UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-2979

WELLS FARGO & COMPANY

(Exact name of registrant as specified in its charter)

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 Non-Cumulative Perpetual Class A Preferred Stock, Series O			WFC.PRO			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 X			WFC.PRX			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
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 19, 2021
Common stock, $1-2/3 par value						4,106,410,513

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

			Wells Fargo & Company			1

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FINANCIAL REVIEW

Summary Financial Data (1)
			Quarter ended																		Jun 30, 2021 % Change from												Six months ended
($ in millions, except per share amounts)			Jun 30, 2021						Mar 31, 2021						Jun 30, 2020						Mar 31, 2021						Jun 30, 2020						Jun 30, 2021						Jun 30, 2020						% Change
Selected Income Statement Data
Total revenue			$	20,270					18,532						18,286						9		%				11						$	38,802					36,459						6		%
Noninterest expense			13,341						13,989						14,551						(5)						(8)						27,330						27,599						(1)
Pre-tax pre-provision profit (PTPP) (2)			6,929						4,543						3,735						53						86						11,472						8,860						29
Provision for credit losses			(1,260)						(1,048)						9,534						(20)						NM						(2,308)						13,539						NM
Wells Fargo net income (loss)			6,040						4,636						(3,846)						30						NM						10,676						(2,930)						NM
Wells Fargo net income (loss) applicable to common stock			5,743						4,256						(4,160)						35						NM						9,999						(3,856)						NM
Common Share Data
Diluted earnings (loss) per common share			1.38						1.02						(1.01)						35						NM						2.40						(0.94)						NM
Dividends declared per common share			0.10						0.10						0.51						—						(80)						0.20						1.02						(80)
Common shares outstanding			4,108.0						4,141.1						4,119.6						(1)						—
Average common shares outstanding			4,124.6						4,141.3						4,105.5						—						—						4,132.9						4,105.2						1
Diluted average common shares outstanding (3)			4,156.1						4,171.0						4,105.5						—						1						4,164.6						4,105.2						1
Book value per common share (4)			$	41.74					40.27						38.31						4						9
Tangible book value per common share (4)(5)			34.95						33.49						31.52						4						11
Selected Equity Data (period-end)
Total equity			193,127						188,034						178,635						3						8
Common stockholders' equity			171,453						166,748						157,835						3						9
Tangible common equity (5)			143,577						138,702						129,842						4						11
Performance Ratios
Return on average assets (ROA) (6)			1.25		%				0.97						(0.79)																		1.11		%				(0.30)
Return on average equity (ROE) (7)			13.6						10.3						(10.2)																		12.0						(4.7)
Return on average tangible common equity (ROTCE) (5)			16.3						12.4						(12.3)																		14.4						(5.7)
Efficiency ratio (8)			66						75						80																		70						76
Net interest margin on a taxable-equivalent basis			2.02						2.05						2.25																		2.04						2.42
Selected Balance Sheet Data (average)
Loans			$	854,747					873,439						971,266						(2)						(12)						$	864,041					968,156						(11)
Assets			1,939,879						1,934,425						1,947,180						—						—						1,937,167						1,948,025						(1)
Deposits			1,435,824						1,393,472						1,386,656						3						4						1,414,765						1,362,309						4
Selected Balance Sheet Data (period-end)
Debt securities			533,565						505,826						472,580						5						13
Loans			852,300						861,572						935,155						(1)						(9)
Allowance for credit losses for loans			16,391						18,043						20,436						(9)						(20)
Equity securities			64,547						57,702						50,776						12						27
Assets			1,945,996						1,957,264						1,967,048						(1)						(1)
Deposits			1,440,472						1,437,119						1,410,711						—						2
Headcount (#) (period-end)			259,196						264,513						276,013						(2)						(6)
Capital and other metrics
Risk-based capital ratios and components (9):
Standardized Approach:
Common equity tier 1 (CET1)			12.07		%				11.85						10.97
Tier 1 capital			13.71						13.54						12.60
Total capital			16.84						16.75						15.88
Risk-weighted assets (RWAs) (in billions)			1,188.7						1,179.0						1,213.1						1						(2)
Advanced Approach:
Common equity tier 1 (CET1)			12.73		%				12.60						11.13
Tier 1 capital			14.47						14.39						12.79
Total capital			16.88						16.92						15.29
Risk-weighted assets (RWAs) (in billions)			$	1,126.5					1,109.4						1,195.4						2						(6)
Tier 1 leverage ratio			8.53		%				8.36						7.95
Supplementary Leverage Ratio (SLR)			7.09						7.91						7.52
Total Loss Absorbing Capacity (TLAC) Ratio (10)			25.11						25.18						25.33
Liquidity Coverage Ratio (LCR) (11)			123						127						129

NM – Not meaningful

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period financial statement line items have been revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, see the “Recent Developments” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

(2)Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

(3)In second quarter 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.

(4)Book value per common share is common stockholders' equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares outstanding.

(5)Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than mortgage servicing rights) and goodwill and other intangibles on nonmarketable equity securities, net of applicable deferred taxes. The methodology of determining tangible common equity may differ among companies. Management believes that return on average tangible common equity and tangible book value per common share, which utilize tangible common equity, are useful financial measures because they enable management, investors, and others to assess the Company’s use of equity. For additional information, including a corresponding reconciliation to generally accepted accounting principles (GAAP) financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.

(6)Represents Wells Fargo net income (loss) divided by average assets.

(7)Represents Wells Fargo net income (loss) applicable to common stock divided by average common stockholders’ equity.

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

(9)The information presented reflects fully phased-in CET1, tier 1 capital, and RWAs, but reflects total capital in accordance with transition requirements. For additional information, see the “Capital Management” section and Note 23 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report.

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

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

2			Wells Fargo & Company

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This Quarterly Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results may differ materially from our forward-looking statements due to several factors. Factors that could cause our actual results to differ materially from our forward-looking statements are described in this Report, including in the “Forward-Looking Statements” section, and in the “Risk Factors” and “Regulation and Supervision” sections of our Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K).

 

When we refer to “Wells Fargo,” “the Company,” “we,” “our,” or “us” in this Report, we mean Wells Fargo & Company and Subsidiaries (consolidated). When we refer to the “Parent,” we mean Wells Fargo & Company. See the Glossary of Acronyms for definitions of terms used throughout this Report. 

Financial Review

Overview

Wells Fargo & Company is a leading financial services company that has approximately $1.9 trillion in assets, proudly serves one in three U.S. households and more than 10% of small businesses in the U.S., and is the leading middle market banking provider in the U.S. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth and Investment Management. Wells Fargo ranked No. 37 on Fortune’s 2021 rankings of America’s largest corporations. We ranked fourth in assets and third in the market value of our common stock among all U.S. banks at June 30, 2021. 

Wells Fargo’s top priority remains meeting its regulatory requirements to build the right foundation for all that lies ahead. The Company is subject to a number of consent orders and other regulatory actions, which may require the Company, among other things, to undertake certain changes to its business, operations, products and services, and risk management practices. Addressing these regulatory actions is expected to take multiple years, and we may experience issues or delays along the way in satisfying their requirements. Issues or delays with one regulatory action could affect our progress on others, and failure to satisfy the requirements of a regulatory action on a timely basis could result in additional penalties, enforcement actions, and other negative consequences. While we still have significant work to do, the Company is committed to devoting the resources necessary to operate with strong business practices and controls, maintain the highest level of integrity, and have an appropriate culture in place.

Federal Reserve Board Consent Order Regarding Governance Oversight and Compliance and Operational Risk Management

On February 2, 2018, the Company entered into a consent order with the Board of Governors of the Federal Reserve System (FRB). As required by the consent order, the Company’s Board of Directors (Board) submitted to the FRB a plan to further enhance the Board’s governance and oversight of the Company, and the Company submitted to the FRB a plan to further improve the Company’s compliance and operational risk management program. The Company continues to engage with the FRB as the Company works to address the consent order provisions. The consent order also requires the Company, following the FRB’s acceptance and approval of the plans and the Company’s adoption and implementation of the plans, to complete an initial third-party review of the enhancements and improvements provided for in the plans. Until this third-party review is complete and the plans are approved and implemented to the satisfaction

of the FRB, the Company’s total consolidated assets as defined under the consent order will be limited to the level as of December 31, 2017. Compliance with this asset cap is measured on a two-quarter daily average basis to allow for management of temporary fluctuations. Due to the COVID-19 pandemic, on April 8, 2020, the FRB amended the consent order to allow the Company to exclude from the asset cap any on-balance sheet exposure resulting from loans made by the Company in connection with the Small Business Administration’s Paycheck Protection Program and the FRB’s Main Street Lending Program. As required under the amendment to the consent order, to the extent the Company chooses to exclude these exposures from the asset cap, certain fees and other economic benefits received by the Company from loans made in connection with these programs shall be transferred to the U.S. Treasury or to non-profit organizations approved by the FRB that support small businesses. As of June 30, 2021, the Company had not excluded these exposures from the asset cap. After removal of the asset cap, a second third-party review must also be conducted to assess the efficacy and sustainability of the enhancements and improvements.

Consent Orders with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency Regarding Compliance Risk Management Program, Automobile Collateral Protection Insurance Policies, and Mortgage Interest Rate Lock Extensions

On April 20, 2018, the Company entered into consent orders with the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) to pay an aggregate of $1 billion in civil money penalties to resolve matters regarding the Company’s compliance risk management program and past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. As required by the consent orders, the Company submitted to the CFPB and OCC an enterprise-wide compliance risk management plan and a plan to enhance the Company’s internal audit program with respect to federal consumer financial law and the terms of the consent orders. In addition, as required by the consent orders, the Company submitted for non-objection plans to remediate customers affected by the automobile collateral protection insurance and mortgage interest rate lock matters, as well as a plan for the management of remediation activities conducted by the Company. The Company continues to work to address the provisions of the consent orders. The Company has not yet satisfied certain aspects of the consent orders, and as a result, we believe regulators may impose additional penalties or take other enforcement actions.

			Wells Fargo & Company			3

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Overview (continued)

Retail Sales Practices Matters

In September 2016, we announced settlements with the CFPB, the OCC, and the Office of the Los Angeles City Attorney, and entered into related consent orders with the CFPB and the OCC, in connection with allegations that some of our retail customers received products and services they did not request. As a result, it remains a top priority to rebuild trust through a comprehensive action plan that includes making things right for our customers, employees, and other stakeholders, and building a better Company for the future. Our priority of rebuilding trust has included numerous actions focused on identifying potential financial harm to customers resulting from these matters and providing remediation.

For additional information regarding retail sales practices matters, including related legal matters, see the “Risk Factors” section in our 2020 Form 10-K and Note 13 (Legal Actions) to Financial Statements in this Report.

Other Customer Remediation Activities

Our priority of rebuilding trust has also included an effort to identify other areas or instances where customers may have experienced financial harm, provide remediation as appropriate, and implement additional operational and control procedures. We are working with our regulatory agencies in this effort. We have previously disclosed key areas of focus as part of our rebuilding trust efforts and are in the process of providing remediation for those matters. We have accrued for the probable and estimable remediation costs related to our rebuilding trust efforts, which amounts may change based on additional facts and information, as well as ongoing reviews and communications with our regulators.

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

Recent Developments

Change in Accounting Policies

In second quarter 2021, we retroactively changed the accounting for certain tax-advantaged investments to better align the financial statement presentation with the economic impact of these investments.

Specifically, we elected to change our accounting for low-income housing tax credit investments from the equity method of accounting to the proportional amortization method. Under the proportional amortization method, the amortization of the investments and the related tax impacts are recognized in income tax expense. Previously, we recognized the amortization of the investments in other noninterest income and the related tax impacts were recognized in income tax expense.

Also, we elected to change the presentation of investment tax credits related to solar energy investments. We reclassified the investment tax credits on our consolidated balance sheet from accrued expenses and other liabilities to a reduction of the carrying value of the investment balances. We also reclassified the investment tax credits from income tax expense to interest income for solar energy leases or noninterest income for solar energy equity investments.

These changes had a nominal impact on net income and retained earnings on an annual basis; however, our quarterly results were affected in both the second and third quarters of

2020 due to the impact of these changes on the estimated annual effective income tax rate applied to each quarter. These changes also improved our efficiency ratio and generally increased our effective income tax rate from what was previously reported.

Prior period financial statement line items have been revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised. For additional information, including the financial statement line items impacted by these changes, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

COVID-19 Pandemic

In response to the COVID-19 pandemic, we have been working diligently to protect employee safety while continuing to carry out Wells Fargo’s role as a provider of essential services to the public. We have taken comprehensive steps to help customers, employees and communities.

We have strong levels of capital and liquidity, and we remain focused on delivering for our customers and communities to get through these unprecedented times.

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

LIBOR Transition

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

For information on the amount of our LIBOR-linked assets and liabilities, as well as initiatives created by our LIBOR Transition Office in an effort to mitigate the risks associated with

4			Wells Fargo & Company

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a transition away from LIBOR, see the “Overview – Recent Developments – LIBOR Transition” section in our 2020 Form

10-K. For information regarding the risks and potential impact of LIBOR or any other referenced financial metric being significantly changed, replaced or discontinued, see the “Risk Factors” section in our 2020 Form 10-K.

Capital Actions and Restrictions

In June 2021, the Company completed the 2021 Comprehensive Capital Analysis and Review (CCAR) stress test process. We expect our stress capital buffer (SCB) for the period October 1, 2021, through September 30, 2022, to be 3.10%. The FRB has indicated it will publish our final SCB by August 31, 2021.

On July 27, 2021, the Board approved an increase to the Company's third quarter 2021 common stock dividend to $0.20 per share. Additionally, our capital plan includes gross common share repurchases of approximately $18 billion for the four-quarter period beginning third quarter 2021 through second quarter 2022.

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

In June 2021, we redeemed the remaining $350 million of our Non-Cumulative Perpetual Class A Preferred Stock, Series N. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD.

Business and Portfolio Divestitures

On February 23, 2021, we announced an agreement to sell Wells Fargo Asset Management for a purchase price of $2.1 billion. As part of the transaction, we will own a 9.9% equity interest and continue to serve as a client and distribution partner. On March 23, 2021, we announced an agreement to sell our Corporate Trust Services business for a purchase price of $750 million. Both transactions are expected to close in the second half of 2021, subject to customary closing conditions.

In the first half of 2021, we completed substantially all of the previously announced sale of our student loan portfolio, which resulted in gains in other noninterest income of $208 million and $147 million in first and second quarter 2021, respectively, and goodwill write-downs in other noninterest expense of $104 million and $79 million in first and second quarter 2021, respectively.

Financial Performance

Consolidated Financial Highlights
			Quarter ended Jun 30,																								Six months ended Jun 30,
($ in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Selected income statement data
Net interest income			$	8,800					9,892						(1,092)						(11)		%				$	17,608					21,222						(3,614)						(17)		%
Noninterest income			11,470						8,394						3,076						37						21,194						15,237						5,957						39
Total revenue			20,270						18,286						1,984						11						38,802						36,459						2,343						6
Net charge-offs			379						1,114						(735)						(66)						902						2,055						(1,153)						(56)
Change in the allowance for credit losses			(1,639)						8,420						(10,059)						NM						(3,210)						11,484						(14,694)						NM
Provision for credit losses			(1,260)						9,534						(10,794)						NM						(2,308)						13,539						(15,847)						NM
Noninterest expense			13,341						14,551						(1,210)						(8)						27,330						27,599						(269)						(1)
Income tax expense			1,445						(2,001)						3,446						NM						2,346						(1,648)						3,994						NM
Wells Fargo net income			6,040						(3,846)						9,886						NM						10,676						(2,930)						13,606						NM
Wells Fargo net income applicable to common stock			5,743						(4,160)						9,903						NM						9,999						(3,856)						13,855						NM

NM – Not meaningful

In second quarter 2021, we generated $6.0 billion of net income and diluted earnings per common share (EPS) of $1.38, compared with a net loss of $3.8 billion and diluted loss per common share of $1.01 in the same period a year ago. Financial performance for second quarter 2021, compared with the same period a year ago, included the following:

•total revenue increased due to higher net gains from equity securities and mortgage banking income, partially offset by lower net interest income;

•provision for credit losses decreased reflecting lower net charge-offs and improvements in the economic environment;

•noninterest expense decreased due to lower operating losses and lower professional and outside services expense;

•average loans decreased due to paydowns exceeding originations in the residential mortgage and credit card portfolios, weak demand for commercial loans, and the reclassification of student loans, included in other consumer loans, to loans held for sale after the announced sale of the portfolio in fourth quarter 2020; and

•average deposits increased driven by growth in consumer deposits in the Consumer Banking and Lending and Wealth

and Investment Management (WIM) operating segments due to higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic, partially offset by actions taken to manage under the asset cap which reduced deposits in the Corporate and Investment Banking operating segment and Corporate.

In the first half of 2021, we generated $10.7 billion of net income and diluted EPS of $2.40, compared with a net loss of $2.9 billion and diluted loss per common share of $0.94 in the same period a year ago. Financial performance for the first half of 2021, compared with the same period a year ago, included the following:

•total revenue increased due to higher net gains from equity securities and mortgage banking income, partially offset by lower net interest income;

•provision for credit losses decreased reflecting lower net charge-offs due to better portfolio credit quality driven by improvements in the economic environment;

			Wells Fargo & Company			5

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Overview (continued)

•noninterest expense decreased due to lower operating losses and lower professional and outside services expense, partially offset by higher personnel expense;

•average loans decreased due to paydowns exceeding originations in the residential mortgage and credit card portfolios, weak demand for commercial loans, and the reclassification of student loans, included in other consumer loans, to loans held for sale after the announced sale of the portfolio in fourth quarter 2020; and

•average deposits increased driven by growth in consumer deposits in the Consumer Banking and Lending and Wealth and Investment Management (WIM) operating segments due to higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic, partially offset by actions taken to manage under the asset cap which reduced deposits in the Corporate and Investment Banking operating segment and Corporate.

Capital and Liquidity

We maintained a strong capital position in the first half of 2021, with total equity of $193.1 billion at June 30, 2021, compared with $185.7 billion at December 31, 2020. Our liquidity and regulatory capital ratios remained strong at June 30, 2021, including:

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

•our Common Equity Tier 1 (CET1) ratio was 12.07%, which continued to exceed both the regulatory requirement of 9% and our current internal target; and

•our eligible external total loss absorbing capacity (TLAC) as a percentage of total risk-weighted assets was 25.11%, compared with the regulatory requirement of 21.50%.

See the “Capital Management” and the “Risk Management – Asset/Liability Management – Liquidity Risk and Funding” sections in this Report for additional information regarding our capital and liquidity, including the calculation of our regulatory capital and liquidity amounts.

Credit Quality

Credit quality reflected the improving economic environment.

•The allowance for credit losses (ACL) for loans of $16.4 billion at June 30, 2021, decreased $3.3 billion from December 31, 2020.

•Our provision for credit losses for loans was $(2.4) billion in the first half of 2021, down from $13.4 billion in the same period a year ago. The decrease in the ACL for loans and the provision for credit losses in the first half of 2021, compared with the same period a year ago, reflected improvements in current and forecasted economic conditions.

•The allowance coverage for total loans was 1.92% at June 30, 2021, compared with 2.22% at December 31, 2020.

•Commercial portfolio net loan charge-offs were $80 million, or 7 basis points of average commercial loans, in second quarter 2021, compared with net loan charge-offs of $602 million, or 44 basis points, in the same period a year ago, predominantly driven by lower losses in our commercial and industrial portfolio primarily within the oil, gas and pipelines industry, and in the real estate mortgage portfolio.

•Consumer portfolio net loan charge-offs were $301 million, or 32 basis points of average consumer loans, in second quarter 2021, compared with net loan charge-offs of $511 million, or 48 basis points, in the same period a year ago, driven by lower losses in all consumer loan portfolios as a result of payment deferral activities, government stimulus programs instituted in response to the COVID-19 pandemic, and the sale of a portion of our student loan portfolio.

•Nonperforming assets (NPAs) of $7.5 billion at June 30, 2021, decreased $1.4 billion, or 16%, from December 31, 2020, predominantly driven by decreases in our commercial and industrial portfolio reflecting improvements in the economic environment, and decreases in our residential mortgage portfolios reflecting loan sales and payment deferral activities. NPAs represented 0.88% of total loans at June 30, 2021.

Earnings Performance

Wells Fargo net income for second quarter 2021 was $6.0 billion ($1.38 diluted EPS), compared with a net loss of $3.8 billion ($1.01 diluted loss per common share) in the same period a year ago. Net income increased in second quarter 2021, compared with the same period a year ago, predominantly due to a $10.8 billion decrease in provision for credit losses, a $3.1 billion increase in noninterest income, and a $1.2 billion decrease in noninterest expense, partially offset by a $3.4 billion increase in income tax expense and a $1.1 billion decrease in net interest income.

Net income for the first half of 2021 was $10.7 billion ($2.40 diluted EPS), compared with a net loss of $2.9 billion ($0.94 diluted loss per common share) in the same period a year ago. Net income increased in the first half of 2021, compared with the same period a year ago, predominantly due to a $15.8 billion decrease in provision for credit losses and a $6.0 billion increase in noninterest income, partially offset by a $4.0 billion increase in income tax expense and a $3.6 billion decrease in net interest income.

Net Interest Income

Net interest income and net interest margin decreased in both the second quarter and first half of 2021, compared with the same periods a year ago, due to the impact of lower interest rates and lower loan balances reflecting soft demand and elevated prepayments, as well as higher mortgage-backed securities premium amortization, partially offset by a reduction in long-term debt. The first half of 2021 was also impacted by unfavorable hedge ineffectiveness accounting results.

Table 1 presents the individual components of net interest income and the net interest margin. Net interest income and net interest margin are presented on a taxable-equivalent basis in Table 1 to consistently reflect income from taxable and tax-exempt loans and debt and equity securities based on a 21% federal statutory tax rate for the periods ended June 30, 2021 and 2020.

For additional information about net interest income and net interest margin, see the “Earnings Performance – Net Interest Income” section in our 2020 Form 10-K.

6			Wells Fargo & Company

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

			Quarter ended June 30,
			2021																		2020
(in millions)			Average balance						Interest income/ expense						Interest rates						Average balance						Interest income/ expense						Interest rates
Assets
Interest-earning deposits with banks			$	255,237					70						0.11		%				$	176,327					51						0.12		%
Federal funds sold and securities purchased under resale agreements			72,513						3						0.02						76,384						2						0.01
Debt securities:
Trading debt securities			84,612						501						2.37						96,049						663						2.76
Available-for-sale debt securities			192,418						686						1.43						232,444						1,416						2.44
Held-to-maturity debt securities			237,812						1,106						1.86						166,804						968						2.33
Total debt securities			514,842						2,293						1.78						495,297						3,047						2.46
Loans held for sale (2)			27,173						193						2.85						27,610						237						3.45
Loans:
Commercial loans:
Commercial and industrial – U.S.			248,153						1,627						2.63						310,104						1,990						2.58
Commercial and industrial – Non-U.S.			70,764						374						2.12						72,241						445						2.48
Real estate mortgage			120,526						823						2.74						123,525						930						3.03
Real estate construction			22,015						169						3.08						21,361						179						3.37
Lease financing			15,565						174						4.49						18,087						210						4.62
Total commercial loans			477,023						3,167						2.66						545,318						3,754						2.77
Consumer loans:
Residential mortgage – first lien			247,815						1,957						3.16						280,878						2,414						3.44
Residential mortgage – junior lien			20,457						211						4.13						27,700						292						4.24
Credit card			34,211						979						11.48						36,539						979						10.78
Auto			50,014						563						4.52						48,441						601						4.99
Other consumer			25,227						233						3.70						32,390						440						5.45
Total consumer loans			377,724						3,943						4.18						425,948						4,726						4.45
Total loans (2)			854,747						7,110						3.33						971,266						8,480						3.50
Equity securities			29,773						133						1.77						27,417						117						1.70
Other			9,103						1						0.04						7,715						—						(0.02)
Total interest-earning assets			1,763,388						9,803						2.23						1,782,016						11,934						2.69
Cash and due from banks			24,336						—												21,227						—
Goodwill			26,213						—												26,384						—
Other (3)			125,942						—												117,553						—
Total noninterest-earning assets			176,491						—												165,164						—
Total assets			$	1,939,879					9,803												1,947,180						11,934
Liabilities
Deposits:
Demand deposits			$	452,184					31						0.03		%				$	53,592					9						0.07		%
Savings deposits			422,650						32						0.03						799,949						311						0.16
Time deposits			37,116						29						0.32						86,971						224						1.04
Deposits in non-U.S offices			29,796						—						—						37,682						41						0.44
Total interest-bearing deposits			941,746						92						0.04						978,194						585						0.24
Short-term borrowings			48,505						(11)						(0.09)						63,535						(17)						(0.10)
Long-term debt			181,101						712						1.57						232,395						1,237						2.13
Other liabilities			27,718						101						1.47						29,947						116						1.53
Total interest-bearing liabilities			1,199,070						894						0.30						1,304,071						1,921						0.59
Noninterest-bearing demand deposits			494,078						—												408,462						—
Other noninterest-bearing liabilities			55,763						—												50,575						—
Total noninterest-bearing liabilities			549,841						—												459,037						—
Total liabilities			1,748,911						894												1,763,108						1,921
Total equity (3)			190,968						—												184,072						—
Total liabilities and equity			$	1,939,879					894												1,947,180						1,921
Interest rate spread on a taxable-equivalent basis (3)															1.93		%																2.10		%
Net interest income and net interest margin on a taxable-equivalent basis (3)									$	8,909					2.02		%										$	10,013					2.25		%

(continued on following page)

			Wells Fargo & Company			7

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Earnings Performance (continued)

(continued from previous page)

			Six months ended June 30,
															2021																		2020
(in millions)			Average  balance						Interest  income/ expense						Interest rates						Average  balance						Interest  income/  expense						Interest rates
Assets
Interest-earning deposits with banks			$	239,425					127						0.11		%				$	152,924					432						0.57		%
Federal funds sold and securities purchased under resale agreements			72,332						10						0.03						91,969						382						0.84
Debt securities:
Trading debt securities			85,990						1,035						2.41						98,556						1,433						2.91
Available-for-sale debt securities			199,642						1,527						1.53						242,501						3,226						2.66
Held-to-maturity debt securities			227,377						2,133						1.88						162,348						1,977						2.44
Total debt securities			513,009						4,695						1.83						503,405						6,636						2.64
Loans held for sale (2)			30,843						524						3.41						24,728						446						3.62
Loans:
Commercial loans:
Commercial and industrial – U.S.			250,510						3,223						2.59						299,303						4,536						3.05
Commercial and industrial – Non-U.S.			68,106						712						2.11						71,451						1,001						2.82
Real estate mortgage			120,629						1,635						2.73						122,656						2,117						3.47
Real estate construction			21,886						335						3.09						20,819						408						3.94
Lease financing			15,681						358						4.55						18,687						443						4.74
Total commercial loans			476,812						6,263						2.64						532,916						8,505						3.21
Consumer loans:
Residential mortgage – first lien			256,982						4,025						3.13						287,217						5,064						3.53
Residential mortgage – junior lien			21,384						439						4.13						28,303						662						4.70
Credit card			34,705						2,012						11.69						38,147						2,186						11.53
Auto			49,351						1,123						4.59						48,350						1,197						4.98
Other consumer			24,807						466						3.79						33,223						974						5.89
Total consumer loans			387,229						8,065						4.18						435,240						10,083						4.65
Total loans (2)			864,041						14,328						3.33						968,156						18,588						3.85
Equity securities			29,604						270						1.82						32,475						325						2.00
Other			9,299						2						0.04						7,573						14						0.37
Total interest-earning assets			1,758,553						19,956						2.28						1,781,230						26,823						3.02
Cash and due from banks			24,466						—												20,899						—
Goodwill			26,297						—												26,386						—
Other(3)			127,851						—												119,510						—
Total noninterest-earning assets			178,614						—												166,795						—
Total assets			$	1,937,167					19,956												1,948,025						26,823
Liabilities
Deposits:
Demand deposits			$	448,495					64						0.03		%				$	58,339					144						0.50		%
Savings deposits			417,153						64						0.03						781,044						1,289						0.33
Time deposits			40,552						76						0.38						99,524						690						1.39
Deposits in non-U.S. offices			30,260						—						—						45,508						204						0.90
Total interest-bearing deposits			936,460						204						0.04						984,415						2,327						0.48
Short-term borrowings			53,764						(20)						(0.08)						83,256						275						0.66
Long-term debt			189,673						1,738						1.83						230,699						2,477						2.15
Other liabilities			28,294						210						1.49						30,073						258						1.71
Total interest-bearing liabilities			1,208,191						2,132						0.35						1,328,443						5,337						0.81
Noninterest-bearing demand deposits			478,305						—												377,894						—
Other noninterest-bearing liabilities			60,645						—												55,706						—
Total noninterest-bearing liabilities			538,950						—												433,600						—
Total liabilities			1,747,141						2,132												1,762,043						5,337
Total equity (3)			190,026						—												185,982						—
Total liabilities and equity			$	1,937,167					2,132												1,948,025						5,337
Interest rate spread on a taxable-equivalent basis (3)															1.93		%																2.21		%
Net interest margin and net interest income on a taxable-equivalent basis (3)									$	17,824					2.04		%										$	21,486					2.42		%

(1)The average balance amounts represent amortized costs. The interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

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

(3)Includes taxable-equivalent adjustments of $109 million and $121 million for the quarters ended June 30, 2021 and 2020, respectively, and $216 million and $264 million for the first half of 2021 and 2020, respectively, predominantly related to tax-exempt income on certain loans and securities.

8			Wells Fargo & Company

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Noninterest Income

Table 2: Noninterest Income

			Quarter ended June 30,																								Six months ended June 30,
(in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Deposit-related fees			$	1,342					1,142						200						18		%				$	2,597					2,589						8						—		%
Lending-related fees			362						323						39						12						723						673						50						7
Investment advisory and other asset-based fees			2,794						2,254						540						24						5,550						4,760						790						17
Commissions and brokerage services fees			580						550						30						5						1,216						1,227						(11)						(1)
Investment banking fees			570						547						23						4						1,138						938						200						21
Card fees			1,077						797						280						35						2,026						1,689						337						20
Servicing income, net			(21)						(689)						668						97						(120)						(418)						298						71
Net gains on mortgage loan originations/sales			1,357						1,006						351						35						2,782						1,114						1,668						150
Mortgage banking			1,336						317						1,019						321						2,662						696						1,966						282
Net gains from trading activities			21						807						(786)						(97)						369						871						(502)						(58)
Net gains on debt securities			—						212						(212)						(100)						151						449						(298)						(66)
Net gains (losses) from equity securities			2,696						533						2,163						406						3,088						(868)						3,956						NM
Lease income			313						335						(22)						(7)						628						688						(60)						(9)
Other			379						577						(198)						(34)						1,046						1,525						(479)						(31)
Total			$	11,470					8,394						3,076						37						$	21,194					15,237						5,957						39

NM – Not meaningful

Second quarter 2021 vs. second quarter 2020

Deposit-related fees increased driven by:

•lower fee waivers and reversals compared with a second quarter 2020 that included elevated fee waivers due to our actions to support customers during the COVID-19 pandemic; and

•higher treasury management fees on commercial accounts driven by an increase in transaction service volumes and repricing.

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

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

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

Servicing income, net increased due to:

•higher income from mortgage servicing right (MSR) valuation changes and related hedges driven by negative valuation adjustments in second quarter 2020 for higher expected servicing costs and prepayment estimates due to changes in economic conditions;

partially offset by:

•lower servicing fees due to a lower balance of loans serviced for others resulting from prepayments.

Net gains on mortgage loan originations/sales increased

driven by:

•higher gains related to the re-securitization of loans we purchased from Government National Mortgage Association (GNMA) loan securitization pools in 2020; and

•higher residential real estate held for sale (HFS) origination volumes in our retail production channel;

partially offset by:

•lower HFS origination volumes in our correspondent production channel; and

•lower margins in our retail and correspondent production channels.

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

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

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

Net gains (losses) from equity securities increased driven by:

•higher unrealized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses; and

•higher realized gains on the sales of equity securities;

partially offset by:

•lower gains on deferred compensation plan investments (largely offset in personnel expense). Refer to Table 3a for the results for our deferred compensation plan and related hedges.

Other income decreased due to:

•lower gains on the sales of residential mortgage loans which were reclassified to held for sale in 2019; and

•higher valuation losses related to the retained litigation risk, including the timing and amount of final settlement, associated with shares of Visa Class B common stock that

			Wells Fargo & Company			9

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Earnings Performance (continued)

we sold. For additional information, see the “Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section in our 2020 Form 10-K;

partially offset by:

•a gain on the sale of a portion of our student loan portfolio.

First half of 2021 vs. first half of 2020

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

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

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

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

Servicing income, net increased reflecting:

•higher income from MSR valuation changes and related hedges driven by negative valuation adjustments to the MSR in the first half of 2020 for higher expected servicing costs and prepayment estimates due to changes in economic conditions;

partially offset by:

•lower servicing fees due to a lower balance of loans serviced for others resulting from prepayments.

Net gains on mortgage loan originations/sales increased

driven by:

•higher margins in our retail production channel;

•higher HFS origination volume in our retail production channel;

•higher gains related to the re-securitization of loans we purchased from GNMA loan securitization pools in 2020; and

•higher gains due to losses in the first half of 2020 driven by the impact of interest rate volatility on hedging activities associated with our residential mortgage loans held for sale portfolio and pipeline, as well as valuation losses on certain residential and commercial loans held for sale due to market conditions.

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

Net gains from trading activities decreased reflecting:

•lower client trading activity for interest rate products, equities, and commodities;

partially offset by:

•higher client trading activity for asset-backed finance products.

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

Net gains (losses) from equity securities increased driven by:

•higher unrealized gains on nonmarketable equity securities from our affiliated venture capital and private equity businesses;

•lower impairment on equity securities due to the market impact of the COVID-19 pandemic in first quarter 2020;

•higher realized gains on the sales of equity securities; and

•higher gains on deferred compensation plan investments (largely offset in personnel expense). Refer to Table 3a for the results for our deferred compensation plan and related hedges.

Other income decreased due to:

•lower gains on the sales of residential mortgage loans which were reclassified to held for sale in 2019; and

•higher valuation losses related to the retained litigation risk, including the timing and amount of final settlement, associated with shares of Visa Class B common stock that we sold. For additional information, see the “Risk Management – Asset/Liability Management – Market Risk – Equity Securities” section in our 2020 Form 10-K;

partially offset by:

•a gain on the sale of substantially all of our student loan portfolio; and

•higher income from investments accounted for under the equity method.

10			Wells Fargo & Company

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Noninterest Expense

Table 3: Noninterest Expense

			Quarter ended June 30,																								Six months ended June 30,
(in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Personnel			$	8,818					8,916						(98)						(1)		%				$	18,376					17,239						1,137						7		%
Technology, telecommunications and equipment			815						672						143						21						1,659						1,470						189						13
Occupancy			735						871						(136)						(16)						1,505						1,586						(81)						(5)
Operating losses			303						1,219						(916)						(75)						516						1,683						(1,167)						(69)
Professional and outside services			1,450						1,676						(226)						(13)						2,838						3,282						(444)						(14)
Leases (1)			226						244						(18)						(7)						452						504						(52)						(10)
Advertising and promotion			132						137						(5)						(4)						222						318						(96)						(30)
Restructuring charges			(4)						—						(4)						NM						9						—						9						NM
Other			866						816						50						6						1,753						1,517						236						16
Total			$	13,341					14,551						(1,210)						(8)						$	27,330					27,599						(269)						(1)

NM – Not meaningful

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

Second quarter 2021 vs. second quarter 2020

Personnel expense decreased driven by:

•lower salaries as a result of reduced headcount; and

•lower deferred compensation expense;

partially offset by:

•higher incentive compensation expense, including the impact of higher market valuations on stock-based compensation; and

•higher revenue-related compensation expense.

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

Occupancy expense decreased driven by:

•lower rent expense; and

•lower cleaning fees, supplies, and equipment expenses compared with a second quarter 2020 that included higher expenses due to the COVID-19 pandemic.

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

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

Other expenses increased driven by a write-down of goodwill in second quarter 2021 related to the sale of a portion of our student loan portfolio.

First half of 2021 vs. first half of 2020

Personnel expense increased driven by:

•higher incentive compensation expense, including the impact of higher market valuations on stock-based compensation;

•higher revenue-related compensation expense; and

•higher deferred compensation expense;

partially offset by:

•lower salaries as a result of reduced headcount.

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

Table 3a: Deferred Compensation and Related Hedges

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Net interest income			$	—					3						$	—					15
Net gains (losses) from equity securities			1						346						1						(275)
Total revenue (losses) from deferred compensation plan investments			1						349						1						(260)
Decrease (increase) in deferred compensation plan liabilities			(257)						(490)						(422)						108
Net derivative gains from economic hedges of deferred compensation			239						141						399						141
Decrease (increase) in personnel expense			(18)						(349)						(23)						249
Loss before income tax expense			$	(17)					—						$	(22)					(11)

Technology, telecommunications and equipment expense increased due to higher expense for technology contracts and

the reversal of a software licensing liability accrual in second quarter 2020.

			Wells Fargo & Company			11

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Earnings Performance (continued)

Occupancy expense decreased driven by:

•lower rent expense; and

•lower cleaning fees, supplies, and equipment expenses compared with a first half of 2020 that included higher expenses due to the COVID-19 pandemic.

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

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

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

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

Other expenses increased driven by:

•a write-down of goodwill in the first half of 2021 related to the sale of substantially all of our student loan portfolio;

•higher charitable donations expense driven by the donation of PPP processing fees; and

•higher Federal Deposit Insurance Corporation (FDIC) deposit assessment expense driven by a higher assessment rate;

partially offset by:

•a reduction in business travel and company events due to the impact of the COVID-19 pandemic.

Income Tax Expense

Income tax expense was $1.4 billion in second quarter 2021, compared with an income tax benefit of $2.0 billion in the same period a year ago. The effective income tax rate was 19.3% for second quarter 2021, compared with 34.2% for the same period a year ago.

Income tax expense was $2.3 billion in the first half of 2021, compared with an income tax benefit of $1.6 billion in the same period a year ago. The effective income tax rate was 18.0% for the first half of 2021, compared with 36.0% for the same period a year ago.

The increase in our income tax expense for both the second quarter and first half of 2021, compared with the same periods a year ago, was driven by higher pre-tax income, including the impact of the changes in accounting policy for certain tax-advantaged investments. For additional information on the changes in accounting policy, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Operating Segment Results

Our management reporting is organized into four reportable operating segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management. All other business activities that are not included in the reportable operating segments have been included in Corporate. For additional information, see Table 4. We define our reportable operating segments by type of product and customer segment, and their results are based on our management reporting process. The management reporting process measures the performance of the reportable operating segments based on the Company’s management structure, and the results are regularly reviewed by our Chief Executive Officer and Operating Committee. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenues and expenses, and taxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources, which allows management to assess performance consistently across the operating segments.

In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. This change did not impact the previously reported consolidated financial results of the Company.

In second quarter 2021, we elected to change our accounting method for low-income housing tax credit (LIHTC) investments and elected to change the presentation of investment tax credits related to solar energy investments. These accounting policy changes had a nominal impact on reportable operating segment results. Prior period financial statement line items for the Company, as well as for the reportable operating segments, have been revised to conform with the current period presentation. Our LIHTC investments are included in the Corporate and Investment Banking operating segment and our solar energy investments are included in the Commercial Banking operating segment. For additional information, see the “Recent Developments” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

12			Wells Fargo & Company

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

Revenue and Expense Sharing When lines of business jointly serve customers, the line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to the other line of business based on established internal revenue-sharing agreements.

When a line of business uses a service provided by another line of business or enterprise function (included in Corporate), expense is generally allocated based on the cost and use of the service provided.

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

Allocated Capital Reportable operating segments are allocated capital under a risk-sensitive framework that is primarily based on aspects of our regulatory capital requirements, and the assumptions and methodologies used to allocate capital are periodically assessed and revised. Management believes that return on allocated capital is a useful financial measure because it enables management, investors, and others to assess a reportable operating segment’s use of capital.

Selected Metrics We present certain financial and nonfinancial metrics that management uses when evaluating reportable operating segment results. Management believes that these metrics are useful to investors and others to assess the performance, customer growth, and trends of reportable operating segments or lines of business.

Table 4: Management Reporting Structure

Wells Fargo & Company

Consumer Banking and 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

Table 5 and the following discussion present our results by reportable operating segment. For additional information, see Note 22 (Operating Segments) to Financial Statements in this Report.

			Wells Fargo & Company			13

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Earnings Performance (continued)

Table 5: 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, 2021
Net interest income			$	5,618					1,202						1,783						610						(304)						(109)						8,800
Noninterest income			3,068						906						1,555						2,926						3,327						(312)						11,470
Total revenue			8,686						2,108						3,338						3,536						3,023						(421)						20,270
Provision for credit losses			(367)						(382)						(501)						24						(34)						—						(1,260)
Noninterest expense			6,202						1,443						1,805						2,891						1,000						—						13,341
Income (loss) before income tax expense (benefit)			2,851						1,047						2,034						621						2,057						(421)						8,189
Income tax expense (benefit)			713						261						513						156						223						(421)						1,445
Net income before noncontrolling interests			2,138						786						1,521						465						1,834						—						6,744
Less: Net income (loss) from noncontrolling interests			—						2						(2)						—						704						—						704
Net income			$	2,138					784						1,523						465						1,130						—						6,040
Quarter ended June 30, 2020
Net interest income			$	5,717					1,554						1,963						719						60						(121)						9,892
Noninterest income			1,891						797						2,096						2,487						1,318						(195)						8,394
Total revenue			7,608						2,351						4,059						3,206						1,378						(316)						18,286
Provision for credit losses			3,102						2,295						3,756						255						126						—						9,534
Noninterest expense			6,933						1,580						2,044						2,743						1,251						—						14,551
Income (loss) before income tax expense (benefit)			(2,427)						(1,524)						(1,741)						208						1						(316)						(5,799)
Income tax expense (benefit)			(650)						(379)						(408)						52						(300)						(316)						(2,001)
Net income (loss) before noncontrolling interests			(1,777)						(1,145)						(1,333)						156						301						—						(3,798)
Less: Net income from noncontrolling interests			—						1						—						—						47						—						48
Net income (loss)			$	(1,777)					(1,146)						(1,333)						156						254						—						(3,846)
Six months ended June 30, 2021
Net interest income			$	11,233					2,456						3,562						1,267						(694)						(216)						17,608
Noninterest income			6,107						1,733						3,380						5,813						4,744						(583)						21,194
Total revenue			17,340						4,189						6,942						7,080						4,050						(799)						38,802
Provision for credit losses			(786)						(781)						(785)						(19)						63						—						(2,308)
Noninterest expense			12,469						3,073						3,638						5,919						2,231						—						27,330
Income (loss) before income tax expense (benefit)			5,657						1,897						4,089						1,180						1,756						(799)						13,780
Income tax expense (benefit)			1,415						473						1,013						296						(52)						(799)						2,346
Net income before noncontrolling interests			4,242						1,424						3,076						884						1,808						—						11,434
Less: Net income (loss) from noncontrolling interests			—						3						(2)						—						757						—						758
Net income			$	4,242					1,421						3,078						884						1,051						—						10,676
Six months ended June 30, 2020
Net interest income			$	11,719					3,287						3,984						1,557						939						(264)						21,222
Noninterest income			4,538						1,409						3,483						4,919						1,303						(415)						15,237
Total revenue			16,257						4,696						7,467						6,476						2,242						(679)						36,459
Provision for credit losses			4,671						3,336						4,881						263						388						—						13,539
Noninterest expense			13,190						3,153						3,914						5,400						1,942						—						27,599
Income (loss) before income tax expense (benefit)			(1,604)						(1,793)						(1,328)						813						(88)						(679)						(4,679)
Income tax expense (benefit)			(445)						(442)						(307)						204						21						(679)						(1,648)
Net income (loss) before noncontrolling interests			(1,159)						(1,351)						(1,021)						609						(109)						—						(3,031)
Less: Net income (loss) from noncontrolling interests			—						2						—						—						(103)						—						(101)
Net income (loss)			$	(1,159)					(1,353)						(1,021)						609						(6)						—						(2,930)

(1)All other business activities that are not included in the reportable operating segments have been included in Corporate. For additional information, see the “Corporate” section below. In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation.

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

14			Wells Fargo & Company

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Consumer Banking and Lending offers diversified financial products and services for consumers and small businesses with annual sales generally up to $5 million. These financial products and services include checking and savings accounts, credit and

debit cards, as well as home, auto, personal, and small business lending. Table 5a and Table 5b provide additional information for Consumer Banking and Lending.

Table 5a: Consumer Banking and Lending – Income Statement and Selected Metrics

			Quarter ended June 30,																								Six months ended June 30,
($ in millions, unless otherwise noted)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Income Statement
Net interest income			$	5,618					5,717						(99)						(2)		%				$	11,233					11,719						(486)						(4)		%
Noninterest income:
Deposit-related fees			732						575						157						27						1,393						1,454						(61)						(4)
Card fees			1,017						749						268						36						1,909						1,568						341						22
Mortgage banking			1,158						256						902						352						2,417						598						1,819						304
Other			161						311						(150)						(48)						388						918						(530)						(58)
Total noninterest income			3,068						1,891						1,177						62						6,107						4,538						1,569						35
Total revenue			8,686						7,608						1,078						14						17,340						16,257						1,083						7
Net charge-offs			359						553						(194)						(35)						729						1,174						(445)						(38)
Change in the allowance for credit losses			(726)						2,549						(3,275)						NM						(1,515)						3,497						(5,012)						NM
Provision for credit losses			(367)						3,102						(3,469)						NM						(786)						4,671						(5,457)						NM
Noninterest expense			6,202						6,933						(731)						(11)						12,469						13,190						(721)						(5)
Income (loss) before income tax expense (benefit)			2,851						(2,427)						5,278						NM						5,657						(1,604)						7,261						NM
Income tax expense (benefit)			713						(650)						1,363						NM						1,415						(445)						1,860						NM
Net income (loss)			$	2,138					(1,777)						3,915						NM						$	4,242					(1,159)						5,401						NM
Revenue by Line of Business
Consumer and Small Business Banking			$	4,714					4,401						313						7						$	9,264					9,262						2						—
Consumer Lending:
Home Lending			2,072						1,477						595						40						4,299						3,353						946						28
Credit Card			1,363						1,196						167						14						2,709						2,571						138						5
Auto			415						388						27						7						818						768						50						7
Personal Lending			122						146						(24)						(16)						250						303						(53)						(17)
Total revenue			$	8,686					7,608						1,078						14						$	17,340					16,257						1,083						7
Selected Metrics
Consumer Banking and Lending:
Return on allocated capital (1)			17.3		%				(15.5)																		17.2		%				(5.5)
Efficiency ratio (2)			71						91																		72						81
Headcount (#) (period-end)			116,185						133,876												(13)						116,185						133,876												(13)
Retail bank branches (#)			4,878						5,300												(8)						4,878						5,300												(8)
Digital active customers (# in millions) (3)			32.6						31.1												5						32.6						31.1												5
Mobile active customers (# in millions) (3)			26.8						25.2												6						26.8						25.2												6
Consumer and Small Business Banking:
Deposit spread (4)			1.5		%				1.8																		1.6		%				1.9
Debit card purchase volume ($ in billions) (5)			$	122.0					93.1						28.9						31						$	230.5					183.7						46.8						25
Debit card purchase transactions (# in millions) (5)			2,504						2,027												24						4,770						4,222												13

(continued on following page)

			Wells Fargo & Company			15

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Earnings Performance (continued)

(continued from previous page)

			Quarter ended June 30,																								Six months ended June 30,
($ in millions, unless otherwise noted)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Home Lending:
Mortgage banking:
Servicing income, net			$	(76)					(666)						590						89%						$	(199)					(409)						210						51		%
Net gains on mortgage loan originations/sales			1,234						922						312						34						2,616						1,007						1,609						160
Total mortgage banking			$	1,158					256						902						352						$	2,417					598						1,819						304
Originations ($ in billions):
Retail			$	36.9					30.5						6.4						21						$	70.5					53.6						16.9						32
Correspondent			16.3						28.7						(12.4)						(43)						34.5						53.6						(19.1)						(36)
Total originations			$	53.2					59.2						(6.0)						(10)						$	105.0					107.2						(2.2)						(2)
% of originations held for sale (HFS)			65.6		%				71.8																		70.7		%				70.7
Third-party mortgage loans serviced (period-end) ($ in billions) (6)			$	769.4					989.5						(220.1)						(22)						$	769.4					989.5						(220.1)						(22)
Mortgage servicing rights (MSR) carrying value (period-end)			6,717						6,819						(102)						(1)						6,717						6,819						(102)						(1)
Ratio of MSR carrying value (period-end) to third-party mortgage loans serviced (period-end) (6)			0.87		%				0.69																		0.87		%				0.69
Home lending loans 30+ days or more delinquency rate (7)(8)			0.51						0.54																		0.51						0.54
Credit Card:
Point of sale (POS) volume ($ in billions)			$	25.5					17.5						8.0						46						$	46.6					37.4						9.2						25
New accounts (# in thousands) (9)			323						255												27						589						570												3
Credit card loans 30+ days or more delinquency rate (8)			1.46		%				2.10																		1.46		%				2.10
Auto:
Auto originations ($ in billions)			$	8.3					5.6						2.7						48						$	15.3					12.1						3.2						26
Auto loans 30+ days or more delinquency rate (8)			1.30		%				1.70																		1.30		%				1.70
Personal Lending:
New funded balances			$	565					315						250						79						$	978					982						(4)						—

NM – Not meaningful

(1)Return on allocated capital is segment net income (loss) applicable to common stock divided by segment average allocated capital. Segment net income (loss) applicable to common stock is segment net income (loss) less allocated preferred stock dividends.

(2)Efficiency ratio is segment noninterest expense divided by segment total revenue (net interest income and noninterest income).

(3)Digital and mobile active customers is the number of consumer and small business customers who have logged on via a digital or mobile device, respectively, in the prior 90 days. Digital active customers includes both online and mobile customers.

(4)Deposit spread is (i) the internal funds transfer pricing credit on segment deposits minus interest paid to customers for segment deposits, divided by (ii) average segment deposits.

(5)Debit card purchase volume and transactions reflect combined activity for both consumer and business debit card purchases.

(6)Excludes residential mortgage loans subserviced for others.

(7)Excludes residential mortgage loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) and loans held for sale.

(8)Beginning in second quarter 2020, customer payment deferral activities instituted in response to the COVID-19 pandemic may have delayed the recognition of delinquencies for those customers who would have otherwise moved into past due status.

(9)Excludes certain private label new account openings.

Second quarter 2021 vs. second quarter 2020

Revenue increased driven by:

•higher mortgage banking noninterest income due to higher gains related to the re-securitization of loans we purchased from GNMA loan securitization pools in 2020, as well as higher income from MSR valuation changes and related hedges;

•higher card fees reflecting higher interchange fees, net of rewards, driven by increased purchase and transaction volumes; and

•higher deposit-related fees driven by lower fee waivers and reversals compared with a second quarter 2020 that included elevated fee waivers due to our actions to support customers during the COVID-19 pandemic;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and lower loan balances; and

•lower other income driven by lower gains on loan sales.

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

Noninterest expense decreased driven by:

•lower operating losses due to lower expense for litigation accruals and customer remediation accruals;

•lower personnel expense driven by additional payments in second quarter 2020 for certain customer-facing and support employees and for back-up child care services, as well as lower branch staffing expense in second quarter 2021 related to efficiency initiatives in Consumer and Small Business Banking, partially offset by higher revenue-related compensation in Home Lending; and

•lower expense allocated from enterprise functions, reflecting risk management and technology support related expenses;

partially offset by:

•higher charitable donations expense due to the donation of PPP processing fees; and

•higher FDIC deposit assessment expense driven by a higher assessment rate.

16			Wells Fargo & Company

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First half of 2021 vs. first half of 2020

Revenue increased driven by:

•higher mortgage banking noninterest income due to higher retail HFS origination volumes and margins, and higher income from MSR valuation changes and related hedges; and

•higher card fees reflecting higher interchange fees, net of rewards, driven by increased purchase and transaction volumes, partially offset by lower late fees due to higher payment rates;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and lower loan balances;

•lower other income driven by lower gains on loan sales; and

•lower deposit-related fees driven by higher fee waivers and reversals, as well as higher average consumer deposit account balances due to the economic slowdown associated with the COVID-19 pandemic.

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

Noninterest expense decreased driven by:

•lower operating losses due to lower expense for litigation accruals and customer remediation accruals;

•lower personnel expense driven by a first half of 2020 that included additional payments for certain customer-facing and support employees and for back-up child care services, as well as lower branch staffing expense in the first half of 2021 related to efficiency initiatives in Consumer and Small Business Banking, partially offset by higher revenue-related compensation in Home Lending; and

•lower advertising and promotion expense;

partially offset by:

•higher charitable donations expense due to the donation of PPP processing fees;

•higher FDIC deposit assessment expense driven by a higher assessment rate; and

•higher expense allocated from enterprise functions, reflecting risk management and technology support related expenses.

