losses) on certain assets held at the end of the reporting periods presented for which a nonrecurring fair value adjustment was recognized in earnings during the respective periods.

Table 12.5: Gains (Losses) on Assets with Nonrecurring Fair Value Adjustment


	Six months ended June 30,
(in millions)	2023		2022
Loans held for sale	$	(40)	(66)
Loans:
Commercial	(205)		(36)
Consumer	(368)		(358)
Total loans	(573)		(394)
Mortgage servicing rights (commercial)	—		4
Nonmarketable equity securities (1)	(526)		(95)

Other assets (2)	(102)		(176)
Total	$	(1,241)	(727)

(1)Includes impairment of nonmarketable equity securities and observable price changes related to nonmarketable equity securities accounted for under the measurement alternative.

(2)Includes impairment of operating lease ROU assets, valuation of physical commodities, valuation losses on foreclosed real estate and other collateral owned, and impairment of private equity and venture capital investments in consolidated portfolio companies.

Table 12.6 provides quantitative information about the valuation techniques and significant unobservable inputs used in the valuation of our Level 3 assets that are measured at fair value on a nonrecurring basis and determined using an internal model. The table is limited to financial instruments that had nonrecurring fair value adjustments during the periods presented. Weighted averages of inputs are calculated using outstanding unpaid principal balance for cash instruments, such as loans, and carrying value prior to the nonrecurring fair value measurement for nonmarketable equity securities and private equity and venture capital investments in consolidated portfolio companies.


			Wells Fargo & Company			111

Note 12: Fair Values of Assets and Liabilities (continued)

Table 12.6: Valuation Techniques – Nonrecurring Basis


($ in millions)	Fair Value Level 3		Valuation Technique (1)	Significant Unobservable Input (1)	Range of Inputs Positive (Negative)					Weighted Average
June 30, 2023
Loans held for sale	$	315	Discounted cash flow	Default rate	0.1		-	98.3	%	16.9
				Discount rate	4.4		-	14.3		5.8
				Loss severity	7.3		-	65.6		16.8
				Prepayment rate	3.2		-	32.4		12.9




Nonmarketable equity securities	429		Market comparable pricing	Comparability adjustment	(100.0)		-	(4.7)		(33.8)

	1,052		Market comparable pricing	Multiples	3.0x		-	27.1x		9.5x





Insignificant Level 3 assets	51
Total	$	1,847
December 31, 2022
Loans held for sale	$	143	Discounted cash flow	Default rate	0.1		-	86.1	%	13.8
				Discount rate	3.8		-	13.8		9.0
				Loss severity	8.1		-	43.8		18.6
				Prepayment rate	2.3		-	23.4		18.6
	411		Market comparable pricing	Comparability adjustment	(8.2)		-	(0.9)		(4.3)
Mortgage servicing rights (commercial)	75		Discounted cash flow	Cost to service per loan	$	3,775	-	3,775		3,775
				Discount rate	5.2		-	5.2	%	5.2
				Prepayment rate	0.0		-	20.6		6.7
Nonmarketable equity securities	1,461		Market comparable pricing	Comparability adjustment	(100.0)		-	(4.0)		(30.1)

	1,352		Market comparable pricing	Multiples	0.8x		-	18.7x		9.9x




Other assets (2)	234		Market comparable pricing	Multiples	6.4		-	8.0		7.1
Insignificant Level 3 assets	67
Total	$	3,743

(1)See Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K for additional information on the valuation technique(s) and significant unobservable inputs used in the valuation of Level 3 assets.

(2)Represents private equity and venture capital investments in consolidated portfolio companies.


112			Wells Fargo & Company

Fair Value Option

The fair value option is an irrevocable election, generally only permitted upon initial recognition of financial assets or liabilities, to measure eligible financial instruments at fair value with changes in fair value reflected in earnings. We may elect the fair value option to align the measurement model with how the financial assets or liabilities are managed or to reduce complexity or accounting asymmetry. Following is a discussion of the

portfolios for which we elected the fair value option. For additional information, including the basis for our fair value option elections, see Note 15 (Fair Values of Assets and Liabilities) in our 2022 Form 10-K.

Table 12.7 reflects differences between the fair value carrying amount of the assets and liabilities for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity.

Table 12.7: Fair Value Option


	June 30, 2023				December 31, 2022
(in millions)	Fair value carrying amount		Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal	Fair value carrying amount	Aggregate unpaid principal	Fair value carrying amount less aggregate unpaid principal
Loans held for sale (1)	$	2,974	3,238	(264)	4,220	4,614	(394)
Long-term debt (2)	(1,600)		(2,147)	547	(1,346)	(1,775)	429

(1)Nonaccrual loans and loans 90 days or more past due and still accruing included in LHFS for which we have elected the fair value option were insignificant at June 30, 2023, and December 31, 2022.

(2)Includes zero coupon notes for which the aggregate unpaid principal amount reflects the contractual principal due at maturity.

Table 12.8 reflects amounts included in earnings related to initial measurement and subsequent changes in fair value, by income statement line item, for assets and liabilities for which

the fair value option was elected. Amounts recorded in net interest income are excluded from the table below.

Table 12.8: Gains (Losses) on Changes in Fair Value Included in Earnings



	2023				2022
(in millions)	Mortgage banking noninterest income		Net gains from trading and securities	Other noninterest income	Mortgage banking noninterest income	Net gains from trading and securities	Other noninterest income
Quarter ended June 30,
Loans held for sale	$	34	13	—	(237)	1	—
Long-term debt	—		9	—	—	11	—
Six months ended June 30,
Loans held for sale	$	131	25	(4)	(603)	10	—
Long-term debt	—		(21)	—	—	23	—

For performing loans, instrument-specific credit risk gains or losses are derived principally by determining the change in fair value of the loans due to changes in the observable or implied credit spread. Credit spread is the market yield on the loans less the relevant risk-free benchmark interest rate. For nonperforming loans, we attribute all changes in fair value to instrument-specific credit risk. For LHFS accounted for under the fair value option, instrument-specific credit gains or losses were insignificant during the second quarter and first half of both 2023 and 2022.

For long-term debt, instrument-specific credit risk gains or losses represent the impact of changes in fair value due to changes in our credit spread and are derived using observable secondary bond market information. These impacts are recorded within the debit valuation adjustments (DVA) in OCI. See

Note 20 (Other Comprehensive Income) for additional information.


			Wells Fargo & Company			113

Note 12: Fair Values of Assets and Liabilities (continued)

Disclosures about Fair Value of Financial Instruments

Table 12.9 presents a summary of fair value estimates for financial instruments that are not carried at fair value on a recurring basis. Some financial instruments are excluded from the scope of this table, such as certain insurance contracts, certain nonmarketable equity securities, and leases. This table also excludes assets and liabilities that are not financial instruments such as the value of the long-term relationships with our deposit, credit card and trust customers, MSRs, premises and equipment, goodwill and deferred taxes.

Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in

Table 12.9. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the allowance for unfunded credit commitments, which totaled $622 million and $737 million at June 30, 2023, and December 31, 2022, respectively.

The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying fair value of the Company.

Table 12.9: Fair Value Estimates for Financial Instruments


			Estimated fair value
(in millions)	Carrying amount		Level 1	Level 2	Level 3	Total
June 30, 2023
Financial assets
Cash and due from banks (1)	$	31,915	31,915	—	—	31,915
Interest-earning deposits with banks (1)	123,418		123,195	223	—	123,418
Federal funds sold and securities purchased under resale agreements (1)	66,500		—	66,500	—	66,500
Held-to-maturity debt securities	272,360		2,371	228,748	2,717	233,836
Loans held for sale	3,055		—	2,641	462	3,103
Loans, net (2)	918,454		—	55,515	825,008	880,523
Nonmarketable equity securities (cost method)	4,552		—	—	4,620	4,620
Total financial assets	$	1,420,254	157,481	353,627	832,807	1,343,915
Financial liabilities
Deposits (3)	$	128,458	—	85,183	41,616	126,799
Short-term borrowings	84,054		—	84,056	—	84,056
Long-term debt (4)	169,012		—	168,245	1,969	170,214
Total financial liabilities	$	381,524	—	337,484	43,585	381,069
December 31, 2022
Financial assets
Cash and due from banks (1)	$	34,596	34,596	—	—	34,596
Interest-earning deposits with banks (1)	124,561		124,338	223	—	124,561
Federal funds sold and securities purchased under resale agreements (1)	68,036		—	68,036	—	68,036
Held-to-maturity debt securities	297,059		14,285	238,552	2,684	255,521
Loans held for sale	2,884		—	2,208	719	2,927
Loans, net (2)	928,049		—	57,532	836,831	894,363
Nonmarketable equity securities (cost method)	4,900		—	—	4,961	4,961
Total financial assets	$	1,460,085	173,219	366,551	845,195	1,384,965
Financial liabilities
Deposits (3)	$	66,887	—	46,745	18,719	65,464
Short-term borrowings	50,964		—	50,970	—	50,970
Long-term debt (4)	173,502		—	172,783	999	173,782
Total financial liabilities	$	291,353	—	270,498	19,718	290,216

(1)Amounts consist of financial instruments for which carrying value approximates fair value.

(2)Excludes lease financing with a carrying amount of $15.1 billion and $14.7 billion at June 30, 2023, and December 31, 2022, respectively.

(3)Excludes deposit liabilities with no defined or contractual maturity of $1.2 trillion and $1.3 trillion at June 30, 2023, and December 31, 2022, respectively.

(4)Excludes obligations under finance leases of $20 million and $22 million at June 30, 2023, and December 31, 2022, respectively.


114			Wells Fargo & Company


Note 13: Securitizations and Variable Interest Entities

Involvement with Variable Interest Entities (VIEs)

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. SPEs are often formed in connection with securitization transactions whereby financial assets are transferred to an SPE. SPEs formed in connection with securitization transactions are generally considered variable interest entities (VIEs). The VIE may alter the risk profile of the asset by entering into derivative transactions or obtaining credit support, and issues various forms of interests in those assets to investors. When we transfer financial assets from our consolidated balance sheet to a VIE in connection with a securitization, we typically receive cash and sometimes other interests in the VIE as proceeds for the assets we transfer. In certain transactions with VIEs, we may retain the right to service the transferred assets and repurchase the transferred assets if the outstanding balance of the assets falls below the level at which the cost to service the assets exceed the benefits. In addition, we may purchase the right to service loans transferred to a VIE by a third party.

