Wells Fargo(US:WFC)2024-08-01 21:16Financial Overview - The quarterly report for Wells Fargo & Company ended June 30, 2024, indicates a total of 3,403,770,246 shares outstanding[3]. - The financial statements include a consolidated statement of income, comprehensive income, balance sheet, and cash flows, providing a comprehensive overview of financial performance[4]. - Total revenue for the quarter ended June 30, 2024, was $20,689 million, a decrease of 1% from $20,533 million in the same quarter last year[5]. - Net income applicable to common stock for the quarter was $4,640 million, an increase of 8% compared to $4,659 million in the same quarter last year[5]. - Diluted earnings per common share increased to $1.33, up 11% from $1.25 in the same quarter last year[5]. - Total revenue for Q2 2024 was $20.7 billion, a slight increase of 1% from $20.5 billion in Q2 2023, driven by a 19% increase in noninterest income[21]. - For the quarter ended June 30, 2024, Wells Fargo reported a consolidated net income of $4.910 billion, a decrease from $4.938 billion in the same quarter of 2023[48]. - Total revenue for the quarter was $20.689 billion, compared to $20.533 billion in the same quarter of the previous year, reflecting a year-over-year increase of 0.76%[48]. Compliance and Regulatory Matters - The company is classified as a large accelerated filer, confirming compliance with filing requirements for the past 90 days[2]. - The company has submitted all required reports electronically, ensuring transparency and compliance with regulatory standards[2]. - The report addresses regulatory matters and critical accounting policies, ensuring adherence to financial regulations[4]. - The company expects a significant reduction in overdraft fees if the CFPB's proposed rule limiting such fees is adopted[18]. - The company expensed an estimated special assessment of $1.9 billion (pre-tax) in Q4 2023 due to FDIC rules related to bank failures[17]. - The company is required to prepare and submit resolution plans, known as "living wills," to facilitate orderly resolution in case of financial distress[200]. - The FRB and FDIC confirmed that the Company's most recent resolution plan did not have any deficiencies as of June 21, 2024[200]. Risk Management and Credit Losses - The report outlines risk management strategies and capital management practices, emphasizing the company's focus on financial stability[4]. - The provision for credit losses was $1,236 million, a 32% increase from $1,713 million in the same quarter last year[5]. - The provision for credit losses was $1.2 billion in Q2 2024, a decrease of 28% from $1.7 billion in Q2 2023, primarily due to decreases in auto loans and commercial real estate loans[21][24]. - The allowance for credit losses (ACL) for loans decreased to $14,789 million, maintaining 1.61% of total loans, down from $15,088 million[107]. - The company reported net loan charge-offs as a percentage of average commercial loans at 0.35% for the quarter ended June 30, 2024, up from 0.15% in the previous quarter[107]. - The total nonperforming assets increased to $8,650 million as of June 30, 2024, from $8,443 million on December 31, 2023, marking a rise of 2.46%[132]. Capital and Equity - The company has a variety of securities registered, including common stock and preferred stock, indicating diverse financing options[2]. - The Common Equity Tier 1 (CET1) capital ratio was 11.01%, down from 11.19% in the previous quarter[5]. - Common Equity Tier 1 (CET1) capital decreased from $140,783 million at December 31, 2023, to $134,249 million at June 30, 2024, a reduction of approximately 4%[178]. - Total capital decreased from $193,061 million at December 31, 2023, to $183,201 million at June 30, 2024, reflecting a decline of about 5%[178]. - The company issued $2.0 billion of Preferred Stock, Series FF in July 2024 to strengthen its capital position[16]. - The Board authorized a common stock repurchase program of up to $30 billion, with approximately $14.7 billion remaining as of June 30, 2024[198]. Income and Expenses - Noninterest income for the second quarter of 2024 reached $8,766 million, a 19% increase from $7,370 million in the same quarter of 2023[30]. - Noninterest expense for the second quarter of 2024 was $13,293 million, a $306 million increase (2%) from $12,987 million in the second quarter of 2023[35]. - The effective income tax rate for the second quarter of 2024 was 20.3%, up from 16.0% in the second quarter of 2023, influenced by changes in accounting for renewable energy tax credit investments[40]. - Operating losses increased by $261 million (113%) in the second quarter of 2024, driven by higher expenses related to legal actions and customer remediation activities[37]. - Noninterest expense decreased to $5,701 million, down 5% from $6,027 million in the prior year[50]. Loans and Deposits - Loans outstanding were $916,977 million, a decrease of 1% from $945,906 million in the same quarter last year[5]. - Total deposits increased to $1,006,806 million, with interest expense of $6,149 million, resulting in an average interest rate of 2.46%[27]. - Total loans decreased by $10,412 million (3%) to $325,939 million in Q2 2024 compared to Q2 2023, primarily due to declines in Home Lending and Auto businesses[56]. - Total deposits decreased by $45,111 million (5%) to $778,228 million in Q2 2024, driven by customer migration to higher yielding deposit products[56]. - Total loans outstanding decreased to $917.9 billion, down $18.8 billion (2%) from $936.7 billion at the end of 2023[94]. Economic Outlook - The forecasted U.S. unemployment rate is expected to rise to 4.4% by June 30, 2024, and further to 5.8% by December 2025[145]. - The forecasted U.S. real GDP is projected to decline by (0.4)% in Q4 2024 and (0.5)% in Q2 2025[145]. - The company anticipates continued challenges in loan demand due to the higher interest rate environment[57]. Trading and Investment Activities - The company engages in trading activities that include debt and equity securities, with income from these activities reflected in net gains from trading[156]. - The company reported a trading general value-at-risk (VaR) of $28 million as of June 30, 2024, with interest rate risk averaging $30 million[157]. - Changes in interest rates may impact mortgage banking noninterest income, including origination and servicing fees, on a lagging basis[154]. Customer Engagement and Digital Services - Digital active customers increased to 35.6 million, up 4% from 34.2 million year-over-year[50]. - Debit card purchase volume reached $128.2 billion, an increase of 3% from $124.9 billion year-over-year[50].