Table 5b: Consumer Banking and Lending – Balance Sheet

			Quarter ended June 30,																								Six months ended June 30,
(in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Selected Balance Sheet Data (average)
Loans by Line of Business:
Home Lending			$	223,229					262,209						(38,980)						(15)		%				$	233,078					269,518						(36,440)						(14)		%
Auto			50,762						49,611						1,151						2						50,143						49,552						591						1
Credit Card			34,211						36,539						(2,328)						(6)						34,705						38,147						(3,442)						(9)
Small Business			18,768						14,887						3,881						26						19,449						12,301						7,148						58
Personal Lending			4,922						6,385						(1,463)						(23)						5,053						6,578						(1,525)						(23)
Total loans			$	331,892					369,631						(37,739)						(10)						$	342,428					376,096						(33,668)						(9)
Total deposits			835,752						715,144						120,608						17						812,723						683,925						128,798						19
Allocated capital			48,000						48,000						—						—						48,000						48,000						—						—
Selected Balance Sheet Data (period-end)
Loans by Line of Business:
Home Lending			$	218,626					258,582						(39,956)						(15)						$	218,626					258,582						(39,956)						(15)
Auto			51,784						49,924						1,860						4						51,784						49,924						1,860						4
Credit Card			34,936						36,018						(1,082)						(3)						34,936						36,018						(1,082)						(3)
Small Business			16,494						18,116						(1,622)						(9)						16,494						18,116						(1,622)						(9)
Personal Lending			4,920						6,113						(1,193)						(20)						4,920						6,113						(1,193)						(20)
Total loans			$	326,760					368,753						(41,993)						(11)						$	326,760					368,753						(41,993)						(11)
Total deposits			840,434						746,602						93,832						13						840,434						746,602						93,832						13

Second quarter 2021 vs. second quarter 2020

Total loans (average) decreased as paydowns exceeded originations. Home lending loan balances were also impacted by actions taken to suspend certain non-conforming residential mortgage and home equity originations.

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

First half of 2021 vs. first half of 2020

Total loans (average and period-end) decreased as paydowns exceeded originations. Home lending loan balances were also impacted by actions taken to suspend certain non-conforming residential mortgage and home equity originations.

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

			Wells Fargo & Company			17

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Earnings Performance (continued)

Commercial Banking provides financial solutions to private, family owned and certain public companies. Products and services include banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management. In March 2021, we announced an agreement to sell our Corporate Trust Services

business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5c and Table 5d provide additional information for Commercial Banking.

Table 5c: Commercial Banking – Income Statement and Selected Metrics

			Quarter ended June 30,																								Six months ended June 30,
($ in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Income Statement
Net interest income			$	1,202					1,554						(352)						(23)		%				$	2,456					3,287						(831)						(25)		%
Noninterest income:
Deposit-related fees			325						297						28						9						642						599						43						7
Lending-related fees			135						125						10						8						271						253						18						7
Lease income			173						189						(16)						(8)						347						387						(40)						(10)
Other			273						186						87						47						473						170						303						178
Total noninterest income			906						797						109						14						1,733						1,409						324						23
Total revenue			2,108						2,351						(243)						(10)						4,189						4,696						(507)						(11)
Net charge-offs			53						120						(67)						(56)						92						290						(198)						(68)
Change in the allowance for credit losses			(435)						2,175						(2,610)						NM						(873)						3,046						(3,919)						NM
Provision for credit losses			(382)						2,295						(2,677)						NM						(781)						3,336						(4,117)						NM
Noninterest expense			1,443						1,580						(137)						(9)						3,073						3,153						(80)						(3)
Income (loss) before income tax expense (benefit)			1,047						(1,524)						2,571						NM						1,897						(1,793)						3,690						NM
Income tax expense (benefit)			261						(379)						640						NM						473						(442)						915						NM
Less: Net income from noncontrolling interests			2						1						1						100						3						2						1						50
Net income (loss)			$	784					(1,146)						1,930						NM						$	1,421					(1,353)						2,774						NM
Revenue by Line of Business
Middle Market Banking			$	1,151					1,267						(116)						(9)						$	2,310					2,722						(412)						(15)
Asset-Based Lending and Leasing			957						1,084						(127)						(12)						1,879						1,974						(95)						(5)
Total revenue			$	2,108					2,351						(243)						(10)						$	4,189					4,696						(507)						(11)
Revenue by Product
Lending and leasing			$	1,207					1,404						(197)						(14)						$	2,409					2,835						(426)						(15)
Treasury management and payments			680						780						(100)						(13)						1,401						1,723						(322)						(19)
Other			221						167						54						32						379						138						241						175
Total revenue			$	2,108					2,351						(243)						(10)						$	4,189					4,696						(507)						(11)
Selected Metrics
Return on allocated capital			15.2		%				(24.7)																		13.8		%				(15.0)
Efficiency ratio			68						67																		73						67
Headcount (#) (period-end)			19,647						21,984												(11)						19,647						21,984												(11)

NM – Not meaningful

Second quarter 2021 vs. second quarter 2020

Revenue decreased driven by:

•lower net interest income reflecting lower loan balances and the lower interest rate environment;

partially offset by:

•higher other noninterest income due to gains on equity securities and higher income from renewable energy investments; and

•higher deposit-related fees due to higher treasury management fees, driven by an increase in transaction service volumes and repricing.

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

Noninterest expense decreased driven by:

•lower spending related to efficiency initiatives, including lower personnel expense from reduced headcount;

•lower lease expense reflecting a reduction in the size of the operating lease asset portfolio;

•lower professional and outside services expense reflecting decreased project-related expense; and

•lower expenses allocated from enterprise functions, including lower technology expenses.

18			Wells Fargo & Company

---

First half of 2021 vs. first half of 2020

Revenue decreased driven by:

•lower net interest income reflecting the lower interest rate environment and lower loan balances; and

•lower lease income reflecting a reduction in the size of the operating lease asset portfolio;

partially offset by:

•higher other noninterest income due to gains on equity securities, impairments on equity securities in first quarter 2020, and higher income from renewable energy investments; and

•higher deposit-related fees due to higher treasury management fees, driven by a lower earnings credit rate due to the lower interest rate environment and repricing.

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

Noninterest expense decreased driven by:

•lower spending related to efficiency initiatives, including lower personnel expense from reduced headcount;

•lower lease expense reflecting a reduction in the size of the operating lease asset portfolio; and

•lower professional and outside services expense reflecting decreased project-related expense;

partially offset by:

•higher expenses due to lower allocations of shared expenses with other lines of business.

Table 5d: Commercial Banking – Balance Sheet

			Quarter ended June 30,																								Six months ended June 30,
(in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial			$	117,585					158,982						(41,397)						(26)		%				$	119,248					156,645						(37,397)						(24)		%
Commercial real estate			47,203						53,157						(5,954)						(11)						47,885						53,223						(5,338)						(10)
Lease financing and other			13,784						16,284						(2,500)						(15)						13,712						16,773						(3,061)						(18)
Total loans			$	178,572					228,423						(49,851)						(22)						$	180,845					226,641						(45,796)						(20)
Loans by Line of Business:
Middle Market Banking			$	102,054					122,319						(20,265)						(17)						$	103,210					119,276						(16,066)						(13)
Asset-Based Lending and Leasing			76,518						106,104						(29,586)						(28)						77,635						107,365						(29,730)						(28)
Total loans			$	178,572					228,423						(49,851)						(22)						$	180,845					226,641						(45,796)						(20)
Total deposits			192,586						184,132						8,454						5						190,984						175,929						15,055						9
Allocated capital			19,500						19,500						—						—						19,500						19,500						—						—
Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial			$	117,782					142,315						(24,533)						(17)						$	117,782					142,315						(24,533)						(17)
Commercial real estate			46,905						52,802						(5,897)						(11)						46,905						52,802						(5,897)						(11)
Lease financing and other			14,218						15,662						(1,444)						(9)						14,218						15,662						(1,444)						(9)
Total loans			$	178,905					210,779						(31,874)						(15)						$	178,905					210,779						(31,874)						(15)
Loans by Line of Business:
Middle Market Banking			$	102,062					115,105						(13,043)						(11)						$	102,062					115,105						(13,043)						(11)
Asset-Based Lending and Leasing			76,843						95,674						(18,831)						(20)						76,843						95,674						(18,831)						(20)
Total loans			$	178,905					210,779						(31,874)						(15)						$	178,905					210,779						(31,874)						(15)
Total deposits			197,461						183,085						14,376						8						197,461						183,085						14,376						8

Second quarter 2021 vs. second quarter 2020

Total loans (average) decreased driven by lower loan demand, including lower line utilization, and higher paydowns reflecting continued high levels of client liquidity and strength in the capital markets.

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

First half of 2021 vs. first half of 2020

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

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

			Wells Fargo & Company			19

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Earnings Performance (continued)

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

estate lending and servicing, equity and fixed income solutions, as well as sales, trading, and research capabilities. Table 5e and Table 5f provide additional information for Corporate and Investment Banking.

Table 5e: Corporate and Investment Banking – Income Statement and Selected Metrics

			Quarter ended June 30,																								Six months ended June 30,
($ in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Income Statement
Net interest income			$	1,783					1,963						(180)						(9)		%				$	3,562					3,984						(422)						(11)		%
Noninterest income:
Deposit-related fees			277						261						16						6						543						518						25						5
Lending-related fees			190						163						27						17						373						335						38						11
Investment banking fees			580						588						(8)						(1)						1,191						1,065						126						12
Net gains from trading activities			30						809						(779)						(96)						361						844						(483)						(57)
Other			478						275						203						74						912						721						191						26
Total noninterest income			1,555						2,096						(541)						(26)						3,380						3,483						(103)						(3)
Total revenue			3,338						4,059						(721)						(18)						6,942						7,467						(525)						(7)
Net charge-offs			(19)						401						(420)						NM						18						448						(430)						(96)
Change in the allowance for credit losses			(482)						3,355						(3,837)						NM						(803)						4,433						(5,236)						NM
Provision for credit losses			(501)						3,756						(4,257)						NM						(785)						4,881						(5,666)						NM
Noninterest expense			1,805						2,044						(239)						(12)						3,638						3,914						(276)						(7)
Income (loss) before income tax expense (benefit)			2,034						(1,741)						3,775						NM						4,089						(1,328)						5,417						NM
Income tax expense (benefit)			513						(408)						921						NM						1,013						(307)						1,320						NM
Less: Net loss from noncontrolling interests			(2)						—						(2)						NM						(2)						—						(2)						NM
Net income (loss)			$	1,523					(1,333)						2,856						NM						$	3,078					(1,021)						4,099						NM
Revenue by Line of Business
Banking:
Lending			$	474					464						10						2						$	927					921						6						1
Treasury Management and Payments			353						403						(50)						(12)						723						901						(178)						(20)
Investment Banking			407						444						(37)						(8)						823						805						18						2
Total Banking			1,234						1,311						(77)						(6)						2,473						2,627						(154)						(6)
Commercial Real Estate			1,014						837						177						21						1,926						1,740						186						11
Markets:
Fixed Income, Currencies, and Commodities (FICC)			888						1,506						(618)						(41)						2,032						2,420						(388)						(16)
Equities			206						302						(96)						(32)						458						698						(240)						(34)
Credit Adjustment (CVA/DVA) and Other			(16)						139						(155)						NM						20						31						(11)						(35)
Total Markets			1,078						1,947						(869)						(45)						2,510						3,149						(639)						(20)
Other			12						(36)						48						NM						33						(49)						82						NM
Total revenue			$	3,338					4,059						(721)						(18)						$	6,942					7,467						(525)						(7)
Selected Metrics
Return on allocated capital			17.0		%				(16.8)																		17.3		%				(7.1)
Efficiency ratio			54						50																		52						52
Headcount (#) (period-end)			8,673						8,213												6						8,673						8,213												6

NM – Not meaningful

Second quarter 2021 vs. second quarter 2020

Revenue decreased driven by:

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

•lower net interest income reflecting the lower interest rate environment, lower deposit balances, and lower trading-related assets;

partially offset by:

•higher other noninterest income driven by higher mortgage banking income due to higher servicing income, reflecting a reversal of an impairment of commercial MSRs in second quarter 2021, compared with the related impairment recorded in second quarter 2020, as well as higher gains on the sales of mortgage loans;

•higher income from low income housing and equity investments; and

20			Wells Fargo & Company

---

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

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

Noninterest expense decreased driven by:

•lower operating losses due to lower expense for litigation accruals and customer remediation accruals; and

•lower expenses allocated from enterprise functions reflecting lower spending due to efficiency initiatives;

partially offset by:

•higher personnel expense driven by higher incentive compensation.

First half of 2021 vs. first half of 2020

Revenue decreased driven by:

•lower net gains from trading activities driven by lower client trading activity for interest rate products, equities, and commodities, partially offset by higher client trading activity for asset-backed finance products; and

•lower net interest income reflecting the lower interest rate environment, lower deposit balances, and lower trading-related assets;

partially offset by:

•higher investment banking fees due to higher loan syndication fees, advisory fees, and equity underwriting fees;

•higher other noninterest income driven by higher mortgage banking income due to higher servicing income, reflecting a reversal of an impairment of commercial MSRs in the first half of 2021, compared with the related impairment recorded in the first half of 2020, as well as higher gains on the sales of mortgage loans; and

•higher income from low income housing and equity investments.

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

Noninterest expense decreased driven by:

•lower operating losses due to lower expense for litigation accruals and customer remediation accruals;

•lower expenses allocated from enterprise functions reflecting lower spending due to efficiency initiatives;

•lower professional and outside services expense reflecting decreased project-related expense; and

•a reduction in business travel and company events due to the impact of the COVID-19 pandemic;

partially offset by:

•higher personnel expense driven by higher incentive compensation.

			Wells Fargo & Company			21

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Earnings Performance (continued)

Table 5f: Corporate and Investment Banking – Balance Sheet

			Quarter ended June 30,																								Six months ended June 30,
(in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Selected Balance Sheet Data (average)
Loans:
Commercial and industrial			$	167,076					190,861						(23,785)						(12)		%				$	164,696					184,558						(19,862)						(11)		%
Commercial real estate			85,346						82,726						2,620						3						84,606						81,357						3,249						4
Total loans			$	252,422					273,587						(21,165)						(8)						$	249,302					265,915						(16,613)						(6)
Loans by Line of Business:
Banking			$	90,839					105,983						(15,144)						(14)						$	88,699					101,414						(12,715)						(13)
Commercial Real Estate			108,893						110,594						(1,701)						(2)						108,255						107,894						361						—
Markets			52,690						57,010						(4,320)						(8)						52,348						56,607						(4,259)						(8)
Total loans			$	252,422					273,587						(21,165)						(8)						$	249,302					265,915						(16,613)						(6)
Trading-related assets:
Trading account securities			$	104,743					106,836						(2,093)						(2)						$	105,546					115,082						(9,536)						(8)
Reverse repurchase agreements/securities borrowed			62,066						70,335						(8,269)						(12)						63,010						79,734						(16,724)						(21)
Derivative assets			24,731						22,380						2,351						11						25,910						20,332						5,578						27
Total trading-related assets			$	191,540					199,551						(8,011)						(4)						$	194,466					215,148						(20,682)						(10)
Total assets			513,414						535,298						(21,884)						(4)						512,476						543,455						(30,979)						(6)
Total deposits			190,810						239,637						(48,827)						(20)						192,645						252,902						(60,257)						(24)
Allocated capital			34,000						34,000						—						—						34,000						34,000						—						—
Selected Balance Sheet Data (period-end)
Loans:
Commercial and industrial			$	166,969					171,859						(4,890)						(3)						$	166,969					171,859						(4,890)						(3)
Commercial real estate			86,290						83,715						2,575						3						86,290						83,715						2,575						3
Total loans			$	253,259					255,574						(2,315)						(1)						$	253,259					255,574						(2,315)						(1)
Loans by Line of Business:
Banking			$	92,758					91,093						1,665						2						$	92,758					91,093						1,665						2
Commercial Real Estate			108,885						109,402						(517)						—						108,885						109,402						(517)						—
Markets			51,616						55,079						(3,463)						(6)						51,616						55,079						(3,463)						(6)
Total loans			$	253,259					255,574						(2,315)						(1)						$	253,259					255,574						(2,315)						(1)
Trading-related assets:
Trading account securities			$	108,291					97,708						10,583						11						$	108,291					97,708						10,583						11
Reverse repurchase agreements/securities borrowed			57,351						70,949						(13,598)						(19)						57,351						70,949						(13,598)						(19)
Derivative assets			25,288						22,757						2,531						11						25,288						22,757						2,531						11
Total trading-related assets			$	190,930					191,414						(484)						—						$	190,930					191,414						(484)						—
Total assets			516,518						510,205						6,313						1						516,518						510,205						6,313						1
Total deposits			188,219						236,620						(48,401)						(20)						188,219						236,620						(48,401)						(20)

Second quarter 2021 vs. second quarter 2020

Total assets (average) decreased predominantly due to a decline in loan balances driven by lower demand due to the COVID-19 pandemic and higher paydowns reflecting continued high levels of client liquidity and strength in the capital markets.

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

First half of 2021 vs. first half of 2020

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

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

22			Wells Fargo & Company

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Wealth and Investment Management provides personalized wealth management, investment and retirement products and services to clients across U.S.-based businesses including Wells Fargo Advisors and The Private Bank. We serve clients’

brokerage needs, and deliver financial planning, private banking, credit, and fiduciary services to high-net worth and ultra-high-net worth individuals and families. Table 5g and Table 5h provide additional information for Wealth and Investment Management.

Table 5g: Wealth and Investment Management

			Quarter ended June 30,																								Six months ended June 30,
($ in millions, unless otherwise noted)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Income Statement
Net interest income			$	610					719						(109)						(15)		%				$	1,267					1,557						(290)						(19)		%
Noninterest income:
Investment advisory and other asset-based fees			2,382						1,835						547						30						4,688						3,908						780						20
Commissions and brokerage services fees			513						470						43						9						1,068						1,063						5						—
Other			31						182						(151)						(83)						57						(52)						109						NM
Total noninterest income			2,926						2,487						439						18						5,813						4,919						894						18
Total revenue			3,536						3,206						330						10						7,080						6,476						604						9
Net charge-offs			(6)						1						(7)						NM						(6)						2						(8)						NM
Change in the allowance for credit losses			30						254						(224)						(88)						(13)						261						(274)						NM
Provision for credit losses			24						255						(231)						(91)						(19)						263						(282)						NM
Noninterest expense			2,891						2,743						148						5						5,919						5,400						519						10
Income before income tax expense			621						208						413						199						1,180						813						367						45
Income tax expense			156						52						104						200						296						204						92						45
Net income			$	465					156						309						198						$	884					609						275						45
Selected Metrics
Return on allocated capital			20.7		%				6.6																		19.8		%				13.4
Efficiency ratio			82						86																		84						83
Headcount (#) (period-end)			26,989						29,088												(7)						26,989						29,088												(7)
Advisory assets ($ in billions)			$	931					743						188						25						$	931					743						188						25
Other brokerage assets and deposits ($ in billions)			1,212						1,042						170						16						1,212						1,042						170						16
Total client assets ($ in billions)			$	2,143					1,785						358						20						$	2,143					1,785						358						20
Annualized revenue per advisor ($ in thousands) (1)			1,084						898						186						21						1,071						904						167						18
Total financial and wealth advisors (#) (period-end)			12,819						14,206												(10)						12,819						14,206												(10)
Selected Balance Sheet Data (average)
Total loans			$	81,784					78,091						3,693						5						$	81,314					77,987						3,327						4
Total deposits			174,980						165,103						9,877						6						174,333						155,246						19,087						12
Allocated capital			8,750						8,750						—						—						8,750						8,750						—						—
Selected Balance Sheet Data (period-end)
Total loans			$	82,783					78,101						4,682						6						$	82,783					78,101						4,682						6
Total deposits			174,267						168,249						6,018						4						174,267						168,249						6,018						4

NM – Not meaningful

(1)Represents annualized segment total revenue divided by average total financial and wealth advisors for the period.

Second quarter 2021 vs. second quarter 2020

Revenue increased driven by:

•higher investment advisory and other asset-based fees due to higher market valuations on WIM advisory assets;

partially offset by:

•lower deferred compensation plan investment results included in other noninterest income (largely offset by personnel expense); and

•lower net interest income reflecting the lower interest rate environment, partially offset by higher deposit balances.

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

Noninterest expense increased due to:

•higher personnel expense driven by higher revenue-related compensation, partially offset by lower deferred compensation expense; and

•the reversal of a software licensing liability accrual in second quarter 2020.

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

			Wells Fargo & Company			23

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Earnings Performance (continued)

First half of 2021 vs. first half of 2020

Revenue increased driven by:

•higher investment advisory and other asset-based fees due to higher market valuations on WIM advisory assets; and

•higher deferred compensation plan investment results included in other noninterest income (largely offset by personnel expense);

partially offset by:

•lower net interest income reflecting the lower interest rate environment, partially offset by higher deposit balances.

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

Noninterest expense increased due to:

•higher personnel expense driven by higher revenue-related compensation and higher deferred compensation expense; and

•the reversal of a software licensing liability accrual in the first half of 2020;

partially offset by:

•lower professional and outside services expense driven by efficiency initiatives to reduce our spending on consultants and contractors.

Total deposits (average and period-end) increased primarily due to growth in customer balances in both The Private Bank and Wells Fargo Advisors.

WIM Advisory Assets In addition to transactional accounts, WIM offers advisory account relationships to brokerage customers. Fees from advisory accounts are based on a percentage of the market value of the assets as of the beginning of the quarter, which vary across the account types based on the distinct services provided, and are affected by investment performance as well as asset inflows and outflows. Advisory accounts include assets that are financial advisor-directed and separately managed by third-party managers, as well as certain client-directed brokerage assets where we earn a fee for advisory and other services, but do not have investment discretion.

WIM also manages personal trust and other assets for high net worth clients, with fee income earned based on a percentage of the market value of these assets. Table 5h presents advisory assets activity by WIM line of business for the second quarter and first half of 2021 and 2020. Management believes that advisory assets is a useful metric because it allows management, investors, and others to assess how changes in asset amounts may impact the generation of certain asset-based fees.

For second quarter 2021 and 2020, the average fee rate by account type ranged from 50 to 120 basis points.

Table 5h: WIM Advisory Assets

			Quarter 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, 2021
Client-directed (4)			$	192.7		11.1			(12.2)			9.7			201.3						$	186.3		21.7			(22.0)			15.3			201.3
Financial advisor-directed (5)			223.4			12.3			(10.9)			13.2			238.0						211.0			24.6			(19.9)			22.3			238.0
Separate accounts (6)			183.1			8.0			(7.7)			9.5			192.9						174.6			16.5			(14.7)			16.5			192.9
Mutual fund advisory (7)			94.7			4.3			(3.6)			4.7			100.1						91.4			8.3			(7.1)			7.5			100.1
Total Wells Fargo Advisors			$	693.9		35.7			(34.4)			37.1			732.3						$	663.3		71.1			(63.7)			61.6			732.3
The Private Bank (8)			191.5			9.3			(11.1)			8.7			198.4						189.4			18.2			(23.6)			14.4			198.4
Total WIM advisory assets			$	885.4		45.0			(45.5)			45.8			930.7						$	852.7		89.3			(87.3)			76.0			930.7
June 30, 2020
Client directed (4)			$	142.7		7.3			(7.8)			20.0			162.2						$	169.4		17.4			(17.4)			(7.2)			162.2
Financial advisor directed (5)			152.4			8.4			(6.6)			22.6			176.8						176.3			19.1			(15.2)			(3.4)			176.8
Separate accounts (6)			134.2			5.0			(5.8)			18.1			151.5						160.1			11.8			(14.3)			(6.1)			151.5
Mutual fund advisory (7)			69.5			2.2			(2.7)			9.9			78.9						83.7			5.4			(7.2)			(3.0)			78.9
Total Wells Fargo Advisors			$	498.8		22.9			(22.9)			70.6			569.4						$	589.5		53.7			(54.1)			(19.7)			569.4
The Private Bank (8)			161.8			7.2			(11.8)			16.0			173.2						188.0			15.7			(22.8)			(7.7)			173.2
Total WIM advisory assets			$	660.6		30.1			(34.7)			86.6			742.6						$	777.5		69.4			(76.9)			(27.4)			742.6

(1)Inflows include new advisory account assets, contributions, dividends and interest.

(2)Outflows include closed advisory account assets, withdrawals and client management fees.

(3)Market impact reflects gains and losses on portfolio investments.

(4)Investment advice and other services are provided to client, but decisions are made by the client and the fees earned are based on a percentage of the advisory account assets, not the number and size of transactions executed by the client.

(5)Professionally managed portfolios with fees earned based on respective strategies and as a percentage of certain client assets.

(6)Professional advisory portfolios managed by Wells Fargo Asset Management or third-party asset managers. Fees are earned based on a percentage of certain client assets.

(7)Program with portfolios constructed of load-waived, no-load and institutional share class mutual funds. Fees are earned based on a percentage of certain client assets.

(8)Discretionary and non-discretionary portfolios held in personal trusts, investment agency, or custody accounts with fees earned based on a percentage of client assets.

24			Wells Fargo & Company

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Corporate includes corporate treasury and enterprise functions, net of allocations (including funds transfer pricing, capital, liquidity and certain expenses), in support of the reportable operating segments, as well as our investment portfolio and affiliated venture capital and private equity businesses. In addition, Corporate includes all restructuring charges related to our efficiency initiatives. See Note 19 (Restructuring Charges) to Financial Statements in this Report for additional information on restructuring charges. Corporate also includes certain lines of

business that management has determined are no longer consistent with the long-term strategic goals of the Company, as well as results for previously divested businesses. In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. Table 5i, Table 5j, and Table 5k provide additional information for Corporate.

Table 5i: Corporate – Income Statement and Selected Metrics

			Quarter ended June 30,																								Six months ended June 30,
($ in millions, unless otherwise noted)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Income Statement
Net interest income			$	(304)					60						(364)						NM						$	(694)					939						(1,633)						NM
Noninterest income			3,327						1,318						2,009						152		%				4,744						1,303						3,441						264		%
Total revenue			3,023						1,378						1,645						119						4,050						2,242						1,808						81
Net charge-offs			(8)						39						(47)						NM						69						141						(72)						(51)
Change in the allowance for credit losses			(26)						87						(113)						NM						(6)						247						(253)						NM
Provision for credit losses			(34)						126						(160)						NM						63						388						(325)						(84)
Noninterest expense			1,000						1,251						(251)						(20)						2,231						1,942						289						15
Income (loss) before income tax expense (benefit)			2,057						1						2,056						NM						1,756						(88)						1,844						NM
Income tax expense (benefit)			223						(300)						523						NM						(52)						21						(73)						NM
Less: Net income (loss) from noncontrolling interests (1)			704						47						657						NM						757						(103)						860						NM
Net income (loss)			$	1,130					254						876						345						$	1,051					(6)						1,057						NM
Selected Metrics
Headcount (#) (period-end) (2)			87,702						82,852												6						87,702						82,852												6
Wells Fargo Asset Management assets under management ($ in billions)			$	603					578						25						4						$	603					578						25						4

NM – Not meaningful

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

(2)Beginning in first quarter 2021, employees who were notified of displacement remained as headcount in their respective operating segment rather than included in Corporate.

Second quarter 2021 vs. second quarter 2020

Revenue increased driven by:

•higher gains on equity securities in our affiliated venture capital and private equity businesses; and

•a gain on the sale of a portion of our student loan portfolio and a modest gain on the sale of our Canadian equipment finance business;

partially offset by:

•lower net interest income reflecting the lower interest rate environment and lower loan balances;

•lower gains on debt securities due to fewer sales; and

•lower gains on deferred compensation plan investments (largely offset by personnel expense).

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

Noninterest expense decreased due to:

•lower operating losses due to lower expense for litigation accruals and customer remediation accruals; and

•lower deferred compensation plan expense;

partially offset by:

•a write-down of goodwill in second quarter 2021 related to the sale of a portion of our student loan portfolio.

First half of 2021 vs. first half of 2020

Revenue increased driven by:

•higher gains on equity securities in our affiliated venture capital and private equity businesses, as well as impairments on equity securities in first quarter 2020 due to the market impact of the COVID-19 pandemic ;

•higher gains on deferred compensation plan investments (largely offset by personnel expense); and

•a gain on the sale of substantially all of our student loan portfolio;

partially offset by:

•lower net interest income reflecting the lower interest rate environment, unfavorable hedge ineffectiveness accounting results, and lower loan balances; and

•lower gains on debt securities due to fewer sales.

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

Noninterest expense increased due to:

•higher incentive compensation expense, including the impact of higher market valuations on stock-based compensation;

•higher deferred compensation expense; and

•a write-down of goodwill in 2021 related to the sale of substantially all of our student loan portfolio.

			Wells Fargo & Company			25

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Earnings Performance (continued)

Corporate includes our rail car leasing business, which had long-lived operating lease assets (as a lessor) of $5.6 billion, which was net of $1.9 billion of accumulated depreciation, as of June 30, 2021. The average age of our rail cars is 21 years and the rail cars are typically leased under short-term leases of 3 to 5 years. Our three largest concentrations, which represented 55% of our rail car fleet as of June 30, 2021, were rail cars used for the transportation of agricultural grain, coal, and cement/sand products. Impairments may result in the future based on changing economic and market conditions affecting the long-term demand and utility of specific types of rail cars. Our assumptions for impairment are sensitive to estimated

utilization and rental rates, as well as the estimated economic life of the leased asset. For additional information on the accounting for impairment of operating lease assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

In addition, Corporate includes assets under management (AUM) and assets under administration (AUA) for Institutional Retirement and Trust (IRT) client assets of $20 billion and $580 billion, respectively, at June 30, 2021, which we continue to administer at the direction of the buyer pursuant to a transition services agreement. The transition services agreement terminates in December 2021, with available options to extend.

Table 5j: Corporate – Balance Sheet

			Quarter ended June 30,																								Six months ended June 30,
(in millions)			2021						2020						$ Change						% Change						2021						2020						$ Change						% Change
Selected Balance Sheet Data (average)
Cash, cash equivalents, and restricted cash			$	255,043					173,754						81,289						47		%				$	239,010					148,108						90,902						61		%
Available-for-sale debt securities			185,396						223,222						(37,826)						(17)						192,867						234,028						(41,161)						(18)
Held-to-maturity debt securities			237,788						166,127						71,661						43						227,623						161,958						65,665						41
Equity securities			11,499						13,604						(2,105)						(15)						11,203						13,787						(2,584)						(19)
Total loans			10,077						21,534						(11,457)						(53)						10,152						21,517						(11,365)						(53)
Total assets			754,629						655,617						99,012						15						741,203						642,513						98,690						15
Total deposits			41,696						82,640						(40,944)						(50)						44,080						94,307						(50,227)						(53)
Selected Balance Sheet Data (period-end)
Cash, cash equivalents, and restricted cash			$	248,784					236,219						12,565						5						$	248,784					236,219						12,565						5
Available-for-sale debt securities			177,923						217,339						(39,416)						(18)						177,923						217,339						(39,416)						(18)
Held-to-maturity debt securities			260,054						168,162						91,892						55						260,054						168,162						91,892						55
Equity securities			13,142						12,546						596						5						13,142						12,546						596						5
Total loans			10,593						21,948						(11,355)						(52)						10,593						21,948						(11,355)						(52)
Total assets			761,915						713,309						48,606						7						761,915						713,309						48,606						7
Total deposits			40,091						76,155						(36,064)						(47)						40,091						76,155						(36,064)						(47)

Second quarter 2021 vs. second quarter 2020

Total assets (average) increased due to:

•an increase in cash, cash equivalents, and restricted cash managed by corporate treasury as a result of an increase in deposits from the reportable operating segments; and

•an increase in held-to-maturity debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

partially offset by:

•a decline in available-for-sale debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

•a decline in average equity securities due to the transition from equity securities to derivative instruments for economic hedges of the deferred compensation plan liabilities in second quarter 2020 and a reduction in Federal Home Loan Bank stock, partially offset by higher balances in our venture capital business; and

•a decline in loans due to the sale of a portion of our student loan portfolio.

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

First half of 2021 vs. first half of 2020

Total assets (average and period-end) increased due to:

•an increase in cash, cash equivalents, and restricted cash managed by corporate treasury as a result of an increase in deposits from the reportable operating segments; and

•an increase in held-to-maturity debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

partially offset by:

•a decline in available-for-sale debt securities related to portfolio rebalancing to manage liquidity and interest rate risk;

•a decline in average equity securities due to the transition from equity securities to derivative instruments for economic hedges of the deferred compensation plan liabilities in second quarter 2020 and a reduction in Federal Home Loan Bank stock, partially offset by higher balances in our venture capital business; and

•a decline in loans due to the sale of substantially all of our student loan portfolio in the first half of 2021.

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

26			Wells Fargo & Company

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Wells Fargo Asset Management (WFAM) Assets Under Management We earn investment advisory and other asset-based fees from managing and administering assets through WFAM, which offers Wells Fargo proprietary mutual funds and manages institutional separate accounts. Generally, we earn fees from AUM where we have discretionary management authority over the investments and generate fees as a percentage of the market value of the AUM. WFAM assets under management

consist of equity, alternative, balanced, fixed income, money market, and stable value, and include client assets that are managed or sub-advised on behalf of other Wells Fargo lines of business. Table 5k presents WFAM AUM activity for the second quarter and first half of 2021 and 2020. Management believes that AUM is a useful metric because it allows management, investors, and others to assess how changes in asset amounts may impact the generation of certain asset-based fees.

Table 5k: WFAM Assets Under Management

			Quarter 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, 2021
Money market funds (4)			$	191.2		8.5			—			—			199.7						$	197.4		2.3			—			—			199.7
Other assets managed			399.2			22.1			(28.5)			11.0			403.8						405.6			45.9			(58.8)			11.1			403.8
Total WFAM assets under management			$	590.4		30.6			(28.5)			11.0			603.5						$	603.0		48.2			(58.8)			11.1			603.5
June 30, 2020
Money market funds (4)			$	166.2		35.7			—			—			201.9						$	130.6		71.3			—			—			201.9
Other assets managed			351.6			26.9			(26.5)			24.4			376.4						378.2			53.1			(55.1)			0.2			376.4
Total WFAM assets under management			$	517.8		62.6			(26.5)			24.4			578.3						$	508.8		124.4			(55.1)			0.2			578.3

(1)Inflows include new managed account assets, contributions, dividends and interest.

(2)Outflows include closed managed account assets, withdrawals and client management fees.

(3)Market impact reflects gains and losses on portfolio investments.

(4)Money Market funds activity is presented on a net inflow or net outflow basis, because the gross flows are not meaningful nor used by management as an indicator of performance.

			Wells Fargo & Company			27

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Balance Sheet Analysis

At June 30, 2021, our assets totaled $1.95 trillion, down $6.9 billion from December 31, 2020.

The following discussion provides additional information about the major components of our consolidated balance sheet.

See the “Capital Management” section in this Report for information on changes in our equity.

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

Table 6: Available-for-Sale and Held-to-Maturity Debt Securities

			June 30, 2021																								December 31, 2020
($ in millions)			Amortized cost, net (1)						Net  unrealized gains						Fair value						Weighted average expected maturity (yrs)						Amortized cost, net (1)						Net  unrealized gains						Fair value						Weighted average expected maturity (yrs)
Available-for-sale (2)			186,309						3,588						189,897						4.9						215,533						4,859						220,392						4.5
Held-to-maturity (3)			260,941						3,146						264,087						6.1						205,720						6,587						212,307						4.5
Total			$	447,250					6,734						453,984						n/a						421,253						11,446						432,699						n/a

(1)Represents amortized cost of the securities, net of the allowance for credit losses of $33 million and $28 million related to available-for-sale debt securities and $77 million and $41 million related to held-to-maturity debt securities at June 30, 2021, and December 31, 2020.

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

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

Table 6 presents a summary of our portfolio of investments in available-for-sale (AFS) and held-to-maturity (HTM) debt securities. See the “Balance Sheet Analysis – Available-for-Sale and Held-to-Maturity Debt Securities” section in our 2020 Form 10-K for information on our investment management objectives and practices and the “Risk Management – Asset/Liability Management” section in this Report for information on liquidity and interest rate risk.

The fair value of AFS debt securities decreased from December 31, 2020, as purchases were more than offset by runoff, sales and transfers to HTM debt securities due to actions taken to reposition the overall portfolio for capital management purposes.

The net amortized cost of HTM debt securities increased from December 31, 2020, as purchases and transfers from AFS debt securities were partially offset by runoff.

At June 30, 2021, 94% of the combined AFS and HTM debt securities portfolio was rated AA- or above. Ratings are based on external ratings where available and, where not available, based on internal credit grades.

The total net unrealized gains on AFS and HTM debt securities decreased from December 31, 2020, driven by higher interest rates, partially offset by tighter credit spreads. See

Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report for additional information on AFS and HTM debt securities, including a summary of debt securities by security type.

Loan Portfolios

Table 7 provides a summary of total outstanding loans by portfolio segment. Commercial loans were relatively flat compared with December 31, 2020. Consumer loans decreased from December 31, 2020, driven by a decrease in the residential mortgage – first lien portfolio due to paydowns and the transfer of $10.8 billion of first lien mortgage loans to loans held for sale (LHFS), substantially all of which related to the sales of loans purchased from GNMA loan securitization pools in prior periods, partially offset by originations of $30.8 billion.

Table 7: Loan Portfolios

(in millions)						June 30, 2021						December 31, 2020
Commercial						$	476,422					478,417
Consumer						375,878						409,220
Total loans						$	852,300					887,637
Change from prior year-end						$	(35,337)					(74,628)

Average loan balances and a comparative detail of average loan balances is included in Table 1 under “Earnings Performance – Net Interest Income” earlier in this Report. Additional information on total loans outstanding by portfolio segment and class of financing receivable is included in the “Risk Management – Credit Risk Management” section in this Report. Period-end balances and other loan related information are in Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

See the “Balance Sheet Analysis – Loan Portfolios” section in our 2020 Form 10-K for additional information regarding contractual loan maturities and the distribution of loans to changes in interest rates.

28			Wells Fargo & Company

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Deposits

Deposits increased from December 31, 2020, reflecting:

•higher levels of liquidity and savings for consumer customers reflecting government stimulus programs and payment deferral programs, as well as continued economic uncertainty associated with the COVID-19 pandemic;

partially offset by:

•actions taken to manage under the asset cap resulting in declines in time deposits, such as brokered certificates of

deposit (CDs), and interest-bearing deposits in non-U.S. offices.

Table 8 provides additional information regarding deposits. Information regarding the impact of deposits on net interest income and a comparison of average deposit balances is provided in the “Earnings Performance – Net Interest Income” section and Table 1 earlier in this Report.

Table 8: Deposits

($ in millions)			Jun 30, 2021						% of total deposits						Dec 31, 2020						% of total  deposits						% Change
Noninterest-bearing demand deposits			$	504,108					35		%				$	467,068					33		%				8
Interest-bearing demand deposits			453,277						32						447,446						32						1
Savings deposits			419,812						29						404,935						29						4
Time deposits			35,269						2						49,775						4						(29)
Interest-bearing deposits in non-U.S. offices			28,006						2						35,157						2						(20)
Total deposits			$	1,440,472					100		%				$	1,404,381					100		%				3

Off-Balance Sheet Arrangements

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

Commitments to Lend

We enter into commitments to lend to customers, which are usually at a stated interest rate, if funded, and for specific purposes and time periods. When we enter into commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments are not funded. For additional information, see Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Transactions with Unconsolidated Entities

In the normal course of business, we enter into various types of on- and off-balance sheet transactions with special purpose entities (SPEs), which are corporations, trusts, limited liability companies or partnerships that are established for a limited purpose. Generally, SPEs are formed in connection with securitization transactions and are considered variable interest entities (VIEs). For additional information, see Note 8 (Securitizations and Variable Interest Entities) to Financial Statements in this Report.

Guarantees and Other Arrangements

Guarantees are contracts that contingently require us to make payments to a guaranteed party based on an event or a change in an underlying asset, liability, rate or index. Guarantees are generally in the form of standby and direct pay letters of credit, written options, recourse obligations, exchange and clearing house guarantees, indemnifications, and other types of similar arrangements. For additional information, see Note 11 (Guarantees and Other Commitments) to Financial Statements in this Report.

Commitments to Purchase Debt and Equity Securities

We enter into commitments to purchase securities under resale agreements. We also may enter into commitments to purchase debt and equity securities to provide capital for customers’ funding, liquidity or other future needs. For additional information, see Note 11 (Guarantees and Other Commitments) to Financial Statements in this Report.

Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. Derivatives are recorded on the consolidated balance sheet at fair value, and volume can be measured in terms of the notional amount, which is generally not exchanged, but is used only as the basis on which interest and other payments are determined. The notional amount is not recorded on the consolidated balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the instruments. For additional information, see Note 14 (Derivatives) to Financial Statements in this Report.

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Risk Management

Wells Fargo manages a variety of risks that can significantly affect our financial performance and our ability to meet the expectations of our customers, shareholders, regulators and other stakeholders. For additional information about how we manage risk, see the “Risk Management” section in our 2020 Form 10-K. The discussion that follows supplements our discussion of the management of certain risks contained in the “Risk Management” section in our 2020 Form 10-K.

Credit Risk Management

We define credit risk as the risk of loss associated with a borrower or counterparty default (failure to meet obligations in accordance with agreed upon terms). Credit risk exists with many of our assets and exposures such as debt security holdings, certain derivatives, and loans.

The Board’s Risk Committee has primary oversight responsibility for credit risk. A Credit Subcommittee of the Risk Committee assists the Risk Committee in providing oversight of credit risk. At the management level, Credit Risk, which is part of IRM, has oversight responsibility for credit risk. Credit Risk reports to the CRO and supports periodic reports related to credit risk provided to the Board’s Risk Committee or its Credit Subcommittee.

Loan Portfolio

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

Table 9: Total Loans Outstanding by Portfolio Segment and Class of Financing Receivable

(in millions)			Jun 30, 2021						Dec 31, 2020
Commercial:
Commercial and industrial			$	317,618					318,805
Real estate mortgage			120,678						121,720
Real estate construction			22,406						21,805
Lease financing			15,720						16,087
Total commercial			476,422						478,417
Consumer:
Residential mortgage – first lien			244,371						276,674
Residential mortgage – junior lien			19,637						23,286
Credit card			34,936						36,664
Auto			51,073						48,187
Other consumer			25,861						24,409
Total consumer			375,878						409,220
Total loans			$	852,300					887,637

We manage our credit risk by establishing what we believe are sound credit policies for underwriting new business, while monitoring and reviewing the performance of our existing loan portfolios. We employ various credit risk management and monitoring activities to mitigate risks associated with multiple risk factors affecting loans we hold including: 

•Loan concentrations and related credit quality;

•Counterparty credit risk;

•Economic and market conditions;

•Legislative or regulatory mandates;

•Changes in interest rates;

•Merger and acquisition activities; and

•Reputation risk.

Our credit risk management oversight process is governed centrally, but provides for direct management and accountability by our lines of business. Our overall credit process includes comprehensive credit policies, disciplined credit underwriting, frequent and detailed risk measurement and modeling, extensive credit training programs, and a continual loan review and audit process.

A key to our credit risk management is adherence to a well-controlled underwriting process, which we believe is appropriate for the needs of our customers as well as investors who purchase the loans or securities collateralized by the loans.

Credit Quality Overview  Credit quality in second quarter 2021 reflected continued improvement in the economic environment. In particular:

•Nonaccrual loans were $7.4 billion at June 30, 2021, down from $8.7 billion at December 31, 2020. Commercial nonaccrual loans decreased to $3.5 billion at June 30, 2021, compared with $4.8 billion at December 31, 2020, and consumer nonaccrual loans declined to $3.8 billion at June 30, 2021, compared with $3.9 billion at December 31, 2020. Nonaccrual loans represented 0.86% of total loans at June 30, 2021, compared with 0.98% at December 31, 2020.

•Net loan charge-offs as a percentage of our average commercial and consumer loan portfolios were 0.07% and 0.32% in the second quarter and 0.10% and 0.35% in the first half of 2021, respectively, compared with 0.44% and 0.48% in the second quarter and 0.35% and 0.51% in the first half of 2020.

•Loans that are not government insured/guaranteed and 90 days or more past due and still accruing were $277 million and $460 million in our commercial and consumer portfolios, respectively, at June 30, 2021, compared with $78 million and $612 million at December 31, 2020.

•Our provision for credit losses for loans was $(1.2) billion and $(2.4) billion in the second quarter and first half of 2021, respectively, compared with $9.6 billion and $13.4 billion for the same periods a year ago.

•The ACL for loans decreased to $16.4 billion, or 1.92% of total loans, at June 30, 2021, compared with $19.7 billion, or 2.22%, at December 31, 2020.

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

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COVID-Related Lending Accommodations During 2020, we provided accommodations to customers in response to the COVID-19 pandemic, including payment deferrals, and other expanded assistance for mortgage, credit card, auto, small business, personal and commercial lending customers. With the exception of residential mortgage-related accommodation programs, the COVID-related lending accommodations instituted during 2020 were no longer offered as of December 31, 2020. Residential mortgage accommodation programs, which continued during the first half of 2021, offered payment deferrals for up to a total of 18 months. Table 10 summarizes the unpaid principal balance (UPB) of consumer loans that received accommodations under loan modification programs established to assist customers with the economic impact of the COVID-19 pandemic (COVID-related modifications) and that remained in a deferral period as of June 30, 2021.

Based on guidance in the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (Revised) issued by federal banking regulators in April 2020 (the Interagency Statement), both of which we elected to apply, loan modifications related to COVID-19 and that meet certain other criteria are exempt from troubled debt restructuring (TDR) classification. Additionally, our election to apply the TDR relief provided by the CARES Act and the Interagency Statement impacts our regulatory capital ratios as these loan modifications

related to COVID-19 are not adjusted to a higher risk-weighting normally required with TDR classification. At June 30, 2021, substantially all residential mortgage loans that were in a deferral period, excluding those that were government insured/guaranteed, met the criteria for TDR relief and were therefore not classified as TDRs. For additional information regarding the TDR relief provided by the CARES Act and the clarifying TDR accounting guidance from the Interagency Statement, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net charge-offs, delinquencies, and nonaccrual status for those customers who would have otherwise moved into past due or nonaccrual status. Customer loans that are not further modified upon exit from the deferral period may be placed on nonaccrual status or charged-off in accordance with our policies if customers are unable to resume making payments in accordance with the contractual terms of their agreement. As of June 30, 2021, substantially all of our consumer loans were current after exiting the deferral period. For additional information about our COVID-related modifications, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Table 10: Consumer Loan Modifications Related to COVID-19

($ in millions)									Unpaid principal balance of modified loans still in deferral period at Jun 30, 2021			% of loan class (1)															% current at Jun 30, 2021 after exit from deferral period (2)
Consumer:
Residential mortgage – first lien (3)									$	6,810		3		%													96
Residential mortgage – junior lien (3)									997			5															90
All other consumer (4)									29			*															92
Subtotal									7,836			2
Residential mortgage – first lien (government insured/guaranteed) (5)									11,400			5
Total consumer									$	19,236

*Less than 1%.

(1)Based on total loans outstanding at June 30, 2021.

(2)Represents the UPB of loans that exited the deferral period and had a balance that was less than 30 days past due as of June 30, 2021.

(3)For residential mortgage loans still in active COVID-related accommodation programs as of June 30, 2021, 96% of first lien and 86% of junior lien mortgage loans had a loan-to-value ratio that was 80% or lower.

(4)Includes credit card, auto, and other consumer loans (including personal lines/loans).

(5)Represents residential mortgage – first lien loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) that were primarily repurchased from GNMA loan securitization pools. For additional information on GNMA loan securitization pools, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in this Report. FHA/VA loans are entitled to payment deferrals of scheduled principal and interest up to a total of 18 months.

Significant Loan Portfolio Reviews  Measuring and monitoring our credit risk is an ongoing process that tracks delinquencies, collateral values, Fair Isaac Corporation (FICO) scores, economic trends by geographic areas, loan-level risk grading for certain portfolios (typically commercial) and other indications of credit risk. Our credit risk monitoring process is designed to enable early identification of developing risk and to support our determination of an appropriate allowance for credit losses. The following discussion provides additional characteristics and analysis of our significant portfolios. See Note 4 (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.

We had $15.6 billion of the commercial and industrial loan and lease financing portfolio internally classified as criticized in accordance with regulatory guidance at June 30, 2021, compared with $19.3 billion at December 31, 2020. The change was driven by decreases in the oil, gas and pipelines, retail, materials and commodities, entertainment and recreation, and technology, telecom and media industries reflecting improvement in the economic environment.

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

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Risk Management – Credit Risk Management (continued)

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

The portfolio decreased slightly at June 30, 2021, compared with December 31, 2020, as a result of paydowns, partially offset

by limited loan draws. Table 11 provides our commercial and industrial loans and lease financing by industry. The industry categories are based on the North American Industry Classification System.

Table 11: Commercial and Industrial Loans and Lease Financing by Industry

			June 30, 2021																								December 31, 2020
($ in millions)			Nonaccrual loans						Total portfolio						% of total loans						Total commitments (1)						Nonaccrual loans						Total portfolio						% of total loans						Total commitments (1)
Financials except banks			$	154					124,759						15		%				$	215,207					$	160					117,726						13		%				$	206,999
Technology, telecom and media			65						20,669						2						59,245						144						23,061						3						56,500
Real estate and construction			136						22,488						3						54,354						133						23,113						3						51,526
Equipment, machinery and parts manufacturing			41						16,833						2						40,174						81						18,158						2						41,332
Retail			44						16,726						2						39,732						94						17,393						2						41,669
Materials and commodities			19						13,033						2						35,232						39						12,071						1						33,879
Food and beverage manufacturing			9						11,955						1						29,460						17						12,401						1						28,908
Health care and pharmaceuticals			26						13,484						2						29,259						145						15,322						2						32,154
Oil, gas and pipelines			486						9,186						1						28,785						953						10,471						1						30,055
Auto related			63						9,873						1						25,036						79						11,817						1						25,034
Commercial services			76						10,018						1						23,965						107						10,284						1						24,442
Utilities			67						7,136						*						21,615						2						5,031						*						18,564
Insurance and fiduciaries			1						4,371						*						19,233						2						3,297						*						14,334
Diversified or miscellaneous			27						6,309						*						17,108						7						5,437						*						14,717
Transportation services			492						8,566						1						16,866						573						9,236						1						15,531
Entertainment and recreation			68						7,612						*						15,540						263						9,884						1						17,551
Banks			—						14,839						2						15,290						—						12,789						1						13,842
Agribusiness			57						5,402						*						11,221						81						6,314						*						11,642
Government and education			4						5,033						*						10,793						9						5,464						*						11,065
Other (2)			71						5,046						*						19,693						68						5,623						*						23,315
Total			$	1,906					333,338						39		%				$	727,808					$	2,957					334,892						33		%				$	713,059

*Less than 1%.

(1)Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit.

(2)No other single industry had total loans in excess of $3.4 billion and $3.8 billion at June 30, 2021, and December 31, 2020, respectively.

Loans to financials except banks, our largest industry concentration, is predominantly comprised of loans to investment firms, financial vehicles, and nonbank creditors. We had $88.1 billion and $80.0 billion of loans originated by our Asset Backed Finance (ABF) and Financial Institution Group (FIG) lines of business at June 30, 2021, and December 31, 2020, respectively. These loans include: (i) loans to customers related to their subscription or capital calls, (ii) loans to nonbank lenders collateralized by commercial loans, and (iii) loans to originators or servicers of financial assets collateralized by residential real estate or other consumer loans such as credit cards, auto loans and leases, student loans and other financial assets eligible for the securitization market. These ABF and FIG loans are limited to a percentage of the value of the underlying financial assets considering underlying credit risk, asset duration, and ongoing performance. These ABF and FIG loans may also have other features to manage credit risk such as cross-collateralization, credit enhancements, and contractual re-margining of collateral supporting the loans. In addition, loans to financials except banks included collateralized loan obligations (CLOs) in loan form, all of which were rated AA or above, of $8.1 billion and $7.9 billion at June 30, 2021, and December 31, 2020, respectively.

Oil, gas and pipelines loans included $6.6 billion and $7.5 billion of senior secured loans outstanding at June 30, 2021, and December 31, 2020, respectively. Oil, gas and pipelines

nonaccrual loans decreased at June 30, 2021, compared with December 31, 2020, driven by loan payoffs.

We continue to perform escalated credit monitoring for certain industries that we consider to be directly and most adversely affected by the COVID-19 pandemic.

Our commercial and industrial loans and lease financing portfolio also includes non-U.S. loans of $72.1 billion and $63.8 billion at June 30, 2021, and December 31, 2020, respectively. Significant industry concentrations of non-U.S. loans at June 30, 2021, and December 31, 2020, respectively, included:

•$43.5 billion and $36.2 billion in the financials except banks category;

•$14.7 billion and $12.8 billion in the banks category; and

•$1.4 billion and $1.6 billion in the oil, gas and pipelines category.

