Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34 Filing Table of Contents
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7: EX-10.V Material Contract HTML 79K
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13: EX-31.B Certification -- §302 - SOA'02 HTML 61K
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15: EX-32.B Certification -- §906 - SOA'02 HTML 57K
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23: R2 Consolidated Statement of Income HTML 205K
24: R3 Consolidated Statement of Income (Parenthetical) HTML 67K
25: R4 Consolidated Statement of Comprehensive Income HTML 123K
26: R5 Consolidated Statement of Comprehensive Income HTML 63K
Consolidated Statement of Comprehensive Income
(Unaudited) (Parenthetical)
27: R6 Consolidated Balance Sheet HTML 187K
28: R7 Consolidated Balance Sheet (Parenthetical) HTML 126K
29: R8 Consolidated Statement of Changes in Equity HTML 231K
30: R9 Consolidated Statement of Changes in Equity HTML 72K
(Parenthetical)
31: R10 Consolidated Statement of Cash Flows HTML 218K
32: R11 Summary of Significant Accounting Policies HTML 242K
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Assets
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40: R19 Securitizations and Variable Interest Entities HTML 735K
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42: R21 Intangible Assets HTML 153K
43: R22 Deposits HTML 89K
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45: R24 Long-Term Debt HTML 254K
46: R25 Guarantees, Pledged Assets and Collateral, and HTML 292K
Other Commitments
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48: R27 Derivatives HTML 788K
49: R28 Fair Values of Assets and Liabilities HTML 2.39M
50: R29 Preferred Stock HTML 386K
51: R30 Common Stock and Stock Plans HTML 179K
52: R31 Revenue from Contracts with Customers HTML 488K
53: R32 Employee Benefits and Other Expenses HTML 696K
54: R33 Income Taxes HTML 193K
55: R34 Earnings Per Common Share HTML 105K
56: R35 Other Comprehensive Income HTML 345K
57: R36 Operating Segments HTML 198K
58: R37 Parent-Only Financial Statements HTML 241K
59: R38 Regulatory and Agency Capital Requirements HTML 166K
60: R39 Summary of Significant Accounting Policies HTML 346K
(Policies)
61: R40 Summary of Significant Accounting Policies HTML 110K
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63: R42 Cash, Loan and Dividend Restrictions Cash, Loan HTML 69K
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Assets (Tables)
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69: R48 Securitizations and Variable Interest Entities HTML 700K
(Tables)
70: R49 Mortgage Banking Activities (Tables) HTML 189K
71: R50 Intangible Assets (Tables) HTML 157K
72: R51 Deposits (Tables) HTML 89K
73: R52 Short-term Borrowings (Tables) HTML 126K
74: R53 Long-term Debt (Tables) HTML 258K
75: R54 Guarantees, Pledged Assets and Collateral, and HTML 280K
Other Commitments (Tables)
76: R55 Derivatives (Tables) HTML 783K
77: R56 Fair Values of Assets and Liabilities (Tables) HTML 2.35M
78: R57 Preferred Stock (Tables) HTML 385K
79: R58 Common Stock and Stock Plans (Tables) HTML 168K
80: R59 Revenue from Contracts with Customers Revenue from HTML 480K
Contracts with Customers (Tables)
81: R60 Employee Benefits and Other Expenses (Tables) HTML 694K
82: R61 Income Taxes (Tables) HTML 187K
83: R62 Earnings Per Common Share (Tables) HTML 109K
84: R63 Other Comprehensive Income (Tables) HTML 347K
85: R64 Operating Segments (Tables) HTML 191K
86: R65 Parent-Only Financial Statements (Tables) HTML 245K
87: R66 Regulatory and Agency Capital Requirements HTML 163K
(Tables)
88: R67 Summary of Significant Accounting Policies HTML 113K
(Details)
89: R68 Business Combinations (Details) HTML 100K
90: R69 Cash, Loan and Dividend Restrictions (Details) HTML 93K
91: R70 Trading Assets and Liabilities (Details) HTML 97K
92: R71 Trading Activities Net Interest Income and Net HTML 89K
Gains (Losses) on Trading Activities (Details)
93: R72 AFS and HTM Debt Securities, Major Categories HTML 140K
(Details)
94: R73 AFS and HTM Debt Securities, Gross Unrealized HTML 151K
Losses and Fair Value (Details)
95: R74 AFS and HTM Debt Securities, Unrealized Loss HTML 157K
Position, by Credit Rating (Details)
96: R75 AFS and HTM Debt Securities, Contractual HTML 229K
Maturities (Details)
97: R76 AFS and HTM Debt Securities, Realized Gains and HTML 65K
Losses (Details)
98: R77 AFS and HTM Debt Securities, OTTI Included in HTML 75K
Earnings (Details)
99: R78 AFS and HTM Debt Securities, OTTI Debt Securities HTML 84K
(Details)
100: R79 AFS ad HTM Debt Securities, Credit Loss Component HTML 79K
(Details)
101: R80 Loans and Allowance for Credit Losses, Loans HTML 212K
Outstanding (Details)
102: R81 Loans and Allowance for Credit Losses, Significant HTML 98K
Activity (Details)
103: R82 Loans and Allowance for Credit Losses, Commitments HTML 125K
to Lend (Details)
104: R83 Loans and Allowance for Credit Losses, Allowance HTML 145K
for Credit Losses (Details)
105: R84 Loans and Allowance for Credit Losses, Allowance HTML 87K
for Credit Losses by Category (Details)
106: R85 Loans and Allowance for Credit Losses, Loans by HTML 101K
Credit Impairment Methodology (Details)
107: R86 Loans and Allowance for Credit Losses, Loans by HTML 132K
Credit Quality Indicator, Commercial (Details)
108: R87 Loans and Allowance for Credit Losses, Loans by HTML 157K
Delinquency Status, Commercial (Details)
109: R88 Loans and Allowance for Credit Losses, Loans by HTML 224K
Delinquency Status, Consumer (Details)
110: R89 Loans and Allowance for Credit Losses, Loans by HTML 224K
FICO Score, Consumer (Details)
111: R90 Loans and Allowance for Credit Losses, Loans by HTML 134K
Loan to Value Ratio, Consumer (Details)
112: R91 Loans and Allowance for Credit Losses, Nonaccrual HTML 93K
(Details)
113: R92 Loans and Allowance for Credit Losses, 90 Days or HTML 98K
More Past Due and Still Accruing (Details)
114: R93 Loans and Allowance for Credit Losses, Impaired HTML 109K
Loans (Details)
115: R94 Loans and Allowance for Credit Losses, Impaired HTML 98K
Loans, Average Recorded Investment and Interest
Income (Details)
116: R95 Loans and Allowance for Credit Losses, Troubled HTML 192K
Debt Restructurings Modifications by Type
