Goldman Sachs US Financial Services Conference. John Stumpf Chairman and CEO

Transcription

1 Goldman Sachs US Financial Services Conference John Stumpf Chairman and CEO December 10, 2013

2 Wells Fargo vision Wells Fargo Vision We want to satisfy all our customers financial needs and help them succeed financially.

3 Serving consumers and businesses in more communities than any other U.S. Bank 70+ MM customers 9,051 stores Store Distribution Retail banking 6,172 Wells Fargo Advisors 1,368 Wholesale 767 Mortgage 744 Sales Team Platform bankers (1) 31,960 Financial advisors (2) 15,285 Wells Fargo Retail Banking stores Wells Fargo Advisors offices Wells Fargo Home Mortgage stores Home Mortgage consultants 10,737 Other Distribution Channels ATMs 12,452 As of September 30, (1) Active, full-time equivalent. (2) Series 7 brokers. (3) Regional banking online and mobile customers, based on 90-day active accounts. Online banking customers (3) Mobile customers (3) 22.9 MM 11.5 MM 2

4 Leading position in key products Deposits #2 in U.S. (1) #2 Debit card issuer (2) Residential Mortgage Other Consumer Lending Commercial Wealth Management/ Brokerage #1 Mortgage originator (3) #1 Mortgage servicing portfolio (3) #1 Small business lender (4) #1 Auto lender (5) #1 Commercial real estate originator (6) #1 Middle market commercial lender (7) #1 Oil & gas loan syndications (8) #1 Agribusiness Lender (9) #3 Full-service retail brokerage (based on FAs) (10) #4 Wealth management provider (based on AUM) (11) (1) FDIC data, June (2) Nilson Report, April (3) Inside Mortgage Finance, 3Q13. (4) U.S. in dollars per CRA data, (5) AutoCount, October 2012 September (6) Based on 2011 U.S. commercial real estate originations, MBA Commercial Real Estate/Multifamily Finance Firms, 12/31/12. (7) Share of lead banking relationships, TNS 2012 Commercial Banking Momentum Monitor. Continental U.S. (excludes AK/HI). (8) 1H13, Thomson Reuters LCP. (9) 4Q12, FDIC. (10) Internal and peer reports, 3Q13. (11) Based on AUM of accounts > $5 million, Barron s, June

5 Strong revenue diversification Balanced Spread and Fee Income Diversified Fee Generation Other noninterest income (1) Deposit service charges Net gains from trading 9% 13% 4% Insurance 4% 52% Net Interest Income 48% Noninterest Income Mortgage Orig./ Sales, net 12% 22% Brokerage advisory, commissions and other 5% Mortgage Servicing, net 2% All other fees >1% Letters of credit <1% CRE brokerage commissions >1% Cash network 2% Merchant processing 8% Trust and investment 4% 4% management 8% Investment banking Card fees Charges and fees on loans Deposit Service Charges 13% Total Trust & Investment Fees 34% Card Fees 8% Total Mortgage Banking 17% Insurance 4% Net Gains from Trading 4% Total Other Fees 11% Other Noninterest Income (1) 9% All data is for 3Q13. (1) Other noninterest income includes net losses on debt securities available for sale, net gains from equity investments, lease income, life insurance investment income and all other noninterest income. 4

6 Deposit and cross-sell growth Average Core Checking and Savings Deposits ($ in billions) Cross-sell (number of products) Up 7% YOY % Retail Banking (1) WBR (2) Wholesale Banking (3) Q13 Percentages are compound annual growth rates (CAGR). (1) Retail Banking cross-sell from December 2009 to August (2) WBR cross-sell from 4Q09 to 3Q13, reported on a one-month lag. (3) Wholesale Banking cross-sell from 4Q11 to 2Q13. Wholesale banking reported a combined cross-sell ratio for the first time in 4Q11. 5

7 Loan growth Period-end Loans Outstanding ($ in billions) Period-end Loan Growth (Year-over-year) Liquidating portfolio down 48% from 4Q09 5.0% 4.0% 3.0% 2.0% 1.0% Core portfolio up 18% from 4Q09 0.0% -1.0% -2.0% -3.0% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13-4.0% -5.0% 4Q09 4Q10 4Q11 4Q12 3Q13 Core loans Non-strategic/liquidating loans 6