In connection with our securitization or other VIE activities, we have various forms of ongoing involvement with VIEs, which may include:

•underwriting securities issued by VIEs and subsequently making markets in those securities;

•providing credit enhancement on securities issued by VIEs through the use of letters of credit or financial guarantees;

•entering into other derivative contracts with VIEs;

•holding senior or subordinated interests in VIEs;

•acting as servicer or investment manager for VIEs;

•providing administrative or trustee services to VIEs; and

•providing seller financing to VIEs.

Loan Sales and Securitization Activity

We periodically transfer consumer and commercial loans and other types of financial assets in securitization and whole loan sale transactions.

MORTGAGE LOANS SOLD TO U.S. GOVERNMENT SPONSORED ENTITIES AND TRANSACTIONS WITH GINNIE MAE In the normal course of business we sell originated and purchased residential and commercial mortgage loans to government-sponsored entities (GSEs). These loans are generally transferred into securitizations sponsored by the GSEs, which provide certain credit guarantees to investors and servicers. We also transfer mortgage loans into securitization pools pursuant to Government National Mortgage Association (GNMA) guidelines which are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Mortgage loans eligible for securitization with the GSEs or GNMA are considered conforming loans. The GSEs or GNMA design the structure of these securitizations, sponsor the involved VIEs, and have power over the activities most significant to the VIE.

We account for loans transferred in conforming mortgage loan securitization transactions as sales and do not consolidate the VIEs as we are not the primary beneficiary. In exchange for the transfer of loans, we typically receive securities issued by the VIEs which we sell to third parties for cash or hold for investment purposes as HTM or AFS securities. We also retain servicing rights on the transferred loans. As a servicer, we retain the option

to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. When we do not repurchase these loans, they are recorded on our consolidated balance sheet and pledged to the GNMA securitization. We repurchased loans of $99 million and $191 million, during the second quarter and first half of 2023, respectively, and $564 million and $1.5 billion during the second quarter and first half of 2022, respectively. In 2022, these predominantly represented repurchases of government insured loans. At June 30, 2023, and December 31, 2022, we recorded assets and related liabilities of $940 million and $743 million, respectively, where we did not exercise our option to repurchase eligible loans.

Upon transfers of loans, we also provide indemnification for losses incurred due to material breaches of contractual representations and warranties as well as other recourse arrangements. At June 30, 2023, and December 31, 2022, our liability for these repurchase and recourse arrangements was $162 million and $167 million, respectively, and the maximum exposure to loss was $13.8 billion at both June 30, 2023, and December 31, 2022.

Substantially all residential servicing activity is related to assets transferred to GSE and GNMA securitizations. See Note 6 (Mortgage Banking Activities) for additional information about residential and commercial servicing rights, advances and servicing fees.

NONCONFORMING MORTGAGE LOAN SECURITIZATIONS In the normal course of business, we sell nonconforming residential and commercial mortgage loans in securitization transactions that we design and sponsor. Nonconforming mortgage loan securitizations do not involve a government credit guarantee, and accordingly, beneficial interest holders are subject to credit risk of the underlying assets held by the securitization VIE. We typically originate the transferred loans and account for the transfers as sales. We also typically retain the right to service the loans and may hold other beneficial interests issued by the VIEs, such as debt securities held for investment purposes. Our servicing role related to nonconforming commercial mortgage loan securitizations is limited to primary or master servicer. We do not consolidate the VIE because the most significant decisions impacting the performance of the VIE are generally made by the special servicer or the controlling class security holder. For our residential nonconforming mortgage loan securitizations accounted for as sales, we either do not hold variable interests that we consider potentially significant or are not the primary servicer for a majority of the VIE assets.

WHOLE LOAN SALE TRANSACTIONS We may also sell whole loans to VIEs where we have continuing involvement in the form of financing. We account for these transfers as sales, and do not consolidate the VIEs as we do not have the power to direct the most significant activities of the VIEs.

Table 13.1 presents information about transfers of assets during the periods presented for which we recorded the transfers as sales and have continuing involvement with the transferred assets. In connection with these transfers, we received proceeds and recorded servicing assets and securities. Each of these interests are initially measured at fair value. Servicing rights are classified as Level 3 measurements, and generally securities are classified as Level 2. The majority of our transfers relate to


			Wells Fargo & Company			115

Note 13: Securitizations and Variable Interest Entities (continued)

residential mortgage securitizations with the GSEs or GNMA and generally result in no gain or loss because the loans are measured at fair value on a recurring basis. Additionally, we may transfer certain government insured loans that we previously

repurchased. These loans are carried at the lower of cost or market, and we recognize gains on such transfers when the market value is greater than the carrying value of the loan when it is sold.

Table 13.1: Transfers with Continuing Involvement



	2023			2022
(in millions)	Residential mortgages		Commercial mortgages	Residential mortgages	Commercial mortgages
Quarter ended June 30,
Assets sold	$	3,917	1,800	23,817	4,345
Proceeds from transfer (1)	3,917		1,823	23,817	4,411
Net gains (losses) on sale	—		23	—	66

Continuing involvement (2):
Servicing rights recognized	$	46	16	313	41
Securities recognized (3)	—		22	475	33

Six months ended June 30,
Assets sold	$	8,378	3,299	49,991	8,378
Proceeds from transfer (1)	8,378		3,363	50,043	8,508
Net gains (losses) on sale	—		64	52	130

Continuing involvement (2):
Servicing rights recognized	$	93	34	640	70
Securities recognized (3)	—		48	2,062	137

(1)Represents cash proceeds and the fair value of non-cash beneficial interests recognized at securitization settlement.

(2)Represents assets or liabilities recognized at securitization settlement date related to our continuing involvement in the transferred assets.

(3)Represents debt securities obtained at securitization settlement held for investment purposes that are classified as available-for-sale or held-to-maturity. In 2022, these predominantly related to agency securities. Excludes trading debt securities held temporarily for market-marking purposes, which are sold to third parties at or shortly after securitization settlement, of $1.8 billion and $3.7 billion during the second quarter and first half of 2023, respectively, and $3.6 billion and $10.3 billion during the second quarter and first half of 2022, respectively.

In the normal course of business, we purchase certain

non-agency securities at initial securitization or subsequently in the secondary market, which we hold for investment. We also provide seller financing in the form of loans. We received cash flows of $91 million and $141 million during the second quarter and first half of 2023, respectively, and $168 million and $304 million, during the second quarter and first half of 2022, respectively, related to principal and interest payments on these securities and loans, which exclude cash flows related to trading activities.

Table 13.2 presents the key weighted-average assumptions we used to initially measure residential MSRs recognized during the periods presented.

Table 13.2: Residential MSRs – Assumptions at Securitization Date



	2023			2022
Quarter ended June 30,
Prepayment rate (1)	16.4		%	10.9
Discount rate	9.4			8.0
Cost to service ($ per loan)	$	176		122
Six months ended June 30,
Prepayment rate (1)	17.5		%	11.0
Discount rate	9.6			7.5
Cost to service ($ per loan)	$	185		117

(1)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

See Note 12 (Fair Values of Assets and Liabilities) and

Note 6 (Mortgage Banking Activities) for additional information on key assumptions for residential MSRs.

RESECURITIZATION ACTIVITIES We enter into resecuritization transactions as part of our trading activities to accommodate the investment and risk management activities of our customers. In resecuritization transactions, we transfer trading debt securities to VIEs in exchange for new beneficial interests that are sold to third parties at or shortly after securitization settlement. This activity is performed for customers seeking a specific return or risk profile. Substantially all of our transactions involve the resecuritization of conforming mortgage-backed securities issued by the GSEs or guaranteed by GNMA. We do not consolidate the resecuritization VIEs as we share in the decision-making power with third parties and do not hold significant economic interests in the VIEs other than for market-making activities. During the six months ended June 30, 2023 and 2022, we transferred securities of $6.1 billion and $12.6 billion, respectively, to resecuritization VIEs, and retained securities of $329 million and $525 million, respectively. These amounts are not included in Table 13.1. Related total VIE assets were $111.1 billion and $112.0 billion at June 30, 2023, and December 31, 2022, respectively. As of June 30, 2023, and December 31, 2022, we held $1.3 billion and $793 million of securities, respectively.


116			Wells Fargo & Company

Sold or Securitized Loans Serviced for Others

Table 13.3 presents information about loans that we sold or securitized in which we have ongoing involvement as servicer. Delinquent loans include loans 90 days or more past due and loans in bankruptcy, regardless of delinquency status. For loans sold or securitized where servicing is our only form of continuing involvement, we generally experience a loss only if we were required to repurchase a delinquent loan or foreclosed asset due

to a breach in representations and warranties associated with our loan sale or servicing contracts. Table 13.3 excludes mortgage loans sold to and held or securitized by GSEs or GNMA of $637.0 billion and $704.5 billion at June 30, 2023, and December 31, 2022, respectively. Delinquent loans and foreclosed assets related to loans sold to and held or securitized by GSEs or GNMA were $3.4 billion and $4.6 billion at June 30, 2023, and December 31, 2022, respectively.

Table 13.3: Sold or Securitized Loans Serviced for Others


						Net charge-offs
	Total loans			Delinquent loans and foreclosed assets (1)		Six months ended June 30,
(in millions)	Jun 30, 2023		Dec 31, 2022	Jun 30, 2023	Dec 31, 2022	2023	2022
Commercial	$	66,082	67,029	849	912	67	22
Residential	8,789		9,201	433	501	8	7
Total off-balance sheet sold or securitized loans	$	74,871	76,230	1,282	1,413	75	29

(1)Includes $213 million and $274 million of commercial foreclosed assets and $28 million and $25 million of residential foreclosed assets at June 30, 2023, and December 31, 2022, respectively.