(Details)
117: R96 Loans and Allowance for Credit Losses, Troubled HTML 85K
Debt Restructurings, Current Defaults (Details)
118: R97 Loans and Allowance for Credit Losses, PCI Loans HTML 84K
Outstanding (Details)
119: R98 Loans and Allowance for Credit Losses, PCI, HTML 84K
Accretable Yield (Details)
120: R99 Loans and Allowance for Credit Losses, PCI, by HTML 65K
Credit Quality Indicator (Details)
121: R100 Loans and Allowance for Credit Losses, PCI, by HTML 65K
Delinquency Status, Commercial (Details)
122: R101 Loans and Allowance for Credit Losses, PCI, by HTML 101K
Delinquency Status, Consumer (Details)
123: R102 Loans and Allowance for Credit Losses, PCI, by HTML 108K
FICO Score, Consumer (Details)
124: R103 Loans and Allowance for Credit Losses, PCI, by HTML 98K
Loan to Value Ratio, Consumer (Details)
125: R104 Premises, Equipment, and Lease Commitments HTML 119K
(Details)
126: R105 Other Assets (Details) HTML 90K
127: R106 Equity Securities Equity Securities (Details) HTML 103K
128: R107 Equity Securities Net Gains (Losses) from Equity HTML 80K
Securities (Details)
129: R108 Equity Securities Measurement Alternative HTML 71K
(Details)
130: R109 Securitizations and Variable Interest Entities, HTML 177K
Balance Sheet Transactions with VIEs (Details)
131: R110 Securitizations and Variable Interest Entities, HTML 221K
Unconsolidated VIEs (Details)
132: R111 Securitizations and Variable Interest Entities, HTML 111K
Cash Flows From Sales and Securitizations Activity
(Details)
133: R112 Securitizations and Variable Interest Entities, HTML 65K
Residential Mortgage Servicing Rights (Details)
134: R113 Securitizations and Variable Interest Entities, HTML 134K
Retained Interests from Unconsolidated VIEs
(Details)
135: R114 Securitizations and Variable Interest Entities, HTML 86K
Off-Balance Sheet Loans Sold or Securitized
(Details)
136: R115 Securitizations and Variable Interest Entities, HTML 136K
Transactions with Consolidated VIEs and Secured
Borrowings (Details)
137: R116 Mortgage Banking Activities, Analysis of Changes HTML 91K
in Fair Value MSRs (Details)
138: R117 Mortgage Banking Activities, Analysis of Changes HTML 78K
in Amortized MSRs (Details)
139: R118 Mortgage Banking Activities, Managed Servicing HTML 69K
Portfolio (Details)
140: R119 Mortgage Banking Activities, Mortgage Banking HTML 90K
Noninterest Income (Details)
141: R120 Intangible Assets (Details) HTML 81K
142: R121 Intangible Assets, Amortization Expense (Details) HTML 93K
143: R122 Intangible Assets, Allocation of Goodwill to HTML 85K
Operating Segments (Details)
144: R123 Deposits (Details) HTML 97K
145: R124 Short-Term Borrowings (Details) HTML 80K
146: R125 Long-term Debt, Summary (Details) HTML 208K
147: R126 Long-term Debt, Annual Maturities (Details) HTML 133K
148: R127 Guarantees, Pledged Assets and Collateral HTML 177K
(Details)
149: R128 Guarantees, Offsetting of Resale and Repurchase HTML 101K
Agreements and Securities Borrowing and Lending
(Details)
150: R129 Guarantees, Pledged Assets and Collateral, and HTML 97K
Other Commitments Guarantees, Collateral Type and
Contractual Maturities of Repurchase Agreements
and Securities Lending Agreements (Details)
151: R130 Guarantees, Pledged Assets and Collateral, and HTML 76K
Other Commitments Guarantees, Other Commitments
(Details)
152: R131 Legal Actions (Details) HTML 144K
153: R132 Derivatives, Notional or Contractual Amounts and HTML 134K
Fair Values of Derivatives (Details)
154: R133 Derivatives, Gross Fair Values of Derivative HTML 147K
Assets and Liabilities (Details)
155: R134 Derivatives, Derivatives in Fair Value and Cash HTML 194K
Flow Hedging Relationships (Details)
156: R135 Derivatives, Fair Value Hedging Basis Adjustment HTML 97K
(Details)
157: R136 Derivatives, Derivatives Not Designated as Hedging HTML 183K
Instruments (Details)
158: R137 Derivatives, Sold and Purchased Credit Derivatives HTML 115K
(Details)
159: R138 Derivatives Derivatives, Credit-Risk Contingent HTML 63K
Feature Textuals (Details)
160: R139 Fair Value, Measurements From Brokers or Third HTML 182K
Party Pricing Services (Details)
161: R140 Fair Value, Assets and Liabilities Recorded at HTML 389K
Fair Value on a Recurring Basis (Details)
162: R141 Fair Value, Assets and Liabilities Measured on HTML 290K
Recurring Basis Level 3 Reconciliation (Details)
163: R142 Fair Value, Assets and Liabilities Measured on HTML 215K
Recurring Basis Level 3 Reconciliation Breakout
(Details)
164: R143 Fair Value, Assets and Liabilities Measured on a HTML 338K
Recurring Basis Level 3 Valuation Techniques and
Significant Unobservable Inputs (Details)
165: R144 Fair Value, Assets Recorded at Fair Value on HTML 114K
Nonrecurring Basis (Details)
166: R145 Fair Value, Changes in Value of Assets with HTML 73K
Nonrecurring Fair Value Adjustments (Details)
167: R146 Fair Value, Assets Recorded at Fair Value on a HTML 118K
Nonrecurring Basis Level 3 Valuation Techniques
and Significant Unobservable Inputs (Details)
168: R147 Fair Value, Option, Carrying Amount (Details) HTML 101K
169: R148 Fair Value Option, Changes in Fair Value Included HTML 92K
in Earnings (Details)
170: R149 Fair Value, Option, Gains/Losses Attributable to HTML 63K
Instrument Specific Credit Risk (Details)
171: R150 Fair Value, Estimates for Financial Instruments HTML 158K
Excluding those Recorded at Fair Value on a
Recurring Basis (Details)
172: R151 Preferred Stock (Details) HTML 187K
173: R152 ESOP Preferred Stock (Details) HTML 120K
174: R153 Common Stock and Stock Plans Textuals (Details) HTML 132K
175: R154 Common Stock and Stock Plans, Common Stock Shares HTML 73K
Reserved, Issued and Authorized (Details)
176: R155 Common Stock and Stock Plans, Stock Incentive HTML 69K
Compensation Expense (Details)
177: R156 Common Stock and Stock Plans, Summary of HTML 83K
Restricted Share Rights and Restricted Share
Awards (Details)
178: R157 Common Stock and Stock Plans, Summary of HTML 82K
Performance Awards (Details)
179: R158 Common Stock and Stock Plans, Stock Option Plans HTML 88K
(Details)
180: R159 Common Stock and Stock Plans, Employee Stock HTML 69K
Ownership Plan (Details)
181: R160 Revenue from Contracts with Customers Revenue from HTML 229K
Contracts with Customers (Details)
