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Wells Fargo Reports $5.8 Billion in Net Income

April 14, 2015 8:02 AM

Diluted EPS of $1.04, Revenue Up 3 Percent from Prior Year

SAN FRANCISCO--(BUSINESS WIRE)-- Wells Fargo & Company (NYSE: WFC):

Endnotes can be found at end of release text

Selected Financial Information

Quarter ended

Mar 31,2015

Dec 31,2014

Mar 31,2014

Earnings
Diluted earnings per common share $ 1.04 1.02 1.05
Wells Fargo net income (in billions) 5.80 5.71 5.89
Return on assets (ROA) 1.38 % 1.36 1.57
Return on equity (ROE) 13.17 12.84 14.35
Asset Quality
Net charge-offs (annualized) as a % of avg. total loans 0.33 % 0.34 0.41
Allowance for credit losses as a % of total loans 1.51 1.53 1.74
Allowance for credit losses as a % of annualized net charge-offs 453 452 431
Other
Revenue (in billions) $ 21.3 21.4 20.6
Efficiency ratio 58.8 % 59.0 57.9
Average loans (in billions) $ 863.3 849.4 823.8
Average core deposits (in billions) 1,063.2 1,036.0 973.8
Net interest margin 2.95 % 3.04 3.20

Wells Fargo & Company (NYSE: WFC) reported net income of $5.8 billion, or $1.04 per diluted common share, for first quarter 2015, compared with $5.9 billion, or $1.05 per share, for first quarter 2014, and up from $5.7 billion, or $1.02 per share, for fourth quarter 2014.

“Our solid first quarter results again reflected the benefit of our diversified business model and the continued focus of our 266,000 team members on serving the needs of consumer and business customers," said Chairman and CEO John Stumpf. “We continued to strengthen our customer relationships in the quarter, as reflected in strong growth in deposits and primary checking customers. In addition, our mortgage business was able to serve more customers by refinancing their mortgage loans with lower rates. Capital levels remained strong, and we were pleased to receive a non-objection to our 2015 Capital Plan, which included a proposed increase in our dividend rate to $0.375 per common share in second quarter 2015, subject to Board approval.”

Chief Financial Officer John Shrewsberry added, “Wells Fargo earned $5.8 billion in first quarter 2015, an increase of $95 million from the prior quarter, including the benefit from lower income tax expense in the first quarter. Credit quality remained strong, as net charge-offs continued to decline. Expenses also decreased from the prior quarter and our efficiency ratio improved. We remained within our targeted ranges for ROA, ROE, efficiency ratio and net payout ratio, while maintaining record liquidity and capital levels."

Revenue

Revenue was $21.3 billion in the first quarter, compared with $21.4 billion in fourth quarter 2014, as higher noninterest income was more than offset by the decline in net interest income primarily due to two fewer days in the quarter. Revenue sources remained balanced between spread and fee income and the sources of fee income were diversified among our consumer and wholesale businesses.

Net Interest Income

Net interest income in first quarter 2015 declined $194 million on a linked-quarter basis to $11.0 billion primarily as a result of two fewer days relative to the fourth quarter of 2014. Additionally, interest income from variable sources, including purchased credit-impaired (PCI) loan resolutions and loan fees included in interest income, declined linked quarter. These impacts were partially offset by growth in average commercial and consumer loan balances, a modest increase in the duration of the commercial loan portfolio, and lower deposit and long-term debt costs.

Net interest margin was 2.95 percent, down 9 basis points from fourth quarter 2014. Approximately 5 basis points of the decrease was from customer driven deposit growth, which had minimal impact to net interest income but was dilutive to net interest margin, and 3 basis points of the decline was due to lower income from variable sources. The net impact of all other growth and repricing was neutral in the first quarter.

Noninterest Income

Noninterest income was $10.3 billion, up $29 million from the prior quarter. Higher revenue from trading activities, debt security gains, mortgage origination gains and insurance was offset by lower other income (which included a $217 million gain on the sale of government guaranteed student loans in fourth quarter 2014), lower mortgage servicing income, and seasonally lower card fees and deposit service charges.

Trust and investment fees were $3.7 billion, down $28 million from the prior quarter. Higher retail brokerage asset-based fees and transaction revenue were offset by lower investment banking fees.

Mortgage banking noninterest income was $1.5 billion, up $32 million from fourth quarter. During the first quarter, residential mortgage originations were $49 billion, up $5 billion linked quarter, while the gain on sale ratio was 2.06 percent, up from 1.80 percent in fourth quarter. Net mortgage servicing rights (MSRs) results were $108 million, compared with $235 million in fourth quarter 2014.

Noninterest Expense

Noninterest expense declined $140 million from the prior quarter to $12.5 billion, as seasonally higher employee benefits and incentive compensation of $688 million were offset by costs that typically decline in the first quarter including outside professional services ($252 million lower), equipment costs ($87 million lower) and advertising and promotion ($77 million lower). First quarter salary expense was $87 million lower than fourth quarter due to two fewer days in the quarter, and revenue-related compensation was $60 million lower, driven primarily by lower investment banking revenue. The efficiency ratio was 58.8 percent in first quarter 2015, an improvement from 59.0 percent in fourth quarter 2014. The Company expects to operate within its targeted efficiency ratio range of 55 to 59 percent for full year 2015.

Income Taxes

The Company’s effective income tax rate was 28.2 percent for first quarter 2015, compared with 30.6 percent in the prior quarter. The tax rate for the first quarter reflected a net $359 million discrete tax benefit primarily from a reduction in the reserve for uncertain tax positions due to the resolution of prior period matters with U.S. federal and state taxing authorities.

Loans

Total average loans were $863.3 billion in the first quarter, up $13.8 billion from the fourth quarter, driven by broad-based loan growth. Period end loan balances were $861.2 billion at March 31, 2015, down $1.3 billion from December 31, 2014, due in part to a seasonal decline in credit card balances and the continued decline in junior lien mortgage loans. Fourth quarter 2014 loan growth included the acquisition of the Dillard's credit card portfolio as well as $6.5 billion from the financing related to the sale of government guaranteed student loans.

March 31, 2015 December 31, 2014
(in millions)

Core

Non-strategicand liquidating (a)

Total Core

Non-strategicand liquidating

Total
Commercial $ 414,600 699 415,299 413,701 1,125 414,826
Consumer 388,077 57,855 445,932 388,062 59,663 447,725
Total loans $ 802,677 58,554 861,231 801,763 60,788 862,551
Change from prior quarter: $ 914 (2,234 ) (1,320 ) 25,972 (2,304 ) 23,668

(a) See table on page 32 for additional information on non-strategic/liquidating loan portfolios. Management believes that the above information provides useful disclosure regarding the Company’s ongoing loan portfolios.

Investment Securities

Investment securities were $324.7 billion at March 31, 2015, up $11.8 billion from fourth quarter. Purchases of approximately $23 billion (primarily U.S. Treasury, federal agency mortgage-backed securities (MBS) and municipal securities), were partially offset by run-off, a significant portion of which was in federal agency MBS.

Net unrealized available-for-sale securities gains of $7.9 billion at March 31, 2015 increased from $7.8 billion at December 31, 2014.

Deposits

Average total deposits for first quarter 2015 were $1.2 trillion, up 9 percent from a year ago, driven by both commercial and consumer growth. The average deposit cost for first quarter 2015 was 9 basis points, unchanged from the prior quarter and an improvement of 2 basis points from a year ago. Average core deposits were $1.1 trillion, up 9 percent from a year ago. Average mortgage escrow deposits were $28.4 billion, compared with $24.2 billion a year ago and $29.2 billion in fourth quarter 2014.

Capital

Capital levels remained strong in the first quarter, with Common Equity Tier 1 of $139.2 billion under Basel III (Standardized Approach with Transition Requirements), or 10.86 percent of risk-weighted assets. The Common Equity Tier 1 ratio under the Basel III (Advanced Approach, fully phased-in) framework was 10.53 percent4. During first quarter 2015, the Company purchased 48.4 million shares of its common stock and entered into a $750 million forward repurchase transaction for an additional 14.0 million shares, which settled in early April 2015. The Company also paid a quarterly common stock dividend of $0.35 per share, up from $0.30 per share a year ago.

On March 11, 2015, the Company received no objection from the Federal Reserve to its 2015 Capital Plan, which included a proposed dividend rate of $0.375 per common share for second quarter 2015, subject to Board approval. On March 31, 2015, the Federal Reserve and the Office of the Comptroller of the Currency announced that the Company may begin using the Basel III Advanced Approaches capital framework to determine risk-based capital requirements starting in the second quarter of 2015. The approval did not include stipulations requiring Wells Fargo to increase its current Advanced Approach risk-weighted assets (RWA).

Credit Quality

“Credit losses were $708 million in first quarter 2015, compared with $735 million in fourth quarter 2014, a 4 percent improvement," said Chief Risk Officer Mike Loughlin. "The quarterly loss rate (annualized) was 0.33 percent with commercial losses of 0.04 percent and consumer losses of 0.60 percent. Nonperforming assets declined by $618 million, or 16 percent (annualized), from the prior quarter, and early stage delinquencies dropped. We released $100 million from the allowance for credit losses in the first quarter, reflecting continued credit quality improvement. Future allowance levels may increase or decrease based on a variety of factors, including loan growth, portfolio performance and general economic conditions."

Net Loan Charge-offs

Net loan charge-offs were $708 million in first quarter 2015, or 0.33 percent (annualized) of average loans, compared with $735 million in fourth quarter 2014, or 0.34 percent (annualized) of average loans.

Net Loan Charge-Offs

Quarter ended
March 31, 2015 December 31, 2014 September 30, 2014
($ in millions)

Net loancharge-offs

As a % ofaverageloans (a)

Net loancharge-offs

As a % ofaverageloans (a)

Net loancharge-offs

As a % ofaverageloans (a)

Commercial:
Commercial and industrial $ 64 0.10 % $ 82 0.12 % $ 67 0.11 %
Real estate mortgage (11 ) (0.04 ) (25 ) (0.09 ) (37 ) (0.13 )
Real estate construction (9 ) (0.19 ) (26 ) (0.56 ) (58 ) (1.27 )
Lease financing — — 1 0.05 4 0.10
Total commercial 44 0.04 32 0.03 (24 ) (0.02 )
Consumer:
Real estate 1-4 family first mortgage 83 0.13 88 0.13 114 0.17
Real estate 1-4 family junior lien mortgage 123 0.85 134 0.88 140 0.90
Credit card 239 3.19 221 2.97 201 2.87
Automobile 101 0.73 132 0.94 112 0.81
Other revolving credit and installment 118 1.32 128 1.45 125 1.46
Total consumer 664 0.60 703 0.63 692 0.62
Total $ 708 0.33 % $ 735 0.34 % $ 668 0.32 %

(a) Quarterly net charge-offs as a percentage of average loans are annualized. See explanation on page 31 of the accounting for purchased credit-impaired (PCI) loans and the impact on selected financial ratios.

Nonperforming Assets

Nonperforming assets decreased by $618 million from fourth quarter to $14.8 billion. Nonaccrual loans decreased $338 million to $12.5 billion. Foreclosed assets were $2.3 billion, down from $2.6 billion in fourth quarter 2014.

Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

March 31, 2015 December 31, 2014 September 30, 2014
($ in millions)

Totalbalances

As a% oftotalloans

Totalbalances

As a% oftotalloans

Totalbalances

As a% oftotalloans

Commercial:
Commercial and industrial $ 663 0.24 % $ 538 0.20 % $ 614 0.24 %
Real estate mortgage 1,324 1.18 1,490 1.33 1,636 1.46
Real estate construction 182 0.91 187 1.00 217 1.20
Lease financing 23 0.19 24 0.20 27 0.22
Total commercial 2,192 0.53 2,239 0.54 2,494 0.63
Consumer:
Real estate 1-4 family first mortgage 8,345 3.15 8,583 3.23 8,785 3.34
Real estate 1-4 family junior lien mortgage 1,798 3.11 1,848 3.09 1,903 3.13
Automobile 133 0.24 137 0.25 143 0.26
Other revolving credit and installment 42 0.12 41 0.11 40 0.11
Total consumer 10,318 2.31 10,609 2.37 10,871 2.46
Total nonaccrual loans 12,510 1.45 12,848 1.49 13,365 1.59
Foreclosed assets:
Government insured/guaranteed 772 982 1,140
Non-government insured/guaranteed 1,557 1,627 1,691
Total foreclosed assets 2,329 2,609 2,831
Total nonperforming assets $ 14,839 1.72 % $ 15,457 1.79 % $ 16,196 1.93 %
Change from prior quarter:
Total nonaccrual loans $ (338 ) $ (517 ) $ (607 )
Total nonperforming assets (618 ) (739 ) (781 )

Loans 90 Days or More Past Due and Still Accruing

Loans 90 days or more past due and still accruing (excluding government insured/guaranteed) totaled $841 million at March 31, 2015, down from $920 million at December 31, 2014. Loans 90 days or more past due and still accruing with repayments insured by the Federal Housing Administration (FHA) or predominantly guaranteed by the Department of Veterans Affairs (VA) for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program were $15.5 billion at March 31, 2015, down from $16.9 billion at December 31, 2014.

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $13.0 billion at March 31, 2015, down from $13.2 billion at December 31, 2014. The allowance coverage to total loans was 1.51 percent, compared with 1.53 percent in fourth quarter 2014. The allowance covered 4.5 times annualized first quarter net charge-offs, unchanged from the prior quarter. The allowance coverage to nonaccrual loans was 104 percent at March 31, 2015, compared with 103 percent at December 31, 2014. “We believe the allowance was appropriate for losses inherent in the loan portfolio at March 31, 2015,” said Loughlin.

Business Segment Performance

Wells Fargo defines its operating segments by product type and customer segment. Segment net income for each of the three business segments was:

Quarter ended
(in millions)

Mar 31,2015

Dec 31,2014

Mar 31,2014

Community Banking $ 3,665 3,435 3,844
Wholesale Banking 1,797 1,970 1,742
Wealth, Brokerage and Retirement 561 514 475

Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including checking and savings accounts, credit and debit cards, and auto, student, and small business lending. Community Banking also offers investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C. through its Regional Banking and Wells Fargo Home Lending business units.

Selected Financial Information

Quarter ended
(in millions) Mar 31, 2015 Dec 31,2014 Mar 31,2014
Total revenue $ 12,784 12,835 12,593
Provision for credit losses 617 518 419
Noninterest expense 7,064 7,281 6,774
Segment net income 3,665 3,435 3,844
(in billions)
Average loans 506.4 503.8 505.0
Average assets 993.1 974.9 892.6
Average core deposits 668.9 655.6 626.5

Community Banking reported net income of $3.7 billion, up $230 million, or 7 percent, from fourth quarter 2014. Revenue of $12.8 billion was flat compared with the prior quarter due to seasonally lower deposit service charges and card fees, and a non-recurring gain on sale of government guaranteed student loans in the prior quarter, partially offset by higher market sensitive revenue, mainly gains on sale of debt securities and equity investments. Noninterest expense decreased $217 million, or 3 percent, due to lower project spending, advertising, travel, and equipment expense, partially offset by seasonally higher personnel costs. The provision for credit losses increased $99 million from the prior quarter as a $59 million improvement in net charge offs was more than offset by a $158 million lower reserve release.

Net income was down $179 million, or 5 percent, from first quarter 2014. Revenue increased $191 million, or 2 percent, from a year ago primarily due to higher net interest income, gains on sale of debt securities, revenue from debit and credit card volumes, and trust and investment fees, partially offset by lower gains on equity investments and lower deposit service charges. Noninterest expense increased $290 million, or 4 percent, from a year ago driven by higher personnel expenses and operating losses, partially offset by lower travel, occupancy and other expenses. The provision for credit losses increased $198 million from a year ago as the $172 million improvement in net charge-offs was more than offset by a $370 million lower reserve release.

Regional Banking

Consumer Lending Group

Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $20 million. Products and business segments include Middle Market Commercial Banking, Government and Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Wells Fargo Securities, Principal Investments, Asset Backed Finance, and Asset Management.

Selected Financial Information

Quarter ended
(in millions)

Mar 31,2015

Dec 31,2014

Mar 31,2014

Total revenue $ 5,912 6,054 5,580
Reversal of provision for credit losses (6 ) (39 ) (93 )
Noninterest expense 3,409 3,307 3,215
Segment net income 1,797 1,970 1,742
(in billions)
Average loans 337.6 326.8 301.9
Average assets 594.9 573.3 517.4
Average core deposits 303.4 292.4 259.0

Wholesale Banking reported net income of $1.8 billion, down $173 million, or 9 percent, from fourth quarter 2014. Revenue of $5.9 billion decreased $142 million, or 2 percent, from prior quarter. Net interest income decreased $183 million, or 6 percent, as strong loan and other earning asset growth was more than offset by the impact of two fewer days in the quarter and lower loan resolution income. Noninterest income increased $41 million, or 1 percent, driven by strong sales and trading results, higher multi-family capital mortgage banking fees and seasonally higher crop insurance fees, partially offset by lower investment banking fees, commercial real estate brokerage fees and gains on equity investments. Noninterest expense increased $102 million, or 3 percent, linked quarter on seasonally higher personnel tax expense and seasonally higher insurance commissions. The provision for credit losses increased $33 million from prior quarter due to lower recoveries.

Net income was up $55 million, or 3 percent, from first quarter 2014. Revenue increased $332 million, or 6 percent, from first quarter 2014 on strong loan and deposit growth, and higher investment banking, commercial real estate brokerage, treasury management, foreign exchange and loan fees. Noninterest expense increased $194 million, or 6 percent, from a year ago primarily due to higher personnel expenses related to growth initiatives, compliance, regulatory requirements and higher variable incentive compensation. The provision for credit losses increased $87 million from a year ago primarily due to lower recoveries and a $23 million lower reserve release.

Wealth, Brokerage and Retirement provides a full range of financial advisory services to clients using a planning approach to meet each client’s financial needs. Wealth Management provides affluent and high net worth clients with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and fiduciary services. Abbot Downing, a Wells Fargo business, provides comprehensive wealth management services to ultra high net worth families and individuals as well as endowments and foundations. Brokerage serves customers’ advisory, brokerage and financial needs as part of one of the largest full-service brokerage firms in the United States. Retirement is a national leader in providing institutional retirement and trust services (including 401(k) and pension plan record keeping) for businesses and reinsurance services for the life insurance industry.

Selected Financial Information

Quarter ended
(in millions)

Mar 31,2015

Dec 31,2014

Mar 31,2014

Total revenue $ 3,733

3,647

3,468
Provision (reversal of provision) for credit losses (3 ) 8 (8 )
Noninterest expense 2,831 2,811 2,711
Segment net income 561 514 475
(in billions)
Average loans 56.9 54.8 50.0
Average assets 195.7 192.2 190.6
Average core deposits 161.4 157.0 156.0

Wealth, Brokerage and Retirement (WBR) reported net income of $561 million, up $47 million, or 9 percent, from fourth quarter 2014. Revenue of $3.7 billion increased $86 million, or 2 percent, from the prior quarter, largely driven by higher asset-based fees and brokerage transaction revenue. Noninterest expense increased $20 million, or 1 percent, from the prior quarter driven primarily by seasonally higher personnel expenses which were partially offset by lower other expenses. The provision for credit losses decreased $11 million from fourth quarter 2014.

Net income was up $86 million, or 18 percent, from first quarter 2014. Revenue increased $265 million, or 8 percent, from a year ago primarily due to strong growth in asset-based fees and net interest income. Noninterest expense increased $120 million, or 4 percent, from a year ago primarily due to brokerage volume-based expenses. The provision for credit losses increased $5 million from a year ago.

Retail Brokerage

Wealth Management

Retirement

WBR cross-sell ratio of 10.44 products per household, up from 10.42 a year ago6

Conference Call

The Company will host a live conference call on Tuesday, April 14, at 7 a.m. PDT (10 a.m. EDT). You may participate by dialing 866-872-5161 (U.S. and Canada) or 706-643-1962 (International). The call will also be available online at wellsfargo.com/invest_relations/earnings and at https://engage.vevent.com/rt/wells_fargo_ao~021415.

A replay of the conference call will be available beginning at 10 a.m. PDT (1 p.m. EDT) on April 14 through Tuesday, April 21. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #82513650. The replay will also be available online at wellsfargo.com/invest_relations/earnings and at https://engage.vevent.com/rt/wells_fargo_ao~021415.

Endnotes

1

Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

2

See table on page 4 for more information on core and non-strategic/liquidating loan portfolios.

3

Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.

4

See tables on pages 34-35 for more information on Common Equity Tier 1. Common Equity Tier 1 (Advanced Approach, fully phased-in) is estimated based on 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.

5

Customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit.

6

Data as of February 2015, comparisons with February 2014.

7

February 2015 Retail Bank household cross-sell ratio includes the impact of the sale of government guaranteed student loans in fourth quarter 2014.

8

Cross-sell reported on a one-quarter lag.

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forward-looking 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 levels; (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 Common Equity Tier 1 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 our expectations 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 current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.

For more information about factors that could cause actual results to differ materially from our expectations, refer to our 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, 2014, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.7 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,700 locations, 12,500 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 266,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.

Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
Pages

Summary Information

Summary Financial Data

17

Income

Consolidated Statement of Income 19
Consolidated Statement of Comprehensive Income 21
Condensed Consolidated Statement of Changes in Total Equity 21
Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 22
Five Quarter Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) 23
Noninterest Income and Noninterest Expense 24

Balance Sheet

Consolidated Balance Sheet 26
Investment Securities 28

Loans

Loans 28
Nonperforming Assets 29
Loans 90 Days or More Past Due and Still Accruing 30
Purchased Credit-Impaired Loans 31
Pick-A-Pay Portfolio 32
Non-Strategic and Liquidating Loan Portfolios 32
Five Quarter Changes in Allowance for Credit Losses 33

Equity

Five Quarter Risk-Based Capital Components 34
Common Equity Tier 1 Under Basel III 35

Operating Segments

Operating Segment Results 36

Other

Mortgage Servicing and other related data 38

Wells Fargo & Company and Subsidiaries

SUMMARY FINANCIAL DATA
Quarter ended

% ChangeMar 31, 2015 from

($ in millions, except per share amounts)