Transactions with Unconsolidated VIEs

MORTGAGE LOAN SECURITIZATIONS Table 13.4 includes nonconforming mortgage loan securitizations where we originate and transfer the loans to the unconsolidated securitization VIEs that we sponsor. For additional information about these VIEs, see the “Loan Sales and Securitization Activity” section within this Note. Nonconforming mortgage loan securitizations also include commercial mortgage loan securitizations sponsored by third parties where we did not originate or transfer the loans but serve as master servicer and invest in securities that could be potentially significant to the VIE.

Conforming loan securitization and resecuritization transactions involving the GSEs and GNMA are excluded from Table 13.4 because we are not the sponsor or we do not have power over the activities most significant to the VIEs. Additionally, due to the nature of the guarantees provided by the GSEs and the FHA and VA, our credit risk associated with these VIEs is limited. For additional information about conforming mortgage loan securitizations and resecuritizations, see the “Loan Sales and Securitization Activity” and “Resecuritization Activities” sections within this Note.

COMMERCIAL REAL ESTATE LOANS We may transfer purchased industrial development bonds and GSE credit enhancements to VIEs in exchange for beneficial interests. We may also acquire such beneficial interests in transactions where we do not act as a transferor. We own all of the beneficial interests and may also service the underlying mortgages that serve as collateral to the bonds. The GSEs have the power to direct the servicing and workout activities of the VIE in the event of a default, therefore we do not have control over the key decisions of the VIEs.

OTHER VIE STRUCTURES We engage in various forms of structured finance arrangements with other VIEs, including asset-backed finance structures and other securitizations collateralized by asset classes other than mortgages. Collateral may include rental properties, asset-backed securities, student loans and mortgage loans. We may participate in structuring or marketing the arrangements as well as provide financing, service one or more of the underlying assets, or enter into derivatives with the VIEs. We may also receive fees for those services. We are not the primary beneficiary of these structures because we do not have power to direct the most significant activities of the VIEs.

Table 13.4 provides a summary of our exposure to the unconsolidated VIEs described above, which includes investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives. We exclude certain transactions with unconsolidated VIEs when our continuing involvement is temporary or administrative in nature or insignificant in size.

In Table 13.4, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. “Carrying value” is the amount in our consolidated balance sheet related to our involvement with the unconsolidated VIEs. “Maximum exposure to loss” is determined as the carrying value of our investment in the VIEs excluding the unconditional repurchase options that have not been exercised, plus the remaining undrawn liquidity and lending commitments, the notional amount of net written derivative contracts, and generally the notional amount of, or stressed loss estimate for, other commitments and guarantees.

Debt, guarantees and other commitments include amounts related to lending arrangements, liquidity agreements, and certain loss sharing obligations associated with loans originated, sold, and serviced under certain GSE programs.

“Maximum exposure to loss” represents estimated loss that would be incurred under severe, hypothetical circumstances, for which we believe the possibility is extremely remote, such as where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this disclosure is not an indication of expected loss.


			Wells Fargo & Company			117

Note 13: Securitizations and Variable Interest Entities (continued)

Table 13.4: Unconsolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt and other liabilities	Net assets
June 30, 2023


Nonconforming mortgage loan securitizations	$	152,727	—		2,424	—	604	(12)	3,016
Commercial real estate loans	5,606		5,590		—	—	16	—	5,606
Other	2,063		256		—	45	17	—	318
Total	$	160,396	5,846		2,424	45	637	(12)	8,940
			Maximum exposure to loss
			Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt, guarantees, and other commitments	Total exposure


Nonconforming mortgage loan securitizations			$	—	2,424	—	604	12	3,040
Commercial real estate loans			5,590		—	—	16	702	6,308
Other			256		—	45	17	229	547
Total			$	5,846	2,424	45	637	943	9,895
			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt and other liabilities	Net assets
December 31, 2022


Nonconforming mortgage loan securitizations	$	154,464	—		2,420	—	617	(13)	3,024
Commercial real estate loans	5,627		5,611		—	—	16	—	5,627
Other	2,174		292		1	43	21	—	357
Total	$	162,265	5,903		2,421	43	654	(13)	9,008
			Maximum exposure to loss
			Loans		Debt securities (1)	Equity securities	All other assets (2)	Debt, guarantees, and other commitments	Total exposure


Nonconforming mortgage loan securitizations			$	—	2,420	—	617	13	3,050
Commercial real estate loans			5,611		—	—	16	705	6,332
Other			292		1	43	21	228	585
Total			$	5,903	2,421	43	654	946	9,967

(1)Includes $170 million and $172 million of securities classified as trading at June 30, 2023, and December 31, 2022, respectively.

(2)All other assets includes mortgage servicing rights, derivative assets, and other assets (predominantly servicing advances).

INVOLVEMENT WITH TAX CREDIT VIES In addition to the unconsolidated VIEs in Table 13.4, we may invest in or provide funding to affordable housing, renewable energy or similar projects that are designed to generate a return primarily through the realization of federal tax credits and other tax benefits. The projects are typically managed by third-party sponsors who have the power over the VIE’s assets, therefore, we do not consolidate the VIEs. The carrying value of our equity investments in tax credit VIEs was $19.0 billion and $18.7 billion at June 30, 2023, and December 31, 2022, respectively. We also had loans to tax credit VIEs with a carrying value of $2.0 billion at both June 30, 2023, and December 31, 2022.

Our maximum exposure to loss for tax credit VIEs at June 30, 2023, and December 31, 2022, was $29.7 billion and $28.0 billion, respectively. Our maximum exposure to loss included total unfunded equity and lending commitments of $8.8 billion and $7.3 billion at June 30, 2023, and December 31, 2022, respectively. See Note 14 (Guarantees and Other Commitments) for additional information about commitments to purchase equity securities.

Our affordable housing equity investments qualify for the low-income housing tax credit (LIHTC). For additional information on our LIHTC investments, see Note 16 (Securitizations and Variable Interest Entities) in our 2022 Form 10-K.

Consolidated VIEs

We consolidate VIEs where we are the primary beneficiary. We are the primary beneficiary of the following structure types:

COMMERCIAL AND INDUSTRIAL LOANS AND LEASES We may securitize dealer floor plan loans in a revolving master trust entity. As servicer and residual interest holder, we control the key decisions of the trust and consolidate the entity. The total VIE assets held by the master trust represent a majority of the total VIE assets presented for this category in Table 13.5. In a separate transaction structure, we may provide the majority of debt and equity financing to an SPE that engages in lending and leasing to specific vendors and service the underlying collateral.

OTHER VIE STRUCTURES Other VIEs are predominantly related to municipal tender option bond (MTOB) transactions. MTOBs are vehicles to finance the purchase of municipal bonds through the issuance of short-term debt to investors. Our involvement with MTOBs includes serving as the residual interest holder, which provides control over the key decisions of the VIE, as well as the remarketing agent or liquidity provider related to the debt issued to investors. We may also securitize nonconforming mortgage loans, in which our involvement includes servicer of the underlying assets and holder of subordinate or senior securities issued by the VIE. During second quarter 2022, we purchased the outstanding mortgage loans from the VIEs and extinguished the related debt associated with such securitizations.


118			Wells Fargo & Company

Table 13.5 presents a summary of financial assets and liabilities of our consolidated VIEs. The carrying value represents assets and liabilities recorded on our consolidated balance sheet. “Total VIE assets” includes affiliate balances that are eliminated upon consolidation, and therefore in some instances will differ from the carrying value of assets.

On our consolidated balance sheet, we separately disclose (1) the consolidated assets of certain VIEs that can only be used to settle the liabilities of those VIEs, and (2) the consolidated liabilities of certain VIEs for which the VIE creditors do not have recourse to Wells Fargo.

Table 13.5: Transactions with Consolidated VIEs


			Carrying value – asset (liability)
(in millions)	Total VIE assets		Loans	Debt securities	All other assets (1)	Liabilities (2)
June 30, 2023
Commercial and industrial loans and leases	$	7,345	4,947	—	204	(136)
Other	72		—	71	1	(72)
Total consolidated VIEs	$	7,417	4,947	71	205	(208)
December 31, 2022
Commercial and industrial loans and leases	$	7,148	4,802	—	190	(129)
Other	72		—	71	1	(72)
Total consolidated VIEs	$	7,220	4,802	71	191	(201)

(1)All other assets includes cash and due from banks, and other assets.

(2)Liabilities include short-term borrowings, and accrued expenses and other liabilities.

Other Transactions

In addition to the transactions included in the previous tables, we have used wholly-owned trust preferred security VIEs to issue debt securities or preferred equity exclusively to third-party investors. As the sole assets of the VIEs are receivables from us, we do not consolidate the VIEs even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs, and may have the right to redeem the third-party securities under certain circumstances. On our consolidated balance sheet, we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of $407 million and $401 million at June 30, 2023, and December 31, 2022, respectively.


			Wells Fargo & Company			119


Note 14: Guarantees and Other Commitments

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. For additional

descriptions of our guarantees, see Note 17 (Guarantees and Other Commitments) in our 2022 Form 10-K. Table 14.1 shows carrying value and maximum exposure to loss on our guarantees.

Table 14.1: Guarantees – Carrying Value and Maximum Exposure to Loss


			Maximum exposure to loss
(in millions)	Carrying value of obligation		Expires in one year or less	Expires after one year through three years	Expires after three years through five years	Expires after five years	Total	Non-investment grade
June 30, 2023
Standby letters of credit (1)	$	92	14,223	4,480	3,550	12	22,265	7,528
Direct pay letters of credit (1)	11		1,137	2,855	407	5	4,404	1,122
Loans and LHFS sold with recourse (2)	20		361	2,112	3,121	8,351	13,945	11,112
Exchange and clearing house guarantees	—		6,204	—	—	—	6,204	—
Other guarantees and indemnifications (3)	—		515	—	9	216	740	469
Total guarantees	$	123	22,440	9,447	7,087	8,584	47,558	20,231
December 31, 2022
Standby letters of credit (1)	$	112	14,014	4,694	3,058	53	21,819	7,071
Direct pay letters of credit (1)	13		1,593	2,734	465	5	4,797	1,283
Loans and LHFS sold with recourse (2)	16		322	1,078	3,408	8,906	13,714	11,399
Exchange and clearing house guarantees	—		4,623	—	—	—	4,623	—
Other guarantees and indemnifications (3)	—		548	1	10	201	760	515
Total guarantees	$	141	21,100	8,507	6,941	9,165	45,713	20,268

(1)Standby and direct pay letters of credit are reported net of syndications and participations.