182: R161 Revenue from Contracts with Customers Revenue from HTML 174K
Contracts with Customers, Disaggregation of
Revenue (Details)
183: R162 Employee Benefits, Changes in Benefit Obligation HTML 175K
and Fair Value of Plan Assets (Details)
184: R163 Employee Benefits, Pension Plans With Benefit HTML 70K
Obligations in Excess of Plan Assets (Details)
185: R164 Employee Benefits, Net Periodic Benefit Cost and HTML 123K
Other Comprehensive Income (Details)
186: R165 Employee Benefits, Benefits Recognized in HTML 143K
Cumulative OCI and Weighted-Average Assumptions in
Determining Net Periodic Benefit Cost (Details)
187: R166 Employee Benefits, Projected Benefits Payments HTML 77K
(Details)
188: R167 Employee Benefits, Pension and Other Benefit Plan HTML 285K
Assets (Details)
189: R168 Employee Benefits, Fair Value Level 3 Pension and HTML 119K
Other Benefit Plan Assets (Details)
190: R169 Employee Benefits and Other Expenses, Expenses Not HTML 71K
Otherwise Shown Separately In Financial Statements
(Details)
191: R170 Income Taxes, Components of Income Tax Expense HTML 90K
(Details)
192: R171 Income Taxes, Net Deferred Tax Asset (Liability) HTML 135K
(Details)
193: R172 Income Taxes, Effective Income Tax Expense and HTML 113K
Rate (Details)
194: R173 Income Taxes, Change in Unrecognized Tax Benefits HTML 87K
(Details)
195: R174 Earnings Per Common Share, Calculation of Earnings HTML 103K
and Diluted Earnings per Common Share (Details)
196: R175 Earnings Per Common Share, Antidilutive Securities HTML 60K
Excluded from the Calculation of Diluted Earnings
per Common Share (Details)
197: R176 Earnings Per Common Share Earnings Per Common HTML 58K
Share Dividends Declared Per Common Shares
(Details)
198: R177 Other Comprehensive Income, Components of Other HTML 247K
Comprehensive Income (Details)
199: R178 Other Comprehensive Income, Cumulative OCI HTML 149K
Balances (Details)
200: R179 Operating Segments (Details) HTML 130K
201: R180 Parent-Only Financial Statements, Statement of HTML 106K
Income (Details)
202: R181 Parent-Only Financial Statements, Statement of HTML 98K
Comprehensive Income (Details)
203: R182 Parent-Only Financial Statements, Balance Sheet HTML 134K
(Details)
204: R183 Parent-Only Financial Statements, Statement of HTML 174K
Cash Flows (Details)
205: R184 Regulatory and Agency Capital Requirements HTML 97K
(Details)
206: R185 Regulatory and Agency Capital Requirements Minimum HTML 77K
Required Regulatory Capital Ratios - Transition
Requirements (Details)
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(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: 1-866-878-5865
Securities registered pursuant
to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange
on Which Registered
Common Stock, par value $1-2/3
New York Stock Exchange (NYSE)
7.5% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L
NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual
Class A Preferred Stock, Series N
NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series O
NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series P
NYSE
Depositary Shares, each representing a 1/1000th interest in a share of 5.85% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series Q
NYSE
Depositary
Shares, each representing a 1/1000th interest in a share of 6.625% Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series R
NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series T
NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series V
NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series W
NYSE
Depositary
Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series X
NYSE
Depositary Shares, each representing a 1/1000th interest in a share of Non-Cumulative Perpetual Class A Preferred Stock, Series Y
NYSE
Guarantee of 5.80% Fixed-to-Floating Rate Normal Wachovia Income Trust Securities of Wachovia Capital Trust III
NYSE
Securities registered pursuant to Section 12(g) of the Act:
Dividend Equalization Preferred Shares, no par value
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,”“accelerated filer,”“smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer ¨
Non-accelerated filer ¨ Smaller reporting company ¨
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. ¨
Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ
At June 29, 2018, the aggregate market value of common stock held by non-affiliates was approximately $268.2 billion, based on a closing price of $55.44. At February 18, 2019, 4,549,421,815 shares of common stock were outstanding.
1. Portions of the Company’s Annual Report to Shareholders for the year ended December 31, 2018 (“2018 Annual Report to Shareholders”)
Part I – Items 1, 1A, 1B, 2, 3 and 4; Part II – Items 5, 6, 7,
7A, 8, 9A and 9B; and Part IV– Item 15.
2.
Portions of the Company’s Proxy Statement for the Annual
Meeting of Shareholders to be held April 23, 2019 (“2019 Proxy Statement”)
Part III – Items 10, 11, 12, 13 and 14
PART I.
ITEM
1.
BUSINESS
Wells Fargo & Company is a corporation organized under the laws of Delaware and a financial holding company and a bank holding company registered under the Bank Holding Company Act of 1956, as amended (BHC Act). Its principal business is to act as a holding company for its subsidiaries. References in this report to “the Parent” mean the holding company. References to “we,”“our,”“us” or “the Company” mean the holding company and its subsidiaries that are consolidated for financial
reporting purposes.
At December 31, 2018, we had assets of $1.9 trillion, loans of $953 billion, deposits of $1.3 trillion and stockholders’ equity of $196 billion. Based on assets, we were the fourth largest bank holding company in the United States. At December 31, 2018, Wells Fargo Bank, N.A. was the Company’s principal subsidiary with assets of $1.7 trillion, or 89% of the Company’s assets.
At
December 31, 2018, we had 258,700 active, full-time equivalent team members.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are available for free at www.wellsfargo.com/about/investor-relations/filings as soon as reasonably practicable after they are electronically filed with or furnished to the Securities and Exchange Commission (SEC). They are also available for free on the SEC’s website at www.sec.gov.
