News Release | January 14, 2022
Wells Fargo Reports Fourth Quarter 2021 Net Income of $5.8 billion, or $1.38 per Diluted Share
Full Year 2021 Net Income of $21.5 billion, or $4.95 per Diluted Share
Company-wide Financial Summary
Quarter ended | |||
Dec 31, | Dec 31, | ||
2021 | 2020 | ||
Selected Income Statement Data | |||
($ in millions except per share amounts) | |||
Total revenue | $ | 20,856 | 18,489 |
Noninterest expense | 13,198 | 14,802 | |
Provision for credit losses | (452) | (179) | |
Net income | 5,750 | 3,091 | |
Diluted earnings per common share | 1.38 | 0.66 | |
Selected Balance Sheet Data | |||
($ in billions) | |||
Average loans | $ | 875.0 | 899.7 |
Average deposits | 1,470.0 | 1,380.1 | |
CET11 | 11.4% | 11.6 | |
Performance Metrics | |||
ROE2 | 12.8% | 6.6 | |
ROTCE3 | 15.3 | 8.0 |
Operating Segments and Other Highlights
Quarter | Dec 31, 2021 | |||
ended | % Change from | |||
($ in billions) | Dec 31, | Sep 30, | Dec 31, | |
2021 | 2021 | 2020 | ||
Average loans | ||||
Consumer Banking and Lending | $ 325.4 | - % | (13) | |
Commercial Banking | 184.6 | 3 | (3) | |
Corporate and Investment | 272.0 | 6 | 13 | |
Banking | ||||
Wealth and Investment | 84.0 | 1 | 5 | |
Management | ||||
Average deposits | ||||
Consumer Banking and Lending | 864.4 | 2 | 13 | |
Commercial Banking | 207.7 | 4 | 12 | |
Corporate and Investment | 182.1 | (4) | (12) | |
Banking | ||||
Wealth and Investment | 180.9 | 2 | 7 | |
Management |
Capital
- Repurchased 139.7 million shares, or $7.0 billion, of common stock in fourth quarter 2021
Fourth quarter 2021 results included:
- $943 million, or $0.18 per share, net gain on the sales of our Corporate Trust Services (CTS) business and Wells Fargo Asset Management (WFAM)
- $875 million, or $0.17 per share, decrease in the allowance for credit losses
- ($268) million, or ($0.05) per share, impairment of certain leased rail cars
Chief Executive Officer Charlie Scharf commented, "As I look back on my slightly more than two years at Wells Fargo, I'm incredibly proud of what our team has accomplished as we remake this incredible franchise. We have made sweeping changes to the leadership and culture, made significant progress on our risk, regulatory, and control work, improved the efficiency of the company while investing in our business in a more holistic and aggressive way, and have taken a different approach to our customer- and community-facing responsibilities as a large public company. And those on the front lines have worked fearlessly and tirelessly to support our customers through incredibly difficult circumstances."
"In 2021, we improved our financial returns, including reducing our expenses and returning a significant amount of excess capital to our shareholders by increasing our dividend and repurchasing $14.5 billion of common stock. We also had strong deposit growth and while loan demand was weak early in the year, loans grew 5% in the second half with growth in both our consumer and commercial portfolios. As the economy continued to recover we saw increased consumer spending, higher investment banking fees, higher asset-based fees in our Wealth and Investment Management business, and strong equity gains in our affiliated venture capital and private equity businesses. We continued to manage credit well and the strong economic environment helped reduce charge-offs to historical lows and our results benefitted from reductions in our allowance for credit losses," Scharf added.
"The changes we've made to the company and continued strong economic growth prospects make us feel good about how we are positioned entering 2022. But we also remain cognizant that we still have a multiyear effort to satisfy our regulatory requirements - with setbacks likely to continue along the way - and we continue our work to put exposures related to our historical practices behind us," Scharf continued.
"As we look forward, we will continue to be aggressive in driving progress and improvement in our performance, embrace our responsibility to our customers and communities, and I remain incredibly optimistic about our future," Scharf concluded.
- Represents our Common Equity Tier 1 (CET1) ratio calculated under the Standardized Approach, which is our binding CET1 ratio. See tables on pages 27-28 of the 4Q21
Quarterly Supplement for more information on CET1. CET1 for December 31, 2021, is a preliminary estimate.
