Annual Report

2023

Annual Report

CEO Letter

Dear Shareholders:

2023 was a year of continued progress for Wells Fargo. We delivered stronger financial performance versus 2022 and we

continued to execute on our strategic priorities. Our results benefited from the strong economic environment, higher interest

rates, our continued focus on efficiency and strong credit discipline. In addition, we are just beginning to see the impacts of

investments we’ve made to better serve our customers and grow more quickly.

We are moving forward with our risk and control work, and we are investing to build a faster-growing and a higher-returning

company, while we in parallel work to become more efficient. We effectively managed through an uncertain economic

environment in 2023 and a period of stress for certain banks. Our franchise allowed us, along with other large banks, to be a

source of strength for the U.S. economy during an unsettled period. All in all, I feel very good about what we accomplished in 2023

and continue to be optimistic as we look forward.

Financial performance

In 2023, Wells Fargo generated $19.1 billion in net income, or $4.83 per diluted common share. We grew net income and diluted

earnings per share from a year ago, with higher revenue and lower expenses.

Our revenue increased 11% from the previous year. The higher rate environment drove strong growth in net interest income,

which was up 17% from a year ago. We also grew noninterest income, with strong growth in trading activities, investment banking

fees, and commissions and brokerage service fees, reflecting market conditions as well as the investments we’ve been making in

our wholesale businesses. This growth was partially offset by a decline in mortgage banking, primarily driven by our efforts to

simplify the home lending business, as well as lower deposit-related fees, reflecting our efforts to help customers avoid overdraft

fees.

Expenses declined 3% from a year ago and included the impact of our efficiency initiatives, which have resulted in $10 billion of

gross saves over the past three years. We reduced expenses even as we incurred a $1.9 billion FDIC special assessment as a result

of regional bank failures early in 2023, in addition to higher severance expense, as we continued our focus on efficiency.

Additionally, we continued to make investments in our risk and control infrastructure and in strategic initiatives across our

businesses. I go into more detail on these efforts later in this letter.

As expected, net loan charge-offs increased from historically low levels. We continue to closely monitor our portfolios, taking

credit tightening actions as appropriate. While we’ve seen credit quality deteriorate modestly, it has remained within our

expectations.

We increased our allowance for credit losses throughout the year. The change was driven by our expectations for potential losses

in parts of our loan portfolio, due to both changes in balances as well as our expectations for higher losses, especially in office

loans. As of year-end, we had approximately 11% reserved for our Commercial Real Estate (CRE) office exposure in our Corporate

and Investment Banking (CIB) business. As expected, losses started to materialize in our CRE office portfolio during 2023 as

market fundamentals remained weak. We will continue to monitor for potential losses going forward and adjust our allowance

accordingly.

Average loans outstanding increased by 2% from a year ago, with growth in the first half of the year offsetting declines later in the

year, reflecting weaker loan demand as well as credit-tightening actions. Average deposits decreased 5%, driven by consumer

spending as well as customers continuing to migrate to higher-yielding alternatives in a rising rate environment.

Our capital levels remained strong while we continued to return a significant amount of capital to shareholders, including

increasing our quarterly common stock dividend from $0.30 per share to $0.35 per share, and we repurchased $12 billion of

common stock.

Our return on equity was 11.0%, and our return on tangible common equity (ROTCE) was 13.1%.

2023 economic events

2023 was a year of uncertain economic outcomes as high inflation caused the Federal Reserve to aggressively increase interest

rates while pursuing a policy of quantitative tightening. There was much talk throughout the year about whether these actions

Return on tangible common equity (ROTCE) is a non-GAAP financial measure. For additional information, including a corresponding

reconciliation to GAAP financial measures, see the "Financial Review - Capital Management - Tangible Common Equity" section in this Report.

2023 Annual Report i

would put the economy in a recession or result in a soft landing. So far the result has been a slowing economy in an orderly

fashion, and the risks of a meaningful recession are diminishing

We took several proactive steps to prepare for the uncertain economic outcome. While we have continued to provide credit

broadly, we have been actively managing credit exposure. This is important not only from a risk-management standpoint; it also

helps us do the right thing for our customers by extending credit based on conservative underwriting standards. Across both

wholesale and consumer segments, those that are on the margin are more at risk, and we have worked to identify stress early to

minimize negative outcomes for our customers and losses for us. Specifically:

• In CRE, we continue to actively work to de-risk and reduce our office exposure. Our CRE team has a rigorous monitoring

process, has issued additional underwriting guidance, and has implemented escalated review and approval requirements.

• On the consumer side, we began taking credit tightening actions in 2022, which included increasing credit score minimums

across our products. Over the past several years, we have launched several new credit cards, which has resulted in strong

new account growth and an increase in loans outstanding. The credit quality of our new accounts has remained strong and

initial vintage performance has been consistent with our expectations.

• Credit losses in our home lending portfolio remained near zero last year, but as higher home prices and interest rates have

raised home affordability concerns, we have taken actions, including reducing loan-to-value maximums in certain

geographies.

• The size of our auto portfolio continued to decline throughout the year as we increased minimum credit scores and

reduced loan-to-value and debt ratio maximums.

In addition to taking these actions, we worked proactively to manage our interest risk and liquidity exposure. Banks such as ours

have large securities portfolios driven by the fact that we have more deposits than loans. We invest some of the difference in

securities and earn a market yield. This portfolio, combined with the other assets and liabilities we hold, creates risk that should

be managed very carefully. We invested prudently when yields were low. By doing this, we forwent additional net interest income

in the short term, but we avoided outsized losses in our securities portfolio as rates rose. Ultimately, we have started to invest at

higher rates.

Managing this trade-off is critical for banks as we rely on the confidence of both our customers and the markets to operate.

Managing our liquidity and capital is extremely important to supporting that confidence. That, in combination with a strong

balance sheet and diversified business model, helped us in 2023.

Regional bank crisis

Each winter when I write this letter, I review events of the prior year that distinguish it from others. There are always surprises

that are either economically or market driven. Our goal is to be prepared for the unknowns, which means being financially strong,

strategically well positioned, and having the operational and management capabilities to not just survive, but to be a source of

strength.

We have a diversified business model, a strong balance sheet, and growing margins. Our management team is extremely capable

and has proven their capabilities over the past several years. The work we have done together has bolstered our position even

more.

We believe our business model provides unique benefits that allow us to serve customers, communities and the broader economy

in important and differentiated ways. We are predominantly a U.S. bank, and we have scale and diversification across the country.

We serve a broad range of customers, from large to small and across numerous industries and wealth segments. We have a

diversified set of risks that we actively manage, and we seek to avoid concentrations that could be outsized for our company. Our

funding sources are diversified, we have a strong capital base, and as one of eight Global Systemically Important Banks (GSIBs) in

the U.S., we operate with heightened regulation and supervision. This enhances our strength.

When there are disruptive events, the benefits of our business model become even clearer. In the first quarter of 2023, we were

able to support the U.S. financial system, along with ten other large banks, by utilizing our strength and liquidity to make a $5

billion uninsured deposit into First Republic. This deposit helped First Republic provide liquidity to its customers and calm the

markets for a period of time.

We were well prepared for this scenario and were viewed as a safe institution to serve customers during this period. Our

customers and ultimately our communities benefit from this stability.

2023 Annual Report iii

Our transformation

We have made significant progress in transforming Wells Fargo. We are executing on our risk and control work, we have

reoriented our business priorities, we have changed how we manage the company, and we have improved how we work across our

business.

2023 was an important year in our transformation. When I began as CEO of Wells Fargo in 2019, we set out a series of strategic

priorities, and in 2023 we continued to execute them.

Risk and control

I have been clear since I joined the company that closing gaps in Wells Fargo’s risk and control environment is our top priority.

Simply stated, the objective is to build a risk and control infrastructure that is appropriate for a bank of our size and complexity,

making our operational and compliance risk management as robust as our credit and other financial risk management has

historically been.

To get this work done, we have developed plans and have been executing them now for several years. We are completing these

plans with increasing confidence. We have detailed project plans that track interim deliverables, not just the dates when the work

is to be finalized and turned over to our regulators for validation. As we have completed these interim deliverables, our control

environment has become increasingly stronger. Building our risk and control framework is a continuous, ongoing effort, and as we

implement changes, we track effectiveness along the way. The numerous internal metrics we track show that the work is clearly

improving our control environment – but we will not be satisfied until all of our work is complete.

We are making progress because we are managing this work differently than we did historically. We have prioritized it as the

most important body of work we have to accomplish at the company. We have much more effective reporting and processes in

place to provide appropriate oversight. We have added approximately 10,000 people across numerous risk- and control-related

groups and spent over $2.5 billion more in 2023 than in 2018 in these areas. Critical to our progress is the experienced people we

now have at the company who have the skills and commitment to complete this work.

In February 2024, we reached an important milestone when the OCC announced the termination of a consent order it issued in

2016 regarding sales practices misconduct at the company. Since the order was put in place in 2016, we have revamped how we

offer and sell products and services and we have taken additional actions to protect our customers and employees.

The closure of this order is an important step forward and is a demonstration of what I wrote above: we have prioritized risk- and

control-related work, we have put substantial resources behind it, and we are seeing results. The OCC’s action is confirmation that

we operate much differently today around sales practices, and it is the sixth enforcement action against Wells Fargo that our

regulators have closed since 2019.

This is not to say that we are done. We remain focused on the work ahead and, again, we are moving forward with confidence. At

the same time, I will repeat what I’ve said in the past. Regulatory pressure on banks with longstanding issues such as ours is high

and until we complete our work and until it is validated by our regulators, we remain at risk of further regulatory actions.

Additionally, as we implement heightened controls and oversight, we could find new issues that need to be remediated, and these

may result in additional regulatory actions.

Reorienting our business mix and building higher returns through cycles

We continue to look at our business mix and react to changes in regulations, market dynamics and the external environment to

put us in a strong position to serve our customers. We are also working more closely across the company’s business units and

functions than ever before.

Repositioning Home Lending

Over the past year, we have implemented a meaningfully different Home Lending business model than we had been

operating for decades. We made the decision to significantly downsize the business and focus on serving customers who

have a broader relationship with Wells Fargo, while continuing to provide support for underserved communities.

In some ways this decision was hard; in other ways it was easy. Having a large home lending platform had been an

important part of what defined Wells Fargo for a long time. We prided ourselves on helping build home ownership across

the United States. And for many years, the origination revenues generally increased when rates decreased, providing

much-needed diversification from many of the company’s other businesses, which generally earned less in lower-rate

environments.

Our decision reflects our belief that much has changed regarding regulation, capital requirements, and reputational risk

for large banks who operate large home lending businesses, as well as the different standards in this space for smaller

banks and non-banks. Simply put, we do not believe the risk-adjusted returns and the reputation risk we bear are

attractive to operate the business at the scale we did previously.

We still view home lending as an important product to offer our customers and we will continue to support their needs.

We can do this with a smaller business than we have had in the past.

Since we announced this change, we have exited the correspondent lending business and reduced the size of our sales

force. Since 2019, Wells Fargo’s home lending originations have decreased from $204 billion to $25 billion, and the

amount of mortgage loans we service for third parties declined by over 45%.

Other business simplification

In addition to executing on our more focused home lending strategy, we continue to look at other activities with an aim

toward simplifying the company. To that end, we sold approximately $2 billion of private equity investments in certain

Norwest Equity Partners and Norwest Mezzanine Partners funds in 2023.

Our actions in 2023 to simplify the company build on other actions we took between 2019-2022. These include the

following:

• Sold Wells Fargo Asset Management

• Sold our Corporate Trust Services business

• Sold our student lending portfolio and stopped the origination of new student loans

• Exited our international wealth management segment

• Sold our Canadian direct equipment finance business

• Exited the direct Auto business

• Stopped originating personal lines of credit

• Sold our Institutional Retirement and Trust business

• In addition, over the past several years, we have closed over a dozen representative offices globally to better

focus our international business, including offices in Asia, Europe, South America, the Middle East, and

elsewhere.

Investing in our core businesses to better serve customers

We are investing more aggressively than in the past in parts of our business to better serve our customers and we

believe these will help produce higher risk adjusted returns over economic cycles.

Credit Card

We continue to believe that a broader credit card platform is important strategically for the company. Providing

credit for our customers is a core strategy for us, but being involved in payments has grown in importance. Though

our card business is smaller than some of our competitors, it operates with necessary scale and we have been

working to introduce attractive new products over the last few years. These include Active Cash®, which offers

customers 2% cash rewards on purchases with no limits and no annual fees; Autograph℠, which offers three-times

points on certain purchases; Reflect®, which offers 0% intro APR for 21 months; and, most recently, new co-branded

cards with Choice Hotels.

In total, spend on our cards grew by 15% between 2022-2023, significantly more than the industry average; our

credit card balances grew 13%; and credit quality remains within our expectations.

These products have been well received in the marketplace because they offer clear and simple customer value

propositions. That’s something we’ll continue to focus on as we build our Cards business, while we also work to

improve our fraud capabilities, line assignments, and customer service.

I’m proud of the progress we’ve made and am excited about what is still to come.

2023 Annual Report v

Corporate and Investment Bank

We are investing to build our fee-based businesses in our Corporate and Investment Bank (CIB). While historically

many outside of Wells Fargo have not perceived us as a bank that serves large corporate clients, in fact we have

relationships with approximately three-quarters of the Fortune 500. We are a significant lender and provide cash

management solutions for many. We have also built out our capabilities to help clients access the public markets

and ranked fourth in high-grade bond underwriting in 2023.

Our investments in CIB are logical extensions of what we currently do for our existing client base. They have

positioned us to increase our fee-based revenues with clients where we already provide significant credit, and to

increase our returns overall. In 2023, for example, we leveraged our leading commercial real estate franchise into a

number-one position in real estate investment banking.

Importantly, feedback from our clients has been extremely

positive.

Our investments in CIB have been disciplined, and the work has been guided by a targeted plan against certain

industries and product capabilities. More than 50 new senior hires have joined CIB since 2019, with many of these in

key coverage and product groups within Banking. We have had a particular focus in high-growth sectors, including

technology, media and telecommunications, as well as health care, sponsors, mergers and acquisitions, and equity

capital markets.

While it is early, the results are quite encouraging. For example, our M&A announced-volume market share and rank

have gone from 2.9% and number 19 in 2019 to 9.9% and number 8 in 2023

. Our M&A fee market share and rank

have gone from 1.6% and number 20 in 2019 to 2.0% and number 14 in 2023.

We have led numerous significant

transactions over the past two years. And Wells Fargo’s overall investment banking share has moved up two ranks in

the U.S. since 2019, from number 8 to number 6, with 3.7% share.

We are also investing in our trading activities, with a focus on technology and serving our institutional client base.

We have enhanced our electronic trading platform by upgrading quantitative hedging methods and trading

algorithms, expanding product offerings, and improving platform scalability. Expanded technology offerings also

attracted more clients to our foreign exchange (FX) platform, and our FX market share ended the year at #4, with

5.4% share.

Investments in Equity Research have also resulted in improvements in our 2023 Institutional Investor

All American Research Ranking; we achieved a #7 (tie) rank, up 3 spots from the prior year.

Overall Markets

achieved a #6 rank in the Americas.

Commercial Bank

We are a leader in U.S. middle-market banking and we are focused on finding ways to provide additional support for

clients. In 2023, we announced that we had entered into a strategic relationship with Centerbridge Partners,

focused on direct lending to non-sponsor North American middle-market companies. Centerbridge has since

launched Overland Advisors to manage a newly formed business development company that will be primarily

focused on making senior secured loans, and Wells Fargo can refer clients to Overland Advisors for evaluation of

possible alternative financing options.

Providing our middle-market clients with greater access to capital that can be used to pursue a broader set of

growth and value creation initiatives across a variety of market conditions should be an important differentiator. It

will help strengthen our client relationships while adding fee-based revenue to Wells Fargo.

Source: Share & Rank as per Dealogic; data as of 1/05/2024.

Source: Coalition Greenwich Competitor Analytics – Americas FY23. Results are based on Wells Fargo internal revenues and internal business

structure. Peer Group in industry rankings includes: BofA, BARC, BNPP, CITI, DB, GS, HSBC, JPM, MS, UBS and WF

Source: Institutional Investor, 2023.

Source: Coalition Greenwich Competitor Analytics – Americas FY23. Results are based on Wells Fargo internal revenues and Coalition Greenwich

standard definition for Markets business structure. Peer Group in industry rankings includes: BofA, BARC, BNPP, CITI, DB, GS, HSBC, JPM, MS,

UBS and WF.

Consumer, Small and Business Banking

In our retail bank, we are happy to have largely preserved our share over the past several years while we have worked

to fundamentally change how we do business. We have revamped how we offer and sell products; we have put in

place new systems, processes, and controls across the retail bank; and we have established stronger oversight.

In parallel to these risk- and control-focused changes, we have worked to build the foundation to grow our business

and improve the customer experience both digitally and in our branches.

Digital

We continued to enhance our consumer banking mobile app in 2023, which is driving mobile adoption

momentum. We added 1.6 million mobile active customers in 2023 and increased mobile logins 11% from

a year ago.

We introduced Fargo

, our new AI-powered virtual assistant, in April of last year, and in the third quarter

we expanded its capabilities to allow customers to communicate with Fargo in Spanish. Consumers

interacted over 21 million times last year with Fargo.

We expect our digital interactions to grow further this year, as we continue to help our customers utilize

banking services in a quicker, more accessible way than they have in the past.

Branch network

Wells Fargo has one of the largest branch networks in the nation, with over 4,000 locations across the

country. We operate branches in 24 of the 30 largest markets, we cover more rural markets than many

large banks, and nearly 30% of our branches are in low- or moderate-income U.S. Census tracts.

As our customers continue to shift to digital channels, we reduced our total number of branches by over

280, or 6%, from a year ago, but that does not mean we are moving away from branches. In fact, it’s the

opposite. Branches remain critical to the work we do as a company. To that end:

• We are refurbishing our existing branches as part of an accelerated multi-year effort to transform

and refresh our branch network.

• We are bringing our digital onboarding experience to our branches, creating a fast and easy

experience for our customers.

• We are investing in new branches. In October 2023, for example, we announced that we are

growing our retail branch footprint in Chicago from seven to at least 30 branches in the coming

years.

• We are expanding Wells Fargo Premier, which provides tailored services to clients with high

qualifying balances.

Other products and services

We continue to look for ways to support our customers with our products, features and services.

We rolled out Early Pay Day in 2022, which makes eligible direct deposits available to customers up to two

days early, with no fee. In 2023, this enhancement provided customers early access to over $800 billion in

direct deposits.

We’ve introduced Extra Day Grace, which gives customers an extra business day to make deposits and

avoid overdraft fees. It benefitted over 5 million customers in 2023, helping them avoid over $750 million

in overdraft fees.

In the fourth quarter of 2022, we launched Flex Loan, a digital-only small dollar loan that provides eligible

customers convenient and affordable access to funds. Customer response continues to exceed our

expectations, and we originated over 350,000 loans last year.

Wealth and Investment Management

When I arrived at Wells Fargo in 2019, it was clear that our Wealth and Investment Management (WIM) business

had significant opportunity to grow, and, today, it is on the right path.

2023 Annual Report vii

In 2023, attrition remained low and we continued our focus of hiring experienced advisors across our multi-channel

offering – a differentiator for the business. We offer a traditional wirehouse option for advisors; a bank-based

channel which allows customers in our nationwide bank branches to forge a relationship with an advisor; and

independent channels comprised of Wells Fargo Advisors Financial Network and First Clearing, our clearing and

custody services for broker-dealers and registered investment advisors.

As we expand the ranks of our financial advisors, we continue to invest in the business. In 2023, we expanded client

access to high-yield products. We modernized our advisor platform, making it easier for our financial advisors to

serve their clients. And we continue to focus on digital enhancements. One example is Stock Fractions, giving

WellsTrade® clients the ability to buy fractions of a company’s stock to help build a diversified portfolio, regardless

of stock price.

Investing in infrastructure

Technology is a key driver of progress across our businesses. We have built new capabilities with more modern

technologies over the past several years – and these will benefit our wholesale and consumer customers as well as our

employees. Examples include:

• Modernization of our core banking systems, with a new pricing platform and customer information management

system

• Continued work to digitize lending origination and servicing platforms for Small Business, Commercial Banking,

and CIB clients

• Enabling the modernization and advancement of the enterprise-wide, global payments capabilities creating

optimized flow of payments, improving operational efficiency, and preparing for potential changes in the market

• Working to launch VantageSM, our new digital channel for Commercial Banking and CIB clients to perform real-

time payments, automated clearing house, lending servicing, and FX transactions

• Refreshing our auto-lending decisioning platform

• Building modern data centers and executing on our hybrid cloud strategy to enable business agility and

efficiencies

• Modernizing our software development processes

Increasing efficiency

We continued to make progress on our efficiency initiatives, including bringing down headcount every quarter since the

third quarter of 2020 and, as noted above, meaningfully reducing the number of retail bank branches as we’ve steadily

improved our digital offerings. We also benefitted from contract efficiencies and infrastructure optimization in our

Technology group. We continue to believe opportunities exist for ongoing efficiency improvements.

More on changes over the past five years

The above sections paint a picture of progress we’ve made on numerous fronts over the past several years. In this section I want

to take a step back and look at some data that quantifies our progress broadly.

When I arrived at the company in 2019, two things were clear.

One, we had to preserve much of what made Wells Fargo such a great place historically: the dedication of our employees, the

company’s longstanding commitment to our communities, and the ability to serve our customers on a highly local basis. Wells

Fargo’s presence in local communities has always been and continues to be a differentiator for us.

Two, while we had to preserve all of this, we also had to make substantial changes to the way we operate. Five years later, we have

done so:

• We are a simpler company, both in terms of the businesses we have exited and the size of our employee base, which has

shrunk by approximately 50,000, or approximately 18%, since second quarter 2020. This has occurred even as we have

added approximately 10,000 employees across numerous risk- and control-related groups since 2018.

• We are a more efficient company. Our noninterest expense has declined by over 4% since 2019. This progress comes even

as we have continued to invest in our risk and control infrastructure – again, with $2.5 billion more in 2023 compared with

2018 – as well as in significant strategic initiatives across our businesses.

• We are a more valuable company from a shareholder perspective. Book value per common share is up approximately 22%

and tangible book value per common share is up approximately 23% since 2018

, while common shares outstanding have

decreased by approximately 21%. And, we continue to return capital to our shareholders in a steady and deliberate way.

Impact on communities

We seek broad impact in our communities, and I’m proud of the work we do. As a company, we are focused on building a

sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health, and a low-carbon

economy.

In 2023, examples of our work include:

• Donated approximately $300 million to over 3,000 nonprofits in support of housing, small business, financial health,

sustainability and other community needs

• Strengthened local communities through approximately 800,000 hours of volunteer service from Wells Fargo employees

• As part of our Banking Inclusion Initiative, introduced HOPE Inside Centers in 15 markets now supporting 57 retail

branches that provide financial education workshops and free one-on-one coaching

• Exceeded our $150 million Special Purpose Credit Program (SPCP) commitment to advance racial equity in

homeownership, helping customers refinance their mortgages to below market rate loans with reduced closing costs

• Launched $10,000 Homebuyer AccessSM grants that will be applied toward the down payment for eligible homebuyers

who currently live in or are purchasing homes in certain underserved communities

• Expanded our commitment to housing affordability through another $20 million breakthrough challenge to advance

ideas addressing the need for more affordable homes

• Announced the Invest Native Initiative, a $20 million commitment to advance economic opportunities in Native

communities, and have already announced nearly $11 million in grants to 28 organizations across six states

• Committed $25 million for UnidosUS community-focused programs and nonprofit affiliate partners to advance Latino

homeownership, of which $10 million will support the development of the HOME (Home Ownership Means Equity)

initiative

A number of these initiatives are covered in more detail in our 2023 Diversity, Equity and Inclusion Report, which is available on

Wells Fargo’s website. The report also includes a broader overview of our DE&I work at Wells Fargo.

In addition, although I do not cover our sustainability work in detail in this year’s letter, you can find more about progress in our

Sustainability and Governance Report, our July 2023 TCFD Report, and our CO2eMission reporting, which are available on our

website.

Supporting our employees

Our employees are our greatest asset. We value their contributions to our company, and we continue to invest in them –

particularly employees with lower salaries.

Since 2019, we have increased wages for U.S. hourly employees by nearly 20% and increased the average pay rate for tellers by

34%. Earlier this year, we provided a special cash bonus of $1,000 to all eligible U.S.

employees making $75,000 or less in annual

salary and less than $85,000 in total cash compensation. This award went to almost 100,000 people.

We provide eligible U.S. employees with numerous benefits designed to protect their physical and financial health and to help

them make the most of their financial future. Below are several examples:

• Up to 85% of per-paycheck cost of medical coverage, depending on compensation level, for U.S. employees. For

employees earning less than $48,000, Wells Fargo has lowered medical premiums by an average of 19% over the last five

years.

• Approximately $1 billion in annual 401(k) contributions, with all eligible U.S. 401(k) plan participants receiving a dollar-

for-dollar company match of up to 6% for eligible compensation. Eligible U.S. employees earning less than $75,000 also

receive a company 401(k) contribution of 1% a year of eligible compensation.

• Back-up care benefits, family-building benefits, wellness benefits, and other benefits

Tangible book value per common share is a non-GAAP financial measure. For additional information, including a corresponding reconciliation to

GAAP financial measures, see the "Financial Review - Capital Management - Tangible Common Equity" section in this Report.

Eligible employees outside the U.S. also received a one-time cash payment, adjusted according to local compensation levels.

viii

2023 Annual Report ix

In addition to compensation and benefits, we also provide employees with skill and capability development and career growth

opportunities:

• During 2023, we invested approximately $200 million in talent development, including skill development, functional

training, regulatory compliance, leadership and professional development.

• In 2022, we launched our career development framework, which provides a holistic experience that enables our

employees to better manage their careers within our company. We are proud of the many programs that the company

offers. These include:

◦ Early career development programs

◦ Manager development programs

◦ Annual tuition reimbursement providing up to $5,000 annually for eligible employees to pursue higher education

◦ Numerous other training programs, as well as a global mentoring program that has enrolled approximately 15,000

employees

We will continue to make investments such as these going forward.

Looking forward

In my shareholder letter over the past three years, I have discussed our path to higher returns. Since 2020, we have made

progress on a number of important items, including executing on our efficiency initiatives, investing in our businesses to help

drive growth, and returning excess capital to shareholders.

Our headcount and expenses are lower, and our market share is increasing where we have been investing in laying the groundwork

for higher returns and increased rates of growth. We have repurchased $32 billion of common stock since 2020, while increasing

our common stock dividend from $0.10 per share to $0.35 per share.

We continue to see a path towards a sustainable 15% ROTCE over the medium term as we continue to make progress

transforming the company. As rates fluctuate and economic conditions change, the path will not always be a straight line

upwards, but as time progresses, I continue to be excited by our opportunities ahead.

I want to close by thanking all reading this letter for your continued interest and support. A special thanks to all of those that work

alongside me at Wells Fargo for your commitment to making Wells Fargo a great company for each other, our communities, and

our customers.