(2)Represents recourse provided, predominantly to the GSEs, on loans sold under various programs and arrangements.

(3)Includes indemnifications provided to certain third-party clearing agents. Estimated maximum exposure to loss was $172 million and $157 million with related collateral of $1.7 billion and $1.3 billion as of June 30, 2023, and December 31, 2022, respectively.

Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a remote possibility, where the value of our interests and any associated collateral declines to zero. Maximum exposure to loss estimates in

Table 14.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, these amounts are not an indication of expected loss. We believe the carrying value is more representative of our current exposure to loss than maximum exposure to loss. The carrying value represents the fair value of the guarantee, if any, and also includes an ACL for guarantees, if applicable. In determining the ACL for guarantees, we consider the credit risk of the related contingent obligation.

For our guarantees in Table 14.1, non-investment grade represents those guarantees on which we have a higher risk of performance under the terms of the guarantee, which is determined based on an external rating or an internal credit grade that is below investment grade.

WRITTEN OPTIONS We enter into written foreign currency options and over-the-counter written equity put options that are derivative contracts that have the characteristics of a guarantee. The fair value of written options represents our view of the probability that we will be required to perform under the contract. The fair value of these written options was an asset of $449 million and a liability of $15 million at June 30, 2023, and December 31, 2022, respectively. The fair value may be an asset as a result of deferred premiums on certain option trades. The maximum exposure to loss represents the notional value of these derivative contracts. At June 30, 2023, the maximum exposure to loss was $31.8 billion, with $29.3 billion expiring in three years or less compared with $23.4 billion and $21.3 billion,

respectively, at December 31, 2022. See Note 11 (Derivatives) for additional information regarding written derivative contracts.

REPRESENTATIONS OR WARRANTIES We record a liability for mortgage loans that we expect to repurchase pursuant to various representations or warranties. See Note 13 (Securitizations and Variable Interest Entities) for further discussion and related amounts. Additionally, when we sell MSRs, we may provide indemnifications for losses incurred due to material breaches of contractual representations or warranties as well as other recourse arrangements. At June 30, 2023, our liability for these indemnification arrangements was $8 million and the maximum exposure to loss was $650 million, with $609 million expiring in three years or less.

MERCHANT PROCESSING SERVICES We provide debit and credit card transaction processing services through payment networks directly for merchants and as a sponsor for merchant processing servicers, including our joint venture with a third party that is accounted for as an equity method investment. In our role as the merchant acquiring bank, we have a potential obligation in connection with payment and delivery disputes between the merchant and the cardholder that are resolved in favor of the cardholder, referred to as a charge-back transaction. We estimate our potential maximum exposure to be the total merchant transaction volume processed in the preceding four months, which is generally the lifecycle for a charge-back transaction. As of June 30, 2023, our potential maximum exposure was approximately $789.5 billion, and related losses, including those from our joint venture entity, were insignificant.


120			Wells Fargo & Company

GUARANTEES OF SUBSIDIARIES The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue. These securities are not guaranteed by any other subsidiary of the Parent. The guaranteed liabilities were $847 million and $948 million at June 30, 2023, and December 31, 2022, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness.

OTHER COMMITMENTS To meet the financing needs of our customers, we may enter into commitments to purchase debt and equity securities to provide capital for their funding, liquidity or other future needs. As of both June 30, 2023, and December 31, 2022, we had commitments to purchase debt securities of $100 million and commitments to purchase equity securities of $5.0 billion and $3.8 billion, respectively.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. Certain of these obligations are guarantees of other members’ performance and accordingly are included in Table 14.1 in Other guarantees and indemnifications.

We have commitments to enter into resale and securities borrowing agreements as well as repurchase and securities lending agreements with certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments for resale and securities borrowing agreements was $16.6 billion and $19.9 billion as of June 30, 2023, and December 31, 2022, respectively. The amount of our unfunded contractual commitments for repurchase and securities lending agreements was $2.4 billion and $1.6 billion as of June 30, 2023, and December 31, 2022, respectively.

Given the nature of these commitments, they are excluded from Table 5.4 (Unfunded Credit Commitments) in Note 5 (Loans and Related Allowance for Credit Losses).


			Wells Fargo & Company			121


Note 15: Pledged Assets and Collateral

Pledged Assets

Table 15.1 provides the carrying amount of on-balance sheet pledged assets as well as the fair value of other pledged collateral not recognized on our consolidated balance sheet, which we have received from third parties, have the right to repledge and have repledged. These amounts include assets pledged in transactions accounted for as secured borrowings, which are presented parenthetically on our consolidated balance sheet.

TRADING RELATED ACTIVITY Our trading businesses may pledge debt and equity securities in connection with securities sold under agreements to repurchase (repurchase agreements) and securities lending arrangements. The collateral that we pledge related to our trading activities may include our own collateral as well as collateral that we have received from third parties and have the right to repledge. All of the collateral we pledge related to trading activity is eligible to be repledged or sold by the secured party.

NON-TRADING RELATED ACTIVITY As part of our liquidity management strategy, we may pledge loans, debt securities, and other financial assets to secure trust and public deposits, borrowings and letters of credit from Federal Home Loan Banks (FHLBs) and the Board of Governors of the Federal Reserve System (FRB) and for other purposes as required or permitted by law or insurance statutory requirements. Substantially all of the non-trading activity pledged collateral is not eligible to be repledged or sold by the secured party.

VIE RELATED We pledge assets in connection with various types of transactions entered into with VIEs. These pledged assets can only be used to settle the liabilities of those entities.

We also have loans recorded on our consolidated balance sheet which represent certain delinquent loans that are eligible for repurchase from GNMA loan securitizations. See Note 13 (Securitizations and Variable Interest Entities) for additional information on consolidated VIE assets.

Table 15.1: Pledged Assets


(in millions)	Jun 30, 2023		Dec 31, 2022
Related to trading activities:
Off-balance sheet repledged third-party owned debt and equity securities	$	56,044	38,191
Trading debt securities and other	51,534		28,284
Equity securities	1,996		1,477
Total pledged assets related to trading activities	109,574		67,952
Related to non-trading activities:
Loans	375,115		344,000
Debt securities:

Available-for-sale	66,018		50,538
Held-to-maturity	247,754		17,477
Equity securities	178		141
Total pledged assets related to non-trading activities	689,065		412,156
Related to VIEs:
Consolidated VIE assets	5,223		5,064
Loans eligible for repurchase from GNMA securitizations	946		749
Total pledged assets related to VIEs	6,169		5,813
Total pledged assets	$	804,808	485,921

Securities and Other Collateralized Financing Activities

We enter into resale and repurchase agreements and securities borrowing and lending agreements (collectively, “securities financing activities”) typically to finance trading positions (including securities and derivatives), acquire securities to cover short trading positions, accommodate customers’ financing needs, and settle other securities obligations. These activities are conducted through our broker-dealer subsidiaries and, to a lesser extent, through other bank entities. Our securities financing activities primarily involve high-quality, liquid securities such as U.S. Treasury securities and government agency securities and, to a lesser extent, less liquid securities, including equity securities, corporate bonds and asset-backed securities. We account for these transactions as collateralized financings in which we typically receive or pledge securities as collateral. We believe these financing transactions generally do not have material credit risk given the collateral provided and the related monitoring processes. We also enter into resale agreements

involving collateral other than securities, such as loans, as part of our commercial lending business activities.

OFFSETTING OF SECURITIES AND OTHER COLLATERALIZED FINANCING ACTIVITIES Table 15.2 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). Where legally enforceable, these master netting arrangements give the ability, in the event of default by the counterparty, to liquidate securities held as collateral and to offset receivables and payables with the same counterparty. Collateralized financings, and those with a single counterparty, are presented net on our consolidated balance sheet, provided certain criteria are met that permit balance sheet netting. The majority of transactions subject to these agreements do not meet those criteria and thus are not eligible for balance sheet netting.

Collateral we pledged consists of non-cash instruments, such as securities or loans, and is not netted on our consolidated balance sheet against the related liability. Collateral we received


122			Wells Fargo & Company

includes securities or loans and is not recognized on our consolidated balance sheet. Collateral pledged or received may be increased or decreased over time to maintain certain contractual thresholds, as the assets underlying each arrangement fluctuate in value. Generally, these agreements require collateral to exceed the asset or liability recognized on the balance sheet. The following table includes the amount of collateral pledged or received related to exposures subject to

enforceable MRAs or MSLAs. While these agreements are typically over-collateralized, U.S. GAAP requires disclosure in this table to limit the reported amount of such collateral to the amount of the related recognized asset or liability for each counterparty.

In addition to the amounts included in Table 15.2, we also have balance sheet netting related to derivatives that is disclosed in Note 11 (Derivatives).

Table 15.2: Offsetting – Securities and Other Collateralized Financing Activities


(in millions)	Jun 30, 2023		Dec 31, 2022
Assets:
Resale and securities borrowing agreements
Gross amounts recognized	$	116,017	114,729
Gross amounts offset in consolidated balance sheet (1)	(27,246)		(24,464)
Net amounts in consolidated balance sheet (2)	88,771		90,265
Collateral not recognized in consolidated balance sheet (3)	(88,285)		(89,592)
Net amount (4)	$	486	673
Liabilities:
Repurchase and securities lending agreements
Gross amounts recognized	$	94,834	55,054
Gross amounts offset in consolidated balance sheet (1)	(27,246)		(24,464)
Net amounts in consolidated balance sheet (5)	67,588		30,590
Collateral pledged but not netted in consolidated balance sheet (6)	(67,478)		(30,383)
Net amount (4)	$	110	207

(1)Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset in our consolidated balance sheet.

(2)Includes $66.5 billion and $68.0 billion classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at June 30, 2023, and December 31, 2022, respectively. Also includes $22.3 billion and $22.3 billion classified on our consolidated balance sheet in loans at June 30, 2023, and December 31, 2022, respectively.

(3)Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized asset due from each counterparty. At June 30, 2023, and December 31, 2022, we have received total collateral with a fair value of $140.0 billion and $136.6 billion, respectively, all of which we have the right to sell or repledge. These amounts include securities we have sold or repledged to others with a fair value of $83.4 billion and $59.1 billion at June 30, 2023, and December 31, 2022, respectively.