2 Return on equity (ROE) represents Wells Fargo net income applicable to common stock divided by average common stockholders' equity.
3 Tangible common equity and return on average tangible common equity (ROTCE) are non-GAAP financial measures. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" tables on pages 25-26 of the 4Q21 Quarterly Supplement.
Financial results reported in this document are preliminary. Final financial results and other disclosures will be reported in our Annual Report on Form 10-K for the year ended December 31, 2021, and may differ materially from the results and disclosures in this document due to, among other things, the completion of final review procedures, the occurrence of subsequent events, or the discovery of additional information.
Selected Company-wide Financial Information
Quarter ended | Dec 31, 2021 | Year ended | ||||||||||
% Change from | ||||||||||||
Dec 31, | Sep 30, | Dec 31, | Sep 30, | Dec 31, | Dec 31, | Dec 31, | ||||||
2021 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||
Earnings ($ in millions except per share amounts) | ||||||||||||
Net interest income | $ | 9,262 | 8,909 | 9,355 | 4 % | (1) | $ | 35,779 | 39,956 | |||
Noninterest income | 11,594 | 9,925 | 9,134 | 17 | 27 | 42,713 | 34,308 | |||||
Total revenue | 20,856 | 18,834 | 18,489 | 11 | 13 | 78,492 | 74,264 | |||||
Net charge-offs | 423 | 257 | 584 | 65 | (28) | 1,582 | 3,370 | |||||
Change in the allowance for credit losses | (875) | (1,652) | (763) | 47 | (15) | (5,737) | 10,759 | |||||
Provision for credit losses | (452) | (1,395) | (179) | 68 | NM | (4,155) | 14,129 | |||||
Noninterest expense | 13,198 | 13,303 | 14,802 | (1) | (11) | 53,831 | 57,630 | |||||
Income tax expense (benefit) | 1,711 | 1,521 | 574 | 12 | 198 | 5,578 | (1,157) | |||||
Wells Fargo net income | $ | 5,750 | 5,122 | 3,091 | 12 | 86 | $ | 21,548 | 3,377 | |||
Diluted earnings per common share | 1.38 | 1.17 | 0.66 | 18 | 109 | 4.95 | 0.43 | |||||
Balance Sheet Data (average) ($ in billions) | ||||||||||||
Loans | $ | 875.0 | 854.0 | 899.7 | 2 | (3) | $ | 864.3 | 941.8 | |||
Deposits | 1,470.0 | 1,450.9 | 1,380.1 | 1 | 7 | 1,437.8 | 1,376.0 | |||||
Assets | 1,943.4 | 1,949.7 | 1,925.0 | - | 1 | 1,941.9 | 1,941.7 | |||||
Financial Ratios | ||||||||||||
Return on assets (ROA) | 1.17 % | 1.04 | 0.64 | 1.11 % | 0.17 | |||||||
Return on equity (ROE) | 12.8 | 11.1 | 6.6 | 12.0 | 1.1 | |||||||
Return on average tangible common equity | 15.3 | 13.2 | 8.0 | 14.3 | 1.3 | |||||||
(ROTCE) (a) | ||||||||||||
Efficiency ratio (b) | 63 | 71 | 80 | 69 | 78 | |||||||
Net interest margin on a taxable-equivalent basis | 2.11 | 2.03 | 2.16 | 2.05 | 2.28 |
NM - Not meaningful
- Tangible common equity and return on average tangible common equity are non-GAAP financial measures. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" tables on pages 25-26 of the 4Q21 Quarterly Supplement.
