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Wells Fargo(WFC) - 2025 Q2 - Quarterly Report
Wells FargoWells Fargo(US:WFC)2025-08-05 13:28

PART I Financial Information Item 1. Financial Statements This section presents Wells Fargo's unaudited consolidated financial statements for Q2 2025, with notes on accounting policies, loans, and regulatory capital Consolidated Financial Statements Wells Fargo's consolidated financial statements show Q2 2025 net income of $10.4 billion on $41.0 billion revenue, with total assets at $1.98 trillion Consolidated Statement of Income Highlights (Six Months Ended June 30) | Metric (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Total revenue | $40,971 | $41,552 | | Net interest income | $23,203 | $24,150 | | Noninterest income | $17,768 | $17,402 | | Provision for credit losses | $1,937 | $2,174 | | Total noninterest expense | $27,270 | $27,631 | | Wells Fargo net income | $10,388 | $9,529 | Consolidated Balance Sheet Highlights (Period-End) | Metric (in millions) | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total assets | $1,981,269 | $1,929,845 | | Net loans | $910,457 | $898,562 | | Total debt securities | $533,916 | $519,131 | | Total deposits | $1,340,703 | $1,371,804 | | Total equity | $182,954 | $181,066 | Notes to Financial Statements Detailed notes disclose accounting policies, securities, loans, credit losses, derivatives, fair value, segment results, and regulatory capital - There were no material changes to the company's significant accounting policies in the first half of 2025357 - The company has evaluated subsequent events through the filing date and determined there were no material events requiring recognition or disclosure362 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Financial Review) Management reviews Wells Fargo's Q2 and H1 2025 financial performance, highlighting a 12% Q2 net income increase, strong capital, and the Federal Reserve's asset growth cap removal Summary Financial Data Q2 2025 summary financial data shows increased net income and diluted EPS, stable noninterest expense, and a strong Common Equity Tier 1 (CET1) ratio of 11.13% Q2 2025 Selected Financial Data | Metric ($ in millions, except per share) | Q2 2025 | Q2 2024 | % Change YoY | | :--- | :--- | :--- | :--- | | Total revenue | $20,822 | $20,689 | 1% | | Noninterest expense | $13,379 | $13,293 | 1% | | Provision for credit losses | $1,005 | $1,236 | (19%) | | Wells Fargo net income | $5,494 | $4,910 | 12% | | Diluted EPS | $1.60 | $1.33 | 20% | Six Months Ended June 30 Selected Financial Data | Metric ($ in millions, except per share) | 2025 | 2024 | % Change YoY | | :--- | :--- | :--- | :--- | | Total revenue | $40,971 | $41,552 | (1%) | | Noninterest expense | $27,270 | $27,631 | (1%) | | Provision for credit losses | $1,937 | $2,174 | (11%) | | Wells Fargo net income | $10,388 | $9,529 | 9% | | Diluted EPS | $2.98 | $2.53 | 18% | Overview Wells Fargo provides diversified financial services, with recent developments including the Federal Reserve's asset growth cap removal, a dividend increase, and a reduced stress capital buffer (SCB) to 3.70% - On June 3, 2025, the Federal Reserve Board (FRB) removed the limitation on growth in total assets that was imposed in a 2018 consent order18 - The Board of Directors approved an increase in the Q3 2025 common stock dividend to $0.45 per share19 - The company's Stress Capital Buffer (SCB) was revised down to 3.70% from 3.80% and is expected to decrease further to 2.50% for the period starting October 1, 2025, pending potential regulatory changes20 Earnings Performance Q2 2025 net income rose to $5.5 billion from $4.9 billion year-over-year, driven by higher noninterest income and lower credit provisions, with H1 2025 net income increasing to $10.4 billion Q2 2025 vs Q2 2024 Performance Drivers ($ in millions) | Component | Q2 2025 | Q2 2024 | $ Change | | :--- | :--- | :--- | :--- | | Net interest income | $11,708 | $11,923 | ($215) | | Noninterest income | $9,114 | $8,766 | $348 | | Provision for credit losses | $1,005 | $1,236 | ($231) | | Noninterest expense | $13,379 | $13,293 | $86 | | Income tax expense | $916 | $1,251 | ($335) | | Wells Fargo net income | $5,494 | $4,910 | $584 | Operating Segment Net Income (in millions) | Segment | Q2 2025 | Q2 2024 | $ Change | | :--- | :--- | :--- | :--- | | Consumer Banking and Lending | $1,863 | $1,777 | $86 | | Commercial Banking | $1,086 | $1,182 | ($96) | | Corporate and Investment Banking | $1,737 | $1,785 | ($48) | | Wealth and Investment Management | $480 | $484 | ($4) | | Corporate | $328 | ($318) | $646 | Balance Sheet Analysis As of June 30, 2025, total assets increased by $51.4 billion to $2.0 trillion, with loans growing 1% to $924.4 billion and deposits declining 2% to $1.34 trillion - Total assets increased by $51.4 billion to $2.0 trillion at June 30, 2025, compared to December 31, 2024125 Loan Portfolio Composition ($ in millions) | Loan Type | Jun 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Commercial | $549,770 | $534,159 | 3% | | Consumer | $374,648 | $378,586 | (1%) | | Total loans | $924,418 | $912,745 | 1% | Deposit Composition ($ in millions) | Deposit Type | Jun 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | Noninterest-bearing | $370,844 | $383,616 | (3%) | | Interest-bearing | $969,859 | $988,188 | (2%) | | Total deposits | $1,340,703 | $1,371,804 | (2%) | Off-Balance Sheet Arrangements The company uses off-balance sheet arrangements, including unfunded credit commitments, transactions with unconsolidated entities (VIEs), guarantees, and derivatives, for customer needs and risk management - Key off-balance sheet arrangements include