COMMERCIAL REAL ESTATE (CRE)  We generally subject CRE loans to individual risk assessment using our internal borrower and collateral quality ratings. Our ratings are aligned to regulatory definitions of pass and criticized categories with criticized segmented among special mention, substandard, doubtful and loss categories. We had $15.6 billion of CRE mortgage loans classified as criticized at June 30, 2021, compared with $12.0 billion at December 31, 2020, and $2.6 billion of CRE construction loans classified as criticized at June 30, 2021,

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compared with $1.6 billion at December 31, 2020. The increase in criticized CRE mortgage and construction loans was driven by the hotel/motel, apartment, institutional, and office property types and reflected the economic impact of the COVID-19 pandemic. Due to uncertainty in the recovery from the economic impacts of the COVID-19 pandemic, the credit quality of certain property types within our CRE loan portfolio, such as retail, hotel/motel, office buildings, and shopping centers, could continue to be adversely affected.

The total CRE loan portfolio decreased $441 million from December 31, 2020, driven by a decrease in CRE mortgage loans predominantly related to the office, retail (excluding shopping

center), and shopping center property types, partially offset by an increase in loans related to apartments. The CRE loan portfolio included $8.4 billion of non-U.S. CRE loans at June 30, 2021. The portfolio is diversified both geographically and by property type. The largest geographic concentrations of CRE loans are in California, New York, Florida and Texas, which combined represented 48% of the total CRE portfolio. The largest property type concentrations are office buildings at 25% and apartments at 20% of the portfolio.

Table 12 summarizes CRE loans by state and property type with the related nonaccrual totals at June 30, 2021.

Table 12: CRE Loans by State and Property Type

			June 30, 2021
			Real estate mortgage												Real estate construction												Total												% of total  loans
($ in millions)			Nonaccrual loans						Total portfolio						Nonaccrual loans						Total portfolio						Nonaccrual loans						Total portfolio
By state:
California			$	218					30,684						3						4,380						221						35,064						4		%
New York			58						12,618						2						1,997						60						14,615						2
Florida			111						8,617						1						1,571						112						10,188						1
Texas			308						8,253						—						1,139						308						9,392						1
Washington			139						3,839						6						1,072						145						4,911						*
Georgia			51						3,820						—						585						51						4,405						*
North Carolina			11						3,526						—						871						11						4,397						*
Arizona			50						3,978						1						289						51						4,267						*
New Jersey			72						2,637						—						1,042						72						3,679						*
Colorado			12						3,146						—						440						12						3,586						*
Other (1)			568						39,560						32						9,020						600						48,580						6
Total			$	1,598					120,678						45						22,406						1,643						143,084						17		%
By property:
Office buildings			$	146					33,098						2						3,173						148						36,271						4		%
Apartments			27						20,645						—						8,208						27						28,853						3
Industrial/warehouse			88						15,331						2						1,746						90						17,077						2
Retail (excluding shopping center)			230						13,091						3						142						233						13,233						2
Hotel/motel			361						10,552						—						1,719						361						12,271						1
Shopping center			509						10,002						—						911						509						10,913						1
Institutional			54						4,289						20						2,619						74						6,908						*
Mixed use properties			98						5,306						—						938						98						6,244						*
Collateral pool			—						2,947						—						191						—						3,138						*
1-4 family structure			—						8						—						1,348						—						1,356						*
Other			85						5,409						18						1,411						103						6,820						*
Total			$	1,598					120,678						45						22,406						1,643						143,084						17		%

*    Less than 1%.

(1)Includes 40 states; no state in Other had loans in excess of $3.6 billion.

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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, 2021, non-U.S. loans totaled $80.8 billion, representing approximately 9% of our total consolidated loans outstanding, compared with $72.9 billion, or approximately 8% of our total consolidated loans outstanding, at December 31, 2020. Non-U.S. loans were approximately 4% of our total consolidated assets at both June 30, 2021, and December 31, 2020.

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

Our largest single country exposure outside the U.S. at June 30, 2021, was the United Kingdom, which totaled $34.4 billion, or approximately 2% of our total assets, and included $7.7 billion of sovereign claims. Our United Kingdom sovereign claims arise predominantly from deposits we have placed with the Bank of England pursuant to regulatory requirements in support of our London branch.

Table 13 provides information regarding our top 20 exposures by country (excluding the U.S.), based on our assessment of risk, which gives consideration to the country of any guarantors and/or underlying collateral. With respect to Table 13:

•Lending and deposits exposure includes outstanding loans, unfunded credit commitments, and deposits with non-U.S. banks. These balances are presented prior to the deduction of allowance for credit losses or collateral received under the terms of the credit agreements, if any.

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

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

Table 13: Select Country Exposures

			June 30, 2021
			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			$	7,716					23,986						—						970						—						1,689						7,716						26,645						34,361
Canada			2						16,693						1						(19)						2						456						5						17,130						17,135
Japan			19						700						11,173						161						—						46						11,192						907						12,099
Cayman Islands			—						6,757						—						—						—						153						—						6,910						6,910
Ireland			254						5,050						—						155						—						117						254						5,322						5,576
Luxembourg			—						4,258						—						126						—						129						—						4,513						4,513
Guernsey			—						4,157						—						3						—						39						—						4,199						4,199
Bermuda			—						3,842						—						65						—						130						—						4,037						4,037
China			—						3,353						(2)						447						17						39						15						3,839						3,854
Germany			—						3,073						—						62						3						93						3						3,228						3,231
France			131						2,233						—						212						184						12						315						2,457						2,772
Netherlands			—						1,978						3						211						—						116						3						2,305						2,308
South Korea			—						1,991						—						198						2						13						2						2,202						2,204
Brazil			—						1,438						—						2						3						—						3						1,440						1,443
Switzerland			—						1,193						—						(13)						—						212						—						1,392						1,392
United Arab Emirates			—						1,014						—						87						—						—						—						1,101						1,101
Australia			—						992						—						8						—						11						—						1,011						1,011
Singapore			—						820						—						51						—						98						—						969						969
Chile			—						918						—						—						—						—						—						918						918
India			—						877						—						20						—						—						—						897						897
Total top 20 country exposures			$	8,122					85,323						11,175						2,746						211						3,353						19,508						91,422						110,930

(1)Total non-sovereign exposure comprised $47.6 billion exposure to financial institutions and $43.8 billion to non-financial corporations at June 30, 2021.

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 93% of the total residential mortgage loan portfolio at both June 30, 2021, and December 31, 2020.

The residential mortgage loan portfolio includes some loans with adjustable-rate features and some with an interest-only feature as part of the loan terms. Interest-only loans were approximately 3% of total loans at both June 30, 2021, and December 31, 2020. We believe our origination process appropriately addresses our adjustable-rate mortgage (ARM) reset risk across our residential mortgage loan portfolios and our ACL for loans considers this risk. We do not offer option ARM products, nor do we offer variable-rate mortgage products with

fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans.

We continue to modify residential mortgage loans to assist homeowners and other borrowers experiencing financial difficulties. For additional information on our modification programs, see the “Risk Management – Credit Risk Management – Residential Mortgage Loans” section in our 2020 Form 10-K. For additional information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

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We monitor changes in real estate values and underlying economic or market conditions for all geographic areas of our residential mortgage portfolios as part of our credit risk management process. Our underwriting and periodic review of loans and lines secured by residential real estate collateral includes original appraisals adjusted for the change in Home Price Index (HPI) or estimates from automated valuation models (AVMs) to support property values. Additional information about appraisals, AVMs, and our policy for their use can be found in Note 4 (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 2020 Form 10-K.

Part of our credit monitoring includes tracking delinquency, current FICO scores and loan/combined loan to collateral values (LTV/CLTV) on the entire residential mortgage loan portfolio. Excluding government insured/guaranteed loans, these credit risk indicators on the residential mortgage portfolio were:

•Loans 30 days or more delinquent at June 30, 2021, totaled $3.7 billion, or 1% of total mortgages, compared with $4.7 billion, or 2%, at December 31, 2020. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies;

•Loans with FICO scores lower than 640 totaled $4.3 billion, or 2% of total mortgages at June 30, 2021, compared with $5.6 billion, or 2%, at December 31, 2020; and

•Mortgages with a LTV/CLTV greater than 100% totaled $912 million at June 30, 2021, or less than 1% of total mortgages, compared with $1.6 billion, or 1%, at December 31, 2020.

Information regarding credit quality indicators can be found in Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report. Residential mortgage loans by state are presented in Table 14.

Table 14: Residential Mortgage Loans by State

			June 30, 2021
($ in millions)			Residential mortgage – first lien						Residential mortgage – junior lien						Total residential mortgage						% of total loans
Residential mortgage loans:
California (1)			$	96,679					5,155						101,834						12		%
New York			29,635						1,117						30,752						4
New Jersey			10,491						1,988						12,479						1
Florida			9,839						1,804						11,643						1
Washington			8,088						414						8,502						1
Texas			6,956						388						7,344						1
Virginia			5,656						1,148						6,804						1
North Carolina			4,380						932						5,312						1
Colorado			4,668						400						5,068						1
Other (2)			47,748						6,291						54,039						6
Government insured/guaranteed loans (3)			20,231						—						20,231						2
Total			$	244,371					19,637						264,008						31		%

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

(2)Consists of 41 states; no state in Other had loans in excess of $5.1 billion.

(3)Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).

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Risk Management – Credit Risk Management (continued)

Residential Mortgage – First Lien Portfolio Our total residential mortgage – first lien portfolio decreased $32.3 billion from December 31, 2020, driven by loan paydowns as a result of the low interest rate environment and the transfer of $10.8 billion of first lien mortgage loans to loans held for sale (LHFS) substantially all of which related to the sales of loans purchased

from GNMA loan securitization pools in prior periods, partially offset by originations of $30.8 billion.

Table 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 loans 30 days or more past due												Loss (recovery) rate (annualized) quarter ended
($ in millions)			Jun 30, 2021			Dec 31, 2020						Jun 30, 2021			Dec 31, 2020									Jun 30, 2021			Mar 31, 2021						Dec 31, 2020			Sep 30, 2020			Jun 30, 2020
California			$	96,679		104,260						0.84		%	1.00									(0.02)			(0.02)						(0.03)			(0.01)			(0.01)
New York			29,635			31,028						1.12			1.40									0.01			(0.01)						0.01			0.02			0.02
New Jersey			10,491			12,073						1.71			1.92									(0.03)			—						(0.03)			(0.01)			0.03
Florida			9,839			10,623						2.04			2.56									(0.14)			(0.11)						0.01			0.03			(0.01)
Washington			8,088			9,094						0.51			0.66									(0.02)			0.02						(0.01)			0.01			(0.01)
Other			69,408			79,356						1.42			1.60									(0.06)			(0.09)						0.02			(0.01)			0.01
Total			224,140			246,434						1.14			1.34									(0.03)			(0.04)						—			—			—
Government insured/guaranteed loans			20,231			30,240
Total first lien mortgage portfolio			$	244,371		276,674

Residential Mortgage – Junior Lien Portfolio The residential mortgage – junior lien portfolio consists of residential mortgage lines and loans that are subordinate in rights to an existing lien on the same property. It is not unusual for these lines and loans to have draw periods, interest-only payments, balloon payments, adjustable rates and similar features. Junior lien loan products are primarily amortizing payment loans with fixed interest rates and repayment periods between five to 30 years. We continuously monitor the credit performance of our residential mortgage –

junior lien portfolio for trends and factors that influence the frequency and severity of losses, such as residential mortgage – junior lien performance when the residential mortgage – first lien loan is delinquent.

The decrease in the residential mortgage – junior lien portfolio at June 30, 2021, compared with December 31, 2020, reflected loan paydowns. Table 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 loans 30 days or more past due												Loss (recovery) rate (annualized) quarter ended
($ in millions)			Jun 30, 2021						Dec 31, 2020						Jun 30, 2021			Dec 31, 2020												Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Sep 30, 2020						Jun 30, 2020
California			$	5,155					6,237						2.49		%	2.20												(0.67)						(0.69)						(0.46)						(0.34)						(0.26)
New Jersey			1,988						2,258						2.78			2.84												(0.33)						0.32						(0.06)						(0.02)						(0.12)
Florida			1,804						2,119						2.67			3.06												(0.78)						(0.11)						(0.35)						(0.22)						(0.01)
Pennsylvania			1,196						1,377						2.22			2.30												(0.13)						(0.22)						(0.62)						(0.19)						0.05
Virginia			1,148						1,355						2.53			2.41												(0.62)						(0.29)						(0.15)						(0.34)						(0.05)
Other			8,346						9,940						2.37			2.31												(0.64)						(0.36)						(0.43)						(0.17)						(0.21)
Total junior lien mortgage portfolio			$	19,637					23,286						2.47		%	2.41												(0.60)						(0.35)						(0.39)						(0.22)						(0.17)

As of June 30, 2021, with respect to loans in the residential mortgage – junior lien portfolio that had a CLTV ratio in excess of 100%:

•such loans totaled 2% of the outstanding balance of the residential mortgage – junior lien portfolio;

•3% were 30 days or more past due. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies; and

•the unsecured portion (the outstanding amount that was in excess of the most recent property collateral value) of the outstanding balances of these loans totaled 1% of the residential mortgage – junior lien portfolio.

CLTV represents the ratio of the total loan balance of first and junior lien mortgages (including unused line amounts for credit line products) to property collateral value. For additional information on consumer loans by LTV/CLTV, see Table 4.11 in Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

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Residential Mortgage – Junior Lien Line and Loan and Residential Mortgage – First Lien Line Our junior lien, as well as first lien, lines of credit portfolios generally have draw periods of 10, 15 or 20 years with variable interest rate and payment options available during the draw period of (1) interest-only or (2) 1.5% of outstanding principal balance plus accrued interest. As of June 30, 2021, lines of credit in a draw period primarily used the interest-only option.

During the draw period, the borrower has the option of converting all or a portion of the line from a variable interest rate to a fixed rate with terms including interest-only payments for a fixed period between three to seven years or a fully amortizing payment with a fixed period between five to 30 years. At the end of the draw period, a line of credit generally converts to an amortizing payment schedule with repayment terms of up to 30 years based on the balance at time of conversion. Certain lines and loans have been structured with a balloon payment, which requires full repayment of the outstanding balance at the end of the term period. The conversion of lines or loans to fully amortizing or balloon payoff may result in a significant payment

increase, which can affect some borrowers’ ability to repay the outstanding balance.

The lines that enter their amortization period may experience higher delinquencies and higher loss rates than the ones in their draw or term period. We have considered this increased risk in our ACL for loans estimate.

In anticipation of our borrowers reaching the end of their contractual commitment, we have created a program to inform, educate and help these borrowers transition from interest-only to fully-amortizing payments or full repayment. We monitor the performance of the borrowers moving through the program in an effort to refine our ongoing program strategy.

Table 17 reflects the outstanding balance of our portfolio of residential mortgage – junior liens, including lines and loans, and residential mortgage – first lien lines segregated into scheduled end of draw or end-of-term periods and products that are currently amortizing, or in balloon repayment status. The unfunded credit commitments for residential mortgage – junior and first lien lines totaled $49.8 billion at June 30, 2021.

Table 17: Residential Mortgage – Junior Lien Line and Loan and Residential Mortgage – First Lien Line Portfolios Payment Schedule

															Scheduled end of draw/term																														Amortizing (2)
			Outstanding balance						Remainder of 2021																														2026 and
($ in millions)			June 30, 2021												2022						2023						2024						2025						thereafter (1)
Residential mortgage – junior lien lines and loans			$	19,637					384						2,271						1,563						1,239						2,059						6,050						6,071
Residential mortgage – first lien lines			7,957						212						1,212						929						721						1,006						2,495						1,382
Total			$	27,594					596						3,483						2,492						1,960						3,065						8,545						7,453
% of portfolios			100		%				2						13						9						7						11						31						27

(1)Substantially all lines and loans are scheduled to convert to amortizing loans by the end of 2030, with annual scheduled amounts through 2030 ranging from $914 million to $3.3 billion and averaging $1.7 billion per year.

(2)Includes $69 million of end-of-term balloon payments which were past due.

At June 30, 2021, $339 million, or 2%, of lines in their draw period were 30 days or more past due, compared with $347 million, or 5%, of amortizing lines of credit. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies. On a monthly basis, we monitor the payment characteristics of borrowers in our residential mortgage – first and junior lien lines of credit portfolios. In June 2021, excluding borrowers with COVID-related loan modification payment deferrals:

•Approximately 43% of these borrowers paid only the minimum amount due and approximately 52% paid more than the minimum amount due. The rest were either delinquent or paid less than the minimum amount due.

•For the borrowers with an interest-only payment feature, approximately 28% paid only the minimum amount due and approximately 67% paid more than the minimum amount due.

Table 18: Credit Card, Auto, and Other Consumer Loans

						June 30, 2021												December 31, 2020
($ in millions)						Outstanding balance						% of total loans						Outstanding balance						% of total loans
Credit card						$	34,936					4.10		%				$	36,664					4.13		%
Auto						51,073						5.99						48,187						5.43
Other consumer (1)						25,861						3.03						24,409						2.75
Total						$	111,870					13.13		%				$	109,260					12.31		%

(1)Other consumer loans primarily include securities-based loans.

CREDIT CARD  Our credit card portfolio totaled $34.9 billion at June 30, 2021, compared with $36.7 billion at December 31, 2020. The decrease in the outstanding balance at June 30, 2021, compared with December 31, 2020, was due to seasonal paydowns.

 

AUTO  Our auto portfolio totaled $51.1 billion at June 30, 2021, compared with $48.2 billion at December 31, 2020. The outstanding balance at June 30, 2021, compared with December 31, 2020, increased as originations exceeded paydowns.

OTHER CONSUMER  Other consumer loans, which include revolving credit and installment loans, totaled $25.9 billion at June 30, 2021, compared with $24.4 billion at December 31, 2020.

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Risk Management – Credit Risk Management (continued)

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS) For information about when we generally place loans on nonaccrual status, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of nonaccrual loans for those customers who would have otherwise moved into nonaccrual status. For additional

information on customer accommodations, including loan modifications, in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

Table 19 summarizes nonperforming assets (NPAs) for each of the last four quarters.

Table 19: Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

						June 30, 2021												March 31, 2021												December 31, 2020												September 30, 2020
($ in millions)						Balance						% of total loans						Balance						% of total loans						Balance						% of total loans						Balance						% of total loans
Nonaccrual loans:
Commercial:
Commercial and industrial						$	1,691					0.53		%				$	2,223					0.70		%				$	2,698					0.85		%				$	2,834					0.88		%
Real estate mortgage						1,598						1.32						1,703						1.41						1,774						1.46						1,343						1.10
Real estate construction						45						0.20						55						0.26						48						0.22						34						0.15
Lease financing						215						1.37						249						1.58						259						1.61						187						1.10
Total commercial						3,549						0.74						4,230						0.89						4,779						1.00						4,398						0.91
Consumer:
Residential mortgage – first lien (1)						2,852						1.17						2,859						1.12						2,957						1.07						2,641						0.90
Residential mortgage – junior lien (1)						713						3.63						747						3.51						754						3.24						767						3.05
Auto						221						0.43						181						0.37						202						0.42						176						0.36
Other consumer						36						0.14						38						0.15						36						0.15						40						0.12
Total consumer						3,822						1.02						3,825						1.00						3,949						0.97						3,624						0.83
Total nonaccrual loans						7,371						0.86						8,055						0.93						8,728						0.98						8,022						0.87
Foreclosed assets:
Government insured/guaranteed (2)						15												16												18												22
Non-government insured/guaranteed						114												124												141												134
Total foreclosed assets						129												140												159												156
Total nonperforming assets						$	7,500					0.88		%				$	8,195					0.95		%				$	8,887					1.00		%				$	8,178					0.89		%
Change in NPAs from prior quarter						$	(695)											$	(692)											$	709											$	378

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

(2)Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. Both principal and interest related to these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA. Receivables related to the foreclosure of certain government guaranteed real estate mortgage loans are excluded from this table and included in Accounts Receivable in Other Assets. For additional information on foreclosed assets, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

Commercial nonaccrual loans decreased $1.2 billion from December 31, 2020, predominantly due to a decline in commercial and industrial nonaccrual loans, driven by a decrease in oil, gas, and pipeline nonaccrual loans, reflecting improvement in the economic environment. For additional information on commercial and industrial nonaccrual loans, see the “Risk Management – Credit Risk Management – Commercial and Industrial Loans and Lease Financing” section in this Report.

Consumer nonaccrual loans decreased $127 million from December 31, 2020, driven by a decline in residential mortgage nonaccrual loans.

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Table 20 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 20: Analysis of Changes in Nonaccrual Loans

			Quarter ended
(in millions)			Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Sep 30, 2020						Jun 30, 2020
Commercial nonaccrual loans
Balance, beginning of period			$	4,230					4,779						4,398						4,285						2,875
Inflows			560						773						1,696						1,316						2,741
Outflows:
Returned to accruing			(287)						(177)						(99)						(166)						(64)
Foreclosures			(3)						(6)						(37)						—						—
Charge-offs			(145)						(202)						(367)						(382)						(560)
Payments, sales and other			(806)						(937)						(812)						(655)						(707)
Total outflows			(1,241)						(1,322)						(1,315)						(1,203)						(1,331)
Balance, end of period			3,549						4,230						4,779						4,398						4,285
Consumer nonaccrual loans
Balance, beginning of period			3,825						3,949						3,624						3,320						3,281
Inflows			563						454						792						696						379
Outflows:
Returned to accruing			(200)						(152)						(208)						(160)						(135)
Foreclosures			(16)						(19)						(5)						(4)						(6)
Charge-offs			(17)						(26)						(36)						(36)						(39)
Payments, sales and other			(333)						(381)						(218)						(192)						(160)
Total outflows			(566)						(578)						(467)						(392)						(340)
Balance, end of period			3,822						3,825						3,949						3,624						3,320
Total nonaccrual loans			$	7,371					8,055						8,728						8,022						7,605

We believe exposure to loss on nonaccrual loans is mitigated by the following factors at June 30, 2021:

•96% of total commercial nonaccrual loans and 99% of total consumer nonaccrual loans are secured. Of the consumer nonaccrual loans, 93% are secured by real estate and 93% have a combined LTV (CLTV) ratio of 80% or less.

•71% of commercial nonaccrual loans were current on interest and 66% of commercial nonaccrual loans were current on both principal and interest, but were on nonaccrual status because the full or timely collection of interest or principal had become uncertain.

•of the $1.0 billion of consumer loans in bankruptcy or discharged in bankruptcy, and classified as nonaccrual, $691 million were current.

•the remaining risk of loss of all nonaccrual loans has been considered in developing our allowance for loan losses.

We continue to work with our customers experiencing financial difficulty to determine if they can qualify for a loan modification. Under our proprietary modification programs, customers may be required to provide updated documentation, and some programs require completion of payment during trial periods to demonstrate sustained performance before the loan can be removed from nonaccrual status.

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Risk Management – Credit Risk Management (continued)

Table 21 provides a summary of foreclosed assets and an analysis of changes in foreclosed assets.

Table 21: Foreclosed Assets

			Quarter ended
(in millions)			Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Sep 30, 2020						Jun 30, 2020
Summary by loan segment
Government insured/guaranteed			$	15					16						18						22						31
Commercial			63						64						70						39						45
Consumer			51						60						71						95						119
Total foreclosed assets			$	129					140						159						156						195
Analysis of changes in foreclosed assets
Balance, beginning of period			$	140					159						156						195						252
Net change in government insured/guaranteed (1)			(1)						(2)						(4)						(9)						(12)
Additions to foreclosed assets (2)			96						88						114						60						51
Reductions:
Sales			(104)						(107)						(104)						(88)						(98)
Write-downs and gains (losses) on sales			(2)						2						(3)						(2)						2
Total reductions			(106)						(105)						(107)						(90)						(96)
Balance, end of period			$	129					140						159						156						195

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

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

Foreclosed assets at June 30, 2021, included $49 million of foreclosed residential real estate, of which 30% is predominantly FHA insured or VA guaranteed and expected to have minimal or no loss content. The remaining amount of foreclosed assets has been written down to estimated net realizable value. Of the $129 million in foreclosed assets at June 30, 2021, 61% have been in the foreclosed assets portfolio for one year or less.

As part of our actions to support customers during the COVID-19 pandemic, we have temporarily suspended certain mortgage foreclosure activities, which has affected the amount of our foreclosed assets. For additional information on loans in process of foreclosure, see Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

TROUBLED DEBT RESTRUCTURINGS (TDRs) Table 22 provides information regarding the recorded investment of loans modified in TDRs. TDRs decreased from December 31, 2020, due to paydowns and a $436 million transfer from residential mortgage – first lien loans to LHFS related to the sales of loans purchased from GNMA loan securitization pools in 2020. The amount of our TDRs at June 30, 2021, would have otherwise been higher without the TDR relief provided by the CARES Act and Interagency Statement.

    Table 22: TDR Balances

(in millions)			Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Sep 30, 2020						Jun 30, 2020
Commercial:
Commercial and industrial			$	1,225					1,331						1,933						2,082						1,882
Real estate mortgage			645						652						774						805						717
Real estate construction			15						21						15						21						20
Lease financing			9						9						9						9						10
Total commercial TDRs			1,894						2,013						2,731						2,917						2,629
Consumer:
Residential mortgage – first lien			8,841						9,446						9,764						9,420						7,176
Residential mortgage – junior lien			1,097						1,174						1,237						1,298						1,309
Credit card			368						411						458						494						510
Auto			196						156						176						156						108
Other consumer			63						67						67						190						173
Trial modifications			77						81						90						91						91
Total consumer TDRs			10,642						11,335						11,792						11,649						9,367
Total TDRs			$	12,536					13,348						14,523						14,566						11,996
TDRs on nonaccrual status			$	3,711					3,800						4,456						4,163						3,475
TDRs on accrual status:
Government insured/guaranteed			3,431						3,708						3,721						3,467						1,277
Non-government insured/guaranteed			5,394						5,840						6,346						6,936						7,244
Total TDRs			$	12,536					13,348						14,523						14,566						11,996

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In those situations where principal is forgiven, the entire amount of such forgiveness is immediately charged off. When we delay the timing on the repayment of a portion of principal (principal forbearance), we charge off the amount of forbearance if that amount is not considered fully collectible. The allowance for loan losses for TDRs was $360 million and $565 million at June 30, 2021, and December 31, 2020, respectively. As part of our actions to support customers during the COVID-19 pandemic, we have provided borrowers relief in the form of loan modifications. Under the CARES Act and the Interagency Statement, loan modifications related to the COVID-19 pandemic will not be classified as TDRs if they meet certain eligibility criteria. For additional information on the CARES Act

and the Interagency Statement, see the “Risk Management – Credit Risk Management – Credit Quality Overview – COVID-Related Lending Accommodations” section in this Report.

For information on our nonaccrual policies when a restructuring is involved, see the “Risk Management – Credit Risk Management – Troubled Debt Restructurings (TDRs)” section in our 2020 Form 10-K.

Table 23 provides an analysis of the changes in TDRs. Loans modified more than once as a TDR are reported as inflows only in the period they are first modified. In addition to foreclosures, sales and transfers to held for sale, we may remove loans from TDR classification, but only if they have been refinanced or restructured at market terms and qualify as a new loan.

Table 23: Analysis of Changes in TDRs

																											Quarter ended
(in millions)			Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Sep 30, 2020						Jun 30, 2020
Commercial TDRs
Balance, beginning of period			$	2,013					2,731						2,917						2,629						2,042
Inflows (1)			336						155						486						866						971
Outflows
Charge-offs			(45)						(49)						(72)						(77)						(60)
Foreclosure			—						(5)						—						—						—
Payments, sales and other (2)			(410)						(819)						(600)						(501)						(324)
Balance, end of period			1,894						2,013						2,731						2,917						2,629
Consumer TDRs
Balance, beginning of period			11,335						11,792						11,649						9,367						9,523
Inflows (1)			495						633						1,226						2,805						425
Outflows
Charge-offs			(36)						(43)						(57)						(58)						(46)
Foreclosure			(15)						(14)						(5)						(7)						(8)
Payments, sales and other (2)			(1,133)						(1,024)						(1,020)						(458)						(510)
Net change in trial modifications (3)			(4)						(9)						(1)						—						(17)
Balance, end of period			10,642						11,335						11,792						11,649						9,367
Total TDRs			$	12,536					13,348						14,523						14,566						11,996

(1)Inflows include loans that modify, even if they resolve within the period, as well as gross advances on term loans that modified in a prior period and net advances on revolving TDRs that modified in a prior period.

(2)Other outflows include normal amortization/accretion of loan basis adjustments and loans transferred to held for sale. Occasionally, loans that have been refinanced or restructured at market terms qualify as new loans, which are also included as other outflows.

(3)Net change in trial modifications includes: inflows of new TDRs entering the trial payment period, net of outflows for modifications that either (i) successfully perform and enter into a permanent modification, or (ii) did not successfully perform according to the terms of the trial period plan and are subsequently charged-off, foreclosed upon or otherwise resolved.

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Risk Management – Credit Risk Management (continued)

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING  Loans 90 days or more past due are still accruing if they are (1) well-secured and in the process of collection or (2) residential mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due.

Table 24 reflects loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed. For additional information on delinquencies by loan class, see Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report.

Table 24: Loans 90 Days or More Past Due and Still Accruing

(in millions)			Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Sep 30, 2020						Jun 30, 2020
Total:			$	4,703					6,273						7,041						11,698						9,739
Less: FHA insured/VA guaranteed (1)			3,966						5,406						6,351						11,041						8,922
Total, not government insured/guaranteed			$	737					867						690						657						817
By segment and class, not government insured/guaranteed: Commercial:
Commercial and industrial			$	165					55						39						61						101
Real estate mortgage			105						128						38						47						44
Real estate construction			7						86						1						—						—
Total commercial			277						269						78						108						145
Consumer:
Residential mortgage – first lien			73						85						135						97						93
Residential mortgage – junior lien			12						15						19						28						19
Credit card			271						394						365						297						418
Auto			43						46						65						50						54
Other consumer			61						58						28						77						88
Total consumer			460						598						612						549						672
Total, not government insured/guaranteed			$	737					867						690						657						817

(1)Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

Loans 90 days or more past due and still accruing, excluding government insured/guaranteed loans, at June 30, 2021, were up from December 31, 2020, due to an increase in delinquent commercial real estate mortgage loans and commercial and industrial loans, partially offset by a decline in delinquent consumer loans in line with the decrease in our total consumer loan portfolio. Customer payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who would have otherwise moved into past due status.

Loans 90 days or more past due and still accruing whose repayments are largely insured by the FHA or guaranteed by the VA for mortgages at June 30, 2021, were down from December 31, 2020, largely due to transfers to LHFS related to the sales of loans purchased from GNMA loan securitization pools in prior periods.

42			Wells Fargo & Company

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NET CHARGE-OFFS Table 25 presents net loan charge-offs for second quarter 2021 and the previous four quarters.

Table 25: Net Loan Charge-offs

															Quarter ended
															Jun 30, 2021												Mar 31, 2021												Dec 31, 2020												Sep 30, 2020												Jun 30, 2020
($ in millions)																					Net loan charge- offs						% of avg. loans (1)						Net loan charge- offs						% of avg. loans (1)						Net loan charge- offs						% of avg. loans (1)						Net loan charge- offs						% of avg. loans (1)						Net loan charge- offs						% of avg. loans (1)
Commercial:
			Commercial and industrial																		$	81					0.10		%				$	88					0.11		%				$	111					0.14		%				$	274					0.33		%				$	521					0.55		%
			Real estate mortgage																		(5)						(0.02)						46						0.16						162						0.53						56						0.18						67						0.22
			Real estate construction																		(1)						—						—						—						—						—						(2)						(0.03)						(1)						(0.02)
			Lease financing																		5						0.12						15						0.40						35						0.83						28						0.66						15						0.33
Total commercial																					80						0.07						149						0.13						308						0.26						356						0.29						602						0.44
Consumer:
			Residential mortgage – first lien																		(19)						(0.03)						(24)						(0.04)						(3)						—						(1)						—						2						—
			Residential mortgage – junior lien																		(31)						(0.60)						(19)						(0.35)						(24)						(0.39)						(14)						(0.22)						(12)						(0.17)
			Credit card																		256						3.01						236						2.71						190						2.09						245						2.71						327						3.60
			Auto																		45						0.35						52						0.44						51						0.43						31						0.25						106						0.88
			Other consumer																		50						0.80						119						1.97						62						0.88						66						0.80						88						1.09
Total consumer																					301						0.32						364						0.37						276						0.26						327						0.30						511						0.48
			Total																		$	381					0.18		%				$	513					0.24		%				$	584					0.26		%				$	683					0.29		%				$	1,113					0.46		%

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

The decrease in commercial net loan charge-offs in second quarter 2021, compared with the prior quarter, was driven by lower charge-offs across the entire portfolio as well as higher recoveries in the CRE portfolio.

The decrease in consumer net loan charge-offs in second quarter 2021, compared with the prior quarter, was driven by lower losses in other consumer loans due to the sale of a portion of our student loan portfolio in first quarter 2021.

The COVID-19 pandemic may continue to impact the credit quality of our loan portfolio. Although the potential impacts were considered in our allowance for credit losses for loans, payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of net loan charge-offs. For additional information on customer accommodations in response to the COVID-19 pandemic, see the “Risk Management – Credit Risk Management – COVID-Related Lending Accommodations” section in this Report.

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

We apply a disciplined process and methodology to establish our ACL each quarter. 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 2020 Form 10-K. For additional information on our ACL for loans, see Note 4 (Loans and Related Allowance for Credit Losses) to Financial Statements in this Report, and for additional information on our ACL for debt securities, see the “Balance Sheet Analysis – Available-For-Sale and Held-To-Maturity Debt Securities” section and Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) to Financial Statements in this Report.

			Wells Fargo & Company			43

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Risk Management – Credit Risk Management (continued)

Table 26 presents the allocation of the ACL for loans by loan portfolio segment and class for the most recent quarter and last four year ends.

Table 26: Allocation of the ACL for Loans (1)

			Jun 30, 2021												Dec 31, 2020												Dec 31, 2019												Dec 31, 2018												Dec 31, 2017
($ in millions)			ACL						Loans as % of total loans						ACL						Loans as % of total loans						ACL						Loans as % of total loans						ACL						Loans as % of total loans						ACL						Loans as % of total loans
Commercial:
Commercial and industrial			$	5,640					37		%				$	7,230					36		%				$	3,600					37		%				$	3,628					37		%				$	3,752					35		%
Real estate mortgage			2,884						14						3,167						14						1,236						13						1,282						13						1,374						13
Real estate construction			530						3						410						2						1,079						2						1,200						2						1,238						3
Lease financing			516						2						709						2						330						2						307						2						268						2
Total commercial			9,570						56						11,516						54						6,245						54						6,417						54						6,632						53
Consumer:
Residential mortgage – first lien			1,283						29						1,600						31						692						30						750						30						1,085						30
Residential mortgage – junior lien			320						2						653						3						247						3						431						3						608						4
Credit card			3,663						4						4,082						4						2,252						4						2,064						4						1,944						4
Auto			1,026						6						1,230						5						459						5						475						5						1,039						5
Other consumer			529						3						632						3						561						4						570						4						652						4
Total consumer			6,821						44						8,197						46						4,211						46						4,290						46						5,328						47
Total			$	16,391					100		%				$	19,713					100		%				$	10,456					100		%				$	10,707					100		%				$	11,960					100		%
Components:
Allowance for loan losses									$	15,148											18,516												9,551												9,775												11,004
Allowance for unfunded credit commitments									1,243												1,197												905												932												956
Allowance for credit losses									$	16,391											19,713												10,456												10,707												11,960
Ratio of allowance for loan losses to total net loan charge-offs (2)									9.93x												5.63												3.46												3.56												3.76
Allowance for loan losses as a percentage of total loans									1.78		%										2.09												0.99												1.03												1.15
Allowance for credit losses for loans as a percentage of total loans									1.92												2.22												1.09												1.12												1.25
Allowance for credit losses for loans as a percentage of total nonaccrual loans									222												226												196												165												156

(1)Disclosure is not comparative due to our adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) on January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 Form 10-K.

(2)Total net loan charge-offs are annualized for the quarter ended June 30, 2021.

The ratios for the allowance for loan losses and the ACL for loans presented in Table 26 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 decreased $3.3 billion, or 17%, from December 31, 2020, reflecting better portfolio credit quality and improvements in current and forecasted economic conditions. Total provision for credit losses for loans was $(1.2) billion in second quarter 2021, compared with $9.6 billion in the same period a year ago, reflecting lower net charge-offs and improvements in current and forecasted economic conditions. 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 4 (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. The scenarios generally include a base scenario, along with an optimistic (upside) and one or more pessimistic (downside) scenarios. Our estimate of the ACL for loans at June 30, 2021, was based on a weighting of the base and a downside economic scenario of 50% and 50%, respectively, with no weighting applied to an upside scenario. The base scenario assumed economic improvements in the near term with a return to normalized levels near the end of 2022. The downside scenario assumed sustained adverse economic impacts resulting from the

COVID-19 pandemic, compared with the base scenario. The downside scenario assumed U.S. real GDP growth rates decline in the first half of 2022 before returning to normalized levels after 2023 and the U.S. unemployment rate increases through 2022 and peaks in the first half of 2023. We considered within each scenario our expectations for the impact of customer accommodation activity, as well as the estimated impact on certain industries that we consider to be directly and most adversely affected by the COVID-19 pandemic.

In addition to quantitative estimates, we consider qualitative factors that represent risks inherent in our processes and assumptions such as economic environmental factors, modeling assumptions and performance, and other subjective factors, including industry trends and emerging risk assessments. We also considered the significant uncertainty related to the duration and severity of the economic impacts from the COVID-19 pandemic and the incremental risks to our loan portfolio.

The forecasted key economic variables used in our estimate of the ACL for loans at June 30 and March 31, 2021, are presented in Table 27.

44			Wells Fargo & Company

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Table 27: Forecasted Key Economic Variables

									4Q 2021						2Q 2022						4Q 2022
Blend of economic scenarios (1):
U.S. unemployment rate (2):
March 31, 2021									6.5		%				7.0						7.1
June 30, 2021									5.6						6.2						6.9
U.S. real GDP (3):
March 31, 2021									(1.1)						(0.6)						1.8
June 30, 2021									1.0						(0.4)						0.6
Home price index (4):
March 31, 2021									1.0						(5.2)						(5.7)
June 30, 2021									2.8						(6.5)						(5.2)
Commercial real estate asset prices (4):
March 31, 2021									(10.0)						(11.5)						(9.0)
June 30, 2021									(7.8)						(11.9)						(10.4)

(1)Represents a weighting of the forecasted economic variable inputs based on a weighting of 50% for the base and 50% for a downside scenario at both June 30 and March 31, 2021.

(2)Quarterly average.

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

(4)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 GDP), among other factors. We observed economic improvements in the first half of 2021; however, there remained significant uncertainty related to the length and severity of the economic impact of the COVID-19 pandemic and the impact of other factors that may influence the level of eventual losses and corresponding requirements for future amounts of the ACL, including the impact of economic stimulus programs and customer accommodation activity. The COVID-19 pandemic could continue to impact the recognition of credit losses in our loan portfolios and may result in increases in our ACL, particularly if the impact on the economy worsens.

We believe the ACL for loans of $16.4 billion at June 30, 2021, 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 2020 Form 10-K.

LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSES  For information on our repurchase liability, see the “Risk Management – Credit Risk Management – Liability For Mortgage Loan Repurchase Losses” section in our 2020 Form 10-K.

RISKS RELATING TO SERVICING ACTIVITIES  In addition to servicing loans in our portfolio, we act as servicer and/or master servicer of residential mortgage loans included in GSE-guaranteed mortgage securitizations, GNMA-guaranteed mortgage securitizations of FHA-insured/VA-guaranteed mortgages and

private label 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 of advances of delinquent payments vary by investor and the applicable servicing agreements. Due to payment deferrals provided as a result of the COVID-19 pandemic, the amount of our servicing advances of principal and interest remained elevated. The amount of these advances may increase if additional payment deferrals are provided. Payment deferrals also delay the collection of contractually specified servicing fees, resulting in lower net servicing income.

Upon transfer as servicer, we retain the option to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. We generally repurchase these loans for cash and as a result, our total consolidated assets do not change. As a result of the COVID-19 pandemic, our repurchases of these loans were elevated in 2020 but returned to more normalized levels in the first half of 2021.

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. However, in accordance with guidance issued by GNMA, certain loans repurchased after June 30, 2020, are ineligible for inclusion in future GNMA loan securitization pools until the borrower has timely made six consecutive payments. This requirement may delay our ability to resell loans into the securitization market.

For additional information about the risks related to our servicing activities, see the “Risk Management – Credit Risk Management – Risks Relating to Servicing Activities” section in our 2020 Form 10-K. For additional information on mortgage banking activities, see Note 9 (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 2020 Form 10-K.

 

INTEREST RATE RISK Interest rate risk is created in our role as a financial intermediary for customers based on investments such as loans and other extensions of credit and debt securities. Interest rate risk can have a significant impact to our earnings. 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, MBS held in the debt securities portfolio may pay down at a slower rate than anticipated, which could impact portfolio income; or

			Wells Fargo & Company			45

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Risk Management – Asset/Liability Management (continued)

•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 speeds on loans and debt securities, deposit flows and mix, as well as pricing strategies.

Our most recent simulations, as presented in Table 28, 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 (e.g., 10-year U.S. Treasury securities) and short-term interest rates defined as all tenors less than three years. Where applicable, U.S. dollar interest rates are floored at 0.00%. The following describes the simulation assumptions for the scenarios presented in Table 28:

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

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

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

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

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

Table 28: Net Interest Income Sensitivity

($ in billions)			Jun 30, 2021						Dec 31, 2020
Parallel Shift:
+100 bps shift in interest rates			$	7.0					6.7
-100 bps shift in interest rates			(2.9)						(2.7)
Steeper yield curve:
+50 bps shift in long-term interest rates			1.2						1.3
Flatter yield curve:
+50 bps shift in short-term interest rates			2.5						2.2
-50 bps shift in long-term interest rates			(1.2)						(1.4)

The interest rate sensitivity included in Table 28 indicates that we would expect to benefit from higher interest rates as our assets would reprice faster and to a greater degree than our liabilities, while in the case of lower interest rates, our assets would reprice downward and to a greater degree than our liabilities 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 predominantly driven by mortgage banking activities, and may 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 2020 Form 10-K for additional information. 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. See Note 1 (Summary of Significant Accounting Policies), Note 3 (Available-for-Sale and Held-to-Maturity Debt Securities) and Note 14 (Derivatives) to Financial Statements in our 2020 Form 10-K for additional information.

MORTGAGE BANKING INTEREST RATE AND MARKET RISK  We originate, fund and service mortgage loans, which subjects us to various risks, including credit, liquidity and interest rate risks. For additional information on mortgage banking interest rate and market risk, see Note 9 (Mortgage Banking Activities) to Financial Statements in this Report and the “Risk Management – Asset/Liability Management – Mortgage Banking Interest Rate and Market Risk” section in our 2020 Form 10-K.

Hedging the various sources of interest rate risk in mortgage banking is a complex process that requires sophisticated modeling and constant monitoring. There are several potential risks to earnings from mortgage banking related to origination volumes and mix, valuation of MSRs and associated hedging results, the relationship and degree of volatility between short-term and long-term interest rates, and changes in servicing and foreclosures costs. While we attempt to balance our mortgage banking interest rate and market risks, the financial instruments we use may not perfectly correlate with the values and income being hedged.

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 also includes price risk in the trading book, mortgage servicing rights and the hedge effectiveness risk associated with the mortgage book, and impairment on private equity investments. For information on our oversight of market risk, see the “Risk Management – Asset/Liability Management – Market Risk” section in our 2020 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.

46			Wells Fargo & Company

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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 2020 Form 10-K.

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

Table 29 shows the Company’s Trading General VaR by risk category. The decrease in average Company Trading General VaR for the quarter ended June 30, 2021, compared with the same period a year ago, was driven by a greater presence of market volatility dropping out of the 12-month historical lookback window used to calculate average Company Trading General VaR for the quarter ended June 30, 2021. Market volatility present in average Company Trading General VaR for the quarter ended June 30, 2020, was driven by the introduction of the COVID-19 pandemic, in particular, changes in interest rate curves and a significant widening of credit spreads.

Table 29: Trading 1-Day 99% General VaR by Risk Category

									Quarter ended
			June 30, 2021																								March 31, 2021																								June 30, 2020
(in millions)			Period end						Average						Low						High						Period end						Average						Low						High						Period end						Average						Low						High
Company Trading General VaR Risk Categories
Credit			$	14					21						12						30						22						94						21						112						86						82						61						99
Interest rate			7						7						4						22						36						73						26						120						155						106						42						161
Equity			29						37						25						56						35						36						28						72						14						10						6						17
Commodity			28						7						2						28						11						5						2						12						4						4						2						7
Foreign exchange			0						1						0						1						1						1						1						1						1						2						1						3
Diversification benefit (1)			(38)						(30)																		(64)						(111)																		(51)						(49)
Company Trading General VaR			40						43																		41						98																		209						155

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

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 2020 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 6 (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 In the ordinary course of business, we enter into contractual obligations that may require future cash payments, including funding for customer loan requests, customer deposit maturities and withdrawals, debt service, leases for premises and equipment, and other cash commitments. The objective of effective liquidity management is to ensure that we can meet 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, we monitor both

the consolidated company and the Parent on a stand-alone basis to ensure that the Parent is a source of strength for its regulated, deposit-taking banking subsidiaries. The Parent acts as a source of funding for the Company through the issuance of long-term debt and equity, and WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), provides funding support for the ongoing operational requirements of the Parent and certain of its direct and indirect subsidiaries. For additional information on liquidity risk and funding management, see the “Risk Management – Liquidity Risk and Funding” section in our 2020 Form 10-K. For additional information on the IHC, see the “Regulatory Matters – ‘Living Will’ Requirements and Related Matters” section in this Report.

Liquidity Standards We are subject to a rule, issued by the FRB, OCC and 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, such as Wells Fargo, to hold high-quality liquid assets (HQLA), predominantly consisting of central bank deposits, government debt securities, and mortgage-backed securities of federal agencies that can be converted easily and quickly into cash, in an amount equal to or greater than its projected net cash outflows during a 30-day stress period. The LCR applies to the Company on a consolidated basis 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.

The FRB, OCC and FDIC have also issued a rule implementing a stable funding requirement, known as the net stable funding

			Wells Fargo & Company			47

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Risk Management – Asset/Liability Management (continued)

ratio (NSFR), which requires a covered banking organization, such as Wells Fargo, to maintain a minimum amount of stable funding, including common equity, long-term debt and most types of deposits, in relation to its assets, derivative exposures and commitments over a one-year horizon period. The NSFR became effective on July 1, 2021, and applies to the Company on a consolidated basis and to our IDIs with total assets of $10 billion or more. As of July 1, 2021, we were compliant with the NSFR requirement.

Liquidity Coverage Ratio As of June 30, 2021, the consolidated Company, Wells Fargo Bank, N.A., and Wells Fargo National Bank West exceeded the minimum LCR requirement of 100%, which is calculated as HQLA divided by projected net cash outflows, as each is defined under the LCR rule. Table 30 presents the Company’s quarterly average values for the daily-calculated LCR and its components calculated pursuant to the LCR rule requirements.

Table 30: Liquidity Coverage Ratio

			Average for Quarter ended
(in millions, except ratio)			Jun 30, 2021						Mar 31, 2021						Jun 30, 2020
HQLA (1):
Eligible cash			$	248,404					216,403						166,947
Eligible securities (2)			137,718						186,270						242,520
Total HQLA			386,122						402,673						409,467
Projected net cash outflows			314,678						316,116						316,268
LCR			123		%				127						129

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

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

Liquidity Sources We maintain liquidity in the form of cash, cash equivalents and unencumbered high-quality, liquid debt securities. These assets make up our primary sources of liquidity. Our primary sources of liquidity are substantially the same in composition as HQLA under the LCR rule; however, our primary sources of liquidity will generally exceed HQLA calculated under the LCR rule due to the applicable haircuts to HQLA and the exclusion of excess HQLA at our subsidiary IDIs required under the LCR rule. Our primary sources of liquidity are presented in Table 31, which also includes encumbered securities that are not included as available HQLA in the calculation of the LCR.

Our cash is predominantly on deposit with the Federal Reserve. Debt securities included as part of our primary sources of liquidity are comprised of U.S. Treasury and federal agency debt, and MBS issued by federal agencies within our debt securities portfolio. We believe these debt securities provide quick sources of liquidity through sales or by pledging to obtain financing, regardless of market conditions. Some of these debt securities are within our HTM portfolio and, as such, are not intended for sale but may be pledged to obtain financing.

Table 31: Primary Sources of Liquidity

			June 30, 2021																		December 31, 2020
(in millions)			Total						Encumbered						Unencumbered						Total						Encumbered						Unencumbered
Interest-earning deposits with banks			$	248,869					—						248,869						236,376						—						236,376
Debt securities of U.S. Treasury and federal agencies			63,934						3,304						60,630						70,756						5,370						65,386
Mortgage-backed securities of federal agencies			280,984						52,700						228,284						258,668						49,156						209,512
Total			$	593,787					56,004						537,783						565,800						54,526						511,274

In addition to our primary sources of liquidity shown in

Table 31, 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. As of June 30, 2021, we also maintained approximately $222.7 billion of available borrowing capacity at various Federal Home Loan Banks and the Federal Reserve Discount Window.

Deposits have historically provided a sizable source of relatively low-cost funds. Deposits were 169% and 158% of total loans at June 30, 2021, and December 31, 2020, respectively. Additional funding is provided by long-term debt and short-term borrowings. Table 32 shows selected information for short-term borrowings, which generally mature in less than 30 days. We pledge certain financial instruments that we own to collateralize repurchase agreements and other securities financings. For additional information, see the “Pledged Assets” section of Note 12 (Pledged Assets and Collateral) to Financial Statements in this Report.

48			Wells Fargo & Company

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Table 32: Short-Term Borrowings

			Quarter ended
(in millions)			Jun 30, 2021						Mar 31, 2021						Dec 31, 2020						Sep 30, 2020						Jun 30, 2020
Balance, period end
Federal funds purchased and securities sold under agreements to repurchase			$	33,708					46,871						46,362						44,055						49,659
Other short-term borrowings			11,927						12,049						12,637						11,169						10,826
Total			$	45,635					58,920						58,999						55,224						60,485
Average daily balance for period
Federal funds purchased and securities sold under agreements to repurchase			$	36,526					47,358						46,069						46,504						52,868
Other short-term borrowings			11,979						11,724						11,235						10,788						10,667
Total			$	48,505					59,082						57,304						57,292						63,535
Maximum month-end balance for period
Federal funds purchased and securities sold under agreements to repurchase (1)			$	33,708					47,050						46,879						49,148						50,397
Other short-term borrowings (2)			12,563						12,049						12,637						11,169						11,220

(1)Maximum month-end balance in each of the last five quarters was in June and February 2021, and November, July and April 2020.

(2)Maximum month-end balance in each of the last five quarters was in April and March 2021, and December, September and April 2020.

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

same purposes. Depending on market conditions, we may purchase our outstanding debt securities from time to time in privately negotiated or open market transactions, by tender offer, or otherwise. We issued $1.0 billion and $1.1 billion of long-term debt in the second quarter and first half of 2021, respectively. Table 33 provides the aggregate carrying value of long-term debt maturities (based on contractual payment dates) for the remainder of 2021 and the following years thereafter, as of June 30, 2021.

Table 33: Maturity of Long-Term Debt

			June 30, 2021
(in millions)			Remaining 2021						2022						2023						2024						2025						Thereafter						Total
Wells Fargo & Company (Parent Only)
Senior notes			$	6,501					13,563						8,260						12,233						15,151						71,163						126,871
Subordinated notes			—						—						3,706						753						1,124						22,752						28,335
Junior subordinated notes			—						—						—						—						—						1,388						1,388
Total long-term debt – Parent			6,501						13,563						11,966						12,986						16,275						95,303						156,594
Wells Fargo Bank, N.A. and other bank entities (Bank)
Senior notes			3,208						2,833						2,861						3						188						231						9,324
Subordinated notes			—						—						1,098						—						168						4,236						5,502
Junior subordinated notes			—						—						—						—						—						382						382
Securitizations and other bank debt			1,579						1,383						876						424						146						1,476						5,884
Total long-term debt – Bank			4,787						4,216						4,835						427						502						6,325						21,092
Other consolidated subsidiaries
Senior notes			358						190						517						107						428						338						1,938
Securitizations and other bank debt			—						—						—						—						—						32						32
Total long-term debt – Other consolidated subsidiaries			358						190						517						107						428						370						1,970
Total long-term debt			$	11,646					17,969						17,318						13,520						17,205						101,998						179,656

			Wells Fargo & Company			49

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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 April 22, 2021, Moody's Investors Service (Moody's) affirmed our ratings and retained the negative ratings outlook. On July 12, 2021, Moody's upgraded the senior debt rating of the Company to A1 from A2 as a result of revisions to its bank

ratings methodology. On May 24, 2021, DBRS Morningstar confirmed our ratings and retained the negative ratings trend. On June 14, 2021, Fitch Ratings affirmed our ratings and retained the negative ratings outlook.

See the “Risk Factors” section in our 2020 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 14 (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, 2021, are presented in Table 34.