Mar 31,2015

Dec 31,2014

Mar 31,2014

Dec 31,2014

Mar 31,2014

For the Period
Wells Fargo net income $ 5,804 5,709 5,893 2 % (2 )
Wells Fargo net income applicable to common stock 5,461 5,382 5,607 1 (3 )
Diluted earnings per common share 1.04 1.02 1.05 2 (1 )
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.38 % 1.36 1.57 1 (12 )
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 13.17 12.84 14.35 3 (8 )
Efficiency ratio (1) 58.8 59.0 57.9 — 2
Total revenue $ 21,278 21,443 20,625 (1 ) 3
Pre-tax pre-provision profit (PTPP) (2) 8,771 8,796 8,677 — 1
Dividends declared per common share 0.35 0.35 0.30 — 17
Average common shares outstanding 5,160.4 5,192.5 5,262.8 (1 ) (2 )
Diluted average common shares outstanding 5,243.6 5,279.2 5,353.3 (1 ) (2 )
Average loans $ 863,261 849,429 823,790 2 5
Average assets 1,707,798 1,663,760 1,525,905 3 12
Average core deposits (3) 1,063,234 1,035,999 973,801 3 9
Average retail core deposits (4) 731,413 714,572 690,643 2 6
Net interest margin 2.95 % 3.04 3.20 (3 ) (8 )
At Period End
Investment securities $ 324,736 312,925 270,327 4 20
Loans 861,231 862,551 826,443 — 4
Allowance for loan losses 12,176 12,319 13,695 (1 ) (11 )
Goodwill 25,705 25,705 25,637 — —
Assets 1,737,737 1,687,155 1,546,707 3 12
Core deposits (3) 1,086,993 1,054,348 994,185 3 9
Wells Fargo stockholders’ equity 188,796 184,394 175,654 2 7
Total equity 189,964 185,262 176,469 3 8
Capital ratios:
Total equity to assets 10.93 % 10.98 11.41 — (4 )
Risk-based capital (5):
Tier 1 capital 12.39 12.45 12.63 — (2 )
Total capital 15.30 15.53 15.71 (1 ) (3 )
Tier 1 leverage (5) 9.48 9.45 9.84 — (4 )
Common Equity Tier 1 (5)(6) 10.86 11.04 11.36 (2 ) (4 )
Common shares outstanding 5,162.9 5,170.3 5,265.7 — (2 )
Book value per common share $ 32.70 32.19 30.48 2 7
Common stock price:
High 56.29 55.95 49.97 1 13
Low 50.42 46.44 44.17 9 14
Period end 54.40 54.82 49.74 (1 ) 9
Team members (active, full-time equivalent) 266,000 264,500 265,300 1 —

(1) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).

(2) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

(3) Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).

(4) Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits.

(5) The March 31, 2015, ratios are preliminary.

(6) See the “Five Quarter Risk-Based Capital Components” table for additional information.

Wells Fargo & Company and Subsidiaries

FIVE QUARTER SUMMARY FINANCIAL DATA
Quarter ended
($ in millions, except per share amounts)

Mar 31,2015

Dec 31,2014

Sep 30,2014

Jun 30,2014

Mar 31,2014

For the Quarter
Wells Fargo net income $ 5,804 5,709 5,729 5,726 5,893
Wells Fargo net income applicable to common stock 5,461 5,382 5,408 5,424 5,607
Diluted earnings per common share 1.04 1.02 1.02 1.01 1.05
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.38 % 1.36 1.40 1.47 1.57
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) 13.17 12.84 13.10 13.40 14.35
Efficiency ratio (1) 58.8 59.0 57.7 57.9 57.9
Total revenue $ 21,278 21,443 21,213 21,066 20,625
Pre-tax pre-provision profit (PTPP) (2) 8,771 8,796 8,965 8,872 8,677
Dividends declared per common share 0.35 0.35 0.35 0.35 0.30
Average common shares outstanding 5,160.4 5,192.5 5,225.9 5,268.4 5,262.8
Diluted average common shares outstanding 5,243.6 5,279.2 5,310.4 5,350.8 5,353.3
Average loans $ 863,261 849,429 833,199 831,043 823,790
Average assets 1,707,798 1,663,760 1,617,942 1,564,003 1,525,905
Average core deposits (3) 1,063,234 1,035,999 1,012,219 991,727 973,801
Average retail core deposits (4) 731,413 714,572 703,062 698,763 690,643
Net interest margin 2.95 % 3.04 3.06 3.15 3.20
At Quarter End
Investment securities $ 324,736 312,925 289,009 279,069 270,327
Loans 861,231 862,551 838,883 828,942 826,443
Allowance for loan losses 12,176 12,319 12,681 13,101 13,695
Goodwill 25,705 25,705 25,705 25,705 25,637
Assets 1,737,737 1,687,155 1,636,855 1,598,874 1,546,707
Core deposits (3) 1,086,993 1,054,348 1,016,478 1,007,485 994,185
Wells Fargo stockholders’ equity 188,796 184,394 182,481 180,859 175,654
Total equity 189,964 185,262 182,990 181,549 176,469
Capital ratios:
Total equity to assets 10.93 % 10.98 11.18 11.35 11.41
Risk-based capital (5):
Tier 1 capital 12.39 12.45 12.55 12.72 12.63
Total capital 15.30 15.53 15.58 15.89 15.71
Tier 1 leverage (5) 9.48 9.45 9.64 9.86 9.84
Common Equity Tier 1 (5)(6) 10.86 11.04 11.11 11.31 11.36
Common shares outstanding 5,162.9 5,170.3 5,215.0 5,249.9 5,265.7
Book value per common share $ 32.70 32.19 31.55 31.18 30.48
Common stock price:
High 56.29 55.95 53.80 53.05 49.97
Low 50.42 46.44 49.47 46.72 44.17
Period end 54.40 54.82 51.87 52.56 49.74
Team members (active, full-time equivalent) 266,000 264,500 263,900 263,500 265,300

(1) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).

(2) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.

(3) Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).

(4) Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits.

(5) The March 31, 2015, ratios are preliminary.

(6) See the “Five Quarter Risk-Based Capital Components” table for additional information.

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME
Quarter ended March 31, %
(in millions, except per share amounts) 2015 2014 Change
Interest income

Trading assets

$ 445 374 19 %
Investment securities 2,144 2,110 2
Mortgages held for sale 177 170 4
Loans held for sale 5 2 150
Loans 8,938 8,746 2
Other interest income 254 210 21
Total interest income 11,963 11,612 3
Interest expense
Deposits 258 279 (8 )
Short-term borrowings 18 12 50
Long-term debt 604 619 (2 )
Other interest expense 97 87 11
Total interest expense 977 997 (2 )
Net interest income 10,986 10,615 3
Provision for credit losses 608 325 87
Net interest income after provision for credit losses 10,378 10,290 1
Noninterest income
Service charges on deposit accounts 1,215 1,215 —
Trust and investment fees 3,677 3,412 8
Card fees 871 784 11
Other fees 1,078 1,047 3
Mortgage banking 1,547 1,510 2
Insurance 430 432 —
Net gains from trading activities 408 432 (6 )
Net gains on debt securities 278 83 235
Net gains from equity investments 370 847 (56 )
Lease income 132 133 (1 )
Other 286 115 149
Total noninterest income 10,292 10,010 3
Noninterest expense
Salaries 3,851 3,728 3
Commission and incentive compensation 2,685 2,416 11
Employee benefits 1,477 1,372 8
Equipment 494 490 1
Net occupancy 723 742 (3 )
Core deposit and other intangibles 312 341 (9 )
FDIC and other deposit assessments 248 243 2
Other 2,717 2,616 4
Total noninterest expense 12,507 11,948 5
Income before income tax expense 8,163 8,352 (2 )
Income tax expense 2,279 2,277 —
Net income before noncontrolling interests 5,884 6,075 (3 )
Less: Net income from noncontrolling interests 80 182 (56 )
Wells Fargo net income $ 5,804 5,893 (2 )
Less: Preferred stock dividends and other 343 286 20
Wells Fargo net income applicable to common stock $ 5,461 5,607 (3 )
Per share information
Earnings per common share $ 1.06 1.07 (1 )
Diluted earnings per common share 1.04 1.05 (1 )
Dividends declared per common share 0.35 0.30 17
Average common shares outstanding 5,160.4 5,262.8 (2 )
Diluted average common shares outstanding 5,243.6 5,353.3 (2 )

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
Quarter ended
(in millions, except per share amounts)

Mar 31,2015

Dec 31,2014

Sep 30,2014

Jun 30,2014

Mar 31,2014

Interest Income
Trading assets $ 445 477 427 407 374
Investment securities 2,144 2,150 2,066 2,112 2,110
Mortgages held for sale 177 187 215 195 170
Loans held for sale 5 25 50 1 2
Loans 8,938 9,091 8,963 8,852 8,746
Other interest income 254 253 243 226 210
Total interest income 11,963 12,183 11,964 11,793 11,612
Interest expense
Deposits 258 269 273 275 279
Short-term borrowings 18 18 15 14 12
Long-term debt 604 620 629 620 619
Other interest expense 97 96 106 93 87
Total interest expense 977 1,003 1,023 1,002 997
Net interest income 10,986 11,180 10,941 10,791 10,615
Provision for credit losses 608 485 368 217 325
Net interest income after provision for credit losses 10,378 10,695 10,573 10,574 10,290
Noninterest income
Service charges on deposit accounts 1,215 1,241 1,311 1,283 1,215
Trust and investment fees 3,677 3,705 3,554 3,609 3,412
Card fees 871 925 875 847 784
Other fees 1,078 1,124 1,090 1,088 1,047
Mortgage banking 1,547 1,515 1,633 1,723 1,510
Insurance 430 382 388 453 432
Net gains from trading activities 408 179 168 382 432
Net gains on debt securities 278 186 253 71 83
Net gains from equity investments 370 372 712 449 847
Lease income 132 127 137 129 133
Other 286 507 151 241 115
Total noninterest income 10,292 10,263 10,272 10,275 10,010
Noninterest expense
Salaries 3,851 3,938 3,914 3,795 3,728
Commission and incentive compensation 2,685 2,582 2,527 2,445 2,416
Employee benefits 1,477 1,124 931 1,170 1,372
Equipment 494 581 457 445 490
Net occupancy 723 730 731 722 742
Core deposit and other intangibles 312 338 342 349 341
FDIC and other deposit assessments 248 231 229 225 243
Other 2,717 3,123 3,117 3,043 2,616

Total noninterest expense

12,507 12,647 12,248 12,194 11,948
Income before income tax expense 8,163 8,311 8,597 8,655 8,352
Income tax expense 2,279 2,519 2,642 2,869 2,277
Net income before noncontrolling interests 5,884 5,792 5,955 5,786 6,075
Less: Net income from noncontrolling interests 80 83 226 60 182
Wells Fargo net income $ 5,804 5,709 5,729 5,726 5,893
Less: Preferred stock dividends and other 343 327 321 302 286
Wells Fargo net income applicable to common stock $ 5,461 5,382 5,408 5,424 5,607
Per share information
Earnings per common share $ 1.06 1.04 1.04 1.02 1.07
Diluted earnings per common share 1.04 1.02 1.02 1.01 1.05
Dividends declared per common share 0.35 0.35 0.35 0.35 0.30
Average common shares outstanding 5,160.4 5,192.5 5,225.9 5,268.4 5,262.8
Diluted average common shares outstanding 5,243.6 5,279.2 5,310.4 5,350.8 5,353.3

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarter ended March 31, %

(in millions)

2015 2014 Change
Wells Fargo net income $ 5,804 5,893 (2 )%
Other comprehensive income, before tax:
Investment securities:
Net unrealized gains arising during the period 393 2,725 (86 )
Reclassification of net gains to net income (300 ) (394 ) (24 )
Derivatives and hedging activities:
Net unrealized gains arising during the period 952 44 NM
Reclassification of net gains on cash flow hedges to net income (234 ) (106 ) 121
Defined benefit plans adjustments:
Net actuarial losses arising during the period (11 ) — NM
Amortization of net actuarial loss, settlements and other to net income 43 18 139
Foreign currency translation adjustments:
Net unrealized losses arising during the period (55 ) (17 ) 224
Reclassification of net losses to net income — 6 (100 )
Other comprehensive income, before tax 788 2,276 (65 )
Income tax expense related to other comprehensive income (228 ) (831 ) (73 )
Other comprehensive income, net of tax 560 1,445 (61 )
Less: Other comprehensive income from noncontrolling interests 301 79 281
Wells Fargo other comprehensive income, net of tax 259 1,366 (81 )
Wells Fargo comprehensive income 6,063 7,259 (16 )
Comprehensive income from noncontrolling interests 381 261 46
Total comprehensive income $ 6,444 7,520 (14 )