Charles W. Scharf

Chief Executive Officer

Wells Fargo & Company

March 8, 2024

Our Performance

$ and shares outstanding in millions, except per share amounts 2023 2022 2021

SELECTED INCOME STATEMENT DATA

Total revenue $ 82,597 74,368 79,166

Noninterest expense 55,562 57,205 53,758

Pre-tax pre-provision profit

27,035 17,163 25,408

Provision for credit losses

5,399 1,534 (4,155)

Wells Fargo net income 19,142 13,677 22,109

Wells Fargo net income applicable to common stock 17,982 12,562 20,818

COMMON SHARE DATA

Diluted earnings per common share 4.83 3.27 5.08

Dividends declared per common share 1.30 1.10 0.60

Common shares outstanding 3,598.9 3,833.8 3,885.8

Average common shares outstanding 3,688.3 3,805.2 4,061.9

Diluted average common shares outstanding 3,720.4 3,837.0 4,096.2

Book value per common share

$ 46.25 41.98 43.26

Tangible book value per common share

4, 5

39.23 34.98 36.29

SELECTED EQUITY DATA (PERIOD-END)

Total equity 187,443 182,213 189,889

Common stockholders’ equity 166,444 160,952 168,111

Tangible common equity

141,193 134,090 141,034

PERFORMANCE RATIOS

Return on average assets (ROA)

1.02 % 0.72 1.14

Return on average equity (ROE)

11.0 7.8 12.3

Return on average tangible common equity (ROTCE)

13.1 9.3 14.8

Efficiency ratio

67 77 68

SELECTED BALANCE SHEET DATA (AVERAGE)

Loans $ 943,916 929,820 864,288

Assets 1,885,475 1,894,303 1,942,063

Deposits 1,346,282 1,424,269 1,437,812

SELECTED BALANCE SHEET DATA (PERIOD-END)

Debt securities 490,458 496,808 537,531

Loans 936,682 955,871 895,394

Allowance for credit losses for loans 15,088 13,609 13,788

Assets 1,932,468 1,881,020 1,948,073

Deposits 1,358,173 1,383,985

1,482,479

OTHER METRICS

Common Equity Tier 1 (CET1) ratio

11.43 % 10.60 11.35

Market capitalization $ 177,136 158,298 186,441

Headcount (#) (period-end) 225,869 238,698 249,435

1. In first quarter 2023, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the

Accounting for Long-Duration Contracts. We adopted ASU 2018-12 with retrospective application, which required revision of prior period financial statements. Prior period risk-based capital and certain

other regulatory related metrics were not revised. For additional information, including the financial statement line items impacted by the adoption of ASU 2018-12, see Note 1 (Summary of Significant

Accounting Policies) to Financial Statements in this Report.

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. Includes provision for credit losses for loans, debt securities, and other financial assets.

4. Book value per common share is common stockholders’ equity divided by common shares outstanding. Tangible book value per common share is tangible common equity divided by common shares

outstanding.

5. Tangible common equity, tangible book value per common share, and return on average tangible common equity are non-GAAP financial measures. For additional information, including a corresponding

reconciliation to GAAP financial measures, see the “Financial Review – Capital Management – Tangible Common Equity” section in this Report.

6. Represents Wells Fargo net income divided by average assets.

7. Represents Wells Fargo net income applicable to common stock divided by average common stockholders’ equity.

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

9. Represents our Common Equity Tier 1 (CET1) ratio calculated under the Standardized Approach, which is our binding CET1 ratio. For additional information, see the “Financial Review – Capital

Management” section and Note 26 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report.

Wells Fargo & Company 2023 Financial Report

Financial Review

Overview

Earnings Performance

Balance Sheet Analysis

Off-Balance Sheet Arrangements

Risk Management

Capital Management

Regulatory Matters

Critical Accounting Policies

Current Accounting Developments

Forward-Looking Statements

Risk Factors

Controls and Procedures

Disclosure Controls and Procedures

Internal Control Over Financial Reporting

Management’s Report on Internal Control over

Financial Reporting

Report of Independent Registered Public

Accounting Firm (KPMG LLP, Charlotte, NC,

Auditor Firm ID: 185)

Financial Statements

Consolidated Statement of Income

Consolidated Statement of Comprehensive

Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to Financial Statements

88 1 Summary of Significant Accounting Policies

101 2 Trading Activities

102

3 Available-for-Sale and Held-to-Maturity Debt Securities

108 4 Equity Securities

110 5 Loans and Related Allowance for Credit Losses

125 6 Mortgage Banking Activities

127 7 Intangible Assets and Other Assets

128 8 Leasing Activity

130 9 Deposits

131 10 Long-Term Debt

133 11 Preferred Stock

134 12 Common Stock and Stock Plans

136 13 Legal Actions

138 14 Derivatives

144 15 Fair Values of Assets and Liabilities

155 16 Securitizations and Variable Interest Entities

160 17 Guarantees and Other Commitments

163 18 Securities and Other Collateralized Financing Activities

165 19 Pledged Assets and Collateral

166 20 Operating Segments

168

21 Revenue and Expenses

171

22 Employee Benefits

176

23 Income Taxes

179

24 Earnings and Dividends Per Common Share

180

25 Other Comprehensive Income

182

26 Regulatory Capital Requirements and Other Restrictions

184

27 Parent-Only Financial Statements

186 Report of Independent Registered Public

Accounting Firm

190 Quarterly Financial Data

191 Glossary of Acronyms

Wells Fargo & Company

This Annual Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking statements,

which may include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those

forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results may differ materially from our forward-looking

statements due to several factors. Factors that could cause our actual results to differ materially from our forward-looking statements are

described in this Report, including in the “Forward-Looking Statements” section, and in the“Risk Factors” and “Regulation and Supervision”

sections of our Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Form 10-K).

When we refer to “WellsFargo,” “the Company,” “we,” “our,” or “us” in this Report, we mean WellsFargo & Company and Subsidiaries

(consolidated). When we refer to the “Parent,” we mean WellsFargo & Company. See the “Glossary of Acronyms” for definitions of terms used

throughout this Report.

Financial Review

Overview

WellsFargo & Company is a leading financial services company

that has approximately $1.9 trillion in assets. We provide a

diversified set of banking, investment and mortgage products

and services, as well as consumer and commercial finance,

through our four reportable operating segments: Consumer

Banking and Lending, Commercial Banking, Corporate and

Investment Banking, and Wealth and Investment Management.

Wells Fargo ranked No. 47 on Fortune’s2023 rankings of

America’s largest corporations. We ranked fourth in assets and

third in the market value of our common stock among all U.S.

banks at December31, 2023.

Wells Fargo’s top priority remains building a risk and control

infrastructure appropriate for its size and complexity. The

Company is subject to a number of consent orders and other

regulatory actions, some of which are described below. These

regulatory actions may require the Company, among other

things, to undertake certain changes to its business, operations,

products and services, and risk management practices.

Addressing these regulatory actions is expected to take multiple

years, and we are likely to continue to experience issues or delays

along the way in satisfying their requirements. We are also likely

to continue to identify more issues as we implement our risk and

control infrastructure, which may result in additional regulatory

actions. Regulators have indicated the potential for escalating

consequences for banks that do not timely resolve open issues or

have repeat issues. Furthermore, issues or delays with one

regulatory action could affect our progress on others. Failure to

satisfy the requirements of a regulatory action on a timely basis

could result in additional fines, penalties, business restrictions,

limitations on subsidiary capital distributions, increased capital or

liquidity requirements, enforcement actions, and other adverse

consequences, which could be significant. While we still have

significant work to do and have not yet satisfied certain aspects

of these regulatory actions, the Company is committed to

devoting the resources necessary to operate with strong

business practices and controls, maintain the highest level of

integrity, and have an appropriate culture in place.

Federal Reserve Board Consent Order Regarding

Governance Oversight and Compliance and Operational

Risk Management

On February 2, 2018, the Company entered into a consent order

with the Board of Governors of the Federal Reserve System

(FRB). As required by the consent order, the Company’s Board of

Directors (Board) submitted to the FRB a plan to further enhance

the Board’s governance and oversight of the Company, and the

Company submitted to the FRB a plan to further improve the

Company’s compliance and operational risk management

program. The Company continues to engage with the FRB as the

Company works to address the consent order provisions. The

consent order also requires the Company, following the FRB’s

acceptance and approval of the plans and the Company’s

adoption and implementation of the plans, to complete an initial

third-party review of the enhancements and improvements

provided for in the plans. Until this third-party review is complete

and the plans are adopted and implemented to the satisfaction

of the FRB, the Company’s total consolidated assets as defined

under the consent order will be limited to the level as of

December 31, 2017. Compliance with this asset cap is measured

on a two-quarter daily average basis to allow for management of

temporary fluctuations. After removal of the asset cap, a second

third-party review must also be conducted to assess the efficacy

and sustainability of the enhancements and improvements.

Consent Orders with the Consumer Financial Protection

Bureau and Office of the Comptroller of the Currency

Regarding Compliance Risk Management Program,

Automobile Collateral Protection Insurance Policies, and

Mortgage Interest Rate Lock Extensions

On April 20, 2018, the Company entered into consent orders

with the Consumer Financial Protection Bureau (CFPB) and the

Office of the Comptroller of the Currency (OCC) to pay an

aggregate of $1 billion in civil money penalties to resolve matters

regarding the Company’s compliance risk management program

and past practices involving certain automobile collateral

protection insurance policies and certain mortgage interest rate

lock extensions. As required by the consent orders, the Company

submitted to the CFPB and OCC an enterprise-wide compliance

risk management plan and a plan to enhance the Company’s

internal audit program with respect to federal consumer financial

law and the terms of the consent orders. In addition, as required

by the consent orders, the Company submitted for non-

objection plans to remediate customers affected by the

automobile collateral protection insurance and mortgage

interest rate lock matters, as well as a plan for the management

of remediation activities conducted by the Company. The

Company continues to work to address the provisions of the

consent orders. On September 9, 2021, the OCC assessed a

$250million civil money penalty against the Company related to

insufficient progress in addressing requirements under the OCC’s

April 2018 consent order and loss mitigation activities in the

Company’s Home Lending business. On December 20, 2022, the

CFPB modified its consent order to clarify how it would

terminate.

2 Wells Fargo & Company

Consent Order with the OCC Regarding Loss Mitigation

Activities

On September 9, 2021, the Company entered into a consent

order with the OCC requiring the Company to improve the

execution, risk management, and oversight of loss mitigation

activities in its Home Lending business. In addition, the consent

order restricts the Company from acquiring certain third-party

residential mortgage servicing and limits transfers of certain

mortgage loans requiring customer remediation out of the

Company’s mortgage servicing portfolio until remediation is

provided.

Consent Order with the CFPB Regarding Automobile

Lending, Consumer Deposit Accounts, and Mortgage

Lending

On December 20, 2022, the Company entered into a consent

order with the CFPB requiring the Company to provide customer

remediation for multiple matters related to automobile lending,

consumer deposit accounts, and mortgage lending; maintain

practices designed to ensure auto lending customers receive

refunds for the unused portion of certain guaranteed automobile

protection agreements; comply with certain business practice

requirements related to consumer deposit accounts; and pay a

$1.7 billion civil penalty to the CFPB. The required actions related

to many of these matters were already substantially complete at

the time we entered into the consent order, and the consent

order lays out a path to termination after the Company

completes the remainder of the required actions.

Retail Sales Practices Matters

In September 2016, we announced settlements with the CFPB,

the OCC, and the Office of the Los Angeles City Attorney, and

entered into related consent orders with the CFPB and the OCC,

in connection with allegations that some of our retail customers

received products and services they did not request. As a result, it

remains a priority to rebuild trust through a comprehensive

action plan that includes making things right for our customers,

employees, and other stakeholders, and building a better

Company for the future. On September 8, 2021, the CFPB

consent order regarding retail sales practices expired. On

February 15, 2024, the OCC announced the termination of its

consent order regarding retail sales practices.

Customer Remediation Activities

Our priority of rebuilding trust has included an effort to identify

areas or instances where customers may have experienced

financial harm, provide remediation as appropriate, and

implement additional operational and control procedures. We are

working with our regulatory agencies in this effort.

We have accrued for the probable and estimable costs

related to our customer remediation activities, which amounts

may change based on additional facts and information, as well as

ongoing reviews and communications with our regulators. We

had $819 million and $2.3 billion of accrued liabilities for

customer remediation activities as of December31, 2023 and

2022, respectively. As our ongoing reviews continue and as we

continue to strengthen our risk and control infrastructure, we

have identified and may in the future identify additional items or

areas of potential concern. To the extent issues are identified, we

will continue to assess any customer harm and provide

remediation as appropriate.

Recent Developments

Federal Deposit Insurance Corporation Special Assessment

In November 2023, the Federal Deposit Insurance Corporation

(FDIC) finalized a rule to recover losses to the FDIC deposit

insurance fund as a result of bank failures in the first half of 2023.

Under the rule, the FDIC will collect a special assessment based

on a calculation using an insured depository institution’s (IDI)

estimated amount of uninsured deposits. Upon the FDIC’s

finalization of the rule, we expensed the entire estimated amount

of our special assessment of $1.9 billion (pre-tax), which will be

paid over eight quarters beginning in June2024. The amount of

our special assessment may change as the FDIC determines the

actual losses to the deposit insurance fund and evaluates any

amendments by IDIs to uninsured deposit amounts reported for

December 31, 2022.

Overdraft Fees Proposal

On January 17, 2024, the CFPB issued a proposed rule that would

limit overdraft fees charged by certain banks. We expect a

significant reduction to our overdraft fees, which are included in

deposit-related fees, if the rule is adopted as currently proposed.

Debit Card Interchange Fees Proposal

On October 25, 2023, the FRB issued a proposed rule that would

reduce the amount of debit card interchange fees received by

debit card issuers. In addition, the proposed rule would allow for

an update to the debit card interchange fee cap every other year

based on an analysis of certain costs incurred by debit card

issuers. We expect a significant reduction to our debit card

interchange fees, which are included in card fees, if the rule is

adopted as currently proposed.

Capital Matters

Wells Fargo & Company 3

On July 27, 2023, federal banking regulators issued a proposed

rule to implement the final components of Basel III, which would

impact risk-based capital requirements for certain banks. The

proposed rule would eliminate the current Advanced Approach

and replace it with a new expanded risk-based approach for the

measurement of risk-weighted assets, including more granular

risk weights for credit risk, a new market risk framework, and a

new standardized approach for measuring operational risk. The

new requirements would be phased in over a three-year period

beginning July 1, 2025. The Company expects a significant

increase in its risk-weighted assets and a net increase in its

capital requirements based on an assessment of the proposed

rule. The Company is considering a range of potential actions to

address the impact of the proposed rule, including balance sheet

and capital optimization strategies.

For additional information about capital planning, see the

“Capital Management – Capital Planning and Stress Testing”

section in this Report.

Financial Performance

Adoption of Accounting Standards Update 2018-12

In first quarter 2023, we adopted Financial Accounting Standards

Board (FASB) Accounting Standards Update (ASU) 2018-12 –

Financial Services – Insurance (Topic 944): Targeted

Improvements to the Accounting for Long-Duration Contracts.

We adopted this ASU with retrospective application, which

required revision of prior period financial statements. Prior

period risk-based capital and certain other regulatory related

metrics were not revised. For additional information, including

the financial statement line items impacted by the adoption of

ASU 2018-12, see Note 1 (Summary of Significant Accounting

Policies) to Financial Statements in this Report.

In 2023, we generated $19.1 billion of net income and diluted

earnings per common share (EPS) of $4.83, compared with

$13.7billion of net income and diluted EPS of $3.27 in 2022.

Financial performance for 2023, compared with 2022, included

the following:

• total revenue increased due to higher net interest income

and higher noninterest income;

• provision for credit losses reflected increases for commercial

real estate loans, primarily office loans, as well as for

increases in credit card loan balances;

• noninterest expense decreased due to lower operating

losses, partially offset by higher personnel expense and

higher other expense driven by an FDIC special assessment;

• average loans increased driven by loan growth in both our

commercial and consumer loan portfolios; and

• average deposits decreased driven by reductions in

Consumer Banking and Lending, Commercial Banking, and

Wealth and Investment Management, partially offset by

growth in Corporate and Investment Banking and Corporate.

Capital and Liquidity

We maintained a strong capital position in 2023, with total

equity of $187.4billion at December31, 2023, compared with

$182.2billion at December31, 2022. In addition, capital and

liquidity at December31, 2023, included the following:

• our Common Equity Tier 1 (CET1) ratio was 11.43% under

the Standardized Approach (our binding ratio), which

continued to exceed the regulatory minimum and buffers of

8.90%;

• our total loss absorbing capacity (TLAC) as a percentage of

total risk-weighted assets was 25.05%, compared with the

regulatory minimum of 21.50%; and

• our liquidity coverage ratio (LCR) was 125%, which

continued to exceed the regulatory minimum of 100%.

See the “Capital Management” and the “Risk Management –

Asset/Liability Management – Liquidity Risk and Funding”

sections in this Report for additional information regarding our

capital and liquidity, including the calculation of our regulatory

capital and liquidity amounts.

Credit Quality

Credit quality reflected the following:

• The allowance for credit losses (ACL) for loans of

$15.1billion at December31, 2023, increased $1.5 billion

from December31, 2022.

• Our provision for credit losses for loans was $5.4 billion in

2023, compared with $1.5 billion in 2022. The ACL for loans

and the provision for credit losses for loans reflected

increases for commercial real estate loans, primarily office

loans, as well as for increases in credit card loan balances.

• The allowance coverage for total loans was 1.61% at

December31, 2023, compared with 1.42% at December31,

2022.

• Commercial portfolio net loan charge-offs were

$923million, or 17 basis points of average commercial loans,

in 2023, compared with net loan charge-offs of $79million

in 2022, due to higher losses in all commercial portfolios,

primarily in our commercial real estate portfolio driven by

the office property type.

• Consumer portfolio net loan charge-offs were $2.5billion, or

65basis points of average consumer loans, in 2023,

compared with net loan charge-offs of $1.5billion, or

39basis points, in 2022, due to higher losses in all consumer

portfolios, primarily in our credit card portfolio.

• Nonperforming assets (NPAs) of $8.4billion at

December31, 2023, increased $2.7billion, or 47%, from

December31, 2022, driven by higher commercial real estate

nonaccrual loans, predominantly within the office property

type, partially offset by lower residential mortgage

nonaccrual loans. NPAs represented 0.90% of total loans at

December31, 2023.

• Criticized loans in the commercial portfolio were

$33.0billion at December31, 2023, compared with

$25.1billion at December31, 2022, primarily driven by an

increase in criticized commercial real estate loans in the

office and apartments property types.

Overview (continued)

4 Wells Fargo & Company

Table 1 presents a three-year summary of selected financial

data and Table 2 presents selected ratios and per common share

data.

Table 1: Summary of Selected Financial Data

Year ended December 31,

(in millions, except per share amounts) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Income statement

Net interest income $ 52,375 44,950 7,425 17% $ 35,779 9,171 26 %

Noninterest income (1) 30,222 29,418 804 3 43,387 (13,969) (32)

Total revenue 82,597 74,368 8,229 11 79,166 (4,798) (6)

Net charge-offs 3,450 1,609 1,841 114 1,582 27 2

Change in the allowance for credit losses 1,949 (75) 2,024 NM (5,737) 5,662 (99)

Provision for credit losses (2) 5,399 1,534 3,865 252 (4,155) 5,689 NM

Noninterest expense (1) 55,562 57,205 (1,643) (3) 53,758 3,447 6

Net income before noncontrolling interests 19,029 13,378 5,651 42 23,799 (10,421) (44)

Less: Net income from noncontrolling interests (113) (299) 186 62 1,690 (1,989) NM

Wells Fargo net income (1) 19,142 13,677 5,465 40 22,109 (8,432) (38)

Earnings per common share 4.88 3.30 1.58 48 5.13 (1.83) (36)

Diluted earnings per common share 4.83 3.27 1.56 48 5.08 (1.81) (36)

Dividends declared per common share 1.30 1.10 0.20 18 0.60 0.50 83

Balance sheet (period-end)

Debt securities 490,458 496,808 (6,350) (1) 537,531 (40,723) (8)

Loans 936,682 955,871 (19,189)

(2) 895,394 60,477 7

Allowance for credit losses for loans 15,088 13,609 1,479 11 13,788 (179) (1)

Equity securities 57,336 64,414 (7,078) (11) 72,886 (8,472) (12)

Assets (1) 1,932,468 1,881,020 51,448 3 1,948,073 (67,053) (3)

Deposits 1,358,173 1,383,985 (25,812) (2) 1,482,479 (98,494) (7)

Long-term debt 207,588 174,870 32,718 19 160,689 14,181 9

Common stockholders’ equity (1) 166,444 160,952 5,492 3 168,111 (7,159) (4)

Wells Fargo stockholders’ equity (1) 185,735 180,227 5,508 3 187,386 (7,159) (4)

Total equity (1) 187,443 182,213 5,230 3 189,889 (7,676) (4)

NM – Not meaningful

(1) In first quarter 2023, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to

the Accounting for Long-Duration Contracts. We adopted ASU 2018-12 with retrospective application, which required revision of prior period financial statements. For additional information, including

the financial statement line items impacted by the adoption of ASU 2018-12, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

(2) Includes provision for credit losses for loans, debt securities, and other financial assets.

Wells Fargo & Company 5

Table 2: Ratios and Per Common Share Data (1)

Year ended December 31,

2023 2022 2021

Performance ratios

Return on average assets (ROA) (2) 1.02% 0.72 1.14

Return on average equity (ROE) (3) 11.0 7.8 12.3

Return on average tangible common equity (ROTCE) (4) 13.1 9.3 14.8

Efficiency ratio (5) 67 77 68

Capital and other metrics (6)

Wells Fargo common stockholders’ equity to assets 8.61 8.56 8.63

Total equity to assets 9.70 9.69 9.75

Risk-based capital ratios and components:

Standardized Approach:

Common Equity Tier 1 (CET1) 11.43 10.60 11.35

Tier 1 capital 12.98 12.11 12.89

Total capital 15.67 14.82 15.84

Risk-weighted assets (RWAs) (in billions) $ 1,231.7 1,259.9 1,239.0

Advanced Approach:

Common Equity Tier 1 (CET1) 12.63% 12.00 12.60

Tier 1 capital 14.34 13.72 14.31

Total capital 16.40 15.94 16.72

Risk-weighted assets (RWAs) (in billions) $ 1,114.3 1,112.3 1,116.1

Tier 1 leverage ratio 8.50% 8.26 8.34

Supplementary Leverage Ratio (SLR) 7.09 6.86 6.89

Total Loss Absorbing Capacity (TLAC) Ratio (7) 25.05 23.27 23.03

Liquidity Coverage Ratio (LCR) (8) 125 122 118

Average balances:

Average Wells Fargo common stockholders’ equity to average assets 8.67 8.53 8.69

Average total equity to average assets 9.80 9.67 9.81

Per common share data

Dividend payout ratio (9) 26.9 33.6 11.8

Book value (10) $ 46.25 41.98 43.26

(1) In first quarter 2023, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to

the Accounting for Long-Duration Contracts. We adopted ASU 2018-12 with retrospective application, which required revision of prior period financial statements. Prior period risk-based capital and

certain other regulatory related metrics were not revised. For additional information, including the financial statement line items impacted by the adoption of ASU 2018-12, see Note 1 (Summary of

Significant Accounting Policies) to Financial Statements in this Report.

(2) Represents Wells Fargo net income divided by average assets.

(3) Represents Wells Fargo net income applicable to common stock divided by average common stockholders’ equity.

(4) Tangible common equity is a non-GAAP financial measure and represents total equity less preferred equity, noncontrolling interests, goodwill, certain identifiable intangible assets (other than

mortgage servicing rights) and goodwill and other intangibles on investments in consolidated portfolio companies, net of applicable deferred taxes. The methodology of determining tangible

common equity may differ among companies. Management believes that return on average tangible common equity, which utilizes tangible common equity, is a useful financial measure because it

enables management, investors, and others to assess the Company’s use of equity. For additional information, including a corresponding reconciliation to generally accepted accounting principles

(GAAP) financial measures, see the “Capital Management – Tangible Common Equity” section in this Report.

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

(6) See the “Capital Management” section and Note 26 (Regulatory Capital Requirements and Other Restrictions) to Financial Statements in this Report for additional information.

(7) Represents TLAC divided by risk-weighted assets (RWAs), which is our binding TLAC ratio, determined by using the greater of RWAs under the Standardized and Advanced Approaches.

(8) Represents average high-quality liquid assets divided by average projected net cash outflows, as each is defined under the LCR rule.

(9) Dividend payout ratio is dividends declared per common share as a percentage of diluted earnings per common share.

(10) Book value per common share is common stockholders’ equity divided by common shares outstanding.

Overview (continued)

6 Wells Fargo & Company

Earnings Performance

Wells Fargo net income for 2023 was $19.1billion ($4.83diluted

EPS), compared with $13.7 billion ($3.27diluted EPS) in 2022.

Net income increased in 2023, compared with 2022,

predominantly due to a $7.4 billion increase in net interest

income and a $1.6 billion decrease in noninterest expense,

partially offset by a $3.9billion increase in provision for credit

losses.

For a discussion of our 2022 financial results, compared with

2021, see the “Earnings Performance” section of our Annual

Report on Form 10-K for the year ended December31, 2022.

Net Interest Income

Net interest income is the interest earned on debt securities,

loans (including yield-related loan fees) and other interest-

earning assets minus the interest paid on deposits, short-term

borrowings and long-term debt. The net interest margin is the

average yield on earning assets minus the average interest rate

paid for deposits and our other sources of funding.

Net interest income and the net interest margin in any one

period can be significantly affected by a variety of factors

including the mix and overall size of our earning assets portfolio

and the cost of funding those assets. In addition, variable sources

of interest income, such as loan fees, periodic dividends, and

collection of interest on nonaccrual loans, can fluctuate from

period to period.

Net interest income and net interest margin increased in

2023, compared with 2022, driven by the impact of higher

interest rates, which resulted in both higher interest income on

interest-earning assets and higher interest expense for interest-

bearing deposits and long-term debt.

Table 3 presents the individual components of net interest

income and net interest margin. Net interest income and net

interest margin are presented on a taxable-equivalent basis in

Table 3 to consistently reflect income from taxable and tax-

exempt loans and debt and equity securities based on a 21%

federal statutory tax rate for the periods ended December31,

2023, 2022 and 2021.