DESCRIPTION
OF BUSINESS
General
We are a diversified financial services company. We provide retail, commercial and corporate banking services through banking locations and offices, the internet (www.wellsfargo.com) and other distribution channels to individuals, businesses and institutions in all 50 states, the District of Columbia and in other countries. We provide other financial services through subsidiaries engaged in various businesses, principally: wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance, commercial finance, securities brokerage and investment
banking, computer and data processing services, trust services, investment advisory services, mortgage-backed securities servicing and venture capital investment.
We have three operating segments for management reporting purposes: Community Banking; Wholesale Banking; and Wealth and Investment Management. The 2018 Annual Report to Shareholders includes financial information and descriptions of these operating segments.
Competition
The financial services industry is highly competitive. Our subsidiaries compete with financial services providers such as banks, savings and loan associations, credit unions, finance companies,
mortgage banking companies, insurance companies, investment banks and mutual fund companies. They also face increased competition from nonbank institutions such as brokerage houses, private equity firms and online lending companies, as well as from financial services
subsidiaries of commercial and manufacturing companies. Many of these competitors enjoy fewer regulatory constraints and some may have lower cost structures.
Securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. Combinations of this type could significantly change the competitive environment in which we conduct business. The financial services industry is also likely to become more competitive as further
technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties.
REGULATION AND SUPERVISION
We describe below, and in Note 3 (Cash, Loan and Dividend Restrictions) and Note 28 (Regulatory and Agency Capital Requirements) to Financial Statements included in the 2018 Annual Report to Shareholders, the material elements of the regulatory framework applicable to us. Banking statutes, regulations and policies are continually under review by Congress and state legislatures and federal and state regulatory agencies, as well as foreign governments and financial
regulators, and a change in them, including changes in how they are interpreted or implemented, could have a material effect on our business. The regulatory framework applicable to bank holding companies is intended to protect depositors, federal deposit insurance funds, consumers and the banking system as a whole, and not necessarily investors in bank holding companies such as the Company.
Statutes, regulations and policies could restrict our ability to diversify into other areas of financial services, acquire depository institutions, and pay dividends on our capital stock. They may also require us to provide financial support to one or more of our subsidiary banks, maintain capital balances in excess of amounts desired by management, and pay higher deposit insurance premiums as a result of a general deterioration in the financial condition
of depository institutions. See the “Regulatory Matters” and "Risk Factors" sections in the 2018 Annual Report to Shareholders for additional information.
General
Parent Bank Holding Company. As a bank holding company, the Parent is subject to regulation under the BHC Act and to inspection, examination and supervision by its primary regulator, the Board of Governors of the Federal Reserve System (Federal Reserve Board or FRB). The Parent is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, both as administered by the SEC. As a company with securities listed on the New York Stock Exchange (NYSE), the Parent
is subject to the rules of the NYSE for listed companies.
Subsidiary Banks. Our subsidiary national banks, and their subsidiaries, are subject to regulation and examination primarily by the Office of the Comptroller of the Currency (OCC) and also by the Federal Deposit Insurance Corporation (FDIC), the FRB, the Consumer Financial Protection Bureau (CFPB), the SEC and the Commodities Futures Trading Commission (CFTC). The foreign branches and representative
1
offices of our subsidiary national banks are subject
to regulation and examination by their respective foreign financial regulators as well as by the OCC and the FRB. Foreign subsidiaries of our national bank subsidiaries may be subject to the laws and regulations of the foreign countries in which they conduct business. Our state-chartered bank is subject to primary federal regulation and examination by the FDIC and, in addition, is regulated and examined by its state banking department.
Nonbank Subsidiaries. Many of our nonbank subsidiaries are also subject
to regulation by the FRB and other applicable federal and state agencies. Our insurance subsidiaries are subject to regulation by applicable state insurance regulatory agencies, as well as the FRB. Our brokerage subsidiaries are regulated by the SEC, the Financial Industry Regulatory Authority (FINRA) and, in some cases, the CFTC and the Municipal Securities Rulemaking Board, and state securities regulators. Our other nonbank subsidiaries may be subject to the laws and regulations of the federal government and/or the various states as well as foreign countries in which they conduct business.
Parent Bank Holding Company
Activities
“Financial in Nature” Requirement. We became a financial holding company effective March 13, 2000. We continue to maintain our status as a bank holding company for purposes of other FRB regulations. As a bank holding company that has elected to become a financial holding company pursuant to the BHC Act, we may affiliate with securities firms and insurance companies and engage in other activities that are financial in nature or incidental or complementary to activities that are financial in nature. “Financial in nature” activities include securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking; and activities that the FRB, in consultation with the Secretary of the U.S. Treasury, determines
to be financial in nature or incidental to such financial activity. “Complementary activities” are activities that the FRB determines upon application to be complementary to a financial activity and do not pose a safety and soundness risk.
FRB approval is generally not required for us to acquire a company (other than a bank holding company, bank or savings association) engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB. Prior notice to the FRB may be required, however, if the company to be acquired has total consolidated assets of $10 billion or more. Prior FRB approval is required before we may acquire the beneficial ownership or control of more than 5% of the voting shares or substantially all of the assets of a bank holding company, bank or savings association.
In addition, the FRB has implemented a final rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) that also prohibits our ability to merge, acquire all or substantially all of the assets of, or acquire control of another company if our total resulting consolidated liabilities would exceed 10% of the aggregate consolidated liabilities of all financial companies.
Because we are a financial holding company, if any of our subsidiary banks receives a rating under the Community Reinvestment Act of 1977, as amended (CRA), of less than satisfactory, we will be prohibited, until the rating is raised to satisfactory or better, from engaging in new activities or
acquiring companies other than bank holding companies, banks or savings associations, except that we could engage in new activities, or acquire companies
engaged in activities, that are closely related to banking under the BHC Act. In March 2017, we announced that the OCC had downgraded our most recent CRA rating, which covers the years 2009-2012, to "Needs to Improve" due to previously issued regulatory consent orders and, thus, we are subject to, among other things, the prohibitions noted above. In addition, if the FRB finds that the Company or any one of our subsidiary banks is not well capitalized or well managed, we would be required to enter into an agreement with the FRB to comply with all applicable capital and management requirements and which may contain additional limitations or conditions. Until corrected, we could be prohibited from engaging in any new activity or acquiring companies engaged in activities that are not closely related to banking under the BHC Act without prior FRB approval. If we fail to correct any such
condition within a prescribed period, the FRB could order us to divest our banking subsidiaries or, in the alternative, to cease engaging in activities other than those closely related to banking under the BHC Act. For more information about our CRA rating, see the "Regulatory Matters" and "Risk Factors" sections of the 2018 Annual Report to Shareholders.