NM - Not meaningful

FIVE QUARTER CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

Quarter ended
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Balance, beginning of period $ 185,262 182,990 181,549 176,469 171,008
Wells Fargo net income 5,804 5,709 5,729 5,726 5,893
Wells Fargo other comprehensive income (loss), net of tax 259 400 (999 ) 1,365 1,366
Noncontrolling interests 301 353 (181 ) (125 ) (52 )
Common stock issued 1,327 508 402 579 994
Common stock repurchased (1) (2,592 ) (2,945 ) (2,490 ) (2,954 ) (1,025 )
Preferred stock released by ESOP 41 166 170 430 305
Common stock warrants repurchased/exercised (8 ) (9 ) — — —
Preferred stock issued 1,997 — 780 1,995 —
Common stock dividends (1,805 ) (1,816 ) (1,828 ) (1,844 ) (1,579 )
Preferred stock dividends (344 ) (327 ) (321 ) (302 ) (285 )
Tax benefit from stock incentive compensation 354 75 48 61 269
Stock incentive compensation expense 376 176 144 164 374
Net change in deferred compensation and related plans (1,008 ) (18 ) (13 ) (15 ) (799 )
Balance, end of period $ 189,964 185,262 182,990 181,549 176,469

(1) For the quarter ended March 31, 2015, includes $750 million related to a private forward repurchase transaction that settled in second quarter 2015 for 14.0 million shares of common stock. For the quarters ended December 31, September 30, and June 30, 2014, includes $750 million, $1.0 billion, and $1.0 billion, respectively, related to private forward repurchase transactions that settled in subsequent quarters for 14.3 million, 19.8 million, and 19.5 million shares of common stock, respectively.

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended March 31,
2015

2014

(in millions)

Averagebalance

Yields/rates

Interestincome/expense

Averagebalance

Yields/rates

Interestincome/expense

Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 275,731 0.28 % $ 190 213,284 0.27 % $ 144
Trading assets 62,977 2.88 453 48,231 3.17 381
Investment securities (3):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 26,163 1.55 100 6,572 1.68 28
Securities of U.S. states and political subdivisions 44,948 4.20 472 42,600 4.37 465
Mortgage-backed securities:
Federal agencies 102,193 2.76 706 117,641 2.94 864
Residential and commercial 23,938 5.71 342 28,035 6.12 429
Total mortgage-backed securities 126,131 3.32 1,048 145,676 3.55 1,293
Other debt and equity securities 47,051 3.43 400 49,156 3.59 438
Total available-for-sale securities 244,293 3.32 2,020 244,004 3.65 2,224
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 42,869 2.21 234 1,104 2.18 6
Securities of U.S. states and political subdivisions 1,948 5.16 25 — — —
Federal agency mortgage-backed securities 11,318 1.87 53 6,162 3.11 48
Other debt securities 6,792 1.72 29 6,414 1.86 29
Total held-to-maturity securities 62,927 2.19 341 13,680 2.45 83
Total investment securities 307,220 3.08 2,361 257,684 3.59 2,307
Mortgages held for sale (4) 19,583 3.61 177 16,556 4.11 170
Loans held for sale (4) 700 2.67 5 111 6.28 2
Loans:
Commercial:
Commercial and industrial - U.S. 227,682 3.28 1,844 193,865 3.43 1,641
Commercial and industrial - Non U.S. 45,062 1.88 209 42,181 1.92 200
Real estate mortgage 111,497 3.57 981 112,824 3.56 990
Real estate construction 19,492 3.52 169 17,071 4.38 184
Lease financing 12,319 4.95 152 12,262 6.12 188
Total commercial 416,052 3.26 3,355 378,203 3.43 3,203
Consumer:
Real estate 1-4 family first mortgage 265,823 4.13 2,741 259,488 4.17 2,705
Real estate 1-4 family junior lien mortgage 58,880 4.27 621 65,014 4.30 692
Credit card 30,380 11.78 883 26,283 12.32 798
Automobile 56,004 5.95 821 51,794 6.50 831
Other revolving credit and installment 36,122 6.01 535 43,008 5.00 531
Total consumer 447,209 5.05 5,601 445,587 5.02 5,557
Total loans (4) 863,261 4.19 8,956 823,790 4.29 8,760
Other 4,730 5.41 63 4,655 5.72 66
Total earning assets $ 1,534,202 3.21 % $ 12,205 1,364,311 3.49 % $ 11,830
Funding sources
Deposits:
Interest-bearing checking $ 39,155 0.05 % $ 5 36,799 0.07 % $ 6
Market rate and other savings 613,413 0.06 97 579,044 0.07 105
Savings certificates 34,608 0.75 64 40,535 0.89 89
Other time deposits 56,549 0.39 56 45,822 0.42 48
Deposits in foreign offices 105,537 0.14 36 91,050 0.14 31
Total interest-bearing deposits 849,262 0.12 258 793,250 0.14 279
Short-term borrowings 71,712 0.11 18 54,502 0.09 13
Long-term debt 183,763 1.32 604 153,793 1.62 619
Other liabilities 16,894 2.30 97 12,859 2.72 87
Total interest-bearing liabilities 1,121,631 0.35 977 1,014,404 0.40 998
Portion of noninterest-bearing funding sources 412,571 349,907 — —
Total funding sources $ 1,534,202 0.26 977 1,364,311 0.29 998
Net interest margin and net interest income on a taxable-equivalent basis (5) 2.95 % $ 11,228 3.20 % $ 10,832
Noninterest-earning assets
Cash and due from banks $ 17,059 16,363
Goodwill 25,705 25,637
Other 130,832 119,594
Total noninterest-earning assets $ 173,596 161,594
Noninterest-bearing funding sources
Deposits $ 325,531 284,069
Other liabilities 71,988 52,955
Total equity 188,648 174,477
Noninterest-bearing funding sources used to fund earning assets (412,571 ) (349,907 )
Net noninterest-bearing funding sources $ 173,596 161,594
Total assets $ 1,707,798 1,525,905

(1) Our average prime rate was 3.25% for the quarters ended March 31, 2015 and 2014. The average three-month London Interbank Offered Rate (LIBOR) was 0.26% and 0.24% for the same quarters, respectively.

(2) Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.

(3) Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.

(4) Nonaccrual loans and related income are included in their respective loan categories.

(5) Includes taxable-equivalent adjustments of $242 million and $217 million for the quarters ended March 31, 2015 and 2014, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented.

Wells Fargo & Company and Subsidiaries

FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
Quarter ended
Mar 31, 2015 Dec 31, 2014 Sep 30, 2014 Jun 30, 2014 Mar 31, 2014
($ in billions)

Averagebalance

Yields/rates

Averagebalance

Yields/rates

Averagebalance

Yields/rates

Averagebalance

Yields/rates

Averagebalance

Yields/rates

Earning assets
Federal funds sold, securities purchased under resale agreements and other short-term investments $ 275.7 0.28 % $ 268.1 0.28 % $ 253.2 0.28 % $ 229.8 0.28 % $ 213.3 0.27 %
Trading assets 63.0 2.88 60.4 3.21 57.5 3.00 54.4 3.05 48.2 3.17
Investment securities (2):
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies 26.2 1.55 19.5 1.55 8.8 1.69 6.6 1.78 6.6 1.68
Securities of U.S. states and political subdivisions 44.9 4.20 43.9 4.30 43.3 4.24 42.7 4.26 42.6 4.37
Mortgage-backed securities:
Federal agencies 102.2 2.76 109.3 2.78 113.0 2.76 116.5 2.85 117.6 2.94
Residential and commercial 23.9 5.71 24.7 5.89 26.0 5.98 27.3 6.11 28.0 6.12
Total mortgage-backed securities 126.1 3.32 134.0 3.36 139.0 3.36 143.8 3.47 145.6 3.55
Other debt and equity securities 47.1 3.43 45.0 3.87 47.1 3.45 48.7 3.76 49.2 3.59
Total available-for-sale securities 244.3 3.32 242.4 3.48 238.2 3.48 241.8 3.62 244.0 3.65
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 42.9 2.21 32.9 2.25 23.7 2.22 10.8 2.20 1.1 2.18
Securities of U.S. states and political subdivisions 1.9 5.16 0.9 4.92 — — — — — —
Federal agency mortgage-backed securities 11.3 1.87 5.6 2.07 5.9 2.23 6.1 2.74 6.2 3.11
Other debt securities 6.8 1.72 6.1 1.81 5.9 1.83 5.2 1.90 6.4 1.86
Total held-to-maturity securities 62.9 2.19 45.5 2.22 35.5 2.17 22.1 2.28 13.7 2.45
Total investment securities 307.2 3.08 287.9 3.28 273.7 3.31 263.9 3.51 257.7 3.59
Mortgages held for sale 19.6 3.61 19.2 3.90 21.5 4.01 18.8 4.16 16.6 4.11
Loans held for sale 0.7 2.67 7.0 1.43 9.5 2.10 0.2 2.55 0.1 6.28
Loans:
Commercial:
Commercial and industrial - U.S. 227.7 3.28 218.3 3.32 207.6 3.29 199.2 3.39 193.9 3.43
Commercial and industrial - Non U.S. 45.1 1.88 43.0 2.03 42.4 2.11 43.0 2.06 42.2 1.92
Real estate mortgage 111.5 3.57 112.3 3.69 113.0 3.69 112.8 3.61 112.8 3.56
Real estate construction 19.5 3.52 18.3 4.33 17.8 3.94 17.5 4.18 17.1 4.38
Lease financing 12.3 4.95 12.3 5.35 12.3 5.38 12.2 5.68 12.2 6.12
Total commercial 416.1 3.26 404.2 3.39 393.1 3.37 384.7 3.42 378.2 3.43
Consumer:
Real estate 1-4 family first mortgage 265.8 4.13 264.8 4.16 262.2 4.23 260.0 4.20 259.5 4.17
Real estate 1-4 family junior lien mortgage 58.9 4.27 60.2 4.28 61.6 4.30 63.3 4.31 65.0 4.30
Credit card 30.4 11.78 29.5 11.71 27.7 11.96 26.4 11.97 26.3 12.32
Automobile 56.0 5.95 55.4 6.08 54.6 6.19 53.5 6.34 51.8 6.50
Other revolving credit and installment 36.1 6.01 35.3 6.01 34.0 6.03 43.1 5.07 43.0 5.00
Total consumer 447.2 5.05 445.2 5.06 440.1 5.11 446.3 5.02 445.6 5.02
Total loans 863.3 4.19 849.4 4.27 833.2 4.29 831.0 4.28 823.8 4.29
Other 4.7 5.41 4.8 5.30 4.7 5.41 4.5 5.74 4.6 5.72
Total earning assets $ 1,534.2 3.21 % $ 1,496.8 3.31 % $ 1,453.3 3.34 % $ 1,402.6 3.43 % $ 1,364.3 3.49 %
Funding sources
Deposits:
Interest-bearing checking $ 39.2 0.05 % $ 40.5 0.06 % $ 41.4 0.07 % $ 40.2 0.07 % $ 36.8 0.07 %
Market rate and other savings 613.4 0.06 593.9 0.07 586.4 0.07 583.9 0.07 579.0 0.07
Savings certificates 34.6 0.75 35.9 0.80 37.3 0.84 38.8 0.86 40.5 0.89
Other time deposits 56.5 0.39 56.1 0.39 55.1 0.39 48.5 0.41 45.8 0.42
Deposits in foreign offices 105.5 0.14 99.3 0.15 98.9 0.14 94.2 0.15 91.1 0.14
Total interest-bearing deposits 849.2 0.12 825.7 0.13 819.1 0.13 805.6 0.14 793.2 0.14
Short-term borrowings 71.7 0.11 64.7 0.12 62.3 0.10 58.9 0.10 54.5 0.09
Long-term debt 183.8 1.32 183.3 1.35 173.0 1.46 159.2 1.56 153.8 1.62
Other liabilities 16.9 2.30 15.6 2.44 15.5 2.73 13.6 2.73 12.9 2.72
Total interest-bearing liabilities 1,121.6 0.35 1,089.3 0.37 1,069.9 0.38 1,037.3 0.39 1,014.4 0.40
Portion of noninterest-bearing funding sources 412.6 — 407.5 — 383.4 — 365.3 — 349.9 —
Total funding sources $ 1,534.2 0.26 $ 1,496.8 0.27 $ 1,453.3 0.28 $ 1,402.6 0.28 $ 1,364.3 0.29
Net interest margin on a taxable-equivalent basis 2.95 % 3.04 % 3.06 % 3.15 % 3.20 %
Noninterest-earning assets
Cash and due from banks $ 17.1 16.9 16.2 15.9 16.4
Goodwill 25.7 25.7 25.7 25.7 25.6
Other 130.8 124.4 122.7 119.8 119.6
Total noninterest-earnings assets $ 173.6 167.0 164.6 161.4 161.6
Noninterest-bearing funding sources
Deposits $ 325.6 324.1 308.0 295.9 284.1
Other liabilities 72.0 65.7 57.9 51.1 52.9
Total equity 188.6 184.7 182.1 179.7 174.5
Noninterest-bearing funding sources used to fund earning assets (412.6 ) (407.5 ) (383.4 ) (365.3 ) (349.9 )
Net noninterest-bearing funding sources $ 173.6 167.0 164.6 161.4 161.6
Total assets $ 1,707.8 1,663.8 1,617.9 1,564.0 1,525.9