Wells Fargo & Company 7

Table 3: Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) (1)

Year ended December 31,

2023 2022 2021

($ in millions)

Average

balance

Interest

income/

expense

Average

interest

rates

Average

balance

Interest

income/

expense

Average

interest

rates

Average

balance

Interest

income/

expense

Interest

rates

Assets

Interest-earning deposits with banks $ 149,401 6,973 4.67% $ 145,802 2,245 1.54% $ 236,281 314 0.13 %

Federal funds sold and securities purchased under resale

agreements 69,878 3,374 4.83 62,137 859 1.38 69,720 14 0.02

Debt securities:

Trading debt securities 104,588 3,805 3.64 91,515 2,490 2.72 88,282 2,107 2.39

Available-for-sale debt securities 142,743 5,365 3.76 141,404 3,167 2.24 189,237 2,924 1 . 5 5

Held-to-maturity debt securities 275,441 7,246 2.63 296,540 6,480 2.19 245,304 4,589 1.87

Total debt securities

522,772 16,416

3.14

529,459 12,137

2.29

522,823 9,620

1.84

Loans held for sale (2)

5,762 363

6.29

13,900 513

3.69

27,554 865

3.14

Loans:

Commercial and industrial – U.S. 307,953 20,941 6.80 291,996 11,293 3.87 252,025 6,526 2.59

Commercial and industrial – Non-U.S. 74,410 5,043 6.78 80,033 2,681 3.35 71,114 1,448 2.04

Commercial real estate mortgage 129,437 8,312 6.42 131,304 4,974 3.79 121,638 3,276 2.69

Commercial real estate construction 24,324 1,898 7.80 21,510 991 4.61 21,589 667

3.09

Lease financing 15,386 749 4.87 14,555 607 4.17 15,519 692 4.46

Total commercial loans 551,510 36,943 6.70 539,398 20,546 3.81 481,885 12,609 2.62

Residential mortgage – first lien 252,857 8,477 3.35 249,985 7,912 3.17 249,862 7,903 3.16

Residential mortgage – junior lien 12,074 836 6.92 14,703 729 4.95 19,710 818 4.15

Credit card 48,202 6,246 12.96 41,275 4,752 11.51 35,471 4,086 11.52

Auto 51,116 2,415 4.72 55,429 2,366 4.27 51,576 2,317 4.49

Other consumer 28,157 2,349 8.34 29,030 1,489 5.13 25,784 962 3.73

Total consumer loans 392,406 20,323 5.18 390,422 17,248 4.42 382,403 16,086 4.21

Total loans (2) 943,916 57,266 6.07 929,820 37,794 4.06 864,288 28,695 3.32

Equity securities 25,920 683 2.63 30,575 708 2.31 31,946 608 1.91

Other 9,638 463 4.80 13,275 204 1.54 10,052 6 0.06

Total interest-earning assets $ 1,727,287 85,538 4.95% $ 1,724,968 54,460 3.16% $ 1,762,664 40,122 2.28 %

Cash and due from banks 27,463 — 25,817 — 24,562 —

Goodwill 25,173 — 25,177 —

26,087 —

Other 105,552 — 118,341 — 128,750 —

Total noninterest-earning assets $ 158,188 — 169,335 — 179,399 —

Total assets $ 1,885,475 85,538 1,894,303 54,460 1,942,063 40,122

Liabilities

Deposits:

Demand deposits $ 418,542 6,947 1.66% $ 432,745 1,356 0.31% $ 450,131 127 0.03 %

Savings deposits 376,233 2,723 0.72 433,415 406 0.09 423,221 124 0.03

Time deposits 132,492 6,215 4.69 33,148 449 1.36 36,519 122 0.33

Deposits in non-U.S. offices 19,278 618 3.21 19,191 138 0.72 28,297 15 0.05

Total interest-bearing deposits 946,545 16,503 1.74 918,499 2,349 0.26 938,168 388 0.04

Short-term borrowings:

Federal funds purchased and securities sold under

agreements to repurchase 65,696 3,313 5.04 24,553 407 1.66 35,245 8 0.02

Other short-term borrowings 15,337 535 3.49 15,257 175 1.15 12,020 (48) (0.41)

Total short-term borrowings 81,033 3,848 4.75 39,810 582 1.46 47,265 (40) (0.09)

Long-term debt 180,464 11,572 6.41 157,742 5,505 3.49 178,742 3,173 1.78

Other liabilities 32,950 820 2.49 34,126 638 1.87 28,809 395 1.37

Total interest-bearing liabilities $ 1,240,992 32,743 2.64% $ 1,150,177 9,074 0.79% $ 1,192,984 3,916 0.33 %

Noninterest-bearing demand deposits 399,737 — 505,770 — 499,644 —

Other noninterest-bearing liabilities 59,886 — 55,189 — 58,933 —

Total noninterest-bearing liabilities $ 459,623 — 560,959 — 558,577 —

Total liabilities $ 1,700,615 32,743 1,711,136 9,074 1,751,561 3,916

Total equity 184,860 — 183,167 — 190,502 —

Total liabilities and equity $ 1,885,475 32,743 1,894,303 9,074 1,942,063 3,916

Interest rate spread on a taxable-equivalent basis (3) 2.31% 2.37% 1.95 %

Net interest margin and net interest income on a

taxable-equivalent basis (3) $ 52,795 3.06% $ 45,386 2.63% $ 36,206 2.05 %

(1) The average balance amounts represent amortized costs, except for certain held-to-maturity (HTM) debt securities, which exclude unamortized basis adjustments related to the transfer of those

securities from available-for-sale (AFS) debt securities. The average interest rates are based on interest income or expense amounts for the period and are annualized. Interest rates and amounts

include the effects of hedge and risk management activities associated with the respective asset and liability categories.

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

(3) Includes taxable-equivalent adjustments of $420 million, $436 million, and $427 million for the years ended December31, 2023, 2022 and 2021, respectively, predominantly related to tax-exempt

income on certain loans and securities.

Earnings Performance (continued)

8 Wells Fargo & Company

Table 4 allocates the changes in net interest income on a

taxable-equivalent basis to changes in either average balances or

average rates for both interest-earning assets and interest-

bearing liabilities. Because of the numerous simultaneous volume

and rate changes during any period, it is not possible to precisely

allocate such changes between volume and rate. For this table,

changes that are not solely due to either volume or rate are

allocated to these categories on a pro-rata basis based on the

absolute value of the change due to average volume and average

rate.

Table 4: Analysis of Changes in Net Interest Income

Year ended December 31,

2023 vs. 2022 2022 vs. 2021

(in millions) Volume Rate Total Volume Rate Total

Increase (decrease) in interest income:

Interest-earning deposits with banks $ 56 4,672 4,728 (162) 2,093 1,931

Federal funds sold and securities purchased under resale agreements 120 2,395 2,515 (2) 847 845

Debt securities:

Trading debt securities 391 924 1,315 80 303 383

Available-for-sale debt securities 30 2,168 2,198 (858) 1,101 243

Held-to-maturity debt securities (482) 1,248 766 1,039 852 1,891

Total debt securities (61) 4,340 4,279 261 2,256 2,517

Loans held for sale (396) 246 (150) (484) 132 (352)

Loans:

Commercial and industrial – U.S. 650 8,998 9,648 1,158 3,609 4,767

Commercial and industrial – Non-U.S. (200) 2,562 2,362 201 1,032 1,233

Commercial real estate mortgage (72) 3,410 3,338 276 1,422 1,698

Commercial real estate construction 144 763 907 (2) 326 324

Lease financing 36 106 142 (42) (43) (85)

Total commercial loans 558 15,839 16,397 1,591 6,346 7,937

Residential mortgage – first lien 95 470 565 1 8 9

Residential mortgage – junior lien (146) 253 107 (230) 141 (89)

Credit card 854 640 1,494 670 (4) 666

Auto (191) 240 49 166 (117) 49

Other consumer (46)

906 860 132 395 527

Total consumer loans 566 2,509 3,075 739 423 1,162

Total loans 1,124 18,348 19,472 2,330 6,769 9,099

Equity securities (116) 91 (25) (26) 126 100

Other (70) 329 259 3 195 198

Total increase in interest income $ 657 30,421 31,078 1,920 12,418 14,338

Increase (decrease) in interest expense:

Deposits:

Demand deposits $ (46) 5,637 5,591 (5) 1,234 1,229

Savings deposits (58) 2,375 2,317 3 279 282

Time deposits 3,173 2,593 5,766 (12) 339 327

Deposits in non-U.S. offices 1 479 480 (7) 130 123

Total interest-bearing deposits 3,070 11,084 14,154 (21) 1,982 1,961

Short-term borrowings:

Federal funds purchased and securities sold under agreements to

repurchase 1,312 1,594 2,906 (3) 402 399

Other short-term borrowings 1 359 360 (10) 233 223

Total short-term borrowings 1,313 1,953 3,266 (13) 635 622

Long-term debt 891 5,176 6,067 (412) 2,744 2,332

Other liabilities (23) 205 182 82 161 243

Total increase (decrease) in interest expense 5,251 18,418 23,669 (364) 5,522 5,158

Increase (decrease) in net interest income on a taxable-equivalent basis $ (4,594) 12,003 7,409 2,284 6,896 9,180

Wells Fargo & Company 9

Noninterest Income

Table 5: Noninterest Income

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Deposit-related fees $ 4,694 5,316 (622) (12) % $ 5,475 (159) (3) %

Lending-related fees 1,446 1,397 49 4 1,445 (48) (3)

Investment advisory and other asset-based fees 8,670 9,004 (334) (4) 11,011 (2,007) (18)

Commissions and brokerage services fees 2,375 2,242 133 6 2,299 (57) (2)

Investment banking fees 1,649 1,439 210 1 5 2,354 (915) (39)

Card fees 4,256 4,355 (99) (2) 4,175 180 4

Net servicing income 436 533 (97) (18) 194 339 175

Net gains on mortgage loan originations/sales 393 850 (457) (54) 4,762 (3,912) (82)

Mortgage banking 829 1,383 (554) (40) 4,956 (3,573) (72)

Net gains from trading activities 4,799 2,116 2,683 127 284 1,832 645

Net gains from debt securities 10 151 (141) (93) 553 (402) (73)

Net gains (losses) from equity securities (441) (806) 365 4 5 6,427 (7,233) NM

Lease income 1,237 1,269 (32) (3) 996 273 27

Other 698 1,552 (854) (55) 3,412 (1,860) (55)

Total $ 30,222 29,418 804 3 $ 43,387 (13,969) (32)

NM – Not meaningful

Full year 2023 vs. full year 2022

Deposit-related fees decreased reflecting:

• our efforts to help customers avoid overdraft fees; and

• lower fees on commercial accounts driven by higher earnings

credits due to an increase in interest rates.

Investment advisory and other asset-based fees decreased

reflecting net outflows of advisory assets and lower market

valuations.

Fees from the majority of Wealth and Investment

Management (WIM) advisory assets are based on a percentage

of the market value of the assets at the beginning of the quarter.

For additional information on certain client investment assets,

see the “Earnings Performance – Operating Segment Results –

Wealth and Investment Management – WIM Advisory Assets”

section in this Report.

Commissions and brokerage services fees increased due to

higher service fee rates and higher transactional revenue.

Investment banking fees increased due to increased activity

across all products, as well as a write-down on unfunded

leveraged finance commitments in 2022.

Net servicing income decreased driven by:

• lower servicing fees due to a lower balance of mortgage

loans serviced for others, including the impact of MSR sales;

partially offset by:

• higher income from net hedge results related to MSR

valuations.

Net gains on mortgage loan originations/sales decreased

due to lower residential mortgage origination volumes related to

higher interest rates and our more focused strategy for Home

Lending, including our exit from the correspondent business.

For additional information on net servicing income and net

gains on mortgage loan originations/sales, see Note 6 (Mortgage

Banking Activities) to Financial Statements in this Report.

Net gains from trading activities increased driven by improved

trading results across all asset classes.

Net gains from debt securities decreased due to lower gains on

sales of asset-based securities and municipal bonds in our

investment portfolio as a result of decreased sales volumes.

Net losses from equity securities decreased reflecting:

• lower impairment of equity securities; and

• higher unrealized gains on marketable equity securities;

partially offset by:

• lower unrealized and realized gains on nonmarketable equity

securities driven by our venture capital and private equity

investments.

Other income decreased driven by the change in fair value of

liabilities associated with our reinsurance business, which was

recognized as a result of our adoption of ASU 2018-12 in first

quarter 2023. For additional information on our adoption of ASU

2018-12, see Note 1 (Summary of Significant Accounting

Policies) to Financial Statements in this Report.

Earnings Performance (continued)

10 Wells Fargo & Company

Noninterest Expense

Table 6: Noninterest Expense

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Personnel $ 35,829 34,340 1,489 4% $ 35,541 (1,201) (3) %

Technology, telecommunications and equipment 3,920 3,375 545 16 3,227 148 5

Occupancy 2,884 2,881 3 — 2,968 (87) (3)

Operating losses (1) 1,183 6,984 (5,801) (83) 1,568 5,416 345

Professional and outside services 5,085 5,188 (103) (2) 5,723 (535) (9)

Leases (2) 697 750 (53) (7) 867 (117) (13)

Advertising and promotion 812 505 307 61 600 (95) (16)

Other 5,152 3,182 1,970 62 3,264 (82) (3)

Total $ 55,562 57,205 (1,643) (3) $ 53,758 3,447 6

(1) Includes expenses for legal actions of $179 million, $3.3 billion, and $341 million for the years ended December31, 2023, 2022 and 2021, respectively, and expenses for customer remediation

activities of $207 million, $2.7 billion, and $536million for the years ended December31, 2023, 2022 and 2021, respectively.

(2) Represents expenses for assets we lease to customers.

Full year 2023 vs. full year 2022

Personnel expense increased due to:

• higher severance expense for planned actions; and

• higher incentive compensation expense;

partially offset by:

• lower revenue-related compensation expense driven by

lower origination volumes in Home Lending.

For additional information on personnel expense, see

Note 21 (Revenue and Expenses) to Financial Statements in this

Report.

Technology, telecommunications and equipment expense

increased due to higher expense for software maintenance and

licenses and for the amortization of internally developed

software.

Operating losses decreased driven by:

• lower expense for legal actions, compared with higher

expense in 2022 that included amounts related to the

December 2022 CFPB consent order. For additional

information on legal actions, see Note 13 (Legal Actions) to

Financial Statements in this Report; and

• lower expense for customer remediation activities,

compared with higher expense in 2022 that included

amounts related to the further refinement of the scope of

remediation for historical mortgage lending, automobile

lending, and consumer deposit accounts matters. Expenses

for customer remediation activities in 2023 were lower

related to matters that had lower estimated costs and

complexity than historical matters. For additional

information on customer remediation activities, see the

“Overview” section above.

As previously disclosed, we have outstanding legal actions

and customer remediation activities that could impact operating

losses in the coming quarters.

For additional information on operating losses, see Note 21

(Revenue and Expenses) to Financial Statements in this Report.

Advertising and promotion expense increased due to higher

marketing volume.

Other expense increased reflecting a $1.9billion FDIC special

assessment. For additional information on the FDIC’s special

assessment, see Note 21 (Revenue and Expenses) to Financial

Statements in this Report.

Income Tax Expense

Table 7: Income Tax Expense

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Income before income tax expense $ 21,636 15,629 6,007 38% 29,563 (13,934) (47%)

Income tax expense 2,607 2,251 356 16 5,764 (3,513) (61)

Effective income tax rate (1) 12.0% 14.1 20.7

(1) Represents (i) Income tax expense (benefit) divided by (ii) Income (loss) before income tax expense (benefit) less Net income (loss) from noncontrolling interests.

Income tax expense for 2023, compared with 2022,

increased due to higher pre-tax income, partially offset by the

impact of discrete tax benefits related to the resolution of prior

period tax matters. The effective income tax rate for 2023,

compared with 2022, decreased primarily due to the impact of

discrete tax benefits related to the resolution of prior period tax

matters.

For additional information on income taxes, see Note 23

(Income Taxes) to Financial Statements in this Report.

Wells Fargo & Company 11

Operating Segment Results

Our management reporting is organized into four reportable

operating segments: Consumer Banking and Lending;

Commercial Banking; Corporate and Investment Banking; and

Wealth and Investment Management. All other business

activities that are not included in the reportable operating

segments have been included in Corporate. For additional

information, see Table 8. We define our reportable operating

segments by type of product and customer segment, and their

results are based on our management reporting process. The

management reporting process measures the performance of

the reportable operating segments based on the Company’s

management structure, and the results are regularly reviewed

with our Chief Executive Officer and relevant senior

management. The management reporting process is based on

U.S. GAAP and includes specific adjustments, such as funds

transfer pricing for asset/liability management, shared revenue

and expenses, and taxable-equivalent adjustments to

consistently reflect income from taxable and tax-exempt

sources, which allows management to assess performance

consistently across the operating segments.

Funds Transfer Pricing Corporate treasury manages a funds

transfer pricing methodology that considers interest rate risk,

liquidity risk, and other product characteristics. Operating

segments pay a funding charge for their assets and receive a

funding credit for their deposits, both of which are included in

net interest income. The net impact of the funding charges or

credits is recognized in corporate treasury.

Revenue and Expense Sharing When lines of business jointly

serve customers, the line of business that is responsible for

providing the product or service recognizes revenue or expense

with a referral fee paid or an allocation of cost to the other line of

business based on established internal revenue-sharing

agreements.

When a line of business uses a service provided by another

line of business or enterprise function (included in Corporate),

expense is generally allocated based on the cost and use of the

service provided. We periodically assess and update our revenue

and expense allocation methodologies.

Taxable-Equivalent Adjustments Taxable-equivalent

adjustments related to tax-exempt income on certain loans and

debt securities are included in net interest income, while taxable-

equivalent adjustments related to income tax credits for low-

income housing and renewable energy investments are included

in noninterest income, in each case with corresponding impacts

to income tax expense (benefit). Adjustments are included in

Corporate, Commercial Banking, and Corporate and Investment

Banking and are eliminated to reconcile to the Company’s

consolidated financial results.

Allocated Capital Reportable operating segments are allocated

capital under a risk-sensitive framework that is primarily based

on aspects of our regulatory capital requirements, and the

assumptions and methodologies used to allocate capital are

periodically assessed and updated. Effective January1, 2023,

management modified its capital allocation methodology to

improve alignment of allocated capital with the binding

regulatory constraints of the Company. Management believes

that return on allocated capital is a useful financial measure

because it enables management, investors, and others to assess

a reportable operating segment’s use of capital.

Selected Metrics We present certain financial and nonfinancial

metrics that management uses when evaluating reportable

operating segment results. Management believes that these

metrics are useful to investors and others to assess the

performance, customer growth, and trends of reportable

operating segments or lines of business.

Table 8: Management Reporting Structure

Wells Fargo & Company

Consumer

Banking and

Lending

• Consumer, Small

and Business

Banking

• Home Lending

• Credit Card

• Auto

• Personal Lending

Commercial

Banking

• Middle Market

Banking

• Asset-Based

Lending and Leasing

Corporate and

Investment

Banking

• Banking

• Commercial Real

Estate

• Markets

Wealth and

Investment

Management

• Wells Fargo

Advisors

• The Private

Bank

Corporate

• Corporate

Treasury

• Enterprise

Functions

• Investment

Portfolio

• Venture capital

and private equity

investments

• Non-strategic

businesses

Earnings Performance (continued)

12 Wells Fargo & Company

Table 9 and the following discussion present our results by

reportable operating segment. For additional information, see

Note 20 (Operating Segments) to Financial Statements in this

Report.

Table 9: Operating Segment Results – Highlights

(in millions)

Consumer

Banking and

Lending

Commercial

Banking

Corporate and

Investment

Banking

Wealth and

Investment

Management Corporate (1)

Reconciling

Items (2)

Consolidated

Company

Year ended December 31, 2023

Net interest income $ 30,185 10,034 9,498 3,966 (888) (420) 52,375

Noninterest income 7,734 3,415 9,693 10,725 431 (1,776) 30,222

Total revenue 37,919 13,449 19,191 14,691 (457) (2,196) 82,597

Provision for credit losses 3,299 75 2,007 6 12 — 5,399

Noninterest expense 24,024 6,555 8,618 12,064 4,301 — 55,562

Income (loss) before income tax expense (benefit) 10,596 6,819 8,566 2,621 (4,770) (2,196) 21,636

Income tax expense (benefit) 2,657 1,704 2,140 657 (2,355) (2,196) 2,607

Net income (loss) before noncontrolling interests 7,939 5,115 6,426 1,964 (2,415) — 19,029

Less: Net income (loss) from noncontrolling

interests — 11 — — (124) — (113)

Net income (loss) $ 7,939 5,104 6,426 1,964 (2,291) — 19,142

Year ended December 31, 2022

Net interest income $ 27,044 7,289 8,733 3,927 (1,607) (436) 44,950

Noninterest income 8,766 3,631 6,509 10,895 1,192 (1,575) 29,418

Total revenue 35,810 10,920 15,242 14,822 (415) (2,011) 74,368

Provision for credit losses 2,276 (534) (185) (25) 2 — 1,534

Noninterest expense 26,277 6,058 7,560 11,613 5,697 — 57,205

Income (loss) before income tax expense (benefit) 7,257

5,396 7,867 3,234 (6,114) (2,011) 15,629

Income tax expense (benefit) 1,816 1,366 1,989 812 (1,721) (2,011) 2,251

Net income (loss) before noncontrolling interests 5,441 4,030 5,878 2,422 (4,393) — 13,378

Less: Net income (loss) from noncontrolling

interests — 12 — — (311) — (299)

Net income (loss) $ 5,441 4,018 5,878 2,422 (4,082) — 13,677

Year ended December 31, 2021

Net interest income $ 22,807 4,960 7,410 2,570 (1,541) (427) 35,779

Noninterest income 12,070 3,589 6,429 11,776 10,710 (1,187) 43,387

Total revenue 34,877 8,549 13,839 14,346 9,169 (1,614) 79,166

Provision for credit losses (1,178) (1,500) (1,439) (95) 57 — (4,155)

Noninterest expense 24,648 5,862 7,200 11,734 4,314 — 53,758

Income (loss) before income tax expense (benefit) 11,407 4,187 8,078 2,707 4,798 (1,614) 29,563

Income tax expense (benefit) 2,852 1,045 2,019 680 782 (1,614) 5,764

Net income before noncontrolling interests 8,555 3,142 6,059 2,027 4,016 — 23,799

Less: Net income (loss) from noncontrolling

interests — 8 (3) — 1,685 — 1,690

Net income $ 8,555 3,134 6,062 2,027 2,331 — 22,109

(1) All other business activities that are not included in the reportable operating segments have been included in Corporate. For additional information, see the “Corporate” section below.

(2) Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax

credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are

included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.

Wells Fargo & Company 13

Consumer Banking and Lending offers diversified financial

products and services for consumers and small businesses with

annual sales generally up to $10 million. These financial products

and services include checking and savings accounts, credit and

debit cards, as well as home, auto, personal, and small business

lending. Table 9a and Table 9b provide additional information for

Consumer Banking and Lending.

Table 9a: Consumer Banking and Lending – Income Statement and Selected Metrics

Year ended December 31,

($ in millions, unless otherwise noted) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Income Statement

Net interest income $ 30,185 27,044 3,141 12% $ 22,807 4,237 19 %

Noninterest income:

Deposit-related fees 2,702 3,093 (391) (13) 3,045 48 2

Card fees 3,967 4,067 (100) (2) 3,930 137 3

Mortgage banking 512 1,100 (588) (53) 4,490 (3,390) (76)

Other 553 506 47 9 605 (99) (16)

Total noninterest income 7,734 8,766 (1,032) (12) 12,070 (3,304) (27)

Total revenue 37,919 35,810 2,109 6 34,877 933 3

Net charge-offs 2,784 1,693 1,091 64 1,439 254 18

Change in the allowance for credit losses 515 583 (68) (12) (2,617) 3,200 122

Provision for credit losses 3,299 2,276 1,023 4 5 (1,178) 3,454 293

Noninterest expense 24,024 26,277 (2,253) (9) 24,648 1,629 7

Income before income tax expense 10,596 7,257 3,339 46 11,407 (4,150) (36)

Income tax expense 2,657 1,816 841 46 2,852 (1,036) (36)

Net income $ 7,939 5,441 2,498 46 $ 8,555 (3,114) (36)

Revenue by Line of Business

Consumer, Small and Business Banking $ 26,384 23,421 2,963 13 $ 18,958 4,463 24

Consumer Lending:

Home Lending

3,389 4,221 (832) (20) 8,154 (3,933) (48)

Credit Card 5,347 5,271 76 1 4,928 343 7

Auto 1,464 1,716 (252) (15) 1,733 (17) (1)

Personal Lending 1,335 1,181 154 13 1,104 77 7

Total revenue $ 37,919 35,810 2,109 6 $ 34,877 933 3

Selected Metrics

Consumer Banking and Lending:

Return on allocated capital (1) 17.5% 10.8 17.2 %

Efficiency ratio (2) 63 73 71

Retail bank branches (#, period-end) 4,311 4,598 (6) 4,777 (4)

Digital active customers (# in millions, period-end) (3) 34.8 33.5 4 33.0 2

Mobile active customers (# in millions, period-end) (3) 29.9 28.3 6 27.3 4

Consumer, Small and Business Banking:

Deposit spread (4) 2.6% 2.0 1.5 %

Debit card purchase volume ($ in billions) (5) $ 492.8 486.6 6.2 1 $ 471.5 15.1 3

Debit card purchase transactions (# in millions) (5) 10,000 9,852 2 9,808 —

(continued on following page)

Earnings Performance (continued)

14 Wells Fargo & Company

(continued from previous page)

Year ended December 31,

($ in millions, unless otherwise noted) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Home Lending:

Mortgage banking:

Net servicing income $ 300 368 (68) (18) % $ 35 333 951 %

Net gains on mortgage loan originations/sales 212 732 (520) (71) 4,455 (3,723) (84)

Total mortgage banking $ 512 1,100 (588) (53) $ 4,490 (3,390) (76)

Originations ($ in billions):

Retail $ 24.2 64.3 (40.1) (62) $ 138.5 (74.2) (54)

Correspondent 1.1 43.8 (42.7) (97) 66.5 (22.7) (34)

Total originations $ 25.3 108.1 (82.8) (77) $ 205.0 (96.9) (47)

% of originations held for sale (HFS) 44.6 % 52.5 64.6 %

Third-party mortgage loans serviced ($ in billions, period-

end) (6)

$ 559.7 679.2 (119.5) (18) $ 716.8 (37.6) (5)

Mortgage servicing rights (MSR) carrying value (period-end) 7,468 9,310 (1,842) (20) 6,920 2,390 3 5

Ratio of MSR carrying value (period-end) to third-party

mortgage loans serviced (period-end) (6)

1.33 % 1.37 0.97 %

Home lending loans 30+ days delinquency rate (period-end)

(7)(8)(9)

0.32 0.31 0.39

Credit Card:

Point of sale (POS) volume ($ in billions) $ 136.4 119.1 17.3 1 5 $ 95.3 23.8 2 5

New accounts (# in thousands) 2,547 2,153 18 1,640 31

Credit card loans 30+ days delinquency rate (period-end) (8) 2.89 % 2.08 1.52 %

Credit card loans 90+ days delinquency rate (period-end) (8) 1.48 1.01 0.72

Auto:

Auto originations ($ in billions) $ 17.2 23.1 (5.9) (26) $ 33.9 (10.8) (32)

Auto loans 30+ days delinquency rate (period-end) (8)(9) 2.80 % 2.64 1.84 %

Personal Lending:

New volume ($ in billions) $ 11.9 12.6

(0.7) (6) $ 9.8 2.8 29

(1) Return on allocated capital is segment net income (loss) applicable to common stock divided by segment average allocated capital. Segment net income (loss) applicable to common stock is segment

net income (loss) less allocated preferred stock dividends.

(2) Efficiency ratio is segment noninterest expense divided by segment total revenue (net interest income and noninterest income).

(3) Digital and mobile active customers is based on the number of consumer and small business customers who have logged on via a digital or mobile device, respectively, in the prior 90 days. Digital

active customers includes both online and mobile customers.

(4) Deposit spread is (i) the internal funds transfer pricing credit on segment deposits minus interest paid to customers for segment deposits, divided by (ii) average segment deposits.

(5) Debit card purchase volume and transactions reflect combined activity for both consumer and business debit card purchases.

(6) Excludes residential mortgage loans subserviced for others.

(7) Excludes residential mortgage loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA).

(8) Excludes loans held for sale.

(9) Excludes nonaccrual loans.

Full year 2023 vs. full year 2022

Revenue increased driven by:

• higher net interest income driven by higher interest rates

and deposit spreads, partially offset by lower deposit

balances;

partially offset by:

• lower mortgage banking noninterest income due to lower

residential mortgage origination volumes related to higher

interest rates and our more focused strategy for Home

Lending, including our exit from the correspondent business,

as well as lower servicing income, including the impact of

MSR sales; and

• lower deposit-related fees reflecting our efforts to help

customers avoid overdraft fees.

Provision for credit losses increased driven by credit card loan

growth.

Noninterest expense decreased due to:

• lower operating losses driven by lower expense for legal

actions and customer remediation activities; and

• lower personnel expense driven by the impact of efficiency

initiatives, as well as lower revenue-related compensation

expense due to lower origination volumes in Home Lending;

partially offset by:

• higher advertising costs due to higher marketing volume.

Wells Fargo & Company 15

Table 9b: Consumer Banking and Lending – Balance Sheet

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Selected Balance Sheet Data (average)

Loans by Line of Business:

Consumer, Small and Business Banking $ 9,104 10,132 (1,028) (10) % $ 16,625 (6,493) (39) %

Consumer Lending:

Home Lending 219,601 219,157 444 — 224,446 (5,289) (2)

Credit Card 40,530 34,151 6,379 19 29,052 5,099 18

Auto 51,689 55,994 (4,305) (8) 52,293 3,701 7

Personal Lending 14,996 12,999 1,997 1 5 11,469 1,530 13

Total loans $ 335,920 332,433 3,487 1 $ 333,885 (1,452) —

Total deposits 811,091 883,130 (72,039) (8) 834,739 48,391 6

Allocated capital 44,000 48,000 (4,000) (8) 48,000 — —

Selected Balance Sheet Data (period-end)

Loans by Line of Business:

Consumer, Small and Business Banking $ 9,042 9,704 (662) (7) $ 11,270 (1,566) (14)

Consumer Lending:

Home Lending 215,823 223,525 (7,702) (3) 214,407 9,118 4

Credit Card 44,428 38,475 5,953 1 5 31,671 6,804 21

Auto 48,283 54,281 (5,998) (11) 57,260 (2,979) (5)

Personal Lending 15,291 14,544 747 5 11,966 2,578 22

Total loans $ 332,867 340,529 (7,662) (2) $ 326,574 13,955 4

Total deposits 782,309 859,695 (77,386) (9) 883,674 (23,979)

(3)

Full year 2023 vs. full year 2022

Total loans (average) increased due to:

• higher loan balances in our Credit Card business driven by

higher point of sale volume and the impact of new product

launches; and

• higher loan balances in our Personal Lending business;

partially offset by:

• a decline in loan balances in our Auto business due to lower

origination volumes reflecting credit tightening actions; and

• a decline in Paycheck Protection Program loans in Consumer,

Small and Business Banking.