unfunded credit commitments, transactions with unconsolidated entities (VIEs), guarantees, and derivatives138 Risk Management This section details the company's management of credit risk and asset/liability, with nonaccrual loans stable at 0.84%, ACL at $14.6 billion, and strong liquidity with an LCR of 121% Credit Quality Overview | Metric | Jun 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total nonaccrual loans | $7,757 million | $7,730 million | | Nonaccrual loans as a % of total loans | 0.84% | 0.85% | | Allowance for credit losses (ACL) for loans | $14,568 million | $14,636 million | | ACL for loans as a % of total loans | 1.58% | 1.60% | Net Interest Income Sensitivity (Next 12 Months) | Scenario | Estimated Impact ($ in billions) | | :--- | :--- | | +100 bps parallel shift | $1.8 | | -100 bps parallel shift | ($2.1) | | -200 bps parallel shift | ($4.6) | - The Liquidity Coverage Ratio (LCR) was 121% for Q2 2025, exceeding the regulatory minimum of 100%250253 Capital Management Wells Fargo maintains robust capital, with a CET1 ratio of 11.13% (exceeding 9.70% minimum) and a TLAC ratio of 24.42% (above 21.50% minimum), repurchasing 88 million shares for $6.6 billion in H1 2025 Key Capital Ratios (Standardized Approach) | Ratio | Jun 30, 2025 | Required Minimum | | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 11.13% | 9.70% | | Tier 1 capital | 12.45% | 11.20% | | Total capital | 15.02% | 13.20% | - The Total Loss Absorbing Capacity (TLAC) ratio was 24.42%, exceeding the regulatory minimum of 21.50%309 - In the first half of 2025, the company repurchased 88 million shares of common stock for $6.6 billion and paid $3.2 billion in dividends317 Regulation and Supervision The Federal Reserve Board removed the company's asset growth limitation on June 3, 2025, a key part of the 2018 consent order, with other governance and risk management provisions remaining in effect - On June 3, 2025, the Federal Reserve Board removed the Company's limitation on growth in total assets, a key part of the 2018 consent order; other provisions of the order remain in place321 Critical Accounting Policies Management identified five critical accounting policies requiring significant, subjective, and complex judgments, fundamental to understanding the company's financial results - The five critical accounting policies involve significant management judgment and govern: the allowance for credit losses, fair value measurements, income taxes, liability for legal actions, and goodwill impairment326327 Current Accounting Developments The company is evaluating new FASB accounting standards, including ASU 2023-09, which will enhance annual income tax disclosures effective for the 2025 annual financial statements - ASU 2023-09 will require more detailed disclosures in the annual income tax rate reconciliation and a breakdown of income taxes paid by jurisdiction, effective for the 2025 annual report329 Forward-Looking Statements This section cautions that the report contains forward-looking statements regarding future performance, credit quality, capital, and strategic plans, subject to inherent risks and uncertainties - The report includes forward-looking statements about future financial performance, credit quality, capital levels, and strategic objectives331 - Actual results may differ materially from forward-looking statements due to various risks, including economic conditions, regulatory changes, interest rate environment, and operational breaches332333334 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section, cross-referenced to 'Risk Management – Asset/Liability Management', details the company's exposure to market risk factors like interest rates, credit spreads, and foreign exchange rates - The content for this item is located within the 'Risk Management' section of the MD&A, specifically under 'Asset/Liability Management' and 'Market Risk'9237 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 2025 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025340 - No changes in the second quarter of 2025 materially affected the Company's internal control over financial reporting341 PART II Other Information Item 1. Legal Proceedings This section incorporates Note 10 to the Financial Statements, detailing ongoing judicial, regulatory, and governmental proceedings related to the company's business activities - Information regarding legal proceedings is detailed in Note 10 of the financial statements730 Item 1A. Risk Factors This section incorporates the 'Risk Factors' section from the Financial Review, which refers to the more detailed discussion in the company's 2024 Annual Report on Form 10-K - Information regarding risk factors is found in the 'Risk Factors' section of the Financial Review, which refers to the 2024 Form 10-K731 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, Wells Fargo repurchased 43.9 million shares under a $30 billion authorization, with approximately $40.8 billion remaining available as of June 30, 2025 Common Stock Repurchases for Q2 2025 | Calendar Month | Total Shares Repurchased (shares) | Weighted Average Price Paid ($) | | :--- | :--- | :--- | | April | 29,592,437 | $66.60 | | May | 14,296,659 | $73.11 | | June | — | — | | Total | 43,889,096 | N/A | - As of June 30, 2025, the company had approximately $40.8 billion remaining under its stock repurchase authorizations322 Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during Q2 2025734 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents, award agreements, and required CEO/CFO certifications - Exhibits filed include corporate governance documents, executive compensation agreements, and required CEO/CFO certifications737