(1) Our average prime rate was 3.25% for quarters ended March 31, 2015 and December 31, September 30, and June 30, and March 31, 2014. The average three-month London Interbank Offered Rate (LIBOR) was 0.26%, 0.24%, 0.23%, 0.23% and 0.24% for the same quarters, respectively.

(2) Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.

Wells Fargo & Company and Subsidiaries

NONINTEREST INCOME
Quarter ended March 31, %
(in millions) 2015 2014 Change
Service charges on deposit accounts $ 1,215 1,215 — %
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,380 2,241 6
Trust and investment management 852 844 1
Investment banking 445 327 36
Total trust and investment fees 3,677 3,412 8
Card fees 871 784 11
Other fees:
Charges and fees on loans 309 367 (16 )
Merchant processing fees 187 172 9
Cash network fees 125 120 4
Commercial real estate brokerage commissions 129 72 79
Letters of credit fees 88 96 (8 )
All other fees 240 220 9
Total other fees 1,078 1,047 3
Mortgage banking:
Servicing income, net 523 938 (44 )
Net gains on mortgage loan origination/sales activities 1,024 572 79
Total mortgage banking 1,547 1,510 2
Insurance 430 432 —
Net gains from trading activities 408 432 (6 )
Net gains on debt securities 278 83 235
Net gains from equity investments 370 847 (56 )
Lease income 132 133 (1 )
Life insurance investment income 145 132 10

All other

141

(17

)

NM

Total $ 10,292 10,010 3
NM - Not meaningful
NONINTEREST EXPENSE
Quarter ended March 31, %
(in millions) 2015 2014 Change
Salaries $ 3,851 3,728 3 %
Commission and incentive compensation 2,685 2,416 11
Employee benefits 1,477 1,372 8
Equipment 494 490 1
Net occupancy 723 742 (3 )
Core deposit and other intangibles 312 341 (9 )
FDIC and other deposit assessments 248 243 2
Outside professional services 548 559 (2 )
Operating losses 295 159 86
Outside data processing 253 241 5
Contract services 225 234 (4 )
Travel and entertainment 158 219 (28 )
Postage, stationery and supplies 171 191 (11 )
Advertising and promotion 118 118 —
Foreclosed assets 135 132 2
Telecommunications 111 114 (2 )
Insurance 140 125 12
Operating leases 62 50 25
All other 501 474 6
Total $ 12,507 11,948 5

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONINTEREST INCOME
Quarter ended
(in millions)

Mar 31,2015

Dec 31,2014

Sep 30,2014

Jun 30,2014

Mar 31,2014

Service charges on deposit accounts $ 1,215 1,241 1,311 1,283 1,215
Trust and investment fees:
Brokerage advisory, commissions and other fees 2,380 2,335 2,327 2,280 2,241
Trust and investment management 852 849 856 838 844
Investment banking 445 521 371 491 327
Total trust and investment fees 3,677 3,705 3,554 3,609 3,412
Card fees 871 925 875 847 784
Other fees:
Charges and fees on loans 309 311 296 342 367
Merchant processing fees 187 187 184 183 172
Cash network fees 125 125 134 128 120
Commercial real estate brokerage commissions 129 155 143 99 72
Letters of credit fees 88 102 100 92 96
All other fees 240 244 233 244 220
Total other fees 1,078 1,124 1,090 1,088 1,047
Mortgage banking:
Servicing income, net 523 685 679 1,035 938
Net gains on mortgage loan origination/sales activities 1,024 830 954 688 572
Total mortgage banking 1,547 1,515 1,633 1,723 1,510
Insurance 430 382 388 453 432
Net gains from trading activities 408 179 168 382 432
Net gains on debt securities 278 186 253 71 83
Net gains from equity investments 370 372 712 449 847
Lease income 132 127 137 129 133
Life insurance investment income 145 145 143 138 132
All other 141 362 8 103 (17 )
Total $ 10,292 10,263 10,272 10,275 10,010
FIVE QUARTER NONINTEREST EXPENSE
Quarter ended
(in millions)

Mar 31,2015

Dec 31,2014

Sep 30,2014

Jun 30,2014

Mar 31,2014

Salaries $ 3,851 3,938 3,914 3,795 3,728
Commission and incentive compensation 2,685 2,582 2,527 2,445 2,416
Employee benefits 1,477 1,124 931 1,170 1,372
Equipment 494 581 457 445 490
Net occupancy 723 730 731 722 742
Core deposit and other intangibles 312 338 342 349 341
FDIC and other deposit assessments 248 231 229 225 243
Outside professional services 548 800 684 646 559
Operating losses 295 309 417 364 159
Outside data processing 253 270 264 259 241
Contract services 225 245 247 249 234
Travel and entertainment 158 216 226 243 219
Postage, stationery and supplies 171 190 182 170 191
Advertising and promotion 118 195 153 187 118
Foreclosed assets 135 164 157 130 132
Telecommunications 111 106 122 111 114
Insurance 140 60 97 140 125
Operating leases 62 58 58 54 50
All other 501 510 510 490 474
Total $ 12,507 12,647 12,248 12,194 11,948

Wells Fargo & Company and Subsidiaries

CONSOLIDATED BALANCE SHEET
(in millions, except shares)

Mar 31,2015

Dec 31,2014

%Change

Assets
Cash and due from banks $ 19,793 19,571 1 %
Federal funds sold, securities purchased under resale agreements and other short-term investments 291,317 258,429 13
Trading assets 79,278 78,255 1
Investment securities:
Available-for-sale, at fair value 257,603 257,442 —
Held-to-maturity, at cost 67,133 55,483 21
Mortgages held for sale 23,606 19,536 21
Loans held for sale 681 722 (6 )
Loans 861,231 862,551 —
Allowance for loan losses (12,176 ) (12,319 ) (1 )
Net loans 849,055 850,232 —
Mortgage servicing rights:
Measured at fair value 11,739 12,738 (8 )
Amortized 1,252 1,242 1
Premises and equipment, net 8,696 8,743 (1 )
Goodwill 25,705 25,705 —
Other assets 101,879 99,057 3
Total assets $ 1,737,737 1,687,155 3
Liabilities
Noninterest-bearing deposits $ 335,858 321,963 4
Interest-bearing deposits 860,805 846,347 2
Total deposits 1,196,663 1,168,310 2
Short-term borrowings 77,697 63,518 22
Accrued expenses and other liabilities 90,121 86,122 5
Long-term debt 183,292 183,943 —
Total liabilities 1,547,773 1,501,893 3
Equity
Wells Fargo stockholders’ equity:
Preferred stock 21,998 19,213 14
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares and 5,481,811,474 shares 9,136 9,136 —
Additional paid-in capital 59,980 60,537 (1 )
Retained earnings 110,676 107,040 3
Cumulative other comprehensive income 3,777 3,518 7
Treasury stock – 318,869,849 shares and 311,462,276 shares (14,556 ) (13,690 ) 6
Unearned ESOP shares (2,215 ) (1,360 ) 63
Total Wells Fargo stockholders’ equity 188,796 184,394 2
Noncontrolling interests 1,168 868 35
Total equity 189,964 185,262 3
Total liabilities and equity $ 1,737,737 1,687,155 3

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED BALANCE SHEET
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Assets
Cash and due from banks $ 19,793 19,571 18,032 20,635 19,731
Federal funds sold, securities purchased under resale agreements and other short-term investments 291,317 258,429 261,932 238,719 222,781
Trading assets 79,278 78,255 67,755 71,674 63,753
Investment securities:
Available-for-sale, at fair value 257,603 257,442 248,251 248,961 252,665
Held-to-maturity, at cost 67,133 55,483 40,758 30,108 17,662
Mortgages held for sale 23,606 19,536 20,178 21,064 16,233
Loans held for sale 681 722 9,292 9,762 91
Loans 861,231 862,551 838,883 828,942 826,443
Allowance for loan losses (12,176 ) (12,319 ) (12,681 ) (13,101 ) (13,695 )
Net loans 849,055 850,232 826,202 815,841 812,748
Mortgage servicing rights:
Measured at fair value 11,739 12,738 14,031 13,900 14,953
Amortized 1,252 1,242 1,224 1,196 1,219
Premises and equipment, net 8,696 8,743 8,768 8,977 9,020
Goodwill 25,705 25,705 25,705 25,705 25,637
Other assets 101,879 99,057 94,727 92,332 90,214
Total assets $ 1,737,737 1,687,155 1,636,855 1,598,874 1,546,707
Liabilities
Noninterest-bearing deposits $ 335,858 321,963 313,791 308,099 294,863
Interest-bearing deposits 860,805 846,347 816,834 810,478 799,713
Total deposits 1,196,663 1,168,310 1,130,625 1,118,577 1,094,576
Short-term borrowings 77,697 63,518 62,927 61,849 57,061
Accrued expenses and other liabilities 90,121 86,122 75,727 69,021 65,179
Long-term debt

183,292

183,943 184,586 167,878 153,422
Total liabilities 1,547,773 1,501,893 1,453,865 1,417,325 1,370,238
Equity
Wells Fargo stockholders’ equity:
Preferred stock 21,998 19,213 19,379 18,749 17,179
Common stock 9,136 9,136 9,136 9,136 9,136
Additional paid-in capital 59,980 60,537 60,100 59,926 60,618
Retained earnings 110,676 107,040 103,494 99,926 96,368
Cumulative other comprehensive income 3,777 3,518 3,118 4,117 2,752
Treasury stock (14,556 ) (13,690 ) (11,206 ) (9,271 ) (8,206 )
Unearned ESOP shares (2,215 ) (1,360 ) (1,540 ) (1,724 ) (2,193 )
Total Wells Fargo stockholders’ equity 188,796 184,394 182,481 180,859 175,654
Noncontrolling interests 1,168 868 509 690 815
Total equity 189,964 185,262 182,990 181,549 176,469
Total liabilities and equity $ 1,737,737 1,687,155 1,636,855 1,598,874 1,546,707