Total loans (period-end) decreased driven by:

• a decline in loan balances in our Home Lending business

driven by a decrease in residential mortgage origination

volumes related to higher interest rates and our more

focused strategy for Home Lending, including our exit from

the correspondent business; and

• a decline in loan balances in our Auto business due to lower

origination volumes reflecting credit tightening actions;

partially offset by:

• higher loan balances in our Credit Card business driven by

higher point of sale volume and the impact of new product

launches.

Total deposits (average and period-end) decreased due to

consumer deposit outflows on consumer spending, as well as

customer migration to higher yielding alternatives.

Earnings Performance (continued)

16 Wells Fargo & Company

Commercial Banking provides financial solutions to private,

family owned and certain public companies. Products and

services include banking and credit products across multiple

industry sectors and municipalities, secured lending and lease

products, and treasury management. Table 9c and Table 9d

provide additional information for Commercial Banking.

Table 9c: Commercial Banking – Income Statement and Selected Metrics

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Income Statement

Net interest income $ 10,034 7,289 2,745 38% $ 4,960 2,329 47 %

Noninterest income:

Deposit-related fees 998 1,131 (133) (12) 1,285 (154) (12)

Lending-related fees 531 491 40 8 532 (41) (8)

Lease income 644 710 (66) (9) 682 28 4

Other 1,242 1,299 (57) (4) 1,090 209 19

Total noninterest income 3,415 3,631 (216) (6) 3,589 42 1

Total revenue 13,449 10,920 2,529 23 8,549 2,371 28

Net charge-offs 96 4 92 NM 101 (97) (96)

Change in the allowance for credit losses (21) (538) 517 96 (1,601) 1,063 66

Provision for credit losses 75 (534) 609 114 (1,500) 966 64

Noninterest expense 6,555 6,058 497 8 5,862 196 3

Income before income tax expense 6,819 5,396 1,423 26 4,187 1,209 29

Income tax expense 1,704 1,366 338 2 5 1,045 321 31

Less: Net income from noncontrolling interests 11 12 (1) (8) 8 4 5 0

Net income $ 5,104 4,018 1,086 27 $ 3,134 884 28

Revenue by Line of Business

Middle Market Banking $ 8,762

6,574 2,188 33 $ 4,642 1,932 42

Asset-Based Lending and Leasing 4,687 4,346 341 8 3,907 439 11

Total revenue $ 13,449 10,920 2,529 23 $ 8,549 2,371 28

Revenue by Product

Lending and leasing $ 5,314 5,253 61 1 $ 4,835 418 9

Treasury management and payments 6,214 4,483 1,731 39 2,825 1,658 5 9

Other 1,921 1,184 737 62 889 295 33

Total revenue $ 13,449 10,920 2,529 23 $ 8,549 2,371 28

Selected Metrics

Return on allocated capital 19.1 % 19.7 15.1 %

Efficiency ratio 49 5 5 69

NM – Not meaningful

Full year 2023 vs. full year 2022

Revenue increased driven by:

• higher net interest income reflecting higher interest rates

and higher loan balances, partially offset by lower deposit

balances;

partially offset by:

• lower deposit-related fees driven by the impact of higher

earnings credits, which resulted in lower fees for commercial

customers; and

• lower other noninterest income due to lower net gains from

equity securities, partially offset by higher revenue from

renewable energy investments.

Provision for credit losses reflected loan growth.

Noninterest expense increased due to higher operating costs

and personnel expense, including severance expense, partially

offset by the impact of efficiency initiatives.

Wells Fargo & Company 17

Table 9d: Commercial Banking – Balance Sheet

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Selected Balance Sheet Data (average)

Loans:

Commercial and industrial $ 164,062 147,379 16,683 11% $ 120,396 26,983 22 %

Commercial real estate 45,705 45,130 575 1 47,018 (1,888) (4)

Lease financing and other 14,335 13,523 812 6 13,823 (300) (2)

Total loans $ 224,102 206,032 18,070 9 $ 181,237 24,795 14

Loans by Line of Business:

Middle Market Banking $ 120,819 114,634 6,185 5 $ 102,882 11,752 11

Asset-Based Lending and Leasing 103,283 91,398 11,885 13 78,355 13,043 17

Total loans $ 224,102 206,032 18,070 9 $ 181,237 24,795 14

Total deposits 165,235 186,079 (20,844) (11) 197,269 (11,190) (6)

Allocated capital 25,500 19,500 6,000 31 19,500 — —

Selected Balance Sheet Data (period-end)

Loans:

Commercial and industrial $ 163,797 163,797 — — $ 131,078 32,719 2 5

Commercial real estate 45,534 45,816 (282) (1) 45,467 349 1

Lease financing and other 15,443 13,916 1,527 11 13,803 113 1

Total loans $ 224,774 223,529 1,245 1 $ 190,348 33,181 17

Loans by Line of Business:

Middle Market Banking $ 118,482 121,192 (2,710) (2) $ 106,834 14,358 13

Asset-Based Lending and Leasing 106,292 102,337 3,955 4 83,514 18,823 23

Total loans $ 224,774 223,529 1,245 1 $ 190,348 33,181 17

Total deposits 162,526 173,942 (11,416) (7) 205,428 (31,486) (15)

Full year 2023 vs. full year 2022

Total loans (average) increased driven by loan growth and higher

average line utilization in Asset-Based Lending and Leasing.

Total loans (period-end) increased driven by loan growth in

Asset-Based Lending and Leasing due to an increase in client

working capital needs, partially offset by lower line utilization for

commercial and industrial loans in Middle Market Banking.

Total deposits (average and period-end) decreased due to

customer migration to higher yielding alternatives, partially

offset by additions of deposits from new and existing customers.

Earnings Performance (continued)

18 Wells Fargo & Company

Corporate and Investment Banking delivers a suite of capital

markets, banking, and financial products and services to

corporate, commercial real estate, government and institutional

clients globally. Products and services include corporate banking,

investment banking, treasury management, commercial real

estate lending and servicing, equity and fixed income solutions as

well as sales, trading, and research capabilities. Table 9e and

Table 9f provide additional information for Corporate and

Investment Banking.

Table 9e: Corporate and Investment Banking – Income Statement and Selected Metrics

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Income Statement

Net interest income $ 9,498 8,733 765 9% $ 7,410 1,323 18 %

Noninterest income:

Deposit-related fees 976 1,068 (92) (9) 1,112 (44) (4)

Lending-related fees 790 769 21 3 761 8 1

Investment banking fees 1,738 1,492 246 16 2,405 (913) (38)

Net gains from trading activities 4,553 1,886 2,667 141 272 1,614 593

Other 1,636 1,294 342 26 1,879 (585) (31)

Total noninterest income 9,693 6,509 3,184 49 6,429 80 1

Total revenue 19,191 15,242 3,949 26 13,839 1,403 10

Net charge-offs 581 (48) 629 NM (22) (26) NM

Change in the allowance for credit losses 1,426 (137) 1,563 NM (1,417) 1,280 90

Provision for credit losses 2,007 (185) 2,192 NM (1,439) 1,254 87

Noninterest expense 8,618 7,560 1,058 14 7,200 360 5

Income before income tax expense 8,566 7,867 699 9 8,078 (211) (3)

Income tax expense 2,140 1,989 151 8 2,019 (30) (1)

Less: Net loss from noncontrolling interests — — — — (3) 3 100

Net income $ 6,426 5,878

548 9 $ 6,062 (184) (3)

Revenue by Line of Business

Banking:

Lending $ 2,872 2,222 650 29 $ 1,948 274 14

Treasury Management and Payments 3,036 2,369 667 28 1,468 901 61

Investment Banking 1,404 1,206 198 16 1,654 (448) (27)

Total Banking 7,312 5,797 1,515 26 5,070 727 14

Commercial Real Estate 5,311 4,534 777 17 3,963 571 14

Markets:

Fixed Income, Currencies, and Commodities (FICC) 4,688 3,660 1,028 28 3,710 (50) (1)

Equities 1,809 1,115 694 62 897 218 24

Credit Adjustment (CVA/DVA) and Other 65 20 45 225 91 (71) (78)

Total Markets 6,562 4,795 1,767 37 4,698 97 2

Other 6 116 (110) (95) 108 8 7

Total revenue $ 19,191 15,242 3,949 26 $ 13,839 1,403 10

Selected Metrics

Return on allocated capital 13.8 % 15.3 16.9 %

Efficiency ratio 45 5 0 5 2

NM – Not meaningful

Full year 2023 vs. full year 2022

Revenue increased driven by:

• higher net gains from trading activities driven by improved

trading results across all asset classes;

• higher net interest income reflecting higher interest rates;

and

• higher investment banking fees due to increased activity

across all products, as well as a write-down on unfunded

leveraged finance commitments in 2022.

Provision for credit losses increased reflecting a $1.6billion

increase in the allowance for credit losses driven by commercial

real estate office loans.

Noninterest expense increased driven by higher operating costs

and personnel expense, including severance expense, partially

offset by the impact of efficiency initiatives.

Wells Fargo & Company 19

Table 9f: Corporate and Investment Banking – Balance Sheet

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Selected Balance Sheet Data (average)

Loans:

Commercial and industrial $ 191,602 198,424 (6,822) (3) % $ 170,713 27,711 16 %

Commercial real estate 100,373 98,560 1,813 2 86,323 12,237 14

Total loans $ 291,975 296,984 (5,009) (2) $ 257,036 39,948 16

Loans by Line of Business:

Banking $ 95,783 106,440 (10,657) (10) $ 93,766 12,674 14

Commercial Real Estate 135,702 133,719 1,983 1 110,978 22,741 20

Markets 60,490 56,825 3,665 6 52,292 4,533 9

Total loans $ 291,975 296,984 (5,009) (2) $ 257,036 39,948 16

Trading-related assets:

Trading account securities $ 118,130 112,213 5,917 5 $ 110,386 1,827 2

Reverse repurchase agreements/securities borrowed 61,510 50,491 11,019 22 59,044 (8,553) (14)

Derivative assets 18,636 27,421 (8,785) (32) 25,315 2,106 8

Total trading-related assets $ 198,276 190,125 8,151 4 $ 194,745 (4,620) (2)

Total assets 553,722 557,396 (3,674) (1) 523,344 34,052 7

Total deposits 162,062 161,720 342 — 189,176 (27,456) (15)

Allocated capital 44,000 36,000 8,000 22 34,000 2,000 6

Selected Balance Sheet Data (period-end)

Loans:

Commercial and industrial $ 189,379 196,529 (7,150) (4) $ 191,391 5,138

Commercial real estate 98,053 101,848 (3,795) (4) 92,983 8,865 10

Total loans $ 287,432 298,377 (10,945) (4) $ 284,374 14,003 5

Loans by Line of Business:

Banking $ 93,987 101,183 (7,196) (7) $ 101,926 (743) (1)

Commercial Real Estate 131,968 137,495 (5,527) (4) 125,926 11,569 9

Markets 61,477 59,699 1,778 3 56,522 3,177 6

Total loans $ 287,432 298,377 (10,945) (4) $ 284,374 14,003 5

Trading-related assets:

Trading account securities $ 115,562 111,801 3,761 3 $ 108,697 3,104 3

Reverse repurchase agreements/securities borrowed 63,614 55,407 8,207 1 5 55,973 (566) (1)

Derivative assets 18,023 22,218 (4,195) (19) 21,398 820 4

Total trading-related assets $ 197,199 189,426 7,773 4 $ 186,068 3,358 2

Total assets 547,203 550,177 (2,974) (1) 546,549 3,628 1

Total deposits 185,142 157,217 27,925 18 168,609 (11,392) (7)

Full year 2023 vs. full year 2022

Total loans (average and period-end) decreased driven by lower

originations.

Total trading-related assets (average and period-end)

increased reflecting:

• increased volume of reverse repurchase agreements; and

• higher trading account securities driven by higher mortgage-

backed securities;

partially offset by:

• lower trading-related derivative assets due to declines in

derivative balances for commodities and equities.

Total deposits (average and period-end) increased driven by

additions of deposits from new and existing customers.

Earnings Performance (continued)

20 Wells Fargo & Company

Wealth and Investment Management provides personalized

wealth management, brokerage, financial planning, lending,

private banking, trust and fiduciary products and services to

affluent, high-net worth and ultra-high-net worth clients. We

operate through financial advisors in our brokerage and wealth

offices, consumer bank branches, independent offices, and

digitally through WellsTrade® and Intuitive Investor®. Table 9g

and Table 9h provide additional information for Wealth and

Investment Management (WIM).

Table 9g: Wealth and Investment Management

Year ended December 31,

($ in millions, unless otherwise noted) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Income Statement

Net interest income $ 3,966 3,927 39 1% $ 2,570 1,357 5 3 %

Noninterest income:

Investment advisory and other asset-based fees 8,446 8,847 (401) (5) 9,574 (727) (8)

Commissions and brokerage services fees 2,058 1,931 127 7 2,010 (79) (4)

Other 221 117 104 89 192 (75) (39)

Total noninterest income 10,725 10,895 (170) (2) 11,776 (881) (7)

Total revenue 14,691 14,822 (131) (1) 14,346 476 3

Net charge-offs (1) (7) 6 86 10 (17) NM

Change in the allowance for credit losses 7 (18) 25 139 (105) 87 83

Provision for credit losses 6 (25) 31 124 (95) 70 74

Noninterest expense 12,064 11,613 451 4 11,734 (121) (1)

Income before income tax expense 2,621 3,234 (613) (19) 2,707 527 19

Income tax expense 657 812 (155) (19) 680 132 19

Net income $ 1,964 2,422 (458) (19) $ 2,027 395 19

Selected Metrics

Return on allocated capital 30.7 % 27.1 22.6 %

Efficiency ratio 82 78 82

Client assets ($ in billions, period-end):

Advisory assets $ 891 797 94 12 $ 964 (167) (17)

Other brokerage assets and deposits

1,193 1,064 129 12 1,219 (155) (13)

Total client assets $ 2,084 1,861 223 12 $ 2,183 (322) (15)

Selected Balance Sheet Data (average)

Total loans $ 82,755 85,228 (2,473) (3) $ 82,364 2,864 3

Total deposits 112,069 164,883 (52,814) (32) 176,562 (11,679) (7)

Allocated capital 6,250 8,750 (2,500) (29) 8,750 — —

Selected Balance Sheet Data (period-end)

Total loans $ 82,555 84,273 (1,718) (2) $ 84,101 172 —

Total deposits 103,902 138,760 (34,858) (25) 192,548 (53,788) (28)

NM- Not meaningful

Full year 2023 vs. full year 2022

Revenue decreased driven by:

• lower investment advisory and other asset-based fees due

to net outflows of advisory assets and lower market

valuations;

partially offset by:

• higher commissions and brokerage services fees due to

higher service fee rates and higher transactional revenue.

Noninterest expense increased driven by:

• higher personnel expense driven by higher revenue-related

compensation and severance expense; and

• higher operating costs;

partially offset by:

• the impact of efficiency initiatives.

Total deposits (average and period-end) decreased due to

customer migration to higher yielding alternatives.

Wells Fargo & Company 21

WIM Advisory Assets In addition to transactional accounts,

WIM offers advisory account relationships to brokerage

customers. Fees from advisory accounts are based on a

percentage of the market value of the assets as of the beginning

of the quarter, which vary across the account types based on the

distinct services provided, and are affected by investment

performance as well as asset inflows and outflows. Advisory

accounts include assets that are financial advisor-directed and

separately managed by third-party managers as well as certain

client-directed brokerage assets where we earn a fee for advisory

and other services, but do not have investment discretion.

WIM also manages personal trust and other assets for high

net worth clients, with fee income earned based on a percentage

of the market value of these assets. Table 9h presents advisory

assets activity by WIM line of business. Management believes

that advisory assets is a useful metric because it allows

management, investors, and others to assess how changes in

asset amounts may impact the generation of certain asset-based

fees.

For the years ended December 31, 2023, 2022 and 2021,

the average fee rate by account type ranged from 50 to 120

basis points.

Table 9h: WIM Advisory Assets

Year ended

(in billions)

Balance, beginning

of period Inflows (1)

Outflows (2) Market impact (3)

Balance, end

of period

December 31, 2023

Client-directed (4) $ 165.2 33.0 (34.7) 21.8 185.3

Financial advisor-directed (5) 222.9 40.3 (38.3) 39.7 264.6

Separate accounts (6) 176.5 24.1 (26.5) 24.3 198.4

Mutual fund advisory (7)

78.6 7.4 (12.8) 10.1 83.3

Total Wells Fargo Advisors $ 643.2 104.8 (112.3) 95.9 731.6

The Private Bank (8) 153.6 25.0 (34.5) 15.4 159.5

Total WIM advisory assets $ 796.8 129.8 (146.8) 111.3 891.1

December 31, 2022

Client-directed (4) $ 205.6 31.8 (39.0) (33.2) 165.2

Financial advisor-directed (5) 255.5 41.6 (44.2) (30.0) 222.9

Separate accounts (6) 203.3 24.6 (26.5) (24.9) 176.5

Mutual fund advisory (7) 102.1 8.7 (15.0) (17.2) 78.6

Total Wells Fargo Advisors $ 766.5 106.7 (124.7) (105.3) 643.2

The Private Bank (8) 198.0 27.4 (47.1) (24.7) 153.6

Total WIM advisory assets $ 964.5 134.1 (171.8) (130.0) 796.8

December 31, 2021

Client directed (4) $ 186.3 41.5 (45.0) 22.8 205.6

Financial advisor directed (5) 211.0 48.7 (41.1) 36.9 255.5

Separate accounts (6) 174.6 31.8 (30.7) 27.6 203.3

Mutual fund advisory (7) 91.4 15.6 (15.0) 10.1 102.1

Total Wells Fargo Advisors $ 663.3 137.6 (131.8) 97.4 766.5

The Private Bank (8) 189.4 40.0 (51.1) 19.7 198.0

Total WIM advisory assets $ 852.7 177.6 (182.9) 117.1 964.5

(1) Inflows include new advisory account assets, contributions, dividends, and interest.

(2) Outflows include closed advisory account assets, withdrawals, and client management fees.

(3) Market impact reflects gains and losses on portfolio investments.

(4) Investment advice and other services are provided to the client, but decisions are made by the client and the fees earned are based on a percentage of the advisory account assets, not the number

and size of transactions executed by the client.

(5) Professionally managed portfolios with fees earned based on respective strategies and as a percentage of certain client assets.

(6) Professional advisory portfolios managed by third-party asset managers. Fees are earned based on a percentage of certain client assets.

(7) Program with portfolios constructed of load-waived, no-load, and institutional share class mutual funds. Fees are earned based on a percentage of certain client assets.

(8) Discretionary and non-discretionary portfolios held in personal trusts, investment agency, or custody accounts with fees earned based on a percentage of client assets.

Earnings Performance (continued)

22 Wells Fargo & Company

Corporate includes corporate treasury and enterprise functions,

net of allocations (including funds transfer pricing, capital,

liquidity and certain expenses), in support of the reportable

operating segments, as well as our investment portfolio and

venture capital and private equity investments. Corporate also

includes certain lines of business that management has

determined are no longer consistent with the long-term

strategic goals of the Company as well as results for previously

divested businesses. In third quarter 2023, we sold investments

in certain private equity funds, which had a minimal impact to net

income. Table 9i and Table 9j provide additional information for

Corporate.

Table 9i: Corporate – Income Statement

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Income Statement

Net interest income $ (888) (1,607) 719 45% $ (1,541) (66) (4) %

Noninterest income 431 1,192 (761) (64) 10,710 (9,518) (89)

Total revenue (457) (415) (42) (10) 9,169 (9,584) NM

Net charge-offs (10) (33) 23 70 54 (87) NM

Change in the allowance for credit losses 22 35 (13) (37) 3 32 NM

Provision for credit losses 12 2 10 500 57 (55) (96)

Noninterest expense 4,301 5,697 (1,396) (25) 4,314 1,383 32

Income (loss) before income tax expense (benefit) (4,770) (6,114) 1,344 22 4,798 (10,912) NM

Income tax expense (benefit) (2,355) (1,721) (634) (37) 782 (2,503) NM

Less: Net income (loss) from noncontrolling interests (1) (124) (311) 187 60 1,685 (1,996) NM

Net income (loss) $ (2,291) (4,082) 1,791 44 $ 2,331 (6,413) NM

NM – Not meaningful

(1) Reflects results attributable to noncontrolling interests predominantly associated with the Company’s consolidated venture capital investments.

Full year 2023 vs. full year 2022

Revenue decreased driven by:

• lower other noninterest income reflecting the change in fair

value of liabilities associated with our reinsurance business,

which was recognized as a result of our adoption of ASU

2018-12 in first quarter 2023. For additional information on

our adoption of ASU 2018-12, see Note 1 (Summary of

Significant Accounting Policies) to Financial Statements in

this Report; and

• lower net gains from debt securities due to lower gains on

sales of asset-based securities and municipal bonds in our

investment portfolio as a result of decreased sales volumes;

partially offset by:

• higher net interest income reflecting higher interest rates;

and

• higher net gains on equity securities driven by lower

impairment of equity securities and higher unrealized gains

on marketable equity securities, partially offset by lower

unrealized and realized gains on nonmarketable equity

securities from our venture capital and private equity

investments.

Noninterest expense decreased driven by:

• lower operating losses due to lower expense for legal

actions;

partially offset by:

• a $1.9billion FDIC special assessment; and

• higher personnel expense driven by higher severance

expense.

Corporate includes our rail car leasing business, which had

long-lived operating lease assets, net of accumulated

depreciation, of $4.6billion and $4.7billion as of December31,

2023 and 2022, respectively. The average age of our rail cars is

22 years and the rail cars are typically leased to customers under

short-term leases of 3to 5 years. Our four largest

concentrations, which represented 66% of our rail car fleet as of

December31, 2023, were rail cars used for the transportation of

cement/sand, agricultural grain, plastics, and coal products. We

may incur impairment charges in the future based on changing

economic and market conditions affecting the long-term

demand and utility of specific types of rail cars. Our assumptions

for impairment are sensitive to estimated utilization and rental

rates as well as the estimated economic life of the leased asset.

For additional information on the accounting for impairment of

operating lease assets, see Note 1 (Summary of Significant

Accounting Policies) and Note 8 (Leasing Activity) to Financial

Statements in this Report.

Wells Fargo & Company 23

Table 9j: Corporate – Balance Sheet

Year ended December 31,

($ in millions) 2023 2022

$ Change

2023/

2022

% Change

2023/

2022 2021

$ Change

2022/

2021

% Change

2022/

2021

Selected Balance Sheet Data (average)

Cash and due from banks, and interest-earning deposits with

banks $ 153,538 147,192 6,346 4 % $ 236,124 (88,932) (38) %

Available-for-sale debt securities (1) 123,542 124,308 (766) (1) 181,841 (57,533) (32)

Held-to-maturity debt securities (1) 267,672 290,087 (22,415) (8) 244,735 45,352 19

Equity securities 15,635 15,695 (60) — 12,720 2,975 23

Total loans 9,164 9,143 21 — 9,766 (623) (6)

Total assets 619,002 638,011 (19,009) (3) 743,247 (105,236) (14)

Total deposits 95,825 28,457 67,368 237 40,066 (11,609) (29)

Selected Balance Sheet Data (period-end)

Cash and due from banks, and interest-earning deposits with

banks $ 211,420 127,106 84,314 66 $ 209,696 (82,590) (39)

Available-for-sale debt securities (1) 118,923 102,669 16,254 16 165,926 (63,257) (38)

Held-to-maturity debt securities (1) 259,748 294,141 (34,393) (12) 269,285 24,856 9

Equity securities 15,810 15,508 302 2 16,549 (1,041) (6)

Total loans 9,054 9,163 (109) (1) 9,997 (834) (8)

Total assets 674,075 601,218 72,857 12 721,340 (120,122) (17)

Total deposits 124,294 54,371 69,923 129 32,220 22,151 69

(1) In first quarter 2023, we reclassified HTM debt securities with a fair value of $23.2 billion to AFS debt securities in connection with the adoption of ASU 2022-01 – Derivatives and Hedging

(Topic815): Fair Value Hedging – Portfolio Layer Method. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Full year 2023 vs. full year 2022

Total assets (period-end) increased driven by:

• an increase in cash and due from banks, and interest-earning

deposits with banks that are managed by corporate treasury

as a result of an increase in issuances of certificates of

deposits (CDs) and long-term debt, partially offset by a

reduction in deposits held by our operating segments; and

• sales of and net unrealized losses on AFS debt securities.

Total deposits (average and period-end) increased driven by

issuances of CDs.

Earnings Performance (continued)

24 Wells Fargo & Company

Balance Sheet Analysis

At December31, 2023, our assets totaled $1.93trillion, up

$51.4billion from December31, 2022.

The following discussion provides additional information

about the major components of our consolidated balance sheet.

See the “Capital Management” section in this Report for

information on changes in our equity.

Available-for-Sale and Held-to-Maturity Debt Securities

Table 10: Available-for-Sale and Held-to-Maturity Debt Securities

December 31, 2023 December 31, 2022

($ in millions)

Amortized

cost, net (1)

Net

unrealized gains

(losses) Fair value

Weighted

average

expected

maturity (yrs)

Amortized

cost, net (1)

Net

unrealized gains

(losses) Fair value

Weighted

average

expected

maturity (yrs)

Available-for-sale (2)

$ 137,155 (6,707) 130,448 4.7 $ 121,725 (8,131) 113,594 5.4

Held-to-maturity (3) 262,708 (35,392) 227,316 7.6 297,059 (41,538) 255,521 8.1

Total $ 399,863 (42,099) 357,764 n/a $ 418,784 (49,669) 369,115 n/a

(1) Represents amortized cost of the securities, net of the allowance for credit losses of $1million and $6 million related to available-for-sale debt securities and $93million and $85 million related to

held-to-maturity debt securities at December31, 2023 and 2022, respectively.

(2) Available-for-sale debt securities are carried on our consolidated balance sheet at fair value.

(3) Held-to-maturity debt securities are carried on our consolidated balance sheet at amortized cost, net of the allowance for credit losses.

Table 10 presents a summary of our portfolio of

investments in available-for-sale (AFS) and held-to-maturity

(HTM) debt securities. The size and composition of our AFS and

HTM debt securities is dependent upon the Company’s liquidity

and interest rate risk management objectives. The AFS debt

securities portfolio can be used to meet funding needs that arise

in the normal course of business or due to market stress.

Changes in our interest rate risk profile may occur due to changes

in overall economic or market conditions, which could influence

loan origination demand, prepayment rates, or deposit balances

and mix.In response, the AFS debt securities portfolio can be

rebalanced to meet the Company’s interest rate risk

management objectives. In addition to meeting liquidity and

interest rate risk management objectives, the AFS and HTM debt

securities portfolios may provide yield enhancement over other

short-term assets. See the “Risk Management – Asset/Liability

Management” section in this Report for additional information

on liquidity and interest rate risk.

The AFS debt securities portfolio predominantly consists of

liquid, high-quality U.S. Treasury and federal agency debt, and

agency mortgage-backed securities (MBS). The portfolio also

includes securities issued by U.S. states and political subdivisions

and highly rated collateralized loan obligations (CLOs).

