10-QPeriod: Q3 FY2020

WELLS FARGO & COMPANY/MN Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 2, 2020For Securities:WFCWFC-PDWFC-PCWFC-PYWFC-PAWFC-PLWFCNPWFC-PZ

Summary

Wells Fargo & Company (WFC) reported a net income of $2.035 billion for the third quarter of 2020, a significant decrease from $4.610 billion in the same quarter last year. Diluted earnings per share were $0.42, down from $0.92 in Q3 2019. The nine-month period showed a net income of $309 million compared to $16.7 billion in the prior year, with a diluted loss per share of $0.23 versus earnings of $3.43 per share a year ago. Performance was impacted by $961 million in customer remediation accruals and $718 million in restructuring charges for the quarter, and $14.3 billion in provision for credit losses, $1.9 billion in customer remediation accruals, and $718 million in restructuring charges for the nine-month period. Total revenue decreased 14% year-over-year for the quarter and 17% for the nine-month period, primarily due to lower net interest income and noninterest income. The company's capital and liquidity positions remained strong, with a Common Equity Tier 1 ratio of 11.38% and a Liquidity Coverage Ratio of 134%. The Federal Reserve's prohibition on capital distributions was extended through the fourth quarter of 2020.

Financial Highlights

37 data points
Beta

Revenue

$18.86B

Net Income

$3.22B

17.1% Net Margin

EPS (Diluted)

$0.70

Total Assets

$1.92T

Cash & Equivalents

$246.77B

Free Cash Flow

-$8.58B

Financial Statements
Beta
Revenue$18.86B
Interest Expense$1.43B
Net Income$3.22B
EPS (Basic)$0.70
EPS (Diluted)$0.70
Shares Outstanding (Basic)4.12B
Shares Outstanding (Diluted)4.13B

Key Highlights

  • 1Net income for Q3 2020 was $2.035 billion, a 56% decrease year-over-year.
  • 2Diluted EPS for Q3 2020 was $0.42, down from $0.92 in Q3 2019.
  • 3Nine-month net income was $309 million, a significant drop from $16.7 billion in the prior year.
  • 4Total revenue declined 14% year-over-year in Q3 2020 due to lower net interest income and noninterest income.
  • 5Provision for credit losses increased significantly, reflecting economic impacts from the COVID-19 pandemic.
  • 6Common Equity Tier 1 (CET1) ratio remained strong at 11.38%, exceeding regulatory minimums.
  • 7Wells Fargo incurred $718 million in restructuring charges related to efficiency initiatives.

Frequently Asked Questions

Wells Fargo reported a net income of $2.035 billion for the third quarter of 2020, a decrease of 56% compared to $4.610 billion in the third quarter of 2019. Diluted earnings per share were $0.42, down from $0.92 in the prior year.

Total revenue decreased by 14% year-over-year in the third quarter of 2020. This was primarily driven by lower net interest income, due to the prevailing low interest rate environment and changes in the mix of earning assets and funding sources, and lower noninterest income, particularly in areas like 'other' noninterest income. Higher mortgage banking noninterest income provided some offset.

The provision for credit losses increased significantly. For the nine months ended September 30, 2020, it was $14.3 billion, up from $2.0 billion in the same period last year. This increase reflects the economic impact of the COVID-19 pandemic on the company's customer base and current and forecasted economic conditions.

Wells Fargo maintained a strong capital position. The Common Equity Tier 1 (CET1) ratio was 11.38% at September 30, 2020, which exceeded both the regulatory minimum of 9% and the company's internal target of 10%. The Liquidity Coverage Ratio (LCR) was 134%, also exceeding the regulatory minimum.

Yes, profitability was impacted by $961 million in customer remediation accruals and $718 million in restructuring charges recognized in noninterest expense during the third quarter of 2020. The nine-month period also included $1.9 billion in customer remediation accruals.