Interstate Banking. Under the Riegle-Neal Interstate Banking and Branching Act (Riegle-Neal Act), a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company
not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the bank holding company’s initial entry into the state, more than 30% of such deposits in the state (or such lesser or greater amount set by the state). The Riegle-Neal Act also authorizes banks to merge across state lines, subject to the same deposit limits noted above, thereby creating interstate branches. Banks are also permitted to acquire and to establish new branches in other states.
Regulatory Approval. In determining whether to approve a proposed bank acquisition, federal banking regulators will consider, among other factors, the effect of the acquisition on competition, financial condition, and future prospects including current and projected capital ratios and levels,
the competence, experience, and integrity of management and record of compliance with laws and regulations, the convenience and needs of the communities to be served, including the acquiring institution’s record of compliance under the CRA, the effectiveness of the acquiring institution in combating money laundering activities and the risk to the stability of the United States banking system.
Dividend Restrictions
The Parent is a legal entity separate and distinct from its subsidiary banks and other subsidiaries. A significant source of funds to pay dividends on our common and preferred stock and principal and interest on our debt is dividends from the Parent’s subsidiaries.
Various federal and state statutory provisions and regulations limit the amount of dividends the Parent’s subsidiary banks and certain other subsidiaries may pay without regulatory approval. Federal banking regulators
2
have the authority to prohibit the Parent’s subsidiary banks from engaging in unsafe or unsound practices in conducting their businesses. The payment of dividends, depending on the financial condition of the bank in question, could be deemed an unsafe or unsound practice. The ability of the Parent’s subsidiary banks to pay dividends in the future is currently, and could be further, influenced by bank regulatory
policies and capital guidelines. For information about the restrictions applicable to the Parent’s subsidiary banks, see Note 3 (Cash, Loan and Dividend Restrictions) to Financial Statements included in the 2018 Annual Report to Shareholders.
Furthermore, under a Support Agreement (the “Support Agreement”) dated June 28, 2017 among the Parent, WFC Holdings, LLC, an intermediate holding company and subsidiary of the Parent (the “IHC”), and Wells Fargo Bank, N.A., Wells Fargo Securities, LLC, and Wells Fargo Clearing Services, LLC, each an indirect subsidiary of the Parent, the IHC may be restricted from making dividend payments to the Parent if certain liquidity and/or capital metrics fall below defined triggers. Any such restriction could materially and adversely impact the Parent’s liquidity and its ability to satisfy
its debt and other obligations, as well as its ability to make dividend payments on its common and preferred stock. See the “Regulatory Matters” and “Risk Factors” sections of the 2018 Annual Report to Shareholders for additional information on the Support Agreement.
In addition to these restrictions on the ability of our subsidiary banks to pay dividends to us, the FRB requires large bank holding companies (BHCs), including Wells Fargo, to submit annual capital plans and to obtain regulatory approval before making capital distributions, such as the payment of dividends. The FRB also finalized rules implementing in the United States the Basel Committee on Banking Supervision’s regulatory capital guidelines, including the reforms known as Basel III, which established various capital requirements for U.S. banking organizations. Moreover, federal banking regulators have
finalized a rule that enhances the supplementary leverage ratio requirements for large BHCs, like Wells Fargo, and their insured depository institutions. We are also subject to the FRB's rule implementing an additional capital surcharge on those U.S. banking organizations, such as the Company, that are designated as global systemically important banks (G-SIBs). The failure to maintain any of these minimum capital ratios, leverage ratios or buffers could result in limitations or restrictions on our ability to make capital distributions.
In addition, the FRB's enhanced supervision regulations for large BHCs, like Wells Fargo, impose capital distribution restrictions, including on the payment of dividends, upon the occurrence of capital, stress test, risk management, or liquidity risk management triggers. For more information on regulations or arrangements
that may impose capital distribution restrictions on the Company and its subsidiaries, see the “Capital Management,”“Regulatory Matters” and “Risk Factors” sections of the 2018 Annual Report to Shareholders.
Holding Company Structure
Transfer of Funds from Subsidiary Banks. The Parent’s subsidiary banks are subject to restrictions under federal law that limit the transfer of funds or other items of value from such subsidiaries to the Parent and its nonbank subsidiaries
(including affiliates) in so-called “covered transactions.” In general, covered transactions include loans and other extensions of credit, investments and asset purchases, as well
as certain other transactions involving the transfer of value from a subsidiary bank to an affiliate or for the benefit of an affiliate. Unless an exemption applies, covered transactions by a subsidiary bank with a single affiliate are limited to 10% of the subsidiary bank’s capital and surplus and, with respect to all covered transactions with affiliates in the aggregate, to 20% of the subsidiary bank’s capital and surplus. Also, loans and extensions of credit to affiliates generally are required to be secured by qualifying collateral. A bank’s transactions with its nonbank affiliates are also generally required to be on arm’s length terms.
Source
of Strength. The FRB has a policy that a BHC is expected to act as a source of financial and managerial strength to each of its subsidiary banks and, under appropriate circumstances, to commit resources to support each such subsidiary bank. This support may be required at times when the BHC may not have the resources to provide the support.
The OCC may order an assessment of the Parent if the capital of one of its national bank subsidiaries were to become impaired. If the Parent failed to pay the assessment within three months, the OCC could order the sale of the Parent’s stock in the national bank to cover the deficiency.
Depositor Preference. In the event of the “liquidation or other resolution”
of an insured depository institution, the claims of deposits payable in the United States (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the institution. If an insured depository institution fails, claims of insured and uninsured U.S. depositors, along with claims of the FDIC, will have priority in payment ahead of unsecured creditors, including the Parent, and depositors whose deposits are solely payable at such insured depository institution’s non-U.S. offices.
Liability of Commonly Controlled Institutions. All of the Company’s subsidiary banks are insured by the FDIC. FDIC-insured depository institutions can be held
liable for any loss incurred, or reasonably expected to be incurred, by the FDIC due to the default of an FDIC-insured depository institution controlled by the same bank holding company, and for any assistance provided by the FDIC to an FDIC-insured depository institution that is in danger of default and that is controlled by the same bank holding company. “Default” means generally the appointment of a conservator or receiver. “In danger of default” means generally the existence of certain conditions indicating that a default is likely to occur in the absence of regulatory assistance.