The HTM debt securities portfolio predominantly consists of

liquid, high-quality U.S. Treasury and federal agency debt, and

agency MBS. The portfolio also includes securities issued by U.S.

states and political subdivisions and highly rated CLOs. Debt

securities are classified as HTM at the time of purchase or when

transferred from the AFS debt securities portfolio. Our intent is

to hold these securities to maturity and collect the contractual

cash flows. In first quarter 2023, we changed our intent with

respect to certain HTM debt securities and reclassified them to

AFS debt securities in connection with the adoption of ASU

2022-01, Derivatives and Hedging (Topic 815): Fair Value

Hedging – Portfolio Layer Method. For additional information on

our adoption of ASU 2022-01, see Note 1 (Summary of

Significant Accounting Policies) to Financial Statements in this

Report.

The amortized cost, net of the allowance for credit losses, of

AFS and HTM debt securities decreased from December31,

2022. Purchases of AFS and HTM debt securities were more than

offset by paydowns and maturities, as well as sales of AFS debt

securities. We reclassified HTM debt securities with an aggregate

fair value of $23.2 billion and amortized cost of $23.9 billion to

AFS debt securities in 2023 in connection with the adoption of

ASU 2022-01. In addition, we transferred AFS debt securities

with a fair value of $3.7billion to HTM debt securities in 2023

due to actions taken to reposition the overall portfolio for capital

management purposes. Debt securities transferred from AFS to

HTM in 2023 had $320million of pre-tax unrealized losses at the

time of the transfers.

The total net unrealized losses on AFS and HTM debt

securities decreased from December31, 2022, due to changes in

interest rates.

At December31, 2023, 99% of the combined AFS and HTM

debt securities portfolio was rated AA- or above. Ratings are

based on external ratings where available and, where not

available, based on internal credit grades. See Note 3 (Available-

for-Sale and Held-to-Maturity Debt Securities) to Financial

Statements in this Report for additional information on AFS and

HTM debt securities, including a summary of debt securities by

security type.

Wells Fargo & Company 25

Loan Portfolios

Table 11 provides a summary of total outstanding loans by

portfolio segment. Commercial loans decreased from

December31, 2022, due to decreases in both the commercial

and industrial and commercial real estate loan portfolios

as paydowns exceeded originations and advances. Consumer

loans decreased from December31, 2022, as increases in the

credit card portfolio were more than offset by decreases in the

residential mortgage loan portfolio as well as the auto loan

portfolio.

Table 11: Loan Portfolios

($ in millions) Dec 31, 2023 Dec 31, 2022 $ Change % Change

Commercial $ 547,427 557,516 (10,089) (2) %

Consumer 389,255 398,355 (9,100) (2)

Total loans $ 936,682 955,871 (19,189) (2)

Average loan balances and a comparative detail of average

loan balances is included in Table 3 under “Earnings Performance

– Net Interest Income” earlier in this Report. Additional

information on total loans outstanding by portfolio segment and

class of financing receivable is included in the “Risk Management

– Credit Risk Management” section in this Report. Period-end

balances and other loan related information are in Note 5 (Loans

and Related Allowance for Credit Losses) to Financial Statements

in this Report.

Table 12 shows loan maturities based on contractually

scheduled repayment timing and the distribution by changes in

interest rates for loans with a contractual maturity greater than

one year. Nonaccrual loans and loans with indeterminate

maturities have been classified as maturing within one year.

Table 12: Loan Maturities

December 31, 2023

Loan maturities

Loans maturing

after one year

(in millions)

Within

one

year

After

one year

through

five years

After five

years

through

fifteen

years

After

fifteen

years Total

Fixed

interest

rates

Floating/

variable

interest

rates

Commercial and industrial $ 134,720 224,669 19,883 1,116 380,388 23,899 221,769

Commercial real estate 51,726 80,164 17,265 1,461 150,616 18,428 80,462

Lease financing 3,697 10,782 1,892 52 16,423 12,649 77

Total commercial 190,143 315,615 39,040 2,629 547,427 54,976 302,308

Residential mortgage 10,085 30,044 87,401 133,194 260,724 176,485 74,154

Credit card 52,230 — — — 52,230 — —

Auto 12,205 34,132 1,425 — 47,762 35,557 —

Other consumer 23,421 4,582 516 20 28,539 4,498 620

Total consumer 97,941 68,758 89,342 133,214 389,255 216,540 74,774

Total loans $ 288,084 384,373 128,382 135,843 936,682 271,516 377,082

Deposits

Deposits decreased from December31, 2022, reflecting:

• customer migration to higher yielding alternatives; and

• consumer deposit outflows on consumer spending;

partially offset by:

• higher time deposits driven by issuances of CDs.

Table 13 provides additional information regarding deposit

balances. Information regarding the impact of deposits on net

interest income and a comparison of average deposit balances is

provided in the “Earnings Performance – Net Interest Income”

section and Table 3 earlier in this Report. Our average deposit

cost in fourth quarter 2023 increased to 1.58%, compared with

0.46% in fourth quarter 2022, as a result of higher interest rates

and shifts in deposit mix.

Table 13: Deposits

($ in millions)

Dec 31,

2023

% of

total

deposits

Dec 31,

2022

% of

total

deposits $ Change % Change

Noninterest-bearing demand deposits $ 360,279 26% $ 458,010 33% $ (97,731) (21) %

Interest-bearing demand deposits 436,908 32 428,877 31 8,031 2

Savings deposits 349,181 26 410,139 30 (60,958) (15)

Time deposits 187,989 14 66,197 5 121,792 184

Interest-bearing deposits in non-U.S. offices 23,816 2 20,762 1 3,054 1 5

Total deposits $ 1,358,173 100% $ 1,383,985 100% $ (25,812) (2)

Balance Sheet Analysis (continued)

26 Wells Fargo & Company

As of December31, 2023 and 2022, total deposits that

exceed FDIC insurance limits, or are otherwise uninsured, were

estimated to be $505 billion and $510 billion, respectively.

Estimated uninsured domestic deposits reflect amounts

disclosed in the U.S. regulatory reports of our subsidiary banks,

with adjustments for amounts related to consolidated

subsidiaries. All non-U.S. deposits are treated for these purposes

as uninsured.

Table 14 presents the contractual maturities of estimated

time deposits that exceed FDIC insurance limits, or are otherwise

uninsured. All non-U.S. time deposits are uninsured.

Table 14: Uninsured Time Deposits by Maturity

(in millions)

Three months

or less

After three

months through

six months

After six

months through

twelve months

After twelve

months Total

December 31, 2023

Domestic time deposits $ 12,625 11,016 21,000 644 45,285

Non-U.S. time deposits 1,675 692 1,911 — 4,278

Total $ 14,300 11,708 22,911 644 49,563

Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial

transactions that are not recorded on our consolidated balance

sheet, or may be recorded on our consolidated balance sheet in

amounts that are different from the full contract or notional

amount of the transaction. Our off-balance sheet arrangements

include unfunded credit commitments, transactions with

unconsolidated entities, guarantees, commitments to purchase

debt and equity securities, derivatives, and other commitments.

These transactions are designed to (1) meet the financial needs

of customers, (2) manage our credit, market or liquidity risks,

and/or (3) diversify our funding sources.

Unfunded Credit Commitments

Unfunded credit commitments are legally binding agreements to

lend to customers with terms covering usage of funds,

contractual interest rates, expiration dates, and any required

collateral. The maximum credit risk for these commitments will

generally be lower than the contractual amount because these

commitments may expire without being used or may be

cancelled at the customer’s request. Our credit risk monitoring

activities include managing the amount of commitments, both to

individual customers and in total, and the size and maturity

structure of these commitments. For additional information, see

Note 5 (Loans and Related Allowance for Credit Losses) to

Financial Statements in this Report.

Transactions with Unconsolidated Entities

In the normal course of business, we enter into various types of

on- and off-balance sheet transactions with special purpose

entities (SPEs), which are corporations, trusts, limited liability

companies or partnerships that are established for a limited

purpose. Generally, SPEs are formed in connection with

securitization transactions and are considered variable interest

entities (VIEs). For additional information, see Note 16

(Securitizations and Variable Interest Entities) to Financial

Statements in this Report.

Guarantees and Other Arrangements

Guarantees are contracts that contingently require us to make

payments to a guaranteed party based on an event or a change in

an underlying asset, liability, rate or index. Guarantees are

generally in the form of standby and direct pay letters of credit,

written options, recourse obligations, exchange and clearing

house guarantees, indemnifications, and other types of similar

arrangements. For additional information, see Note 17

(Guarantees and Other Commitments) to Financial Statements

in this Report.

Commitments to Purchase Debt and Equity Securities

We enter into commitments to purchase securities under resale

agreements. We also may enter into commitments to purchase

debt and equity securities to provide capital for customers’

funding, liquidity or other future needs. For additional

information, see Note 17 (Guarantees and Other Commitments)

to Financial Statements in this Report.

Derivatives

We use derivatives to manage exposure to market risk, including

interest rate risk, credit risk and foreign currency risk, and to

assist customers with their risk management objectives.

Derivatives are recorded on our consolidated balance sheet at

fair value, and volume can be measured in terms of the notional

amount, which is generally not exchanged, but is used only as the

basis on which interest and other payments are determined. The

notional amount is not recorded on our consolidated balance

sheet and is not, when viewed in isolation, a meaningful measure

of the risk profile of the instruments. For additional information,

see Note 14 (Derivatives) to Financial Statements in this Report.

Wells Fargo & Company 27

Risk Management

Wells Fargo manages a variety of risks that can significantly

affect our financial performance and our ability to meet the

expectations of our customers, shareholders, regulators and

other stakeholders.

Risk is Part of our Business Model. Risk is the possibility of an

event occurring that could adversely affect the Company’s ability

to achieve its strategic and business objectives. The Company

routinely takes risks to achieve its business goals and to serve its

customers. These risks include financial risks, such as interest

rate, credit, liquidity, and market risks, and non-financial risks,

such as operational (which includes compliance and model risks),

strategic and reputation risks.

Risk Profile. The Company’s risk profile is an assessment of the

aggregate risks associated with the Company’s exposures and

business activities after taking into consideration risk

management effectiveness. The Company monitors its risk

profile, and the Board reviews risk profile reports and analysis.

Risk Capacity. Risk capacity is the maximum level of risk that

the Company could assume given its current level of resources

before triggering regulatory and other constraints on its capital

and liquidity needs.

Risk Appetite. Risk appetite is the nature and level of risk the

Company is willing to take, within its risk capacity, while pursuing

its strategic and business objectives. Risk appetite is articulated

in our Statement of Risk Appetite, which establishes acceptable

risks and at what level and includes risk appetite principles. The

Company’s Statement of Risk Appetite is defined by senior

management, approved at least annually by the Board, and helps

guide the Company’s business and risk leaders. The Company

continuously monitors its risk appetite, and the Board reviews

reports which include risk appetite information and analysis.

Risk and Strategy. The Chief Executive Officer (CEO) drives the

Company’s strategic planning process, which identifies the

Company’s most significant opportunities and challenges,

develops plans to address them, evaluates the risks of those

plans, and articulates the resulting decisions in the form of a

company-wide strategic plan. The Company’s risk profile, risk

capacity, risk appetite, and risk management effectiveness are

considered in the strategic planning process, which is linked with

the Company’s capital planning process. The Company’s

Independent Risk Management (IRM) organization participates

in strategic planning, providing challenge to and independent

assessment of the risks associated with strategic initiatives. IRM

also independently assesses and challenges the impact of the

strategic plan on risk capacity, risk appetite, and risk

management effectiveness at the principal lines of business,

enterprise functions, and aggregate Company levels. The

strategic plan is presented to the Board each year with IRM’s

evaluation.

Risk and Climate Change. The Company views climate change as

a global challenge that presents significant impacts for

businesses and communities around the world. The Company

expects that climate change will increasingly impact the risk

types it manages, and the Company continues to integrate

climate considerations into its risk management framework as its

understanding of climate change and risks driven by it evolve.

Risk is Managed by Everyone. Every employee, in the course of

their daily activities, creates risk and is responsible for managing

risk. Every employee has a role to play in risk management,

including establishing and maintaining the Company’s risk and

control environment. Every employee must comply with

applicable laws, regulations, and Company policies.

Risk and Culture. Senior management sets the tone at the top

by supporting a strong culture, defined by the Company’s

expectations and Code of Conduct, that guides how employees

conduct themselves and make decisions. The Board is

responsible for holding senior management accountable for

establishing and maintaining this culture and effectively

managing risk. Senior management expects employees to speak

up when they see something that could cause harm to the

Company’s customers, communities, employees, shareholders,

or reputation. Because risk management is everyone’s

responsibility, all employees are empowered to and expected to

challenge risk decisions when appropriate and to escalate their

concerns when they have not been addressed. The Company’s

performance management and incentive compensation

programs are designed to establish a balanced framework for risk

and reward under core principles that employees are expected to

know and practice. The Board, through its Human Resources

Committee, plays an important role in overseeing and providing

credible challenge to the Company’s performance management

and incentive compensation programs. Effective risk

management is a central component of employee performance

evaluations.

Risk Management Framework. The Company’s risk

management framework sets forth the Company’s core

principles for managing and governing its risk. It is approved by

the Board’s Risk Committee and reviewed and updated annually.

Many other documents and policies flow from its core principles.

Wells Fargo’s top priority is to strengthen our company by

building an appropriate risk and control infrastructure. We

continue to enhance and mature our risk management programs,

including operational and compliance risk management programs

as required by the FRB’s February 2, 2018, and the CFPB/OCC’s

April 20, 2018, consent orders.

Risk Governance

Role of the Board. The Board oversees the Company’s business,

including its risk management. It assesses senior management’s

performance and holds senior management accountable for

maintaining and adhering to an effective risk management

program.

Board Committee Structure. The Board carries out its risk

oversight responsibilities directly and through its committees.

The Risk Committee reviews and approves the Company’s risk

management framework and oversees management’s

implementation of the framework, including how the Company

manages and governs risk. The Risk Committee also oversees the

Company’s adherence to its risk appetite. In addition, the Risk

Committee supports the stature, authority and independence of

IRM and oversees and receives reports on its operation. The Chief

Risk Officer (CRO) reports functionally to the Risk Committee

and administratively to the CEO.

28 Wells Fargo & Company

Management Committee Structure. The Company has

established management committees, including those focused

on risk, that support management in carrying out its governance

and risk management responsibilities. One type of management

committee is a governance committee, which is a decision-

making body that operates for a particular purpose and may

report to a Board committee.

Each management governance committee, in accordance

with its charter, is expected to discuss, document, and make

decisions regarding high priority and significant risks, emerging

risks, risk acceptances, and risks and issues escalated to it; review

and monitor progress related to critical and high-risk issues and

remediation efforts, including lessons learned; and report key

challenges, decisions, escalations, other actions, and open issues

as appropriate.

Table 15 presents, as of December31, 2023, the structure

of the Company’s Board committees and escalation paths of

relevant management governance committees reporting to a

Board committee.

Table 15: Board and Relevant Management-level Governance Committee Structure

Wells Fargo & Company

Audit

Committee (1)

Finance

Committee

Corporate

Responsibility

Committee

Risk

Committee

Governance &

Nominating

Committee

Human

Resources

Committee

Management Governance Committees

Disclosure

Committee

Capital

Management

Committee

Allowance for Credit

Losses Approval

Governance

Committee

Enterprise Risk &

Control Committee

Incentive

Compensation

& Performance

Management

Committee

Regulatory

Reporting

Oversight

Committee

Corporate

Asset/Liability

Committee

Risk & Control

Committees

Recovery &

Resolution

Committee

Risk Type

Committees

Risk Topic

Committees

(1) The Audit Committee assists the Board in its oversight of the Company’s financial statements and disclosures to shareholders and regulatory agencies; oversees the internal audit function and

external auditor independence, activities, and performance; and assists the Board and the Risk Committee in the oversight of the Company’s compliance with legal and regulatory requirements.

Management Governance Committees Reporting to the Risk

Committee of the Board. The Enterprise Risk & Control

Committee (ERCC) is a decision-making and escalation body that

governs the management of all risk types. The ERCC receives

information about risk and control issues, addresses escalated

risks and issues, and actively oversees risk controls. The ERCC

also makes decisions related to significant risks and changes to

the Company’s risk appetite. The Risk Committee receives

regular updates from the ERCC chairs and senior management

regarding current and emerging risks and senior management’s

assessment of the effectiveness of the Company’s risk

management program.

The ERCC is co-chaired by the CEO and CRO, with

membership comprising the heads of principal lines of business

and certain enterprise functions. The Chief Auditor or a designee

attends all meetings of the ERCC. The ERCC has a direct

escalation path to the Risk Committee. The ERCC also has an

escalation path for certain human capital risks and issues to the

Human Resources Committee. In addition, the CRO may escalate

directly to the Board. Risks and issues are escalated to the ERCC

in accordance with the Company’s escalation management

policy.

Each principal line of business and enterprise function has a

risk and control committee, which is a management governance

committee with a mandate that aligns with the ERCC but with its

scope limited to the respective principal line of business or

enterprise function. These committees focus on and consider

risks that the respective principal line of business or enterprise

function generate and manage, and the controls the principal line

of business or enterprise function are expected to have in place.

As a complement to these risk and control committees,

management governance committees dedicated to specific risk

types and risk topics also report to the ERCC to enable more

comprehensive governance of risks.

Risk Operating Model – Roles and Responsibilities

The Company has three lines of defense for managing risk: the

Front Line, Independent Risk Management, and Internal Audit.

• Front Line The Front Line, which comprises principal line of

business and certain enterprise function activities, is the first

line of defense. The Front Line is responsible for

understanding the risks generated by its activities, applying

adequate controls, and managing risk in the course of its

business activities. The Front Line identifies, measures and

assesses, controls, monitors, and reports on risk generated

by or associated with its business activities and balances risk

and reward in decision making while operating within the

Company’s risk appetite.

• Independent Risk Management IRM is the second line of

defense. It establishes and maintains the Company’s risk

management program and provides oversight, including

challenge to and independent assessment and monitoring

Wells Fargo & Company 29

of, the Front Line’s execution of its risk management

responsibilities.

• Internal Audit Internal Audit is the third line of defense. It is

responsible for acting as an independent assurance function

and validates that the risk management program is

adequately designed and functioning effectively.

Risk Type Classifications

The Company uses common classifications, hierarchies, and

ratings to enable consistency across risk management programs

and aggregation of information. Risk type classifications permit

the Company to identify and prioritize its risk exposures,

including emerging risk exposures.

Operational Risk Management

Operational risk, which in addition to those discussed in this

section, includes compliance risk and model risk, is the risk

resulting from inadequate or failed internal processes, people

and systems, or from external events.

The Board’s Risk Committee has primary oversight

responsibility for operational risk, including significant

supporting programs and/or policies regarding the Company’s

business resiliency and disaster recovery, change management,

data management, information security, technology, and third-

party risk management. As part of its oversight responsibilities,

the Board’s Risk Committee reviews and approves significant

operational risk policies and oversees the Company’s operational

risk management program.

At the management level, Operational Risk Management,

which is part of IRM, has oversight responsibility for operational

risk. Operational Risk Management reports to the CRO and

provides periodic reports related to operational risk to the

Board’s Risk Committee. Operational Risk Management’s

oversight responsibilities include change management risk, data

management risk, fraud risk, human capital risk, information

management risk, information security risk, technology risk, and

third-party risk.

Information Security Risk Management. Information security

risk, which includes cybersecurity risk, is a significant operational

risk for financial institutions such as Wells Fargo and includes the

risk arising from unauthorized access, use, disclosure, disruption,

modification, or destruction of information or information

systems.

The Board’s Risk Committee has primary oversight

responsibility for information security risk and approves the

Company’s information security program, which includes

information protection and cyber resiliency. The Risk Committee

receives regular reports from the Company’s Head of

Technology, as well as from Operational Risk Management

representatives, on information security risks, and the Board

receives a report from the Head of Technology on Wells Fargo’s

information security program and receives reports from

management on significant information security developments,

including certain incidents involving third parties.

As described above, at the management level, Operational

Risk Management has oversight responsibility for information

security risk. As a second line of defense, Operational Risk

Management reviews and provides guidance to the Front Line

technology team, including with respect to the development and

maintenance of risk management policies, governance

documents, processes, and controls, and oversees and challenges

the Front Line technology team’s risk assessment activities.

The Company’s cybersecurity team, which is part of the

broader technology team, provides Front Line information

security risk assessment and management and is responsible for

protecting the Company’s information systems, networks, and

data, including customer and employee data, through the design,

execution, and oversight of our information security program.

The technology team is led by the Company’s Head of

Technology, who reports to the CEO and leads our efforts to

manage information security and related risks across the

enterprise, including overseeing the Company’s Chief

Information Security Officer (CISO). Our Head of Technology has

nearly 20 years of technology and information security risk

management experience in the financial services industry,

including prior roles with Wells Fargo as Chief Information

Officer for the Consumer Technology group and the Enterprise

Functions Technology group. Prior to joining Wells Fargo, our

Head of Technology served as Chief Operations and Technology

Officer at a financing and investment solutions company, and

prior to that served in several technology leadership roles at large

financial institutions.

The Company has processes designed to prevent, detect,

mitigate, escalate, and remediate cybersecurity incidents,

including monitoring of the Company’s networks for actual or

potential attacks or breaches. The Company’s incident response

program includes notification, escalation, and remediation

protocols for cybersecurity incidents, including to our Head of

Technology and CISO. In addition, to help monitor and assess our

exposure to ongoing and evolving risks in these areas, the

Company has a cyber and information security focused risk

committee led by the CISO and a technology risk committee led

by the Head of Technology.

Additional components of the Company’s information

security program include: (i) enhancing and strengthening of our

practices, policies, and procedures in response to the evolving

information security landscape; (ii) designing our information

security program to align with regulatory and industry standards;

(iii) investing in emerging technologies to proactively monitor

new vulnerabilities and reduce risk; (iv) conducting periodic

internal and third-party assessments to test our information

security systems and controls; (v) leveraging third-party

specialists and advisors to review and strengthen our information

security program; (vi) evaluating and updating our incident

response planning and protocols; and (vii) requiring employees

and third-party service providers who have access to our systems

to complete annual information security training modules

designed to provide guidance for identifying and avoiding

information security risks.

In addition, Operational Risk Management oversees the

Company’s third-party risk management program, which, among

other things, is designed to identify and address information

security risks arising from third-party service providers.

Components of this program include incorporating information

security and cybersecurity incident notification requirements

into contracts with third-party service providers, requiring third

parties to adhere to defined information security and control

standards, and performing periodic third-party risk assessments.

Wells Fargo and other financial institutions, as well as our

third-party service providers, continue to be the target of various

evolving and adaptive information security threats, including

cyber attacks, malware, ransomware, other malicious software

intended to exploit hardware or software vulnerabilities,

phishing, credential validation, and distributed denial-of-service,

in an effort to disrupt the operations of financial institutions, test

their cybersecurity capabilities, commit fraud, or obtain

confidential, proprietary or other information. Cyber attacks

have also focused on targeting online applications and services,

such as online banking, as well as cloud-based and other products

Risk Management (continued)

30 Wells Fargo & Company

and services provided by third parties, and have targeted the

infrastructure of the internet causing the widespread

unavailability of websites and degrading website performance. As

a result, information security and the continued development

and enhancement of our controls, processes and systems

designed to protect our networks, computers, software and data

from attack, damage or unauthorized access remain a priority for

Wells Fargo. Wells Fargo is also involved in industry cybersecurity

efforts and working with other parties, including our third-party

service providers and governmental agencies, to continue to

enhance defenses and improve resiliency to information security

threats. See the “Risk Factors” section in this Report for

additional information regarding the risks and potential impacts

associated with a failure or breach of our operational or security

systems or infrastructure, including as a result of cyber attacks or

other information security incidents.

Compliance Risk Management

Compliance risk (a type of operational risk) is the risk resulting

from the failure to comply with laws (legislation, regulations and

rules) and regulatory guidance, and the failure to appropriately

address associated impact, including to customers. Compliance

risk encompasses violations of applicable internal policies,

program requirements, procedures, and standards related to

ethical principles applicable to the Company.

The Board’s Risk Committee has primary oversight

responsibility for all aspects of compliance risk, including financial

crimes risk. As part of its oversight responsibilities, the Board’s

Risk Committee reviews and approves significant supporting

compliance risk and financial crimes risk policies and programs

and oversees the Company’s compliance risk management and

financial crimes risk management programs.

Conduct risk, a sub-category of compliance risk, is the risk of

inappropriate, unethical, or unlawful behavior on the part of

employees or individuals acting on behalf of the Company,

caused by deliberate or unintentional actions or business

practices. In connection with its oversight of conduct risk, the

Board oversees the alignment of employee conduct to the

Company’s risk appetite (which the Board approves annually).

The Board’s Risk Committee has primary oversight responsibility

for conduct risk and risk management components of the

Company’s culture, while the responsibilities of the Board’s

Human Resources Committee include oversight of the

Company’s culture, Code of Ethics and Business Conduct,

human capital management (including talent management and

succession planning), performance management program, and

incentive compensation risk management program.

At the management level, the Compliance function, which is

part of IRM, monitors the implementation of the Company’s

compliance and conduct risk programs. Financial Crimes Risk

Management, which is part of the Compliance function, oversees

and monitors financial crimes risk. The Compliance function

reports to the CRO and provides periodic reports related to

compliance risk to the Board’s Risk Committee.

Model Risk Management

Model risk (a type of operational risk) is the risk arising from the

potential for adverse consequences of decisions made based on

model output that may be incorrect or used inappropriately.

The Board’s Risk Committee has primary oversight

responsibility for model risk. As part of its oversight

responsibilities, the Board’s Risk Committee oversees the

Company’s model risk management policy, model governance,

model performance, model issue remediation status, and

adherence to model risk appetite metrics.

At the management level, the Model Risk function, which is

part of IRM, has oversight responsibility for model risk and is

responsible for governance, validation and monitoring of model

risk across the Company. The Model Risk function reports to the

CRO and provides periodic reports related to model risk to the

Board’s Risk Committee.

Strategic Risk Management

Strategic risk is the risk to earnings, capital, or liquidity arising

from adverse business decisions, improper implementation of

strategic initiatives, or inadequate responses to changes in the

external operating environment.

The Board has primary oversight responsibility for strategic

planning and oversees management’s development and

implementation of and approves the Company’s strategic plan,

and considers whether it is aligned with the Company’s risk

appetite and risk management effectiveness. Management

develops, executes and recommends significant strategic

corporate transactions and the Board evaluates management’s

proposals, including their impact on the Company’s risk profile

and financial position. The Board’s Risk Committee has primary

oversight responsibility for the Company’s strategic risk and the

adequacy of the Company’s strategic risk management program,

including associated risk management practices, processes and

controls.

At the management level, the Strategic Risk Oversight

function, which is part of IRM, has oversight responsibility for

strategic risk. The Strategic Risk Oversight function reports into

the CRO and supports periodic reports related to strategic risk

provided to the Board’s Risk Committee.

Reputation Risk Management

Reputation risk is the risk arising from the potential that

negative stakeholder opinion or negative publicity regarding the

Company’s business practices, whether true or not, will adversely

impact current or projected financial conditions and resilience,

cause a decline in the customer base, or result in costly litigation.

Key stakeholders include customers, employees, communities,

shareholders, regulators, elected officials, advocacy groups, and

media organizations.

The Board’s Risk Committee has primary oversight

responsibility for reputation risk, while each Board committee

has reputation risk oversight responsibilities related to their

primary oversight responsibilities. As part of its oversight

responsibilities, the Board’s Risk Committee receives reports

from management that help it monitor how effectively the

Company is managing reputation risk. As part of its oversight

responsibilities for social and public responsibility matters, the

Board’s Corporate Responsibility Committee receives reports

from management relating to stakeholder perceptions of the

Company.