Table 34: Credit Ratings as of June 30, 2021

Wells Fargo & Company

Wells Fargo Bank, N.A.

Senior debt

Short-term  borrowings

Long-term  deposits

Short-term  borrowings

Moody’s

A2

P-1

Aa1

P-1

S&P Global Ratings

BBB+

A-2

A+

A-1

Fitch Ratings

A+

F1

AA

F1+

DBRS Morningstar

AA (low)

R-1 (middle)

AA

R-1 (high)

FEDERAL HOME LOAN BANK MEMBERSHIP The Federal Home Loan Banks (the FHLBs) are a group of cooperatives that lending institutions use to finance housing and economic development in local communities. We are a member of the FHLBs based in Dallas, Des Moines and San Francisco. FHLB members are required to maintain a minimum investment in capital stock of the applicable FHLB. The board of directors of each FHLB can increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency. Because the extent of any obligation to increase our investment in any of the FHLBs depends entirely upon the occurrence of a future event, the amount of any future investment in the capital stock of the FHLBs is not determinable.

50			Wells Fargo & Company

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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, 2021, increased $9.1 billion from December 31, 2020, predominantly as a result of $10.7 billion of Wells Fargo net income, partially offset by $1.5 billion of common and preferred stock dividends. During the first half of 2021, we issued $819 million of common stock, substantially all of which was issued in connection with employee compensation and benefits. During the first half of 2021, we repurchased 53 million shares of common stock at a cost of $2.2 billion. For additional information about capital planning, see the “Capital Planning and Stress Testing” section below.

In the first half of 2021, we issued $4.6 billion of preferred stock and redeemed $4.9 billion of preferred stock, including the redemption of the remaining $350 million of our Preferred Stock, Series N, in June 2021. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD. For additional information, see Note 16 (Preferred Stock) to Financial Statements in this Report.

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. Our capital adequacy is assessed based on the lower of our risk-based capital ratios calculated under the two approaches. The Company is required to satisfy the risk-based capital ratio requirements to avoid restrictions on capital distributions and discretionary bonus payments. Table 35 and Table 36 present the risk-based capital requirements applicable to the Company on a fully phased-in basis under the Standardized Approach and Advanced Approach, respectively, as of June 30, 2021.

Table 35: Risk-Based Capital Requirements – Standardized Approach

Table 36: Risk-Based Capital Requirements – Advanced Approach

In addition to the risk-based capital requirements described in Table 35 and Table 36, if the FRB determines that a period of excessive credit growth is contributing to an increase in systemic risk, a countercyclical buffer of up to 2.50% could be added to the risk-based capital ratio requirements under federal banking regulations.

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

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. The Company’s stress capital buffer for the period October 1, 2020, through September 30, 2021, is 2.50%. The Company expects its stress capital buffer for the period October 1, 2021, through September 30, 2022, to be 3.10%. The FRB has indicated that it will publish the final stress capital buffer for the period October 1, 2021, through September 30, 2022, for each BHC by August 31, 2021.

			Wells Fargo & Company			51

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Capital Management (continued)

As a global systemically important bank (G-SIB), we are also subject to the FRB’s rule implementing an additional capital surcharge of 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. We expect our G-SIB capital surcharge to decrease by 50 basis points to 1.50% beginning in first quarter 2022, subject to finalization in fourth quarter 2021.

The Basel III capital requirements for calculating CET1 and tier 1 capital, along with risk-weighted assets (RWAs), are fully phased-in. However, the requirements for determining tier 2 and total capital are still in accordance with transition requirements and are scheduled to be fully phased-in by the end of 2021.

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 RWAs.

The tables that follow provide information about our risk-based capital and related ratios as calculated under Basel III capital rules. Although we report certain capital amounts and ratios in accordance with transition requirements for bank regulatory reporting purposes, we manage our capital on a fully phased-in basis. For information about our capital requirements calculated in accordance with transition requirements, see

Note 23 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report.

Table 37 summarizes our CET1, tier 1 capital, total capital, RWAs and capital ratios on a fully phased-in basis at June 30, 2021, and December 31, 2020. Fully phased-in total capital amounts and ratios are considered non-GAAP financial measures that are used by management, bank regulatory agencies, investors and analysts to assess and monitor the Company’s capital position. See Table 38 for information regarding the calculation and components of our CET1, tier 1 capital, total capital and RWAs, as well as a corresponding reconciliation to GAAP financial measures for our fully phased-in total capital amounts.

Table 37: Capital Components and Ratios (Fully Phased-In)

												June 30, 2021															December 31, 2020
(in millions, except ratios)						Required Capital Ratios (1)						Advanced Approach						Standardized Approach									Advanced Approach						Standardized Approach
Common Equity Tier 1			(A)									$	143,442					143,442									138,297						138,297
Tier 1 Capital			(B)									162,999						162,999									158,196						158,196
Total Capital			(C)									190,147						200,130									186,803						196,529
Risk-Weighted Assets			(D)									1,126,535						1,188,727									1,158,355						1,193,744
Common Equity Tier 1 Capital Ratio			(A)/(D)			9.00		%				12.73						12.07			*						11.94						11.59			*
Tier 1 Capital Ratio			(B)/(D)			10.50						14.47						13.71			*						13.66						13.25			*
Total Capital Ratio			(C)/(D)			12.50						16.88						16.84			*						16.14			*			16.47

*Denotes the binding ratio based on the lower calculation under the Advanced and Standardized Approaches.

(1)Represents the minimum ratios required to avoid restrictions on capital distributions and discretionary bonus payments. The required ratios were the same under both the Standardized and Advanced Approaches at June 30, 2021.

52			Wells Fargo & Company

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Table 38 provides information regarding the calculation and composition of our risk-based capital under the Advanced and Standardized Approaches at June 30, 2021, and December 31, 2020.

Table 38: Risk-Based Capital Calculation and Components

						June 30, 2021																					December 31, 2020
(in millions)						Advanced Approach						Standardized Approach															Advanced Approach						Standardized Approach
Total equity (1)						$	193,127					193,127															185,712						185,712
Effect of accounting policy changes (1)						—						—															208						208
Total equity (as reported)						193,127						193,127															185,920						185,920
Adjustments:
Preferred stock						(20,820)						(20,820)															(21,136)						(21,136)
Additional paid-in capital on preferred stock						136						136															152						152
Unearned ESOP shares						875						875															875						875
Noncontrolling interests						(1,865)						(1,865)															(1,033)						(1,033)
Total common stockholders’ equity						$	171,453					171,453															164,778						164,778
Adjustments:
Goodwill						(26,194)						(26,194)															(26,392)						(26,392)
Certain identifiable intangible assets (other than MSRs)						(301)						(301)															(342)						(342)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)						(2,256)						(2,256)															(1,965)						(1,965)
Applicable deferred taxes related to goodwill and other intangible assets (2)						875						875															856						856
CECL transition provision (3)						879						879															1,720						1,720
Other						(1,014)						(1,014)															(358)						(358)
Common Equity Tier 1						$	143,442					143,442															138,297						138,297
Preferred stock						20,820						20,820															21,136						21,136
Additional paid-in capital on preferred stock						(136)						(136)															(152)						(152)
Unearned ESOP shares						(875)						(875)															(875)						(875)
Other						(252)						(252)															(210)						(210)
Total Tier 1 capital			(A)			$	162,999					162,999															158,196						158,196
Long-term debt and other instruments qualifying as Tier 2						23,206						23,206															24,387						24,387
Qualifying allowance for credit losses (4)						4,304						14,287															4,408						14,134
Other						(362)						(362)															(188)						(188)
Total Tier 2 capital (fully phased-in)			(B)			$	27,148					37,131															28,607						38,333
Effect of Basel III transition requirements						26						26															131						131
Total Tier 2 capital (Basel III transition requirements)						$	27,174					37,157															28,738						38,464
Total qualifying capital (fully phased-in)			(A)+(B)			$	190,147					200,130															186,803						196,529
Total Effect of Basel III transition requirements						26						26															131						131
Total qualifying capital (Basel III transition requirements)						$	190,173					200,156															186,934						196,660
Risk-Weighted Assets (RWAs)(5):
Credit risk (6)						$	729,917					1,140,459															752,999						1,125,813
Market risk						48,268						48,268															67,931						67,931
Operational risk						348,350						—															337,425						—
Total RWAs						$	1,126,535					1,188,727															1,158,355						1,193,744

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period total equity was revised to conform with the current period presentation. Prior period risk-based capital and certain other regulatory related metrics were not revised.

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

(3)At June 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $879 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $7.5 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2021.

(4)Under the Advanced Approach the allowance for credit losses that exceeds expected credit losses is eligible for inclusion in tier 2 capital, to the extent the excess allowance does not exceed 0.60% of Advanced credit RWAs, and under the Standardized Approach, the allowance for credit losses is includable in tier 2 capital up to 1.25% of Standardized credit RWAs, in each case with any excess allowance for credit losses being deducted from the respective total RWAs.

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

(6)Includes an increase of $547 million under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses as of June 30, 2021. See footnote (4) to this table.

			Wells Fargo & Company			53

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Capital Management (continued)

Table 39 presents the changes in CET1 for the six months ended June 30, 2021.

Table 39: Analysis of Changes in Common Equity Tier 1

(in millions)
Common Equity Tier 1 at December 31, 2020						$	138,297
Net income applicable to common stock						9,999
Common stock dividends						(826)
Common stock issued, repurchased, and stock compensation-related items						(1,539)
Changes in cumulative other comprehensive income						(758)
Goodwill						198
Certain identifiable intangible assets (other than MSRs)						41
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)						(291)
Applicable deferred taxes related to goodwill and other intangible assets (1)						19
CECL transition provision (2)						(841)
Other						(857)
Change in Common Equity Tier 1						5,145
Common Equity Tier 1 at June 30, 2021						$	143,442

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

(2)At June 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on our regulatory capital was an increase in capital of $879 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $7.5 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2021.

Table 40 presents net changes in the components of RWAs under the Advanced and Standardized Approaches for the six months ended June 30, 2021.

Table 40: Analysis of Changes in RWAs

(in millions)			Advanced Approach			Standardized Approach
RWAs at December 31, 2020			$	1,158,355		1,193,744
Net change in credit risk RWAs (1)			(23,082)			14,646
Net change in market risk RWAs			(19,663)			(19,663)
Net change in operational risk RWAs			10,925			—
Total change in RWAs			(31,820)			(5,017)
RWAs at June 30, 2021			$	1,126,535		1,188,727

(1)Includes an increase of $547 million under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on our excess allowance for credit losses. See Table 38 for additional information.

54			Wells Fargo & Company

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TANGIBLE COMMON EQUITY We also evaluate our business based on certain ratios that utilize tangible common equity. Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than MSRs) and goodwill and other intangibles on nonmarketable equity securities, net of applicable deferred taxes. 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 41 provides a reconciliation of these non-GAAP financial measures to GAAP financial measures.

Table 41: Tangible Common Equity

									Balance at period end												Average balance
									Quarter ended												Quarter ended												Six months ended
(in millions, except ratios)									Jun 30, 2021			Mar 31, 2021			Jun 30, 2020						Jun 30, 2021			Mar 31, 2021			Jun 30, 2020						Jun 30, 2021			Jun 30, 2020
Total equity									$	193,127		188,034			178,635						190,968			189,074			184,072						190,026			185,982
Adjustments:
Preferred stock									(20,820)			(21,170)			(21,098)						(21,108)			(21,840)			(21,344)						(21,472)			(21,569)
Additional paid-in capital on preferred stock									136			139			159						138			145			140						142			138
Unearned ESOP shares									875			875			875						875			875			1,140						875			1,141
Noncontrolling interests									(1,865)			(1,130)			(736)						(1,313)			(1,115)			(643)						(1,215)			(714)
Total common stockholders’ equity			(A)						171,453			166,748			157,835						169,560			167,139			163,365						168,356			164,978
Adjustments:
Goodwill									(26,194)			(26,290)			(26,385)						(26,213)			(26,383)			(26,384)						(26,297)			(26,386)
Certain identifiable intangible assets (other than MSRs)									(301)			(322)			(389)						(310)			(330)			(402)						(320)			(414)
Goodwill and other intangibles on nonmarketable equity securities (included in other assets)									(2,256)			(2,300)			(2,050)						(2,208)			(2,217)			(1,922)						(2,212)			(2,037)
Applicable deferred taxes related to goodwill and other intangible assets (1)									875			866			831						873			863			828						868			823
Tangible common equity			(B)						$	143,577		138,702			129,842						141,702			139,072			135,485						140,395			136,964
Common shares outstanding			(C)						4,108.0			4,141.1			4,119.6						N/A			N/A			N/A						N/A			N/A
Net income applicable to common stock			(D)						N/A			N/A			N/A						$	5,743		4,256			(4,160)						$	9,999		(3,856)
Book value per common share			(A)/(C)						$	41.74		40.27			38.31						N/A			N/A			N/A						N/A			N/A
Tangible book value per common share			(B)/(C)						34.95			33.49			31.52						N/A			N/A			N/A						N/A			N/A
Return on average common stockholders’ equity (ROE) (annualized)			(D)/(A)						N/A			N/A			N/A						13.59		%	10.33			(10.24)						11.98		%	(4.70)		%
Return on average tangible common equity (ROTCE) (annualized)			(D)/(B)						N/A			N/A			N/A						16.26			12.41			(12.35)						14.36		%	(5.66)		%

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

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 42 presents the leverage requirements applicable to the Company as of June 30, 2021.

Table 42: 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 2020 Form 10-K.

At June 30, 2021, the Company’s SLR was 7.09%, and each of our IDIs exceeded their applicable SLR requirements. Table 43 presents information regarding the calculation and components of the Company’s SLR and tier 1 leverage ratio.

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Capital Management (continued)

Table 43: Leverage Ratios for the Company

(in millions, except ratios)						Quarter ended June 30, 2021
Tier 1 capital			(A)			$	162,999
Total average assets						1,940,757
Less: Goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities)						29,103
Less: Other SLR exclusions						—
Total adjusted average assets						1,911,654
Plus adjustments for off-balance sheet exposures:
Derivatives (1)						68,738
Repo-style transactions (2)						3,626
Other (3)						316,398
Total off-balance sheet exposures						388,762
Total leverage exposure			(B)			$	2,300,416
Supplementary leverage ratio			(A)/(B)			7.09		%
Tier 1 leverage ratio (4)						8.53		%

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

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

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

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

TOTAL LOSS ABSORBING CAPACITY As a G-SIB, we are required to have a minimum amount of equity and unsecured long-term debt for purposes of resolvability and resiliency, often referred to as Total Loss Absorbing Capacity (TLAC). U.S. G-SIBs are required to have a minimum amount of TLAC (consisting of CET1 capital and additional tier 1 capital issued directly by the top-tier or covered BHC plus eligible external long-term debt) to avoid restrictions on capital distributions and discretionary bonus payments, as well as a minimum amount of eligible unsecured long-term debt. The components used to calculate our minimum TLAC and eligible unsecured long-term debt requirements as of June 30, 2021, are presented in Table 44.

Table 44: Components Used to Calculate TLAC and Eligible Unsecured Long-Term Debt Requirements

TLAC requirement Greater of:

18.00% of 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

+

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 2020 Form 10-K.

Table 45 provides our TLAC and eligible unsecured long-term debt and related ratios as of June 30, 2021, and December 31, 2020.

Table 45: TLAC and Eligible Unsecured Long-Term Debt

($ in millions)						TLAC (1)						Regulatory Minimum (2)						Eligible Unsecured Long-term Debt						Regulatory Minimum
						June 30, 2021
Total eligible amount						$	298,496											129,411
Percentage of RWAs (3)						25.11		%				21.50						10.89						8.00
Percentage of total leverage exposure						12.98						9.50						5.63						4.50
						December 31, 2020
Total eligible amount						$	307,226											140,703
Percentage of RWAs (3)						25.74		%				22.00						11.79						8.00
Percentage of total leverage exposure (4)						15.64						9.50						7.16						4.50

(1)TLAC ratios are calculated using the 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.

(4)Total leverage exposure at December 31, 2020, reflected an interim final rule issued by the FRB that temporarily allowed a bank holding company to exclude on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of its total leverage exposure.

OTHER REGULATORY CAPITAL AND LIQUIDITY MATTERS 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.

Capital Planning and Stress Testing

Our planned long-term capital structure is designed to meet regulatory and market expectations. We believe that our long-term targeted capital structure enables us to invest in and grow our business, satisfy our customers’ financial needs in varying environments, access markets, and maintain flexibility to return capital to our shareholders. Our long-term targeted capital structure also considers capital levels sufficient to exceed capital requirements including the G-SIB capital surcharge. Accordingly, we currently target a long-term CET1 capital ratio that is 100 basis points above our regulatory requirement plus an incremental buffer of 25 to 50 basis points. Our capital targets are subject to change based on various factors, including changes to the regulatory capital framework and expectations for large banks promulgated by bank regulatory agencies, changes to the regulatory requirements for our capital ratios, planned capital actions, changes in our risk profile and other factors.

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.

On March 25, 2021, the FRB announced that it was extending measures it previously announced limiting large BHCs, including Wells Fargo, from making any capital distribution (excluding any capital distribution arising from the issuance of a capital instrument eligible for inclusion in the numerator of a regulatory capital ratio), unless otherwise approved by the FRB. The FRB generally authorized BHCs to (i) provided that the BHC does not increase the amount of its common stock dividends to

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be larger than the level paid in second quarter 2020, pay common stock dividends and make share repurchases that, in the aggregate, do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters; (ii) make share repurchases that equal the amount of share issuances related to expensed employee compensation; and (iii) redeem and make scheduled payments on additional tier 1 and tier 2 capital instruments. These limitations on capital distributions ended on June 30, 2021.

Concurrently with CCAR, federal banking regulators also require large BHCs and banks to conduct their own stress tests to evaluate whether the institution has sufficient capital to continue to operate during periods of adverse economic and financial conditions.

In June 2021, the Company completed the 2021 CCAR stress test process. On July 27, 2021, the Board approved an increase to the Company's third quarter 2021 common stock dividend to $0.20 per share. Additionally, our capital plan includes gross common share repurchases of approximately $18 billion for the four-quarter period beginning third quarter 2021 through second quarter 2022.

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 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, 2021, we had remaining Board authority to repurchase approximately 615 million shares, subject to regulatory and legal conditions. For additional information about share repurchases during second quarter 2021, 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 the other significant regulations and regulatory oversight initiatives that have affected or may affect our business contained in the “Regulatory Matters” and “Risk Factors” sections in our 2020 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 29, 2021, we submitted our most recent resolution plan to the FRB and FDIC.

If Wells Fargo were to fail, it may be resolved in 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 Wells Fargo & Company (the “Parent”), then the orderly liquidation authority, rather than the U.S. Bankruptcy Code, would determine the powers of the receiver and the rights and obligations of our security holders. The FDIC’s orderly liquidation authority requires that security holders of a company in receivership bear all losses before U.S. taxpayers are exposed to any losses, and allows the FDIC to disregard the strict priority of creditor claims under the U.S. Bankruptcy Code in certain circumstances.

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

To facilitate the 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

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Regulatory Matters (continued)

and restated on June 26, 2019 (the “Support Agreement”), with WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), the Bank, Wells Fargo Securities, LLC (“WFS”), Wells Fargo Clearing Services, LLC (“WFCS”), and certain other subsidiaries of the Parent designated from time to time as material entities for resolution planning purposes (the “Covered Entities”) or identified from time to time as related support entities in our resolution plan (the “Related Support Entities”). Pursuant to the Support Agreement, the Parent transferred a significant amount of its assets, including the majority of its cash, deposits, liquid securities and intercompany loans (but excluding its equity interests in its subsidiaries and certain other assets), to the IHC and will continue to transfer those types of assets to the IHC from time to time. In the event of our material financial distress or failure, the IHC will be obligated to use the transferred assets to provide capital and/or liquidity to the Bank, WFS, WFCS, and the Covered Entities pursuant to the Support Agreement. Under the Support Agreement, the IHC will also provide funding and liquidity to the Parent through subordinated notes and a committed line of credit, which, together with the issuance of dividends, is expected to provide the Parent, during business as usual operating conditions, with the same access to cash necessary to service its debts, pay dividends, repurchase its shares, and perform its other obligations as it would have had if it had not entered into these arrangements and transferred any assets. If certain liquidity and/or capital metrics fall below defined triggers, or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code, the subordinated notes would be forgiven, the committed line of credit would terminate, and the IHC’s ability to pay dividends to the Parent would be restricted, any of which could materially and adversely impact the Parent’s liquidity and its ability to satisfy its debts and other 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 submit to the FRB a recovery plan that identifies a range of options that we may consider during times of idiosyncratic or systemic economic stress to remedy any financial weaknesses and restore market confidence without extraordinary government support. Recovery options include the possible sale, transfer or disposal of assets, securities, loan portfolios or businesses. The Bank must also prepare and submit to the OCC 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.

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Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2020 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 2020 Form 10-K.

Current Accounting Developments

The following significant accounting update has been issued by the Financial Accounting Standards Board (FASB) and is applicable to us, but is not yet effective:

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

ASU 2018-12 See the “Current Accounting Developments” section in our 2020 Form 10-K for information on the effective date and our assessment of the expected financial statement impact upon adoption.

Other Accounting Developments

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

•ASU 2020-06 – Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

•ASU 2021-05 – Leases (Topic 842): Lessors – Certain Leases with Variable Lease Payments

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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 noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses, our allowance for credit losses, and the economic scenarios considered to develop the allowance; (iv) our expectations regarding net interest income and net interest margin; (v) loan growth or the reduction or mitigation of risk in our loan portfolios; (vi) future capital or liquidity levels, ratios or targets; (vii) the performance of our mortgage business and any related exposures; (viii) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (ix) future common stock dividends, common share repurchases and other uses of capital; (x) our targeted range for return on assets, return on equity, and return on tangible common equity; (xi) expectations regarding our effective income tax rate; (xii) the outcome of contingencies, such as legal proceedings; (xiii) environmental, social and governance related goals or commitments; and (xiv) the Company’s plans, objectives and strategies.

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

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

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

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

•current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses,

including rules and regulations relating to bank products and financial services;

•developments in our mortgage banking business, including the extent of the success of our mortgage loan modification efforts, the amount of mortgage loan repurchase demands that we receive, any negative effects relating to our mortgage servicing, loan modification or foreclosure practices, and the effects of regulatory or judicial requirements or guidance impacting our mortgage banking business and any changes in industry standards;

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

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

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

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

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

•resolution of regulatory matters, litigation, or other legal actions, which may result in, among other things, additional costs, fines, penalties, restrictions on our business activities, reputational harm, or other adverse consequences;

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

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

•fiscal and monetary policies of the Federal Reserve Board;

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

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

•the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and

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

For additional information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.1

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

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

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

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Risk Factors

An investment in the Company involves risk, including the possibility that the value of the investment could fall substantially and that dividends or other distributions on the investment could be reduced or eliminated. For a discussion of risk factors that could adversely affect our financial results and condition, and the value of, and return on, an investment in the Company, we refer you to the “Risk Factors” section in our 2020 Form 10-K.

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Controls and Procedures

Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of June 30, 2021, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2021.

 

Internal Control Over Financial Reporting

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

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

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

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

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during second quarter 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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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)			2021						2020						2021						2020
Interest income
Debt securities			$	2,199					2,946						$	4,511					6,418
Loans held for sale			193						237						524						446
Loans (1)			7,095						8,460						14,296						18,543
Equity securities			132						116						269						322
Other interest income			74						54						139						829
Total interest income			9,693						11,813						19,739						26,558
Interest expense
Deposits			92						585						204						2,327
Short-term borrowings			(12)						(17)						(21)						274
Long-term debt			712						1,237						1,738						2,477
Other interest expense			101						116						210						258
Total interest expense			893						1,921						2,131						5,336
Net interest income			8,800						9,892						17,608						21,222
Noninterest income
Deposit and lending-related fees			1,704						1,465						3,320						3,262
Investment advisory and other asset-based fees (2)			2,794						2,254						5,550						4,760
Commissions and brokerage services fees (2)			580						550						1,216						1,227
Investment banking fees			570						547						1,138						938
Card fees			1,077						797						2,026						1,689
Mortgage banking			1,336						317						2,662						696
Net gains on trading and securities			2,717						1,552						3,608						452
Other (1)			692						912						1,674						2,213
Total noninterest income			11,470						8,394						21,194						15,237
Total revenue			20,270						18,286						38,802						36,459
Provision for credit losses			(1,260)						9,534						(2,308)						13,539
Noninterest expense
Personnel			8,818						8,916						18,376						17,239
Technology, telecommunications and equipment			815						672						1,659						1,470
Occupancy			735						871						1,505						1,586
Operating losses			303						1,219						516						1,683
Professional and outside services			1,450						1,676						2,838						3,282
Advertising and promotion			132						137						222						318
Restructuring charges			(4)						—						9						—
Other			1,092						1,060						2,205						2,021
Total noninterest expense			13,341						14,551						27,330						27,599
Income (loss) before income tax expense			8,189						(5,799)						13,780						(4,679)
Income tax expense (benefit) (1)			1,445						(2,001)						2,346						(1,648)
Net income (loss) before noncontrolling interests			6,744						(3,798)						11,434						(3,031)
Less: Net income (loss) from noncontrolling interests			704						48						758						(101)
Wells Fargo net income (loss) (1)			$	6,040					(3,846)						$	10,676					(2,930)
Less: Preferred stock dividends and other			297						314						677						926
Wells Fargo net income (loss) applicable to common stock (1)			$	5,743					(4,160)						$	9,999					(3,856)
Per share information (1)
Earnings (loss) per common share			$	1.39					(1.01)						$	2.42					(0.94)
Diluted earnings (loss) per common share			1.38						(1.01)						2.40						(0.94)
Average common shares outstanding			4,124.6						4,105.5						4,132.9						4,105.2
Diluted average common shares outstanding			4,156.1						4,105.5						4,164.6						4,105.2

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)In first quarter 2021, trust and investment management fees and asset-based brokerage fees were combined into a single line item for investment advisory and other asset-based fees, and brokerage commissions and other brokerage services fees were combined into a single line item for commissions and brokerage services fees. Prior period balances have been revised to conform with the current period presentation.

The accompanying notes are an integral part of these statements.

64			Wells Fargo & Company

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Wells Fargo & Company and Subsidiaries
Consolidated Statement of Comprehensive Income (Unaudited)
			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Net income (loss) before noncontrolling interests (1)			$	6,744					(3,798)						11,434						(3,031)
Other comprehensive income (loss), after tax:
Net change in debt securities			304						1,143						(1,221)						915
Net change in derivatives and hedging activities			27						3						63						140
Defined benefit plans adjustments			334						(431)						369						(401)
Net change in foreign currency translation adjustments			22						51						33						(142)
Other comprehensive income (loss), after tax			687						766						(756)						512
Total comprehensive income (loss) before noncontrolling interests (1)			7,431						(3,032)						10,678						(2,519)
Less: Other comprehensive income (loss) from noncontrolling interests			1						—						2						(1)
Less: Net income (loss) from noncontrolling interests			704						48						758						(101)
Wells Fargo comprehensive income (loss) (1)			$	6,726					(3,080)						9,918						(2,417)

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

The accompanying notes are an integral part of these statements.

			Wells Fargo & Company			65

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Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet
(in millions, except shares)			Jun 30, 2021						Dec 31, 2020
Assets			(Unaudited)
Cash and due from banks			$	25,304					28,236
Interest-earning deposits with banks			248,869						236,376
Total cash, cash equivalents, and restricted cash			274,173						264,612
Federal funds sold and securities purchased under resale agreements			70,149						65,672
Debt securities:
Trading, at fair value			82,727						75,095
Available-for-sale, at fair value (includes amortized cost of $186,309 and $215,533, net of allowance for credit losses)			189,897						220,392
Held-to-maturity, at amortized cost, net of allowance for credit losses (fair value $264,087 and $212,307)			260,941						205,720
Loans held for sale (includes $18,894 and $18,806 carried at fair value)			25,594						36,384
Loans			852,300						887,637
Allowance for loan losses			(15,148)						(18,516)
Net loans			837,152						869,121
Mortgage servicing rights (includes $6,717 and $6,125 carried at fair value)			8,009						7,437
Premises and equipment, net			8,745						8,895
Goodwill			26,194						26,392
Derivative assets			25,415						25,846
Equity securities (includes $35,331 and $34,009 carried at fair value) (1)			64,547						60,008
Other assets			72,453						87,337
Total assets (2)			$	1,945,996					1,952,911
Liabilities
Noninterest-bearing deposits			$	504,108					467,068
Interest-bearing deposits			936,364						937,313
Total deposits			1,440,472						1,404,381
Short-term borrowings			45,635						58,999
Derivative liabilities			14,551						16,509
Accrued expenses and other liabilities (includes $22,043 and $22,441 carried at fair value) (1)			72,555						74,360
Long-term debt			179,656						212,950
Total liabilities (3)			1,752,869						1,767,199
Equity
Wells Fargo stockholders’ equity:
Preferred stock			20,820						21,136
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares			9,136						9,136
Additional paid-in capital			60,018						60,197
Retained earnings (1)			171,765						162,683
Cumulative other comprehensive income (loss)			(564)						194
Treasury stock – 1,373,813,200 shares and 1,337,799,931 shares			(69,038)						(67,791)
Unearned ESOP shares			(875)						(875)
Total Wells Fargo stockholders’ equity			191,262						184,680
Noncontrolling interests			1,865						1,032
Total equity			193,127						185,712
Total liabilities and equity			$	1,945,996					1,952,911

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)Our consolidated assets at June 30, 2021, and December 31, 2020, included the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Debt securities, $518 million and $967 million; Loans, $4.1 billion and $10.9 billion; All other assets, $334 million and $310 million; and Total assets, $4.9 billion and $12.1 billion, respectively.

(3)Our consolidated liabilities at June 30, 2021, and December 31, 2020, include the following VIE liabilities for which the VIE creditors do not have recourse to Wells Fargo: Long-term debt, $178 million and $203 million; All other liabilities, $587 million and $900 million; and Total liabilities, $765 million and $1.1 billion, respectively.

The accompanying notes are an integral part of these statements.

66			Wells Fargo & Company

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Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity – Quarter ended June 30 (Unaudited)
			Wells Fargo stockholders’ equity
			Preferred stock												Common stock
($ and shares in millions)			Shares						Amount						Shares						Amount						Additional paid-in capital						Retained earnings						Cumulative other comprehensive income (loss)						Treasury stock						Unearned ESOP shares												Noncontrolling interests						Total equity
Balance March 31, 2021 (1)			5.6						$	21,170					4,141.1						$	9,136					59,854						166,458						(1,250)						(67,589)						(875)												1,130						188,034
Net income																																	6,040																														704						6,744
Other comprehensive income (loss), net of tax																																							686																								1						687
Noncontrolling interests																																																															30						30
Common stock issued															2.2												—						(20)												115																								95
Common stock repurchased															(35.3)																														(1,565)																								(1,565)
Preferred stock redeemed (2)			—						(350)																		4						(4)																																				(350)
Preferred stock released by ESOP																											—																								—																		—
Preferred stock converted to common shares			—						—						—												—																		—																								—
Common stock dividends																											4						(416)																																				(412)
Preferred stock dividends																																	(293)																																				(293)
Stock incentive compensation expense																											226																																										226
Net change in deferred compensation and related plans																											(70)																		1																								(69)
Net change			—						(350)						(33.1)						—						164						5,307						686						(1,449)						—												735						5,093
Balance June 30, 2021			5.6						$	20,820					4,108.0						$	9,136					60,018						171,765						(564)						(69,038)						(875)												1,865						193,127
Balance March 31, 2020 (1)			5.7						$	21,347					4,096.4						$	9,136					59,849						165,288						(1,564)						(70,215)						(1,143)												612						183,310
Net income (loss) (1)																																	(3,846)																														48						(3,798)
Other comprehensive income (loss), net of tax																																							766																								—						766
Noncontrolling interests																																																															75						75
Common stock issued															13.5												224						(549)												692																								367
Common stock repurchased															—																														(2)																								(2)
Preferred stock redeemed			—						—																		—						—																																				—
Preferred stock released by ESOP																											(19)																								268																		249
Preferred stock converted to common shares			(0.2)						(249)						9.7												(243)																		492																								—
Common stock dividends																											20						(2,113)																																				(2,093)
Preferred stock dividends																																	(314)																																				(314)
Stock incentive compensation expense																											120																																										120
Net change in deferred compensation and related plans																											(28)																		(17)																								(45)
Net change (1)			(0.2)						(249)						23.2						—						74						(6,822)						766						1,165						268												123						(4,675)
Balance June 30, 2020 (1)			5.5						$	21,098					4,119.6						$	9,136					59,923						158,466						(798)						(69,050)						(875)												735						178,635

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)Represents the impact of the redemption of the remaining Preferred Stock, Series N, in second quarter 2021. For additional information, see Note 16 (Preferred Stock).

The accompanying notes are an integral part of these statements.

			Wells Fargo & Company			67

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Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Equity – Six months ended June 30 (Unaudited)
			Wells Fargo stockholders’ equity
			Preferred stock												Common stock
($ and shares in millions)			Shares						Amount						Shares						Amount						Additional paid-in capital						Retained earnings						Cumulative other comprehensive income (loss)						Treasury stock						Unearned ESOP shares												Noncontrolling interests						Total equity
Balance December 31, 2020 (1)			5.5						$	21,136					4,144.0						$	9,136					60,197						162,683						194						(67,791)						(875)												1,032						185,712
Net income																																	10,676																														758						11,434
Other comprehensive income (loss), net of tax																																							(758)																								2						(756)
Noncontrolling interests																																																															73						73
Common stock issued															16.5												—						(81)												900																								819
Common stock repurchased															(52.5)																														(2,161)																								(2,161)
Preferred stock redeemed (2)			(0.1)						(4,876)																		48						(48)																																				(4,876)
Preferred stock released by ESOP																											—																								—																		—
Preferred stock converted to common shares			—						—						—												—																		—																								—
Preferred stock issued			0.2						4,560																		(31)																																										4,529
Common stock dividends																											10						(836)																																				(826)
Preferred stock dividends																																	(629)																																				(629)
Stock incentive compensation expense																											724																																										724
Net change in deferred compensation and related plans																											(930)																		14																								(916)
Net change			0.1						(316)						(36.0)						—						(179)						9,082						(758)						(1,247)						—												833						7,415
Balance June 30, 2021			5.6						$	20,820					4,108.0						$	9,136					60,018						171,765						(564)						(69,038)						(875)												1,865						193,127
Balance December 31, 2019			7.5						$	21,549					4,134.4						$	9,136					61,049						166,697						(1,311)						(68,831)						(1,143)												838						187,984
Cumulative effect from change in accounting policies (1)																																	708																																				708
Balance January 1, 2020 (1)			7.5						21,549						4,134.4						9,136						61,049						167,405						(1,311)						(68,831)						(1,143)												838						188,692
Net income (loss) (1)																																	(2,930)																														(101)						(3,031)
Other comprehensive income (loss), net of tax																																							513																								(1)						512
Noncontrolling interests																																																															(1)						(1)
Common stock issued															50.9												207						(857)												2,694																								2,044
Common stock repurchased															(75.4)																														(3,409)																								(3,409)
Preferred stock redeemed (3)			(1.9)						(2,215)																		17						(272)																																				(2,470)
Preferred stock released by ESOP																											(19)																								268																		249
Preferred stock converted to common shares			(0.2)						(249)						9.7												(243)																		492																								—
Preferred stock issued			0.1						2,013																		(45)																																										1,968
Common stock dividends																											38						(4,226)																																				(4,188)
Preferred stock dividends																																	(654)																																				(654)
Stock incentive compensation expense																											301																																										301
Net change in deferred compensation and related plans																											(1,382)																		4																								(1,378)
Net change (1)			(2.0)						(451)						(14.8)						—						(1,126)						(8,939)						513						(219)						268												(103)						(10,057)
Balance June 30, 2020 (1)			5.5						$	21,098					4,119.6						$	9,136					59,923						158,466						(798)						(69,050)						(875)												735						178,635

(1)We adopted Accounting Standards Update (ASU) 2016-13 – Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (CECL) effective January 1, 2020. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020. In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)Represents the impact of the redemption of Preferred Stock, Series I, Series P and Series W, in first quarter 2021, and Preferred Stock, Series N, in second quarter 2021. For additional information, see Note 16 (Preferred Stock).

(3)Represents the impact of the redemption of the remaining Preferred Stock, Series K, and partial redemption of Preferred Stock, Series T, in first quarter 2020.

The accompanying notes are an integral part of these statements.

68			Wells Fargo & Company

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Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
			Six months ended June 30,
(in millions)			2021						2020
Cash flows from operating activities:
Net income (loss) before noncontrolling interests (1)			$	11,434					(3,031)
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			(2,308)						13,539
Changes in fair value of MSRs and LHFS carried at fair value			(895)						4,481
Depreciation, amortization and accretion (1)			4,173						3,858
Stock-based compensation			1,475						953
Deferred income tax benefit (1)			(1,495)						(118)
Other net (gains) losses (2)			(7,661)						7,150
Originations and purchases of loans held for sale (2)			(87,673)						(83,540)
Proceeds from sales of and paydowns on loans originally classified as held for sale (2)			55,502						69,195
Net change in:
Debt and equity securities, held for trading			7,531						36,459
Derivative assets and liabilities			(1,299)						(6,825)
Other assets			11,256						(5,910)
Other accrued expenses and liabilities (1)			(1,572)						(2,819)
Net cash provided (used) by operating activities			(11,532)						33,392
Cash flows from investing activities:
Net change in:
Federal funds sold and securities purchased under resale agreements			(4,477)						22,851
Available-for-sale debt securities:
Proceeds from sales			13,675						29,524
Prepayments and maturities			45,238						35,340
Purchases			(71,997)						(28,310)
Held-to-maturity debt securities:
Paydowns and maturities			45,833						11,566
Purchases			(43,192)						(25,376)
Equity securities, not held for trading:
Proceeds from sales and capital returns			2,131						5,584
Purchases			(3,033)						(5,587)
Loans:
Loans originated by banking subsidiaries, net of principal collected			21,926						8,871
Proceeds from sales of loans originally classified as held for investment			22,174						5,325
Purchases of loans			(186)						(775)
Principal collected on nonbank entities’ loans			7,007						5,505
Loans originated by nonbank entities			(5,723)						(5,856)
Proceeds from sales of foreclosed assets and short sales			372						753
Other, net			1,056						(31)
Net cash provided by investing activities			30,804						59,384
Cash flows from financing activities:
Net change in:
Deposits			36,575						88,085
Short-term borrowings			(13,364)						(44,027)
Long-term debt:
Proceeds from issuance			1,125						37,664
Repayment			(29,810)						(44,574)
Preferred stock:
Proceeds from issuance			4,529						1,968
Redeemed			(4,875)						(2,470)
Cash dividends paid			(629)						(654)
Common stock:
Proceeds from issuance			114						454
Stock tendered for payment of withholding taxes			(250)						(320)
Repurchased			(2,161)						(3,409)
Cash dividends paid			(795)						(4,055)
Net change in noncontrolling interests			(13)						(31)
Other, net			(157)						(154)
Net cash provided (used) by financing activities			(9,711)						28,477
Net change in cash, cash equivalents, and restricted cash			9,561						121,253
Cash, cash equivalents, and restricted cash at beginning of period			264,612						141,250
Cash, cash equivalents, and restricted cash at end of period			$	274,173					262,503
Supplemental cash flow disclosures:
Cash paid for interest			$	2,345					5,545
Cash paid for income taxes, net (2)			3,052						2,070

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)Prior period balances have been revised to conform with the current period presentation.

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

			Wells Fargo & Company			69

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Notes to Financial Statements

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

Note 1: Summary of Significant Accounting Policies

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

Our accounting and reporting policies conform with U.S. generally accepted accounting principles (GAAP) and practices in the financial services industry. For discussion of our significant accounting policies, see Note 1 (Summary of Significant Accounting Policies) in our Annual Report on Form 10-K for the year ended December 31, 2020 (2020 Form 10-K).

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

•allowance for credit losses (Note 4 (Loans and Related Allowance for Credit Losses));

•valuations of residential mortgage servicing rights (MSRs) (Note 8 (Securitizations and Variable Interest Entities) and Note 9 (Mortgage Banking Activities));

•valuations of financial instruments (Note 15 (Fair Values of Assets and Liabilities));

•liabilities for contingent litigation losses (Note 13 (Legal Actions));

•income taxes; and

•goodwill impairment (Note 10 (Intangible Assets)).

Actual results could differ from those estimates.

These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The results of operations in the interim financial statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with our 2020 Form 10-K.

Change in Accounting Policies

In second quarter 2021, we elected to change our accounting method for low-income housing tax credit (LIHTC) investments from the equity method of accounting to the proportional amortization method. Under the proportional amortization method, the investments are carried at amortized cost and amortized in proportion to the tax credits received. The amortization of the investments and the related tax impacts are recognized in income tax expense. Previously, we recognized the amortization of the investments in other noninterest income and the related tax impacts were recognized in income tax expense. We determined that the proportional amortization method is preferable because it better aligns the financial statement presentation with the economic impact of these investments, which generate tax credits over the lives of the investments. Adoption of the proportional amortization method was applied retrospectively, to the earliest period presented, which resulted in a cumulative-effect adjustment to reduce retained earnings by $283 million as of January 1, 2020.

In second quarter 2021, we also elected to change the presentation of investment tax credits related to solar energy investments, which are accounted for under the deferral method. We reclassified the investment tax credits on our consolidated balance sheet from accrued expenses and other liabilities to a reduction of the carrying value of the investment balances. We also reclassified the investment tax credits, which are recognized over time, from income tax expense to interest income for solar energy leases or noninterest income for solar energy equity investments. We determined that this presentation is preferable because it better reflects the financial statement presentation of the investment tax credits as an integral component of the investments. The change in accounting policy was adopted retrospectively to January 1, 2020.

Table 1.1 presents the impact of the accounting policy changes for LIHTC investments and solar energy investments to our consolidated statement of income and consolidated balance sheet. There was no material impact to the consolidated statement of cash flows.

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Table 1.1: Impact of the Accounting Policy Changes for LIHTC Investments and Solar Energy Investments

			Quarter ended June 30, 2020																					Six months ended June 30, 2020
									Effect of accounting policy changes ($)																					Effect of accounting policy changes ($)
($ in millions, except per share amounts)			As reported						LIHTC			Solar						As revised						As reported						LIHTC			Solar						As revised
Selected Income Statement Data
Interest income – loans			$	8,448					—			12						8,460						18,513						—			30						18,543
Noninterest income			7,956						370			68						8,394						14,361						739			137						15,237
Income tax expense (benefit) (1)			(3,917)						1,434			482						(2,001)						(3,758)						1,584			526						(1,648)
Net income (loss)			(2,379)						(1,064)			(403)						(3,846)						(1,726)						(845)			(359)						(2,930)
Earnings (loss) per common share			(0.66)						(0.26)			(0.09)						(1.01)						(0.65)						(0.21)			(0.08)						(0.94)
Diluted earnings (loss) per common share			(0.66)						(0.26)			(0.09)						(1.01)						(0.65)						(0.21)			(0.08)						(0.94)
																								At December 31, 2020
																														Effect of accounting policy changes ($)
																								As reported						LIHTC			Solar						As revised
Selected Balance Sheet Data
Equity securities																								$	62,260					(275)			(1,977)						60,008
Accrued expenses and other liabilities																								76,404						(62)			(1,982)						74,360
Retained earnings																								162,890						(207)			—						162,683

(1)The quarterly income tax expense (benefit) varies based on the income (loss) before income tax expense (benefit) and the estimated annual effective income tax rate applied to each quarter.

Accounting Standards Adopted in 2021

In 2021, we adopted the following new accounting guidance:

•Accounting Standards Update (ASU or Update) 2021-01 – Reference Rate Reform (Topic 848): Scope

•ASU 2020-08 – Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs

•ASU 2020-01 – Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Financial Accounting Standards Board (FASB) Emerging Issues Task Force)

•ASU 2019-12 – Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

ASU 2021-01 clarifies the scope of Topic 848 to include derivatives affected by changes in interest rates for margining, discounting, or contract price alignment as part of the market-wide transition to new reference rates (commonly referred to as the “discounting transition”), even if they do not reference the London Interbank Offered Rate or another rate that is expected to be discontinued as a result of reference rate reform. The Update also clarifies other aspects of the relief provided in Accounting Standards Codification (ASC) 848. We adopted this Update in first quarter 2021 on a prospective basis, and the guidance will be followed until the Update terminates on December 31, 2022. The Update did not have a material impact on our consolidated financial statements.

ASU 2020-08 clarifies the accounting for purchased callable debt securities carried at a premium and was issued to correct an unintended application of ASU 2017-08 – Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which requires amortization of such premiums to the earliest call date, but was not clear for the method to be used for instruments with multiple call dates. The Update now specifies that such premiums are amortized to the next call date and requires reassessment throughout the life of the instruments with multiple call dates. We adopted this Update in first quarter

2021. The Update did not have a material impact on our consolidated financial statements.

ASU 2020-01 clarifies the accounting for equity securities upon transition between the measurement alternative and equity method. The Update also clarifies for forward contracts and options to purchase equity securities an entity need not consider whether upon settlement of the forward contract or option if the equity securities would be accounted for by the equity method or the fair value option. We adopted this Update in first quarter 2021. The Update did not have a material impact on our consolidated financial statements.

ASU 2019-12 provides narrow scope simplifications and improvements to the general principles in ASC Topic 740 – Income Taxes related to intraperiod tax allocation, basis differences when there are changes in ownership of foreign investments and interim periods income tax accounting for year to date losses that exceed anticipated annual losses. We adopted this Update in first quarter 2021. The Update did not have a material impact on our consolidated financial statements.

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Note 1: Summary of Significant Accounting Policies (continued)

Supplemental Cash Flow Information

Significant noncash activities are presented in Table 1.2.

Table 1.2: Supplemental Cash Flow Information

			Six months ended June 30,
(in millions)			2021						2020
Held-to-maturity debt securities purchased from securitization of LHFS (1)			16,462						664
Transfers from loans to LHFS (2)			11,551						12,753
Transfers from available-for-sale debt securities to held-to-maturity debt securities			41,298						—

(1)For the six months ended June 30, 2021, predominantly represents agency mortgage-backed securities purchased upon settlement of the sale and securitization of our conforming residential mortgage loans. See Note 8 (Securitizations and Variable Interest Entities) for additional information.

(2)Prior periods have been revised to conform to the current period presentation.

Subsequent Events

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

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Note 2:  Trading Activities

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

Table 2.1: Trading Assets and Liabilities

(in millions)			Jun 30, 2021						Dec 31, 2020
Trading assets:
Debt securities			$	82,727					75,095
Equity securities			23,701						23,032
Loans held for sale			2,269						1,015
Gross trading derivative assets			54,965						58,767
Netting (1)			(31,052)						(34,301)
Total trading derivative assets			23,913						24,466
Total trading assets			132,610						123,608
Trading liabilities:
Short sale			22,043						22,441
Gross trading derivative liabilities			45,441						53,285
Netting (1)			(33,614)						(39,444)
Total trading derivative liabilities			11,827						13,841
Total trading liabilities			$	33,870					36,282

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

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

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

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

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Interest income:
Debt securities			$	496					$	659					$	1,025					1,425
Equity securities			93						68						196						205
Loans held for sale			3						6						15						18
Total interest income			592						733						1,236						1,648
Less: Interest expense			105						116						215						257
Net interest income			487						617						1,021						1,391
Net gains (losses) from trading activities (1):
Debt securities			769						329						(1,337)						2,684
Equity securities			856						2,329						2,009						(2,072)
Loans held for sale			15						24						39						12
Derivatives (2)			(1,619)						(1,875)						(342)						247
Total net gains from trading activities			21						807						369						871
Total trading-related net interest and noninterest income			$	508					$	1,424					$	1,390					2,262

(1)Represents realized gains (losses) from our 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.

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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 cumulative other comprehensive income (OCI), net of the ACL and applicable income taxes. Information on debt securities held for trading is included in Note 2 (Trading Activities).

    Outstanding balances exclude accrued interest receivable on AFS and HTM debt securities, which are included in other assets. See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. The interest income reversed in the second quarter and first half of both 2021 and 2020 was insignificant.

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

(in millions)			Amortized cost, net (1)						Gross unrealized gains						Gross unrealized losses						Fair value
June 30, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies			$	35,741					195						(31)						35,905
Non-U.S. government securities			11,201						—						—						11,201
Securities of U.S. states and political subdivisions (2)			19,121						410						(32)						19,499
Federal agency mortgage-backed securities			94,186						2,679						(331)						96,534
Non-agency mortgage-backed securities (3)			4,349						51						(22)						4,378
Collateralized loan obligations			12,406						8						(7)						12,407
Other debt securities			9,305						699						(31)						9,973
Total available-for-sale debt securities			186,309						4,042						(454)						189,897
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies			27,576						862						(409)						28,029
Securities of U.S. states and political subdivisions			28,243						931						(36)						29,138
Federal agency mortgage-backed securities			182,891						2,908						(1,349)						184,450
Non-agency mortgage-backed securities			948						46						(11)						983
Collateralized loan obligations			21,283						205						(1)						21,487
Total held-to-maturity debt securities			260,941						4,952						(1,806)						264,087
Total (4)			$	447,250					8,994						(2,260)						453,984
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies			$	21,954					205						—						22,159
Non-U.S. government securities			16,816						—						(3)						16,813
Securities of U.S. states and political subdivisions (2)			19,263						224						(81)						19,406
Federal agency mortgage-backed securities			134,838						4,260						(28)						139,070
Non-agency mortgage-backed securities (3)			3,745						30						(46)						3,729
Collateralized loan obligations			9,058						4						(44)						9,018
Other debt securities			9,859						399						(61)						10,197
Total available-for-sale debt securities			215,533						5,122						(263)						220,392
Held-to-maturity debt securities:
Securities of U.S. Treasury and federal agencies			47,295						1,472						(170)						48,597
Securities of U.S. states and political subdivisions			25,860						938						(5)						26,793
Federal agency mortgage-backed securities			115,437						4,182						(21)						119,598
Non-agency mortgage-backed securities			890						51						(8)						933
Collateralized loan obligations			16,238						148						—						16,386
Total held-to-maturity debt securities			205,720						6,791						(204)						212,307
Total (4)			$	421,253					11,913						(467)						432,699

(1)Represents amortized cost of the securities, net of the ACL of $33 million and $28 million related to AFS debt securities and $77 million and $41 million related to HTM debt securities at June 30, 2021, and December 31, 2020, respectively.

(2)Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The amortized cost, net of the ACL and fair value of these types of securities, was $5.2 billion at June 30, 2021, and $5.0 billion at December 31, 2020.

(3)Predominantly consists of commercial mortgage-backed securities at both June 30, 2021, and December 31, 2020.

(4)We held AFS and HTM debt securities from Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC) that each exceeded 10% of stockholders’ equity, with an amortized cost of $119.8 billion and $89.9 billion and a fair value of $121.5 billion and $91.3 billion at June 30, 2021, and an amortized cost of $99.8 billion and $88.7 billion and a fair value of $103.2 billion and $91.5 billion at December 31, 2020, respectively.

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

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

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Purchases of held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies			$	—					—						$	—					3,016
Securities of U.S. states and political subdivisions			1,173						15						3,083						881
Federal agency mortgage-backed securities			24,855						6,958						49,722						22,821
Non-agency mortgage-backed securities			55						12						84						74
Collateralized loan obligations			3,385						—						7,338						—
Total purchases of held-to-maturity debt securities			29,468						6,985						60,227						26,792
Transfers from available-for-sale debt securities to held-to-maturity debt securities:
Federal agency mortgage-backed securities			24,681						—						41,298						—
Total transfers from available-for-sale debt securities to held-to-maturity debt securities			$	24,681					—						$	41,298					—

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

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

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

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

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Interest income (1):
Available-for-sale			$	655					1,349						$	1,466					3,075
Held-to-maturity			1,048						938						2,020						1,918
Total interest income			1,703						2,287						3,486						4,993
Provision for credit losses:
Available-for-sale			(10)						(40)						12						128
Held-to-maturity			(11)						9						36						13
Total provision for credit losses			(21)						(31)						48						141
Realized gains and losses (2):
Gross realized gains			1						248						152						504
Gross realized losses			(1)						(36)						(1)						(40)
Impairment write-downs			—						—						—						(15)
Net realized gains			$	—					$	212					$	151					449

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

(2)Realized gains and losses relate to AFS debt securities. There were 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, 2021, and December 31, 2020.

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

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

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, 2021
Total portfolio (1)			$	189,897		99		%				261,018			99		%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)			$	132,439		100		%				210,467			100		%
Securities of U.S. states and political subdivisions			19,499			99						28,258			100
Collateralized loan obligations (3)			12,407			100						21,329			100
All other debt securities (4)			25,552			91						964			4
December 31, 2020
Total portfolio (1)			$	220,392		99		%				205,761			99		%
Breakdown by category:
Securities of U.S. Treasury and federal agencies (2)			$	161,229		100		%				162,732			100		%
Securities of U.S. states and political subdivisions			19,406			99						25,870			100
Collateralized loan obligations (3)			9,018			100						16,255			100
All other debt securities (4)			30,739			93						904			6

(1)94% and 92% were rated AA- and above at June 30, 2021, and December 31, 2020, respectively.