Dodd-Frank Act
The Dodd-Frank Act, enacted on July 21, 2010, has resulted in broad changes to the
U.S. financial system and is the most significant financial reform legislation since the 1930s. The Dodd-Frank Act and the numerous rules to implement its provisions have resulted in enhanced regulation and supervision of large BHCs, such as Wells Fargo. This includes, among other things, rules to promote financial stability and prevent or mitigate the risks that may arise from the material distress or failure of a large BHC; enhance consumer protections; prohibit proprietary trading; and implement enhanced prudential requirements for large BHCs regarding risk-based capital and leverage, risk and liquidity management,
3
stress testing, and recovery and resolution planning. The Dodd-Frank Act, including current
and future rules implementing its provisions and the interpretation of those rules, has affected, and we expect will continue to affect, most of our businesses in some way, either directly through regulation of specific activities or indirectly through regulation of concentration risks, capital or liquidity. For more information about the Dodd-Frank Act and its effect on our business, see the “Regulatory Matters” and "Risk Factors" sections of the 2018 Annual Report to Shareholders.
Capital Requirements and Planning
The Company and each of our insured depository institutions are subject to various regulatory capital adequacy requirements
administered by federal banking regulators. These capital rules, among other things, establish required minimum ratios relating capital to different categories of assets and exposures. Federal banking regulators have also finalized rules to impose a supplementary leverage ratio on large BHCs like Wells Fargo and our insured depository institutions and to implement a liquidity coverage ratio. The FRB has also finalized rules to address the amount of equity and unsecured long-term debt a G-SIB must hold to improve its resolvability and resiliency, often referred to as total loss absorbing capacity.
From time to time, the FRB and the Federal Financial Institutions Examination Council (FFIEC) propose changes and amendments to, and issue interpretations of, risk-based capital guidelines and related reporting instructions. In addition, the FRB closely monitors capital levels of the institutions it supervises and may require such
institutions to modify capital levels based on FRB determinations. Such determinations, proposals or interpretations could, if implemented in the future, affect our reported capital ratios and net risk-adjusted assets.
As an additional means to identify problems in the financial management of depository institutions, the Federal Deposit Insurance Act (FDI Act) requires federal banking regulators to establish certain non-capital safety and soundness standards for institutions for which they are the primary federal regulator. The standards relate generally to operations and management, asset quality, interest rate exposure, executive compensation and risk management. The agencies are authorized to take action against institutions that fail to meet such standards.
The FDI Act requires federal banking regulators to take “prompt corrective action” with respect to FDIC-insured depository
institutions that do not meet minimum capital requirements. A depository institution’s treatment for purposes of the prompt corrective action provisions will depend upon how its capital levels compare to various capital measures and certain other factors, as established by regulation.
In addition, the FRB's capital plan rule requires large BHCs to submit capital plans annually for review to determine if the FRB has any objections before making any capital distributions. The rule requires updates to capital plans in the event of material changes in a BHC’s risk profile, including as a result of any significant acquisitions. Federal banking regulators also require stress tests to evaluate whether an institution has sufficient capital to continue to operate during periods of adverse economic and financial conditions.
For more information on our capital requirements and planning, see
the “Capital Management” section of the 2018 Annual Report to Shareholders.
Deposit Insurance Assessments
Our subsidiary banks, including Wells Fargo Bank, N.A., are members of the Deposit Insurance Fund (DIF) maintained by the FDIC. Through the DIF, the FDIC insures the deposits of our banks up to prescribed limits for each depositor and funds the DIF through assessments on member banks. To maintain the DIF, member institutions are assessed an insurance premium based on an assessment base and an assessment rate.
The Dodd-Frank Act gave the FDIC greater discretion to manage the DIF, changed the assessment base from domestic deposits to consolidated average
assets less average tangible equity, and mandated a minimum Designated Reserve Ratio (reserve ratio or DRR) of 1.35%. The FDIC Board adopted a Restoration Plan to ensure that the DIF reserve ratio reaches 1.35% by September 30, 2020, as required by the Dodd-Frank Act, and, in March 2016, issued a final rule to meet this DRR level. The final rule, which became effective on July 1, 2016, imposed on insured depository institutions with $10 billion or more in assets, such as Wells Fargo, a surcharge of 4.5 cents per $100 of their assessment base, after making certain adjustments. The surcharge was in addition to the base assessments paid by the affected institutions. The surcharge was completed in third quarter 2018. In addition to ensuring that the DIF reserve ratio reached the statutory minimum of 1.35% by September 30, 2020, the
FDIC Board also finalized a comprehensive, long-range plan for DIF management, whereby the DRR has been targeted at 2%.
In addition to the base assessments and any surcharge, all FDIC-insured depository institutions must also pay a quarterly assessment towards interest payments on bonds (commonly referred to as FICO bonds) issued by the Financing Corporation, a federal corporation chartered under the authority of the Federal Housing Finance Board. This assessment was 0.46% of the assessable deposit base for first quarter 2018, 0.44% for second quarter 2018, and was 0.32% for the third and fourth quarters of 2018. For the year ended December 31, 2018, the Company’s
FDIC deposit insurance assessments, including FICO assessments, totaled $1.1 billion.
The FDIC may terminate a depository institution’s deposit insurance upon a finding that the institution’s financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable rule, regulation, order or condition enacted or imposed by the institution’s regulatory agency. The termination of deposit insurance for one or more of our bank subsidiaries could have a material adverse effect on our earnings, depending on the collective size of the particular banks involved.
Fiscal and Monetary Policies
Our business
and earnings are affected significantly by the fiscal and monetary policies of the federal government and its agencies. We are particularly affected by the policies of the FRB, which regulates the supply of money and credit in the United States. Among the instruments of monetary policy available to the FRB are (a) conducting open market operations in United States government securities, (b) changing the discount rates of borrowings of depository institutions, (c) imposing or changing reserve requirements against depository institutions’ deposits, and (d) imposing or changing reserve requirements against certain borrowings by banks and their affiliates. These methods are used in varying degrees and combinations to directly affect the availability of bank loans
4
and
deposits, as well as the interest rates charged on loans and paid on deposits. The policies of the FRB may have a material effect on our business, results of operations and financial condition.