At the management level, the Reputation Risk Oversight

function, which is part of IRM, has oversight responsibility for

reputation risk. The Reputation Risk Oversight function reports

into the CRO and supports periodic reports related to reputation

risk provided to the Board’s Risk Committee.

Credit Risk Management

Credit risk is the risk of loss associated with a borrower or

counterparty default (failure to meet obligations in accordance

with agreed upon terms). Credit risk exists with many of the

Company’s assets and exposures such as debt security holdings,

certain derivatives, and loans.

The Board’s Risk Committee has primary oversight

responsibility for credit risk. A Credit Subcommittee of the Risk

Wells Fargo & Company 31

Committee assists the Risk Committee in providing oversight of

credit risk. At the management level, Corporate Credit Risk,

which is part of Independent Risk Management, has oversight

responsibility for credit risk. Corporate Credit Risk reports to the

CRO and supports periodic reports related to credit risk provided

to the Board’s Risk Committee or its Credit Subcommittee.

Loan Portfolio Our loan portfolios represent the largest

component of assets on our consolidated balance sheet for which

we have credit risk. Table 16 presents our total loans outstanding

by portfolio segment and class of financing receivable.

Table 16: Total Loans Outstanding by Portfolio Segment and Class of

Financing Receivable

(in millions) Dec 31, 2023 Dec 31, 2022

Commercial and industrial $ 380,388 386,806

Commercial real estate 150,616 155,802

Lease financing 16,423 14,908

Total commercial 547,427 557,516

Residential mortgage 260,724 269,117

Credit card 52,230 46,293

Auto 47,762 53,669

Other consumer 28,539 29,276

Total consumer 389,255 398,355

Total loans $ 936,682 955,871

We manage our credit risk by establishing what we believe

are sound credit policies for underwriting new business, while

monitoring and reviewing the performance of our existing loan

portfolios. We employ various credit risk management and

monitoring activities to mitigate risks associated with multiple

risk factors affecting loans we hold including:

• Loan concentrations and related credit quality;

• Counterparty credit risk;

• Economic and market conditions;

• Legislative or regulatory mandates;

• Changes in interest rates;

• Merger and acquisition activities; and

• Reputation risk.

In addition, the Company will continue to integrate climate

considerations into its credit risk management activities.

Our credit risk management oversight process is governed

centrally, but provides for direct management and accountability

by our lines of business. Our overall credit process includes

comprehensive credit policies, disciplined credit underwriting,

frequent and detailed risk measurement and modeling, extensive

credit training programs, and a continual loan review and audit

process.

A key to our credit risk management is adherence to a well-

controlled underwriting process, which we believe is appropriate

for the needs of our customers as well as investors who purchase

the loans or securities collateralized by the loans.

Credit Quality Overview

Table 17 provides credit quality trends.

Table 17: Credit Quality Overview

($ in millions) Dec 31, 2023 Dec 31, 2022

Nonaccrual loans

Commercial loans $ 4,914 1,823

Consumer loans 3,342 3,803

Total nonaccrual loans $ 8,256 5,626

Nonaccrual loans as a % of total loans 0.88% 0.59

Allowance for credit losses (ACL) for loans $ 15,088 13,609

ACL for loans as a % of total loans 1.61% 1.42

Net loan charge-offs as a % of:

Average commercial loans 0.17% 0.01

Average consumer loans 0.65 0.39

Additional information on our loan portfolios and our credit

quality trends follows.

Significant Loan Portfolio Reviews

Our credit risk monitoring

process is designed to enable early identification of developing

risk and to support our determination of an appropriate

allowance for credit losses. The following discussion provides

additional characteristics and analysis of our significant

portfolios. See Note 5 (Loans and Related Allowance for Credit

Losses) to Financial Statements in this Report for more analysis

and credit metric information for each of the following

portfolios.

COMMERCIAL AND INDUSTRIAL LOANS AND LEASE FINANCING

For purposes of portfolio risk management, we aggregate

commercial and industrial loans and leasefinancing according

tomarket segmentation andstandard industry codes.We

generally subject commercial and industrial loans and lease

financing to individual risk assessment using our internal

borrower and collateral quality ratings. Our ratings are aligned to

regulatory definitions of pass and criticized categories with

criticized segmented among special mention, substandard,

doubtful, and loss categories.

We had $14.6 billion of the commercial and industrial loans

and lease financing portfolio internally classified as criticized in

accordance with regulatory guidance at December31, 2023,

compared with $12.6billion at December31, 2022. The increase

was driven by the technology, telecom and media, and retail

industries.

The majority of our commercial and industrial loans and

lease financing portfolio is secured by short-term assets, such as

accounts receivable, inventory and debt securities, as well as

long-lived assets, such as equipment and other business assets.

Generally, the primary source of repayment for this portfolio is

the operating cash flows of customers, with the collateral

securing this portfolio representing a secondary source of

repayment.

The portfolio decreased at December31, 2023, compared

with December31, 2022, as a result of paydowns and decreased

loan draws. Table 18 provides our commercial and industrial loans

and lease financing by industry. The industry categories are based

on the North American Industry Classification System.

Risk Management – Credit Risk Management (continued)

32 Wells Fargo & Company

Table 18: Commercial and Industrial Loans and Lea se Financing by Industry

December 31, 2023 December 31, 2022

($ in millions)

Nonaccrual

loans

Loans

outstanding

balance

% of

total

loans

Total

commitments (1)

Nonaccrual

loans

Loans

outstanding

balance

% of

total

loans

Total

commitments (1)

Financials except banks $ 9 146,635 16% $ 234,513 44 147,171 15% $ 229,822

Technology, telecom and media 60 25,460 3 59,216 31 27,767 3 66,340

Real estate and construction 55 24,987 3 54,345 73 24,478 3 56,393

Retail 72 19,596 2 48,829 47 19,487 2 49,334

Equipment, machinery and parts manufacturing 37 24,785 3 48,265 83 23,675 2 47,507

Materials and commodities 112 14,235 2 37,758 86 16,610 2 39,667

Food and beverage manufacturing 15 16,047 2 33,957 17 17,393 2 33,951

Oil, gas and pipelines 2 10,730 1 32,544 55 9,991 1 31,077

Health care and pharmaceuticals 26 14,863 2 30,386 21 14,861 2 30,294

Auto related 8 15,203 2 28,795 10 13,168 1 27,451

Commercial services 37 11,095 1 26,025 50 11,418 1 26,693

Utilities 1 8,325 * 25,710 18 9,457 * 26,899

Diversified or miscellaneous 67 8,284 * 22,877 2 8,161 * 21,498

Entertainment and recreation 18 13,968 1 20,250

28 13,085 1 18,741

Transportation services 134 9,277 * 16,750 237 8,389 * 16,064

Insurance and fiduciaries 1 4,715 * 15,724 1 4,691 * 15,592

Banks — 11,820 1 12,981 — 14,403 2 16,537

Agribusiness 31 6,466 * 12,080 24 6,180 * 11,457

Government and education 26 5,603 * 11,552 25 6,482 * 12,590

Other (2) 15 4,717 * 12,297 13 4,847 * 12,301

Total $ 726 396,811 42% $ 784,854 865 401,714 42% $ 790,208

* Less than 1%.

(1) Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit. Effective first quarter 2023, unfunded credit commitments exclude

discretionary amounts where our approval or consent is required prior to any loan funding or commitment increase. Prior period balances have been revised to conform with the current period

presentation. For additional information on issued letters of credit, see Note 17 (Guarantees and Other Commitments) to Financial Statements in this Report.

(2) No other single industry had total loans in excess of $3.0 billion and $3.4 billion at December31, 2023 and 2022, respectively.

Table 18a provides further loan segmentation for our largest

industry category, financials except banks. This category includes

loans to investment firms, financial vehicles, nonbank creditors,

rental and leasing companies, securities firms, and investment

banks. These loans are generally secured and have features to

help manage credit risk, such as structural credit enhancements,

collateral eligibility requirements, contractual re-margining of

collateral supporting the loans, and loan amounts limited to a

percentage of the value of the underlying assets considering

underlying credit risk, asset duration, and ongoing performance.

Table 18a: Financials Except Banks Industry Category

December 31, 2023 December 31, 2022

($ in millions)

Nonaccrual

loans

Loans

outstanding

balance

% of

total

loans

Total

commitments (1)

Nonaccrual

loans

Loans

outstanding

balance

% of

total

loans

Total

commitments (1)

Asset managers and funds (2) $ — 51,842 6% $ 98,074 1 52,254 5 % $ 97,998

Commercial finance (3) 2 52,007 6 78,369 31 53,269 5 76,016

Consumer finance (4) — 20,308 2 33,547 4 17,028 2 29,047

Real estate finance (5) 7 22,478 2 24,523 8 24,620 3 26,761

Total $ 9 146,635 16% $ 234,513 44 147,171 15% $ 229,822

(1) Total commitments consist of loans outstanding plus unfunded credit commitments. Effective first quarter 2023, unfunded credit commitments exclude discretionary amounts where our approval

or consent is required prior to any loan funding or commitment increase. Prior period balances have been revised to conform with the current period presentation. For additional information on

issued letters of credit, see Note 17 (Guarantees and Other Commitments) to Financial Statements in this Report.

(2) Includes loans for subscription or capital calls and loans to prime brokerage customers and securities firms.

(3) Includes asset-based lending and leasing, including loans to special purpose entities, loans to commercial leasing entities, structured lending facilities to commercial loan managers, and also includes

collateralized loan obligations (CLOs) in loan form, all of which were rated AA or above, of $7.6billion and $7.8billion at December31, 2023 and 2022, respectively.

(4) Includes originators or servicers of financial assets collateralized by consumer loans such as auto loans and leases, and credit cards.

(5) Includes originators or servicers of financial assets collateralized by commercial or residential real estate loans.

Our commercial and industrial loans and lease financing

portfolio included non-U.S. loans of $72.9billion and $79.7billion

at December31, 2023 and 2022, respectively. Significant

industry concentrations of non-U.S. loans at December31, 2023

and 2022, respectively, included:

• $40.5 billion and $45.7 billion in the financials except banks

industry;

• $11.4 billion and $14.1 billion in the banks industry; and

• $2.0 billion and $1.2 billion in the oil, gas and pipelines

industry.

Risk mitigation actions, including the restructuring of

repayment terms, securing collateral or guarantees, and entering

into extensions, are based on a re-underwriting of the loan and

our assessment of the borrower’s ability to perform under the

agreed-upon terms. Extension terms generally range from six to

thirty-six months and may require that the borrower provide

Wells Fargo & Company 33

additional economic support in the form of partial repayment, or

additional collateral or guarantees. In cases where the value of

collateral or financial condition of the borrower is insufficient to

repay our loan, we may rely upon the support of an outside

repayment guarantee in providing the extension.

Our ability to seek performance under a guarantee is directly

related to the guarantor’s creditworthiness, capacity and

willingness to perform, which is evaluated on an annual basis, or

more frequently as warranted. Our evaluation is based on the

most current financial information available and is focused on

various key financial metrics, including net worth, leverage, and

current and future liquidity. We consider the guarantor’s

reputation, creditworthiness, and willingness to work with us

based on our analysis, as well as other lenders’ experience with

the guarantor. Our assessment of the guarantor’s credit strength

is reflected in our loan risk ratings for such loans. The loan risk

rating and accruing status are important factors in our allowance

for credit losses methodology.

In considering the accrual status of the loan, we evaluate

the collateral and future cash flows, as well as the anticipated

support of any repayment guarantor. In many cases, the

strength of the guarantor provides sufficient assurance that full

repayment of the loan is expected. When full and timely

collection of the loan becomes uncertain, including the

performance of the guarantor, we place the loan on nonaccrual

status. As appropriate, we also charge the loan down in

accordance with our charge-off policies, generally to the net

realizable value of the collateral securing the loan, if any.

COMMERCIAL REAL ESTATE (CRE) Our CRE loan portfolio is

composed of CRE mortgage and CRE construction loans. The

total CRE loan portfolio decreased $5.2billion from

December31, 2022, as paydowns exceeded originations and

advances. The portfolio is diversified both geographically and by

property type. The largest geographic concentrations of CRE

loans are in California, New York, Florida, and Texas, which

represented a combined 48% of the total CRE portfolio. The

largest property type concentrations are apartments at 28% and

office at 21% of the portfolio. Unfunded credit commitments at

December31, 2023 and 2022 were $7.7billion and $8.8billion,

respectively, for CRE mortgage loans and $13.2billion and

$20.7billion, respectively, for CRE construction loans.

We generally subject CRE loans to individual risk assessment

using our internal borrower and collateral quality ratings. We had

$17.5billion of CRE mortgage loans classified as criticized at

December31, 2023, compared with $11.3billion at

December31, 2022, and $830 million of CRE construction loans

classified as criticized at December31, 2023, compared with

$1.1 billion at December31, 2022. The increase in criticized CRE

mortgage loans was predominantly driven by the office and

apartments property types. The credit quality of the office

property type continued to be adversely affected as weakened

demand for office space continued to drive higher vacancy rates

and deteriorating operating performance. Loans in California and

NewYork represented approximately 40% of the office property

type at December31, 2023. We continue to closely monitor this

portfolio.

Risk Management – Credit Risk Management (continued)

34 Wells Fargo & Company

Table 19 provides our CRE loans by state and property type.

Table 19: CRE Loans by State and Pro perty Type

December 31, 2023 December 31, 2022

Real estate mortgage Real estate construction Totalcommercial real estate Total commercial real estate

($ in millions)

Nonaccrual

loans

Loans

outstanding

balance

Nonaccrual

loans

Loans

outstanding

balance

Nonaccrual

loans

Loans

outstanding

balance

Loans

as % of

total

loans

Total

commitments

(1)

Loans

outstanding

balance

Total

commitments

(1)

By state:

California $ 1,138 27,565 — 4,054 1,138 31,619 3 % $ 35,629 34,285 39,594

New York 922 14,229 — 2,346 922 16,575 2 17,930 17,294 19,360

Florida 114 10,324 — 2,168 114 12,492 1 14,577 11,418 14,690

Texas 19 10,562 — 1,471 19 12,033 1 14,224 12,807 14,941

Georgia 165 5,111 — 994 165 6,105 * 6,804 5,428 6,651

North Carolina 45 4,239 — 1,158 45 5,397 * 6,408 5,227 6,650

Washington 287 4,076 — 1,171 287 5,247 * 5,994 5,603 6,868

Arizona 12 4,579 — 603 12 5,182 * 5,806 5,302 6,288

New Jersey 8 2,599 — 1,765 8 4,364 * 5,130 4,119 5,660

Illinois 313 4,125 24 279 337 4,404 *

4,985 4,591 5,394

Other (2) 1,140 39,466 1 7,732 1,141 47,198 5 53,979 49,728 59,224

Total $ 4,163 126,875 25 23,741 4,188 150,616 1 6 % $ 171,466 155,802 185,320

By property:

Apartments $ 56 31,467 — 11,118 56 42,585 5 % $ 51,749 39,743 51,567

Office (3) 3,357 28,504 — 3,022 3,357 31,526 3 34,295 36,144 40,827

Industrial/warehouse 28 20,994 — 4,419 28 25,413 3 28,493 20,634 24,546

Hotel/motel 171 11,847 — 878 171 12,725 1 13,612 12,751 13,758

Retail (excl shopping center) 271 11,591 1 79 272 11,670 1 12,338 11,753 12,486

Shopping center 183 8,401 — 344 183 8,745 * 9,356 9,534 10,131

Institutional 57 4,431 24 1,555 81 5,986 * 6,568 7,725 9,178

Mixed use properties 32 3,172 — 339 32 3,511 * 3,763 5,887 7,139

Storage facility — 2,614 — 168 — 2,782 * 3,002 2,929 3,201

1-4 family structure — 7 — 1,188 — 1,195 * 2,691 1,324 3,589

Other 8 3,847 — 631 8 4,478 * 5,600 7,378 8,898

Total $ 4,163 126,875 25 23,741 4,188 150,616 16 % $ 171,467 155,802 185,320

* Less than 1%.

(1) Total commitments consist of loans outstanding plus unfunded credit commitments, excluding issued letters of credit. For additional information on issued letters of credit, see Note 17 (Guarantees

and Other Commitments) to Financial Statements in this Report.

(2) Includes 40 states and non-U.S. loans. No state in Other had loans in excess of $4.4 billion and $4.1 billion at December31, 2023 and 2022, respectively. Non-U.S. loans were $6.9billion and

$7.6billion at December31, 2023 and 2022, respectively.

(3) In second quarter 2023, we reclassified certain CRE loans to better align with regulatory reporting guidance, which resulted in a decrease in loans outstanding of approximately $2.0 billion to the

office property type.

NON-U.S. LOANS Our classification of non-U.S. loans is based on

whether the borrower’s primary address is outside of the United

States. At December31, 2023, non-U.S. loans totaled

$80.0billion, representing approximately 9% of our total

consolidated loans outstanding, compared with $87.5billion, or

approximately 9% of our total consolidated loans outstanding, at

December31, 2022. Non-U.S. loans were approximately 4% and

5% of our total consolidated assets at December31, 2023 and

2022, respectively.

COUNTRY RISK EXPOSURE Our country risk monitoring process

incorporates centralized monitoring of economic, political, social,

legal, and transfer risks in countries where we do or plan to do

business, along with frequent dialogue with our customers,

counterparties and regulatory agencies. We establish exposure

limits for each country through a centralized oversight process

based on customer needs, and through consideration of the

relevant and distinct risk of each country. We monitor exposures

closely and adjust our country limits in response to changing

conditions. We evaluate our individual country risk exposure

based on our assessment of a borrower’s ability to repay,

which gives consideration for allowable transfers of risk, such as

guarantees and collateral, and may be different from the

reporting based on a borrower’s primary address.

Our largest single country exposure outside the U.S. at

December31, 2023, was the United Kingdom, which totaled

$27.8billion, or approximately 1% of our total assets, and

included $4.1 billion of sovereign claims. Our United Kingdom

sovereign claims arise from deposits we have placed with the

Bank of England pursuant to regulatory requirements in support

of our London branch.

Table 20 provides information regarding our top 20

exposures by country (excluding the U.S.), based on our

assessment of risk, which gives consideration to the country of

any guarantors and/or underlying collateral. With respect to

Table 20:

• Lending and deposits with banks exposure includes

outstanding loans, unfunded credit commitments (excluding

discretionary amounts where our approval or consent is

required prior to any loan funding or commitment increase),

and deposits with non-U.S. banks. These balances are

presented prior to the deduction of allowance for credit

Wells Fargo & Company 35

losses or collateral received under the terms of the credit

agreements, if any.

• Securities exposure represents debt and equity securities of

non-U.S. issuers. Long and short positions are netted, and

net short positions are reflected as negative exposure.

• Derivatives and other exposure represents foreign exchange

contracts, derivative contracts, securities resale agreements,

and securities lending agreements.

Table 20: Select Country Exposures

December 31, 2023

Lending and deposits

with banks (1) Securities Derivatives and other Total exposure

(in millions) Sovereign

Non-

sovereign Sovereign

Non-

sovereign Sovereign

Non-

sovereign Sovereign

Non-

sovereign (2)

Total

Top 20 country exposures:

United Kingdom $ 4,096 22,249 10 213 2 1,212 4,108 23,674 27,782

Canada 8 16,547 (11) 352 133 513 130 17,412 17,542

Japan 8,513 595 — 66 — 86 8,513 747 9,260

Cayman Islands — 8,173 — — — 193 — 8,366 8,366

Luxembourg — 7,526 — 232 — 288 — 8,046 8,046

Ireland 5 4,898 — 163 1 215 6 5,276 5,282

France 34 4,278 — 358 19 104 53 4,740 4,793

Bermuda — 3,786 — 12 — 57 — 3,855 3,855

Germany — 2,990 (138) 377 9 167 (129) 3,534 3,405

China 13 1,351 (88) 1,456 21 8 (54) 2,815 2,761

Netherlands — 2,350 — 110 — 138 — 2,598 2,598

Guernsey — 2,482 — — — 2 — 2,484 2,484

South Korea — 1,899 (55) 348 — 4 (55) 2,251 2,196

Australia

— 1,588 — 412 — 29 — 2,029 2,029

Norway — 1,427 — 109 — 1 — 1,537 1,537

Switzerland — 1,222 — 25 — 289 — 1,536 1,536

Chile — 1,475 — 15 — 1 — 1,491 1,491

Brazil — 1,246 — (13) — — — 1,233 1,233

Spain — 819 — 52 — 223 — 1,094 1,094

India — 980 (68) 139 — 1 (68) 1,120 1,052

Total top 20 country exposures $ 12,669 87,881 (350) 4,426 185 3,531 12,504 95,838 108,342

(1) Includes sovereign and non-sovereign deposits with banks of $12.6 billion and $2.3 billion, respectively.

(2) Total non-sovereign exposure consisted of $45.3 billion exposure to financial institutions and $50.6 billion to non-financial corporations at December31, 2023.

RESIDENTIAL MORTGAGE LOANS Our residential mortgage loan

portfolio is composed of 1–4 family first and junior lien mortgage

loans. Residential mortgage – first lien loans represented 96% of

the total residential mortgage loan portfolio at December31,

2023, compared with 95% at December31, 2022.

The residential mortgage loan portfolio includes loans with

adjustable-rate features. We monitor the risk of default as a

result of interest rate increases on adjustable-rate mortgage

(ARM) loans, which may be mitigated by product features that

limit the amount of the increase in the contractual interest rate.

The default risk of these loans is considered in our ACL for loans.

ARM loans were 7% of total loans at both December31, 2023

and 2022, with an initial reset date in 2025 or later for the

majority of this portfolio at December31, 2023. We do not offer

option ARM products, nor do we offer variable-rate mortgage

products with fixed payment amounts, commonly referred to

within the financial services industry as negative amortizing

mortgage loans.

The residential mortgage – junior lien portfolio consists of

residential mortgage lines of credit and loans that are

subordinate in rights to an existing lien on the same property.

These lines and loans may have draw periods, interest-only

payments, balloon payments, adjustable rates and similar

features. Junior lien loan products are primarily amortizing

payment loans with fixed interest rates and repayment periods

between five to 30 years.We continuously monitor the credit

performance of our residential mortgage – junior lien portfolio

for trends and factors that influence the frequency and severity

of losses, such as junior lien performance when the first lien loan

is delinquent.

The outstanding balance of residential mortgage lines of

credit was $15.0 billion at December31, 2023, compared with

$18.3billion at December31, 2022. The unfunded credit

commitments for these lines of credit totaled $28.6billion at

December31, 2023, compared with $35.5billion at

December31, 2022. Our residential mortgage lines of credit

(both first and junior lien) generally have draw periods of 10, 15

or 20 years with variable interest rate and payment options

available during the draw period of (1)interest-only or (2) 1.5%

of outstanding principal balance plus accrued interest. The lines

that enter their amortization period may experience higher

delinquencies and higher loss rates than the ones in their draw or

term period. We have considered this increased risk in our ACL

for loans estimate. Interest-only lines and loans were

approximately 2% of total loans at both December31, 2023 and

2022.

During the draw period, the borrower has the option of

converting all or a portion of the line from a variable interest rate

to a fixed rate. At the end of the draw period, a line of credit

generally converts to an amortizing payment schedule with

repayment terms of up to 30years based on the balance at time

of conversion. Certain lines and loans have been structured with a

Risk Management – Credit Risk Management (continued)

36 Wells Fargo & Company

balloon payment, which requires full repayment of the

outstanding balance at the end of the term period. The

conversion of lines or loans to fully amortizing or balloon payoff

may result in a significant payment increase, which can affect

some borrowers’ ability to repay the outstanding balance. As

borrowers near the end of their draw period, we work with them

to transition from interest-only to fully-amortizing payments or

full repayment.

We monitor changes in real estate values and underlying

economic or market conditions for the geographic areas of our

residential mortgage portfolio as part of our credit risk

management process. Our periodic review of this portfolio

includes original appraisals adjusted for the change in Home Price

Index (HPI) or estimates from automated valuation models

(AVMs) to support property values. AVMs are computer-based

tools used to estimate the market value of homes. We have

processes to periodically validate AVMs and specific risk

management guidelines addressing the circumstances when

AVMs may be used. For additional information about our use of

appraisals and AVMs, see Note 5 (Loans and Related Allowance

for Credit Losses) to Financial Statements in this Report.

Part of our credit monitoring includes tracking delinquency,

current Fair Isaac Corporation (FICO) credit scores and loan to

collateral values (LTV) on the entire residential mortgage loan

portfolio. For junior lien mortgages, LTV uses the total combined

loan balance of first and junior lien mortgages (including unused

line of credit amounts). For additional information regarding

credit quality indicators, see Note 5 (Loans and Related

Allowance for Credit Losses) to Financial Statements in this

Report.

We continue to modify residential mortgage loans to assist

homeowners and other borrowers experiencing financial

difficulties. Under these programs, we may provide concessions

such as interest rate reductions, term extensions, forbearance of

principal, and in some cases, principal forgiveness. These

programs generally include a trial payment period of three

months, and after successful completion and compliance with

terms during this period, the loan is permanently modified. For

additional information on loan modifications, see Note 5 (Loans

and Related Allowance for Credit Losses) to Financial Statements

in this Report.

Residential Mortgage – First Lien Portfolio Our residential

mortgage – first lien portfolio decreased $6.2 billion from

December31, 2022, due to loan paydowns, partially offset by

originations.

Table 21 shows certain delinquency and loss information for

the residential mortgage – first lien portfolio and lists the top

five states by outstanding balance.

Table 21: Residential Mortgage – First Lien Portfolio Performance

Outstanding balance % of total loans

% of loans 30 days

or more past due Net loan charge-off rate

December 31, December 31, December 31, Year ended December 31,

($ in millions) 2023 2022 2023 2022 2023 2022 2023 2022

California (1) $ 109,972 110,877 11.74% 11.60 0.36 0.45 0.01 —

New York 31,322 31,753 3.34 3.32 0.79 0.80 — (0.02)

Washington 10,672 10,523 1.14 1.10 0.29 0.30 (0.02) —

New Jersey 10,161 10,416 1.08 1.09 1.13 1.24 0.01 0.01

Florida 10,065 10,535 1.07 1.10 1.11 1.13 (0.07) (0.08)

Other (2) 69,893 72,843 7.46 7.62 0.82 0.93 0.01 0.01

Total 242,085 246,947 25.83 25.83 0.61 0.69 — —

Government insured/guaranteed loans (3) 7,568 8,860 0.81 0.93

Total first lien mortgage portfolio $ 249,653 255,807 26.64% 26.76

(1) Our residential mortgage loans to borrowers in California are located predominantly within the larger metropolitan areas, with no single California metropolitan area consisting of more than 4% of

total loans.

(2) Consists of 45 states; no state in Other had loans in excess of $7.4 billion and $7.7 billion at December31, 2023 and 2022, respectively.

(3) Represents loans, substantially all of which were purchased from Government National Mortgage Association (GNMA) loan securitization pools, where the repayment of the loans is predominantly

insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). For additional information on GNMA loan securitization pools, see the “Risk

Management – Credit Risk Management – Mortgage Banking Activities” section in this Report.

Wells Fargo & Company 37

Residential Mortgage – Junior Lien Portfolio Our residential

mortgage – junior lien portfolio decreased $2.2 billion from

December31, 2022, driven by loan paydowns.

Table 22 shows certain delinquency and loss information for

the residential mortgage – junior lien portfolio and lists the top

five states by outstanding balance.

Table 22: Residential Mortgage – Junior Lien Portfolio Performance

Outstanding balance % of total loans

% of loans 30 days

or more past due Net loan charge-off rate

December 31, December 31, December 31, Year ended December 31,

($ in millions) 2023 2022 2023 2022 2023 2022 2023 2022

California $ 3,101 3,550 0.33% 0.37 1.65 2.02 (0.10) (0.26)

New Jersey 1,114 1,383 0.12 0.14 2.81 2.76 (0.13) 0.10

Florida 924 1,165 0.10 0.12 2.42 2.69 (0.37) (0.71)

Pennsylvania 673 832 0.07 0.09 2.70 2.76 (0.01) (0.17)

New York 661 794 0.07 0.08 3.26 2.86 0.07 (0.09)

Other (1) 4,598 5,586 0.49 0.58 2.05 2.05 (0.38) (0.53)

Total junior lien mortgage portfolio $ 11,071 13,310 1.18% 1.38 2.16 2.27 (0.23) (0.36)

(1) Consists of 45 states; no state in Other had loans in excess of $640 million and $790 million at December31, 2023 and 2022, respectively.