- The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
Fourth Quarter 2021 vs. Fourth Quarter 2020
- Net interest income decreased 1%, primarily due to the impact of lower yields on earning assets and lower loan balances reflecting soft demand and elevated prepayments, largely offset by a decrease in long-termdebt, lower mortgage- backed securities premium amortization, and higher interest income from loans purchased from securitization pools and Paycheck Protection Program (PPP) loans
- Noninterest income increased 27%, driven by strong results in our affiliated venture capital and private equity businesses, and net gains from the sales of divested businesses. In addition, investment banking fees improved on higher debt underwriting and advisory fees, and card and deposit-related fees increased. These increases were partially offset by impairment of certain leased rail cars, lower mortgage banking income primarily due to lower gain on sale margins and lower originations, and lower trading activity in spread products
- Noninterest expense decreased 11%, driven by efficiency initiatives that drove lower personnel expense, consultant spend, and occupancy expense, as well as lower restructuring charges and operating losses
- Provision for credit losses in fourth quarter 2021 included an $875 million decrease in the allowance for credit losses due to continued improvements in the economic environment, as well as a decrease in net charge-offs
-2-
Selected Company-wide Capital and Liquidity Information
Quarter ended | ||||
($ in billions) | Dec 31, | Sep 30, | Dec 31, | |
2021 | 2021 | 2020 | ||
Capital: | ||||
Total equity | $ | 190.1 | 191.1 | 185.7 |
Common stockholders' equity | 168.3 | 169.8 | 164.6 | |
Tangible common equity (a) | 141.3 | 142.0 | 136.7 | |
Common Equity Tier 1 (CET1) ratio (b) | 11.4 % | 11.6 | 11.6 | |
Total loss absorbing capacity (TLAC) ratio (c) | 23.0 | 23.7 | 25.7 | |
Supplementary Leverage Ratio (SLR) (d) | 6.9 | 6.9 | 8.1 | |
Liquidity: | ||||
Liquidity Coverage Ratio (LCR) (e) | 118 | 119 | 133 |
- Tangible common equity and return on average tangible common equity are non-GAAP financial measures. For additional information, including a corresponding reconciliation to GAAP financial measures, see the "Tangible Common Equity" tables on pages 25-26 of the 4Q21 Quarterly Supplement.
- Represents our CET1 ratio calculated under the Standardized Approach, which is our binding CET1 ratio. See tables on pages 27-28 of the 4Q21 Quarterly Supplement for more information on CET1. CET1 for December 31, 2021, is a preliminary estimate.
- Represents TLAC divided by the greater of risk-weighted assets determined under the Standardized and Advanced Approaches, which is our binding TLAC ratio. TLAC for December 31, 2021, is a preliminary estimate.
- SLR for December 31, 2021, is a preliminary estimate.
- Represents high-quality liquid assets divided by projected net cash outflows, as each is defined under the LCR rule. LCR for December 31, 2021, is a preliminary estimate.
Selected Company-wide Credit Information
Quarter ended | ||||
($ in millions) | Dec 31, | Sep 30, | Dec 31, | |
2021 | 2021 | 2020 | ||
Net charge-offs | $ | 423 | 257 | 584 |
Net loan charge-offs as a % of average total loans (annualized) | 0.19 % | 0.12 | 0.26 | |
Total nonaccrual loans | $ | 7,212 | 7,058 | 8,728 |
As a % of total loans | 0.81 % | 0.82 | 0.98 | |
Total nonperforming assets | $ | 7,324 | 7,179 | 8,887 |
As a % of total loans | 0.82 % | 0.83 | 1.00 | |
Allowance for credit losses for loans | $ | 13,788 | 14,705 | 19,713 |
As a % of total loans | 1.54 % | 1.70 | 2.22 |
Fourth Quarter 2021 vs. Third Quarter 2021
- Net loan charge-offs remained low. In our commercial portfolio, net loan charge-offs as a percentage of average loans decreased to 0.02% (annualized). The consumer net loan charge-off rate increased to 0.41% (annualized); $152 million of the $172 million increase in consumer net loan charge-offs was related to a change in practice to fully charge-off certain delinquent legacy residential mortgage loans
- Nonperforming assets increased 2%. Nonaccrual loans increased $154 million driven by an increase in residential mortgage nonaccrual loans primarily resulting from certain borrowers exiting COVID-19-related accommodation programs, partially offset by a decrease in commercial nonaccrual loans
-3-
Business Segment Performance
Consumer Banking and Lendingoffers diversified financial products and services for consumers and small businesses with annual sales generally up to $5 million. These financial products and services include checking and savings accounts, credit and debit cards, as well as home, auto, personal, and small business lending.