Privacy Provisions of the Gramm-Leach-Bliley Act and Restrictions on Affiliate Marketing
Federal banking regulators, as required under the Gramm-Leach-Bliley Act (the GLB Act), have adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties. The privacy provisions of the GLB Act affect how consumer information is transmitted
through diversified financial services companies and conveyed to outside vendors. Federal financial regulators have issued regulations under the Fair and Accurate Credit Transactions Act that have the effect of increasing the length of the waiting period, after privacy disclosures are provided to new customers, before information can be shared among different affiliated companies for the purpose of marketing products and services by those affiliated companies.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) implemented a broad range of corporate governance and accounting measures to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the
accuracy and reliability of disclosures under federal securities laws. We are subject to Sarbanes-Oxley because we are required to file periodic reports with the SEC under the Securities Exchange Act of 1934. Among other things, Sarbanes-Oxley and/or its implementing regulations established membership requirements and additional responsibilities for our audit committee, imposed restrictions on the relationship between us and our outside auditors (including restrictions on the types of non-audit services our auditors may provide to us), imposed additional responsibilities for our external financial statements on our chief executive officer and chief financial officer, expanded the disclosure requirements for our corporate insiders, required our management to evaluate our disclosure controls and procedures and our internal control over financial reporting, and required our independent registered public accounting firm to issue a report on our internal control over financial
reporting.
Patriot Act
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Patriot Act) is intended to strengthen the ability of U.S. law enforcement agencies and intelligence communities to work together to combat terrorism on a variety of fronts. The Patriot Act has significant implications for depository institutions, brokers, dealers and other businesses involved in the transfer of money. The Patriot Act requires the implementation of policies and procedures relating to anti‑money laundering, compliance, suspicious activities, and currency transaction reporting and due diligence on customers.
The Patriot Act also requires
federal banking regulators to evaluate the effectiveness of an applicant in combating money laundering in determining whether to approve a proposed bank acquisition.
Future Legislation or Regulation
Economic, market and political conditions during the past few years have led to a significant amount of legislation and regulation in the U.S. and abroad affecting the financial services industry, as well as heightened expectations and scrutiny of financial services companies from banking regulators. Further legislative changes and additional regulations may change our operating environment in substantial and unpredictable ways. Such legislation and regulations could increase our cost of doing business, affect our compensation structure, restrict or expand the activities in which we may engage or
affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. We cannot predict whether future legislative proposals will be enacted and, if enacted, the effect that they, or any implementing regulations, would have on our business, results of operations or financial condition.
ADDITIONAL INFORMATION
Additional information in response to this Item 1 can be found in the 2018 Annual Report to Shareholders under “Financial Review” and under “Financial Statements.” That information is incorporated into this item by reference.
ITEM
1A.
RISK FACTORS
Information in response to this Item 1A can be found in this report on pages 2-6 and in the 2018 Annual Report to Shareholders under “Financial Review – Risk Factors.” That information is incorporated into this item by reference.
As of December 31, 2018, we provided banking, investment and mortgage products and services, as well as consumer and commercial finance, through approximately 7,800 locations under ownership and lease agreements. We continue to evaluate our owned and leased properties and may determine from time to time that certain of our properties are no longer necessary for our operations. There is no assurance that we will be able to dispose of any excess properties or that we will not incur charges in connection with such dispositions, which
could be material to our operating results in a given period.
ADDITIONAL INFORMATION
Additional information in response to this Item 2 can be found in the 2018 Annual Report to Shareholders under “Financial Statements – Notes to Financial Statements – Note 7 (Premises, Equipment, Lease Commitments and Other Assets).” That information is incorporated into this item by reference.
ITEM
3.
LEGAL PROCEEDINGS
Information in response to this Item 3 can be found in the 2018 Annual Report to Shareholders under “Financial Statements – Notes to Financial Statements – Note 16 (Legal Actions).” That information is incorporated into this item by reference.
ITEM 4.
MINE SAFETY DISCLOSURES
Not
applicable.
6
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
The
Company’s common stock is listed on the NYSE (symbol “WFC”). The “Stock Performance” section of the 2018 Annual Report to Shareholders provides stockholder return comparisons and is incorporated herein by reference. At February 19, 2019, there were 173,797 holders of record of the Company’s common stock.
DIVIDENDS
The dividend restrictions discussions on page 3 of this report and in the 2018 Annual Report to Shareholders
under “Financial Statements – Notes to Financial Statements – Note 3 (Cash, Loan and Dividend Restrictions)” are incorporated into this item by reference.
REPURCHASES OF EQUITY SECURITIES
In January 2018, our Board of Directors authorized the repurchase of 350 million shares of our common stock. In October 2018, our Board of Directors authorized the repurchase of an additional 350 million shares of our common stock. The authorizations cover shares repurchased to meet team member benefit plan requirements. The Company maintains a variety of retirement plans for its team members and typically is a net issuer of shares of common stock to these plans. From
time to time, it also purchases shares of common stock from these plans to accommodate team member preferences. Share repurchases are subtracted from the Company’s repurchase authority without offset for share issuances. Shares may be repurchased as part of employee stock option exercises, from the different benefit plans or in the open market, subject to regulatory approval.
The amount and timing of stock repurchases will be based on various factors, including our capital requirements, the number of shares we expect to issue for employee benefit plans and acquisitions, market conditions (including the trading price of our stock), and regulatory and legal considerations. In June 2010, our Board of Directors also authorized the repurchase of up to $1 billion of warrants to purchase our common stock. The amount and timing of warrant repurchases
were based on various factors including market conditions. The warrants expired on October 29, 2018. See the “Capital Management” section in the 2018 Annual Report to Shareholders for additional information about our common stock and warrant repurchases.
The following table shows Company repurchases of its common stock for each calendar month in the quarter ended December 31,
2018.
Maximum
number of
Total number
shares that may yet
of
shares
Weighted-average
be repurchased under
Calendar month
repurchased (1)
price
paid per share
the authorizations
October
16,714,696
$
52.49
521,271,489
November
51,737,904
53.01
469,533,585
December (2)
74,199,170
49.58
395,334,415
Total
142,651,770
(1)
All
shares were repurchased under an authorization covering up to 350 million shares of common stock approved by the Board of Directors and publicly announced by the Company on January 23, 2018. In addition, the Company publicly announced on October 23, 2018, that the Board of Directors authorized the repurchase of an additional 350 million shares of common stock. Unless modified or revoked by the Board, these authorizations do not expire.
(2)
December
includes a private repurchase transaction of 19,264,045 shares at a weighted-average price per share of $51.91.
The following table shows Company repurchases of the warrants for each calendar month in the quarter ended December 31, 2018.
