10-QPeriod: Q2 FY2019

WELLS FARGO & COMPANY/MN Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 2, 2019For Securities:WFCWFC-PDWFC-PCWFC-PYWFC-PAWFC-PLWFCNPWFC-PZ

Summary

Wells Fargo & Company reported a strong second quarter of 2019, with net income of $6.2 billion, or $1.30 per diluted share, up from $5.2 billion, or $0.98 per diluted share, in the prior year. Total revenue remained stable year-over-year at $21.6 billion, driven by a $477 million increase in noninterest income offsetting a $446 million decrease in net interest income. The company saw a 4% decrease in noninterest expense to $13.4 billion, primarily due to lower remediation and FDIC assessment expenses. Profitability ratios, including ROA and ROE, improved compared to the prior year. Capital ratios remained strong, with the Common Equity Tier 1 ratio at 11.97%, well above the company's internal target. Wells Fargo successfully reduced its common shares outstanding through buybacks and returned $6.1 billion to shareholders via dividends and net share repurchases, a 52% increase from the previous year's second quarter.

Financial Highlights

37 data points
Beta

Revenue

$21.58B

Net Income

$6.21B

28.8% Net Margin

EPS (Diluted)

$1.30

Total Assets

$1.92T

Cash & Equivalents

$164.43B

Free Cash Flow

-$669.00M

Financial Statements
Beta
Revenue$21.58B
Interest Expense$4.89B
Net Income$6.21B
EPS (Basic)$1.31
EPS (Diluted)$1.30
Shares Outstanding (Basic)4.47B
Shares Outstanding (Diluted)4.50B

Key Highlights

  • 1Net income increased to $6.2 billion ($1.30 diluted EPS) from $5.2 billion ($0.98 diluted EPS) in Q2 2018.
  • 2Total revenue remained flat at $21.6 billion, with noninterest income rising and net interest income declining.
  • 3Noninterest expense decreased by 4% to $13.4 billion, driven by lower operating losses and regulatory costs.
  • 4Profitability metrics like ROA (1.31%) and ROE (13.26%) showed significant improvement year-over-year.
  • 5Common Equity Tier 1 (CET1) ratio remained strong at 11.97%, exceeding the company's target.
  • 6Total capital returned to shareholders via dividends and share repurchases was $6.1 billion, a 52% increase from Q2 2018.
  • 7The company continued to reduce its outstanding common shares through repurchases, demonstrating a commitment to shareholder returns.

Frequently Asked Questions

Wells Fargo reported a net income of $6.2 billion, or $1.30 per diluted share, for the second quarter of 2019. This represents a significant increase compared to $5.2 billion, or $0.98 per diluted share, in the same quarter of the previous year. Profitability ratios such as Return on Assets (ROA) improved to 1.31% from 1.10%, and Return on Equity (ROE) increased to 13.26% from 10.60% year-over-year.

Wells Fargo successfully reduced its noninterest expense by 4% to $13.4 billion in the second quarter of 2019 compared to the prior year. This reduction was primarily attributed to lower operating losses, reduced expenses related to core deposit and other intangibles amortization, and lower FDIC and other deposit assessments. The efficiency ratio improved to 62.3% from 64.9% in the prior year's second quarter.

Wells Fargo maintained a strong capital position, with its Common Equity Tier 1 (CET1) ratio at 11.97%, exceeding its internal target. The company returned $6.1 billion to shareholders through common stock dividends and net share repurchases, a 52% increase from the second quarter of 2018. This indicates a continued commitment to returning capital to shareholders while maintaining robust capital levels.

The filing mentions ongoing engagement with regulatory agencies like the Federal Reserve Board (FRB), Consumer Financial Protection Bureau (CFPB), and Office of the Comptroller of the Currency (OCC) regarding consent orders related to governance, compliance, and operational risk management. While remediation costs were noted to be lower, impacting noninterest expense favorably, the company continues to work through these matters, which could still present future financial or reputational impacts. The outlook section also mentions the potential for litigation and regulatory matters to have material adverse effects.