(4)Represents the amount of our exposure (assets) or obligation (liabilities) that is not collateralized and/or is not subject to an enforceable MRA or MSLA.

(5)Amount is classified in short-term borrowings on our consolidated balance sheet.

(6)Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized liability owed to each counterparty. At June 30, 2023, and December 31, 2022, we have pledged total collateral with a fair value of $97.1 billion and $56.3 billion, respectively, substantially all of which may be sold or repledged by the counterparty.

REPURCHASE AND SECURITIES LENDING AGREEMENTS Securities sold under repurchase agreements and securities lending arrangements are effectively short-term collateralized borrowings. In these transactions, we receive cash in exchange for transferring securities as collateral and recognize an obligation to reacquire the securities for cash at the transaction’s maturity. These types of transactions create risks, including (1) the counterparty may fail to return the securities at maturity, (2) the fair value of the securities transferred may decline below the amount of our obligation to reacquire the securities, and therefore create an obligation for us to pledge additional amounts, and (3) the counterparty may accelerate the maturity on demand, requiring us to reacquire the security prior to contractual maturity. We attempt to mitigate these risks in various ways. Our collateral primarily consists of highly liquid securities. In addition, we underwrite and monitor the financial strength of our counterparties, monitor the fair value of collateral pledged relative to contractually required repurchase amounts, and monitor that our collateral is properly returned through the clearing and settlement process in advance of our cash repayment. Table 15.3 provides the gross amounts recognized on our consolidated balance sheet (before the effects of offsetting) of our liabilities for repurchase and securities lending agreements disaggregated by underlying collateral type.


			Wells Fargo & Company			123

Note 15: Pledged Assets and Collateral (continued)

Table 15.3: Gross Obligations by Underlying Collateral Type


(in millions)	Jun 30, 2023		Dec 31, 2022
Repurchase agreements:
Securities of U.S. Treasury and federal agencies	$	34,235	27,857
Securities of U.S. States and political subdivisions	79		83
Federal agency mortgage-backed securities	42,968		8,386
Non-agency mortgage-backed securities	694		682
Corporate debt securities	6,617		6,541
Asset-backed securities	2,633		1,529
Equity securities	433		711
Other	245		300
Total repurchases	87,904		46,089
Securities lending arrangements:
Securities of U.S. Treasury and federal agencies	284		278

Federal agency mortgage-backed securities	62		58

Corporate debt securities	210		206

Equity securities (1)	6,342		8,356
Other	32		67
Total securities lending	6,930		8,965
Total repurchases and securities lending	$	94,834	55,054

(1)Equity securities are generally exchange traded and represent collateral received from third parties that has been repledged. We received the collateral through either margin lending agreements or contemporaneous securities borrowing transactions with other counterparties.

Table 15.4 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.

Table 15.4: Contractual Maturities of Gross Obligations


(in millions)	Overnight/continuous		Up to 30 days	30-90 days	>90 days	Total gross obligation
June 30, 2023
Repurchase agreements	$	77,293	492	3,784	6,335	87,904
Securities lending arrangements	6,830		—	—	100	6,930
Total repurchases and securities lending (1)	$	84,123	492	3,784	6,435	94,834
December 31, 2022
Repurchase agreements	$	36,251	734	2,884	6,220	46,089
Securities lending arrangements	8,965		—	—	—	8,965
Total repurchases and securities lending (1)	$	45,216	734	2,884	6,220	55,054

(1)Securities lending is executed under agreements that allow either party to terminate the transaction without notice, while repurchase agreements have a term structure to them that technically matures at a point in time. The overnight/continuous repurchase agreements require election of both parties to roll the trade rather than the election to terminate the arrangement as in securities lending.


124			Wells Fargo & Company


Note 16: Operating Segments

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. 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 with our Chief Executive Officer and relevant senior management. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenue 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.

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

Corporate 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. Corporate also includes certain lines of business that management has determined are no longer consistent with the long-term strategic goals of the Company as well as results for previously divested businesses.

Basis of Presentation

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

REVENUE AND EXPENSE SHARING When lines of business jointly serve customers, the line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to the other line of business based on established internal revenue-sharing agreements.

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


			Wells Fargo & Company			125

Note 16: Operating Segments (continued)

Table 16.1 presents our results by operating segment.

Table 16.1: Operating Segments


(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
Quarter ended June 30, 2023
Net interest income (3)	$	7,490	2,501	2,359	1,009	(91)	(105)	13,163
Noninterest income	1,965		868	2,272	2,639	121	(495)	7,370
Total revenue	9,455		3,369	4,631	3,648	30	(600)	20,533
Provision for credit losses	874		26	933	24	(144)	—	1,713
Noninterest expense	6,027		1,630	2,087	2,974	269	—	12,987
Income (loss) before income tax expense (benefit)	2,554		1,713	1,611	650	(95)	(600)	5,833
Income tax expense (benefit)	640		429	401	163	(103)	(600)	930
Net income before noncontrolling interests	1,914		1,284	1,210	487	8	—	4,903
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(38)	—	(35)
Net income	$	1,914	1,281	1,210	487	46	—	4,938
Quarter ended June 30, 2022
Net interest income (3)	$	6,372	1,580	2,057	916	(619)	(108)	10,198
Noninterest income	2,135		912	1,516	2,789	(102)	(408)	6,842
Total revenue	8,507		2,492	3,573	3,705	(721)	(516)	17,040
Provision for credit losses	613		21	(62)	(7)	15	—	580
Noninterest expense	6,036		1,478	1,840	2,911	597	—	12,862
Income (loss) before income tax expense (benefit)	1,858		993	1,795	801	(1,333)	(516)	3,598
Income tax expense (benefit)	465		249	459	198	(233)	(516)	622
Net income (loss) before noncontrolling interests	1,393		744	1,336	603	(1,100)	—	2,976
Less: Net income (loss) from noncontrolling interests	—		3	—	—	(169)	—	(166)
Net income (loss)	$	1,393	741	1,336	603	(931)	—	3,142
Six months ended June 30, 2023
Net interest income (3)	$	14,923	4,990	4,820	2,053	(75)	(212)	26,499
Noninterest income	3,896		1,686	4,713	5,276	126	(934)	14,763
Total revenue	18,819		6,676	9,533	7,329	51	(1,146)	41,262
Provision for credit losses	1,741		(17)	1,185	35	(24)	—	2,920
Noninterest expense	12,065		3,382	4,304	6,035	877	—	26,663
Income (loss) before income tax expense (benefit)	5,013		3,311	4,044	1,259	(802)	(1,146)	11,679
Income tax expense (benefit)	1,258		828	1,016	315	(375)	(1,146)	1,896
Net income (loss) before noncontrolling interests	3,755		2,483	3,028	944	(427)	—	9,783
Less: Net income (loss) from noncontrolling interests	—		6	—	—	(152)	—	(146)
Net income (loss)	$	3,755	2,477	3,028	944	(275)	—	9,929
Six months ended June 30, 2022
Net interest income (3)	$	12,368	2,941	4,047	1,715	(1,437)	(215)	19,419
Noninterest income	4,702		1,878	2,996	5,747	840	(814)	15,349
Total revenue	17,070		4,819	7,043	7,462	(597)	(1,029)	34,768
Provision for credit losses	423		(323)	(258)	(44)	(5)	—	(207)
Noninterest expense	12,431		3,009	3,823	6,086	1,364	—	26,713
Income (loss) before income tax expense (benefit)	4,216		2,133	3,478	1,420	(1,956)	(1,029)	8,262
Income tax expense (benefit)	1,053		529	884	352	(421)	(1,029)	1,368
Net income (loss) before noncontrolling interests	3,163		1,604	2,594	1,068	(1,535)	—	6,894
Less: Net income (loss) from noncontrolling interests	—		6	—	—	(42)	—	(36)
Net income (loss)	$	3,163	1,598	2,594	1,068	(1,493)	—	6,930












(continued on following page)


126			Wells Fargo & Company


(continued from previous page)

	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate (1)	Reconciling Items (2)	Consolidated Company
Quarter ended June 30, 2023
Loans (average)	$	336,351	225,824	291,470	83,045	9,216	—	945,906
Assets (average)	378,532		249,230	550,091	89,983	610,417	—	1,878,253
Deposits (average)	823,339		166,747	160,251	112,360	84,752	—	1,347,449

Six months ended June 30, 2023
Loans (average)	$	337,325	224,333	293,097	83,331	9,185	—	947,271
Assets (average)	380,135		247,674	549,453	90,450	603,293	—	1,871,005
Deposits (average)	832,252		168,597	158,908	119,443	72,846	—	1,352,046

Loans (period-end)	336,217		228,711	291,345	82,456	9,231	—	947,960
Assets (period-end)	378,078		255,914	559,520	89,211	593,597	—	1,876,320
Deposits (period-end)	820,495		164,764	158,770	108,532	92,023	—	1,344,584
Quarter ended June 30, 2022
Loans (average)	$	330,859	202,019	298,694	85,912	9,083	—	926,567
Assets (average)	379,194		223,890	564,306	92,575	642,606	—	1,902,571
Deposits (average)	898,650		188,286	164,860	173,670	20,327	—	1,445,793

Six months ended June 30, 2022
Loans (average)	$	327,973	198,228	291,635	85,342	9,187	—	912,365
Assets (average)	377,043		219,438	557,891	91,713	664,853	—	1,910,938
Deposits (average)	890,042		194,458	167,009	179,708	23,665	—	1,454,882

Loans (period-end)	335,732		205,241	308,286	85,342	9,133	—	943,734
Assets (period-end)	380,353		229,454	567,733	91,944	611,657	—	1,881,141
Deposits (period-end)	892,373		183,145	162,439	165,633	21,563	—	1,425,153

(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.

(3)Net interest income is interest earned on assets minus the interest paid on liabilities to fund those assets. Segment interest earned includes actual interest income on segment assets as well as a funding credit for their deposits. Segment interest paid on liabilities includes actual interest expense on segment liabilities as well as a funding charge for their assets.