CREDIT CARD, AUTO, AND OTHER CONSUMER LOANS Table 23

shows the outstanding balance of our credit card, auto, and other

consumer loan portfolios. For information regarding credit

quality indicators for these portfolios, see Note 5 (Loans and

Related Allowance for Credit Losses) to Financial Statements in

this Report.

Table 23: Credit Card, Auto, and Other Consumer Loans

December 31, 2023 December 31, 2022

($ in millions)

Outstanding

balance

% of

total

loans

Outstanding

balance

% of

total

loans

Credit card $ 52,230 5.58% $ 46,293 4.84%

Auto 47,762 5.10 53,669 5.61

Other consumer (1) 28,539 3.05 29,276 3.06

Total $ 128,531 13.73% $ 129,238 13.51%

(1) Includes $18.3 billion and $19.4 billion at December31, 2023 and 2022, respectively, of

securities-based loans originated by the WIM operating segment.

Credit Card The increase in the outstanding balance at

December31, 2023, compared with December31, 2022, was

primarily due to higher purchase volume and new account

growth.

Auto The decrease in the outstanding balance at December31,

2023, compared with December31, 2022, was due to lower

origination volumes reflecting credit tightening actions.

Other Consumer The decrease in the outstanding balance at

December31, 2023, compared with December31, 2022, was

due to a decline in securities-based lending.

Risk Management – Credit Risk Management (continued)

38 Wells Fargo & Company

NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED

ASSETS)

We generally place loans on nonaccrual status when:

• the full and timely collection of interest or principal becomes

uncertain (generally based on an assessment of the

borrower’s financial condition and the adequacy of collateral,

if any), such as in bankruptcy or other circumstances;

• they are 90 days (120 days with respect to residential

mortgage loans) past due for interest or principal, unless the

loan is both well-secured and in the process of collection;

• part of the principal balance has been charged off; or

• for junior lien mortgage loans, we have evidence that the

related first lien mortgage may be 120 days past due or in

the process of foreclosure regardless of the junior lien

delinquency status.

Certain nonaccrual loans may be returned to accrual status

after they perform for a period of time. Consumer credit card

loans are not placed on nonaccrual status, but are generally fully

charged off when the loan reaches 180 days past due.

Table 24 summarizes nonperforming assets (NPAs).

Table 24: Nonperforming Assets (Nonaccrual Loans and Fo reclosed Assets)

($ in millions) Dec 31, 2023 Dec 31, 2022

Nonaccrual loans:

Commercial and industrial $ 662 746

Commercial real estate 4,188 958

Lease financing 64 119

Total commercial 4,914 1,823

Residential mortgage (1) 3,192 3,611

Auto 115 153

Other consumer 35 39

Total consumer 3,342 3,803

Total nonaccrual loans $ 8,256 5,626

As a percentage of total loans 0.88% 0.59

Foreclosed assets:

Government insured/guaranteed (2) $ 12 22

Non-government insured/guaranteed 175 115

Total foreclosed assets 187 137

Total nonperforming assets $ 8,443 5,763

As a percentage of total loans 0.90% 0.60

(1) Residential mortgage loans predominantly insured by the FHA or guaranteed by the VA are not placed on nonaccrual status because they are insured or guaranteed.

(2) Consistent with regulatory reporting requirements, foreclosed real estate resulting from government insured/guaranteed loans are classified as nonperforming. Both principal and interest related to

these foreclosed real estate assets are collectible because the loans were predominantly insured by the FHA or guaranteed by the VA. Receivables related to the foreclosure of certain government

guaranteed real estate mortgage loans are excluded from this table and included in accounts receivable in other assets. For additional information on the classification of certain government-

guaranteed mortgage loans upon foreclosure, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

Commercial nonaccrual loans increased $3.1 billion from

December31, 2022, driven by an increase in commercial real

estate nonaccrual loans, predominantly within the office

property type. For additional information on commercial

nonaccrual loans, see the “Risk Management – Credit Risk

Management – Commercial and Industrial Loans and Lease

Financing” and “Risk Management – Credit Risk Management –

Commercial Real Estate” sections in this Report.

Consumer nonaccrual loans decreased $461 million from

December31, 2022, due to lower residential mortgage

nonaccrual loans.

Wells Fargo & Company 39

Table 25 provides an analysis of the changes in nonaccrual

loans. Typically, changes to nonaccrual loans period-over-period

represent inflows for loans that are placed on nonaccrual status

in accordance with our policies, offset by reductions for loans

that are paid down, charged off, sold, foreclosed, or are no longer

classified as nonaccrual as a result of continued performance and

an improvement in the borrower’s financial condition and loan

repayment capabilities.

Table 25: Analysis of Changes in Nonaccrual Loans

Year ended December 31,

(in millions) 2023 2022

Commercial nonaccrual loans

Balance, beginning of period $ 1,823 2,376

Inflows 6,524 1,391

Outflows:

Returned to accruing (474) (451)

Foreclosures (70) (20)

Charge-offs (1,054) (247)

Payments, sales and other (1,835) (1,226)

Total outflows (3,433) (1,944)

Balance, end of period 4,914 1,823

Consumer nonaccrual loans

Balance, beginning of period 3,803 4,836

Inflows 1,314 1,728

Outflows:

Returned to accruing (737) (1,599)

Foreclosures (101) (85)

Charge-offs (167) (245)

Payments, sales and other (770) (832)

Total outflows (1,775) (2,761)

Balance, end of period 3,342 3,803

Total nonaccrual loans $ 8,256 5,626

We considered the risk of losses on nonaccrual loans in

developing our allowance for loan losses. We believe exposure to

losses on nonaccrual loans is mitigated by the following factors

at December31, 2023:

• 99% of total commercial nonaccrual loans are secured,

predominantly by real estate.

• 76% of commercial nonaccrual loans were current on

interest and 66% of commercial nonaccrual loans were

current on both principal and interest, but were on

nonaccrual status because the full or timely collection of

interest or principal had become uncertain.

• 99% of total consumer nonaccrual loans are secured, of

which 96% are secured by real estate and 98% have a LTV

ratio of 80% or less.

• $489million of the $629million of consumer loans in

bankruptcy or discharged in bankruptcy, and classified as

nonaccrual, were current.

Table 26 provides a summary of foreclosed assets and an

analysis of changes in foreclosed assets.

Table 26: Foreclosed Assets

(in millions)

December 31,

2023 2022

Summary by loan segment

Government insured/guaranteed $ 12 22

Commercial 135 65

Consumer 40 50

Total foreclosed assets $ 187 137

(in millions)

Year ended December 31,

2023 2022

Analysis of changes in foreclosed assets

Balance, beginning of period $ 137 112

Net change in government insured/guaranteed (1) (10) 6

Additions to foreclosed assets (2) 576 420

Reductions from sales and write-downs (516) (401)

Balance, end of period $ 187 137

(1) Foreclosed government insured/guaranteed loans are temporarily transferred to and held by us as servicer, until reimbursement is received from the FHA or the VA.

(2) Includes loans moved into foreclosed assets from nonaccrual status and repossessed autos.

Risk Management – Credit Risk Management (continued)

Wells Fargo & Company 40

NET CHARGE-OFFS Table 27 presents net loan charge-offs.

Table 27: Net Loan Charge-offs

Quarter ended December 31, Year ended December 31,

2023 2022 2023 2022

($ in millions)

Net loan

charge-

offs

% of

avg.

loans (1)

Net loan

charge-

offs

% of

avg.

loans (1)

Net loan

charge-

offs

% of

avg.

loans

Net loan

charge-

offs

% of

avg.

loans

Commercial and industrial $ 90 0.09% $ 66 0.07% $ 345 0.09% $ 83 0.02%

Commercial real estate 377 0.99 10 0.03 566 0.37 (11) (0.01)

Lease financing 5 0.14 3 0.06 12 0.08 7 0.04

Total commercial 472 0.34 79 0.06 923 0.17 79 0.01

Residential mortgage 3 — (12) (0.02) (24) (0.01) (63) (0.02)

Credit card 520 4.02 274 2.42 1,680 3.49 851 2.06

Auto 130 1.06 137 1.00 478 0.93 422 0.76

Other consumer 127 1.79 82 1.13 413 1.47 319 1.11

Total consumer 780 0.79 481 0.48 2,547 0.65 1,529 0.39

Total $ 1,252 0.53% $ 560 0.23% $ 3,470 0.37% $ 1,608 0.17%

(1) Net loan charge-offs (recoveries) as a percentage of average loans are annualized.

The increase in commercial net loan charge-offs in 2023,

compared with 2022, was due to higher losses in all commercial

portfolios, primarily in our commercial real estate portfolio

driven by the office property type.

The increase in consumer net loan charge-offs in 2023,

compared with 2022, was due to higher losses in all consumer

portfolios, primarily in our credit card portfolio.

ALLOWANCE FOR CREDIT LOSSES We maintain an allowance for

credit losses (ACL) for loans, which is management’s estimate of

the expected lifetime credit losses in the loan portfolio and

unfunded credit commitments, at the balance sheet date,

excluding loans and unfunded credit commitments carried at fair

value or held for sale. Additionally, we maintain an ACL for debt

securities classified as either AFS or HTM, other financial assets

measured at amortized cost, including deposits with banks, net

investments in leases, and other off-balance sheet credit

exposures.

The process for establishing the ACL for loans takes into

consideration many factors, including historical and forecasted

loss trends, loan-level credit quality ratings and loan grade-

specific characteristics. The process involves subjective and

complex judgments. In addition, we review a variety of credit

metrics and trends. These credit metrics and trends, however, do

not solely determine the amount of the allowance as we use

several analytical tools. For additional information on our ACL,

see the “Critical Accounting Policies – Allowance for Credit

Losses” section andNote 1 (Summary of Significant Accounting

Policies) to Financial Statements in this Report. For additional

information on our ACL for loans, see Note 5 (Loans and Related

Allowance for Credit Losses) to Financial Statements in this

Report, and for additional information on our ACL for debt

securities, see Note 3 (Available-for-Sale and Held-to-Maturity

Debt Securities) to Financial Statements in this Report.

Table 28 presents the allocation of the ACL for loans by loan

portfolio segment and class.

Wells Fargo & Company 41

Table 28: Allocation of the ACL for Loans

Dec 31, 2023 Dec 31, 2022

($ in millions) ACL

ACL

as %

of loan

class

Loans

as %

of total

loans ACL

ACL

as %

of loan

class

Loans

as %

of total

loans

Commercial and industrial $ 4,272 1.12% 40 $ 4,507 1.17% 40

Commercial real estate 3,939 2.62 16 2,231 1.43 16

Lease financing 201 1.22 2 218 1.46 2

Total commercial 8,412 1.54 58 6,956 1.25 5 8

Residential mortgage (1) 652 0.25 28 1,096 0.41 28

Credit card 4,223 8.09 6 3,567 7.71 5

Auto 1,042 2.18 5 1,380 2.57 6

Other consumer 759 2.66 3 610 2.08 3

Total consumer 6,676 1.72 42 6,653 1.67 42

Total $ 15,088 1.61% 100 $ 13,609 1.42% 100

Components:

Allowance for loan losses $ 14,606 12,985

Allowance for unfunded credit commitments 482 624

Allowance for credit losses $ 15,088 13,609

Ratio of allowance for loan losses to total net loan charge-offs 4.21x 8.08

Ratio of allowance for loan losses to total nonaccrual loans 1.77 2.31

Allowance for loan losses as a percentage of total loans 1.56% 1.36

(1) Includes negative allowance for expected recoveries of amounts previously charged off.

The ratios for the allowance for loan losses and the ACL for

loans presented in Table 28 may fluctuate from period to period

due to such factors as the mix of loan types in the portfolio,

borrower credit strength, and the value and marketability of

collateral.

The ACL for loans increased $1.5billion, or 11%, from

December31, 2022, reflecting increases for commercial real

estate loans, primarily office loans, as well as for increases in

credit card loan balances, partially offset by a decrease for

residential mortgage loans related to the adoption of ASU

2022-02. For additional information on ASU 2022-02, see

Note 1 (Summary of Significant Accounting Policies) to Financial

Statements in this Report. The detail of the changes in the ACL

for loans by portfolio segment (including charge-offs and

recoveries by loan class) is included in Note 5 (Loans and Related

Allowance for Credit Losses) to Financial Statements in this

Report.

We consider multiple economic scenarios to develop our

estimate of the ACL for loans, which generally include a base

scenario, along with an optimistic (upside) and one or more

pessimistic (downside) scenarios. We weighted the base scenario

and the downside scenarios in our estimate of the ACL for loans

at December31, 2023. The base scenario assumed elevated

inflation and economic contraction in the near term, reflecting

declining property values and increased unemployment rates

from historically low levels. The downside scenarios assumed a

more substantial economic contraction due to declining property

values, high inflation, and lower business and consumer

confidence.

Additionally, we consider qualitative factors that represent

the risk of limitations inherent in our processes and assumptions

such as economic environmental factors, modeling assumptions

and performance, and other subjective factors, including industry

trends and emerging risk assessments.

The forecasted key economic variables used in our estimate

of the ACL for loans at December31 and September 30, 2023,

are presented in Table 29.

Table 29: Forecasted Key Economic Variables

2024

2025

Weighted blend of economic scenarios:

U.S. unemployment rate (1)

December 31, 2023 4.4% 5.3 5.9

September 30, 2023 4.6 5.6 6.0

U.S. real GDP (2):

December 31, 2023 (1.2) (0.5) 0.8

September 30, 2023 (1.5) 0.3 1.6

Home price index (3):

December 31, 2023 (2.3) (6.7) (6.6)

September 30, 2023 (6.1) (6.8) (5.8)

Commercial real estate asset prices (3):

December 31, 2023 (6.6) (14.0) (10.4)

September 30, 2023 (13.8) (10.3) (4.5)

(1) Quarterly average.

(2) Percent change from the preceding period, seasonally adjusted annualized rate.

(3) Percent change year over year of national average; outlook differs by geography and

property type.

Future amounts of the ACL for loans will be based on a

variety of factors, including loan balance changes, portfolio credit

quality and mix changes, and changes in general economic

conditions and expectations (including for unemployment and

real GDP), among other factors.

We believe the ACL for loans of $15.1billion at

December31, 2023, was appropriate to cover expected credit

losses, including unfunded credit commitments, at that date. The

entire allowance is available to absorb credit losses from the total

loan portfolio. The ACL for loans is subject to change and reflects

existing factors as of the date of determination, including

economic or market conditions and ongoing internal and external

examination processes. Due to the sensitivity of the ACL for

loans to changes in the economic and business environment, it is

possible that we will incur incremental credit losses not

anticipated as of the balance sheet date. Our process for

Risk Management – Credit Risk Management (continued)

42 Wells Fargo & Company

determining the ACL is discussed in the “Critical Accounting

Policies – Allowance for Credit Losses” section and Note 1

(Summary of Significant Accounting Policies) to Financial

Statements in this Report.

MORTGAGE BANKING ACTIVITIES We sell residential and

commercial mortgage loans to various parties, including (1)

government-sponsored entities (GSEs), Federal Home Loan

Mortgage Corporation (FHLMC) and Federal National Mortgage

Association (FNMA), who include the mortgage loans in GSE-

guaranteed mortgage securitizations, (2) SPEs that issue private

label MBS, and (3) other financial institutions that purchase

mortgage loans for investment or private label securitization. In

addition, we pool FHA-insured and VA-guaranteed residential

mortgage loans that are then used to back securities guaranteed

by the Government National Mortgage Association (GNMA). We

may be required to repurchase these mortgage loans, indemnify

the securitization trust, investor or insurer, or reimburse the

securitization trust, investor or insurer for credit losses incurred

on loans (collectively, repurchase) in the event of a breach of

contractual representations or warranties that is not remedied

within a period (usually 90 days or less) after we receive notice of

the breach.

In connection with our sales and securitization of residential

mortgage loans, we have established a mortgage repurchase

liability, initially at fair value, related to various representations

and warranties that reflect management’s estimate of losses for

loans for which we could have a repurchase obligation, whether or

not we currently service those loans, based on a combination of

factors. See Note 16 (Securitizations and Variable Interest

Entities) to Financial Statements in this Report for additional

information about our liability for mortgage loan repurchase

losses.

We provide recourse to GSEs for commercial mortgage

loans sold under various programs and arrangements. The terms

of certain programs require that we incur a pro-rata share of

actual losses in the event of borrower default. See Note 17

(Guarantees and Other Commitments) to Financial Statements

in this Report for additional information about our exposure to

loss related to these programs.

In addition to servicing loans in our portfolio, we act as

servicer and/or master servicer of residential and commercial

mortgage loans included in GSE mortgage securitizations,

GNMA-guaranteed mortgage securitizations of FHA-insured/

VA-guaranteed mortgages and private label mortgage

securitizations, as well as for unsecuritized loans owned by

institutional investors.

The loans we service were originated by us or by other

mortgage loan originators. As servicer, our primary duties are

typically to (1) collect payments due from borrowers, (2) advance

certain delinquent payments of principal and interest on the

mortgage loans, (3) maintain and administer any hazard, title or

primary mortgage insurance policies relating to the mortgage

loans, (4)maintain any required escrow accounts for payment of

taxes and insurance and administer escrow payments, and (5)

foreclose on defaulted mortgage loans or, to the extent

consistent with the related servicing agreement, consider

alternatives to foreclosure, such as loan modifications or short

sales, and for certain investors, manage the foreclosed property

through liquidation. As master servicer, our primary duties are

typically to (1) supervise, monitor and oversee the servicing of

the mortgage loans by the servicer, and (2) advance delinquent

amounts required by non-affiliated servicers who fail to perform

their advancing obligations. The amount and timing of

reimbursement for advances of delinquent payments vary by

investor and the applicable servicing agreements. See Note 6

(Mortgage Banking Activities) to Financial Statements in this

Report for additional information about residential and

commercial servicing rights, servicer advances and servicing fees.

In accordance with applicable servicing guidelines, upon

transfer as servicer, we have the option to repurchase loans from

certain loan securitizations, which generally becomes exercisable

based on delinquency status such as when three scheduled loan

payments are past due. When we have the unilateral option to

repurchase a loan, we recognize the loan and a corresponding

liability on our balance sheet regardless of our intent to

repurchase the loan. We may repurchase these loans for cash and

as a result, our total consolidated assets do not change.

Loans repurchased from GNMA securitization pools that

regain current status or are otherwise modified in accordance

with applicable servicing guidelines may be included in future

GNMA loan securitization pools. At December31, 2023 and

2022, these loans, which we have repurchased or have the

unilateral option to repurchase, were $7.8billion and $9.8billion,

respectively, which included $7.4billion and $8.6billion,

respectively, in loans held for investment, with the remainder in

loans held for sale. See Note 16 (Securitizations and Variable

Interest Entities) to Financial Statements in this Report for

additional information about our involvement with mortgage

loan securitizations.

Each agreement under which we act as servicer or master

servicer generally specifies a standard of responsibility for

actions we take in such capacity. We are required to indemnify

the securitization trustee against any failure by us, as servicer or

master servicer, to perform our servicing obligations. In addition,

if we commit a breach of our obligations as servicer or master

servicer, we may be subject to termination if the breach is not

cured within a specified period. The standards governing

servicing in GSE-guaranteed securitizations, and the possible

remedies for violations of such standards, vary, and those

standards and remedies are determined by servicing guides

maintained by the GSEs, contracts between the GSEs and

individual servicers and topical guides published by the GSEs

from time to time. Such remedies could include indemnification

or repurchase of an affected mortgage loan. In addition, in

connection with our servicing activities, we could continue to

become subject to consent orders and settlement agreements

with federal and state regulators for alleged servicing issues and

practices. In general, these can require us to provide customers

with loan modification relief, refinancing relief, and foreclosure

prevention and assistance, and can result in business restrictions

or the imposition of certain monetary penalties on us.

Wells Fargo & Company 43

Asset/Liability Management

Asset/liability management involves measuring, monitoring and

managing interest rate risk, market risk, liquidity and funding.

Primary oversight of interest rate risk and market risk resides

with the Finance Committee of the Board, while primary

oversight of liquidity and funding resides with the Risk

Committee of the Board. These committees oversee the

administration and effectiveness of financial risk management

policies and processes used to assess and manage these risks.

At the management level, the Corporate Asset/Liability

Committee (Corporate ALCO), which consists of management

from finance, risk and business groups, oversees these risks and

supports periodic reports provided to the Board’s Finance

Committee and Risk Committee as appropriate. As discussed in

more detail for market risk activities below, we employ separate

management level oversight specific to market risk.

INTEREST RATE RISK Interest rate risk is the risk that market

fluctuations in interest rates, credit spreads, or foreign exchange

can cause a loss of the Company’s earnings and capital stemming

from mismatches in the cash flows of the Company’s assets and

liabilities generally arising from customer-related lending and

deposit-taking activities. We are subject to interest rate risk

because:

• assets and liabilities may mature or reprice at different times

or by different amounts;

• short-term and long-term market interest rates may change

independently or with different magnitudes;

• the remaining maturity for various assets or liabilities may

shorten or lengthen as interest rates change; or

• interest rates may also have a direct or indirect effect on

loan demand, collateral values, credit losses, loan origination

volume, and the fair value of financial instruments and

MSRs.

We assess interest rate risk by comparing the earnings

outcomes from multiple interest rate scenarios that differ in the

direction of interest rate changes, the degree and speed of

interest rate changes over time, and the projected shape of the

yield curve. These scenarios require assumptions regarding

drivers of earnings and balance sheet composition such as loan

originations, prepayment rates on loans and debt securities,

deposit flows and mix, as well as pricing strategies. We

periodically assess and enhance our scenarios and assumptions.

Our scenario assumptions reflected the following:

• Scenarios are dynamic and reflect anticipated changes to our

assets and liabilities over time.

• Mortgage prepayment and origination assumptions vary

across scenarios and reflect only the impact of the higher or

lower interest rates.

• Other macroeconomic variables that could be correlated

with the changes in interest rates are held constant.

• The funding forecast in our base scenario incorporates

deposit mix changes and market funding levels consistent

with the base interest rate trajectory. Our hypothetical

scenarios incorporate deposit mix that is the same as in the

base scenario. In higher interest rate scenarios, customer

deposit activity that shifts balances into higher yielding

products and/or requires additional market funding could

reduce the expected benefit from higher rates.

• The interest rate sensitivity of deposits as market interest

rates change, referred to as deposit betas, are informed by

historical behavior and expectations for near-term pricing

strategies. Our actual experience may differ from

expectations due to the lag or acceleration of deposit

repricing, changes in consumer behavior, and other factors.

Table 30 presents the results of the estimated net interest

income sensitivity over the next 12 months from the multiple

scenarios compared with our base scenario. The base scenario is a

reference point used by the Company for financial planning

purposes. These hypothetical scenarios include instantaneous

movements across the yield curve with both lower and higher

interest rates under a parallel shift, as well as steeper and flatter

non-parallel changes in the yield curve. Long-term interest rates

are defined as all tenors three years and longer, and short-term

interest rates are defined as all tenors less than three years.

Table 30: Net Interest Income Sensitivity Over the Next 12 Months

Using Instantaneous Movements

($ in billions) Dec 31, 2023 Dec 31, 2022

Parallel shift:

+100 bps shift in interest rates $ 1.8 2.3

-100 bps shift in interest rates (2.0) (1.7)

Steeper yield curve:

+100 bps shift in long-term interest rates 1.1 0.8

-100 bps shift in short-term interest rates (1.0) (1.0)

Flatter yield curve:

+100 bps shift in short-term interest rates 0.7 1.5

-100 bps shift in long-term interest rates (1.1) (0.7)

Our interest rate sensitivity indicates that we would expect

to benefit from higher interest rates as our assets would reprice

faster and to a greater degree than our liabilities, while in the

case of lower interest rates, our assets would reprice downward

and to a greater degree than our liabilities resulting in lower net

interest income. The changes in our interest rate sensitivity from

December31, 2022, to December31, 2023, reflected updates

for our expected balance sheet composition, including a shift to

higher cost deposits. The magnitude of the benefit, if any, from

higher interest rates may vary from our scenarios, including

because future deposit pricing and balances may be different

from our current expectations. The realized impact of interest

rate changes may also vary from our base and hypothetical

scenarios for various reasons, including any deposit pricing lags.

We use interest rate derivatives and our debt securities

portfolio to manage our interest rate exposures. We use

derivatives for asset/liability management to (i) convert cash

flows from selected assets and/or liabilities from floating-rate

payments to fixed-rate payments, or vice versa, (ii) reduce

accumulated other comprehensive income (AOCI) sensitivity of

our AFS debt securities portfolio, and/or (iii) economically hedge

our mortgage origination pipeline, funded mortgage loans, and

MSRs. Derivatives used to hedge our interest rate risk exposures

are presented in Note 14 (Derivatives) to Financial Statements in

this Report. As interest rates increase, changes in the fair value of

AFS debt securities may negatively affect AOCI, which lowers the

amount of our regulatory capital. AOCI also includes unrealized

gains or losses related to the transfer of debt securities from AFS

to HTM, which are subsequently amortized into earnings over the

life of the security with no further impact from interest rate

changes. See Note 1 (Summary of Significant Accounting

Policies) and Note 3 (Available-for-Sale and Held-to-Maturity

Debt Securities) to Financial Statements in this Report for

additional information on our debt securities portfolio.

44 Wells Fargo & Company

In addition to the net interest income sensitivity above, we

also measure and evaluate the economic value sensitivity (EVS)

of our balance sheet. EVS is the change in the present value of

the life-time cash flows of the Company’s assets and liabilities

across a range of scenarios. It is based on the existing balance

sheet, at a point in time, and helps indicate whether we are

exposed to higher or lower interest rates. We manage EVS

through a set of limits that are designed to align with our interest

rate risk appetite.

Our interest rate sensitive noninterest income and expense

are impacted by mortgage banking activities that may have

sensitivity impacts that move in the opposite direction of our net

interest income. See the “Risk Management – Asset/Liability

Management – Mortgage Banking Interest Rate and Market

Risk” section in this Report for additional information.

Interest rate sensitive noninterest income is also impacted

by changes in earnings credit for noninterest-bearing deposits

that reduce treasury management deposit-related service fees

on commercial accounts, and by trading assets. In addition, the

impact to net interest income does not include the fair value

changes of trading securities, which, along with the effects of

related economic hedges, are recorded in noninterest income. In

addition to changes in interest rates, net interest income and

noninterest income from trading securities may be impacted by

the actual composition of the trading portfolio. For additional

information on our trading assets and liabilities, see Note 2

(Trading Activities) to Financial Statements in this Report.

MORTGAGE BANKING INTEREST RATE AND MARKET RISK We

originate and service mortgage loans, which subjects us to

various risks, including market, interest rate, credit, and liquidity

risks that can be substantial. Based on market conditions and

other factors, we reduce credit and liquidity risks by selling or

securitizing mortgage loans. We determine whether mortgage

loans will be held for investment or held for sale at the time of

commitment, but may change our intent to hold loans for

investment or sale as part of our corporate asset/liability

management activities. We may also retain securities in our

investment portfolio at the time we securitize mortgage loans.

Changes in interest rates may impact mortgage banking

noninterest income, including origination and servicing fees, and

the fair value of our residential MSRs, LHFS, and derivative loan

commitments (interest rate “locks”) extended to mortgage

applicants. Interest rate changes will generally impact our

mortgage banking noninterest income on a lagging basis due to

the time it takes for the market to reflect a shift in customer

demand, as well as the time required for processing a new

application, providing the commitment, and securitizing and

selling the loan. The amount and timing of the impact will depend

on the magnitude, speed and duration of the changes in interest

rates.