8 Significant credit quality improvement $5.4 Net Charge-offs (1) ($ in billions, and rate as a % of average loans) 2.71% $ % $ % $ % $ % 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 (1) Wells Fargo s net charge-offs in part reflect reduced risk in the legacy Wachovia portfolio due to PCI accounting used for the highest risk Wachovia loans. 7

9 Earnings and EPS growth Wells Fargo Net Income ($ in millions) Wells Fargo Diluted Earnings Per Common Share 12,275 12, % 15,869 18,897 Up 18% YOY Up 18% YOY +24.3% $ ,268 $2.89 $2.82 $1.75 $ Q13 YTD Q13 YTD Percentages are compound annual growth rates (CAGR). 8

10 ROA and ROE growth Return on Assets Return on Equity 1.41% 1.52% 11.93% 12.95% 13.92% 1.25% 9.88% 10.33% 0.97% 1.01% Q13 YTD Q13 YTD 9

11 Strong returns vs. peers Return on Assets Return on Equity 1.65% 1.53% 1.36% 15.9% 14.1% 10.5% 0.69% 0.47% 6.3% 4.1% USB WFC PNC C BAC JPM -0.06% USB WFC PNC C BAC JPM -1.3% 3Q13 results. Source: SNL. 10

12 Capital growth 6.46% Tier 1 Common Equity Ratio Under Basel I 8.30% 9.46% 10.12% 10.60% Tier 1 common equity ratio under Basel III is estimated to be 9.56% at 9/30/13 (1) Dividend per common share increased from $0.05 in 4Q09 to $0.30 in 3Q13 Purchased 94.1 million common shares 3Q13 YTD 4Q09 4Q10 4Q11 4Q12 3Q13 See pages of this presentation for additional information regarding Tier 1 common equity ratios. (1) Estimated based on management s interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. 11

13 Targets Efficiency Ratio 55-59% ROA 1.30% % ROE 12% - 15% Total Payout Ratio (1) ~50% - 65% Targets depend on the overall economic, interest rate and evolving regulatory environment and assume continued annual revenue and earnings growth over time (1) Total payout consists of common stock dividends and share repurchases. Dividends and share repurchases are subject to Wells Fargo board and regulatory approvals, and other considerations. 12

14 Performance relative to targets Efficiency Ratio ROA 1.53% 60.1% 59.1% 1.31% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 ROE Total Payout Ratio 14.07% 48% 55% 12.14% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q YTD Represents target ranges referenced on page

15 Well positioned for the future Demonstrated performance over both the short and long term - 15 consecutive quarters of EPS growth - Strong returns versus peers - Lower risk profile than large peers Experienced management team - CEO s direct reports have an average tenure with Wells Fargo of 28 years Managing through the current environment - Re-sizing the mortgage business to match demand - Investing opportunistically in securities - Continuing to grow non-mortgage fee income - Continuing to build a high quality loan portfolio and benefitting from current credit trends Well positioned for the future - Leading market share in key products - Broad product set and strong distribution capabilities - Diversified revenue sources - Efficient operations with additional opportunities for improvement - Large, low cost deposit base - Strong capital Focused on returning more to shareholders Strong capital also gives the ability to continue to make acquisitions 14

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17 Tier 1 common equity under Basel I (1) Wells Fargo & Company and Subsidiaries FIVE QUARTER TIER 1 COMMON EQUITY UNDER BASEL I (1) Sept. 30, Dec. 31, Dec. 31, Dec. 31, Dec. 31, ($ in billions) Total equity $ Noncontrolling interests (1.6) (1.3) (1.5) (1.5) (2.6) Total Wells Fargo stockholders' equity $ Adjustments: Preferred equity (14.3) (12.0) (10.6) (8.1) (8.1) Goodwill and intangible assets (other than MSRs) (31.8) (32.9) (34.0) (35.5) (37.7) Applicable deferred taxes Deferred tax asset limitation (1.0) MSRs over specified limitations (0.9) (0.7) (0.8) (0.9) (1.6) Cumulative other comprehensive income (2.2) (5.6) (3.1) (4.6) (3.0) Other (0.6) (0.6) (0.4) (0.3) (0.2) Tier 1 common equity (A) $ Total risk-weighted assets (2) (B) $ 1, , , ,013.6 Tier 1 common equity to total risk-weighted assets (2) (A)/(B) % (1) (2) Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-gaap financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor, or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. 16