			Wells Fargo & Company			127


Note 17: Revenue and Expenses

Revenue

Our revenue includes net interest income on financial instruments and noninterest income. Table 17.1 presents our

revenue by operating segment. For additional description of our

operating segments, including additional financial information

and the underlying management accounting process, see

Note 16 (Operating Segments). For a description of our revenue from contracts with customers, see Note 20 (Revenue and Expenses) in our 2022 Form 10-K.

Table 17.1: Revenue by Operating Segment


(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Reconciling Items (1)	Consolidated Company
Quarter ended June 30, 2023
Net interest income (2)	$	7,490	2,501	2,359	1,009	(91)	(105)	13,163
Noninterest income:
Deposit-related fees	666		248	247	6	(2)	—	1,165
Lending-related fees (2)	28		131	191	2	—	—	352
Investment advisory and other asset-based fees (3)	—		17	36	2,110	—	—	2,163
Commissions and brokerage services fees	—		—	76	494	—	—	570
Investment banking fees	(4)		15	390	—	(25)	—	376
Card fees:
Card interchange and network revenue (4)	929		59	15	1	1	—	1,005
Other card fees (2)	93		—	—	—	—	—	93
Total card fees	1,022		59	15	1	1	—	1,098
Mortgage banking (2)	132		—	73	(3)	—	—	202
Net gains (losses) from trading activities (2)	—		(6)	1,081	21	26	—	1,122
Net gains from debt securities (2)	—		—	—	—	4	—	4
Net gains (losses) from equity securities (2)	—		2	(16)	—	(80)	—	(94)
Lease income (2)	—		167	4	—	136	—	307
Other (2)	121		235	175	8	61	(495)	105
Total noninterest income	1,965		868	2,272	2,639	121	(495)	7,370
Total revenue	$	9,455	3,369	4,631	3,648	30	(600)	20,533
Quarter ended June 30, 2022
Net interest income (2)	$	6,372	1,580	2,057	916	(619)	(108)	10,198
Noninterest income:
Deposit-related fees	779		310	280	7	—	—	1,376
Lending-related fees (2)	34		122	195	2	—	—	353
Investment advisory and other asset-based fees (3)	—		10	30	2,306	—	—	2,346
Commissions and brokerage services fees	—		—	83	459	—	—	542
Investment banking fees	(2)		15	307	—	(34)	—	286
Card fees:
Card interchange and network revenue (4)	920		58	15	1	—	—	994
Other card fees (2)	118		—	—	—	—	—	118
Total card fees	1,038		58	15	1	—	—	1,112
Mortgage banking (2)	211		—	79	(3)	—	—	287
Net gains from trading activities (2)	—		—	378	11	57	—	446
Net gains from debt securities (2)	—		5	—	—	138	—	143
Net losses from equity securities (2)	(8)		(67)	(2)	(1)	(537)	—	(615)
Lease income (2)	—		179	11	—	143	—	333
Other (2)(5)	83		280	140	7	131	(408)	233
Total noninterest income	2,135		912	1,516	2,789	(102)	(408)	6,842
Total revenue	$	8,507	2,492	3,573	3,705	(721)	(516)	17,040
Six months ended June 30, 2023
Net interest income (2)	$	14,923	4,990	4,820	2,053	(75)	(212)	26,499
Noninterest income:
Deposit-related fees	1,338		484	483	11	(3)	—	2,313
Lending-related fees (2)	59		260	385	4	—	—	708
Investment advisory and other asset-based fees (3)	—		35	71	4,171	—	—	4,277
Commissions and brokerage services fees	—		—	154	1,035	—	—	1,189
Investment banking fees	(4)		35	704	—	(33)	—	702
Card fees:
Card interchange and network revenue (4)	1,792		115	32	2	2	—	1,943
Other card fees (2)	188		—	—	—	—	—	188
Total card fees	1,980		115	32	2	2	—	2,131
Mortgage banking (2)	292		—	148	(6)	—	—	434
Net gains (losses) from trading activities (2)	—		(7)	2,338	44	89	—	2,464
Net gains from debt securities (2)	—		—	—	—	4	—	4
Net losses from equity securities (2)	—		(10)	(17)	(2)	(422)	—	(451)
Lease income (2)	—		336	46	—	272	—	654
Other (2)	231		438	369	17	217	(934)	338
Total noninterest income	3,896		1,686	4,713	5,276	126	(934)	14,763
Total revenue	$	18,819	6,676	9,533	7,329	51	(1,146)	41,262


(continued on following page)


128			Wells Fargo & Company


(continued from previous page)

(in millions)	Consumer Banking and Lending		Commercial Banking	Corporate and Investment Banking	Wealth and Investment Management	Corporate	Reconciling Items (1)	Consolidated Company
Six months ended June 30, 2022
Net interest income (2)	$	12,368	2,941	4,047	1,715	(1,437)	(215)	19,419
Noninterest income:
Deposit-related fees	1,624		638	573	14	—	—	2,849
Lending-related fees (2)	68		243	380	4	—	—	695
Investment advisory and other asset-based fees (3)	—		12	42	4,782	8	—	4,844
Commissions and brokerage services fees	—		—	166	913	—	—	1,079
Investment banking fees	(3)		30	769	—	(63)	—	733
Card fees:
Card interchange and network revenue (4)	1,754		111	29	2	—	—	1,896
Other card fees (2)	245		—	—	—	—	—	245
Total card fees	1,999		111	29	2	—	—	2,141
Mortgage banking (2)	865		—	121	(6)	—	—	980
Net gains from trading activities (2)	—		—	606	12	46	—	664
Net gains from debt securities (2)	—		5	—	—	140	—	145
Net gains (losses) from equity securities (2)	(17)		19	(7)	(1)	(33)	—	(39)
Lease income (2)	—		358	13	—	289	—	660
Other (2)(5)	166		462	304	27	453	(814)	598
Total noninterest income	4,702		1,878	2,996	5,747	840	(814)	15,349
Total revenue	$	17,070	4,819	7,043	7,462	(597)	(1,029)	34,768

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

(2)These revenue types are related to financial assets and liabilities, including loans, leases, securities and derivatives, with additional details included in other footnotes to our financial statements.

(3)We earned trailing commissions of $227 million and $454 million for the second quarter and first half of 2023, respectively, and $245 million and $516 million for the second quarter and first half of 2022, respectively.

(4)The cost of credit card rewards and rebates of $628 million and $1.2 billion for the second quarter and first half of 2023, respectively, and $552 million and $1.0 billion for the second quarter and first half of 2022, respectively, are presented net against the related revenue.

(5)In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see Note 1 (Summary of Significant Accounting Policies).

Expenses

OPERATING LOSSES Operating losses consist of litigation, regulatory matters, customer remediation activities, and losses from other business activities, such as fraud losses. Operating losses may have significant variability given the inherent and unpredictable nature of litigation, regulatory, and customer remediation matters. The timing and determination of the amount of any associated losses for these matters depends on a variety of factors, some of which are outside of our control. Our operating losses were $232 million and $499 million for the second quarter and first half of 2023, respectively, compared with $576 million and $1.2 billion in the same periods a year ago. See Note 10 (Legal Actions) for additional information on accruals for legal actions.

OTHER EXPENSES Regulatory Charges and Assessments expense, which is included in other noninterest expense, was $301 million and $572 million in the second quarter and first half of 2023, respectively, compared with $208 million and $433 million in the same periods a year ago, and primarily consisted of Federal Deposit Insurance Corporation (FDIC) deposit assessment expense.

In May 2023, the FDIC proposed a rule to recover by special assessment losses to the FDIC deposit insurance fund as a result of recent bank failures. Under the proposed rule, the FDIC would collect a special assessment based on a calculation using an insured depository institution’s estimated amount of uninsured deposits. As currently proposed, the amount of our special assessment may be up to $1.8 billion (pre-tax), and we expect to expense the entire amount upon the FDIC’s finalization of the rule. The proposed rule may be changed prior to finalization and any changes may affect the timing or amount of the special assessment.


			Wells Fargo & Company			129


Note 18: Employee Benefits

Pension and Postretirement Plans

We sponsor a frozen noncontributory qualified defined benefit retirement plan, the Wells Fargo & Company Cash Balance Plan (Cash Balance Plan), which covers eligible employees of Wells Fargo. The Cash Balance Plan was frozen on July 1, 2009, and no new benefits accrue after that date. For additional information on our pension and postretirement plans, including plan assumptions, investment strategy and asset allocation, projected benefit payments, and valuation methodologies used

for assets measured at fair value, see Note 1 (Summary of Significant Accounting Policies) and Note 21 (Employee Benefits) in our 2022 Form 10-K.

Table 18.1 presents the components of net periodic benefit cost. Service cost is reported in personnel expense and all other components of net periodic benefit cost are reported in other noninterest expense on our consolidated statement of income.

Table 18.1: Net Periodic Benefit Cost


	2023				2022
	Pension benefits				Pension benefits
(in millions)	Qualified		Non- qualified	Other benefits	Qualified	Non- qualified	Other benefits
Quarter ended June 30,
Service cost	$	7	—	—	5	—	—
Interest cost	100		4	4	82	3	3
Expected return on plan assets	(126)		—	(7)	(126)	—	(6)
Amortization of net actuarial loss (gain)	35		1	(6)	33	3	(6)
Amortization of prior service credit	—		—	(2)	—	—	(2)
Settlement loss	—		—	—	62	—	—
Net periodic benefit cost	$	16	5	(11)	56	6	(11)
Six months ended June 30,
Service cost	$	13	—	—	10	—	—
Interest cost	201		9	8	149	5	5
Expected return on plan assets	(252)		—	(13)	(265)	—	(11)
Amortization of net actuarial loss (gain)	70		2	(12)	66	6	(11)
Amortization of prior service credit	—		—	(5)	—	—	(5)
Settlement loss	—		—	—	109	1	—
Net periodic benefit cost	$	32	11	(22)	69	12	(22)


130			Wells Fargo & Company


Note 19: Earnings and Dividends Per Common Share

Table 19.1 shows earnings per common share and diluted earnings per common share and reconciles the numerator and denominator of both earnings per common share calculations.