(2)Includes federal agency mortgage-backed securities.

(3)99% and 98% were rated AA- and above at June 30, 2021, and December 31, 2020, respectively.

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

DELINQUENCY STATUS AND NONACCRUAL DEBT 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 were insignificant at both June 30, 2021, and December 31, 2020. The carrying value of debt securities in nonaccrual status was insignificant at both June 30, 2021, and December 31, 2020. Charge-offs on debt securities were insignificant in the second quarter and first half of both 2021 and 2020.

Purchased debt securities with credit deterioration (PCD) are not considered to be in nonaccrual status, as payments from issuers of these securities remain current. PCD securities were insignificant in the second quarter and first half of both 2021 and 2020.

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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						Fair value						Gross unrealized losses						Fair value						Gross unrealized losses						Fair value
June 30, 2021
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies			$	(31)					11,924						—						—						(31)						11,924
Non-U.S. government securities			—						—						—						—						—						—
Securities of U.S. states and political subdivisions			(21)						1,413						(11)						717						(32)						2,130
Federal agency mortgage-backed securities			(285)						18,152						(46)						2,924						(331)						21,076
Non-agency mortgage-backed securities			(3)						330						(19)						771						(22)						1,101
Collateralized loan obligations			(2)						1,312						(5)						1,698						(7)						3,010
Other debt securities			(15)						1,196						(16)						807						(31)						2,003
Total available-for-sale debt securities			$	(357)					34,327						(97)						6,917						(454)						41,244
December 31, 2020
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies			$	—					—						—						—						—						—
Non-U.S. government securities			(3)						16,812						—						—						(3)						16,812
Securities of U.S. states and political subdivisions			(51)						3,681						(30)						1,101						(81)						4,782
Federal agency mortgage-backed securities			(27)						11,310						(1)						316						(28)						11,626
Non-agency mortgage-backed securities			(28)						1,366						(18)						534						(46)						1,900
Collateralized loan obligations			(27)						5,082						(17)						1,798						(44)						6,880
Other debt securities			(16)						647						(45)						1,604						(61)						2,251
Total available-for-sale debt securities			$	(152)					38,898						(111)						5,353						(263)						44,251

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

For descriptions of the factors we consider when analyzing debt securities for impairment as well as methodology and significant inputs used to measure credit losses, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.

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

Contractual Maturities

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

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

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

By remaining contractual maturity ($ in millions)			Total						Within one year						After one year through five years						After five years through ten years						After ten years
June 30, 2021
Available-for-sale debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net			$	35,741					5						17,965						15,777						1,994
Fair value			35,905						5						17,978						15,837						2,085
Weighted average yield			0.75		%				2.00						0.33						1.13						1.44
Non-U.S. government securities
Amortized cost, net			$	11,201					11,176						25						—						—
Fair value			11,201						11,176						25						—						—
Weighted average yield			(0.11		%)				(0.11)						0.42						—						—
Securities of U.S. states and political subdivisions
Amortized cost, net			$	19,121					1,546						2,225						5,244						10,106
Fair value			19,499						1,549						2,270						5,253						10,427
Weighted average yield			2.07		%				1.46						1.58						1.41						2.62
Federal agency mortgage-backed securities
Amortized cost, net			$	94,186					8						171						3,359						90,648
Fair value			96,534						8						181						3,484						92,861
Weighted average yield			2.72		%				2.35						3.30						2.30						2.74
Non-agency mortgage-backed securities
Amortized cost, net			$	4,349					—						—						151						4,198
Fair value			4,378						—						—						150						4,228
Weighted average yield			2.00		%				—						—						2.27						1.99
Collateralized loan obligations
Amortized cost, net			$	12,406					—						90						7,306						5,010
Fair value			12,407						—						90						7,304						5,013
Weighted average yield			1.42		%				—						2.21						1.44						1.39
Other debt securities
Amortized cost, net			$	9,305					160						2,791						2,865						3,489
Fair value			9,973						160						3,152						2,910						3,751
Weighted average yield			3.17		%				2.97						4.23						3.31						2.22
Total available-for-sale debt securities
Amortized cost, net			$	186,309					12,895						23,267						34,702						115,445
Fair value			$	189,897					12,898						23,696						34,938						118,365
Weighted average yield			2.03		%				0.22						0.95						1.54						2.60

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

78			Wells Fargo & Company

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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, 2021
Held-to-maturity debt securities (1):
Securities of U.S. Treasury and federal agencies
Amortized cost, net			$	27,576					11,386						12,407						—						3,783
Fair value			28,029						11,461						13,140						—						3,428
Weighted average yield			2.10		%				1.98						2.37						—						1.57
Securities of U.S. states and political subdivisions
Amortized cost, net			$	28,243					673						2,177						2,066						23,327
Fair value			29,138						680						2,246						2,150						24,062
Weighted average yield			2.19		%				2.09						1.90						2.65						2.18
Federal agency mortgage-backed securities
Amortized cost, net			$	182,891					—						—						—						182,891
Fair value			184,450						—						—						—						184,450
Weighted average yield			2.20		%				—						—						—						2.20
Non-agency mortgage-backed securities
Amortized cost, net			$	948					—						15						—						933
Fair value			983						—						15						—						968
Weighted average yield			3.09		%				—						1.56						—						3.12
Collateralized loan obligations
Amortized cost, net			$	21,283					—						—						8,155						13,128
Fair value			21,487						—						—						8,248						13,239
Weighted average yield			1.68		%				—						—						1.73						1.65
Total held-to-maturity debt securities
Amortized cost, net			$	260,941					12,059						14,599						10,221						224,062
Fair value			264,087						12,141						15,401						10,398						226,147
Weighted average yield			2.15		%				1.98						2.30						1.91						2.16

(1)Weighted average yields displayed by maturity bucket are weighted based on amortized cost and are shown pre-tax.

			Wells Fargo & Company			79

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Note 4:  Loans and Related Allowance for Credit Losses

Table 4.1 presents total loans outstanding by portfolio segment and class of financing receivable. Outstanding balances include unearned income, net deferred loan fees or costs, and unamortized discounts and premiums. These amounts were less

than 1% of our total loans outstanding at June 30, 2021, and December 31, 2020.

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

See Note 7 (Other Assets) for additional information on accrued interest receivable. Amounts considered to be uncollectible are reversed through interest income. During the first half of 2021, we reversed accrued interest receivable of $24 million for our commercial portfolio segment and $104 million for our consumer portfolio segment, compared with $21 million and $114 million, respectively, for the same period a year ago.

Table 4.1: Loans Outstanding

(in millions)			Jun 30, 2021						Dec 31, 2020
Commercial:
Commercial and industrial			$	317,618					318,805
Real estate mortgage			120,678						121,720
Real estate construction			22,406						21,805
Lease financing			15,720						16,087
Total commercial			476,422						478,417
Consumer:
Residential mortgage – first lien			244,371						276,674
Residential mortgage – junior lien			19,637						23,286
Credit card			34,936						36,664
Auto			51,073						48,187
Other consumer			25,861						24,409
Total consumer			375,878						409,220
Total loans			$	852,300					887,637

Our non-U.S. loans are reported by respective class of financing receivable in the table above. Substantially all of our non-U.S. loan portfolio is commercial loans. Table 4.2 presents total non-U.S. commercial loans outstanding by class of financing receivable.

Table 4.2: Non-U.S. Commercial Loans Outstanding

(in millions)			Jun 30, 2021						Dec 31, 2020
Non-U.S. commercial loans:
Commercial and industrial			$	71,409					63,128
Real estate mortgage			6,619						7,278
Real estate construction			1,820						1,603
Lease financing			672						629
Total non-U.S. commercial loans			$	80,520					72,638

80			Wells Fargo & Company

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Loan Purchases, Sales, and Transfers

Table 4.3 presents the proceeds paid or received for purchases and sales of loans and transfers from loans held for investment to mortgages/loans held for sale. The table excludes loans for

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

Table 4.3: Loan Purchases, Sales, and Transfers

			2021																		2020
(in millions)			Commercial						Consumer						Total						Commercial						Consumer						Total
Quarter ended June 30,
Purchases			$	134					1						135						332						2						334
Sales			(65)						—						(65)						(1,957)						(1)						(1,958)
Transfers (to)/from LHFS			(359)						(99)						(458)						(8)						(10,379)						(10,387)
Six months ended June 30,
Purchases			$	182					2						184						673						3						676
Sales			(338)						(188)						(526)						(2,770)						(27)						(2,797)
Transfers (to)/from LHFS			(794)						(36)						(830)						69						(10,377)						(10,308)

Commitments to Lend

A commitment to lend is a legally binding agreement to lend to a customer, usually at a stated interest rate, if funded, and for specific purposes and time periods. We generally require a fee to extend such commitments. Certain commitments are subject to loan agreements with covenants regarding the financial performance of the customer or borrowing base formulas on an ongoing basis that must be met before we are required to fund the commitment. We may reduce or cancel consumer commitments, including home equity lines and credit card lines, in accordance with the contracts and applicable law. For unconditionally cancelable commitments at our discretion, we do not recognize an ACL.

We may, as a representative for other lenders, advance funds or provide for the issuance of letters of credit under syndicated loan or letter of credit agreements. Any advances are generally repaid in less than a week and would normally require default of both the customer and another lender to expose us to loss. The unfunded amount of these temporary advance arrangements totaled approximately $82.6 billion at June 30, 2021.

We issue commercial letters of credit to assist customers in purchasing goods or services, typically for international trade. At June 30, 2021, and December 31, 2020, we had $1.4 billion and $1.3 billion, respectively, of outstanding issued commercial letters of credit. We also originate multipurpose lending commitments under which borrowers have the option to draw on the facility for different purposes in one of several forms, including a standby letter of credit. See Note 11 (Guarantees and Other Commitments) for additional information on standby letters of credit.

When we enter into commitments, we are exposed to credit risk. The maximum credit risk for these commitments will generally be lower than the contractual amount because a significant portion of these commitments are not funded. We manage the potential risk in commitments to lend by limiting the total amount of commitments, both by individual customer and in total, by monitoring the size and maturity structure of these commitments and by applying the same credit standards for these commitments as for all of our credit activities.

For loans and commitments to lend, we generally require collateral or a guarantee. We may require various types of collateral, including commercial and consumer real estate, autos, other short-term liquid assets such as accounts receivable or inventory and long-lived assets, such as equipment and other business assets. Collateral requirements for each loan or commitment may vary based on the loan product and our assessment of a customer’s credit risk according to the specific credit underwriting, including credit terms and structure.

The contractual amount of our unfunded credit commitments, including unissued standby and commercial letters of credit, is summarized by portfolio segment and class of financing receivable in Table 4.4. The table excludes the issued standby and commercial letters of credit and temporary advance arrangements described above.

Table 4.4: Unfunded Credit Commitments

(in millions)			Jun 30, 2021						Dec 31, 2020
Commercial:
Commercial and industrial			$	394,370					378,167
Real estate mortgage			8,794						7,993
Real estate construction			16,260						15,650
Total commercial			419,424						401,810
Consumer:
Residential mortgage – first lien			37,920						31,530
Residential mortgage – junior lien			30,170						32,820
Credit card			124,985						121,096
Other consumer			54,724						49,179
Total consumer			247,799						234,625
Total unfunded credit commitments			$	667,223					636,435

			Wells Fargo & Company			81

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Note 4: Loans and Related Allowance for Credit Losses (continued)

Allowance for Credit Losses

Table 4.5 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 decreased $3.3 billion from December 31, 2020, due to improvements in current and forecasted economic conditions.

Table 4.5: Allowance for Credit Losses for Loans

			Quarter ended June 30,												Six months ended June 30,
($ in millions)			2021						2020						2021						2020
Balance, beginning of period			$	18,043					12,022						19,713						10,456
Cumulative effect from change in accounting policies (1)			—						—						—						(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)			—						—						—						8
Balance, beginning of period, adjusted			18,043						12,022						19,713						9,127
Provision for credit losses			(1,239)						9,565						(2,356)						13,398
Interest income on certain impaired loans (3)			(36)						(38)						(77)						(76)
Loan charge-offs:
Commercial:
Commercial and industrial			(149)						(556)						(308)						(933)
Real estate mortgage			(11)						(72)						(63)						(75)
Real estate construction			—						—						—						—
Lease financing			(10)						(19)						(31)						(32)
Total commercial			(170)						(647)						(402)						(1,040)
Consumer:
Residential mortgage – first lien			(6)						(20)						(23)						(43)
Residential mortgage – junior lien			(12)						(18)						(31)						(48)
Credit card			(357)						(415)						(692)						(886)
Auto			(128)						(158)						(257)						(314)
Other consumer			(79)						(113)						(226)						(278)
Total consumer			(582)						(724)						(1,229)						(1,569)
Total loan charge-offs			(752)						(1,371)						(1,631)						(2,609)
Loan recoveries:
Commercial:
Commercial and industrial			68						35						139						79
Real estate mortgage			16						5						22						10
Real estate construction			1						1						1						17
Lease financing			5						4						11						8
Total commercial			90						45						173						114
Consumer:
Residential mortgage – first lien			25						18						66						44
Residential mortgage – junior lien			43						30						81						65
Credit card			101						88						200						182
Auto			83						52						160						126
Other consumer			29						25						57						56
Total consumer			281						213						564						473
Total loan recoveries			371						258						737						587
Net loan charge-offs			(381)						(1,113)						(894)						(2,022)
Other			4						—						5						9
Balance, end of period			$	16,391					20,436						16,391						20,436
Components:
Allowance for loan losses			$	15,148					18,926						15,148						18,926
Allowance for unfunded credit commitments			1,243						1,510						1,243						1,510
Allowance for credit losses			$	16,391					20,436						16,391						20,436
Net loan charge-offs (annualized) as a percentage of average total loans			0.18		%				0.46						0.21						0.42
Allowance for loan losses as a percentage of total loans			1.78						2.02						1.78						2.02
Allowance for credit losses for loans as a percentage of total loans			1.92						2.19						1.92						2.19

(1)Represents the overall decrease in our ACL for loans as a result of our adoption of CECL on January 1, 2020.

(2)Represents the allowance estimated for purchased credit-impaired (PCI) loans that automatically became PCD loans with the adoption of CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.

(3)Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.

82			Wells Fargo & Company

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Table 4.6 summarizes the activity in the ACL by our commercial and consumer portfolio segments. 

Table 4.6: Allowance for Credit Losses for Loans Activity by Portfolio Segment

			2021																		2020
(in millions)			Commercial						Consumer						Total						Commercial						Consumer						Total
Quarter ended June 30,
Balance, beginning of period			$	10,682					7,361						18,043						5,279						6,743						12,022
Provision for credit losses			(1,021)						(218)						(1,239)						6,999						2,566						9,565
Interest income on certain loans (3)			(15)						(21)						(36)						(12)						(26)						(38)
Loan charge-offs			(170)						(582)						(752)						(647)						(724)						(1,371)
Loan recoveries			90						281						371						45						213						258
Net loan charge-offs			(80)						(301)						(381)						(602)						(511)						(1,113)
Other			4						—						4						5						(5)						—
Balance, end of period			$	9,570					6,821						16,391						11,669						8,767						20,436
Six months ended June 30,
Balance, beginning of period			$	11,516					8,197						19,713						6,245						4,211						10,456
Cumulative effect from change in accounting policies (1)			—						—						—						(2,861)						1,524						(1,337)
Allowance for purchased credit-deteriorated (PCD) loans (2)			—						—						—						—						8						8
Balance, beginning of period, adjusted			11,516						8,197						19,713						3,384						5,743						9,127
Provision for credit losses			(1,688)						(668)						(2,356)						9,239						4,159						13,398
Interest income on certain loans (3)			(34)						(43)						(77)						(26)						(50)						(76)
Loan charge-offs			(402)						(1,229)						(1,631)						(1,040)						(1,569)						(2,609)
Loan recoveries			173						564						737						114						473						587
Net loan charge-offs			(229)						(665)						(894)						(926)						(1,096)						(2,022)
Other			5						—						5						(2)						11						9
Balance, end of period			$	9,570					6,821						16,391						11,669						8,767						20,436

(1)Represents the overall decrease in our ACL for loans as a result of our adoption of CECL on January 1, 2020.

(2)Represents the allowance estimated for PCI loans that automatically became PCD loans with the adoption of CECL. For additional information, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.

(3)Loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize changes in allowance attributable to the passage of time as interest income.

			Wells Fargo & Company			83

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Note 4: Loans and Related Allowance for Credit Losses (continued)

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, with the exception of updated Fair Isaac Corporation (FICO) scores and updated loan-to-value (LTV)/combined LTV (CLTV). We obtain FICO scores at loan origination and the scores are generally updated at least quarterly, except in limited circumstances, including compliance with the Fair Credit Reporting Act (FCRA). Generally, the LTV and CLTV indicators are updated in the second month of each quarter, with updates no older than March 31, 2021.

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 4.7 provides the outstanding balances of our commercial loan portfolio by risk category. 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 in a troubled debt restructuring (TDR). At June 30, 2021, we had $442.6 billion and $33.8 billion of pass and criticized commercial loans, respectively.

Table 4.7: Commercial Loan Categories by Risk Categories and Vintage

			Term loans by origination year																																				Revolving loans						Revolving loans converted to term loans						Total
(in millions)			2021						2020						2019						2018						2017						Prior
June 30, 2021
Commercial and industrial
Pass			$	37,051					25,171						28,385						11,075						5,582						12,341						183,360						341						303,306
Criticized			729						1,317						1,325						1,594						826						1,078						7,443						—						14,312
Total commercial and industrial			37,780						26,488						29,710						12,669						6,408						13,419						190,803						341						317,618
Real estate mortgage
Pass			14,713						18,977						21,983						15,350						9,245						20,321						4,478						1						105,068
Criticized			1,664						2,450						3,444						2,679						1,286						3,665						422						—						15,610
Total real estate mortgage			16,377						21,427						25,427						18,029						10,531						23,986						4,900						1						120,678
Real estate construction
Pass			2,800						4,995						6,148						3,607						775						359						1,138						2						19,824
Criticized			354						501						746						418						442						120						1						—						2,582
Total real estate construction			3,154						5,496						6,894						4,025						1,217						479						1,139						2						22,406
Lease financing
Pass			2,244						3,545						3,180						1,752						1,107						2,555						—						—						14,383
Criticized			145						293						374						254						129						142						—						—						1,337
Total lease financing			2,389						3,838						3,554						2,006						1,236						2,697						—						—						15,720
Total commercial loans			$	59,700					57,249						65,585						36,729						19,392						40,581						196,842						344						476,422
			Term loans by origination year																																				Revolving loans						Revolving loans converted to term loans						Total
			2020						2019						2018						2017						2016						Prior
December 31, 2020
Commercial and industrial
Pass			$	56,915					34,040						15,936						7,274						4,048						4,738						177,107						997						301,055
Criticized			1,404						1,327						1,357						972						672						333						11,534						151						17,750
Total commercial and industrial			58,319						35,367						17,293						8,246						4,720						5,071						188,641						1,148						318,805
Real estate mortgage
Pass			22,444						26,114						18,679						11,113						11,582						14,663						5,152						6						109,753
Criticized			2,133						2,544						1,817						1,287						1,625						2,082						479						—						11,967
Total real estate mortgage			24,577						28,658						20,496						12,400						13,207						16,745						5,631						6						121,720
Real estate construction
Pass			5,242						6,574						4,771						1,736						477						235						1,212						3						20,250
Criticized			449						452						527						4						113						10						—						—						1,555
Total real estate construction			5,691						7,026						5,298						1,740						590						245						1,212						3						21,805
Lease financing
Pass			3,970						3,851						2,176						1,464						1,199						1,924						—						—						14,584
Criticized			308						433						372						197						108						85						—						—						1,503
Total lease financing			4,278						4,284						2,548						1,661						1,307						2,009						—						—						16,087
Total commercial loans			$	92,865					75,335						45,635						24,047						19,824						24,070						195,484						1,157						478,417

84			Wells Fargo & Company

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Table 4.8 provides past due information for commercial loans, which we monitor as part of our credit risk management practices; however, delinquency is not a primary credit quality indicator for commercial loans. Payment deferral activities

instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into past due status.

Table 4.8: Commercial Loan Categories by Delinquency Status

(in millions)			Commercial and industrial						Real estate mortgage						Real estate construction						Lease financing						Total
June 30, 2021
By delinquency status:
Current-29 days past due (DPD) and still accruing			$	315,279					118,719						22,329						15,350						471,677
30-89 DPD and still accruing			483						256						25						155						919
90+ DPD and still accruing			165						105						7						—						277
Nonaccrual loans			1,691						1,598						45						215						3,549
Total commercial loans			$	317,618					120,678						22,406						15,720						476,422
December 31, 2020
By delinquency status:
Current-29 DPD and still accruing			$	315,493					119,561						21,532						15,595						472,181
30-89 DPD and still accruing			575						347						224						233						1,379
90+ DPD and still accruing			39						38						1						—						78
Nonaccrual loans			2,698						1,774						48						259						4,779
Total commercial loans			$	318,805					121,720						21,805						16,087						478,417

CONSUMER CREDIT QUALITY INDICATORS  We have various classes of consumer loans that present unique credit risks. Loan delinquency, FICO credit scores and 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.

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.

Table 4.9 provides the outstanding balances of our consumer loan portfolio by delinquency status. Payment deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into past due status.

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 in a TDR. The revolving loans converted to term loans in the credit card loan category represent credit card loans with modified terms that require payment over a specific term.

			Wells Fargo & Company			85

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Note 4: Loans and Related Allowance for Credit Losses (continued)

Table 4.9: Consumer Loan Categories by Delinquency Status and Vintage

			Term loans by origination year																																				Revolving loans						Revolving loans converted to term loans
(in millions)			2021						2020						2019						2018						2017						Prior																		Total
June 30, 2021
Residential mortgage – first lien
By delinquency status:
Current-29 DPD			$	30,494					47,246						32,078						10,137						17,647						76,251						5,989						1,598						221,440
30-59 DPD			28						33						52						21						34						604						15						30						817
60-89 DPD			1						11						1						3						3						187						8						18						232
90-119 DPD			2						8						3						1						7						64						6						11						102
120-179 DPD			—						12						6						3						3						85						16						23						148
180+ DPD			—						204						12						10						21						809						100						245						1,401
Government insured/guaranteed loans (1)			3						193						364						566						635						18,470						—						—						20,231
Total residential mortgage – first lien			30,528						47,707						32,516						10,741						18,350						96,470						6,134						1,925						244,371
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD			13						22						34						35						28						909						12,913						4,680						18,634
30-59 DPD			—						—						1						—						—						15						28						40						84
60-89 DPD			—						—						—						—						—						7						16						29						52
90-119 DPD			—						—						—						—						—						3						11						22						36
120-179 DPD			—						—						—						—						—						6						37						49						92
180+ DPD			—						—						—						—						—						32						215						492						739
Total residential mortgage – junior lien			13						22						35						35						28						972						13,220						5,312						19,637
Credit cards
By delinquency status:
Current-29 DPD			—						—						—						—						—						—						34,201						226						34,427
30-59 DPD			—						—						—						—						—						—						135						7						142
60-89 DPD			—						—						—						—						—						—						90						6						96
90-119 DPD			—						—						—						—						—						—						80						7						87
120-179 DPD			—						—						—						—						—						—						182						2						184
180+ DPD			—						—						—						—						—						—						—						—						—
Total credit cards			—						—						—						—						—						—						34,688						248						34,936
Auto
By delinquency status:
Current-29 DPD			14,445						15,920						11,321						4,644						2,309						1,677						—						—						50,316
30-59 DPD			33						143						148						81						52						85						—						—						542
60-89 DPD			8						42						44						24						14						25						—						—						157
90-119 DPD			3						17						17						8						5						8						—						—						58
120-179 DPD			—						—						—						—						—						—						—						—						—
180+ DPD			—						—						—						—						—						—						—						—						—
Total auto			14,489						16,122						11,530						4,757						2,380						1,795						—						—						51,073
Other consumer
By delinquency status:
Current-29 DPD			982						990						994						335						155						173						22,011						150						25,790
30-59 DPD			1						2						3						2						1						2						8						3						22
60-89 DPD			—						2						2						1						1						1						5						1						13
90-119 DPD			—						1						2						1						—						—						4						1						9
120-179 DPD			—						—						—						—						—						—						8						2						10
180+ DPD			—						—						—						—						—						2						4						11						17
Total other consumer			983						995						1,001						339						157						178						22,040						168						25,861
Total consumer loans			$	46,013					64,846						45,082						15,872						20,915						99,415						76,082						7,653						375,878

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			Term loans by origination year																																				Revolving loans						Revolving loans converted to term loans
(in millions)			2020						2019						2018						2017						2016						Prior																		Total
December 31, 2020
Residential mortgage – first lien
By delinquency status:
Current-29 DPD			$	53,298					43,297						14,761						24,619						30,533						67,960						6,762						1,719						242,949
30-59 DPD			111						76						36						67						79						750						52						66						1,237
60-89 DPD			88						10						6						12						13						305						56						68						558
90-119 DPD			232						11						5						8						7						197						26						33						519
120-179 DPD			3						4						1						3						5						151						17						29						213
180+ DPD			3						1						4						11						15						758						21						145						958
Government insured/guaranteed loans (1)			215						639						904						1,076						2,367						25,039						—						—						30,240
Total residential mortgage – first lien			53,950						44,038						15,717						25,796						33,019						95,160						6,934						2,060						276,674
Residential mortgage – junior lien
By delinquency status:
Current-29 DPD			22						39						39						37						31						1,115						15,366						5,434						22,083
30-59 DPD			—						—						1						1						—						22						113						160						297
60-89 DPD			—						—						1						—						—						11						154						271						437
90-119 DPD			—						—						—						1						—						7						45						84						137
120-179 DPD			—						—						—						—						—						9						36						77						122
180+ DPD			—						—						—						—						1						25						29						155						210
Total residential mortgage – junior lien			22						39						41						39						32						1,189						15,743						6,181						23,286
Credit cards
By delinquency status:
Current-29 DPD			—						—						—						—						—						—						35,612						255						35,867
30-59 DPD			—						—						—						—						—						—						243						12						255
60-89 DPD			—						—						—						—						—						—						167						10						177
90-119 DPD			—						—						—						—						—						—						144						10						154
120-179 DPD			—						—						—						—						—						—						208						3						211
180+ DPD			—						—						—						—						—						—						—						—						—
Total credit cards			—						—						—						—						—						—						36,374						290						36,664
Auto
By delinquency status:
Current-29 DPD			19,625						14,561						6,307						3,459						2,603						697						—						—						47,252
30-59 DPD			120						183						114						80						107						46						—						—						650
60-89 DPD			32						60						36						25						35						16						—						—						204
90-119 DPD			13						26						14						9						12						6						—						—						80
120-179 DPD			—						1						—						—						—						—						—						—						1
180+ DPD			—						—						—						—						—						—						—						—						—
Total auto			19,790						14,831						6,471						3,573						2,757						765						—						—						48,187
Other consumer
By delinquency status:
Current-29 DPD			1,406						1,383						577						261						59						193						20,246						162						24,287
30-59 DPD			2						7						5						2						1						3						19						10						49
60-89 DPD			1						5						3						1						1						1						10						6						28
90-119 DPD			1						4						2						1						—						1						8						3						20
120-179 DPD			—						—						—						—						—						—						10						4						14
180+ DPD			—						—						—						—						—						2						3						6						11
Total other consumer			1,410						1,399						587						265						61						200						20,296						191						24,409
Total consumer loans			$	75,172					60,307						22,816						29,673						35,869						97,314						79,347						8,722						409,220

(1)Represents loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $6.1 billion and $11.1 billion at June 30, 2021, and December 31, 2020, respectively.

Of the $2.9 billion of consumer loans not government insured/guaranteed that are 90 days or more past due at June 30, 2021, $460 million was accruing, compared with

$2.7 billion past due and $612 million accruing at December 31, 2020.

			Wells Fargo & Company			87

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Note 4: Loans and Related Allowance for Credit Losses (continued)

Table 4.10 provides the outstanding balances of our consumer loan portfolio by FICO score. Substantially all of the scored consumer portfolio has an updated FICO score of 680 and above, reflecting a strong current borrower credit profile. FICO 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. Loans not requiring a FICO score totaled $15.9 billion and $13.2 billion at June 30, 2021, and December 31, 2020, respectively. Substantially all loans not requiring a FICO score are securities-based loans originated through retail brokerage.

Table 4.10: Consumer Loan Categories by FICO and Vintage

			Term loans by origination year																																				Revolving loans						Revolving loans converted to term loans
(in millions)			2021						2020						2019						2018						2017						Prior																		Total
June 30, 2021
By FICO:
Residential mortgage – first lien
800+			$	14,373					29,351						21,113						6,709						12,245						47,225						2,973						453						134,442
760-799			11,864						12,539						7,250						2,017						3,200						12,684						1,229						257						51,040
720-759			3,281						4,024						2,566						857						1,343						7,473						771						243						20,558
680-719			794						1,103						788						363						603						4,188						463						215						8,517
640-679			129						294						222						107						143						2,117						213						135						3,360
600-639			30						47						75						37						51						1,234						109						93						1,676
< 600			7						11						28						16						32						1,303						139						145						1,681
No FICO available			47						145						110						69						98						1,776						237						384						2,866
Government insured/guaranteed loans (1)			3						193						364						566						635						18,470						—						—						20,231
Total residential mortgage – first lien			30,528						47,707						32,516						10,741						18,350						96,470						6,134						1,925						244,371
Residential mortgage – junior lien
800+			—						—						—						—						—						236						6,715						1,612						8,563
760-799			—						—						—						—						—						142						2,588						906						3,636
720-759			—						—						—						—						—						169						1,721						891						2,781
680-719			—						—						—						—						—						143						1,022						719						1,884
640-679			—						—						—						—						—						82						396						405						883
600-639			—						—						—						—						—						52						189						232						473
< 600			—						—						—						—						—						53						195						267						515
No FICO available			13						22						35						35						28						95						394						280						902
Total residential mortgage – junior lien			13						22						35						35						28						972						13,220						5,312						19,637
Credit card
800+			—						—						—						—						—						—						3,987						1						3,988
760-799			—						—						—						—						—						—						5,561						8						5,569
720-759			—						—						—						—						—						—						7,825						30						7,855
680-719			—						—						—						—						—						—						8,437						57						8,494
640-679			—						—						—						—						—						—						5,122						56						5,178
600-639			—						—						—						—						—						—						1,929						39						1,968
< 600			—						—						—						—						—						—						1,819						56						1,875
No FICO available			—						—						—						—						—						—						8						1						9
Total credit card			—						—						—						—						—						—						34,688						248						34,936
Auto
800+			2,576						2,329						2,157						941						509						271						—						—						8,783
760-799			2,505						2,698						2,145						850						390						216						—						—						8,804
720-759			2,430						2,721						1,999						825						387						251						—						—						8,613
680-719			2,518						2,965						1,968						772						358						259						—						—						8,840
640-679			2,267						2,548						1,400						527						257						222						—						—						7,221
600-639			1,418						1,519						822						333						178						190						—						—						4,460
< 600			775						1,313						993						498						288						362						—						—						4,229
No FICO available			—						29						46						11						13						24						—						—						123
Total auto			14,489						16,122						11,530						4,757						2,380						1,795						—						—						51,073
Other consumer
800+			253						250						204						59						18						60						1,839						19						2,702
760-799			265						225						186						59						15						31						943						22						1,746
720-759			190						184						175						67						19						26						829						28						1,518
680-719			115						125						147						61						19						21						711						26						1,225
640-679			47						52						74						34						12						11						343						19						592
600-639			9						14						24						13						5						6						122						11						204
< 600			3						13						27						16						6						7						121						14						207
No FICO available			101						132						164						30						63						16						1,197						29						1,732
FICO not required			—						—						—						—						—						—						15,935						—						15,935
Total other consumer			983						995						1,001						339						157						178						22,040						168						25,861
Total consumer loans			$	46,013					64,846						45,082						15,872						20,915						99,415						76,082						7,653						375,878

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88			Wells Fargo & Company

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			Term loans by origination year																																				Revolving loans						Revolving loans converted to term loans
(in millions)			2020						2019						2018						2017						2016						Prior																		Total
December 31, 2020
By FICO:
Residential mortgage – first lien
800+			$	29,365					28,652						9,911						17,416						22,215						40,440						3,391						493						151,883
760-799			17,154						9,866						2,908						4,380						4,955						10,843						1,361						274						51,741
720-759			5,274						3,290						1,189						1,829						2,106						7,001						879						265						21,833
680-719			1,361						1,084						490						678						831						4,403						520						221						9,588
640-679			376						287						148						192						226						2,385						241						154						4,009
600-639			55						56						44						56						92						1,429						127						106						1,965
< 600			14						29						36						44						66						1,789						162						175						2,315
No FICO available			136						135						87						125						161						1,831						253						372						3,100
Government insured/guaranteed loans (1)			215						639						904						1,076						2,367						25,039						—						—						30,240
Total residential mortgage – first lien			53,950						44,038						15,717						25,796						33,019						95,160						6,934						2,060						276,674
Residential mortgage – junior lien
800+			—						—						—						—						—						293						7,973						1,819						10,085
760-799			—						—						—						—						—						177						3,005						1,032						4,214
720-759			—						—						—						—						—						207						2,093						1,034						3,334
680-719			—						—						—						—						—						183						1,233						854						2,270
640-679			—						—						—						—						—						103						503						493						1,099
600-639			—						—						—						—						—						67						241						299						607
< 600			—						—						—						—						—						76						254						374						704
No FICO available			22						39						41						39						32						83						441						276						973
Total residential mortgage – junior lien			22						39						41						39						32						1,189						15,743						6,181						23,286
Credit card
800+			—						—						—						—						—						—						3,860						1						3,861
760-799			—						—						—						—						—						—						5,438						7						5,445
720-759			—						—						—						—						—						—						7,897						29						7,926
680-719			—						—						—						—						—						—						8,854						60						8,914
640-679			—						—						—						—						—						—						5,657						64						5,721
600-639			—						—						—						—						—						—						2,242						46						2,288
< 600			—						—						—						—						—						—						2,416						82						2,498
No FICO available			—						—						—						—						—						—						10						1						11
Total credit card			—						—						—						—						—						—						36,374						290						36,664
Auto
800+			2,875						2,606						1,211						731						452						104						—						—						7,979
760-799			3,036						2,662						1,122						579						349						81						—						—						7,829
720-759			3,162						2,514						1,095						576						395						98						—						—						7,840
680-719			3,534						2,542						1,066						545						400						105						—						—						8,192
640-679			3,381						1,948						763						395						334						94						—						—						6,915
600-639			2,208						1,165						479						274						276						87						—						—						4,489
< 600			1,581						1,357						730						463						533						186						—						—						4,850
No FICO available			13						37						5						10						18						10						—						—						93
Total auto			19,790						14,831						6,471						3,573						2,757						765						—						—						48,187
Other consumer
800+			353						287						94						35						10						71						2,249						21						3,120
760-799			342						279						93						29						10						34						1,110						16						1,913
720-759			262						258						107						35						11						30						915						26						1,644
680-719			156						213						99						36						11						24						798						31						1,368
640-679			71						112						59						21						7						10						415						23						718
600-639			18						36						22						9						4						8						151						13						261
< 600			13						41						30						12						5						7						161						18						287
No FICO available			195						173						83						88						3						16						1,248						43						1,849
FICO not required			—						—						—						—						—						—						13,249						—						13,249
Total other consumer			1,410						1,399						587						265						61						200						20,296						191						24,409
Total consumer loans			$	75,172					60,307						22,816						29,673						35,869						97,314						79,347						8,722						409,220

(1)Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

LTV refers to the ratio comparing the loan’s unpaid principal balance to the property’s collateral value. CLTV refers to the combination of first lien mortgage and junior lien mortgage (including unused line amounts for credit line products) ratios. LTVs and CLTVs are updated quarterly using a cascade approach which first uses values provided by automated valuation models (AVMs) for the property. If an AVM is not available, then the

value is estimated using the original appraised value adjusted by the change in Home Price Index (HPI) for the property location. If an HPI is not available, the original appraised value is used. The HPI value is normally the only method considered for high value properties, generally with an original value of $1 million or more, as the AVM values have proven less accurate for these properties.

			Wells Fargo & Company			89

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Note 4: Loans and Related Allowance for Credit Losses (continued)

Table 4.11 shows the most updated LTV and CLTV distribution of the residential mortgage – first lien and residential mortgage – junior lien loan portfolios. We consider the trends in residential real estate markets as we monitor credit risk and establish our ACL. In the event of a default, any loss should be

limited to the portion of the loan amount in excess of the net realizable value of the underlying real estate collateral value. Certain loans do not have an LTV or CLTV due to industry data availability and portfolios acquired from or serviced by other institutions.

Table 4.11: Consumer Loan Categories by LTV/CLTV and Vintage

			Term loans by origination year																																				Revolving loans						Revolving loans converted to term loans
(in millions)			2021						2020						2019						2018						2017						Prior																		Total
June 30, 2021
Residential mortgage – first lien
By LTV:
0-60%			$	9,789					18,204						14,733						5,341						11,884						66,680						4,604						1,567						132,802
60.01-80%			20,654						27,433						15,773						4,339						5,369						10,096						1,071						256						84,991
80.01-100%			40						1,720						1,498						416						382						801						304						68						5,229
100.01-120% (1)			—						35						52						19						16						101						72						17						312
> 120% (1)			—						21						17						6						7						50						30						6						137
No LTV available			42						101						79						54						57						272						53						11						669
Government insured/guaranteed loans (2)			3						193						364						566						635						18,470						—						—						20,231
Total residential mortgage – first lien			30,528						47,707						32,516						10,741						18,350						96,470						6,134						1,925						244,371
Residential mortgage – junior lien
By CLTV:
0-60%			—						—						—						—						—						496						8,124						3,558						12,178
60.01-80%			—						—						—						—						—						254						3,718						1,178						5,150
80.01-100%			—						—						—						—						—						123						1,051						424						1,598
100.01-120% (2)			—						—						—						—						—						31						225						92						348
> 120% (2)			—						—						—						—						—						8						78						28						114
No CLTV available			13						22						35						35						28						60						24						32						249
Total residential mortgage – junior lien			13						22						35						35						28						972						13,220						5,312						19,637
Total			$	30,541					47,729						32,551						10,776						18,378						97,442						19,354						7,237						264,008
			Term loans by origination year																																				Revolving loans						Revolving loans converted to term loans
			2020						2019						2018						2017						2016						Prior																		Total
December 31, 2020
Residential mortgage – first lien
By LTV:
0-60%			$	16,582					15,449						6,065						13,190						21,097						59,291						4,971						1,587						138,232
60.01-80%			34,639						24,736						7,724						10,745						8,970						9,333						1,323						326						97,796
80.01-100%			2,332						2,975						900						654						441						1,003						425						100						8,830
100.01-120% (1)			41						106						45						40						41						168						117						26						584
> 120% (1)			31						41						16						19						16						78						44						8						253
No LTV available			110						92						63						72						87						248						54						13						739
Government insured/guaranteed loans (2)			215						639						904						1,076						2,367						25,039						—						—						30,240
Total residential mortgage – first lien			53,950						44,038						15,717						25,796						33,019						95,160						6,934						2,060						276,674
Residential mortgage – junior lien
By CLTV:
0-60%			—						—						—						—						—						548						8,626						3,742						12,916
60.01-80%			—						—						—						—						—						335						5,081						1,554						6,970
80.01-100%			—						—						—						—						—						187						1,507						641						2,335
100.01-120% (2)			—						—						—						—						—						59						376						156						591
> 120% (2)			—						—						—						—						—						15						128						50						193
No CLTV available			22						39						41						39						32						45						25						38						281
Total residential mortgage – junior lien			22						39						41						39						32						1,189						15,743						6,181						23,286
Total			$	53,972					44,077						15,758						25,835						33,051						96,349						22,677						8,241						299,960

(1)Reflects total loan balances with LTV/CLTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV/CLTV.

(2)Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

90			Wells Fargo & Company

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NONACCRUAL LOANS Table 4.12 provides loans on nonaccrual status. In connection with our adoption of CECL, nonaccrual loans may have an ACL or a negative allowance for credit losses from expected recoveries of amounts previously written off. Payment

deferral activities instituted in response to the COVID-19 pandemic could continue to delay the recognition of delinquencies for customers who otherwise would have moved into nonaccrual status.

Table 4.12: 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, 2021						Dec 31, 2020						Jun 30, 2021						Dec 31, 2020						2021						2020
Commercial:
Commercial and industrial			$	1,691					2,698						464						382						45						30
Real estate mortgage			1,598						1,774						201						93						33						17
Real estate construction			45						48						13						15						1						5
Lease financing			215						259						40						16						—						—
Total commercial			3,549						4,779						718						506						79						52
Consumer:
Residential mortgage- first lien			2,852						2,957						1,949						1,908						56						81
Residential mortgage- junior lien			713						754						463						461						25						28
Auto			221						202						—						—						17						7
Other consumer			36						36						—						—						1						1
Total consumer			3,822						3,949						2,412						2,369						99						117
Total nonaccrual loans			$	7,371					8,728						3,130						2,875						178						169

(1)Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given solid collateral value.

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 $939 million and $2.1 billion at June 30, 2021, and December 31, 2020, respectively, which included $650 million and $1.7 billion, respectively, of loans that are government insured/guaranteed. Under the Consumer Financial Protection Bureau guidelines, we do not commence the foreclosure process on 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. In connection with our actions to support customers during the COVID-19 pandemic, we have suspended certain mortgage foreclosure activities.

			Wells Fargo & Company			91

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Note 4: Loans and Related Allowance for Credit Losses (continued)

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING  Certain loans 90 days or more past due are still accruing, because they are (1) well-secured and in the process of collection or (2) residential mortgage or consumer loans exempt under regulatory rules from being classified as nonaccrual until later delinquency, usually 120 days past due.

Table 4.13 shows loans 90 days or more past due and still accruing by class for loans not government insured/guaranteed.

Table 4.13: Loans 90 Days or More Past Due and Still Accruing

($ in millions)			Jun 30, 2021						Dec 31, 2020
Total:			$	4,703					7,041
Less: FHA insured/VA guaranteed (1)			3,966						6,351
Total, not government insured/guaranteed			$	737					690
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial			$	165					39
Real estate mortgage			105						38
Real estate construction			7						1
Total commercial			277						78
Consumer:
Residential mortgage – first lien			73						135
Residential mortgage – junior lien			12						19
Credit card			271						365
Auto			43						65
Other consumer			61						28
Total consumer			460						612
Total, not government insured/guaranteed			$	737					690

(1)Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

TROUBLED DEBT RESTRUCTURINGS (TDRs)  When, for economic or legal reasons related to a borrower’s financial difficulties, we grant a concession for other than an insignificant period of time to a borrower that we would not otherwise consider, the related loan is classified as a TDR, the balance of which totaled $12.5 billion and $14.5 billion at June 30, 2021, and December 31, 2020, respectively. We do not consider loan resolutions such as foreclosure or short sale to be a TDR. In addition, COVID-related modifications are generally not classified as TDRs due to the relief under the CARES Act and the Interagency Statement. For additional information on the TDR relief, see Note 1 (Summary of Significant Accounting Policies) in our 2020 Form 10-K.

We may require some consumer borrowers experiencing financial difficulty to make trial payments generally for a period of three to four months, according to the terms of a planned permanent modification, to determine if they can perform according to those terms. These arrangements represent trial modifications, which we classify and account for as TDRs. While loans are in trial payment programs, their original terms are not considered modified and they continue to advance through delinquency status and accrue interest according to their original terms.

Commitments to lend additional funds on loans whose terms have been modified in a TDR amounted to $344 million and $489 million at June 30, 2021, and December 31, 2020, respectively.

Table 4.14 summarizes our TDR modifications for the periods presented by primary modification type and includes the financial effects of these modifications. For those loans that modify more than once, the table reflects each modification that occurred during the period. Loans that both modify and 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.

92			Wells Fargo & Company

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Table 4.14: 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, 2021
Commercial:
Commercial and industrial			$	—					1						330						331						14						1.22		%				$	1
Real estate mortgage			41						5						86						132						—						1.15						5
Real estate construction			—						—						2						2						—						—						—
Lease financing			—						—						1						1						—						—						—
Total commercial			41						6						419						466						14						1.17						6
Consumer:
Residential mortgage – first lien			—						8						353						361						1						1.26						8
Residential mortgage – junior lien			—						2						9						11						—						2.51						2
Credit card			—						24						—						24						—						19.02						24
Auto			1						1						72						74						30						3.93						1
Other consumer			—						4						—						4						—						12.02						4
Trial modifications (5)			—						—						2						2						—						—						—
Total consumer			1						39						436						476						31						13.24						39
Total			$	42					45						855						942						45						11.68		%				$	45
Quarter ended June 30, 2020
Commercial:
Commercial and industrial			$	—					17						948						965						38						0.79		%				$	17
Real estate mortgage			—						5						98						103						—						1.75						5
Real estate construction			—						—						—						—						—						—						—
Lease financing			—						—						1						1						—						—						—
Total commercial			—						22						1,047						1,069						38						1.00						22
Consumer:
Residential mortgage – first lien			—						14						288						302						1						1.84						14
Residential mortgage – junior lien			—						3						24						27						—						2.39						3
Credit card			—						62						—						62						—						12.79						62
Auto			1						2						44						47						28						4.42						2
Other consumer			—						3						6						9						—						5.90						3
Trial modifications (5)			—						—						(13)						(13)						—						—						—
Total consumer			1						84						349						434						29						10.09						84
Total			$	1					106						1,396						1,503						67						8.17		%				$	106

(continued on following page)

			Wells Fargo & Company			93

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Note 4: Loans and Related Allowance for Credit Losses (continued)

(continued from previous page)

			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)
Six months ended June 30, 2021
Commercial:
Commercial and industrial			$	—					2						560						562						20						1.10		%				$	2
Real estate mortgage			41						9						186						236						—						1.04						9
Real estate construction			—						—						3						3						—						—						—
Lease financing			—						—						4						4						—						—						—
Total commercial			41						11						753						805						20						1.05						11
Consumer:
Residential mortgage – first lien			—						15						885						900						1						1.53						15
Residential mortgage – junior lien			—						7						22						29						1						2.44						7
Credit card			—						56						—						56						—						18.93						56
Auto			1						2						86						89						37						3.90						2
Other consumer			—						11						1						12						—						12.14						11
Trial modifications (5)			—						—						2						2						—						—						—
Total consumer			1						91						996						1,088						39						13.67						91
Total			$	42					102						1,749						1,893						59						12.31		%				$	102
Six months ended June 30, 2020
Commercial:
Commercial and industrial			$	18					32						1,262						1,312						82						0.73		%				$	32
Real estate mortgage			—						18						250						268						—						1.17						18
Real estate construction			—						—						6						6						—						2.49						—
Lease financing			—						—						1						1						—						—						—
Total commercial			18						50						1,519						1,587						82						0.90						50
Consumer:
Residential mortgage – first lien			—						31						461						492						1						1.73						31
Residential mortgage – junior lien			—						9						39						48						—						2.38						9
Credit card			—						157						—						157						—						12.51						157
Auto			3						4						54						61						34						4.56						4
Other consumer			—						15						8						23						—						7.71						15
Trial modifications (5)			—						—						(11)						(11)						—						—						—
Total consumer			3						216						551						770						35						10.04						216
Total			$	21					266						2,070						2,357						117						8.30		%				$	266

(1)Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first modification type based on the order presented in the table above. The reported amounts include loans remodified of $202 million and $221 million for the quarters ended June 30, 2021 and 2020, respectively, and $458 million and $484 million for the first half of 2021 and 2020, respectively.

(2)Other concessions include loans with payment (principal and/or interest) deferral, loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but exclude modifications that also forgive principal and/or reduce the contractual interest rate. The reported amounts include COVID-related payment deferrals that are new TDRs and exclude COVID-related payment deferrals previously reported as TDRs given limited current financial effects other than payment deferral.

(3)Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification.

(4)Recorded investment related to interest rate reduction reflects the effect of reduced interest rates on loans with an interest rate concession as one of their concession types, which includes loans reported as a principal primary modification type that also have an interest rate concession.

(5)Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the current period.

94			Wells Fargo & Company

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Table 4.15 summarizes permanent modification TDRs that have defaulted in the current period within 12 months of their permanent modification date. We are reporting these defaulted

TDRs based on a payment default definition of 90 days past due for the commercial portfolio segment and 60 days past due for the consumer portfolio segment.

Table 4.15: Defaulted TDRs

			Recorded investment of defaults
			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Commercial:
Commercial and industrial			$	84					37						125						222
Real estate mortgage			9						81						25						102
Real estate construction			—						—						—						—
Lease financing			—						—						—						—
Total commercial			93						118						150						324
Consumer:
Residential mortgage – first lien			2						8						5						18
Residential mortgage – junior lien			—						6						1						8
Credit card			6						19						16						45
Auto			12						1						23						3
Other consumer			—						2						1						3
Total consumer			20						36						46						77
Total			$	113					154						196						401

			Wells Fargo & Company			95

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Note 5:  Leasing Activity

The information below provides a summary of our leasing activities as a lessor and lessee. See Note 5

(Leasing Activity) in our 2020 Form 10-K for additional information about our leasing activities.

As a Lessor

Noninterest income on leases, which is presented in Table 5.1, is included in other noninterest income on our consolidated statement of income. Lease expense, included in other noninterest expense on our consolidated statement of income, was $226 million and $244 million for the quarters ended June 30, 2021 and 2020, respectively, and $452 million and $504 million for the first half of 2021 and 2020, respectively.

Table 5.1: Leasing Revenue

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Interest income on lease financing (1)			$	172					208						353						437
Other lease revenues:
Variable revenues on lease financing			25						26						51						54
Fixed revenues on operating leases			254						294						514						608
Variable revenues on operating leases			18						12						36						25
Other lease-related revenues (2)			16						3						27						1
Noninterest income on leases			313						335						628						688
Total leasing revenue			$	485					543						981						1,125

(1)    In second quarter 2021, we elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)    Predominantly includes net gains (losses) on disposition of assets leased under operating leases or lease financings.

As a Lessee

Substantially all of our leases are operating leases. Table 5.2 presents balances for our operating leases.

Table 5.2: Operating Lease Right of Use (ROU) Assets and Lease Liabilities

(in millions)			Jun 30, 2021			Dec 31, 2020
ROU assets			$	4,053		4,306
Lease liabilities			4,705			4,962

Table 5.3 provides the composition of our lease costs, which are predominantly included in net occupancy expense.

Table 5.3: Lease Costs

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Fixed lease expense – operating leases			$	265					292						530						583
Variable lease expense			69						80						147						146
Other (1)			(28)						(42)						(31)						(56)
Total lease costs			$	306					330						646						673

(1)Predominantly includes gains recognized from sale leaseback transactions and sublease rental income.

96			Wells Fargo & Company

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Note 6:  Equity Securities

Table 6.1 provides a summary of our equity securities by business purpose and accounting method.

Table 6.1: Equity Securities

(in millions)			Jun 30, 2021						Dec 31, 2020
Held for trading at fair value:
Marketable equity securities (1)			$	23,701					23,032
Not held for trading:
Fair value:
Marketable equity securities			1,624						1,564
Nonmarketable equity securities (2)			10,006						9,413
Total equity securities at fair value			11,630						10,977
Equity method:
Private equity			2,897						2,960
Tax-advantaged renewable energy (3)			3,853						3,481
New market tax credit and other			378						409
Total equity method			7,128						6,850
Other methods :
Low-income housing tax credit investments (3)			11,439						11,353
Federal Reserve Bank stock and other at cost (4)			3,585						3,588
Private equity (5)			7,064						4,208
Total equity securities not held for trading			40,846						36,976
Total equity securities			$	64,547					60,008

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

(2)    Substantially all of these securities are economically hedged with equity derivatives.

(3)    In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(4)    Substantially all relates to investments in Federal Reserve Bank stock at both June 30, 2021, and December 31, 2020.

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

Low-Income Housing Tax Credit Investments

We invest in affordable housing projects that qualify for the low-income housing tax credit (LIHTC), which are designed to promote private development of low-income housing. These investments typically generate a return through the realization of tax credits and other tax benefits. Table 6.2 summarizes the amortization of the investments and the related tax credits and other tax benefits that are recognized in income tax expense/(benefit) on our consolidated statement of income. We are

periodically required to provide additional financial support during the investment period. A liability is recognized for unfunded commitments that are both legally binding and probable of funding. These commitments are predominantly funded within three years of initial investment. Our liability for these unfunded commitments was $4.2 billion at both June 30, 2021, and December 31, 2020. This liability for unfunded commitments is included in long-term debt on our consolidated balance sheet.

Table 6.2: LIHTC Investments (1)

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Proportional amortization of investments			$	382					352						764						703
Tax credits and other tax benefits			(431)						(401)						(875)						(797)
Net expense/(benefit) recognized within income tax expense			$	(49)					(49)						(111)						(94)

(1)Excludes the impact of the estimated annual effective income tax rate applied to each period.

			Wells Fargo & Company			97

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Note 6: Equity Securities (continued)

Realized Gains and Losses Not Held for Trading

Table 6.3 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 on trading and securities.