18 Tier 1 common equity under Basel III (Estimated) (1) Wells Fargo & Company and Subsidiaries (1) (2) TIER 1 COMMON EQUITY UNDER BASEL III (ESTIMATED) Sept. 30, ($ in billions) 2013 Tier 1 common equity under Basel I $ Adjustments from Basel I to Basel III (3)(5) : Cumulative other comprehensive income related to AFS securities and Other defined benefit pension plans $ 2.2 Total adjustments from Basel I to Basel III Threshold deductions, as defined under Basel III (4) (5) - Tier 1 common equity anticipated under Basel III (C) $ Total risk-weighted assets anticipated under Basel III (6) (D) $ 1,293.6 Tier 1 common equity to total risk-weighted assets anticipated under Basel III (C)/(D) 9.56 % (1) Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-gaap financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. (2) The Basel III Tier 1 common equity and risk-weighted assets are estimated based on management s interpretation of the Basel III capital rules adopted July 2, 2013, by the Federal Reserve Board. The rules establish a new comprehensive capital framework for U.S. banking organizations that implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. (3) Adjustments from Basel I to Basel III represent reconciling adjustments, primarily certain components of cumulative other comprehensive income deducted for Basel I purposes, to derive Tier 1 common equity under Basel III. (4) Threshold deductions, as defined under Basel III, include individual and aggregate limitations, as a percentage of Tier 1 common equity, with respect to MSRs (net of related deferred tax liability, which approximates the MSR book value times the applicable statutory tax rates), deferred tax assets and investments in unconsolidated financial companies. (5) Volatility in interest rates can have a significant impact on the valuation of cumulative other comprehensive income and MSRs and therefore, may impact adjustments from Basel I to Basel III, and MSRs subject to threshold deductions, as defined under Basel III, in future reporting periods. (6) The final Basel III capital rules provide for two capital frameworks: the standardized approach intended to replace Basel I, and the advanced approach applicable to certain institutions as originally defined under Basel II. Under the final rules, we will be subject to the lower of our Tier 1 common equity ratio calculated under the standardized approach and under the advanced approach in the assessment of our capital adequacy. Accordingly, the estimate of RWA reflects management s interpretation of RWA determined under the advanced approach because management expects RWA to be higher using the advanced approach compared with the standardized approach. Basel III capital rules adopted by the Federal Reserve Board incorporate different classification of assets, with certain risk weights based on a borrower s credit rating or Wells Fargo s own models, along with adjustments to address a combination of credit/counterparty, operational and market risks, and other Basel III elements

19 Forward-looking statements and additional information Forward-looking statements: This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forwardlooking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as anticipates, intends, plans, seeks, believes, estimates, expects, target, projects, outlook, forecast, will, may, could, should, can and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and allowance releases; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital levels and our estimated Tier 1 common equity ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as ourexpectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets and return on equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company s plans, objectives and strategies. Forward-looking statements are not based on historical facts but instead represent our currentexpectations and assumptions regarding our business, the economy and other future conditions. Investors are urged to not unduly rely on forwardlooking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. For more information about factors that could cause actual results to differ materially from expectations, refer to the Forward-Looking Statements discussion in Wells Fargo s press release announcing our third quarter 2013 results and in our most recent Quarterly Report on Form 10-Q, as well as to Wells Fargo s other reports filed with the Securities and Exchange Commission, including the discussion under Risk Factors in our Annual Report on Form 10-K for the year ended December 31, Purchased credit-impaired loan portfolio: Loans that were acquired from Wachovia that were considered credit impaired were written down at acquisition date in purchase accounting to an amount estimated to be collectible and the related allowance for loan losses was not carried over to Wells Fargo s allowance. In addition, such purchased credit-impaired loans are not classified as nonaccrual or nonperforming, and are not included in loans that were contractually 90+ days past due and still accruing. Any losses on such loans are charged against the nonaccretable differenceestablished in purchase accounting and are not reported as charge-offs (until such difference is fully utilized). As a result of accounting for purchased loans with evidence of credit deterioration, certain ratios of the combined company are not comparable to a portfolio that does not include purchased credit-impaired loans. In certain cases, the purchased credit-impaired loans may affect portfolio credit ratios and trends. Management believes that the presentation of information adjusted to exclude the purchased credit-impaired loans provides useful disclosure regarding the credit quality of the non-impaired loan portfolio. Accordingly, certain of the loan balances and credit ratios in this document have been adjusted to exclude the purchased credit-impaired loans. References in this document to impaired loans mean the purchased credit-impaired loans. Please see pages of the press release announcing our 3Q13 results for additional information regarding the purchased credit-impaired loans. 18