Table 19.1: Earnings Per Common Share Calculations


		Quarter ended June 30,			Six months ended June 30,
(in millions, except per share amounts)		2023		2022	2023		2022
Wells Fargo net income (1)		$	4,938	3,142	$	9,929	6,930
Less: Preferred stock dividends and other		279		279	557		558
Wells Fargo net income applicable to common stock (numerator) (1)		$	4,659	2,863	$	9,372	6,372
Earnings per common share
Average common shares outstanding (denominator)		3,699.9		3,793.8	3,742.6		3,812.3
Per share		$	1.26	0.75	$	2.50	1.67
Diluted earnings per common share
Average common shares outstanding		3,699.9		3,793.8	3,742.6		3,812.3

Add:	Restricted share rights (2)	25.0		25.8	29.8		32.7
Diluted average common shares outstanding (denominator)		3,724.9		3,819.6	3,772.4		3,845.0
Per share		$	1.25	0.75	$	2.48	1.66

(2)Calculated using the treasury stock method.

Table 19.2 presents the outstanding securities that were anti-dilutive and therefore not included in the calculation of diluted earnings per common share.

Table 19.2: Outstanding Anti-Dilutive Securities


			Weighted-average shares
	Quarter ended June 30,		Six months ended June 30,
(in millions)	2023	2022	2023	2022
Convertible Preferred Stock, Series L (1)	25.3	25.3	25.3	25.3
Restricted share rights (2)	0.2	0.2	0.4	0.2

(1) Calculated using the if-converted method.

(2) Calculated using the treasury stock method.

Table 19.3 presents dividends declared per common share.

Table 19.3: Dividends Declared Per Common Share


	Quarter ended June 30,			Six months ended June 30,
	2023		2022	2023		2022
Per common share	$	0.30	0.25	$	0.60	0.50


			Wells Fargo & Company			131


Note 20: Other Comprehensive Income

Table 20.1 provides the components of other comprehensive income (OCI), reclassifications to net income by income statement line item, and the related tax effects.

Table 20.1: Summary of Other Comprehensive Income


	Quarter ended June 30,								Six months ended June 30,
	2023					2022			2023			2022
(in millions)	Before tax		Tax effect	Net of tax		Before tax	Tax effect	Net of tax	Before tax	Tax effect	Net of tax	Before tax	Tax effect	Net of tax
Debt securities:
Net unrealized gains (losses) arising during the period	$	(557)	138	(419)		(4,806)	1,183	(3,623)	(199)	51	(148)	(11,694)	2,880	(8,814)
Reclassification of net (gains) losses to net income	148		(37)	111		4	(1)	3	269	(67)	202	62	(16)	46
Net change	(409)		101	(308)		(4,802)	1,182	(3,620)	70	(16)	54	(11,632)	2,864	(8,768)
Derivatives and hedging activities:
Fair Value Hedges:
Change in fair value of excluded components on fair value hedges (1)	5		(1)	4		46	(11)	35	11	(3)	8	110	(27)	83
Cash Flow Hedges:
Net unrealized gains (losses) arising during the period on cash flow hedges	(1,001)		248	(753)		(114)	28	(86)	(617)	153	(464)	(165)	41	(124)
Reclassification of net (gains) losses to net income	185		(46)	139		(43)	11	(32)	298	(74)	224	(29)	7	(22)
Net change	(811)		201	(610)		(111)	28	(83)	(308)	76	(232)	(84)	21	(63)
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period	—		—	—		(120)	30	(90)	—	—	—	(101)	25	(76)
Reclassification of amounts to noninterest expense (2)	28		(7)	21		90	(22)	68	55	(13)	42	166	(40)	126
Net change	28		(7)	21		(30)	8	(22)	55	(13)	42	65	(15)	50
Debit valuation adjustments (DVA) and other:
Net unrealized gains (losses) arising during the period (3)	(13)		3	(10)		101	(21)	80	(9)	2	(7)	113	(24)	89
Reclassification of net (gains) losses to net income	—		—	—		—	—	—	—	—	—	—	—	—
Net change	(13)		3	(10)		101	(21)	80	(9)	2	(7)	113	(24)	89
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period	39		—	39		(122)	(2)	(124)	65	(1)	64	(127)	(2)	(129)
Reclassification of net (gains) losses to net income	—		—	—		—	—	—	—	—	—	—	—	—
Net change	39		—	39		(122)	(2)	(124)	65	(1)	64	(127)	(2)	(129)
Other comprehensive income (loss)	$	(1,166)	298	(868)		(4,964)	1,195	(3,769)	(127)	48	(79)	(11,665)	2,844	(8,821)
Less: Other comprehensive income from noncontrolling interests, net of tax				1				—			—			1
Wells Fargo other comprehensive loss, net of tax				$	(869)			(3,769)			(79)			(8,822)

(1)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income.

(2)These items are included in the computation of net periodic benefit cost (see Note 18 (Employee Benefits) for additional information).


132			Wells Fargo & Company

Table 20.2 provides the accumulated OCI (AOCI) balance activity on an after-tax basis.

Table 20.2: Accumulated OCI Balances


(in millions)	Debt securities		Fair value hedges (1)	Cash flow hedges (2)	Defined benefit plans adjustments	Debit valuation adjustments (DVA) and other	Foreign currency translation adjustments	Accumulated other comprehensive income (loss)
Quarter ended June 30, 2023
Balance, beginning of period	$	(9,473)	(73)	(809)	(1,880)	17	(354)	(12,572)


Net unrealized gains (losses) arising during the period	(419)		4	(753)	—	(10)	39	(1,139)
Amounts reclassified from accumulated other comprehensive income	111		—	139	21	—	—	271
Net change	(308)		4	(614)	21	(10)	39	(868)
Less: Other comprehensive income from noncontrolling interests	—		—	—	—	—	1	1
Balance, end of period (3)(4)	$	(9,781)	(69)	(1,423)	(1,859)	7	(316)	(13,441)
Quarter ended June 30, 2022
Balance, beginning of period	$	(4,483)	(95)	(55)	(1,983)	(3)	(148)	(6,767)
Transition adjustment (3)	—		—	—	—	(32)	—	(32)
Balance, beginning of period (3)	(4,483)		(95)	(55)	(1,983)	(35)	(148)	(6,799)
Net unrealized gains (losses) arising during the period	(3,623)		35	(86)	(90)	80	(124)	(3,808)
Amounts reclassified from accumulated other comprehensive income	3		—	(32)	68	—	—	39
Net change	(3,620)		35	(118)	(22)	80	(124)	(3,769)
Less: Other comprehensive income (loss) from noncontrolling interests	—		—	—	—	—	—	—
Balance, end of period (3)(4)	$	(8,103)	(60)	(173)	(2,005)	45	(272)	(10,568)
Six months ended June 30, 2023
Balance, beginning of period	$	(9,835)	(77)	(1,183)	(1,901)	(6)	(380)	(13,382)
Transition adjustment (3)	—		—	—	—	20	—	20
Balance, beginning of period (3)	(9,835)		(77)	(1,183)	(1,901)	14	(380)	(13,362)
Net unrealized gains (losses) arising during the period	(148)		8	(464)	—	(7)	64	(547)
Amounts reclassified from accumulated other comprehensive income	202		—	224	42	—	—	468
Net change	54		8	(240)	42	(7)	64	(79)
Less: Other comprehensive income (loss) from noncontrolling interests	—		—	—	—	—	—	—
Balance, end of period (3)(4)	$	(9,781)	(69)	(1,423)	(1,859)	7	(316)	(13,441)
Six months ended June 30, 2022

Balance, beginning of period	$	665	(143)	(27)	(2,055)	—	(142)	(1,702)
Transition adjustment (3)	—		—	—	—	(44)	—	(44)
Balance, beginning of period (3)	665		(143)	(27)	(2,055)	(44)	(142)	(1,746)
Net unrealized gains (losses) arising during the period	(8,814)		83	(124)	(76)	89	(129)	(8,971)
Amounts reclassified from accumulated other comprehensive income	46		—	(22)	126	—	—	150
Net change	(8,768)		83	(146)	50	89	(129)	(8,821)
Less: Other comprehensive income from noncontrolling interests	—		—	—	—	—	1	1
Balance, end of period (3)(4)	$	(8,103)	(60)	(173)	(2,005)	45	(272)	(10,568)

(1)Substantially all of the amounts for fair value hedges are foreign exchange contracts.

(2)Substantially all of the amounts for cash flow hedges are interest rate contracts.

(4)AOCI related to debt securities includes after-tax unrealized gains or losses associated with the transfer of securities from AFS to HTM of $3.7 billion and $3.4 billion at June 30, 2023 and 2022, respectively. These amounts are subsequently amortized from AOCI into earnings over the same period as the related unamortized premiums and discounts.


			Wells Fargo & Company			133


Note 21: Regulatory Capital Requirements and Other Restrictions

Regulatory Capital Requirements

The Company and each of its subsidiary banks are subject to regulatory capital adequacy requirements promulgated by federal banking regulators. The FRB establishes capital requirements for the consolidated financial holding company, and the Office of the Comptroller of the Currency (OCC) has similar requirements for the Company’s national banks, including Wells Fargo Bank, N.A. (the Bank).

Table 21.1 presents regulatory capital information for the Company and the Bank in accordance with Basel III capital requirements. We must calculate our risk-based capital ratios

under both the Standardized and Advanced Approaches. The Standardized Approach applies assigned risk weights to broad risk categories, while the calculation of risk-weighted assets (RWAs) under the Advanced Approach differs by requiring applicable banks to utilize a risk-sensitive methodology, which relies upon the use of internal credit models, and includes an operational risk component.

At June 30, 2023, the Bank and our other insured depository institutions were considered well-capitalized under the requirements of the Federal Deposit Insurance Act.