Table 6.3: Net Gains (Losses) from Equity Securities Not Held for Trading

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Net gains (losses) from equity securities carried at fair value:
Marketable equity securities			$	74					394						$	134					(409)
Nonmarketable equity securities			893						1,424						535						320
Total equity securities carried at fair value			967						1,818						669						(89)
Net gains (losses) from nonmarketable equity securities not carried at fair value (1):
Impairment write-downs			(42)						(106)						(57)						(1,041)
Net unrealized gains related to measurement alternative observable transactions			2,037						24						2,262						246
Net realized gains on sale			496						199						551						199
Total nonmarketable equity securities not carried at fair value			2,491						117						2,756						(596)
Net losses from economic hedge derivatives (2)			(762)						(1,402)						(337)						(183)
Total net gains (losses) from equity securities not held for trading			$	2,696					533						$	3,088					(868)

(1)Includes impairment write-downs and net realized gains on sale related to private equity and venture capital investments in consolidated portfolio companies, which are not reported in equity securities on our consolidated balance sheet.

(2)Includes net gains (losses) on derivatives not designated as hedging instruments.

Measurement Alternative

Table 6.4 provides additional information about the impairment write-downs and observable price adjustments related to

nonmarketable equity securities accounted for under the measurement alternative. Gains and losses related to these adjustments are also included in Table 6.3.

Table 6.4: Net Gains (Losses) from Measurement Alternative Equity Securities

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Net gains (losses) recognized in earnings during the period:
Gross unrealized gains due to observable price changes			$	2,037					24						$	2,262					246
Impairment write-downs			(38)						(58)						(50)						(412)
Realized net gains from sale			195						11						195						13
Total net gains recognized during the period			$	2,194					$	(23)					$	2,407					(153)

Table 6.5 presents cumulative carrying value adjustments to nonmarketable equity securities accounted for under the measurement alternative that were still held at the end of each reporting period presented.

Table 6.5: Measurement Alternative Cumulative Gains (Losses)

(in millions)			Jun 30, 2021						Dec 31, 2020
Cumulative gains (losses):
Gross unrealized gains due to observable price changes			$	4,577					2,356
Gross unrealized losses due to observable price changes			(25)						(25)
Impairment write-downs			(1,008)						(969)

98			Wells Fargo & Company

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Note 7: Other Assets

Table 7.1 presents the components of other assets.

Table 7.1: Other Assets

(in millions)			Jun 30, 2021						Dec 31, 2020
Corporate/bank-owned life insurance			$	20,488					20,380
Accounts receivable			24,372						38,116
Interest receivable:
AFS and HTM debt securities			1,366						1,368
Loans			2,224						2,838
Trading and other			482						415
Customer relationship and other amortized intangibles			287						328
Foreclosed assets:
Residential real estate			49						73
Other			80						86
Operating lease assets (lessor)			6,773						7,391
Operating lease ROU assets (lessee)			4,053						4,306
Due from customers on acceptances			144						268
Other			12,135						11,768
Total other assets			$	72,453					87,337

			Wells Fargo & Company			99

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Note 8: 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 securitizations pursuant to Government National Mortgage Association (GNMA) guidelines which are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). Mortgage loans eligible for securitization with the GSEs or GNMA are considered conforming loans. The GSEs or GNMA design the structure of these securitizations, sponsor the involved VIEs, and have power over the activities most significant to the VIE.

We account for loans transferred in conforming mortgage loan securitization transactions as sales and do not consolidate the VIEs as we are not the primary beneficiary. In exchange for the transfer of loans, we typically receive securities issued by the VIEs which we sell to third parties for cash or hold for investment purposes as HTM or AFS securities. We also retain servicing rights on the transferred loans. As a servicer, we retain the option

to repurchase loans from GNMA loan securitization pools, which becomes exercisable when three scheduled loan payments remain unpaid by the borrower. We repurchased loans of $1.0 billion and $2.9 billion, during the second quarter and first half of 2021, respectively, and $3.6 billion and $5.1 billion during the second quarter and first half of 2020, respectively, which predominantly represented repurchases of government insured loans. We recorded assets and related liabilities of $128 million and $176 million at June 30, 2021, and December 31, 2020, respectively, where we did not exercise our option to repurchase eligible loans.

Upon transfers of loans, we also provide indemnification for losses incurred due to material breaches of contractual representations and warranties, as well as other recourse arrangements. At June 30, 2021, and December 31, 2020, our liability associated with these provisions was $201 million and $221 million, respectively, and the maximum exposure to loss was $13.4 billion and $13.7 billion, respectively.

Off-balance sheet mortgage loans sold or securitized presented in Table 8.5 are predominantly loans securitized by the GSEs and GNMA. See Note 9 (Mortgage Banking Activities) for additional information about residential and commercial servicing rights, advances and servicing fees. Substantially all residential servicing activity is related to assets transferred to GSE and GNMA securitizations.

NONCONFORMING MORTGAGE LOAN SECURITIZATIONS In the normal course of business, we sell nonconforming residential and commercial mortgage loans in securitization transactions that we design and sponsor. Nonconforming mortgage loan securitizations do not involve a government credit guarantee, and accordingly, beneficial interest holders are subject to credit risk of the underlying assets held by the securitization VIE. We typically originate the transferred loans, account for the transfers as sales and do not consolidate the VIE. We also typically retain the 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 and the most significant decisions impacting the performance of the VIE are generally made by the special servicer or the controlling class security holder. For our residential nonconforming mortgage loan securitizations accounted for as sales, we either do not hold variable interests that we consider potentially significant or are not the primary servicer for a majority of the VIE assets.

WHOLE LOAN SALE TRANSACTIONS We 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 8.1 presents information about transfers of assets during the period for which we recorded the transfers as sales and have continuing involvement with the transferred assets. In connection with these transfers, we received proceeds and recorded servicing assets, securities, and loans. Substantially all transfers were related to residential mortgage securitizations with the GSEs or GNMA and resulted in no gain or loss because the loans were already measured at fair value on a recurring basis. Each of these interests are initially measured at fair value.

100			Wells Fargo & Company

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Servicing rights are classified as Level 3 measurements, and generally securities are classified as Level 2.

Table 8.1: Transfers with Continuing Involvement

			2021												2020
(in millions)			Residential mortgages						Commercial mortgages						Residential mortgages						Commercial mortgages
Quarter ended June 30,
Assets sold			$	45,903					5,173						43,602						2,505
Proceeds from transfer (1)			46,230						5,227						43,605						2,569
Net gains (losses) on sale			327						54						3						64
Continuing involvement (2):
Servicing rights recognized			$	487					24						443						48
Securities recognized (3)			6,171						39						590						12
Loans recognized			—						—						—						—
Six months ended June 30,
Asset balances sold			$	86,489					8,364						81,987						5,233
Proceeds from transfer (1)			86,921						8,509						82,025						5,366
Net gains (losses) on sale			432						145						38						133
Continuing involvement (2):
Servicing rights recognized			$	894					71						889						82
Securities recognized (3)			16,394						68						590						74
Loans recognized			926						—						—						—

(1)Represents cash proceeds and the fair value of non-cash beneficial interests recognized at securitization settlement. Prior periods have been revised to conform with the current period presentation.

(2)Represents assets or liabilities recognized at securitization settlement date related to our continuing involvement in the transferred assets.

(3)Represents debt securities obtained at securitization settlement held for investment purposes that are classified as available-for-sale or held-to-maturity, which predominantly relate to agency securities. Excludes trading debt securities held temporarily for market-marking purposes, which are sold to third parties at or shortly after securitization settlement, of $11.2 billion and $18.0 billion during the second quarter and first half of 2021, respectively, and $9.4 billion and $17.1 billion during the second quarter and first half of 2020, respectively.

In the normal course of business we purchase certain non-agency securities at initial securitization or subsequently in the secondary market. We also provide seller financing in the form of loans. We received cash flows of $3.0 billion and $3.1 billion during the second quarter and first half of 2021, respectively, and $44 million and $117 million during the second quarter and first half of 2020, respectively, related to principal and interest payments on these securities and loans.

Table 8.2 presents the key weighted-average assumptions we used to initially measure residential MSRs recognized during the periods presented.

Table 8.2: Residential Mortgage Servicing Rights

			2021						2020
Quarter ended June 30,
Prepayment speed (1)			13.4		%				15.0
Discount rate			6.1						7.0
Cost to service ($ per loan) (2)			$	91					97
Six months ended June 30,
Prepayment speed (1)			13.8		%				14.0
Discount rate			6.0						6.8
Cost to service ($ per loan) (2)			$	87					94

(1)The prepayment speed assumption for residential MSRs includes a blend of prepayment speeds and default rates. Prepayment speed assumptions are influenced by mortgage interest rate inputs as well as our estimation of drivers of borrower behavior.

(2)Includes costs to service and unreimbursed foreclosure costs, which can vary period to period due to changes in model assumptions and the mix of modified government-guaranteed loans sold to GNMA.

See Note 15 (Fair Values of Assets and Liabilities) and Note 9 (Mortgage Banking Activities) for additional information on key economic assumptions for residential MSRs.

SALE OF STUDENT LOAN PORTFOLIO In the second quarter and first half of 2021, we sold $3.9 billion and $9.5 billion of student loans, servicing-released, respectively. For the same periods, we received $4.0 billion and $9.8 billion in proceeds from the sales, respectively, and recognized $147 million and $355 million of gains, respectively, which are included in other noninterest income on our consolidated statement of income. In connection with the sales, we provided $1.6 billion and $3.8 billion of collateralized loan financing to a third-party sponsored VIE in the second quarter and first half of 2021, respectively. The loans are measured at amortized cost and are classified in loans on the consolidated balance sheet. The collateral supporting our loan includes the student loans we sold. We do not consolidate the VIE as we do not have power over the significant activities of the entity.

RESECURITIZATION ACTIVITIES We enter into resecuritization transactions as part of our trading activities to accommodate the investment and risk management activities of our customers. In our resecuritization transactions, we transfer trading debt securities to VIEs in exchange for new beneficial interests 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 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. Table 8.3 presents information about assets transferred to re-securitization VIEs and Table 8.4 presents information about our resecuritization VIEs.

			Wells Fargo & Company			101

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Note 8: Securitizations and Variable Interest Entities  (continued)

Table 8.3: Transfers to Resecuritization VIEs

(in millions)			2021						2020
Quarter ended June 30,
Assets sold			$	7,873					19,982
Securities recognized			(99)						153
Six months ended June 30,
Assets sold			$	25,302					29,454
Securities recognized			915						815

Table 8.4: Resecuritization VIEs

(in millions)			Jun 30, 2021			Dec 31, 2020
Total VIE assets			$	125,543		130,446
Carrying value of securities			1,137			1,461

Off-Balance Sheet Loans

Table 8.5 presents information about the principal balances of off-balance sheet loans that were sold or securitized, including residential mortgage loans sold to the GSEs, GNMA and other investors, for which we have some form of continuing involvement (including servicer). Delinquent loans include loans 90 days or more past due and loans in bankruptcy, regardless of delinquency status. In accordance with applicable servicing guidelines, delinquency status continues to advance for loans with COVID-related payment deferrals. For loans sold or securitized where servicing is our only form of continuing involvement, we 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 8.5: Off-Balance Sheet Loans Sold or Securitized

																											Net charge-offs (2)
			Total loans												Delinquent loans and foreclosed assets (1)												Six months ended June 30,
(in millions)			Jun 30, 2021						Dec 31, 2020						Jun 30, 2021						Dec 31, 2020						2021						2020
Commercial			$	116,704					114,134						2,363						2,217						122						83
Residential			738,698						818,886						20,869						29,962						12						59
Total off-balance sheet sold or securitized loans (3)			$	855,402					933,020						23,232						32,179						134						142

(1)Includes $203 million and $394 million of commercial foreclosed assets and $163 million and $204 million of residential foreclosed assets at June 30, 2021, and December 31, 2020, respectively.

(2)Net charge-offs exclude loans sold to FNMA, FHLMC and GNMA as we do not service or manage the underlying real estate upon foreclosure and, as such, do not have access to net charge-off information

(3) At June 30, 2021, and December 31, 2020, the table includes total loans of $784.3 billion and $864.8 billion, delinquent loans of $19.8 billion and $28.5 billion, and foreclosed assets of $124 million and $152 million, respectively, for FNMA, FHLMC and GNMA.

Transactions with Unconsolidated VIEs

MORTGAGE LOAN SECURITIZATIONS Table 8.6 includes nonconforming mortgage loan securitizations where we originate and transfer the loans to the unconsolidated securitization VIEs that we sponsor. For additional information about these VIEs, see the “Loan Sales and Securitization Activity” section within this Note. Nonconforming mortgage loan securitizations also include commercial mortgage loan securitizations sponsored by third parties where we did not originate or transfer the loans but serve as master servicer and invest in securities that could be potentially significant to the VIE.

Conforming loan securitization and resecuritization transactions involving the GSEs and GNMA are excluded from Table 8.6 because we are not the sponsor or we do not have power over the activities most significant to the VIEs. Additionally, due to the nature of the guarantees provided by the GSEs and the FHA and VA, our credit risk associated with these VIEs is limited. For additional information about conforming mortgage loan securitizations and resecuritizations, see the “Loan Sales and Securitization Activity” and "Resecuritization Activities" sections within this Note.

TAX CREDIT STRUCTURES  We co-sponsor and make investments in affordable housing and sustainable energy projects that are designed to generate a return primarily through the realization of federal tax credits. The projects are typically managed by project sponsors who have the power over the VIE’s assets. In some instances, our investments in these structures may require that we fund future capital commitments at the discretion of the project sponsors.

COMMERCIAL REAL ESTATE LOANS We transfer purchased industrial development bonds and GSE credit enhancements to VIEs in exchange for beneficial interests. We own all of the beneficial interests and may also service the underlying mortgages that serve as collateral to the bonds. Prior to first quarter 2021, we consolidated these VIEs as we controlled the key decisions. During first quarter 2021, we amended the structures such that we no longer control the key decisions of the VIEs. The GSEs have the power to direct the servicing and workout activities of the VIE in the event of a default. As a result, we deconsolidated the VIEs during first quarter 2021, and recognized the beneficial interests at fair value on our consolidated balance sheet.

OTHER VIE STRUCTURES  We engage in various forms of structured finance arrangements with other VIEs, including collateralized debt obligations, asset-backed finance structures and other securitizations collateralized by asset classes other than mortgages. Collateral may include rental properties, asset-backed securities, student loans, mortgage loans and auto loans. We may participate in structuring or marketing the arrangements, as well as provide financing, service one or more of the underlying assets, or enter into derivatives with the VIEs. We may also receive fees for those services. We are not the primary beneficiary of these structures because we do not have power to direct the most significant activities of the VIEs.

102			Wells Fargo & Company

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Table 8.6 provides a summary of our exposure to the unconsolidated VIEs described above, which includes investments in securities, loans, guarantees, liquidity agreements, commitments and certain derivatives. We exclude certain transactions with unconsolidated VIEs when our continuing involvement is temporary or administrative in nature or insignificant in size.

In Table 8.6, “Total VIE assets” represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. For VIEs that obtain exposure to assets synthetically through derivative instruments, the notional amount of the derivative is included in the asset balance. “Carrying value” is the amount in our consolidated balance sheet related to our involvement with the unconsolidated VIEs. “Maximum exposure to loss” is determined as the carrying value of our investment in the VIEs excluding the unconditional repurchase options that have not been exercised, plus the remaining undrawn liquidity and lending commitments, the notional amount of net written derivative contracts, and

generally the notional amount of, or stressed loss estimate for, other commitments and guarantees.

Debt, guarantees and other commitments include amounts related to loans sold that we may be required to repurchase, or otherwise indemnify or reimburse the investor or insurer for losses incurred, due to material breach of contractual representations and warranties as well as other retained recourse arrangements. The maximum exposure to loss for material breach of contractual representations and warranties represents a stressed case estimate we utilize for determining stressed case regulatory capital needs and is considered to be a remote scenario.

“Maximum exposure to loss” represents estimated loss that would be incurred under severe, hypothetical circumstances, for which we believe the possibility is extremely remote, such as where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. Accordingly, this disclosure is not an indication of expected loss.

Table 8.6: Unconsolidated VIEs

									Carrying value – asset (liability)
(in millions)			Total VIE assets						Loans						Debt securities (1)						Equity securities						All other assets (2)						Debt and other liabilities						Net assets
June 30, 2021
Nonconforming mortgage loan securitizations			$	134,023					—						2,401						—						663						—						3,064
Tax credit structures			41,058						1,875						—						11,448						—						(4,218)						9,105
Commercial real estate loans			5,366						5,357						—						—						8						—						5,365
Other			6,541						1,888						—						57						52						(1)						1,996
Total			$	186,988					9,120						2,401						11,505						723						(4,219)						19,530
									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									$	—					2,401						—						663						31						3,095
Tax credit structures									1,875						—						11,448						—						3,023						16,346
Commercial real estate loans									5,357						—						—						8						712						6,077
Other									1,888						—						57						52						230						2,227
Total									$	9,120					2,401						11,505						723						3,996						27,745
									Carrying value – asset (liability)
(in millions)			Total VIE assets						Loans						Debt securities (1)						Equity securities						All other assets (2						Debt and other liabilities						Net assets
December 31, 2020
Nonconforming mortgage loan securitizations			$	127,717					—						2,303						—						606						—						2,909
Tax credit structures (3)			41,125						1,760						—						11,362						—						(4,202)						8,920
Commercial real estate loans			—						—						—						—						—						—						—
Other			1,991						89						—						51						62						(1)						201
Total			$	170,833					1,849						2,303						11,413						668						(4,203)						12,030
									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									$	—					2,303						—						607						34						2,944
Tax credit structures (3)									1,760						—						11,362						—						3,108						16,230
Commercial real estate loans									—						—						—						—						—						—
Other									89						—						51						62						230						432
Total									$	1,849					2,303						11,413						669						3,372						19,606

(1)Includes $317 million and $310 million of securities classified as trading at June 30, 2021, and December 31, 2020, respectively.

(2)All other assets includes mortgage servicing rights, derivative assets, and other assets (predominantly servicing advances).

(3)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

			Wells Fargo & Company			103

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Note 8: Securitizations and Variable Interest Entities  (continued)

Consolidated VIEs

We consolidate VIEs where we are the primary beneficiary. We are the primary beneficiary of the following structure types:

COMMERCIAL AND INDUSTRIAL LOANS AND LEASES We securitize dealer floor plan loans and leases in a revolving master trust entity and hold the subordinated notes and residual equity interests. As servicer and residual interest holder, we control the key decisions of the trust and consolidate the entity. The total VIE assets held by the master trust represent a majority of the total VIE assets presented for this category in Table 8.7. In a separate transaction structure, we also provide the majority of debt and equity financing to an SPE that engages in lending and leasing to specific vendors and service the underlying collateral.

OTHER VIE STRUCTURES Other VIEs are primarily related to municipal tender option bond (MTOB) transactions and nonconforming mortgage loan securitizations that we sponsor. MTOBs are vehicles to finance the purchase of municipal bonds through the issuance of short-term debt to investors. Our involvement with MTOBs includes serving as the residual interest

holder, which provides control over the key decisions of the VIE, as well as the remarketing agent or liquidity provider related to the debt issued to investors. We also securitize nonconforming mortgage loans, in which our involvement includes servicer of the underlying assets and holder of subordinate or senior securities issued by the VIE.

Table 8.7 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. Carrying values of assets are presented using GAAP measurement methods, which may include fair value, credit impairment or other adjustments, and therefore in some instances will differ from “Total VIE assets.” For VIEs that obtain exposure synthetically through derivative instruments, the notional amount of the derivative is included in “Total VIE assets.”

On 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 8.7: Transactions with Consolidated VIEs

									Carrying value – asset (liability)
(in millions)			Total VIE assets						Loans						Debt securities (1)						All other assets (2)						Long-term debt						All other liabilities (3)
June 30, 2021
Commercial and industrial loans and leases			$	6,981					3,623						—						238						—						(183)
Commercial real estate loans (4)			—						—						—						—						—						—
Other			1,138						452						518						96						(178)						(404)
Total consolidated VIEs			$	8,119					4,075						518						334						(178)						(587)
December 31, 2020
Commercial and industrial loans and leases			$	6,987					5,005						—						223						—						(200)
Commercial real estate loans (4)			5,369						5,357						—						12						—						—
Other			1,627						507						967						75						(203)						(900)
Total consolidated VIEs			$	13,983					10,869						967						310						(203)						(1,100)

(1)Includes $117 million and $269 million of securities classified as trading at June 30, 2021, and December 31, 2020, respectively.

(2)All other assets includes cash and due from banks, Interest-earning deposits with banks, derivative assets, equity securities, and other assets.

(3)All other liabilities includes short-term borrowings, derivative liabilities, and accrued expenses and other liabilities.

(4)For structure description, see the "Transactions with Unconsolidated VIEs" section within this Note. These consolidated VIEs were deconsolidated in first quarter 2021.

Other Transactions

In addition to the transactions included in the previous tables, we have used wholly-owned trust preferred security VIEs to issue debt securities or preferred equity exclusively to third-party investors. As the sole assets of the VIEs are receivables from us, we do not consolidate the VIEs even though we own all of the voting equity shares of the VIEs, have fully guaranteed the obligations of the VIEs, and may have the right to redeem the third-party securities under certain circumstances. In our consolidated balance sheet we reported the debt securities issued to the VIEs as long-term junior subordinated debt with a carrying value of $381 million and $704 million at June 30, 2021, and December 31, 2020, respectively. In second quarter 2021, we liquidated certain of our trust preferred security VIEs. As part of these liquidations, the preferred securities issued by the trusts were canceled and junior subordinated debentures with a total carrying value of $332 million were distributed to the preferred security holders. See Note 16 (Preferred Stock) for additional information about trust preferred securities.

Certain money market funds are also excluded from the previous tables because they are exempt from the consolidation analysis. We voluntarily waived a portion of our management fees for these money market funds to maintain a minimum level of daily net investment income. The amount of fees waived was insignificant in the second quarter and first half of both 2021 and 2020.

104			Wells Fargo & Company

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Note 9:  Mortgage Banking Activities

Mortgage banking activities consist of residential and commercial mortgage originations, sales and servicing.

We apply the amortization method to commercial MSRs and apply the fair value method to residential MSRs. The amortized

cost of commercial MSRs was $1.3 billion and $1.4 billion with an estimated fair value of $1.5 billion and $1.4 billion at June 30, 2021, and June 30, 2020, respectively. Table 9.1 presents the changes in MSRs measured using the fair value method.

Table 9.1: Analysis of Changes in Fair Value MSRs

			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Fair value, beginning of period			$	7,536					8,126						6,125						11,517
Servicing from securitizations or asset transfers (1)			485						462						891						923
Sales and other (2)			(7)						(1)						(8)						(32)
Net additions			478						461						883						891
Changes in fair value:
Due to valuation inputs or assumptions:
Mortgage interest rates (3)			(529)						(600)						1,101						(3,622)
Servicing and foreclosure costs (4)			—						(349)						9						(422)
Discount rates			160						—						207						27
Prepayment estimates and other (5)			(440)						(182)						(535)						(371)
Net changes in valuation inputs or assumptions			(809)						(1,131)						782						(4,388)
Changes due to collection/realization of expected cash flows (6)			(488)						(637)						(1,073)						(1,201)
Total changes in fair value			(1,297)						(1,768)						(291)						(5,589)
Fair value, end of period			$	6,717					6,819						6,717						6,819

(1)Includes impacts associated with exercising cleanup calls on securitizations and our right to repurchase delinquent loans from GNMA loan securitization pools. MSRs may increase upon repurchase due to servicing liabilities associated with these delinquent GNMA loans.

(2)Includes sales and transfers of MSRs, which can result in an increase in MSRs if related to portfolios with servicing liabilities.

(3)Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates.

(4)Includes costs to service and unreimbursed foreclosure costs.

(5)Represents other changes in valuation model inputs or assumptions including prepayment speed estimation changes that are independent of mortgage interest rate changes.

(6)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

Table 9.2 provides key economic assumptions and sensitivity of the current fair value of residential MSRs to immediate adverse changes in those assumptions. Amounts for residential MSRs include purchased servicing rights as well as servicing

rights resulting from the transfer of loans. See Note 15 (Fair Values of Assets and Liabilities) for additional information on key economic assumptions for residential MSRs.

Table 9.2: Economic Assumptions and Sensitivity of Residential MSRs

($ in millions, except cost to service amounts)			Jun 30, 2021						Dec 31, 2020
Fair value of interests held			$	6,717					6,125
Expected weighted-average life (in years)			4.2						3.7
Key economic assumptions:
Prepayment speed assumption			17.2		%				19.9
Impact on fair value from 10% adverse change			$	417					434
Impact on fair value from 25% adverse change			967						1,002
Discount rate assumption			5.4		%				5.8
Impact on fair value from 100 basis point increase			$	274					229
Impact on fair value from 200 basis point increase			525						440
Cost to service assumption ($ per loan)			111						130
Impact on fair value from 10% adverse change			171						181
Impact on fair value from 25% adverse change			427						454

The sensitivities in the preceding table are hypothetical and caution should be exercised when relying on this data. Changes in value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in value may not be linear. Also, the effect of a variation in a particular assumption on the value of the other interests held is calculated independently without changing any other assumptions. In reality, changes in one factor may

result in changes in others, which might magnify or counteract the sensitivities.

			Wells Fargo & Company			105

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Note 9:  Mortgage Banking Activities  (continued)

We present the components of our managed servicing portfolio in Table 9.3 at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.

Table 9.3: Managed Servicing Portfolio

(in billions)			Jun 30, 2021						Dec 31, 2020
Residential mortgage servicing:
Serviced and subserviced for others			$	771					859
Owned loans serviced			284						323
Total residential servicing			1,055						1,182
Commercial mortgage servicing:
Serviced and subserviced for others			584						583
Owned loans serviced			123						123
Total commercial servicing			707						706
Total managed servicing portfolio			$	1,762					1,888
Total serviced for others, excluding subserviced for others			$	1,344					1,431
MSRs as a percentage of loans serviced for others			0.60		%				0.52
Weighted average note rate (mortgage loans serviced for others)			3.93						4.03

At both June 30, 2021, and December 31, 2020, we had servicer advances, net of an allowance for uncollectible amounts, of $3.4 billion. As the servicer of loans for others, we advance certain payments of principal, interest, taxes, insurance, and default-related expenses which are generally reimbursed within a short timeframe from cash flows from the trust, GSEs, insurer or borrower. The credit risk related to these advances is limited since the reimbursement is generally senior to cash payments to investors. We also advance payments of taxes and insurance for our owned loans which are collectible from the borrower. We

maintain an allowance for uncollectible amounts for advances on loans serviced for others that may not be reimbursed if the payments were not made in accordance with applicable servicing agreements or if the insurance or servicing agreements contain limitations on reimbursements. Servicing advances on owned loans are charged-off when deemed uncollectible.

Table 9.4 presents the components of mortgage banking noninterest income.

Table 9.4: Mortgage Banking Noninterest Income

						Quarter ended June 30,												Six months ended June 30,
(in millions)						2021						2020						2021						2020
Servicing fees:
Contractually specified servicing fees, late charges and ancillary fees						$	692					749						1,416						1,614
Unreimbursed direct servicing costs (1)						(90)						(105)						(214)						(212)
Servicing fees						602						644						1,202						1,402
Amortization (2)						(33)						(100)						(98)						(166)
Changes due to collection/realization of expected cash flows (3)			(A)			(488)						(637)						(1,073)						(1,201)
Net servicing fees						81						(93)						31						35
Changes in fair value of MSRs due to valuation inputs or assumptions (4)			(B)			(809)						(1,131)						782						(4,388)
Net derivative gains (losses) from economic hedges (5)						707						535						(933)						3,935
Market-related valuation changes to MSRs, net of hedge results						(102)						(596)						(151)						(453)
Total servicing income, net						(21)						(689)						(120)						(418)
Net gains on mortgage loan originations/sales (6)						1,357						1,006						2,782						1,114
Total mortgage banking noninterest income						$	1,336					317						2,662						696
Total changes in fair value of MSRs carried at fair value			(A)+(B)			$	(1,297)					(1,768)						(291)						(5,589)

(1)Includes costs associated with foreclosures, unreimbursed interest advances to investors, and other interest costs.

(2)Includes a $37 million reversal of impairment recorded in the second quarter and first half of 2021, on the commercial amortized MSRs. Also, includes $30 million impairment recorded in the second quarter and first half of 2020, on the commercial amortized MSRs.

(3)Represents the reduction in the MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

(4)Refer to the analysis of changes in fair value MSRs presented in Table 9.1 in this Note for more detail.

(5)See Note 14 (Derivatives) for additional discussion and detail on economic hedges.

(6)Includes net gains (losses) of $(420) million and $845 million in the second quarter and first half of 2021, respectively, and $(393) million and $(1.3) billion in the second quarter and first half of 2020, respectively, related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments.

106			Wells Fargo & Company

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Note 10:  Intangible Assets

Table 10.1 presents the gross carrying value of intangible assets and accumulated amortization.

 

Table 10.1: Intangible Assets

			June 30, 2021																		December 31, 2020
(in millions)			Gross carrying value						Accumulated amortization						Net carrying value						Gross carrying value						Accumulated amortization						Net carrying value
Amortized intangible assets (1):
MSRs (2)			$	4,690					(3,398)						1,292						4,612						(3,300)						1,312
Customer relationship and other intangibles			879						(592)						287						879						(551)						328
Total amortized intangible assets			$	5,569					(3,990)						1,579						5,491						(3,851)						1,640
Unamortized intangible assets:
MSRs (carried at fair value)			$	6,717																	6,125
Goodwill			26,194																		26,392
Trademark			14																		14

(1)Balances are excluded commencing in the period following full amortization.

(2)Includes a $5 million and $37 million valuation allowance recorded for amortized MSRs at June 30, 2021, and December 31, 2020, respectively. See Note 9 (Mortgage Banking Activities) for additional information on MSRs.

Table 10.2 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, 2021. Future amortization expense may vary from these projections.

Table 10.2: Amortization Expense for Intangible Assets

(in millions)			Amortized MSRs												Customer relationship and other intangibles						Total
Six months ended June 30, 2021 (actual)			$	98											41						139
Estimate for the remainder of 2021			$	127											40						167
Estimate for year ended December 31,
2022			232												68						300
2023			203												59						262
2024			177												48						225
2025			152												39						191
2026			117												32						149

In the first half of 2021, we announced agreements to sell Wells Fargo Asset Management and Corporate Trust Services and transferred the associated goodwill from the Wealth and Investment Management operating segment and the Commercial Banking operating segment, respectively, to

Corporate. Also in the first half of 2021, we recognized goodwill write-downs related to sales of the student loan portfolio and our Canadian equipment finance business. Table 10.3 shows the allocation of goodwill to our reportable operating segments.

Table 10.3: Goodwill

(in millions)			Consumer Banking and Lending												Commercial Banking						Corporate and Investment Banking						Wealth and Investment Management						Corporate						Consolidated Company
December 31, 2020			$	16,418											3,018						5,375						1,276						305						26,392
Divestitures			—												—						—						—						(201)						(201)
Foreign currency translation			—												3						—						—						—						3
Transfers of goodwill			—												(80)						—						(932)						1,012						—
June 30, 2021			$	16,418											2,941						5,375						344						1,116						26,194

			Wells Fargo & Company			107

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Note 11:  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. Guarantees are generally in the form of standby and direct pay letters of credit,

written options, recourse obligations, and other types of similar arrangements. Table 11.1 shows carrying value, maximum exposure to loss on our guarantees and the related non-investment grade amounts.

Table 11.1: Guarantees – Carrying Value and Maximum Exposure to Loss

									Maximum exposure to loss
(in millions)			Carrying value of obligation (asset)						Expires in one year or 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, 2021
Standby letters of credit			$	132					12,639						4,838						1,927						457						19,861						6,873
Direct pay letters of credit			10						1,927						2,544						368						43						4,882						1,140
Written options (1)			(548)						12,943						6,278						723						58						20,002						13,666
Loans and LHFS sold with recourse (2)			30						89						826						3,010						9,323						13,248						11,216
Exchange and clearing house guarantees			—						—						—						—						5,243						5,243						—
Other guarantees and indemnifications (3)			1						629						3						—						239						871						570
Total guarantees			$	(375)					28,227						14,489						6,028						15,363						64,107						33,465
December 31, 2020
Standby letters of credit			$	156					11,977						4,962						1,897						433						19,269						7,528
Direct pay letters of credit			18						2,256						2,746						531						39						5,572						1,102
Written options (1)			(538)						12,735						7,972						889						58						21,654						13,394
Loans and LHFS sold with recourse (2)			33						177						819						1,870						9,723						12,589						10,332
Exchange and clearing house guarantees			—						—						—						—						5,510						5,510						—
Other guarantees and indemnifications (3)			—						734						1						1						1,414						2,150						590
Total guarantees			$	(331)					27,879						16,500						5,188						17,177						66,744						32,946

(1)Written options, which are in the form of derivatives, are also included in the derivative disclosures in Note 14 (Derivatives). Carrying value net asset position is a result of certain deferred premium option trades.

(2)Represents recourse provided, all to the GSEs, on loans sold under various programs and arrangements.

(3)Includes indemnifications provided to certain third-party clearing agents. Estimated maximum exposure to loss was $210 million and $1.4 billion with related collateral of $2.1 billion and $1.2 billion as of June 30, 2021, and December 31, 2020, respectively.

“Maximum exposure to loss” and “Non-investment grade” are required disclosures under GAAP. Maximum exposure to loss represents the estimated loss that would be incurred under an assumed hypothetical circumstance, despite what we believe is a remote possibility, where the value of our interests and any associated collateral declines to zero. Maximum exposure to loss estimates in Table 11.1 do not reflect economic hedges or collateral we could use to offset or recover losses we may incur under our guarantee agreements. Accordingly, this required disclosure is not an indication of expected loss. We believe the carrying value is more representative of our exposure to loss than maximum exposure to loss. The carrying value represents the fair value of the guarantee, if any, and also includes an ACL for guarantees, if applicable.

Non-investment grade represents those guarantees on which we have a higher risk of performance under the terms of the guarantee. If the underlying assets under the guarantee are non-investment grade (that is, an external rating that is below investment grade or an internal credit default grade that is equivalent to a below investment grade external rating), we consider the risk of performance to be high. Internal credit default grades are determined based upon the same credit policies that we use to evaluate the risk of payment or performance when making loans and other extensions of credit. Credit quality indicators we usually consider in evaluating risk of payments or performance are described in Note 4 (Loans and Related Allowance for Credit Losses).

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. If we are unable to collect the amounts from the merchant, we incur a loss for the refund to the cardholder. We are secondarily obligated to make a refund for transactions involving sponsored merchant processing servicers. We generally have a low likelihood of loss in connection with our merchant processing services because most products and services are delivered when purchased and amounts are generally refunded when items are returned to the merchant. In addition, we may reduce our risk in connection with these transactions by withholding future payments and requiring cash or other collateral. For the first half of 2021, we processed card transaction volume of $790.2 billion as a merchant acquiring bank, and related losses, including those from our joint venture entity, were immaterial.

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GUARANTEES OF SUBSIDIARIES In the normal course of business, the Parent may provide counterparties with guarantees related to its subsidiaries’ obligations. These obligations are included in the Company’s consolidated balance sheet or are reflected as off-balance sheet commitments, and therefore, the Parent has not recognized a separate liability for these guarantees.

The Parent fully and unconditionally guarantees the payment of principal, interest, and any other amounts that may be due on securities that its 100% owned finance subsidiary, Wells Fargo Finance LLC, may issue. These securities are not guaranteed by any other subsidiary of the Parent. The guaranteed liabilities were $1.6 billion and $2.3 billion at June 30, 2021, and December 31, 2020, respectively. These guarantees rank on parity with all of the Parent’s other unsecured and unsubordinated indebtedness. The assets of the Parent consist primarily of equity in its subsidiaries, and the Parent is a separate and distinct legal entity from its subsidiaries. As a result, the Parent’s ability to address claims of holders of these debt securities against the Parent under the guarantee depends on the Parent’s receipt of dividends, loan payments and other funds from its subsidiaries. If any of the Parent’s subsidiaries becomes insolvent, the direct creditors of that subsidiary will have a prior claim on that subsidiary’s assets. The rights of the Parent and the rights of the Parent’s creditors will be subject to that prior claim unless the Parent is also a direct creditor of that subsidiary. For additional information regarding other restrictions on the Parent’s ability to receive dividends, loan payments and other funds from its subsidiaries, see Note 23 (Regulatory Capital Requirements and Other Restrictions).

OTHER COMMITMENTS To meet the financing needs of our customers, we may enter into commitments to purchase debt and equity securities to provide capital for their funding, liquidity or other future needs. As of both June 30, 2021, and December 31, 2020, we had commitments to purchase debt securities of $18 million and commitments to purchase equity securities of $3.2 billion.

As part of maintaining our memberships in certain clearing organizations, we are required to stand ready to provide liquidity to sustain market clearing activity in the event unforeseen events occur or are deemed likely to occur. Certain of these obligations are guarantees of other members’ performance and accordingly are included in Table 11.1 in Other guarantees and indemnifications.

Also, we have commitments to purchase loans and securities under resale agreements from certain counterparties, including central clearing organizations. The amount of our unfunded contractual commitments was $12.9 billion and $12.0 billion as of June 30, 2021, and December 31, 2020, respectively.

Given the nature of these commitments, they are excluded from Table 4.4 (Unfunded Credit Commitments) in Note 4 (Loans and Related Allowance for Credit Losses).

			Wells Fargo & Company			109

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Note 12:  Pledged Assets and Collateral

Pledged Assets

Table 12.1 provides the carrying amount of on-balance sheet pledged assets and the fair value of other pledged collateral. Other pledged collateral is collateral we have received from third parties, have the right to repledge and is not recognized on our consolidated balance sheet.

TRADING RELATED 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 the Federal Home Loan Bank (FHLB) 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 8 (Securitizations and Variable Interest Entities) for additional information on consolidated VIE assets.

Table 12.1: Pledged Assets

(in millions)			Jun 30, 2021						Dec 31, 2020
Related to trading activities:
Repledged third-party owned debt and equity securities			$	37,134					44,765
Trading debt securities and other			18,362						19,572
Equity securities			704						470
Total pledged assets related to trading activities			56,200						64,807
Related to non-trading activities:
Loans			308,551						344,220
Debt securities:
Available-for-sale			59,512						57,289
Held-to-maturity			11,552						17,290
Other financial assets			531						230
Total pledged assets related to non-trading activities			380,146						419,029
Related to VIEs:
Consolidated VIE assets			4,927						12,146
Loans eligible for repurchase from GNMA securitizations			130						179
Total pledged assets related to VIEs			5,057						12,325
Total pledged assets			$	441,403					496,161

Securities Financing Activities

We enter into resale and repurchase agreements and securities borrowing and lending agreements (collectively, “securities financing activities”) typically to finance trading positions (including securities and derivatives), acquire securities to cover short trading positions, accommodate customers’ financing needs, and settle other securities obligations. These activities are conducted through our broker-dealer subsidiaries and, to a lesser extent, through other bank entities. Our securities financing activities primarily involve high-quality, liquid securities such as U.S. Treasury securities and government agency securities and, to a lesser extent, less liquid securities, including equity securities, corporate bonds and asset-backed securities. We account for these transactions as collateralized financings in which we typically receive or pledge securities as collateral. We believe these financing transactions generally do not have material credit risk given the collateral provided and the related monitoring processes.

OFFSETTING OF SECURITIES FINANCING ACTIVITIES Table 12.2 presents resale and repurchase agreements subject to master repurchase agreements (MRA) and securities borrowing and lending agreements subject to master securities lending agreements (MSLA). Collateralized financings, and those with a single counterparty, are presented net on our consolidated balance sheet, provided certain criteria are met that permit balance sheet netting. Substantially all transactions subject to these agreements do not meet those criteria and thus are not eligible for balance sheet netting.

Collateral we pledged consists of non-cash instruments, such as securities or loans, and is not netted on the consolidated balance sheet against the related liability. Collateral we received includes securities or loans and is not recognized on our consolidated balance sheet. Collateral pledged or received may be increased or decreased over time to maintain certain contractual thresholds, as the assets underlying each arrangement fluctuate in value. Generally, these agreements require collateral to exceed the asset or liability recognized on

110			Wells Fargo & Company

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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 12.2, we also have balance sheet netting related to derivatives that is disclosed in Note 14 (Derivatives).

Table 12.2: Offsetting – Securities Financing Activities

(in millions)			Jun 30, 2021						Dec 31, 2020
Assets:
Resale and securities borrowing agreements
Gross amounts recognized			$	101,027					92,446
Gross amounts offset in consolidated balance sheet (1)			(13,845)						(11,513)
Net amounts in consolidated balance sheet (2)			87,182						80,933
Collateral not recognized in consolidated balance sheet (3)			(86,453)						(80,158)
Net amount (4)			$	729					775
Liabilities:
Repurchase and securities lending agreements
Gross amounts recognized			$	47,281					57,622
Gross amounts offset in consolidated balance sheet (1)			(13,844)						(11,513)
Net amounts in consolidated balance sheet (5)			33,437						46,109
Collateral pledged but not netted in consolidated balance sheet (6)			(33,177)						(45,819)
Net amount (4)			$	260					290

(1)Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset in the consolidated balance sheet.

(2)Includes $70.1 billion and $65.6 billion classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at June 30, 2021, and December 31, 2020, respectively. Also includes securities purchased under long-term resale agreements (generally one year or more) classified in loans, which totaled $17.1 billion and $15.3 billion, at June 30, 2021, and December 31, 2020, respectively.

(3)Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized asset due from each counterparty. At June 30, 2021, and December 31, 2020, we have received total collateral with a fair value of $118.9 billion and $108.5 billion, respectively, all of which we have the right to sell or repledge. These amounts include securities we have sold or repledged to others with a fair value of $34.5 billion and $36.1 billion at June 30, 2021, and December 31, 2020, respectively.

(4)Represents the amount of our exposure (assets) or obligation (liabilities) that is not collateralized and/or is not subject to an enforceable MRA or MSLA.

(5)Amount is classified in short-term borrowings on our consolidated balance sheet.

(6)Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized liability owed to each counterparty. At June 30, 2021, and December 31, 2020, we have pledged total collateral with a fair value of $48.5 billion and $59.2 billion, respectively, substantially all of which may be sold or repledged by the counterparty.

REPURCHASE AND SECURITIES LENDING AGREEMENTS Securities sold under repurchase agreements and securities lending arrangements are effectively short-term collateralized borrowings. In these transactions, we receive cash in exchange for transferring securities as collateral and recognize an obligation to reacquire the securities for cash at the transaction’s maturity. These types of transactions create risks, including (1) the counterparty may fail to return the securities at maturity, (2) the fair value of the securities transferred may decline below the amount of our obligation to reacquire the securities, and therefore create an obligation for us to pledge additional amounts, and (3) the counterparty may accelerate the maturity on demand, requiring us to reacquire the security prior to contractual maturity. We attempt to mitigate these risks in various ways. Our collateral primarily consists of highly liquid securities. In addition, we underwrite and monitor the financial strength of our counterparties, monitor the fair value of collateral pledged relative to contractually required repurchase amounts, and monitor that our collateral is properly returned through the clearing and settlement process in advance of our cash repayment. Table 12.3 provides the gross amounts recognized on the consolidated balance sheet (before the effects of offsetting) of our liabilities for repurchase and securities lending agreements disaggregated by underlying collateral type.

			Wells Fargo & Company			111

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Note 12:  Pledged Assets and Collateral (continued)

Table 12.3: Gross Obligations by Underlying Collateral Type

(in millions)						Jun 30, 2021						Dec 31, 2020
Repurchase agreements:
Securities of U.S. Treasury and federal agencies						$	19,730					22,922
Securities of U.S. States and political subdivisions						24						4
Federal agency mortgage-backed securities						8,029						15,353
Non-agency mortgage-backed securities						860						1,069
Corporate debt securities						10,047						9,944
Asset-backed securities						1,262						1,054
Equity securities						892						1,500
Other						783						336
Total repurchases						41,627						52,182
Securities lending arrangements:
Securities of U.S. Treasury and federal agencies						42						64
Federal agency mortgage-backed securities						31						23
Corporate debt securities						45						79
Equity securities (1)						5,422						5,189
Other						114						85
Total securities lending						5,654						5,440
Total repurchases and securities lending						$	47,281					57,622

(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 12.4 provides the contractual maturities of our gross obligations under repurchase and securities lending agreements.

Table 12.4: Contractual Maturities of Gross Obligations

(in millions)			Overnight/continuous						Up to 30 days						30-90 days						>90 days						Total gross obligation
June 30, 2021
Repurchase agreements			$	28,584					3,093						4,765						5,185						41,627
Securities lending arrangements			4,853						200						601						—						5,654
Total repurchases and securities lending (1)			$	33,437					3,293						5,366						5,185						47,281
December 31, 2020
Repurchase agreements			$	36,946					5,251						5,100						4,885						52,182
Securities lending arrangements			4,690						400						350						—						5,440
Total repurchases and securities lending (1)			$	41,636					5,651						5,450						4,885						57,622

(1)Securities lending is executed under agreements that allow either party to terminate the transaction without notice, while repurchase agreements have a term structure to them that technically matures at a point in time. The overnight/continuous repurchase agreements require election of both parties to roll the trade rather than the election to terminate the arrangement as in securities lending.

112			Wells Fargo & Company

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Note 13:  Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a number of judicial, regulatory, governmental, arbitration, and other proceedings or investigations concerning matters arising from the conduct of our business activities, and many of those proceedings and investigations expose Wells Fargo to potential financial loss. These proceedings and investigations include actions brought against Wells Fargo and/or our subsidiaries with respect to corporate-related matters and transactions in which Wells Fargo and/or our subsidiaries were involved. In addition, Wells Fargo and our subsidiaries may be requested to provide information or otherwise cooperate with government authorities in the conduct of investigations of other persons or industry groups.

Although there can be no assurance as to the ultimate outcome, Wells Fargo and/or our subsidiaries have generally denied, or believe we have a meritorious defense and will deny, liability in all significant legal actions pending against us, including the matters described below, and we intend to defend vigorously each case, other than matters we describe as having settled. We establish accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. For such accruals, we record the amount we consider to be the best estimate within a range of potential losses that are both probable and estimable; however, if we cannot determine a best estimate, then we record the low end of the range of those potential losses. The actual costs of resolving legal actions may be substantially higher or lower than the amounts accrued for those actions.

ATM ACCESS FEE LITIGATION In October 2011, plaintiffs filed a putative class action, Mackmin, et al. v. Visa, Inc. et al., against Wells Fargo & Company, Wells Fargo Bank, N.A., Visa, MasterCard, and several other banks in the United States District Court for the District of Columbia. Plaintiffs allege that the Visa and MasterCard requirement that if an ATM operator charges an access fee on Visa and MasterCard transactions, then that fee cannot be greater than the access fee charged for transactions on other networks, violates antitrust rules. Plaintiffs seek treble damages, restitution, injunctive relief, and attorneys’ fees where available under federal and state law. Two other antitrust cases that make similar allegations were filed in the same court, but these cases did not name Wells Fargo as a defendant. On February 13, 2013, the district court granted defendants’ motions to dismiss the three actions. Plaintiffs appealed the dismissals and, on August 4, 2015, the United States Court of Appeals for the District of Columbia Circuit vacated the district court’s decisions and remanded the three cases to the district court for further proceedings. On June 28, 2016, the United States Supreme Court granted defendants’ petitions for writ of certiorari to review the decisions of the United States Court of Appeals for the District of Columbia. On November 17, 2016, the United States Supreme Court dismissed the petitions as improvidently granted, and the three cases returned to the district court for further proceedings. The Company has entered into an agreement pursuant to which the Company will pay $20.8 million to resolve the cases, subject to court approval.

AUTOMOBILE LENDING MATTERS On April 20, 2018, the Company entered into consent orders with the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) to resolve, among other things, investigations by the agencies into the Company’s compliance risk management program and its past practices involving certain automobile collateral protection insurance (CPI) policies and certain mortgage interest rate lock extensions. The consent orders require remediation to customers and the payment of a total of $1.0 billion in civil money penalties to the agencies. In July 2017, the Company announced a plan to remediate customers who may have been financially harmed due to issues related to automobile CPI policies purchased through a third-party vendor on their behalf. Multiple putative class actions alleging, among other things, unfair and deceptive practices relating to these CPI policies, were filed against the Company and consolidated into one multi-district litigation in the United States District Court for the Central District of California. As previously disclosed, the Company entered into a settlement to resolve the multi-district litigation. Shareholders also filed a putative securities fraud class action against the Company and its executive officers alleging material misstatements and omissions of CPI-related information in the Company’s public disclosures. In January 2020, the court dismissed this action as to all defendants except the Company and a former executive officer and limited the action to two alleged misstatements. In addition, the Company is subject to a class action in the United States District Court for the Central District of California alleging that customers are entitled to refunds related to the unused portion of guaranteed automobile protection (GAP) waiver or insurance agreements between the customer and dealer and, by assignment, the lender. In June 2021, the court granted preliminary approval of an agreement pursuant to which the Company will pay $45 million and make certain changes to its GAP refund practices in order to settle the action. Allegations related to the CPI and GAP programs are among the subjects of a shareholder derivative lawsuit pending in the United States District Court for the Northern District of California. These and other issues related to the origination, servicing, and collection of consumer auto loans, including related insurance products, have also subjected the Company to formal or informal inquiries, investigations, or examinations from federal and state government agencies, including the CFPB. As previously disclosed, the Company entered into an agreement to resolve investigations by the state attorneys general.

COMMERCIAL LENDING SHAREHOLDER LITIGATION In October and November 2020, plaintiffs filed two putative securities fraud class actions in the United States District Court for the Northern District of California alleging that the Company and certain of its former executive officers made false and misleading statements or omissions regarding, among other things, the Company’s commercial lending underwriting practices, the credit quality of its commercial credit portfolios, and the value of its commercial loans, collateralized loan obligations and commercial mortgage-backed securities.

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Note 13:  Legal Actions (continued)

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. Allegations related to the Company’s efforts to comply with these three consent orders are also among the subjects of a shareholder derivative lawsuit pending in the United States District Court for the Northern District of California.

CONSUMER DEPOSIT ACCOUNT RELATED REGULATORY INVESTIGATIONS The CFPB is conducting an investigation into whether customers were unduly harmed by the Company’s historical practices associated with the freezing (and, in many cases, closing) of consumer deposit accounts after the Company detected suspected fraudulent activity (by third parties or account holders) that affected those accounts. The CFPB is also investigating certain of the Company's past disclosures to customers regarding the minimum qualifying debit card usage required for customers to receive a waiver of monthly service fees on certain consumer deposit accounts.

FOREIGN EXCHANGE BUSINESS The United States Department of Justice (Department of Justice) is investigating certain activities in the Company’s foreign exchange business, including whether customers may have received pricing inconsistent with commitments made to those customers. Previous investigations by other federal government agencies have been resolved.

INTERCHANGE LITIGATION Plaintiffs representing a class of merchants have filed putative class actions, and individual merchants have filed individual actions, against Wells Fargo Bank, N.A., Wells Fargo & Company, Wachovia Bank, N.A., and Wachovia Corporation regarding the interchange fees associated with Visa and MasterCard payment card transactions. Visa, MasterCard, and several other banks and bank holding companies are also named as defendants in these actions. These actions have been consolidated in the United States District Court for the Eastern District of New York. The amended and consolidated complaint asserts claims against defendants based on alleged violations of federal and state antitrust laws and seeks damages, as well as injunctive relief. Plaintiff merchants allege that Visa, MasterCard, and payment card issuing banks unlawfully colluded to set interchange rates. Plaintiffs also allege that enforcement of certain Visa and MasterCard rules and alleged tying and bundling of services offered to merchants are anticompetitive. Wells Fargo and Wachovia, along with other defendants and entities, are parties to Loss and Judgment Sharing Agreements, which provide that they, along with other entities, will share, based on a formula, in any losses from the Interchange Litigation. On July 13, 2012, Visa, MasterCard, and the financial institution defendants, including Wells Fargo, signed a memorandum of understanding with plaintiff merchants to resolve the consolidated class action and reached a separate settlement in principle of the consolidated individual actions. The settlement payments to be made by all defendants in the consolidated class and individual actions totaled approximately $6.6 billion before reductions applicable to certain merchants opting out of the settlement. The class settlement also provided for the distribution to class merchants of 10 basis points of default interchange across all credit rate categories for a period of eight consecutive months. The district court granted final

approval of the settlement, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Other merchants opted out of the settlement and are pursuing several individual actions. On June 30, 2016, the Second Circuit vacated the settlement agreement and reversed and remanded the consolidated action to the United States District Court for the Eastern District of New York for further proceedings. On November 23, 2016, prior class counsel filed a petition to the United States Supreme Court, seeking review of the reversal of the settlement by the Second Circuit, and the Supreme Court denied the petition on March 27, 2017. On November 30, 2016, the district court appointed lead class counsel for a damages class and an equitable relief class. The parties have entered into a settlement agreement to resolve the money damages class claims pursuant to which defendants will pay a total of approximately $6.2 billion, which includes approximately $5.3 billion of funds remaining from the 2012 settlement and $900 million in additional funding. The Company’s allocated responsibility for the additional funding is approximately $94.5 million. The court granted final approval of the settlement on December 13, 2019, which was appealed to the United States Court of Appeals for the Second Circuit by settlement objector merchants. Several of the opt-out and direct action litigations have been settled while others remain pending.