Information in response to this Item 6 can be found in the 2018 Annual
Report to Shareholders under “Financial Review” in Table 1. That information is incorporated into this item by reference.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information in response to this Item 7 can be found in the 2018 Annual Report to Shareholders under “Financial Review.” That information is incorporated into this item by reference.
ITEM
7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information in response to this Item 7A can be found in the 2018 Annual Report to Shareholders under “Financial Review – Risk Management – Asset/Liability Management.” That information is incorporated into this item by reference.
ITEM 8.
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
Information in response to this Item 8 can be found in the 2018 Annual Report to Shareholders under “Financial Statements,” under “Notes to Financial Statements” and under “Quarterly Financial Data.” That information is incorporated into this item by reference.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not
applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Information in response to this Item 9A can be found in the
2018 Annual Report to Shareholders under “Controls and
Procedures.” That information is incorporated into this item by reference.
ITEM
9B.
OTHER INFORMATION
Not applicable.
8
PART III
ITEM
10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Senior Executive Vice President since January 2019, Executive Vice President from July 2018 to January 2019, and Human Resources Director since July 2018;
Senior Vice President and Head of Talent at Walmart Inc., a multinational retailer, from October 2017 to June 2018;
Senior Vice President and Chief Human Resources Officer at Sam’s Club (Walmart Inc.) from October
2016 to June 2018;
Vice President and Head of Human Resources at Medallia Inc., an international software company, from May 2012 to October 2016.
Mr. Galloreese has served with the Company for less than 1 year.
President since November 2015 and Chief Executive Officer since October 2016;
Chief Operating Officer from November 2015 to October 2016;
Senior Executive Vice President (Wholesale Banking) from May 2014 to November 2015;
Senior Executive Vice President and Chief Financial Officer from February 2011 to May 2014.
Mr. Sloan has served with the Company or its predecessors for 31 years.
9
Jonathan
G. Weiss (age 61)
Senior Executive Vice President (Wealth and Investment Management) since July 2017;
President and Chief Executive Officer of Wells Fargo Securities, LLC from May 2014 to June 2017;
Managing Director of Wells Fargo Securities, LLC (Investment Banking, Securities & Markets, f/k/a Investment Banking & Capital Markets) from June 2008 to May 2014.
Mr. Weiss has served with the Company for 13 years.
There is no family relationship between any of the Company’s executive officers or directors. All executive officers serve at
the pleasure of the Board of Directors.
AUDIT COMMITTEE INFORMATION
The Audit and Examination Committee is a standing audit committee of the Board of Directors established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The Committee has four members: John D. Baker II, Theodore F. Craver, Jr., James H. Quigley (Chair), and Ronald L. Sargent. Each member is independent, as independence for audit committee members is defined by NYSE rules. The Board of Directors has determined, in its business judgment, that each member of the Audit and Examination Committee is financially literate, as required by NYSE rules, and that each
qualifies as an “audit committee financial expert” as defined by SEC regulations.
CODE OF ETHICS AND BUSINESS
CONDUCT
The Company’s Code of Ethics and Business Conduct applicable to team members (including executive officers) as well as directors, the Company’s corporate governance guidelines, and the charters for the Audit and Examination, Governance and Nominating, Human Resources, Corporate Responsibility, Credit, Finance, and Risk Committees are available at www.wellsfargo.com/about/corporate/governance.
ADDITIONAL
INFORMATION
Additional information in response to this Item 10 can be found in the Company’s 2019 Proxy Statement under “Ownership of Our Common Stock – Directors and Executive Officers – Section 16(a) Beneficial Ownership Reporting Compliance,” under “Corporate Governance – Item 1 – Election of Directors – Director Nominees for Election,” and “Corporate Governance – Director Election Standard and Nomination Process – Director Nomination Process.” That information is incorporated into this item by reference.
ITEM
11.
EXECUTIVE COMPENSATION
Information in response to this Item 11 can be found in the Company’s 2019 Proxy Statement under “Corporate Governance – Compensation Committee Interlocks and Insider Participation,” under “Corporate Governance – Director Compensation,” under “Information About Related Persons – Related Person Transactions,” and under “Executive Compensation – Compensation Committee Report,”“Executive Compensation – Compensation Discussion and Analysis,”“Executive Compensation – Executive Compensation Tables,” and “Human Capital Management – Performance Management and Compensation – Incentive Compensation
Risk Management,” and “Human Capital Management – Our Workforce – CEO Pay Ratio and Annual Median Total Compensation.” That information is incorporated into this item by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information in response to this Item 12 can be found in the
Company’s 2019 Proxy Statement under “Ownership of Our Common Stock – Directors and Executive Officers – Director and Executive Officer Stock Ownership Table,”“Ownership of Our Common Stock – Principal Shareholders,” and “Executive Compensation – Equity Compensation Plan Information.” That information is incorporated into this item by reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information
in response to this Item 13 can be found in the Company’s 2019 Proxy Statement under “Corporate Governance – Item 1 – Election of Directors – Director Independence” and under “Information About Related Persons.” That information is incorporated into this item by reference.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Information in response to this Item 14
can be found in the Company’s 2019 Proxy Statement under “Audit Matters – Item 4 – Ratify Appointment of Independent Registered Public Accounting Firm for 2019 – KPMG Fees” and “Audit Matters – Item 4 – Ratify Appointment of Independent Registered Public Accounting Firm for 2019 – Audit and Examination Committee Pre-Approval Policies and Procedures.” That information is incorporated into this item by reference.
10
PART IV
ITEM
15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. FINANCIAL STATEMENTS
The Company’s consolidated financial statements, including the notes thereto, and the report of the independent registered public accounting firm thereon, are set forth in the 2018 Annual Report to Shareholders, and are incorporated into this item by reference.
2. FINANCIAL STATEMENT SCHEDULES
All
financial statement schedules for the Company have been included in the consolidated financial statements or the related footnotes, or are either inapplicable or not required.
11
3. EXHIBITS
A list of exhibits to this Form 10-K is set forth below. Shareholders may obtain a copy of any of the following exhibits, upon payment of a reasonable fee, by writing to Wells Fargo & Company, Office of the Corporate
Secretary, MAC D1130-117, 301 S. Tryon Street, 11th Floor, Charlotte, North Carolina28202.
The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC
file number 001-6214. The former Wachovia Corporation filed documents under SEC file number 001-10000.
The Company agrees to furnish upon request to the Commission
a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 27, 2019.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
The Directors
of Wells Fargo & Company listed below have duly executed powers of attorney empowering James H. Quigley to sign this document on their behalf.