Wells Fargo & Company and Subsidiaries

FIVE QUARTER INVESTMENT SECURITIES
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Available-for-sale securities:
Securities of U.S. Treasury and federal agencies $ 30,031 25,804 14,794 6,414 6,359
Securities of U.S. states and political subdivisions 47,380 44,944 45,805 44,779 44,140
Mortgage-backed securities:
Federal agencies 103,217 110,089 112,613 116,908 118,090
Residential and commercial 24,712 26,263 27,491 29,433 30,362
Total mortgage-backed securities 127,929 136,352 140,104 146,341 148,452
Other debt securities 48,759 46,666 45,013 48,312 50,253
Total available-for-sale debt securities 254,099 253,766 245,716 245,846 249,204
Marketable equity securities 3,504 3,676 2,535 3,115 3,461
Total available-for-sale securities 257,603 257,442 248,251 248,961 252,665
Held-to-maturity securities:
Securities of U.S. Treasury and federal agencies 44,244 40,886 28,887 17,777 5,861
Securities of U.S. states and political subdivisions 2,092 1,962 123 41 —
Federal agency mortgage-backed securities 14,311 5,476 5,770 6,030 6,199
Other debt securities 6,486 7,159 5,978 6,260 5,602
Total held-to-maturity debt securities 67,133 55,483 40,758 30,108 17,662
Total investment securities $ 324,736 312,925 289,009 279,069 270,327

FIVE QUARTER LOANS

(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Commercial:
Commercial and industrial $ 271,088 271,795 254,199 248,192 239,233
Real estate mortgage 111,848 111,996 112,064 113,564 112,920
Real estate construction 19,981 18,728 18,090 17,272 16,816
Lease financing 12,382 12,307 12,006 12,252 12,164
Total commercial 415,299 414,826 396,359 391,280 381,133
Consumer:
Real estate 1-4 family first mortgage 265,213 265,386 263,337 260,114 259,488
Real estate 1-4 family junior lien mortgage 57,839 59,717 60,875 62,487 63,998
Credit card 30,078 31,119 28,280 27,226 26,073
Automobile 56,339 55,740 55,242 54,095 52,607
Other revolving credit and installment 36,463 35,763 34,790 33,740 43,144
Total consumer 445,932 447,725 442,524 437,662 445,310
Total loans (1) $ 861,231 862,551 838,883 828,942 826,443

(1) Includes $22.4 billion, $23.3 billion, $24.2 billion, $25.0 billion and $25.9 billion of purchased credit-impaired (PCI) loans at March 31, 2015, and December 31, September 30, June 30 and March 31, 2014, respectively.

Our foreign loans are reported by respective class of financing receivable in the table above. Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign primarily based on whether the borrower's primary address is outside of the United States. The following table presents total commercial foreign loans outstanding by class of financing receivable.

(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Commercial foreign loans:
Commercial and industrial $ 45,325 44,707 41,829 42,136 42,465
Real estate mortgage 5,171 4,776 4,856 5,146 4,952
Real estate construction 241 218 209 216 201
Lease financing 307 336 332 344 322
Total commercial foreign loans $ 51,044 50,037 47,226 47,842 47,940

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Nonaccrual loans:
Commercial:
Commercial and industrial $ 663 538 614 724 664
Real estate mortgage 1,324 1,490 1,636 1,805 2,034
Real estate construction 182 187 217 239 296
Lease financing 23 24 27 29 32
Total commercial 2,192 2,239 2,494 2,797 3,026
Consumer:
Real estate 1-4 family first mortgage 8,345 8,583 8,785 9,026 9,357
Real estate 1-4 family junior lien mortgage 1,798 1,848 1,903 1,965 2,073
Automobile 133 137 143 150 161
Other revolving credit and installment 42 41 40 34 33
Total consumer 10,318 10,609 10,871 11,175 11,624
Total nonaccrual loans (1)(2)(3) 12,510 12,848 13,365 13,972 14,650
As a percentage of total loans 1.45 % 1.49 1.59 1.69 1.77
Foreclosed assets:
Government insured/guaranteed $ 772 982 1,140 1,257 1,609
Non-government insured/guaranteed 1,557 1,627 1,691 1,748 1,813
Total foreclosed assets 2,329 2,609 2,831 3,005 3,422
Total nonperforming assets $ 14,839 15,457 16,196 16,977 18,072
As a percentage of total loans 1.72 % 1.79 1.93 2.05 2.19

(1) Includes nonaccrual mortgages held for sale and loans held for sale in their respective loan categories.

(2) Excludes PCI loans because they continue to earn interest income from accretable yield, independent of performance in accordance with their contractual terms.

(3) Real estate 1-4 family mortgage loans predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) and student loans predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program are not placed on nonaccrual status because they are insured or guaranteed.

Wells Fargo & Company and Subsidiaries

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Loans 90 days or more past due and still accruing:
Total (excluding PCI)(1): $ 16,344 17,810 18,295 18,582 21,215
Less: FHA insured/guaranteed by the VA (2)(3) 15,453 16,827 16,628 16,978 19,405
Less: Student loans guaranteed under the FFELP (4) 50 63 721 707 860
Total, not government insured/guaranteed $ 841 920 946 897 950
By segment and class, not government insured/guaranteed:
Commercial:
Commercial and industrial $ 31 31 35 52 12
Real estate mortgage 43 16 37 53 13
Real estate construction — — 18 16 69
Total commercial 74 47 90 121 94
Consumer:
Real estate 1-4 family first mortgage (3) 221 260 327 311 333
Real estate 1-4 family junior lien mortgage (3) 55 83 78 70 88
Credit card 352 364 302 266 308
Automobile 47 73 64 48 41
Other revolving credit and installment 92 93 85 81 86
Total consumer 767 873 856 776 856
Total, not government insured/guaranteed $ 841 920 946 897 950

(1) PCI loans totaled $3.6 billion, $3.7 billion, $4.0 billion, $4.0 billion and $4.3 billion, at March 31, 2015 and December 31, September 30, June 30, and March 31, 2014, respectively.

(2) Represents loans whose repayments are predominantly insured by the FHA or guaranteed by the VA.

(3) Includes mortgages held for sale 90 days or more past due and still accruing.

(4) Represents loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the FFELP. In fourth quarter 2014, substantially all government guaranteed loans were sold.

Wells Fargo & Company and Subsidiaries

CHANGES IN ACCRETABLE YIELD RELATED TO PURCHASED CREDIT-IMPAIRED (PCI) LOANS

Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. PCI loans predominantly represent loans acquired from Wachovia that were deemed to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include statistics such as past due and nonaccrual status, recent borrower credit scores and recent LTV percentages. PCI loans are initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, the associated allowance for credit losses related to these loans is not carried over at the acquisition date.
As a result of PCI loan accounting, certain credit-related ratios cannot be used to compare a portfolio that includes PCI loans against one that does not, or to compare ratios across quarters or years. The ratios particularly affected include the allowance for loan losses and allowance for credit losses as percentages of loans, of nonaccrual loans and of nonperforming assets; nonaccrual loans and nonperforming assets as a percentage of total loans; and net charge-offs as a percentage of loans.
The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated lives of the PCI loans using the effective yield method. The accretable yield is affected by:

•

Changes in interest rate indices for variable rate PCI loans - Expected future cash flows are based on the variable rates in effect at the time of the quarterly assessment of expected cash flows;

•

Changes in prepayment assumptions - Prepayments affect the estimated life of PCI loans which may change the amount of interest income, and possibly principal, expected to be collected; and

•

Changes in the expected principal and interest payments over the estimated life - Updates to changes in expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The change in the accretable yield related to PCI loans is presented in the following table.
(in millions)
Balance, December 31, 2008 $ 10,447
Addition of accretable yield due to acquisitions 132
Accretion into interest income (1) (12,783 )
Accretion into noninterest income due to sales (2) (430 )
Reclassification from nonaccretable difference for loans with improving credit-related cash flows 8,568
Changes in expected cash flows that do not affect nonaccretable difference (3) 11,856
Balance, December 31, 2014 17,790
Addition of accretable yield due to acquisitions —
Accretion into interest income (1) (398 )
Accretion into noninterest income due to sales (2) (28 )
Reclassification from nonaccretable difference for loans with improving credit-related cash flows (3) 22
Changes in expected cash flows that do not affect nonaccretable difference (4) (61 )
Balance, March 31, 2015 $ 17,325

(1) Includes accretable yield released as a result of settlements with borrowers, which is included in interest income.

(2) Includes accretable yield released as a result of sales to third parties, which is included in noninterest income.

(3) At March 31, 2015, our carrying value for PCI loans totaled $22.4 billion and the remainder of nonaccretable difference established in purchase accounting totaled $2.9 billion. The nonaccretable difference absorbs losses of contractual amounts that exceed our carrying value for PCI loans.

(4) Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, changes in interest rates on variable rate PCI loans and sales to third parties.

Wells Fargo & Company and Subsidiaries

PICK-A-PAY PORTFOLIO (1)
March 31, 2015
PCI loans All other loans
(in millions) Adjusted

unpaid

principal

balance (2)

Current

LTV

ratio (3)

Carrying

value (4)

Ratio of

carrying

value to

current

value (5)

Carrying

value (4)

Ratio of

carrying

value to

current

value (5)

California $ 17,901 76 % $ 14,690 61 % $ 11,037 56 %
Florida 2,047 86 1,525 61 2,286 70
New Jersey 863 82 727 64 1,482 70
New York 557 77 494 62 699 68
Texas 227 62 208 56 888 49
Other states 4,156 82 3,391 65 6,318 68
Total Pick-a-Pay loans $ 25,751 77 $ 21,035 61 $ 22,710 62

(1) The individual states shown in this table represent the top five states based on the total net carrying value of the Pick-a-Pay loans at the beginning of 2015.

(2) Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan.

(3) The current LTV ratio is calculated as the adjusted unpaid principal balance divided by the collateral value. Collateral values are generally determined using automated valuation models (AVM) and are updated quarterly. AVMs are computer-based tools used to estimate market values of homes based on processing large volumes of market data including market comparables and price trends for local market areas.

(4) Carrying value, which does not reflect the allowance for loan losses, includes remaining purchase accounting adjustments, which, for PCI loans may include the nonaccretable difference and the accretable yield and, for all other loans, an adjustment to mark the loans to a market yield at date of merger less any subsequent charge-offs.

(5) The ratio of carrying value to current value is calculated as the carrying value divided by the collateral value.

NON-STRATEGIC AND LIQUIDATING LOAN PORTFOLIOS

(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Commercial:
Legacy Wachovia commercial and industrial and commercial real estate PCI loans (1) $ 699 1,125 1,465 1,499 1,720
Total commercial 699 1,125 1,465 1,499 1,720
Consumer:
Pick-a-Pay mortgage (1)(2) 43,745 45,002 46,389 47,965 49,533
Legacy Wells Fargo Financial debt consolidation 11,067 11,417 11,781 12,169 12,545
Liquidating home equity 2,744 2,910 3,083 3,290 3,505
Legacy Wachovia other PCI loans (1) 276 300 320 336 355
Legacy Wells Fargo Financial indirect auto 23 34 54 85 132
Education Finance - government insured (3) — — — — 10,204
Total consumer 57,855 59,663 61,627 63,845 76,274
Total non-strategic and liquidating loan portfolios $ 58,554 60,788 63,092 65,344 77,994

(1) Net of purchase accounting adjustments related to PCI loans.