Selected Financial Information
Quarter ended | Dec 31, 2021 | |||||||
% Change from | ||||||||
Dec 31, | Sep 30, | Dec 31, | Sep 30, | Dec 31, | ||||
2021 | 2021 | 2020 | 2021 | 2020 | ||||
Earnings (in millions) | ||||||||
Consumer and Small Business Banking | $ | 4,872 | 4,822 | 4,701 | 1 % | 4 | ||
Consumer Lending: | ||||||||
Home Lending | 1,843 | 2,012 | 1,995 | (8) | (8) | |||
Credit Card | 1,419 | 1,399 | 1,372 | 1 | 3 | |||
Auto | 470 | 445 | 403 | 6 | 17 | |||
Personal Lending | 129 | 126 | 142 | 2 | (9) | |||
Total revenue | 8,733 | 8,804 | 8,613 | (1) | 1 | |||
Provision for credit losses | 126 | (518) | 351 | 124 | (64) | |||
Noninterest expense | 6,126 | 6,053 | 6,441 | 1 | (5) | |||
Net income | $ | 1,862 | 2,451 | 1,364 | (24) | 37 | ||
Average balances (in billions) | ||||||||
Loans | $ | 325.4 | 325.6 | 373.9 | - | (13) | ||
Deposits | 864.4 | 848.4 | 763.2 | 2 | 13 |
Fourth Quarter 2021 vs. Fourth Quarter 2020
- Revenue increased 1%
- Consumer and Small Business Banking was up 4% primarily due to higher deposit-related fees reflecting lower fee waivers provided in response to the COVID-19 pandemic and an increase in consumer activity, including higher debit card transactions. Net interest income declined modestly as a result of the impact of lower interest rates, largely offset by higher deposit balances
- Home Lending was down 8% primarily due to lower mortgage banking income driven by lower gain on sale margins and lower originations, partially offset by higher interest income from loans purchased from securitization pools and higher gains from increased re-securitization activity of these loans
- Credit Card was up 3% on higher point-of-sale volume, partially offset by higher rewards costs including promotional offers on our new Active CashSM card
- Auto was up 17% on higher loan balances, while Personal Lending was down 9% primarily due to lower loan balances
- Noninterest expense was down 5% primarily due to lower operating losses, as well as lower personnel expense and professional and outside services expense primarily due to efficiency initiatives
-4-
Commercial Bankingprovides financial solutions to private, family owned and certain public companies. Products and services include banking and credit products across multiple industry sectors and municipalities, secured lending and lease products, and treasury management.
Selected Financial Information
Quarter ended | Dec 31, 2021 | |||||||
% Change from | ||||||||
Dec 31, | Sep 30, | Dec 31, | Sep 30, | Dec 31, | ||||
2021 | 2021 | 2020 | 2021 | 2020 | ||||
Earnings (in millions) | ||||||||
Middle Market Banking | $ | 1,167 | 1,165 | 1,149 | - % | 2 | ||
Asset-Based Lending and Leasing | 1,117 | 911 | 1,104 | 23 | 1 | |||
Total revenue | 2,284 | 2,076 | 2,253 | 10 | 1 | |||
Provision for credit losses | (384) | (335) | 69 | (15) | NM | |||
Noninterest expense | 1,393 | 1,396 | 1,547 | - | (10) | |||
Net income | $ | 954 | 759 | 472 | 26 | 102 | ||
Average balances (in billions) | ||||||||
Loans | $ | 184.6 | 178.6 | 190.9 | 3 | (3) | ||
Deposits | 207.7 | 199.2 | 184.9 | 4 | 12 |
NM - Not meaningful
Fourth Quarter 2021 vs. Fourth Quarter 2020
- Revenue increased 1%
- Middle Market Banking was up 2% and included higher deposit balances, as well as modestly higher investment banking fees, partially offset by the impact of lower interest rates
- Asset-BasedLending and Leasing was up 1% driven by higher net gains from equity securities and higher revenue from renewable energy investments, partially offset by lower loan balances
- Noninterest expense decreased 10% primarily driven by lower personnel and consulting expense due to efficiency initiatives, and lower lease expense
-5-
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Wells Fargo & Company published this content on 14 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 January 2022 12:11:03 UTC.