10-QPeriod: Q2 FY2016

WELLS FARGO & COMPANY/MN Quarterly Report for Q2 Ended Jun 30, 2016

Filed August 3, 2016For Securities:WFCWFC-PDWFC-PCWFC-PYWFC-PAWFC-PLWFCNPWFC-PZ

Summary

Wells Fargo & Company/MN (WFC) reported solid financial results for the second quarter and first half of 2016, demonstrating the resilience of its diversified business model. Net income for the quarter was $5.6 billion, or $1.01 per diluted share, a slight decrease from the prior year but marking the 15th consecutive quarter with earnings exceeding $5 billion. Total revenue increased 4% year-over-year to $22.2 billion, driven by growth in both net interest and non-interest income. The company continued its strong growth in loans, reaching a record $957.2 billion, and deposits, totaling a record $1.25 trillion. Profitability metrics, such as Return on Average Assets (ROA) and Return on Average Common Equity (ROE), remained robust, although slightly down from the prior year, reflecting the persistent low-interest-rate environment. The company also maintained strong capital levels and returned $3.2 billion to shareholders through dividends and share repurchases, underscoring its commitment to capital returns.

Financial Highlights

35 data points
Beta

Net Income

$5.56B

EPS (Diluted)

$1.01

Total Assets

$1.89T

Free Cash Flow

-$7.33B

Financial Statements
Beta
Interest Expense$1.41B
Net Income$5.56B
EPS (Basic)$1.02
EPS (Diluted)$1.01
Shares Outstanding (Basic)5.07B
Shares Outstanding (Diluted)5.12B

Key Highlights

  • 1Net income of $5.6 billion for Q2 2016, translating to $1.01 diluted EPS, demonstrating continued profitability.
  • 2Total revenue of $22.2 billion for Q2 2016, a 4% increase year-over-year, driven by net interest income and non-interest income growth.
  • 3Total loans reached a record $957.2 billion, an 8% increase year-over-year, highlighting strong lending activity.
  • 4Total deposits increased 5% year-over-year to a record $1.25 trillion, indicating a strong deposit franchise.
  • 5Pre-tax pre-provision profit (PTPP) grew 5% year-over-year, showing improved operational profitability.
  • 6Returned $3.2 billion to shareholders in Q2 2016 via dividends and net share repurchases, continuing a trend of robust capital returns.
  • 7Net charge-offs increased to $924 million (0.39% of average loans), primarily due to challenges in the oil and gas portfolio, though consumer credit losses declined.

Frequently Asked Questions

Wells Fargo reported a net income of $5.6 billion, or $1.01 per diluted share, for the second quarter of 2016.

Wells Fargo experienced strong growth in both loans and deposits. Total loans reached a record $957.2 billion, an increase of 8% year-over-year, while total deposits reached a record $1.25 trillion, up 5% year-over-year.

The provision for credit losses increased to $1.1 billion in the second quarter of 2016 from $300 million in the prior year. This increase was primarily driven by the deterioration in the oil and gas portfolio due to low energy prices, along with overall loan growth across commercial, automobile, and credit card portfolios.

The efficiency ratio was 58.1% in the second quarter of 2016, compared to 58.5% in the second quarter of 2015. The company expects to operate at the higher end of its targeted efficiency ratio range of 55-59% for the full year 2016.