LOW INCOME HOUSING TAX CREDITS Federal government agencies have undertaken formal or informal inquiries or investigations regarding the manner in which the Company purchased, and negotiated the purchase of, certain federal low income housing tax credits in connection with the financing of low income housing developments.

MORTGAGE LENDING MATTERS Plaintiffs representing a class of mortgage borrowers have filed separate putative class actions, Hernandez v. Wells Fargo, et al., Coordes v. Wells Fargo, et al., Ryder v. Wells Fargo, Liguori v. Wells Fargo, and Dore v. Wells Fargo, against Wells Fargo Bank, N.A., in the United States District Court for the Northern District of California, the United States District Court for the District of Washington, the United States District Court for the Southern District of Ohio, the United States District Court for the Southern District of New York, and the United States District Court for the Western District of Pennsylvania, respectively. Plaintiffs allege that Wells Fargo improperly denied mortgage loan modifications or repayment plans to customers in the foreclosure process due to the overstatement of foreclosure attorneys’ fees that were included for purposes of determining whether a customer in the foreclosure process qualified for a mortgage loan modification or repayment plan. In March 2020, the Company entered into an agreement pursuant to which the Company paid $18.5 million to resolve the claims of the initial certified class in the Hernandez case, which was approved by the district court in October 2020. The Hernandez settlement has been reopened to include additional borrowers who the Company determined should have been included in the settlement class because the Company identified a population of additional borrowers during the relevant class period whose loans had not previously been reviewed for inclusion in the original population of impacted customers. In June 2021, the Company entered into an agreement pursuant to which the Company will pay an additional approximately $22 million to resolve the Hernandez case. In July 2021, the Company entered into an agreement in the Ryder case pursuant to which the Company will pay $12 million to cover other impacted borrowers who were not included in the Hernandez case. The Dore and Coordes cases have been voluntarily dismissed. In addition, federal banking regulators and other government agencies have undertaken formal or informal

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inquiries or investigations regarding these and other mortgage servicing matters.

NOMURA/NATIXIS MORTGAGE-RELATED LITIGATION In August 2014 and August 2015, Nomura Credit & Capital Inc. (Nomura) and Natixis Real Estate Holdings, LLC (Natixis) filed a total of seven third-party complaints against Wells Fargo Bank, N.A., in New York state court. In the underlying first-party actions, Nomura and Natixis have been sued for alleged breaches of representations and warranties made in connection with residential mortgage-backed securities sponsored by them. In the third-party actions, Nomura and Natixis allege that Wells Fargo, as master servicer, primary servicer or securities administrator, failed to notify Nomura and Natixis of their own breaches, failed to properly oversee the primary servicers, and failed to adhere to accepted servicing practices. Natixis additionally alleges that Wells Fargo failed to perform default oversight duties. Wells Fargo has asserted counterclaims alleging that Nomura and Natixis failed to provide Wells Fargo notice of their representation and warranty breaches.

OFAC RELATED INVESTIGATION The Company has self-identified an issue whereby certain foreign banks utilized a Wells Fargo software-based solution to conduct import/export trade-related financing transactions with countries and entities prohibited by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury. We do not believe any funds related to these transactions flowed through accounts at Wells Fargo as a result of the aforementioned conduct. The Company has made voluntary self-disclosures to OFAC and is cooperating with an inquiry from the Department of Justice.

ORDER OF POSTING LITIGATION Plaintiffs filed a series of putative class actions against Wachovia Bank, N.A., and Wells Fargo Bank, N.A., as well as many other banks, challenging the “high to low” order in which the banks post debit card transactions to consumer deposit accounts. Most of these actions were consolidated in multi-district litigation proceedings (MDL proceedings) in the United States District Court for the Southern District of Florida. The court in the MDL proceedings has certified a class of putative plaintiffs, and Wells Fargo moved to compel arbitration of the claims of unnamed class members. The court denied the motions to compel arbitration in October 2016, and Wells Fargo appealed this decision to the United States Court of Appeals for the Eleventh Circuit. In May 2018, the Eleventh Circuit ruled in Wells Fargo’s favor and found that Wells Fargo had not waived its arbitration rights and remanded the case to the district court for further proceedings. On September 26, 2019, the district court entered an order granting Wells Fargo’s motion and dismissed the claims of unnamed class members in favor of arbitration, which was appealed by plaintiffs to the United States Court of Appeals for the Eleventh Circuit. In April 2021, the Eleventh Circuit upheld the district court's decision.

RETAIL SALES PRACTICES MATTERS A number of bodies or entities, including (a) federal, state, and local government agencies, including the Department of Justice, the United States Securities and Exchange Commission (SEC), and the United States Department of Labor, (b) state attorneys general, including the New York Attorney General, and (c) Congressional committees, have undertaken formal or informal inquiries, investigations, or examinations arising out of certain retail sales practices of the Company that were the subject of settlements with the CFPB, the OCC, and the Office of the Los Angeles City

Attorney announced by the Company on September 8, 2016. The Company has responded to requests from certain of the foregoing. As previously disclosed, the Company entered into agreements to resolve the state attorneys general investigations. On February 21, 2020, the Company entered into an agreement with the Department of Justice to resolve the Department of Justice’s criminal investigation into the Company’s retail sales practices, as well as a separate agreement to resolve the Department of Justice’s civil investigation. As part of the Department of Justice criminal settlement, no charges will be filed against the Company provided the Company abides by all the terms of the agreement. The Department of Justice criminal settlement also includes the Company’s agreement that the facts set forth in the settlement document constitute sufficient facts for the finding of criminal violations of statutes regarding bank records and personal information. On February 21, 2020, the Company also entered into an order to resolve the SEC’s investigation arising out of the Company’s retail sales practices. The SEC order contains a finding, to which the Company consented, that the facts set forth include violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. As part of the resolution of the Department of Justice and SEC investigations, the Company made payments totaling $3.0 billion. In addition, as part of the settlements and included in the $3.0 billion amount, the Company agreed to the creation of a $500 million Fair Fund for the benefit of investors who were harmed by the conduct covered in the SEC settlement. In addition, a number of lawsuits were filed by non-governmental parties seeking damages or other remedies related to these retail sales practices. As previously disclosed, the Company entered into various settlements to resolve these lawsuits.

RMBS TRUSTEE LITIGATION In December 2014, Phoenix Light SF Limited and certain related entities and the National Credit Union Administration (NCUA) filed complaints in the United States District Court for the Southern District of New York against Wells Fargo Bank, N.A., alleging claims against the Company in its capacity as trustee for a number of residential mortgage-backed securities trusts. Complaints raising similar allegations have been filed by Commerzbank AG in the Southern District of New York and by IKB International and IKB Deutsche Industriebank 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. The Company previously settled two class actions with similar allegations that were filed in November 2014 and December 2016 by institutional investors in the Southern District of New York and New York state court, respectively. In March 2021, the Company entered into an agreement to resolve the case filed by the NCUA.

SEMINOLE TRIBE TRUSTEE LITIGATION The Seminole Tribe of Florida filed a complaint in Florida state court alleging that Wells Fargo, as trustee, charged excess fees in connection with the administration of a minor’s trust and failed to invest the assets of the trust prudently. The complaint was later amended to include three individual current and former beneficiaries as plaintiffs and to remove the Tribe as a party to the case. In December 2016, the Company filed a motion to dismiss the amended complaint on the grounds that the Tribe is a necessary party and that the individual beneficiaries lack standing to bring

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Note 13:  Legal Actions (continued)

claims. The motion was denied in June 2018. The case is pending trial.

OUTLOOK  As described above, the Company establishes accruals for legal actions when potential losses associated with the actions become probable and the costs can be reasonably estimated. The high end of the range of reasonably possible potential losses in excess of the Company’s accrual for probable and estimable losses was approximately $2.8 billion as of June 30, 2021. The outcomes of legal actions are unpredictable and subject to significant uncertainties, and it is inherently difficult to determine whether any loss is probable or even possible. It is also inherently difficult to estimate the amount of any loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Accordingly, actual losses may be in excess of the established accrual or the range of reasonably possible loss. 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.

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Note 14:  Derivatives

We use derivatives to manage exposure to market risk, including interest rate risk, credit risk and foreign currency risk, and to assist customers with their risk management objectives. We designate certain derivatives as hedging instruments in qualifying hedge accounting relationships (fair value or cash flow hedges). Our remaining derivatives consist of economic hedges that do not qualify for hedge accounting and derivatives held for customer accommodation trading or other purposes. For additional information on our derivative activities, see Note 16 (Derivatives) in our 2020 Form 10-K.

Table 14.1 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 interest and other payments are determined.

Table 14.1: Notional or Contractual Amounts and Fair Values of Derivatives

			June 30, 2021																		December 31, 2020
			Notional or						Fair value												Notional or						Fair value
			contractual						Derivative						Derivative						contractual						Derivative						Derivative
(in millions)			amount						assets						liabilities						amount						assets						liabilities
Derivatives designated as hedging instruments
Interest rate contracts			$	166,843					2,428						529						184,090						3,212						789
Foreign exchange contracts			39,001						1,143						504						47,331						1,381						607
Total derivatives designated as qualifying hedging instruments									3,571						1,033												4,593						1,396
Derivatives not designated as hedging instruments
Economic hedges:
Interest rate contracts			231,356						251						161						261,159						341						344
Equity contracts			27,740						1,582						392						25,997						1,363						490
Foreign exchange contracts			53,396						372						1,292						47,106						331						1,515
Credit contracts			72						26						—						73						31						—
Subtotal									2,231						1,845												2,066						2,349
Customer accommodation trading and other derivatives:
Interest rate contracts			9,256,224						24,068						18,785						7,947,941						32,510						25,169
Commodity contracts			76,612						7,234						2,309						65,790						2,036						1,543
Equity contracts			322,733						17,697						21,126						280,195						17,522						21,516
Foreign exchange contracts			415,458						6,177						4,505						412,879						6,891						6,034
Credit contracts			36,179						49						50						34,329						64						58
Subtotal									55,225						46,775												59,023						54,320
Total derivatives not designated as hedging instruments									57,456						48,620												61,089						56,669
Total derivatives before netting									61,027						49,653												65,682						58,065
Netting									(35,612)						(35,102)												(39,836)						(41,556)
Total									$	25,415					14,551												25,846						16,509

Table 14.2 provides information on the gross fair values of derivative assets and liabilities, the balance sheet netting adjustments and the resulting net fair value amount recorded on our consolidated balance sheet, as well as the non-cash collateral associated with such arrangements. We execute substantially all of our derivative transactions under master netting arrangements and reflect all derivative balances and related cash collateral subject to enforceable master netting arrangements on a net basis within the consolidated balance sheet. The “Gross amounts recognized” column in the following table includes $52.9 billion and $44.7 billion of gross derivative assets and liabilities, respectively, at June 30, 2021, and $54.6 billion and $50.1 billion, respectively, at December 31, 2020, with counterparties subject to enforceable master netting arrangements that are eligible for balance sheet netting adjustments. The majority of these amounts are interest rate contracts executed in over-the-counter (OTC) markets. The remaining gross derivative assets and liabilities of $8.1 billion and $5.0 billion, respectively, at June 30, 2021, and $11.1 billion

and $8.0 billion, respectively, at December 31, 2020, include those with counterparties subject to master netting arrangements for which we have not assessed the enforceability because they are with counterparties where we do not currently have positions to offset, those subject to master netting arrangements where we have not been able to confirm the enforceability and those not subject to master netting arrangements. As such, we do not net derivative balances or collateral within the consolidated balance sheet for these counterparties. Cash collateral receivables and payables that have not been offset against our derivatives were $2.6 billion and $828 million, respectively, at June 30, 2021, and $1.8 billion and $984 million, respectively, at December 31, 2020.

We determine the balance sheet netting adjustments based on the terms specified within each master netting arrangement. We disclose the balance sheet netting amounts within the column titled “Gross amounts offset in consolidated balance sheet.” Balance sheet netting adjustments are determined at the counterparty level for which there may be multiple contract

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Note 14: Derivatives (continued)

types. For disclosure purposes, we allocate these netting adjustments to the contract type for each counterparty proportionally based upon the “Gross amounts recognized” by counterparty. As a result, the net amounts disclosed by contract type may not represent the actual exposure upon settlement of the contracts.

We do not net non-cash collateral that we receive and pledge on our consolidated balance sheet. For disclosure purposes, we present the fair value of this non-cash collateral in the column titled “Gross amounts not offset in consolidated balance sheet (Disclosure-only netting)” within the table. We determine and allocate the Disclosure-only netting amounts in the same manner as balance sheet netting amounts.

The “Net amounts” column within Table 14.2 represents the aggregate of our net exposure to each counterparty after

considering the balance sheet and Disclosure-only netting adjustments. We manage derivative exposure by monitoring the credit risk associated with each counterparty using counterparty-specific credit risk limits, using master netting arrangements and obtaining collateral. Derivative contracts executed in OTC markets include bilateral contractual arrangements that are not cleared through a central clearing organization but are typically subject to master netting arrangements. The proportion of these derivative contracts relative to our total derivative assets and liabilities are presented in the “Percent exchanged in over-the-counter market” column in Table 14.2. In addition to the netting amounts included in the table, we also have balance sheet netting related to resale and repurchase agreements that are disclosed within Note 12 (Pledged Assets and Collateral).

Table 14.2: Gross Fair Values of Derivative Assets and Liabilities

(in millions)			Gross amounts recognized						Gross amounts offset in consolidated balance sheet (1)						Net amounts in consolidated balance sheet						Gross amounts not offset in consolidated balance sheet (Disclosure-only netting)						Net amounts						Percent exchanged in over-the-counter market
June 30, 2021
Derivative assets
Interest rate contracts			$	26,747					(16,711)						10,036						(680)						9,356						97		%
Commodity contracts			7,234						(1,481)						5,753						(14)						5,739						92
Equity contracts			19,279						(11,488)						7,791						(766)						7,025						69
Foreign exchange contracts			7,692						(5,892)						1,800						(28)						1,772						100
Credit contracts			75						(40)						35						(1)						34						90
Total derivative assets			$	61,027					(35,612)						25,415						(1,489)						23,926
Derivative liabilities
Interest rate contracts			$	19,475					(16,453)						3,022						(1,524)						1,498						96		%
Commodity contracts			2,309						(1,086)						1,223						(17)						1,206						50
Equity contracts			21,518						(12,956)						8,562						(749)						7,813						79
Foreign exchange contracts			6,301						(4,574)						1,727						(423)						1,304						100
Credit contracts			50						(33)						17						(3)						14						90
Total derivative liabilities			$	49,653					(35,102)						14,551						(2,716)						11,835
December 31, 2020
Derivative assets
Interest rate contracts			$	36,063					(21,968)						14,095						(1,274)						12,821						96		%
Commodity contracts			2,036						(940)						1,096						(4)						1,092						84
Equity contracts			18,885						(10,968)						7,917						(737)						7,180						74
Foreign exchange contracts			8,603						(5,887)						2,716						(141)						2,575						100
Credit contracts			95						(73)						22						(1)						21						90
Total derivative assets			$	65,682					(39,836)						25,846						(2,157)						23,689
Derivative liabilities
Interest rate contracts			$	26,302					(21,934)						4,368						(2,219)						2,149						95		%
Commodity contracts			1,543						(819)						724						—						724						69
Equity contracts			22,006						(12,283)						9,723						(837)						8,886						78
Foreign exchange contracts			8,156						(6,481)						1,675						(529)						1,146						100
Credit contracts			58						(39)						19						(3)						16						91
Total derivative liabilities			$	58,065					(41,556)						16,509						(3,588)						12,921

(1)Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in the consolidated balance sheet, including related cash collateral and portfolio level counterparty valuation adjustments. Counterparty valuation adjustments related to derivative assets were $299 million and $399 million and debit valuation adjustments related to derivative liabilities were $145 million and $201 million as of June 30, 2021, and December 31, 2020, respectively. Cash collateral totaled $5.4 billion and $5.1 billion, netted against derivative assets and liabilities, respectively, at June 30, 2021, and $5.5 billion and $7.5 billion, respectively, at December 31, 2020.

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Fair Value and Cash Flow Hedges

For fair value hedges, we use interest rate swaps to convert certain of our fixed-rate long-term debt and time certificates of deposit to floating rates to hedge our exposure to interest rate risk. We also enter into cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge our exposure to foreign currency risk and interest rate risk associated with the issuance of non-U.S. dollar denominated long-term debt. In addition, we use interest rate swaps, cross-currency swaps, cross-currency interest rate swaps and forward contracts to hedge against changes in fair value of certain investments in available-for-sale debt securities due to changes in interest rates, foreign currency rates, or both. For certain fair value hedges of foreign currency risk, changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income. See Note 21 (Other Comprehensive Income) for the amounts recognized in other comprehensive income.

For cash flow hedges, we use interest rate swaps to hedge the variability in interest payments received on certain floating-

rate commercial loans and paid on certain floating-rate debt due to changes in the contractually specified interest rate. We also use cross-currency swaps to hedge variability in interest payments on fixed-rate foreign currency-denominated long-term debt due to changes in foreign exchange rates.

We estimate $76 million pre-tax of deferred net losses related to cash flow hedges in OCI at June 30, 2021, will be reclassified into net interest income during the next twelve months. The deferred losses expected to be reclassified into net interest income are predominantly related to discontinued hedges of floating rate loans. For cash flow hedges as of June 30, 2021, we are hedging our 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).

Table 14.3 and Table 14.4 show the net gains (losses) related to derivatives in fair value and cash flow hedging relationships, respectively.

Table 14.3: 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, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income			$	2,199		(92)			(712)						692						N/A						37
Interest contracts
Amounts related to interest settlements on derivatives			(68)			74			541						—						547
Recognized on derivatives			(468)			(61)			2,453						—						1,924						—
Recognized on hedged items			452			62			(2,402)						—						(1,888)
Total gains (losses) (pre-tax) on interest rate contracts			(84)			75			592						—						583						—
Foreign exchange contracts
Amounts related to interest settlements on derivatives			15			—			4						—						19
Recognized on derivatives			2			—			(42)						202						162						(14)
Recognized on hedged items			(1)			—			44						(203)						(160)
Total gains (losses) (pre-tax) on foreign exchange contracts			16			—			6						(1)						21						(14)
Total gains (losses) (pre-tax) recognized on fair value hedges			$	(68)		75			598						(1)						604						(14)
Quarter ended June 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income			$	2,946		(585)			(1,237)						912						N/A						3
Interest contracts
Amounts related to interest settlements on derivatives			(93)			152			428						—						487
Recognized on derivatives			(21)			(86)			549						—						442						—
Recognized on hedged items			63			77			(618)						—						(478)
Total gains (losses) (pre-tax) on interest rate contracts			(51)			143			359						—						451						—
Foreign exchange contracts
Amounts related to interest settlements on derivatives			11			—			(46)						—						(35)
Recognized on derivatives			(1)			—			117						709						825						(57)
Recognized on hedged items			1			—			(70)						(684)						(753)
Total gains (losses) (pre-tax) on foreign exchange contracts			11			—			1						25						37						(57)
Total gains (losses) (pre-tax) recognized on fair value hedges			$	(40)		143			360						25						488						(57)

(continued on following page)

			Wells Fargo & Company			119

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Note 14: 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, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income			$	4,511					(204)			(1,738)						1,674						N/A						84
Interest contracts
Amounts related to interest settlements on derivatives			(135)						165			1,091						—						1,121
Recognized on derivatives			826						(184)			(4,618)						—						(3,976)						—
Recognized on hedged items			(806)						181			4,542						—						3,917
Total gains (losses) (pre-tax) on interest rate contracts			(115)						162			1,015						—						1,062						—
Foreign exchange contracts
Amounts related to interest settlements on derivatives			43						—			3						—						46
Recognized on derivatives			3						—			(269)						509						243						11
Recognized on hedged items			(2)						—			238						(520)						(284)
Total gains (losses) (pre-tax) on foreign exchange contracts			44						—			(28)						(11)						5						11
Total gains (losses) (pre-tax) recognized on fair value hedges			$	(71)					162			987						(11)						1,067						11
Six months ended June 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income			$	6,418					(2,327)			(2,477)						2,213						N/A						185
Interest contracts
Amounts related to interest settlements on derivatives			(139)						222			602						—						685
Recognized on derivatives			(1,892)						444			10,324						—						8,876						—
Recognized on hedged items			1,919						(434)			(10,044)						—						(8,559)
Total gains (losses) (pre-tax) on interest rate contracts			(112)						232			882						—						1,002						—
Foreign exchange contracts
Amounts related to interest settlements on derivatives			17						—			(131)						—						(114)
Recognized on derivatives			(2)						—			224						(76)						146						87
Recognized on hedged items			3						—			(244)						80						(161)
Total gains (losses) (pre-tax) on foreign exchange contracts			18						—			(151)						4						(129)						87
Total gains (losses) (pre-tax) recognized on fair value hedges			$	(94)					232			731						4						873						87

120			Wells Fargo & Company

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Table 14.4: Gains (Losses) Recognized on Cash Flow Hedging Relationships

			Net interest income									Total recorded in net income			Total recorded in OCI
(in millions)			Loans			Long-term debt						Derivative gains (losses)			Derivative gains (losses)
Quarter ended June 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income			$	7,095		(712)						N/A			37
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income			(39)			—						(39)			39
Net unrealized gains (losses) (pre-tax) recognized in OCI			N/A			N/A						N/A			10
Total gains (losses) (pre-tax) on interest rate contracts			(39)			—						(39)			49
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income			—			(1)						(1)			1
Net unrealized gains (losses) (pre-tax) recognized in OCI			N/A			N/A						N/A			1
Total gains (losses) (pre-tax) on foreign exchange contracts			—			(1)						(1)			2
Total gains (losses) (pre-tax) recognized on cash flow hedges			$	(39)		(1)						(40)			51
Quarter ended June 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income			$	8,460		(1,237)						N/A			3
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income			(53)			1						(52)			52
Net unrealized gains (losses) (pre-tax) recognized in OCI			N/A			N/A						N/A			—
Total gains (losses) (pre-tax) on interest rate contracts			(53)			1						(52)			52
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income			—			(3)						(3)			3
Net unrealized gains (losses) (pre-tax) recognized in OCI			N/A			N/A						N/A			5
Total gains (losses) (pre-tax) on foreign exchange contracts			—			(3)						(3)			8
Total gains (losses) (pre-tax) recognized on cash flow hedges			$	(53)		(2)						(55)			60
Six months ended June 30, 2021
Total amounts presented in the consolidated statement of income and other comprehensive income			$	14,296		(1,738)						N/A			84
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income			(91)			—						(91)			91
Net unrealized gains (losses) (pre-tax) recognized in OCI			N/A			N/A						N/A			(10)
Total gains (losses) (pre-tax) on interest rate contracts			(91)			—						(91)			81
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			(10)
Total gains (losses) (pre-tax) on foreign exchange contracts			—			(2)						(2)			(8)
Total gains (losses) (pre-tax) recognized on cash flow hedges			$	(91)		(2)						(93)			73
Six months ended June 30, 2020
Total amounts presented in the consolidated statement of income and other comprehensive income			$	18,543		(2,477)						N/A			185
Interest rate contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income			(109)			1						(108)			108
Net unrealized gains (losses) (pre-tax) recognized in OCI			N/A			N/A						N/A			—
Total gains (losses) (pre-tax) on interest rate contracts			(109)			1						(108)			108
Foreign exchange contracts:
Realized gains (losses) (pre-tax) reclassified from OCI into net income			—			(5)						(5)			5
Net unrealized gains (losses) (pre-tax) recognized in OCI			N/A			N/A						N/A			(15)
Total gains (losses) (pre-tax) on foreign exchange contracts			—			(5)						(5)			(10)
Total gains (losses) (pre-tax) recognized on cash flow hedges			$	(109)		(4)						(113)			98

			Wells Fargo & Company			121

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Note 14: Derivatives (continued)

Table 14.5 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 14.5: Hedged Items in Fair Value Hedging Relationship

			Hedged Items Currently Designated									Hedged Items No Longer Designated (1)
(in millions)			Carrying Amount of Assets/(Liabilities) (2)(4)			Hedge Accounting Basis Adjustment Assets/(Liabilities) (3)						Carrying Amount of Assets/(Liabilities) (4)			Hedge Accounting Basis Adjustment Assets/(Liabilities)
June 30, 2021
Available-for-sale debt securities (5)			$	28,655		(35)						16,792			994
Deposits			(14,206)			(295)						—			—
Long-term debt			(148,673)			(7,312)						(5,248)			2
December 31, 2020
Available-for-sale debt securities (5)			$	29,538		827						17,091			1,111
Deposits			(22,384)			(477)						—			—
Long-term debt			(156,907)			(12,466)						(14,468)			31

(1)Represents hedged items no longer designated in qualifying fair value hedging relationships for which an associated basis adjustment exists at the balance sheet date.

(2)Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded for debt securities is $12.0 billion and for long-term debt is $(2.8) billion as of June 30, 2021, and $17.6 billion for debt securities and $(4.7) billion for long-term debt as of December 31, 2020.

(3)The balance includes $188 million and $160 million of debt securities and long-term debt cumulative basis adjustments as of June 30, 2021, respectively, and $205 million and $130 million of debt securities and long-term debt cumulative basis adjustments as of December 31, 2020, respectively, on terminated hedges whereby the hedged items have subsequently been re-designated into existing hedges.

(4)Represents the full carrying amount of the hedged asset or liability item as of the balance sheet date, except for circumstances in which only a portion of the asset or liability was designated as the hedged item in which case only the portion designated is presented.

(5)Carrying amount represents the amortized cost.

122			Wells Fargo & Company

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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. In second quarter 2020, we entered into arrangements to

transition the economic hedges of our deferred compensation plan liabilities from equity securities to derivative instruments. Changes in the fair values of derivatives used to economically hedge the deferred compensation plan are reported in personnel expense.

For additional information on economic hedges and other derivatives, see Note 14 (Derivatives) to Financial Statements in our 2020 Form 10-K.

Table 14.6 shows the net gains (losses), recognized by income statement lines, related to derivatives not designated as hedging instruments.

Table 14.6: 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, 2021
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)			$	287		—						14			301						—
Equity contracts			—			(762)						(4)			(766)						(239)
Foreign exchange contracts			—			—						(90)			(90)						—
Credit contracts			—			—						(5)			(5)						—
Subtotal			287			(762)						(85)			(560)						(239)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts			482			(594)						—			(112)						—
Commodity contracts			—			(36)						—			(36)						—
Equity contracts			—			(922)						(304)			(1,226)						—
Foreign exchange contracts			—			(24)						—			(24)						—
Credit contracts			—			(43)						—			(43)						—
Subtotal			482			(1,619)						(304)			(1,441)						—
Net gains (losses) recognized related to derivatives not designated as hedging instruments			$	769		(2,381)						(389)			(2,001)						(239)
Quarter ended June 30, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)			$	142		—						(74)			68						—
Equity contracts			—			(1,402)						(6)			(1,408)						(141)
Foreign exchange contracts			—			—						(55)			(55)						—
Credit contracts			—			—						1			1						—
Subtotal			142			(1,402)						(134)			(1,394)						(141)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts			546			676						—			1,222						—
Commodity contracts			—			(224)						—			(224)						—
Equity contracts			—			(2,348)						(145)			(2,493)						—
Foreign exchange contracts			—			155						—			155						—
Credit contracts			—			(134)						—			(134)						—
Subtotal			546			(1,875)						(145)			(1,474)						—
Net gains (losses) recognized related to derivatives not designated as hedging instruments			$	688		(3,277)						(279)			(2,868)						(141)

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			Wells Fargo & Company			123

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Note 14: Derivatives (continued)

(continued from previous page)

			Noninterest income															Noninterest expense
(in millions)			Mortgage banking			Net gains (losses) on trading and securities						Other			Total						Personnel expense
Six months ended June 30, 2021
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)			$	(88)		—						(6)			(94)						—
Equity contracts			—			(337)						1			(336)						(399)
Foreign exchange contracts			—			—						(19)			(19)						—
Credit contracts			—			—						(5)			(5)						—
Subtotal			(88)			(337)						(29)			(454)						(399)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts			(49)			1,330						—			1,281						—
Commodity contracts			—			44						—			44						—
Equity contracts			—			(2,085)						(393)			(2,478)						—
Foreign exchange contracts			—			440						—			440						—
Credit contracts			—			(71)						—			(71)						—
Subtotal			(49)			(342)						(393)			(784)						—
Net gains (losses) recognized related to derivatives not designated as hedging instruments			$	(137)		(679)						(422)			(1,238)						(399)
Six months ended June 30, 2020
Net gains (losses) recognized on economic hedges derivatives:
Interest contracts (1)			$	2,613		—						(45)			2,568						—
Equity contracts			—			(183)						(34)			(217)						(141)
Foreign exchange contracts			—			—						572			572						—
Credit contracts			—			—						17			17						—
Subtotal			2,613			(183)						510			2,940						(141)
Net gains (losses) recognized on customer accommodation trading and other derivatives:
Interest contracts			1,099			(1,787)						—			(688)						—
Commodity contracts			—			(112)						—			(112)						—
Equity contracts			—			2,401						(72)			2,329						—
Foreign exchange contracts			—			(402)						—			(402)						—
Credit contracts			—			147						—			147						—
Subtotal			1,099			247						(72)			1,274						—
Net gains (losses) recognized related to derivatives not designated as hedging instruments			$	3,712		64						438			4,214						(141)

(1)Mortgage banking amounts for the second quarter and first half of 2021 are comprised of gains (losses) of $707 million and $(933) million, respectively, related to derivatives used as economic hedges of MSRs measured at fair value offset by gains (losses) of $(420) million and $845 million related to derivatives used as economic hedges of mortgage loans held for sale and derivative loan commitments. The corresponding amounts for the second quarter and first half of 2020 are comprised of gains (losses) of $535 million and $3.9 billion offset by gains (losses) of $(393) million and $(1.3) billion, respectively.

124			Wells Fargo & Company

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Credit Derivatives

Credit derivative contracts are arrangements whose value is derived from the transfer of credit risk of a reference asset or entity from one party (the purchaser of credit protection) to another party (the seller of credit protection). We use credit derivatives to assist customers with their risk management objectives. We may also use credit derivatives in structured product transactions or liquidity agreements written to special purpose vehicles. The maximum exposure of sold credit derivatives is managed through posted collateral, purchased credit derivatives and similar products in order to achieve our desired credit risk profile. This credit risk management provides an ability to recover a significant portion of any amounts that

would be paid under sold credit derivatives. We would be required to perform under the sold credit derivatives in the event of default by the referenced obligors. Events of default include events such as bankruptcy, capital restructuring or lack of principal and/or interest payment. In certain cases, other triggers may exist, such as the credit downgrade of the referenced obligors or the inability of the special purpose vehicle for which we have provided liquidity to obtain funding.

Table 14.7 provides details of sold and purchased credit derivatives.

Table 14.7: Sold and Purchased Credit Derivatives

															Notional amount
(in millions)			Fair value asset						Fair value liability						Protection sold (A)						Protection sold – non-investment grade						Protection purchased with identical underlyings (B)						Net protection sold (A)-(B)						Other protection purchased						Range of maturities
June 30, 2021
Credit default swaps on:
Corporate bonds			$	5					3						4,724						1,236						3,130						1,594						3,582						2021 - 2031
Structured products			—						4						16						16						12						4						82						2034 - 2047
Credit protection on:
Default swap index			1						—						1,760						698						924						836						3,765						2021 - 2030
Commercial mortgage-backed securities index			2						15						283						29						258						25						134						2047 - 2072
Asset-backed securities index			—						7						41						41						40						1						1						2045 - 2046
Other			—						2						6,300						6,206						—						6,300						11,199						2021 - 2040
Total credit derivatives			$	8					31						13,124						8,226						4,364						8,760						18,763
December 31, 2020
Credit default swaps on:
Corporate bonds			$	7					2						3,767						971						2,709						1,058						3,012						2021 - 2029
Structured products			—						5						20						20						19						1						84						2034 - 2047
Credit protection on:
Default swap index			—						—						1,582						731						559						1,023						3,925						2021 - 2030
Commercial mortgage-backed securities index			3						21						297						42						272						25						75						2047 - 2072
Asset-backed securities index			—						7						41						41						40						1						1						2045 - 2046
Other			—						4						6,378						6,262						—						6,378						11,621						2021 - 2040
Total credit derivatives			$	10					39						12,085						8,067						3,599						8,486						18,718

Protection sold represents the estimated maximum exposure to loss that would be incurred under an assumed hypothetical circumstance, where the value of our interests and any associated collateral declines to zero, without any consideration of recovery or offset from any economic hedges. We believe this hypothetical circumstance to be an extremely remote possibility and accordingly, this required disclosure is not an indication of expected loss. The amounts under non-investment grade represent the notional amounts of those credit derivatives on which we have a higher risk of being required to perform under the terms of the credit derivative and are a function of the underlying assets.

We consider the risk of performance to be high if the underlying assets under the credit derivative have an external rating that is below investment grade or an internal credit default grade that is equivalent thereto. We believe the net protection sold, which is representative of the net notional amount of protection sold and purchased with identical underlyings, in combination with other protection purchased, is more representative of our exposure to loss than either non-investment grade or protection sold. Other protection purchased represents additional protection, which may offset the exposure to loss for protection sold, that was not purchased with an identical underlying of the protection sold.

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 14.8 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 14.8: Credit-Risk Contingent Features

(in billions)			Jun 30, 2021			Dec 31, 2020
Net derivative liabilities with credit-risk contingent features			$	10.4		10.5
Collateral posted			9.4			9.0
Additional collateral to be posted upon a below investment grade credit rating (1)			1.0			1.5

(1)Any credit rating below investment grade requires us to post the maximum amount of collateral.

			Wells Fargo & Company			125

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Note 15:  Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis, such as derivatives, residential MSRs, and trading or AFS debt securities, are presented in Table 15.1 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 15.4 in this Note. We provide in Table 15.8 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 2020 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 17 (Fair Values of Assets and Liabilities) in our 2020 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 2020 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.

126			Wells Fargo & Company

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Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table 15.1 presents the balances of assets and liabilities recorded at fair value on a recurring basis.

Table 15.1: Fair Value on a Recurring Basis

			June 30, 2021																								December 31, 2020
(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			$	29,497					2,207						—						31,704						$	32,060					3,197						—						35,257
Collateralized loan obligations			—						469						158						627						—						534						148						682
Corporate debt securities			—						12,062						11						12,073						—						10,696						13						10,709
Federal agency mortgage-backed securities			—						33,105						—						33,105						—						23,549						—						23,549
Non-agency mortgage-backed securities			—						1,275						22						1,297						—						1,039						12						1,051
Other debt securities			—						3,920						1						3,921						—						3,847						—						3,847
Total trading debt securities			29,497						53,038						192						82,727						32,060						42,862						173						75,095
Available-for-sale debt securities:
Securities of U.S. Treasury and federal agencies			35,905						—						—						35,905						22,159						—						—						22,159
Non-U.S. government securities			—						11,201						—						11,201						—						16,813						—						16,813
Securities of U.S. states and political subdivisions			—						19,377						122						19,499						—						19,182						224						19,406
Federal agency mortgage-backed securities			—						96,534						—						96,534						—						139,070						—						139,070
Non-agency mortgage-backed securities			—						4,347						31						4,378						—						3,697						32						3,729
Collateralized loan obligations			—						12,407						—						12,407						—						9,018						—						9,018
Other debt securities			37						7,284						2,652						9,973						38						7,421						2,738						10,197
Total available-for-sale debt securities			35,942						151,150						2,805						189,897						22,197						195,201						2,994						220,392
Loans held for sale			—						17,825						1,069						18,894						—						17,572						1,234						18,806
Mortgage servicing rights (residential)			—						—						6,717						6,717						—						—						6,125						6,125
Derivative assets (gross):
Interest rate contracts			20						26,370						357						26,747						11						35,590						462						36,063
Commodity contracts			—						7,139						95						7,234						—						1,997						39						2,036
Equity contracts			4,620						12,763						1,896						19,279						4,888						12,384						1,613						18,885
Foreign exchange contracts			21						7,664						7						7,692						19						8,573						11						8,603
Credit contracts			—						36						39						75						—						45						50						95
Total derivative assets (gross)			4,661						53,972						2,394						61,027						4,918						58,589						2,175						65,682
Equity securities:
Marketable			25,138						186						1						25,325						23,995						596						5						24,596
Nonmarketable (1)			—						199						9,659						9,858						10						21						9,228						9,259
Total equity securities			25,138						385						9,660						35,183						24,005						617						9,233						33,855
Total assets prior to derivative netting			$	95,238					276,370						22,837						394,445						$	83,180					314,841						21,934						419,955
Derivative netting (2)																					(35,612)																								(39,836)
Total assets after derivative netting																					358,833																								380,119
Derivative liabilities (gross):
Interest rate contracts			$	(14)					(19,418)						(43)						(19,475)						$	(27)					(26,259)						(16)						(26,302)
Commodity contracts			—						(2,216)						(93)						(2,309)						—						(1,503)						(40)						(1,543)
Equity contracts			(4,108)						(15,089)						(2,321)						(21,518)						(4,860)						(15,219)						(1,927)						(22,006)
Foreign exchange contracts			(14)						(6,280)						(7)						(6,301)						(10)						(8,134)						(12)						(8,156)
Credit contracts			—						(44)						(6)						(50)						—						(49)						(9)						(58)
Total derivative liabilities (gross)			(4,136)						(43,047)						(2,470)						(49,653)						(4,897)						(51,164)						(2,004)						(58,065)
Short-sale trading liabilities			(15,579)						(6,464)						—						(22,043)						(15,292)						(7,149)						—						(22,441)
Total liabilities prior to derivative netting			$	(19,715)					(49,511)						(2,470)						(71,696)						$	(20,189)					(58,313)						(2,004)						(80,506)
Derivative netting (2)																					35,102																								41,556
Total liabilities after derivative netting																					(36,594)																								(38,950)

(1)Excludes $148 million and $154 million of nonmarketable equity securities as of June 30, 2021, and December 31, 2020, respectively, that are measured at fair value using non-published NAV per share (or its equivalent) as a practical expedient that are not classified in the fair value hierarchy.

(2)Represents balance sheet netting of derivative asset and liability balances, related cash collateral and portfolio level counterparty valuation adjustments. See Note 14 (Derivatives) for additional information.

			Wells Fargo & Company			127

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

Level 3 Assets and Liabilities Recorded at Fair Value on a Recurring Basis

Table 15.2 presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis.

Table 15.2: 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, 2021
Trading debt securities			$	192					4						123						(129)						(5)						15						(8)						192						1			(6)
Available-for-sale debt securities			3,142						28						9						—						(120)						11						(265)						2,805						41			(6)
Loans held for sale			1,166						15						131						(231)						(107)						97						(2)						1,069						9			(7)
Mortgage servicing rights (residential) (8)			7,536						(1,297)						485						(7)						—						—						—						6,717						(809)			(7)
Net derivative assets and liabilities:
Interest rate contracts			1						458						—						—						(145)						—						—						314						167
Equity contracts			(429)						(158)						—						—						120						(10)						52						(425)						(130)
Other derivative contracts			56						(67)						2						(1)						42						—						3						35						(16)
Total derivative contracts			(372)						233						2						(1)						17						(10)						55						(76)						21			(9)
Equity securities			8,865						794						—						—						—						1						—						9,660						794			(6)
Quarter ended June 30, 2020
Trading debt securities			$	389					33						186						(346)						(5)						15						(49)						223						14			(6)
Available-for-sale debt securities			2,412						21						5						(28)						(100)						85						(297)						2,098						8			(6)
Loans held for sale			3,176						(41)						94						(288)						(64)						80						(2,199)						758						(32)			(7)
Mortgage servicing rights (residential) (8)			8,126						(1,768)						462						(1)						—						—						—						6,819						(1,131)			(7)
Net derivative assets and liabilities:
Interest rate contracts			685						460						—						—						(622)						—						—						523						291
Equity contracts			217						(277)						—						—						79						—						1						20						(387)
Other derivative contracts			(3)						7						2						(1)						12						18						—						35						47
Total derivative contracts			899						190						2						(1)						(531)						18						1						578						(49)			(9)
Equity securities			6,754						1,414						—						—						—						—						(3)						8,165						1,414			(6)
Six months ended June 30, 2021
Trading debt securities			$	173					20						292						(302)						(5)						22						(8)						192						5			(6)
Available-for-sale debt securities			2,994						21						24						—						(188)						253						(299)						2,805						16			(6)
Loans held for sale			1,234						(4)						260						(379)						(217)						178						(3)						1,069						(5)			(7)
Mortgage servicing rights (residential) (8)			6,125						(291)						891						(8)						—						—						—						6,717						782			(7)
Net derivative assets and liabilities:
Interest rate contracts			446						(83)						—						—						(44)						—						(5)						314						109
Equity contracts			(314)						(326)						—						—						160						(37)						92						(425)						(236)
Other derivative contracts			39						(40)						2						(1)						32						—						3						35						4
Total derivative contracts			171						(449)						2						(1)						148						(37)						90						(76)						(123)			(9)
Equity securities			9,233						429						—						(5)						—						3						—						9,660						429			(6)
Six months ended June 30, 2020
Trading debt securities			$	223					(85)						476						(439)						(15)						115						(52)						223						(69)			(6)
Available-for-sale debt securities			1,565						(121)						31						(33)						(148)						1,172						(368)						2,098						(99)			(6)
Loans held for sale			1,214						(104)						960						(358)						(162)						1,409						(2,201)						758						(34)			(7)
Mortgage servicing rights (residential) (8)			11,517						(5,589)						923						(33)						1						—						—						6,819						(4,388)			(7)
Net derivative assets and liabilities:
Interest rate contracts			214						1,204						—						—						(895)						—						—						523						374
Equity contracts			(269)						153						—						—						152						(10)						(6)						20						48
Other derivative contracts			(5)						(48)						8						(4)						72						12						—						35						33
Total derivative contracts			(60)						1,309						8						(4)						(671)						2						(6)						578						455			(9)
Equity securities			7,850						313						—						—						—						7						(5)						8,165						310			(6)

(1)Includes net gains (losses) included in both net income and other comprehensive income. All amounts represent net gains (losses) included in net income except for $22 million and $36 million included in other comprehensive income from available-for-sale debt securities in the second quarter and first half of 2021, respectively. The corresponding amounts for the second quarter and first half of 2020 were $16 million and $(75) million, respectively.

(2)Includes originations of mortgage servicing rights and loans held for sale.

(3)All assets and liabilities transferred into Level 3 were previously classified within Level 2.

(4)All assets and liabilities transferred out of Level 3 are classified as Level 2.

(5)Includes net unrealized gains (losses) related to assets and liabilities held at period end included in both net income and other comprehensive income. All amounts represent net unrealized gains (losses) included in net income except for $38 million and $31 million included in other comprehensive income from available-for-sale debt securities in the second quarter and first half of 2021 , respectively. The corresponding amounts for the second quarter and first half of 2020 were $13 million and $(40) million, respectively.

(6)Included in net gains on trading and securities in the consolidated statement of income.

(7)Included in mortgage banking income in the consolidated statement of income.

(8)For additional information on the changes in mortgage servicing rights, see Note 9 (Mortgage Banking Activities).

(9)Included in mortgage banking income, net gains on trading and securities, and other noninterest income in the consolidated statement of income.

128			Wells Fargo & Company

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Table 15.3 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 17 (Fair Values of Assets and Liabilities) in our 2020 Form 10-K).

Weighted averages of inputs are calculated using outstanding unpaid principal balance for cash instruments, such as loans and securities, and notional amounts for derivative instruments.

Table 15.3: 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, 2021
Trading and available-for-sale debt securities			$	1,926					Discounted cash flow						Discount rate						0.4			-			12.4			%						4.4
			747						Vendor priced
			193						Market comparable pricing						Comparability adjustment						(29.1)			-			9.5									(6.6)
			131						Market comparable pricing						Multiples						0.4x			-			12.1x									6.5x
Loans held for sale			1,069						Discounted cash flow						Default rate						0.0			-			35.7			%						1.5
															Discount rate						1.1			-			12.5									4.6
															Loss severity						0.0			-			32.9									15.8
															Prepayment rate						6.9			-			17.6									12.9
Mortgage servicing rights (residential)			6,717						Discounted cash flow						Cost to service per loan (1)						$	57		-			642									111
															Discount rate						4.6			-			8.3			%						5.4
															Prepayment rate (2)						14.2			-			21.4									17.2
Net derivative assets and (liabilities):
Interest rate contracts			139						Discounted cash flow						Default rate						0.0			-			6.0									1.9
															Loss severity						50.0			-			50.0									50.0
															Prepayment rate						2.8			-			22.0									18.5
Interest rate contracts: derivative loan commitments			175						Discounted cash flow						Fall-out factor						1.0			-			99.0									20.2
															Initial-value servicing						(65.9)			-			151.0			bps						89.9
Equity contracts			239						Discounted cash flow						Conversion factor						(9.3)			-			0.0			%						(9.0)
															Weighted average life						0.0			-			2.5			yrs						1.4
			(664)						Option model						Correlation factor						(77.0)			-			99.0			%						17.5
															Volatility factor						6.5			-			78.8									21.8
Nonmarketable equity securities			9,659						Market comparable pricing						Comparability adjustment						(19.3)			-			(5.5)									(15.6)
Insignificant Level 3 assets, net of liabilities			36
Total Level 3 assets, net of liabilities			$	20,367		(3)
December 31, 2020
Trading and available-for-sale debt securities			$	2,126					Discounted cash flow						Discount rate						0.4			-			14.7			%						3.6
			759						Vendor priced
			173						Market comparable pricing						Comparability adjustment						(39.8)			-			0.3									(8.4)
			109						Market comparable pricing						Multiples						7.2x			-			12.1x									8.0x
Loans held for sale			1,234						Discounted cash flow						Default rate						0.0			-			31.6			%						1.7
															Discount rate						1.3			-			12.0									4.5
															Loss severity						0.0			-			32.3									18.4
															Prepayment rate						8.3			-			23.6									15.1
Mortgage servicing rights (residential)			6,125						Discounted cash flow						Cost to service per loan (1)						$	63		-			712									130
															Discount rate						4.9			-			8.3			%						5.8
															Prepayment rate (2)						14.3			-			22.8									19.9
Net derivative assets and (liabilities):
Interest rate contracts			206						Discounted cash flow						Default rate						0.0			-			6.0									1.7
															Loss severity						50.0			-			50.0									50.0
															Prepayment rate						2.8			-			22.0									18.2
Interest rate contracts: derivative loan commitments			240						Discounted cash flow						Fall-out factor						1.0			-			99.0									28.8
															Initial-value servicing						(51.6)			-			268.0			bps						65.5
Equity contracts			220						Discounted cash flow						Conversion factor						(8.6)			-			0.0			%						(8.2)
															Weighted average life						0.5			-			2.0			yrs						1.0
			(534)						Option model						Correlation factor						(77.0)			-			99.0			%						24.8
															Volatility factor						6.5			-			96.6									26.4
Nonmarketable equity securities			9,228						Market comparable pricing						Comparability adjustment						(20.3)			-			(3.2)									(13.8)
Insignificant Level 3 assets, net of liabilities			44
Total Level 3 assets, net of liabilities			$	19,930		(3)

(1)The high end of the range of inputs is for servicing modified loans. For non-modified loans the range is $57 - $239 at June 30, 2021, and $63 - $252 at December 31, 2020.

(2)Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

(3)Consists of total Level 3 assets of $22.8 billion and $21.9 billion and total Level 3 liabilities of $2.5 billion and $2.0 billion, before netting of derivative balances, at June 30, 2021, and December 31, 2020, respectively.

			Wells Fargo & Company			129

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

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 17 (Fair Values of Assets and Liabilities) in our 2020 Form 10-K.

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 nonmarketable equity securities.

Table 15.4 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, 2021, and December 31, 2020, and for which a nonrecurring fair value adjustment was recorded during the six months ended June 30, 2021, and year ended December 31, 2020.

Table 15.5 presents the increase (decrease) in value of certain assets held at the end of the respective reporting periods presented for which a nonrecurring fair value adjustment was recognized during the periods presented. 

Table 15.4: Fair Value on a Nonrecurring Basis

			June 30, 2021																		December 31, 2020
(in millions)			Level 2						Level 3						Total						Level 2						Level 3						Total
Loans held for sale (1)			2,956						1,439						4,395						2,672						2,945						5,617
Loans:
Commercial			432						—						432						1,385						—						1,385
Consumer			221						—						221						395						—						395
Total loans			653						—						653						1,780						—						1,780
Mortgage servicing rights (commercial)			—						567						567						—						510						510
Nonmarketable equity securities			3,882						85						3,967						2,397						790						3,187
Other assets			976						157						1,133						1,350						428						1,778
Total assets at fair value on a nonrecurring basis			$	8,467					2,248						10,715						8,199						4,673						12,872

(1)Predominantly consists of commercial mortgages and residential mortgage – first lien loans.

Nonmarketable equity securities includes impairment on private equity and venture capital investments and gains or losses under the measurement alternative. Other assets includes impairments of operating lease ROU assets, valuation losses on foreclosed real estate and other collateral owned, and impairment on private equity and venture capital investments in consolidated portfolio companies.

Table 15.5: Change in Value of Assets with Nonrecurring Fair Value Adjustment

			Six months ended June 30,
(in millions)			2021						2020
Loans held for sale			$	38					(77)
Loans:
Commercial			(182)						(392)
Consumer			(90)						(128)
Total loans			(272)						(520)
Mortgage servicing rights (commercial)			31						(30)
Nonmarketable equity securities			2,215						(410)
Other assets			(56)						(394)
Total			$	1,956					(1,431)

Table 15.6 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.

130			Wells Fargo & Company

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Table 15.6: Valuation Techniques – Nonrecurring Basis

($ in millions)			Fair Value Level 3			Valuation Technique (1)						Significant Unobservable Input (1)						Range of Inputs Positive (Negative)												Weighted Average
June 30, 2021
Loans held for sale (2)			$	1,269		Discounted cash flow						Default rate			(3)			0.8			-			80.2		%				30.3
												Discount rate						0.6			-			12.6						3.1
												Loss severity						0.3			-			51.0						5.9
												Prepayment rate			(4)			4.2			-			100.0						41.3
			170			Market comparable pricing						Comparability adjustment						(5.9)			-			(1.4)						(5.0)
Mortgage servicing rights (commercial)			567			Discounted cash flow						Cost to service per loan						$	150		-			3,381						2,773
												Discount rate						4.0			-			4.2		%				4.0
												Prepayment rate						0.0			-			20.6						5.5
Nonmarketable equity securities			15			Market comparable pricing						Multiples						2.0x			-			3.3x						2.8x
			65			Market comparable pricing						Comparability Adjustment						(100.0)			-			(5.3)		%				(50.0)
			5			Discounted cash flow						Discount rate						10.5			-			10.5						10.5
Other assets			157			Discounted cash flow						Discount rate						0.3			-			4.4						2.9
Total			$	2,248
December 31, 2020
Loans held for sale (2)			$	1,628		Discounted cash flow						Default rate			(3)			0.3			-			85.5		%				31.5
												Discount rate						0.6			-			11.9						3.0
												Loss severity						0.4			-			45.0						8.1
												Prepayment rate			(4)			8.3			-			100.0						42.5
			1,317			Market comparable pricing						Comparability adjustment						(11.6)			-			(1.8)						(3.1)
Mortgage servicing rights (commercial)			510			Discounted cash flow						Cost to service per loan						$	150		-			3,377						2,779
												Discount rate						1.9			-			1.9		%				1.9
												Prepayment rate						0.0			-			20.0						5.4
Nonmarketable equity securities (5)			844			Market comparable pricing						Multiples						0.1x			-			10.9x						5.0x
			188			Market comparable pricing						Comparability adjustment						(100.0)			-			(20.0)		%				(61.4)
			76			Other						Company risk factor						(100.0)			-			(20.0)						(57.7)
			91			Discounted cash flow						Discount rate						10.0			-			20.0						11.5
												Company risk factor						(62.6)			-			0.0						(30.3)
												Crude oil prices ($/barrel)						$	42		-			48						47
												Natural gas prices ($/MMBtu)						2			-			2						2
Insignificant Level 3 assets			19
Total			$	4,673

(1)See Note 17 (Fair Values of Assets and Liabilities) in our 2020 Form 10-K for additional information on the valuation technique(s) and significant unobservable inputs used in the valuation of Level 3 assets.

(2)Consists of approximately $1.2 billion and $2.6 billion of government insured/guaranteed loans purchased from GNMA-guaranteed mortgage securitizations at June 30, 2021, and December 31, 2020, respectively, and approximately $200 million and $300 million of other mortgage loans that are not government insured/guaranteed at June 30, 2021, and December 31, 2020.

(3)Applies only to non-government insured/guaranteed loans.

(4)Includes the impact on prepayment rate of expected defaults for government insured/guaranteed loans, which impact the frequency and timing of early resolution of loans.