(2) Includes PCI loans of $21.0 billion, $21.5 billion, $22.1 billion, $22.7 billion and $23.3 billion at March 31, 2015 and December 31, September 30, June 30, and March 31, 2014, respectively.

(3) The government guaranteed student loan portfolio was transferred to held for sale during 2014, and substantially all of the portfolio was sold as of December 31, 2014.

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES
Quarter ended
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Balance, beginning of quarter $ 13,169 13,481 13,834 14,414 14,971
Provision for credit losses 608 485 368 217 325
Interest income on certain impaired loans (1) (52 ) (48 ) (52 ) (55 ) (56 )
Loan charge-offs:
Commercial:
Commercial and industrial (133 ) (161 ) (157 ) (146 ) (163 )
Real estate mortgage (23 ) (19 ) (11 ) (16 ) (20 )
Real estate construction (1 ) (2 ) (3 ) (3 ) (1 )
Lease financing (3 ) (3 ) (5 ) (3 ) (4 )
Total commercial (160 ) (185 ) (176 ) (168 ) (188 )
Consumer:
Real estate 1-4 family first mortgage (130 ) (138 ) (167 ) (193 ) (223 )
Real estate 1-4 family junior lien mortgage (179 ) (193 ) (202 ) (220 ) (249 )
Credit card (278 ) (256 ) (236 ) (266 ) (267 )
Automobile (195 ) (214 ) (192 ) (143 ) (180 )
Other revolving credit and installment (154 ) (160 ) (160 ) (171 ) (177 )
Total consumer (936 ) (961 ) (957 ) (993 ) (1,096 )
Total loan charge-offs (1,096 ) (1,146 ) (1,133 ) (1,161 ) (1,284 )
Loan recoveries:
Commercial:
Commercial and industrial 69 79 90 86 114
Real estate mortgage 34 44 48 26 42
Real estate construction 10 28 61 23 24
Lease financing 3 2 1 2 3
Total commercial 116 153 200 137 183
Consumer:
Real estate 1-4 family first mortgage 47 50 53 56 53
Real estate 1-4 family junior lien mortgage 56 59 62 60 57
Credit card 39 35 35 55 36
Automobile 94 82 80 97 90
Other revolving credit and installment 36 32 35 39 40
Total consumer 272 258 265 307 276
Total loan recoveries 388 411 465 444 459
Net loan charge-offs (708 ) (735 ) (668 ) (717 ) (825 )
Allowances related to business combinations/other (4 ) (14 ) (1 ) (25 ) (1 )
Balance, end of quarter $ 13,013 13,169 13,481 13,834 14,414
Components:
Allowance for loan losses $ 12,176 12,319 12,681 13,101 13,695
Allowance for unfunded credit commitments 837 850 800 733 719
Allowance for credit losses $ 13,013 13,169 13,481 13,834 14,414
Net loan charge-offs (annualized) as a percentage of average total loans 0.33 % 0.34 0.32 0.35 0.41
Allowance for loan losses as a percentage of:
Total loans 1.41 1.43 1.51 1.58 1.66
Nonaccrual loans 97 96 95 94 93
Nonaccrual loans and other nonperforming assets 82 80 78 77 76
Allowance for credit losses as a percentage of:
Total loans 1.51 1.53 1.61 1.67 1.74
Nonaccrual loans 104 103 101 99 98
Nonaccrual loans and other nonperforming assets 88 85 83 81 80

(1) Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize reductions in allowance as interest income.

Wells Fargo & Company and Subsidiaries

FIVE QUARTER RISK-BASED CAPITAL COMPONENTS UNDER BASEL III
Standardized Approach (1) General Approach (1)
(in billions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Total equity $ 190.0 185.3 183.0 181.5 176.5
Noncontrolling interests (1.2 ) (0.9 ) (0.5 ) (0.6 ) (0.8 )
Total Wells Fargo stockholders’ equity 188.8 184.4 182.5 180.9 175.7
Adjustments:
Preferred stock (20.0 ) (18.0 ) (18.0 ) (17.2 ) (15.2 )
Cumulative other comprehensive income (2) (1.9 ) (2.6 ) (2.5 ) (3.2 ) (2.2 )
Goodwill and other intangible assets (2)(3) (26.9 ) (26.3 ) (26.1 ) (25.6 ) (25.6 )
Investment in certain subsidiaries and other (0.8 ) (0.4 ) — (0.1 ) —
Common Equity Tier 1 (1)(4) (A) 139.2 137.1 135.9 134.8 132.7
Preferred stock 20.0 18.0 18.0 17.2 15.2
Qualifying hybrid securities and noncontrolling interests — — — — —
Other (0.4 ) (0.4 ) (0.5 ) (0.3 ) (0.3 )
Total Tier 1 capital 158.8 154.7 153.4 151.7 147.6
Long-term debt and other instruments qualifying as Tier 2 24.4 25.0 23.7 24.0 21.7
Qualifying allowance for credit losses 13.0 13.2 13.5 13.8 14.1
Other — — (0.1 ) — 0.2
Total Tier 2 capital 37.4 38.2 37.1 37.8 36.0
Total qualifying capital (B) $ 196.2 192.9 190.5 189.5 183.6
Risk-Weighted Assets (RWAs) (5)(6):
Credit risk $ 1,234.6 1,192.9 1,171.8 1,145.7 1,120.3
Market risk 47.6 49.6 51.1 46.8 48.1
Total RWAs (C) $ 1,282.2 1,242.5 1,222.9 1,192.5 1,168.4
Capital Ratios (6):
Common Equity Tier 1 to total RWAs (A)/(C) 10.86 % 11.04 11.11 11.31 11.36
Total capital to total RWAs (B)/(C) 15.30 15.53 15.58 15.89 15.71

(1) Basel III revises the definition of capital, increases minimum capital ratios, and introduces a minimum Common Equity Tier 1 (CET1) ratio. These changes are being fully phased in effective January 1, 2014, through the end of 2021. The capital ratios were determined using the Basel III definition of capital and the Basel III Standardized Approach RWAs as of March 31, 2015 and the general risk-based capital rules (General Approach) RWAs for 2014.

(2) Under transition provisions to Basel III, cumulative other comprehensive income (previously deducted under Basel I) is included in CET1 over a specified phase-in period. In addition, certain intangible assets includable in CET1 are phased out over a specified period.

(3) Goodwill and other intangible assets are net of any associated deferred tax liabilities.

(4) CET1 (formerly Tier 1 common equity under Basel I) is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews CET1 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.

(5) 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 RWAs. The risk weights and categories were changed, and some were added, by Basel III for the Standardized Approach and will generally result in higher RWAs than result from the General Approach risk weights and categories.

(6) The Company’s March 31, 2015, RWAs and capital ratios are preliminary.

Wells Fargo & Company and Subsidiaries

COMMON EQUITY TIER 1 UNDER BASEL III (ADVANCED APPROACH, FULLY PHASED-IN) (1)(2)
(in billions) Mar 31, 2015
Common Equity Tier 1 (transition amount) under Basel III $ 139.2
Adjustments from transition amount to fully phased-in under Basel III (3):
Cumulative other comprehensive income 1.9
Other (2.0 )
Total adjustments (0.1 )
Common Equity Tier 1 (fully phased-in) under Basel III (C) $ 139.1
Total RWAs anticipated under Basel III (4)(5) (D) $ 1,320.3
Common Equity Tier 1 to total RWAs anticipated under Basel III (Advanced Approach, fully phased-in) (5) (C)/(D) 10.53 %

(1) CET1 is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews CET1 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 CET1 and RWAs are estimated based on the Basel III capital rules adopted July 2, 2013, by the FRB. 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. The rules are being phased in effective January 1, 2014 through the end of 2021.

(3) Assumes cumulative other comprehensive income is fully phased in and certain other intangible assets are fully phased out under Basel III capital rules.

(4) 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. Under the final rules, we will be subject to the lower of our CET1 ratio calculated under the Standardized Approach and under the Advanced Approach in the assessment of our capital adequacy. While the amount of RWAs determined under the Standardized and Advanced Approaches has been converging, management’s estimate of RWAs as of March 31, 2015, is based on the Advanced Approach, which is currently estimated to be higher than RWAs under the Standardized Approach, resulting in a lower CET1 compared with the Standardized Approach. Basel III capital rules adopted by the Federal Reserve Board incorporate different classification of assets, with risk weights based on Wells Fargo’s internal models, along with adjustments to address a combination of credit/counterparty, operational and market risks, and other Basel III elements.

(5) The Company’s March 31, 2015, RWAs and capital ratio are preliminary.

Wells Fargo & Company and Subsidiaries

OPERATING SEGMENT RESULTS (1)

(income/expense in millions,

average balances in billions)

Community

Banking

Wholesale

Banking

Wealth, Brokerage

and Retirement

Other (2) Consolidated

Company

2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Quarter ended Mar. 31,
Net interest income (3) $ 7,561 7,275 2,921 2,891 861 768 (357 ) (319 ) 10,986 10,615
Provision (reversal of provision) for credit losses 617 419 (6 ) (93 ) (3 ) (8 ) — 7 608 325
Noninterest income 5,223 5,318 2,991 2,689 2,872 2,700 (794 ) (697 ) 10,292 10,010
Noninterest expense 7,064 6,774 3,409 3,215 2,831 2,711 (797 ) (752 ) 12,507 11,948
Income (loss) before income tax expense (benefit) 5,103 5,400 2,509 2,458 905 765 (354 ) (271 ) 8,163 8,352
Income tax expense (benefit) 1,364 1,376 706 714 344 290 (135 ) (103 ) 2,279 2,277
Net income (loss) before noncontrolling interests 3,739 4,024 1,803 1,744 561 475 (219 ) (168 ) 5,884 6,075
Less: Net income (loss) from noncontrolling interests 74 180 6 2 — — — — 80 182
Net income (loss) $ 3,665 3,844 1,797 1,742 561 475 (219 ) (168 ) 5,804 5,893
Average loans $ 506.4 505.0 337.6 301.9 56.9 50.0 (37.6 ) (33.1 ) 863.3 823.8
Average assets 993.1 892.6 594.9 517.4 195.7 190.6 (75.9 ) (74.7 ) 1,707.8 1,525.9
Average core deposits 668.9 626.5 303.4 259.0 161.4 156.0 (70.5 ) (67.7 ) 1,063.2 973.8

(1) The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment.

(2) Includes items not specific to a business segment and elimination of certain items that are included in more than one business segment, substantially all of which represents services for wealth management customers provided in Community Banking stores.

(3) Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment.