Table 21.1: Regulatory Capital Information


	Wells Fargo & Company								Wells Fargo Bank, N.A.
	Standardized Approach						Advanced Approach		Standardized Approach			Advanced Approach
(in millions, except ratios)	June 30, 2023				December 31, 2022		June 30, 2023	December 31, 2022	June 30, 2023		December 31, 2022	June 30, 2023	December 31, 2022
Regulatory capital:
Common Equity Tier 1	$	134,221			133,527		134,221	133,527	142,300		140,644	142,300	140,644
Tier 1	153,201				152,567		153,201	152,567	142,300		140,644	142,300	140,644
Total	187,563				186,747		176,926	177,258	166,077		163,885	155,862	154,292
Assets:
Risk-weighted assets	1,250,690				1,259,889		1,118,379	1,112,307	1,153,795		1,177,300	975,072	977,713
Adjusted average assets	1,850,084				1,846,954		1,850,084	1,846,954	1,651,211		1,685,401	1,651,211	1,685,401
Regulatory capital ratios:
Common Equity Tier 1 capital	10.73		%	*	10.60		12.00	12.00	12.33	*	11.95	14.59	14.39
Tier 1 capital	12.25			*	12.11		13.70	13.72	12.33	*	11.95	14.59	14.39
Total capital	15.00			*	14.82		15.82	15.94	14.39	*	13.92	15.98	15.78
Required minimum capital ratios:
Common Equity Tier 1 capital	9.20				9.20		8.50	8.50	7.00		7.00	7.00	7.00
Tier 1 capital	10.70				10.70		10.00	10.00	8.50		8.50	8.50	8.50
Total capital	12.70				12.70		12.00	12.00	10.50		10.50	10.50	10.50
	Wells Fargo & Company								Wells Fargo Bank, N.A.
	June 30, 2023						December 31, 2022		June 30, 2023			December 31, 2022
Regulatory leverage:
Total leverage exposure (1)	$	2,217,575					2,224,789		2,005,228			2,058,568
Supplementary leverage ratio (SLR) (1)	6.91					%	6.86		7.10			6.83
Tier 1 leverage ratio (2)	8.28						8.26		8.62			8.34
Required minimum leverage:
Supplementary leverage ratio	5.00						5.00		6.00			6.00
Tier 1 leverage ratio	4.00						4.00		4.00			4.00

*Denotes the binding ratio under the Standardized and Advanced Approaches at June 30, 2023.

(1)The SLR consists of Tier 1 capital divided by total leverage exposure. Total leverage exposure consists of total average assets, less goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities), plus certain off-balance sheet exposures.

(2)The Tier 1 leverage ratio consists of Tier 1 capital divided by total average assets, excluding goodwill and certain other items as determined under the rule.

At June 30, 2023, the Common Equity Tier 1 (CET1), Tier 1 and total capital ratio requirements for the Company included a global systemically important bank (G-SIB) surcharge of 1.50%. The G-SIB surcharge is not applicable to the Bank. In addition, the CET1, Tier 1 and total capital ratio requirements for the Company included a stress capital buffer of 3.20% under the Standardized Approach and a capital conservation buffer of 2.50% under the Advanced Approach. The capital ratio requirements for the Bank included a capital conservation buffer of 2.50% under both the Standardized and Advanced Approaches. The Company is required to maintain these risk-based capital ratios and to maintain an SLR of at least 5.00% (composed of a 3.00% minimum requirement plus a supplementary leverage buffer of 2.00%) to avoid restrictions on capital distributions and discretionary bonus payments. The Bank is required to maintain an SLR of at least 6.00% to be considered well-capitalized under applicable regulatory capital adequacy rules.

Capital Planning Requirements

The FRB’s capital plan rule establishes capital planning and other requirements that govern capital distributions, including dividends and share repurchases, by certain large bank holding companies (BHCs), including Wells Fargo. The FRB conducts an annual Comprehensive Capital Analysis and Review exercise and has also published guidance regarding its supervisory expectations for capital planning, including capital policies regarding the process relating to common stock dividend and repurchase decisions in the FRB’s SR Letter 15-18. The Parent’s ability to make certain capital distributions is subject to the requirements of the capital plan rule and is also subject to the Parent meeting or exceeding certain regulatory capital minimums.


134			Wells Fargo & Company

Loan and Dividend Restrictions

Federal law restricts the amount and the terms of both credit and non-credit transactions between a bank and its nonbank affiliates. Additionally, federal laws and regulations limit, and regulators can impose additional limitations on, the dividends that a national bank may pay.

Our nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. In addition, under a Support Agreement dated June 28, 2017, as amended and restated on June 26, 2019, among Wells Fargo & Company, the parent holding company (Parent), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (IHC), the Bank, Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, and certain other subsidiaries of the Parent designated from time to time as material entities for resolution planning purposes or identified from time to time as related support entities in our resolution plan, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code.

For additional information on loan and dividend restrictions, see Note 25 (Regulatory Capital Requirements and Other Restrictions) in our 2022 Form 10-K.

Cash Restrictions

Cash and cash equivalents may be restricted as to usage or withdrawal. Table 21.2 provides a summary of restrictions on cash and cash equivalents.

Table 21.2: Nature of Restrictions on Cash and Cash Equivalents


(in millions)	Jun 30, 2023		Dec 31, 2022
Reserve balance for non-U.S. central banks	$	229	238
Segregated for benefit of brokerage customers under federal and other brokerage regulations	690		898


			Wells Fargo & Company			135


Glossary of Acronyms

ACL	Allowance for credit losses	HTM	Held-to-maturity
AFS	Available-for-sale	LCR	Liquidity coverage ratio
AOCI	Accumulated other comprehensive income	LHFS	Loans held for sale
ARM	Adjustable-rate mortgage	LIBOR	London Interbank Offered Rate
ASC	Accounting Standards Codification	LIHTC	Low-income housing tax credit
ASU	Accounting Standards Update	LOCOM	Lower of cost or fair value
AVM	Automated valuation model	LTV	Loan-to-value
BCBS	Basel Committee on Banking Supervision	MBS	Mortgage-backed securities
BHC	Bank holding company	MSR	Mortgage servicing right
CCAR	Comprehensive Capital Analysis and Review	NAV	Net asset value
CD	Certificate of deposit	NPA	Nonperforming asset
CECL	Current expected credit loss	NSFR	Net stable funding ratio
CET1	Common Equity Tier 1	OCC	Office of the Comptroller of the Currency
CFPB	Consumer Financial Protection Bureau	OCI	Other comprehensive income
CLO	Collateralized loan obligation	OTC	Over-the-counter
CLTV	Combined loan-to-value	PCD	Purchased credit-deteriorated
CPI	Collateral protection insurance	PTPP	Pre-tax pre-provision profit
CRE	Commercial real estate	RMBS	Residential mortgage-backed securities
DPD	Days past due	ROA	Return on average assets
ESOP	Employee Stock Ownership Plan	ROE	Return on average equity
FASB	Financial Accounting Standards Board	ROTCE	Return on average tangible common equity
FDIC	Federal Deposit Insurance Corporation	RWAs	Risk-weighted assets
FHA	Federal Housing Administration	SEC	Securities and Exchange Commission
FHLB	Federal Home Loan Bank	S&P	Standard & Poor’s Global Ratings
FHLMC	Federal Home Loan Mortgage Corporation	SLR	Supplementary leverage ratio
FICO	Fair Isaac Corporation (credit rating)	SOFR	Secured Overnight Financing Rate
FNMA	Federal National Mortgage Association	SPE	Special purpose entity
FRB	Board of Governors of the Federal Reserve System	TDR	Troubled debt restructuring
GAAP	Generally accepted accounting principles	TLAC	Total Loss Absorbing Capacity
GNMA	Government National Mortgage Association	VA	Department of Veterans Affairs
GSE	Government-sponsored entity	VaR	Value-at-Risk
G-SIB	Global systemically important bank	VIE	Variable interest entity
HQLA	High-quality liquid assets	WIM	Wealth and Investment Management


136			Wells Fargo & Company

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

Information in response to this item can be found in Note 10 (Legal Actions) to Financial Statements in this Report which information is incorporated by reference into this item.

Item 1A. Risk Factors

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

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows Company repurchases of its common stock for each calendar month in the quarter ended June 30, 2023.


Calendar month	Total number of shares repurchased (1)	Weighted average price paid per share		Maximum number of shares that may yet be repurchased under the authorization
April	29,637,759	$	41.17	134,366,515
May	70,530,974	39.46		63,835,541
June	59,638	41.51		63,775,903
Total	100,228,371

(1)All shares were repurchased under an authorization covering up to 500 million shares of common stock approved by the Board of Directors (Board) and publicly announced by the Company on January 15, 2021. The Company publicly announced on July 25, 2023, that the Board authorized a new common stock repurchase program of up to $30 billion. Unless modified or revoked by the Board, this authorization does not expire and supersedes the prior share repurchase authority approved by the Board.

Item 5. Other Information

Trading Plans

During the three months ended June 30, 2023, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.


			Wells Fargo & Company			137

Item 6. Exhibits

A list of exhibits to this Form 10-Q is set forth below.

The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214.

Exhibit

Number

Description

Location

3(a)

Restated Certificate of Incorporation, as amended and in effect on the date hereof.

Filed herewith.

3(b)

By-Laws.

Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 29, 2023.

4(a)

See Exhibits 3(a) and 3(b).

4(b)

The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.

10(a)

Amendment to Deferred Compensation Plan, effective July 1, 2023.

Filed herewith.

10(b)

Amendment to Supplemental 401(k) Plan, effective July 1, 2023.

Filed herewith.

10(c)

Amendment to Supplemental Cash Balance Plan, effective July 1, 2023.

Filed herewith.

10(d)

Amendment to the Wachovia Savings Restoration Plan, effective July 1, 2023.

Filed herewith.

Subsidiary guarantors and issuers of guaranteed securities and affiliates whose securities collateralize securities of the registrant.

Incorporated by reference to Exhibit 22 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

31(a)

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

31(b)

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

32(a)

Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.

Furnished herewith.

32(b)

Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350.

Furnished herewith.

101.INS

Inline XBRL Instance Document

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed herewith.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith.

101.DEF

Inline XBRL Taxonomy Extension Definitions Linkbase Document

Filed herewith.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed herewith.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

104

Cover Page Interactive Data File

Formatted as Inline XBRL and contained in Exhibit 101.


138			Wells Fargo & Company

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 1, 2023 WELLS FARGO & COMPANY


By:			/s/ MUNEERA S. CARR
			Muneera S. Carr
			Executive Vice President, Chief Accounting Officer and Controller
			(Principal Accounting Officer)


			Wells Fargo & Company			139