(5)Includes $417 million of private equity and venture capital investments in consolidated portfolio companies classified in other assets on the consolidated balance sheet at December 31, 2020.

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 17 (Fair Values of Assets and Liabilities) in our 2020 Form 10-K.

Table 15.7 reflects differences between the fair value carrying amount of the assets for which we have elected the fair value option and the contractual aggregate unpaid principal amount at maturity. Nonaccrual loans and loans 90 days or more past due and still accruing included in LHFS for which we have elected the fair value option were insignificant at June 30, 2021, and December 31, 2020.

Table 15.7: Fair Value Option

			June 30, 2021																		December 31, 2020
(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			$	18,894					18,526						368						18,806						18,217						589

			Wells Fargo & Company			131

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

The changes in fair value related to initial measurement and subsequent changes in fair value included in earnings for LHFS accounted for under the fair value option were $823 million and $1.2 billion in the second quarter and first half of 2021, respectively, and $773 million and $1.1 billion in the second quarter and first half of 2020, respectively. Substantially all of these amounts were included in the mortgage banking noninterest income line of the consolidated statement of income. For performing loans, instrument-specific credit risk gains or losses were derived principally by determining the change in fair value of the loans due to changes in the observable or implied credit spread. Credit spread is the market yield on the loans less the relevant risk-free benchmark interest rate. For nonperforming loans, we attribute all changes in fair value to instrument-specific credit risk. Gains and losses attributable to instrument-specific credit risk related to assets accounted for under the fair value option in the second quarter and first half of both 2021 and 2020 were insignificant.

Disclosures about Fair Value of Financial Instruments

Table 15.8 presents a summary of fair value estimates for financial instruments that are not carried at fair value on a recurring basis. Some financial instruments are excluded from the scope of this table, such as certain insurance contracts, certain nonmarketable equity securities, and leases. This table also excludes assets and liabilities that are not financial instruments such as the value of the long-term relationships with our deposit, credit card and trust customers, MSRs, premises and equipment, goodwill and deferred taxes.

Loan commitments, standby letters of credit and commercial and similar letters of credit are not included in

Table 15.8. A reasonable estimate of the fair value of these instruments is the carrying value of deferred fees plus the allowance for unfunded credit commitments, which totaled $1.4 billion and at both June 30, 2021, and December 31, 2020, respectively.

The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying fair value of the Company.

Table 15.8: Fair Value Estimates for Financial Instruments

									Estimated fair value
(in millions)			Carrying amount						Level 1						Level 2						Level 3						Total
June 30, 2021
Financial assets
Cash and due from banks (1)			$	25,304					25,304						—						—						25,304
Interest-earning deposits with banks (1)			248,869						248,686						183						—						248,869
Federal funds sold and securities purchased under resale agreements (1)			70,149						—						70,149						—						70,149
Held-to-maturity debt securities			260,941						28,028						235,075						984						264,087
Loans held for sale			6,700						—						5,259						1,669						6,928
Loans, net (2)			821,774						—						59,140						781,652						840,792
Nonmarketable equity securities (cost method)			3,585						—						—						3,647						3,647
Total financial assets			$	1,437,322					302,018						369,806						787,952						1,459,776
Financial liabilities
Deposits (3)			$	35,964					—						18,823						17,368						36,191
Short-term borrowings			45,635						—						45,635						—						45,635
Long-term debt (4)			179,625						—						186,681						1,282						187,963
Total financial liabilities			$	261,224					—						251,139						18,650						269,789
December 31, 2020
Financial assets
Cash and due from banks (1)			$	28,236					28,236						—						—						28,236
Interest-earning deposits with banks (1)			236,376						236,258						118						—						236,376
Federal funds sold and securities purchased under resale agreements (1)			65,672						—						65,672						—						65,672
Held-to-maturity debt securities			205,720						48,597						162,777						933						212,307
Loans held for sale			17,578						—						14,952						3,419						18,371
Loans, net (2)			853,595						—						56,270						817,827						874,097
Nonmarketable equity securities (cost method)			3,588						—						—						3,632						3,632
Total financial assets			$	1,410,765					313,091						299,789						825,811						1,438,691
Financial liabilities
Deposits (3)			$	52,807					—						33,321						19,940						53,261
Short-term borrowings			58,999						—						58,999						—						58,999
Long-term debt (4)			212,922						—						219,321						1,381						220,702
Total financial liabilities			$	324,728					—						311,641						21,321						332,962

(1)Amounts consist of financial instruments for which carrying value approximates fair value.

(2)Excludes lease financing with a carrying amount of $15.2 billion and $15.4 billion at June 30, 2021, and December 31, 2020, respectively.

(3)Excludes deposit liabilities with no defined or contractual maturity of $1.4 trillion at both June 30, 2021, and December 31, 2020, respectively.

(4)Excludes capital lease obligations under capital leases of $28 million at both June 30, 2021, and December 31, 2020, respectively.

132			Wells Fargo & Company

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Note 16:  Preferred Stock

We are authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. We have not issued any preference shares under this authorization. If issued, preference shares would be limited to one vote per share. Our total authorized, issued and outstanding preferred stock is presented in the following two tables along with the Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock.

In January 2021, we issued $3.5 billion of our Preferred Stock, Series BB, and in February 2021, we issued $1.05 billion of our Preferred Stock, Series CC. In March 2021, we redeemed our Preferred Stock Series I, Series P and Series W, and partially redeemed our Preferred Stock, Series N, for an aggregate cost of $4.5 billion. In June 2021, we redeemed the remaining outstanding shares of our Preferred Stock, Series N, for a cost of $350 million. In July 2021, we issued $1.25 billion of our Preferred Stock, Series DD.

Table 16.1: Preferred Stock Shares

			June 30, 2021												December 31, 2020
			Liquidation  preference  per share						Shares  authorized and designated						Liquidation  preference  per share						Shares  authorized  and designated
DEP Shares
Dividend Equalization Preferred Shares (DEP)			$	10					97,000						$	10					97,000
Series I (1)
Floating Class A Preferred Stock			—						—						100,000						25,010
Series L (2)
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock			1,000						4,025,000						1,000						4,025,000
Series N (3)
5.20% Non-Cumulative Perpetual Class A Preferred Stock			—						—						25,000						30,000
Series O
5.125% Non-Cumulative Perpetual Class A Preferred Stock			25,000						27,600						25,000						27,600
Series P (3)
5.25% Non-Cumulative Perpetual Class A Preferred Stock			—						—						25,000						26,400
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock			25,000						69,000						25,000						69,000
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock			25,000						34,500						25,000						34,500
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock			25,000						80,000						25,000						80,000
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock			25,000						80,000						25,000						80,000
Series W (3)
5.70% Non-Cumulative Perpetual Class A Preferred Stock			—						—						25,000						40,000
Series X
5.50% Non-Cumulative Perpetual Class A Preferred Stock			25,000						46,000						25,000						46,000
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock			25,000						27,600						25,000						27,600
Series Z
4.75% Non-Cumulative Perpetual Class A Preferred Stock			25,000						80,500						25,000						80,500
Series AA
4.70% Non-Cumulative Perpetual Class A Preferred Stock			25,000						46,800						25,000						46,800
Series BB
3.90% Fixed-Reset Non-Cumulative Perpetual Class A Preferred Stock			25,000						140,400						—						—
Series CC
4.375% Non-Cumulative Perpetual Class A Preferred Stock			25,000						46,000						—						—
ESOP (4)
Cumulative Convertible Preferred Stock			—						822,242						—						822,242
Total									5,622,642												5,557,652

(1)Series I preferred stock issuance relates to trust preferred securities. See Note 8 (Securitizations and Variable Interest Entities) for additional information. This issuance has a floating interest rate that is the greater of three-month London Interbank Offered Rate (LIBOR) plus 0.93% and 5.56975%. In first quarter 2021, Preferred Stock, Series I, was redeemed.

(2)Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814 shares of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.

(3)In first quarter 2021, 16,000 shares of Preferred Stock, Series N, were redeemed and Preferred Stock, Series P and Series W were fully redeemed; in second quarter 2021, the remaining 14,000 shares of Preferred Stock, Series N, were redeemed.

(4)See the “ESOP Cumulative Convertible Preferred Stock” section in this Note for additional information about the liquidation preference for the ESOP Cumulative Convertible Preferred Stock.

			Wells Fargo & Company			133

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Note 16: Preferred Stock (continued)

Table 16.2: Preferred Stock – Shares Issued and Carrying Value

			June 30, 2021																								December 31, 2020
(in millions, except shares)			Shares issued and outstanding						Liquidation preference value						Carrying value						Discount						Shares issued and outstanding						Liquidation preference value						Carrying value						Discount
DEP Shares
Dividend Equalization Preferred Shares (DEP)			96,546						$	—					—						—						96,546						$	—					—						—
Series I (1)
Floating Class A Preferred Stock			—						—						—						—						25,010						2,501						2,501						—
Series L (2)
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock			3,967,995						3,968						3,200						768						3,967,995						3,968						3,200						768
Series N (3)
5.20% Non-Cumulative Perpetual Class A Preferred Stock			—						—						—						—						30,000						750						750						—
Series O
5.125% Non-Cumulative Perpetual Class A Preferred Stock			26,000						650						650						—						26,000						650						650						—
Series P (3)
5.25% Non-Cumulative Perpetual Class A Preferred Stock			—						—						—						—						25,000						625						625						—
Series Q
5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock			69,000						1,725						1,725						—						69,000						1,725						1,725						—
Series R
6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock			33,600						840						840						—						33,600						840						840						—
Series S
5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock			80,000						2,000						2,000						—						80,000						2,000						2,000						—
Series U
5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock			80,000						2,000						2,000						—						80,000						2,000						2,000						—
Series W (3)
5.70% Non-Cumulative Perpetual Class A Preferred Stock			—						—						—						—						40,000						1,000						1,000						—
Series X
5.50% Non-Cumulative Perpetual Class A Preferred Stock			46,000						1,150						1,150						—						46,000						1,150						1,150						—
Series Y
5.625% Non-Cumulative Perpetual Class A Preferred Stock			27,600						690						690						—						27,600						690						690						—
Series Z
4.750% Non-Cumulative Perpetual Class A Preferred Stock			80,500						2,013						2,013						—						80,500						2,013						2,013						—
Series AA
4.70% Non-Cumulative Perpetual Class A Preferred Stock			46,800						1,170						1,170						—						46,800						1,170						1,170						—
Series BB
3.90% Fixed-Reset Non-Cumulative Perpetual Class A Preferred Stock			140,400						3,510						3,510						—						—						—						—						—
Series CC
4.375% Non-Cumulative Perpetual Class A Preferred Stock			42,000						1,050						1,050						—						—						—						—						—
ESOP (4)
Cumulative Convertible Preferred Stock			822,242						822						822						—						822,242						822						822						—
Total			5,558,683						$	21,588					20,820						768						5,496,293						$	21,904					21,136						768

(1)Floating rate for Preferred Stock, Series I, is the greater of three-month London Interbank Offered Rate (LIBOR) plus 0.93% and 5.56975%. In first quarter 2021, Preferred Stock, Series I, was redeemed.

(2)Preferred Stock, Series L, may be converted at any time, at the option of the holder, into 6.3814 shares of our common stock, plus cash in lieu of fractional shares, subject to anti-dilution adjustments.

(3)In first quarter 2021, $400 million of Preferred Stock, Series N, was redeemed and Preferred Stock, Series P and Series W were fully redeemed; in second quarter 2021, the remaining $350 million of Preferred Stock, Series N, was redeemed.

(4)See the “ESOP Cumulative Convertible Preferred Stock” section in this Note for additional information about the liquidation preference for the ESOP Cumulative Convertible Preferred Stock.

134			Wells Fargo & Company

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ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK All shares of our ESOP Cumulative Convertible Preferred Stock (ESOP Preferred Stock) were issued to a trustee acting on behalf of the Wells Fargo & Company 401(k) Plan (the 401(k) Plan). Dividends on the ESOP Preferred Stock are cumulative from the date of initial issuance and are payable quarterly at annual rates based upon the year of issuance. Each share of ESOP Preferred Stock released from the unallocated reserve of the 401(k) Plan is converted into shares of our common stock based on the stated

value of the ESOP Preferred Stock and the then current market price of our common stock. The ESOP Preferred Stock is also convertible at the option of the holder at any time, unless previously redeemed. We have the option to redeem the ESOP Preferred Stock at any time, in whole or in part, at a redemption price per share equal to the higher of (a) $1,000 per share plus accrued and unpaid dividends or (b) the fair market value, as defined in the Certificates of Designation for the ESOP Preferred Stock.

Table 16.3: ESOP Preferred Stock

			Shares issued and outstanding												Carrying value												Adjustable dividend rate
(in millions, except shares)			Jun 30, 2021						Dec 31, 2020						Jun 30, 2021						Dec 31, 2020						Minimum						Maximum
ESOP Preferred Stock
$1,000 liquidation preference per share
2018			221,945						221,945						$	222					222						7.00		%				8.00		%
2017			163,210						163,210						163						163						7.00						8.00
2016			162,450						162,450						162						162						9.30						10.30
2015			92,904						92,904						93						93						8.90						9.90
2014			99,151						99,151						99						99						8.70						9.70
2013			61,948						61,948						62						62						8.50						9.50
2012			20,634						20,634						21						21						10.00						11.00
Total ESOP Preferred Stock (1)			822,242						822,242						$	822					822
Unearned ESOP shares (2)															$	(875)					(875)

(1)At both June 30, 2021, and December 31, 2020, additional paid-in capital included $53 million related to ESOP preferred stock.

(2)We recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.

			Wells Fargo & Company			135

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Note 17: Revenue from Contracts with Customers

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 22 (Operating Segments).

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, 2021
Net interest income (2)			$	5,618					1,202						1,783						610						(304)						(109)						8,800
Noninterest income:
Deposit-related fees			732						325						277						7						1						—						1,342
Lending-related fees (2)			36						135						190						2						(1)						—						362
Investment advisory and other asset-based fees (3)			—						2						12						2,382						398						—						2,794
Commissions and brokerage services fees			—						—						68						513						(1)						—						580
Investment banking fees			(2)						9						580						(1)						(16)						—						570
Card fees:
Card interchange and network revenues (4)			896						49						11						1						—						—						957
Other card fees (2)			121						—						—						—						(1)						—						120
Total card fees			1,017						49						11						1						(1)						—						1,077
Mortgage banking (2)			1,158						—						181						(3)						—						—						1,336
Net gains (losses) from trading activities (2)			—						(1)						30						6						(14)						—						21
Net gains on debt securities (2)			—						—						—						—						—						—						—
Net gains from equity securities (2)			—						32						46						6						2,612						—						2,696
Lease income (2)			—						173						—						—						140						—						313
Other (2)			127						182						160						13						209						(312)						379
Total noninterest income			3,068						906						1,555						2,926						3,327						(312)						11,470
Total revenue			$	8,686					2,108						3,338						3,536						3,023						(421)						20,270
Quarter ended June 30, 2020
Net interest income (2)			$	5,717					1,554						1,963						719						60						(121)						9,892
Noninterest income:
Deposit-related fees			575						297						261						6						3						—						1,142
Lending-related fees (2)			33						125						163						2						—						—						323
Investment advisory and other asset-based fees (3)			—						8						24						1,835						387						—						2,254
Commissions and brokerage services fees			—						—						79						470						1						—						550
Investment banking fees			(1)						26						588						1						(67)						—						547
Card fees:
Card interchange and network revenues (4)			650						36						11						1						—						—						698
Other card fees (2)			99						—						—						—						—						—						99
Total card fees			749						36						11						1						—						—						797
Mortgage banking (2)			256						—						65						(3)						(1)						—						317
Net gains (losses) from trading activities (2)			1						1						809						9						(13)						—						807
Net gains on debt securities (2)			6						—						—						—						206						—						212
Net gains (losses) from equity securities (2)			—						(28)						8						150						403						—						533
Lease income (2)			—						189						5						—						141						—						335
Other (2)			272						143						83						16						258						(195)						577
Total noninterest income			1,891						797						2,096						2,487						1,318						(195)						8,394
Total revenue			$	7,608					2,351						4,059						3,206						1,378						(316)						18,286
Six months ended June 30, 2021
Net interest income (2)			$	11,233					2,456						3,562						1,267						(694)						(216)						17,608
Noninterest income:
Deposit-related fees			1,393						642						543						14						5						—						2,597
Lending-related fees (2)			76						271						373						4						(1)						—						723
Investment advisory and other asset-based fees (3)			—						7						34						4,688						821						—						5,550
Commissions and brokerage services fees			—						—						149						1,068						(1)						—						1,216
Investment banking fees			(8)						22						1,191						(2)						(65)						—						1,138
Card fees:
Card interchange and network revenues (4)			1,674						94						21						2						—						—						1,791
Other card fees (2)			235						—						—						—						—						—						235
Total card fees			1,909						94						21						2						—						—						2,026
Mortgage banking (2)			2,417						—						251						(6)						—						—						2,662
Net gains (losses) from trading activities (2)			1						1						361						12						(6)						—						369
Net gains on debt securities (2)			—						—						—						—						151						—						151
Net gains from equity securities (2)			34						45						121						6						2,882						—						3,088
Lease income (2)			—						347						1						—						280						—						628
Other (2)			285						304						335						27						678						(583)						1,046
Total noninterest income			6,107						1,733						3,380						5,813						4,744						(583)						21,194
Total revenue			$	17,340					4,189						6,942						7,080						4,050						(799)						38,802
(continued on following page)

136			Wells Fargo & Company

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(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, 2020
Net interest income (2)			$	11,719					3,287						3,984						1,557						939						(264)						21,222
Noninterest income:
Deposit-related fees			1,454						599						518						13						5						—						2,589
Lending-related fees (2)			81						253						335						4						—						—						673
Investment advisory and other asset-based fees (3)			—						16						40						3,908						796						—						4,760
Commissions and brokerage services fees			—						—						169						1,063						(5)						—						1,227
Investment banking fees			(2)						39						1,065						2						(166)						—						938
Card fees:
Card interchange and network revenues (4)			1,307						88						29						2						2						—						1,428
Other card fees (2)			261						—						—						—						—						—						261
Total card fees			1,568						88						29						2						2						—						1,689
Mortgage banking (2)			598						—						105						(6)						(1)						—						696
Net gains (losses) from trading activities (2)			1						(4)						844						8						22						—						871
Net gains on debt securities (2)			6						—						—						—						443						—						449
Net gains (losses) from equity securities (2)			—						(222)						124						(111)						(659)						—						(868)
Lease income (2)			—						387						6						—						295						—						688
Other (2)			832						253						248						36						571						(415)						1,525
Total noninterest income			4,538						1,409						3,483						4,919						1,303						(415)						15,237
Total revenue			$	16,257					4,696						7,467						6,476						2,242						(679)						36,459

(1)Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax credits for low-income housing and renewable energy investments are included in noninterest income, in each case with 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 revenues are related to financial assets and liabilities, including loans, leases, securities and derivatives, with additional details included in other footnotes to our financial statements.

(3)We earned trailing commissions of $300 million and $598 million for the second quarter and first half of 2021, respectively, and $257 million and $532 million for the second quarter and first half of 2020, respectively.

(4)The cost of credit card rewards and rebates of $373 million and $683 million for the second quarter and first half of 2021, respectively, and $266 million and $651 million for the second quarter and first half of 2020, respectively, are presented net against the related revenues.

INVESTMENT ADVISORY AND OTHER ASSET-BASED FEES are earned for providing brokerage advisory, asset management and trust services.

Fees from advisory account relationships with brokerage customers are charged based on a percentage of the market value of the client’s assets. Services and obligations related to providing investment advice, active management of client assets, and assistance with selecting and engaging a third-party advisory manager are generally satisfied over a month or quarter. Trailing commissions are earned for selling shares to investors and our obligation is satisfied at the time shares are sold. However, these fees are received and recognized over time during the period the customer owns the shares and we remain the broker of record. The amount of trailing commissions is variable based on the length of time the customer holds the shares and on changes in the value of the underlying assets.

Asset management services include managing and administering assets, including mutual funds, and institutional separate accounts. Fees for these services are generally determined based on a tiered scale relative to the market value of assets under management (AUM). In addition to AUM, we have client assets under administration (AUA) that earn various administrative fees which are generally based on the extent of the services provided to administer the account. Services with AUM and AUA-based fees are generally satisfied over time.

Trust services include acting as a trustee or agent for corporate trust, personal trust, and agency assets. Obligations for trust services are generally satisfied over time; however, obligations for activities that are transitional in nature are satisfied at the time of the transaction.

COMMISSIONS AND BROKERAGE SERVICES FEES are earned for providing brokerage services.

Commissions from transactional accounts with brokerage customers are earned for executing transactions at the client’s direction. Our obligation is generally satisfied upon the execution of the transaction and the fees are based on the size and number of transactions executed.

Fees earned from other brokerage services include securities clearance, omnibus and networking fees received from mutual fund companies in return for providing record keeping and other administrative services, and annual account maintenance fees charged to customers. Our obligation is satisfied at the time we provide the service which is generally at the time of the transaction.

For a description of our other revenues, see Note 20 (Revenue from Contracts with Customers) in our 2020 Form 10-K.

			Wells Fargo & Company			137

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Note 18: Employee Benefits and Other Expenses

Pension and Postretirement Plans

We sponsor a frozen noncontributory qualified defined benefit retirement plan, the Wells Fargo & Company Cash Balance Plan (Cash Balance Plan), which covers eligible employees of Wells Fargo. The Cash Balance Plan was frozen on July 1, 2009, and 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 21 (Employee Benefits and Other Expenses) in our 2020 Form 10-K.

We recognize settlement losses for our Cash Balance Plan based on an assessment of whether lump sum benefit payments will, in aggregate for the year, exceed the sum of its annual service and interest cost (threshold). Settlement losses of $62 million and $70 million were recognized during second quarter 2021 and 2020, respectively, representing the pro rata portion of the net loss in cumulative other comprehensive income based on the percentage reduction in the Cash Balance

Plan’s projected benefit obligation attributable to lump sum benefit payments during the first half of both 2021 and 2020. As a result of the settlement losses, we re-measured the Cash Balance Plan obligation and plan assets as of both June 30, 2021 and 2020, and used a discount rate of 2.80% and 2.75%, respectively, based on our consistent methodology of determining our discount rate using a yield curve with maturity dates that closely match the estimated timing of the expected benefit payments. The result of the settlement losses and remeasurement increased the Cash Balance Plan asset by $347 million and other comprehensive income (pre-tax) by $409 million in second quarter 2021, and increased the Cash Balance Plan liability by $674 million and decreased other comprehensive income (pre-tax) by $604 million in second quarter 2020.

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 the consolidated statement of income.

Table 18.1: Net Periodic Benefit Cost

			2021																		2020
			Pension benefits																		Pension benefits
(in millions)			Qualified						Non-  qualified						Other  benefits						Qualified						Non-  qualified						Other  benefits
Quarter ended June 30,
Service cost			$	5					—						—						4						—						—
Interest cost			71						3						3						86						4						4
Expected return on plan assets			(154)						—						(4)						(149)						—						(5)
Amortization of net actuarial loss (gain)			38						3						(5)						35						3						(4)
Amortization of prior service credit			—						—						(3)						—						—						(3)
Settlement loss			62						—						—						70						—						—
Net periodic benefit cost			$	22					6						(9)						46						7						(8)
Six months ended June 30,
Service cost			$	9					—						—						7						—						—
Interest cost			142						6						6						172						8						8
Expected return on plan assets			(306)						—						(9)						(297)						—						(11)
Amortization of net actuarial loss (gain)			75						7						(10)						71						7						(9)
Amortization of prior service credit			—						—						(5)						—						—						(5)
Settlement loss			62						2						—						70						3						—
Net periodic benefit cost			$	(18)					15						(18)						23						18						(17)

Other Expenses

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

138			Wells Fargo & Company

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Note 19:  Restructuring Charges

The Company began pursuing various initiatives to reduce expenses and create a more efficient and streamlined organization in third quarter 2020. Actions from these initiatives may include (i) reorganizing and simplifying business processes and structures to improve internal operations and the customer experience, (ii) reducing headcount, (iii) optimizing third-party spending, including for our technology infrastructure, and (iv) rationalizing our branch and administrative locations, which may include consolidations and closures.

Restructuring charges are recorded as a component of noninterest expense on our consolidated statement of income.

The following costs associated with these initiatives are included in restructuring charges.

•Personnel costs – Severance costs associated with headcount reductions with payments made over time in accordance with our severance plan, as well as payments for other employee benefit costs such as incentive compensation.

•Facility closure costs – Write-downs and acceleration of depreciation and amortization of owned or leased assets for branch and administrative locations, as well as related decommissioning costs.

•Other – Impairment of other assets and costs associated with our technology infrastructure.

Table 19.1 provides details on our restructuring charges.

Table 19.1: Accruals for Restructuring Charges

(in millions)			Personnel costs			Facility closure costs			Other			Total
Quarter ended June 30, 2021
Balance, beginning of period			$	1,010		—			44			1,054
Restructuring charges			155			3			—			158
Payments and utilization			(213)			4			(37)			(246)
Changes in estimates (1)			(148)			(7)			(7)			(162)
Balance, end of period			$	804		—			—			804
Six months ended June 30, 2021
Balance, beginning of period			$	1,170		—			44			1,214
Restructuring charges			285			18			—			303
Payments and utilization			(370)			(11)			(38)			(419)
Changes in estimates (1)			(281)			(7)			(6)			(294)
Balance, end of period			$	804		—			—			804
Year ended December 31, 2020
Balance, beginning of year			$	—		—			—			—
Restructuring charges			1,371			80			144			1,595
Payments and utilization			(105)			(80)			(100)			(285)
Changes in estimates (1)			(96)			—			—			(96)
Balance, end of year			$	1,170		—			44			1,214

(1)Represents reduction of expense for changes in previously estimated amounts based on refinements of assumptions.

			Wells Fargo & Company			139

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Note 20: Earnings and Dividends Per Common Share

Table 20.1 shows earnings per common share and diluted earnings per common share and reconciles the numerator and denominator of both earnings per common share calculations.

Table 20.1: Earnings Per Common Share Calculations

						Quarter ended June 30,												Six months ended June 30,
(in millions, except per share amounts)						2021						2020						2021						2020
Wells Fargo net income (loss) (1)						$	6,040					$	(3,846)					$	10,676					(2,930)
Less: Preferred stock dividends and other (2)						297						314						677						926
Wells Fargo net income (loss) applicable to common stock (numerator) (1)						$	5,743					(4,160)						$	9,999					(3,856)
Earnings per common share
Average common shares outstanding (denominator)						4,124.6						4,105.5						4,132.9						4,105.2
Per share						$	1.39					(1.01)						$	2.42					(0.94)
Diluted earnings per common share
Average common shares outstanding						4,124.6						4,105.5						4,132.9						4,105.2
Add: Restricted share rights (3)						31.5						—						31.7						—
Diluted average common shares outstanding (denominator)						4,156.1						4,105.5						4,164.6						4,105.2
Per share						$	1.38					(1.01)						$	2.40					(0.94)

(1)In second quarter 2021, we elected to change our accounting method for low-income housing tax credit investments and elected to change the presentation of investment tax credits related to solar energy investments. Prior period balances have been revised to conform with the current period presentation. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2)The quarter ended June 30, 2021, balance included $4 million, and the six months ended June 30, 2021 and 2020, includes $48 million and $272 million, respectively, from the elimination of discounts or issuance costs associated with redemptions of preferred stock.

(3)Calculated using the treasury stock method. In the second quarter and first half of 2020, diluted average common shares outstanding equaled average common shares outstanding because our securities convertible into common shares had an anti-dilutive effect.

Table 20.2 presents the outstanding securities that were anti-dilutive and therefore not included in the calculation of diluted earnings per common share.

Table 20.2: Outstanding Anti-Dilutive Securities

															Weighted-average shares
			Quarter ended June 30,												Six months ended June 30,
(in millions)			2021						2020						2021						2020
Convertible Preferred Stock, Series L (1)			25.3						25.3						25.3						25.3
Restricted share rights (2)			0.2						35.9						0.1						0.9

(1)    Calculated using the if-converted method.

(2)    Calculated using the treasury stock method. Since we had net losses attributable to common shareholders for the second quarter and first half of 2020, all RSRs outstanding were anti-dilutive. Weighted average RSRs outstanding were 50.7 million and 54.7 million for the second quarter and first half of 2020, respectively.

Table 20.3 presents dividends declared per common share.

Table 20.3: Dividends Declared Per Common Share

			Quarter ended June 30,												Six months ended June 30,
			2021						2020						2021						2020
Per common share			$	0.10					$	0.51					$	0.20					1.02

140			Wells Fargo & Company

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Note 21: Other Comprehensive Income

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

Table 21.1: Summary of Other Comprehensive Income

			Quarter ended June 30,																																				Six months ended June 30,
			2021																		2020																		2021																		2020
(in millions)			Before   tax						Tax   effect						Net of   tax						Before   tax						Tax   effect						Net of   tax						Before   tax						Tax   effect						Net of   tax						Before   tax						Tax   effect						Net of   tax
Debt securities:
Net unrealized gains (losses) arising during the period			$	272					(68)						204						1,596						(395)						1,201						(1,740)						432						(1,308)						1,486						(373)						1,113
Reclassification of net (gains) losses to net income:
Interest income on debt securities (1)			134						(33)						101						123						(31)						92						271						(67)						204						189						(47)						142
Net gains on debt securities			—						—						—						(212)						63						(149)						(151)						35						(116)						(449)						111						(338)
Other noninterest income			(2)						1						(1)						(1)						—						(1)						(2)						1						(1)						(2)						—						(2)
Subtotal reclassifications to net income			132						(32)						100						(90)						32						(58)						118						(31)						87						(262)						64						(198)
Net change			404						(100)						304						1,506						(363)						1,143						(1,622)						401						(1,221)						1,224						(309)						915
Derivatives and hedging activities:
Fair Value Hedges:
Change in fair value of excluded components on fair value hedges (2)			(14)						3						(11)						(57)						13						(44)						11						(3)						8						87						(22)						65
Cash Flow Hedges:
Net unrealized gains (losses) arising during the period on cash flow hedges			11						(3)						8						5						(1)						4						(20)						5						(15)						(15)						4						(11)
Reclassification of net (gains) losses to net income:
Interest income on loans			39						(10)						29						53						(12)						41						91						(23)						68						109						(26)						83
Interest expense on long-term debt			1						—						1						2						—						2						2						—						2						4						(1)						3
Subtotal reclassifications to net income			40						(10)						30						55						(12)						43						93						(23)						70						113						(27)						86
Net change			37						(10)						27						3						—						3						84						(21)						63						185						(45)						140
Defined benefit plans adjustments:
Net actuarial and prior service gains (losses) arising during the period			347						(85)						262						(674)						167						(507)						357						(88)						269						(671)						166						(505)
Reclassification of amounts to noninterest expense (3):
Amortization of net actuarial loss			36						(9)						27						34						(9)						25						72						(18)						54						69						(17)						52
Settlements and other			59						(14)						45						67						(16)						51						59						(13)						46						68						(16)						52
Subtotal reclassifications to noninterest expense			95						(23)						72						101						(25)						76						131						(31)						100						137						(33)						104
Net change			442						(108)						334						(573)						142						(431)						488						(119)						369						(534)						133						(401)
Foreign currency translation adjustments:
Net unrealized gains (losses) arising during the period			23						(1)						22						51						—						51						36						(3)						33						(144)						2						(142)
Net change			23						(1)						22						51						—						51						36						(3)						33						(144)						2						(142)
Other comprehensive income (loss)			$	906					(219)						687						987						(221)						766						(1,014)						258						(756)						731						(219)						512
Less: Other comprehensive income (loss) from noncontrolling interests, net of tax															1																		—																		2																		(1)
Wells Fargo other comprehensive income (loss), net of tax															$	686																	766																		(758)																		513

(1)Represents net unrealized gains and losses amortized over the remaining lives of securities that were transferred from the available-for-sale portfolio to the held-to-maturity portfolio.

(2)Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in other comprehensive income.

(3)These items are included in the computation of net periodic benefit cost (see Note 18 (Employee Benefits and Other Expenses) for additional information).

			Wells Fargo & Company			141

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Note 21: Other Comprehensive Income (continued)

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

Table 21.2: Cumulative OCI Balances

(in millions)			Debt securities						Fair value hedges (1)						Cash flow hedges (2)						Defined   benefit   plans   adjustments												Foreign   currency   translation  adjustments						Cumulative   other  comprehensive   income (loss)
Quarter ended June 30, 2021
Balance, beginning of period			$	1,514					(185)						(108)						(2,369)												(102)						(1,250)
Net unrealized gains (losses) arising during the period			204						(11)						8						262												22						485
Amounts reclassified from accumulated other comprehensive income			100						—						30						72												—						202
Net change			304						(11)						38						334												22						687
Less: Other comprehensive income from noncontrolling interests			1						—						—						—												—						1
Balance, end of period			$	1,817					(196)						(70)						(2,035)												(80)						(564)
Quarter ended June 30, 2020
Balance, beginning of period			$	1,324					(71)						(270)						(2,193)												(354)						(1,564)
Net unrealized gains (losses) arising during the period			1,201						(44)						4						(507)												51						705
Amounts reclassified from accumulated other comprehensive income			(58)						—						43						76												—						61
Net change			1,143						(44)						47						(431)												51						766
Less: Other comprehensive income from noncontrolling interests			—						—						—						—												—						—
Balance, end of period			$	2,467					(115)						(223)						(2,624)												(303)						(798)
Six months ended June 30, 2021
Balance, beginning of period			$	3,039					(204)						(125)						(2,404)												(112)						194
Net unrealized gains (losses) arising during the period			(1,308)						8						(15)						269												33						(1,013)
Amounts reclassified from accumulated other comprehensive income			87						—						70						100												—						257
Net change			(1,221)						8						55						369												33						(756)
Less: Other comprehensive income from noncontrolling interests			1						—						—						—												1						2
Balance, end of period			$	1,817					(196)						(70)						(2,035)												(80)						(564)
Six months ended June 30, 2020
Balance, beginning of period			$	1,552					(180)						(298)						(2,223)												(162)						(1,311)
Net unrealized gains (losses) arising during the period			1,113						65						(11)						(505)												(142)						520
Amounts reclassified from accumulated other comprehensive income			(198)						—						86						104												—						(8)
Net change			915						65						75						(401)												(142)						512
Less: Other comprehensive loss from noncontrolling interests			—						—						—						—												(1)						(1)
Balance, end of period			$	2,467					(115)						(223)						(2,624)												(303)						(798)

(1)Substantially all of the amounts for fair value hedges are foreign exchange contracts.

(2)Majority of the amounts for cash flow hedges are interest rate contracts.

142			Wells Fargo & Company

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Note 22:  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 by our Chief Executive Officer and Operating Committee. The management reporting process is based on U.S. GAAP and includes specific adjustments, such as funds transfer pricing for asset/liability management, shared revenues and expenses, and taxable-equivalent adjustments to consistently reflect income from taxable and tax-exempt sources, which allows management to assess performance consistently across the operating segments.

In March 2021, we announced an agreement to sell our Corporate Trust Services business and, in second quarter 2021, we moved the business from the Commercial Banking operating segment to Corporate. Prior period balances have been revised to conform with the current period presentation. This change did not impact the previously reported consolidated financial results of the Company.

In second quarter 2021, we elected to change our accounting method for low-income housing tax credit (LIHTC) investments and elected to change the presentation of investment tax credits related to solar energy investments. These accounting policy changes had a nominal impact on reportable operating segment results. Prior period financial statement line items for the Company, as well as for the reportable operating segments, have been revised to conform with the current period presentation. Our LIHTC investments are included in the Corporate and Investment Banking operating segment and our solar energy investments are included in the Commercial Banking operating segment. For additional information, see Note 1 (Summary of Significant Accounting Policies).

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

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

Corporate and Investment Banking delivers a suite of capital markets, banking, and financial products and services to corporate, commercial real estate, government and institutional clients globally. Products and services include corporate banking, investment banking, treasury management, commercial real estate lending and servicing, equity and fixed income solutions, as well as sales, trading, and research capabilities.

Wealth and Investment Management provides personalized wealth management, investment and retirement products and services to clients across U.S.-based businesses including Wells Fargo Advisors and The Private Bank. We serve clients’ brokerage needs, and deliver financial planning, private banking, credit, and fiduciary services to high-net worth and ultra-high-net worth individuals and families.

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

Basis of Presentation

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

REVENUE AND EXPENSE SHARING When lines of business jointly serve customers, the line of business that is responsible for providing the product or service recognizes revenue or expense with a referral fee paid or an allocation of cost to the other line of business based on established internal revenue-sharing agreements.

When a line of business uses a service provided by another line of business or enterprise function (included in Corporate), expense is generally allocated based on the cost and use of the service provided.

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

			Wells Fargo & Company			143

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Note 22: Operating Segments (continued)

Table 22.1 presents our results by operating segment.

Table 22.1: Operating Segments

(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, 2021
Net interest income (2)			$	5,618					1,202						1,783						610						(304)						(109)						8,800
Noninterest income			3,068						906						1,555						2,926						3,327						(312)						11,470
Total revenue			8,686						2,108						3,338						3,536						3,023						(421)						20,270
Provision for credit losses			(367)						(382)						(501)						24						(34)						—						(1,260)
Noninterest expense			6,202						1,443						1,805						2,891						1,000						—						13,341
Income (loss) before income tax expense (benefit)			2,851						1,047						2,034						621						2,057						(421)						8,189
Income tax expense (benefit)			713						261						513						156						223						(421)						1,445
Net income before noncontrolling interests			2,138						786						1,521						465						1,834						—						6,744
Less: Net income (loss) from noncontrolling interests			—						2						(2)						—						704						—						704
Net income			$	2,138					784						1,523						465						1,130						—						6,040
Quarter ended June 30, 2020
Net interest income (2)			$	5,717					1,554						1,963						719						60						(121)						9,892
Noninterest income			1,891						797						2,096						2,487						1,318						(195)						8,394
Total revenue			7,608						2,351						4,059						3,206						1,378						(316)						18,286
Provision for credit losses			3,102						2,295						3,756						255						126						—						9,534
Noninterest expense			6,933						1,580						2,044						2,743						1,251						—						14,551
Income (loss) before income tax expense (benefit)			(2,427)						(1,524)						(1,741)						208						1						(316)						(5,799)
Income tax expense (benefit)			(650)						(379)						(408)						52						(300)						(316)						(2,001)
Net income (loss) before noncontrolling interests			(1,777)						(1,145)						(1,333)						156						301						—						(3,798)
Less: Net income from noncontrolling interests			—						1						—						—						47						—						48
Net income (loss)			$	(1,777)					(1,146)						(1,333)						156						254						—						(3,846)
Six months ended June 30, 2021
Net interest income (2)			$	11,233					2,456						3,562						1,267						(694)						(216)						17,608
Noninterest income			6,107						1,733						3,380						5,813						4,744						(583)						21,194
Total revenue			17,340						4,189						6,942						7,080						4,050						(799)						38,802
Provision for credit losses			(786)						(781)						(785)						(19)						63						—						(2,308)
Noninterest expense			12,469						3,073						3,638						5,919						2,231						—						27,330
Income (loss) before income tax expense (benefit)			5,657						1,897						4,089						1,180						1,756						(799)						13,780
Income tax expense (benefit)			1,415						473						1,013						296						(52)						(799)						2,346
Net income before noncontrolling interests			4,242						1,424						3,076						884						1,808						—						11,434
Less: Net income (loss) from noncontrolling interests			—						3						(2)						—						757						—						758
Net income			$	4,242					1,421						3,078						884						1,051						—						10,676
Six months ended June 30, 2020
Net interest income (2)			$	11,719					3,287						3,984						1,557						939						(264)						21,222
Noninterest income			4,538						1,409						3,483						4,919						1,303						(415)						15,237
Total revenue			16,257						4,696						7,467						6,476						2,242						(679)						36,459
Provision for credit losses			4,671						3,336						4,881						263						388						—						13,539
Noninterest expense			13,190						3,153						3,914						5,400						1,942						—						27,599
Income (loss) before income tax expense (benefit)			(1,604)						(1,793)						(1,328)						813						(88)						(679)						(4,679)
Income tax expense (benefit)			(445)						(442)						(307)						204						21						(679)						(1,648)
Net income (loss) before noncontrolling interests			(1,159)						(1,351)						(1,021)						609						(109)						—						(3,031)
Less: Net income (loss) from noncontrolling interests			—						2						—						—						(103)						—						(101)
Net income (loss)			$	(1,159)					(1,353)						(1,021)						609						(6)						—						(2,930)
(continued on following page)

144			Wells Fargo & Company

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(continued from previous page)
			Consumer Banking and Lending						Commercial Banking						Corporate and Investment Banking						Wealth and Investment Management						Corporate						Reconciling Items (1)						Consolidated Company
Quarter ended June 30, 2021
Loans (average)			$	331,892					178,572						252,422						81,784						10,077						—						854,747
Assets (average)			388,617						195,453						513,414						87,766						754,629						—						1,939,879
Deposits (average)			835,752						192,586						190,810						174,980						41,696						—						1,435,824
Six months ended June 30, 2021
Loans (average)			$	342,428					180,845						249,302						81,314						10,152						—						864,041
Assets (average)			398,530						197,396						512,476						87,562						741,203						—						1,937,167
Deposits (average)			812,723						190,984						192,645						174,333						44,080						—						1,414,765
Loans (period-end)			326,760						178,905						253,259						82,783						10,593						—						852,300
Assets (period-end)			382,464						196,421						516,518						88,678						761,915						—						1,945,996
Deposits (period-end)			840,434						197,461						188,219						174,267						40,091						—						1,440,472
Quarter ended June 30, 2020
Loans (average)			$	369,631					228,423						273,587						78,091						21,534						—						971,266
Assets (average)			427,065						243,762						535,298						85,438						655,617						—						1,947,180
Deposits (average)			715,144						184,132						239,637						165,103						82,640						—						1,386,656
Six months ended June 30, 2020
Loans (average)			$	376,096					226,641						265,915						77,987						21,517						—						968,156
Assets (average)			433,226						243,293						543,455						85,538						642,513						—						1,948,025
Deposits (average)			683,925						175,929						252,902						155,246						94,307						—						1,362,309
Loans (period-end)			368,753						210,779						255,574						78,101						21,948						—						935,155
Assets (period-end)			432,100						226,735						510,205						84,699						713,309						—						1,967,048
Deposits (period-end)			746,602						183,085						236,620						168,249						76,155						—						1,410,711

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

(2)Net interest income is interest earned on assets minus the interest paid on liabilities to fund those assets. Segment interest earned includes actual interest income on segment assets as well as a funding credit for their deposits. Segment interest paid on liabilities includes actual interest expense on segment liabilities as well as a funding charge for their assets.

			Wells Fargo & Company			145

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Note 23:  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 OCC has similar requirements for the Company’s national banks, including Wells Fargo Bank, N.A. (the Bank).

Table 23.1 presents regulatory capital information for Wells Fargo & Company and the Bank in accordance with Basel III capital requirements. Our capital adequacy is assessed based on the lower of our risk-based capital ratios calculated under the Standardized Approach and under the Advanced Approach. The Standardized Approach applies assigned risk weights to broad risk categories, while the calculation of risk-weighted assets (RWAs) under the Advanced Approach differs by requiring

applicable banks to utilize a risk-sensitive methodology, which relies upon the use of internal credit models, and includes an operational risk component. The Basel III capital requirements for calculating Common Equity Tier 1 (CET1) and tier 1 capital, along with RWAs, are fully phased-in. However, the requirements for determining tier 2 and total capital are still in accordance with transition requirements and are scheduled to be fully phased-in by the end of 2021. Accordingly, the information presented below reflects fully phased-in CET1 capital, tier 1 capital, and RWAs, but reflects total capital still in accordance with transition requirements.

At June 30, 2021, the Bank and our other insured depository institutions were considered well-capitalized under the requirements of the Federal Deposit Insurance Act.

Table 23.1: Regulatory Capital Information (1)

			Wells Fargo & Company																														Wells Fargo Bank, N.A.
			June 30, 2021															December 31, 2020															June 30, 2021															December 31, 2020
(in millions, except ratios)			Advanced Approach						Standardized Approach									Advanced Approach						Standardized Approach									Advanced Approach						Standardized Approach									Advanced Approach						Standardized Approach
Regulatory capital:
Common Equity Tier 1			$	143,442					143,442									138,297						138,297									151,121						151,121									150,168						150,168
Tier 1			162,999						162,999									158,196						158,196									151,121						151,121									150,168						150,168
Total			190,173						200,156									186,934						196,660									165,154						174,641									164,412						173,719
Assets:
Risk-weighted assets (2)			1,126,535						1,188,727									1,158,355						1,193,744									988,692						1,087,876									1,012,751						1,085,599
Adjusted average assets			1,911,654						1,911,654									1,900,258						1,900,258									1,752,195						1,752,195									1,735,406						1,735,406
Regulatory capital ratios:
Common Equity Tier 1 capital			12.73		%				12.07			*						11.94						11.59			*						15.28						13.89			*						14.83						13.83			*
Tier 1 capital			14.47						13.71			*						13.66						13.25			*						15.28						13.89			*						14.83						13.83			*
Total capital			16.88						16.84			*						16.14			*			16.47									16.70						16.05			*						16.23						16.00			*
			Wells Fargo & Company																														Wells Fargo Bank, N.A.
			June 30, 2021															December 31, 2020															June 30, 2021															December 31, 2020
Regulatory leverage:
Total leverage exposure (3)			$	2,300,416														1,963,971															2,117,710															2,041,952
Supplementary leverage ratio (SLR) (3)(4)			7.09								%							8.05															7.14															7.35
Tier 1 leverage ratio (5)			8.53															8.32															8.62															8.65

*Denotes the binding ratio based on the lower calculation under the Advanced and Standardized Approaches.

(1)At June 30, 2021, the impact of the CECL transition provision issued by federal banking regulators on the regulatory capital of the Company was an increase in capital of $879 million, reflecting a $991 million (post-tax) increase in capital recognized upon our initial adoption of CECL, offset by 25% of the $7.5 billion increase in our ACL under CECL from January 1, 2020, through June 30, 2021. The impact of the CECL transition provision on the regulatory capital of the Bank at June 30, 2021, was an increase in capital of $879 million.

(2)RWAs for the Company and the Bank included an increase of $547 million under the Standardized Approach and a decrease of $1.4 billion under the Advanced Approach related to the impact of the CECL transition provision on the excess allowance for credit losses as of June 30, 2021.

(3)The SLR consists of tier 1 capital divided by total leverage exposure. Total leverage exposure consists of total average assets, less goodwill and other permitted tier 1 capital deductions (net of deferred tax liabilities), plus certain off-balance sheet exposures.

(4)In 2020, the FRB issued an interim final rule that temporarily allowed the exclusion for on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of total leverage exposure in the denominator of the SLR. The Company adopted this interim final rule, but the Bank did not elect to apply these exclusions. The interim final rule expired on April 1, 2021.

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

At June 30, 2021, under transition requirements, the CET1, tier 1 and total capital ratio requirements for the Company included a global systemically important bank (G-SIB) surcharge of 2.00%. The G-SIB surcharge is not applicable to the Bank. In addition, the CET1, tier 1 and total capital ratio requirements for the Company and the Bank included a stress capital buffer of 2.50% under the Standardized Approach and a capital conservation buffer of 2.50% under the Advanced Approach. The Company is required to maintain these risk-based capital ratios and to maintain an SLR of at least 5.00% (comprised of a 3.00% minimum requirement plus a supplementary leverage buffer of 2.00%) to avoid restrictions on capital distributions and discretionary bonus payments. The Bank is required to maintain an SLR of at least 6.00% to be considered well-capitalized under applicable regulatory capital adequacy rules. Table 23.2 presents the risk-based capital and leverage requirements under transition requirements to which the Company and the Bank

were subject as of June 30, 2021, and December 31, 2020, which were the same under both the Standardized and Advanced Approaches.

Table 23.2: Risk-Based Capital and Leverage Ratios – Transition Requirements

			Wells Fargo & Company												Wells Fargo Bank, N.A.
			Jun 30, 2021												Jun 30, 2021
			and Dec 31, 2020												and Dec 31, 2020
Common Equity Tier 1 capital			9.00		%										7.00
Tier 1 capital			10.50												8.50
Total capital			12.50												10.50
Tier 1 leverage			4.00												4.00
Supplementary leverage			5.00												6.00

146			Wells Fargo & Company

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Capital Planning Requirements

The FRB’s capital plan rule establishes capital planning and other requirements that govern capital distributions, including dividends and share repurchases, by certain large bank holding companies (BHCs), including Wells Fargo. The FRB conducts an annual Comprehensive Capital Analysis and Review exercise and has also published guidance regarding its supervisory expectations for capital planning, including capital policies regarding the process relating to common stock dividend and repurchase decisions in the FRB’s SR Letter 15-18. The Parent’s ability to make certain capital distributions is subject to the requirements of the capital plan rule and is also subject to the Parent meeting or exceeding certain regulatory capital minimums.

On March 25, 2021, the FRB announced that it was extending measures it previously announced limiting large BHCs, including Wells Fargo, from making any capital distribution (excluding any capital distribution arising from the issuance of a capital instrument eligible for inclusion in the numerator of a regulatory capital ratio), unless otherwise approved by the FRB. The FRB generally authorized BHCs to (i) provided that the BHC does not increase the amount of its common stock dividends to be larger than the level paid in second quarter 2020, pay common stock dividends and make share repurchases that, in the aggregate, do not exceed an amount equal to the average of the BHC’s net income for the four preceding calendar quarters; (ii) make share repurchases that equal the amount of share issuances related to expensed employee compensation; and (iii) redeem and make scheduled payments on additional tier 1 and tier 2 capital instruments. These limitations on capital distributions ended on June 30, 2021.

Loan and Dividend Restrictions

Federal law restricts the amount and the terms of both credit and non-credit transactions between a bank and its nonbank affiliates. Additionally, federal laws and regulations limit the dividends that a national bank may pay.

Our nonbank subsidiaries are also limited by certain federal and state statutory provisions and regulations covering the amount of dividends that may be paid in any given year. In addition, under a Support Agreement dated June 28, 2017, as amended and restated on June 26, 2019, among Wells Fargo & Company, the parent holding company (the “Parent”), WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, Wells Fargo Clearing Services, LLC, and certain other subsidiaries of the Parent designated from time to time as material entities for resolution planning purposes or identified from time to time as related support entities in our resolution plan, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers or if the Parent’s board of directors authorizes it to file a case under the U.S. Bankruptcy Code.

For additional information on loan and dividend restrictions, see Note 28 (Regulatory Capital Requirements and Other Restrictions) in our 2020 Form 10-K.

Cash Restrictions

Cash and cash equivalents may be restricted as to usage or withdrawal. Table 23.3 provides a summary of restrictions on cash and cash equivalents.

Table 23.3: Nature of Restrictions on Cash and Cash Equivalents

(in millions)			Jun 30, 2021						Dec 31, 2020
Reserve balance for non-U.S. central banks			$	199					243
Segregated for benefit of brokerage customers under federal and other brokerage regulations			878						957

			Wells Fargo & Company			147

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Glossary of Acronyms
ACL			Allowance for credit losses			HTM			Held-to-maturity
AFS			Available-for-sale			LCR			Liquidity coverage ratio
ALCO			Asset/Liability Committee			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
AUA			Assets under administration			LTV			Loan-to-value
AUM			Assets under management			MBS			Mortgage-backed security
AVM			Automated valuation model			MSR			Mortgage servicing right
BCBS			Basel Committee on Banking Supervision			NAV			Net asset value
BHC			Bank holding company			NPA			Nonperforming asset
CCAR			Comprehensive Capital Analysis and Review			NSFR			Net stable funding ratio
CD			Certificate of deposit			OCC			Office of the Comptroller of the Currency
CECL			Current expected credit loss			OCI			Other comprehensive income
CET1			Common Equity Tier 1			OTC			Over-the-counter
CFPB			Consumer Financial Protection Bureau			OTTI			Other-than-temporary impairment
CLO			Collateralized loan obligation			PCD			Purchased credit-deteriorated
CLTV			Combined loan-to-value			PCI			Purchased credit-impaired
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 Ratings Services
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

148			Wells Fargo & Company

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PART II – OTHER INFORMATION

Item 1.    Legal Proceedings

 

Information in response to this item can be found in Note 13 (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, 2021.

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 authorizations
April			20,075,596						$	43.60					629,954,518
May			10,893,389						46.11						619,061,129
June			4,354,796						43.08						614,706,333
Total			35,323,781

(1)All shares were repurchased under an authorization covering up to 350 million shares of common stock approved by the Board of Directors and publicly announced by the Company on July 23, 2019. In addition, the Company publicly announced on January 15, 2021, that the Board of Directors authorized the repurchase of an additional 500 million shares of common stock. Unless modified or revoked by the Board, these authorizations do not expire.

			Wells Fargo & Company			149

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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 March 1, 2018.

4(a)

See Exhibits 3(a) and 3(b).

4(b)

The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.

18

Preferability Letters from KPMG LLP.

Filed herewith.

22

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 Annual Report on Form 10-K for the year ended December 31, 2020.

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.

150			Wells Fargo & Company

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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: July 28, 2021     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			151