Wells Fargo & Company and Subsidiaries

FIVE QUARTER OPERATING SEGMENT RESULTS (1)
Quarter ended
(income/expense in millions, average balances in billions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
COMMUNITY BANKING
Net interest income (2) $ 7,561 7,576 7,472 7,386 7,275
Provision for credit losses 617 518 465 279 419
Noninterest income 5,223 5,259 5,356 5,220 5,318
Noninterest expense 7,064 7,281 7,051 7,020 6,774
Income before income tax expense 5,103 5,036 5,312 5,307 5,400
Income tax expense 1,364 1,545 1,609 1,820 1,376
Net income before noncontrolling interests 3,739 3,491 3,703 3,487 4,024
Less: Net income from noncontrolling interests 74 56 233 56 180
Segment net income 3,665 3,435 3,470 3,431 3,844
Average loans $ 506.4 503.8 498.6 505.4 505.0
Average assets 993.1 974.9 950.2 918.1 892.6
Average core deposits 668.9 655.6 646.9 639.8 626.5
WHOLESALE BANKING
Net interest income (2) $ 2,921 3,104 3,007 2,953 2,891
Reversal of provision for credit losses (6 ) (39 ) (85 ) (49 ) (93 )
Noninterest income 2,991 2,950 2,895 2,993 2,689
Noninterest expense 3,409 3,307 3,250 3,203 3,215
Income before income tax expense 2,509 2,786 2,737 2,792 2,458
Income tax expense 706 789 824 838 714
Net income before noncontrolling interests 1,803 1,997 1,913 1,954 1,744
Less: Net income (loss) from noncontrolling interests 6 27 (7 ) 2 2
Segment net income $ 1,797 1,970 1,920 1,952 1,742
Average loans $ 337.6 326.8 316.5 308.1 301.9
Average assets 594.9 573.3 553.0 532.4 517.4
Average core deposits 303.4 292.4 278.4 265.8 259.0
WEALTH, BROKERAGE AND RETIREMENT
Net interest income (2) $ 861 846 790 775 768
Provision (reversal of provision) for credit losses (3 ) 8 (25 ) (25 ) (8 )
Noninterest income 2,872 2,801 2,763 2,775 2,700
Noninterest expense 2,831 2,811 2,690 2,695 2,711
Income before income tax expense 905 828 888 880 765
Income tax expense 344 314 338 334 290
Net income before noncontrolling interests 561 514 550 546 475
Less: Net income from noncontrolling interests — — — 2 —
Segment net income $ 561 514 550 544 475
Average loans $ 56.9 54.8 52.6 51.0 50.0
Average assets 195.7 192.2 188.8 187.6 190.6
Average core deposits 161.4 157.0 153.6 153.0 156.0
OTHER (3)
Net interest income (2) $ (357 ) (346 ) (328 ) (323 ) (319 )
Provision (reversal of provision) for credit losses — (2 ) 13 12 7
Noninterest income (794 ) (747 ) (742 ) (713 ) (697 )
Noninterest expense (797 ) (752 ) (743 ) (724 ) (752 )
Loss before income tax benefit (354 ) (339 ) (340 ) (324 ) (271 )
Income tax benefit (135 ) (129 ) (129 ) (123 ) (103 )
Net loss before noncontrolling interests (219 ) (210 ) (211 ) (201 ) (168 )
Less: Net income from noncontrolling interests — — — — —
Other net loss $ (219 ) (210 ) (211 ) (201 ) (168 )
Average loans $ (37.6 ) (36.0 ) (34.5 ) (33.5 ) (33.1 )
Average assets (75.9 ) (76.6 ) (74.1 ) (74.1 ) (74.7 )
Average core deposits (70.5 ) (69.0 ) (66.7 ) (66.9 ) (67.7 )
CONSOLIDATED COMPANY
Net interest income (2) $ 10,986 11,180 10,941 10,791 10,615
Provision for credit losses 608 485 368 217 325
Noninterest income 10,292 10,263 10,272 10,275 10,010
Noninterest expense 12,507 12,647 12,248 12,194 11,948
Income before income tax expense 8,163 8,311 8,597 8,655 8,352
Income tax expense 2,279 2,519 2,642 2,869 2,277
Net income before noncontrolling interests 5,884 5,792 5,955 5,786 6,075
Less: Net income from noncontrolling interests 80 83 226 60 182
Wells Fargo net income $ 5,804 5,709 5,729 5,726 5,893
Average loans $ 863.3 849.4 833.2 831.0 823.8
Average assets 1,707.8 1,663.8 1,617.9 1,564.0 1,525.9
Average core deposits 1,063.2 1,036.0 1,012.2 991.7 973.8

(1) The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment.

(2) Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment.

(3) Includes items not specific to a business segment and elimination of certain items that are included in more than one business segment, substantially all of which represents products and services for wealth management customers provided in Community Banking stores.

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING
Quarter ended
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
MSRs measured using the fair value method:
Fair value, beginning of quarter $ 12,738 14,031 13,900 14,953 15,580
Servicing from securitizations or asset transfers 308 296 340 271 289
Sales (1 ) (7 ) — — —
Net additions 307 289 340 271 289
Changes in fair value:
Due to changes in valuation model inputs or assumptions:
Mortgage interest rates (1) (572 ) (1,016 ) 251 (876 ) (509 )
Servicing and foreclosure costs (2) (18 ) (5 ) (4 ) 23 (34 )
Discount rates (3) — — — (55 ) —
Prepayment estimates and other (4) (183 ) (78 ) 6 73 102
Net changes in valuation model inputs or assumptions (773 ) (1,099 ) 253 (835 ) (441 )
Other changes in fair value (5) (533 ) (483 ) (462 ) (489 ) (475 )
Total changes in fair value (1,306 ) (1,582 ) (209 ) (1,324 ) (916 )
Fair value, end of quarter $ 11,739 12,738 14,031 13,900 14,953

(1) Includes prepayment speed changes as well as other valuation changes due to changes in mortgage interest rates (such as changes in estimated interest earned on custodial deposit balances).

(2) Includes costs to service and unreimbursed foreclosure costs.
(3) Reflects discount rate assumption change, excluding portion attributable to changes in mortgage interest rates.

(4) Represents changes driven by other valuation model inputs or assumptions including prepayment speed estimation changes and other assumption updates. Prepayment speed estimation changes are influenced by observed changes in borrower behavior and other external factors that occur independent of interest rate changes.

(5) Represents changes due to collection/realization of expected cash flows over time.
Quarter ended
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Amortized MSRs:
Balance, beginning of quarter $ 1,242 1,224 1,196 1,219 1,229
Purchases 22 38 47 32 40
Servicing from securitizations or asset transfers 50 43 29 24 14
Amortization (62 ) (63 ) (48 ) (79 ) (64 )
Balance, end of quarter $ 1,252 1,242 1,224 1,196 1,219
Fair value of amortized MSRs:
Beginning of quarter $ 1,637 1,647 1,577 1,624 1,575
End of quarter 1,522 1,637 1,647 1,577 1,624

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
Quarter ended
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Servicing income, net:
Servicing fees (1) $ 1,010 996 919 1,128 1,070
Changes in fair value of MSRs carried at fair value:
Due to changes in valuation model inputs or assumptions (2) (773 ) (1,099 ) 253 (835 ) (441 )
Other changes in fair value (3) (533 ) (483 ) (462 ) (489 ) (475 )
Total changes in fair value of MSRs carried at fair value (1,306 ) (1,582 ) (209 ) (1,324 ) (916 )
Amortization (62 ) (63 ) (48 ) (79 ) (64 )
Net derivative gains (losses) from economic hedges (4) 881 1,334 17 1,310 848
Total servicing income, net $ 523 685 679 1,035 938
Market-related valuation changes to MSRs, net of hedge results (2)+(4) $ 108 235 270 475 407
(1) Includes contractually specified servicing fees, late charges and other ancillary revenues.
(2) Refer to the changes in fair value MSRs table on the previous page for more detail.
(3) Represents changes due to collection/realization of expected cash flows over time.
(4) Represents results from free-standing derivatives (economic hedges) used to hedge the risk of changes in fair value of MSRs.
(in billions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Managed servicing portfolio (1):
Residential mortgage servicing:
Serviced for others $ 1,374 1,405 1,430 1,451 1,470
Owned loans serviced 344 342 342 341 337
Subserviced for others 5 5 5 5 5
Total residential servicing 1,723 1,752 1,777 1,797 1,812
Commercial mortgage servicing:
Serviced for others 461 456 440 429 424
Owned loans serviced 112 112 107 109 108
Subserviced for others 7 7 7 7 7
Total commercial servicing 580 575 554 545 539
Total managed servicing portfolio $ 2,303 2,327 2,331 2,342 2,351
Total serviced for others $ 1,835 1,861 1,870 1,880 1,894
Ratio of MSRs to related loans serviced for others 0.71 % 0.75 0.82 0.80 0.85
Weighted-average note rate (mortgage loans serviced for others) 4.43 4.45 4.47 4.49 4.51

(1) The components of our managed servicing portfolio are presented at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced.

SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA

Quarter ended
(in billions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Application data:
Wells Fargo first mortgage quarterly applications $ 93 66 64 72 60
Refinances as a percentage of applications 61 % 52 40 36 39
Wells Fargo first mortgage unclosed pipeline, at quarter end $ 44 26 25 30 27
Residential real estate originations:
Purchases as a percentage of originations 45 % 60 70 74 66
Refinances as a percentage of originations 55 40 30 26 34
Total 100 % 100 100 100 100
Wells Fargo first mortgage loans:
Retail $ 28 27 27 25 20
Correspondent 20 16 20 21 16
Other (1) 1 1 1 1 —
Total quarter-to-date $ 49 44 48 47 36
Total year-to-date $ 49 175 131 83 36

(1) Consists of home equity loans and lines.

Wells Fargo & Company and Subsidiaries

CHANGES IN MORTGAGE REPURCHASE LIABILITY
Quarter ended
(in millions) Mar 31, 2015 Dec 31,2014 Sep 30,2014 Jun 30,2014 Mar 31,2014
Balance, beginning of period $ 615 669 766 799 899
Provision for repurchase losses:
Loan sales 10 10 12 12 10
Change in estimate (1) (26 ) (49 ) (93 ) (38 ) (4 )
Total additions (reductions) (16 ) (39 ) (81 ) (26 ) 6
Losses (13 ) (15 ) (16 ) (7 ) (106 )
Balance, end of period $ 586 615 669 766 799

(1) Results from changes in investor demand, mortgage insurer practices, credit and the financial stability of correspondent lenders.

UNRESOLVED REPURCHASE DEMANDS AND MORTGAGE INSURANCE RESCISSIONS

($ in millions) Government

sponsored

entities (1)

Private Mortgage

insurance

rescissions

with no

demand (2)

Total
March 31, 2015
Number of loans 526 161 108 795
Original loan balance (3) $ 118 29 28 175
December 31, 2014
Number of loans 546 173 120 839
Original loan balance (3) $ 118 34 31 183
September 30, 2014
Number of loans 426 322 233 981
Original loan balance (3) $ 93 75 52 220
June 30, 2014
Number of loans 678 362 305 1,345
Original loan balance (3) $ 149 80 66 295
March 31, 2014
Number of loans 599 391 409 1,399
Original loan balance (3) $ 126 89 90 305

(1) Includes repurchase demands of 7 and $1 million, 4 and $1 million, 7 and $1 million, 14 and $3 million, and 25 and $3 million at March 31, 2015, and December 31, September 30, June 30 and March 31, 2014, respectively, received from investors on mortgage servicing rights acquired from other originators. We generally have the right of recourse against the seller and may be able to recover losses related to such repurchase demands subject to counterparty risk associated with the seller.

(2) As part of our representations and warranties in our loan sales contracts, we typically represent to GSEs and private investors that certain loans have mortgage insurance to the extent there are loans that have loan to value ratios in excess of 80% that require mortgage insurance. To the extent the mortgage insurance is rescinded by the mortgage insurer due to a claim of breach of a contractual representation or warranty, the lack of insurance may result in a repurchase demand from an investor. Similar to repurchase demands, we evaluate mortgage insurance rescission notices for validity and appeal for reinstatement if the rescission was not based on a contractual breach. When investor demands are received due to lack of mortgage insurance, they are reported as unresolved repurchase demands based on the applicable investor category for the loan (GSE or private).

(3) While the original loan balances related to these demands are presented above, the establishment of the repurchase liability is based on a combination of factors, such as our appeals success rates, reimbursement by correspondent and other third party originators, and projected loss severity, which is driven by the difference between the current loan balance and the estimated collateral value less costs to sell the property.

Wells Fargo & Company

Mary Eshet, 704-383-7777 (Media)

Jim Rowe, 415-396-8216 (Investors)

Source: Wells Fargo & Company

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