The valuation of our residential MSRs can be highly

subjective and involve complex judgments by management

about matters that are inherently unpredictable. Changes in

interest rates influence a variety of significant assumptions

captured in the periodic valuation of residential MSRs, including

prepayment rates, expected returns and potential risks on the

servicing asset portfolio, costs to service, the value of escrow

balances and other servicing valuation elements. See the “Critical

Accounting Policies – Valuation of Residential Mortgage

Servicing Rights” section in this Report for additional

information on the valuation of our residential MSRs.

An increase in interest rates generally reduces the

propensity for refinancing, extends the expected duration of the

servicing portfolio, and therefore increases the estimated fair

value of the MSRs. However, an increase in interest rates can also

reduce mortgage loan demand, including refinancing activity,

which reduces noninterest income from origination activities. A

decline in interest rates would generally have an opposite impact.

To reduce our exposure to changes in interest rates, our

residential MSRs are economically hedged with a combination of

derivative instruments, including interest rate swaps, Eurodollar

futures, highly liquid mortgage forward contracts and interest

rate options. Hedging the various sources of interest rate risk in

mortgage banking is a complex process that requires

sophisticated modeling and constant monitoring. There are

several potential risks to earnings from mortgage banking

related to origination volumes and mix, valuation of MSRs and

associated hedging results, the relationship and degree of

volatility between short-term and long-term interest rates, and

changes in servicing and foreclosures costs. While we attempt to

balance our mortgage banking interest rate and market risks, the

financial instruments we use may not perfectly correlate with the

values and income being hedged.

The size of the hedge and the particular combination of

hedging instruments at any point in time is designed to reduce

the volatility of our earnings over various time frames within a

range of mortgage interest rates. Market factors, the

composition of the mortgage servicing portfolio, and the

relationship between the origination and servicing sides of our

mortgage businesses change continually, and therefore the types

of instruments used in our hedging are reviewed daily and

rebalanced based on our evaluation of current market factors and

the interest rate risk inherent in our portfolio.

For additional information on mortgage banking, including

key assumptions and the sensitivity of the fair value of MSRs, see

Note 6 (Mortgage Banking Activities), Note 14 (Derivatives), and

Note 15 (Fair Values of Assets and Liabilities) to Financial

Statements in this Report.

MARKET RISK Market risk is the risk of possible economic loss

from adverse changes in market risk factors such as interest

rates, credit spreads, foreign exchange rates, equity and

commodity prices, and the risk of possible loss due to

counterparty exposure. This applies to implied volatility risk,

basis risk, and market liquidity risk. It includes price risk in the

trading book, mortgage servicing rights, the hedge effectiveness

risk associated with the mortgage book held at fair value, and

impairment on private equity investments.

The Board’s Finance Committee has primary oversight

responsibility for market risk and oversees the Company’s

market risk exposure and market risk management strategies. In

addition, the Board’s Risk Committee has certain oversight

responsibilities with respect to market risk, including

counterparty risk. The Finance Committee also reports key

market risk matters to the Risk Committee.

At the management level, the Market and Counterparty Risk

Management function, which is part of IRM, has oversight

responsibility for market risk across the enterprise. The Market

and Counterparty Risk Management function reports into

Corporate and Investment Banking Risk and provides periodic

reports related to market risk to the Board’s Finance Committee

and Risk Committee, as applicable.

MARKET RISK – TRADING ACTIVITIES We engage in trading

activities to accommodate the investment and risk management

activities of our customers and to execute economic hedging to

manage certain balance sheet risks. These trading activities

predominantly occur within our CIB businesses and, to a lesser

extent, other businesses of the Company. Debt securities held

Wells Fargo & Company 45

for trading, equity securities held for trading, trading loans, and

trading derivatives are financial instruments used in our trading

activities, and all are carried at fair value. Income earned on the

financial instruments used in our trading activities include net

interest income, changes in fair value, and realized gains and

losses. Net interest income earned from our trading activities is

reflected in the interest income and interest expense

components of our consolidated statement of income. Changes

in fair value of the financial instruments used in our trading

activities are reflected in net gains from trading activities. For

additional information on the financial instruments used in our

trading activities and the income from these trading activities,

see Note 2 (Trading Activities) to Financial Statements in this

Report.

Value-at-risk (VaR) is a statistical risk measure used to

estimate the potential loss from adverse moves in the financial

markets. The Company uses VaR metrics complemented with

sensitivity analysis and stress testing in measuring and

monitoring market risk. These market risk measures are

monitored at both the business unit level and at aggregated

levels on a daily basis. Our corporate market risk management

function aggregates and monitors exposures against our

established risk appetite. Changes to the market risk profile are

analyzed and reported on a daily basis. The Company monitors

various market risk exposure measures from a variety of

perspectives, including line of business, product, risk type, and

legal entity.

Trading VaR is the measure used to provide insight into the

market risk exhibited by the Company’s trading positions. The

Company calculates Trading VaR for risk management purposes

to establish and monitor line of business and Company-wide risk

limits. Trading VaR is calculated based on all trading positions on

our consolidated balance sheet.

Table 31 shows the Company’s Trading General VaR by risk

category. Our Trading General VaR uses a historical simulation

model which assumes that historical changes in market values

are representative of the potential future outcomes and

measures the expected earnings loss of the Company over a

1-day time interval at a 99% confidence level. Our historical

simulation model is based on equally weighted data from a

12-month historical look-back period. We believe using a

12-month look-back period helps ensure the Company’s VaR is

responsive to current market conditions. The 99% confidence

level equates to an expectation that the Company would incur

single-day trading losses in excess of the VaR estimate on

average once every 100 trading days.

Table 31: Trading 1-Day 99% General VaR by Risk Category

Year ended December 31,

2023 2022

(in millions)

Period

end Average Low High

Period

end Average Low High

Company Trading General VaR Risk Categories

Credit $ 30 35 20 52 29 32 19 85

Interest rate 16 33 9 65 25 25 9 88

Equity 23 21 13 31 27 23 13 38

Commodity 3 4 2 8 4 6 2 20

Foreign exchange 1 1 0 4 1 1 0 2

Diversification benefit (1) (36) (59) (47) (52)

Company Trading General VaR $ 37 35 39 35

(1) The period-end VaR was less than the sum of the VaR components described above due to portfolio diversification. The diversification effect arises because the risks are not perfectly correlated

causing a portfolio of positions to usually be less risky than the sum of the risks of the positions alone. The diversification benefit is not meaningful for low and high metrics since they may occur on

different days.

Sensitivity Analysis Given the inherent limitations of the VaR

models, the Company uses other measures, including sensitivity

analysis, to measure and monitor risk. Sensitivity analysis is the

measure of exposure to a single risk factor, such as a 0.01%

increase in interest rates or a 1% increase in equity prices. We

conduct and monitor sensitivity on interest rates, credit spreads,

volatility, equity, commodity, and foreign exchange exposure.

Sensitivity analysis complements VaR as it provides an indication

of risk relative to each factor irrespective of historical market

moves.

Stress Testing While VaR captures the risk of loss due to

adverse changes in markets using recent historical market data,

stress testing is designed to capture the Company’s exposure to

extreme but low probability market movements. Stress scenarios

estimate the risk of losses based on management’s assumptions

of abnormal but severe market movements such as severe credit

spread widening or a large decline in equity prices. These

scenarios assume that the market moves happen

instantaneously and no repositioning or hedging activity takes

place to mitigate losses as events unfold (a conservative

approach since experience demonstrates otherwise).

An inventory of scenarios is maintained representing both

historical and hypothetical stress events that affect a broad

range of market risk factors with varying degrees of correlation

and differing time horizons. Hypothetical scenarios assess the

impact of large movements in financial variables on portfolio

values. Typical examples include a 1% (100 basis point) increase

across the yield curve or a 10% decline in equity market indexes.

Historical scenarios utilize an event-driven approach: the stress

scenarios are based on plausible but rare events, and the analysis

addresses how these events might affect the risk factors

relevant to a portfolio.

The Company’s stress testing framework is also used in

calculating results in support of the Federal Reserve Board’s

Comprehensive Capital Analysis and Review (CCAR) and internal

stress tests. Stress scenarios are regularly reviewed and updated

to address potential market events or concerns. For more detail

on the CCAR process, see the “Capital Management” section in

this Report.

MARKET RISK – EQUITY SECURITIES We are directly and indirectly

affected by changes in the equity markets. We make and manage

equity investments in various businesses, such as start-up

companies and emerging growth companies. We also invest in

Risk Management – Asset/Liability Management (continued)

46 Wells Fargo & Company

funds that make similar private equity investments. These

private equity investments are made within capital allocations

approved by management and the Board. The Board reviews

business developments, key risks and historical returns for the

private equity investment portfolio at least annually.

Management reviews these investments at least quarterly to

assess them for impairment and observable price changes. For

nonmarketable equity securities, the analysis is based on facts

and circumstances of each individual investment and the

expectations for that investment’s cash flows, capital needs, the

viability of its business model, our exit strategy, and observable

price changes that are similar to the investments held.

Investments in nonmarketable equity securities include private

equity investments accounted for under the equity method, fair

value through net income, and the measurement alternative.

As part of our business to support our customers, we trade

public equities, listed/over-the-counter equity derivatives, and

convertible bonds. We have parameters that govern these

activities. We also have marketable equity securities that include

investments relating to our venture capital activities. We manage

these marketable equity securities within capital risk limits

approved by management and the Board and monitored by

Corporate ALCO and the Market Risk Committee. The fair value

changes in these marketable equity securities are recognized in

net income. For additional information, see Note 4 (Equity

Securities) to Financial Statements in this Report.

Changes in equity market prices may also indirectly affect

our net income by (1) the value of third-party assets under

management and, hence, fee income, (2) borrowers whose ability

to repay principal and/or interest may be affected by the stock

market, or (3) brokerage activity, related commission income and

other business activities. Each business line monitors and

manages these indirect risks.

LIQUIDITY RISK AND FUNDING Liquidity risk is the risk arising from

the inability of the Company to meet obligations when they

come due, or roll over funds at a reasonable cost, without

incurring heightened costs. In the ordinary course of business, we

enter into contractual obligations that may require future cash

payments, including funding for customer loan requests,

customer deposit maturities and withdrawals, debt service,

leases for premises and equipment, and other cash

commitments. Liquidity risk also considers the stability of

deposits, including the risk of losing uninsured or non-

operational deposits. The objective of effective liquidity

management is to be able to meet our contractual obligations

and other cash commitments efficiently under both normal

operating conditions and under periods of Wells Fargo-specific

and/or market stress. For additional information on these

obligations, see the following sections and Notes to Financial

Statements in this Report:

• “

Unfunded Credit Commitments” section within Loans and

Related Allowance for Credit Losses (Note 5)

• Leasing Activity (Note 8)

• Deposits (Note 9)

• Long-Term Debt (Note 10)

• Guarantees and Other Commitments (Note 17)

• Employee Benefits (Note 22)

• Income Taxes (Note 23)

To help achieve this objective, the Board establishes liquidity

guidelines that require sufficient asset-based liquidity to cover

potential funding requirements and to avoid over-dependence

on volatile, less reliable funding markets. These guidelines are

monitored on a monthly basis by the management-level

Corporate Asset/Liability Committee and on a quarterly basis by

the Board. These guidelines are established and monitored for

both the Company and the Parent on a stand-alone basis so that

the Parent is a source of strength for its banking subsidiaries.

Liquidity Stress Tests Liquidity stress tests are performed to

help the Company maintain sufficient liquidity to meet

contractual and contingent outflows modeled under a variety of

stress scenarios. Our scenarios utilize market-wide as well as

idiosyncratic events, including a range of stress conditions and

time horizons. Stress testing results facilitate evaluation of the

Company’s projected liquidity position during stress and inform

future needs in the Company’s funding plan.

Contingency Funding Plan Our contingency funding plan (CFP),

which is approved by the Corporate Asset/Liability Committee

and the Board’s Risk Committee, sets out the Company’s

strategies and action plans to address potential liquidity needs

during market-wide or idiosyncratic liquidity events. The CFP

establishes measures for monitoring emerging liquidity events

and describes the processes for communicating and managing

stress events should they occur. The CFP also identifies alternate

funding and liquidity strategies available to the Company in a

period of stress.

Liquidity Standards We are subject to a rule issued by the FRB,

OCC and FDIC that establishes a quantitative minimum liquidity

requirement consistent with the liquidity coverage ratio (LCR)

established by the Basel Committee on Banking Supervision

(BCBS). The rule requires a covered banking organization to hold

high-quality liquid assets (HQLA) in an amount equal to or

greater than its projected net cash outflows during a 30-day

stress period. Our HQLA under the rule predominantly consists

of central bank deposits, government debt securities, and

mortgage-backed securities of federal agencies. The LCR applies

to the Company and to our insured depository institutions (IDIs)

with total assets of $10 billion or more. In addition, rules issued

by the FRB impose enhanced liquidity risk management

standards on large bank holding companies (BHCs), such as

WellsFargo.

We are also subject to a rule issued by the FRB, OCC and

FDIC that establishes a stable funding requirement, known as the

net stable funding ratio (NSFR), which requires a covered banking

organization, such as Wells Fargo, to maintain a minimum

amount of stable funding, including common equity, long-term

debt and most types of deposits, in relation to its assets,

derivative exposures and commitments over a one-year horizon

period. The NSFR applies to the Company and to our IDIs with

total assets of $10billion or more. As of December31, 2023, we

were compliant with the NSFR requirement.

Wells Fargo & Company 47

Liquidity Coverage Ratio As of December31, 2023, the

Company, Wells Fargo Bank, N.A., and Wells Fargo National Bank

West exceeded the minimum LCR requirement of 100%.

Table 32 presents the Company’s quarterly average values for

the daily-calculated LCR and its components calculated pursuant

to the LCR rule requirements. The LCR represents average HQLA

divided by average projected net cash outflows, as each is

defined under the LCR rule.

Table 32: Liquidity Coverage Ratio

Average for quarter ended

(in millions, except ratio) Dec 31, 2023 Sep 30, 2023 Dec 31, 2022

HQLA (1):

Eligible cash $ 187,133 154,258 123,446

Eligible securities (2) 162,930 191,606 231,337

Total HQLA 350,063 345,864 354,783

Projected net cash outflows (3)

279,903 280,468 292,001

LCR 125% 123 122

(1) Excludes excess HQLA at certain subsidiaries that are not transferable to other Wells Fargo entities.

(2) Net of applicable haircuts required under the LCR rule.

(3) Projected net cash outflows are calculated by applying a standardized set of outflow and inflow assumptions, defined by the LCR rule, to various exposures and liability types, such as deposits and

unfunded loan commitments, which are prescribed based on a number of factors, including the type of customer and the nature of the account.

Liquidity Sources We maintain liquidity in the form of cash,

interest-earning deposits with banks, and unencumbered high-

quality, liquid debt securities. These assets make up our primary

sources of liquidity. Our primary sources of liquidity are

substantially the same in composition as HQLA under the LCR

rule; however, our primary sources of liquidity will generally

exceed HQLA calculated under the LCR rule due to the applicable

haircuts to HQLA and the exclusion of excess HQLA at our

subsidiary IDIs required under the LCR rule. Our primary sources

of liquidity are presented in Table 33 at fair value, which also

includes encumbered securities that are not included as available

HQLA in the calculation of the LCR.

Table 33: Primary Sources of Liquidity

December 31, 2023 December 31, 2022

(in millions) Total Encumbered Unencumbered Total Encumbered Unencumbered

Interest-earning deposits with banks (1) $ 203,026 — 203,026 124,561 — 124,561

Debt securities of U.S. Treasury and federal agencies 47,754 9,351 38,403 59,570 12,080 47,490

Federal agency mortgage-backed securities (2)

237,966 28,471 209,495 230,881 34,151 196,730

Total $ 488,746 37,822 450,924 415,012 46,231 368,781

(1)

Excludes time deposits, which are included in interest-earning deposits with banks in our consolidated balance sheet.

(2) Encumbered securities at December31, 2023, included securities with a fair value of $545million which were purchased in December 2023, but settled in January 2024.

Our interest-earning deposits with banks are mainly on

deposit with the Federal Reserve. We believe the debt securities

included in Table 33 provide quick and reliable sources of liquidity

through sales or by pledging to obtain financing, regardless of

market conditions. Debt securities within our HTM portfolio are

not intended for sale but may be pledged to obtain financing.

As of December31, 2023, we had approximately

$485.8billion of available borrowing capacity at various Federal

Home Loan Banks and the Federal Reserve Discount Window,

based on collateral pledged. Although available, we do not view

this borrowing capacity as a primary source of liquidity.

In addition, liquidity is also available through the sale or

financing of other debt securities, including trading and/or AFS

debt securities, as well as through the sale, securitization, or

financing of loans, to the extent such debt securities and loans

are not encumbered.

Funding Sources The Parent acts as a source of funding for the

Company through the issuance of long-term debt and equity.

WFC Holdings, LLC (the “IHC”) is an intermediate holding

company and subsidiary of the Parent, which provides funding

support for the ongoing operational requirements of the Parent

and certain of its direct and indirect subsidiaries. For additional

information on the IHC, see the “Regulatory Matters – ‘Living

Will’ Requirements and Related Matters” section in this Report.

Additional subsidiary funding is provided by deposits, short-term

borrowings and long-term debt.

Deposits have historically provided a sizable source of

relatively low-cost funds. Loans were 69% of total deposits at

both December31, 2023 and 2022.

Table 34 presents a summary of our short-term borrowings,

which generally mature in less than 30 days. The balances of

federal funds purchased and securities sold under agreements to

repurchase may vary over time due to client activity, our own

demand for financing, and our overall mix of liabilities. For

additional information on the classification of our short-term

borrowings, see Note 1 (Summary of Significant Accounting

Policies) to Financial Statements in this Report. We pledge

certain financial instruments that we own to collateralize

repurchase agreements and other securities financings. For

additional information, see the “Pledged Assets” section of

Note 19 (Pledged Assets and Collateral) to Financial Statements

in this Report.

Risk Management – Asset/Liability Management (continued)

48 Wells Fargo & Company

Table 34: Short-Term Borrowings

(in millions) Dec 31, 2023 Dec 31, 2022

Federal funds purchased and securities sold under agreements to repurchase $ 77,676 30,623

Other short-term borrowings (1) 11,883 20,522

Total $ 89,559 51,145

(1) Includes $0 and $7.0 billion of Federal Home Loan Bank (FHLB) advances at December31, 2023 and 2022, respectively.

We access domestic and international capital markets for

long-term funding through issuances of registered debt

securities, private placements and asset-backed secured funding.

We issue long-term debt in a variety of maturities and currencies

to achieve cost-efficient funding and to maintain an appropriate

maturity profile. Proceeds from securities issued were used for

general corporate purposes unless otherwise specified in the

applicable prospectus or prospectus supplement, and we expect

the proceeds from securities issued in the future will be used for

the same purposes. Depending on market conditions and our

liquidity position, we may redeem or repurchase, and

subsequently retire, our outstanding debt securities in privately

negotiated or open market transactions, by tender offer, or

otherwise.

Table 35 presents a summary of our long-term debt. For

additional information on our long-term debt, including

contractual maturities, see Note 10 (Long-Term Debt), and for

information on the classification of our long-term debt, see

Note 1 (Summary of Significant Accounting Policies) to Financial

Statements in this Report.

Table 35: Long-Term Debt

(in millions) December 31, 2023 December 31, 2022

Wells Fargo & Company (Parent Only) $ 148,312 134,401

Wells Fargo Bank, N.A., and other bank entities (Bank) (1) 58,466 39,189

Other consolidated subsidiaries 810 1,280

Total $ 207,588 174,870

(1) Includes $38.0 billion and $27.0 billion of FHLB advances at December31, 2023 and 2022, respectively. For additional information, see Note 10 (Long-Term Debt) to Financial Statements in this

Report.

Credit Ratings Investors in the long-term capital markets, as

well as other market participants, generally will consider, among

other factors, a company’s debt rating in making investment

decisions. Rating agencies base their ratings on many

quantitative and qualitative factors, including capital adequacy,

liquidity, asset quality, business mix, the level and quality of

earnings, and rating agency assumptions regarding the

probability and extent of federal financial assistance or support

for certain large financial institutions. Adverse changes in these

factors could result in a reduction of our credit rating; however,

our debt securities do not contain credit rating covenants.

On October 2, 2023, S&P Global Ratings affirmed the

Company’s ratings and maintained the stable outlook. On

October 23, 2023, Moody’s affirmed the Company’s ratings and

retained the stable outlook. On November 13, 2023, Moody’s

affirmed the ratings for Wells Fargo Bank, N.A. but changed the

outlook to negative from stable for long-term bank deposits,

long-term issuer ratings, and senior unsecured debt.

Moody’s indicated that the outlook change reflected their view

of the potentially weaker capacity of the U.S government to

support systemically important banks in the U.S., as reflected in

Moody’s recent change in the outlook on the U.S. government to

negative from stable. There were no other actions undertaken by

the rating agencies with regard to our credit ratings during

fourth quarter 2023.

See the “Risk Factors” section in this Report for additional

information regarding our credit ratings and the potential impact

a credit rating downgrade would have on our liquidity and

operations as well as Note 14 (Derivatives) to Financial

Statements in this Report for information regarding additional

collateral and funding obligations required for certain derivative

instruments in the event our credit ratings were to fall below

investment grade.

The credit ratings of the Parent and Wells Fargo Bank, N.A.,

as of December31, 2023, are presented in Table 36.

Table 36: Credit Ratings as of December 31, 2023

Wells Fargo & Company Wells Fargo Bank, N.A.

Senior debt

Short-term

borrowings

Long-term

deposits

Short-term

borrowings

Moody’s A1 P-1 Aa1 P-1

S&P Global Ratings BBB+ A-2 A+ A-1

Fitch Ratings A+ F1 AA F1+

DBRS Morningstar AA (low) R-1 (middle) AA R-1 (high)

Wells Fargo & Company 49

Capital Management

We have an active program for managing capital through a

comprehensive process for assessing the Company’s overall

capital adequacy. Our objective is to maintain capital at an

amount commensurate with our risk profile and risk tolerance

objectives, and to meet both regulatory and market

expectations. We primarily fund our capital needs through the

retention of earnings net of both dividends and share

repurchases, as well as through the issuance of preferred stock

and long- and short-term debt. Retained earnings at

December31, 2023, increased $13.2billion from December31,

2022, predominantly as a result of $19.1 billion of WellsFargo

net income, partially offset by $6.0 billion of common and

preferred stock dividends. During 2023, we issued $1.6billion of

common stock, substantially all of which was issued in

connection with employee compensation and benefits. In 2023,

we repurchased 272million shares of common stock at a cost of

$12.0 billion. For additional information about capital planning,

see the “Capital Planning and Stress Testing” section below.

In 2023, we issued $1.725 billion of our Preferred Stock,

Series EE, and redeemed all of our Preferred Stock, Series Q.

Regulatory Capital Requirements

The Company and each of our IDIs are subject to various

regulatory capital adequacy requirements administered by the

FRB and the OCC. Risk-based capital rules establish risk-adjusted

ratios relating regulatory capital to different categories of assets

and off-balance sheet exposures as discussed below.

RISK-BASED CAPITAL AND RISK-WEIGHTED ASSETS The Company

is subject to rules issued by federal banking regulators to

implement Basel III capital requirements for U.S. banking

organizations. The rules contain two frameworks for calculating

capital requirements, a Standardized Approach and an Advanced

Approach applicable to certain institutions, including Wells Fargo,

and we must calculate our risk-based capital ratios under both

approaches. The Company is required to satisfy the risk-based

capital ratio requirements to avoid restrictions on capital

distributions and discretionary bonus payments.

On July 27, 2023, federal banking regulators issued a

proposed rule to implement the final components of Basel III,

which would impact risk-based capital requirements for certain

banks. The proposed rule would eliminate the current Advanced

Approach and replace it with a new expanded risk-based

approach for the measurement of risk-weighted assets, including

more granular risk weights for credit risk, a new market risk

framework, and a new standardized approach for measuring

operational risk. The new requirements would be phased in over a

three-year period beginning July 1, 2025. The Company expects

a significant increase in its risk-weighted assets and a net

increase in its capital requirements based on an assessment of

the proposed rule. The Company is considering a range of

potential actions to address the impact of the proposed rule,

including balance sheet and capital optimization strategies.

Table 37 and Table 38 present the risk-based capital

requirements applicable to the Company under the Standardized

Approach and Advanced Approach, respectively, as of

December31, 2023.

Table 37: Risk-Based Capital Requirements – Standardized Approach

Standardized Approach

8.90%

10.40%

12.40%

4.50%

6.00%

8.00%

2.90%

1.50%

Minimum requirement Stress capital buffer

G-SIB capital surcharge

Common Equity Tier 1

(CET1) ratio

Tier 1 capital ratio

Total capital ratio

Table 38: Risk-Based Capital Requirements – Advanced Approach

Advanced Approach

8.50%

10.00%

12.00%

4.50%

6.00%

8.00%

2.50%

1.50%

Minimum requirement Capital conservation buffer

G-SIB capital surcharge

Common Equity Tier 1

(CET1) ratio

Tier 1 capital ratio

Total capital ratio

In addition to the risk-based capital requirements described

in Table 37 and Table 38, if the FRB determines that a period of

excessive credit growth is contributing to an increase in systemic

risk, a countercyclical buffer of up to 2.50% could be added to the

risk-based capital ratio requirements under federal banking

regulations. The countercyclical buffer in effect at December31,

2023, was 0.00%.

The capital conservation buffer is applicable to certain

institutions, including Wells Fargo, under the Advanced Approach

and is intended to absorb losses during times of economic or

financial stress.

The stress capital buffer is calculated based on the decrease

in a BHC’s risk-based capital ratios under the severely adverse

scenario in the FRB’s annual supervisory stress test and related

Comprehensive Capital Analysis and Review (CCAR), plus four

quarters of planned common stock dividends. Because the stress

capital buffer is calculated annually based on data that can differ

over time, our stress capital buffer, and thus our risk-based

capital ratio requirements under the Standardized Approach, are

subject to change in future periods. Our stress capital buffer for

the period October1, 2023, through September 30, 2024, is

2.90%.

50 Wells Fargo & Company

As a global systemically important bank (G-SIB), we are also

subject to the FRB’s rule implementing an additional capital

surcharge between 1.00-4.50% on the risk-based capital ratio

requirements of G-SIBs. Under the rule, we must annually

calculate our surcharge under two methods and use the higher

of the two surcharges. The first method (method one) considers

our size, interconnectedness, cross-jurisdictional activity,

substitutability, and complexity, consistent with the

methodology developed by the BCBS and the Financial Stability

Board (FSB). The second method (method two) uses similar

inputs, but replaces substitutability with use of short-term

wholesale funding and will generally result in higher surcharges

than under method one. Because the G-SIB capital surcharge is

calculated annually based on data that can differ over time, the

amount of the surcharge is subject to change in future years. If

our annual calculation results in a decrease to our G-SIB capital

surcharge, the decrease takes effect the next calendar year. If our

annual calculation results in an increase to our G-SIB capital

surcharge, the increase takes effect in two calendar years. Our

G-SIB capital surcharge will continue to be 1.50% in 2024. On

July27, 2023, the FRB issued a proposed rule that would impact

the methodology used to calculate the G-SIB capital surcharge.

Under the risk-based capital rules, on-balance sheet assets

and credit equivalent amounts of derivatives and off-balance

sheet items are assigned to one of several broad risk categories

according to the obligor, or, if relevant, the guarantor or the

nature of any collateral. The aggregate dollar amount in each risk

category is then multiplied by the risk weight associated with

that category. The resulting weighted values from each of the

risk categories are aggregated for determining total risk-

weighted assets (RWAs).

The tables that follow provide information about our risk-

based capital and related ratios as calculated under Basel III

capital rules. Table 39 summarizes our CET1, Tier 1 capital, total

capital, RWAs and capital ratios.

Table 39: Capital Components and Ratios

Standardized Approach Advanced Approach

($ in millions)

Required

Capital

Ratios (1)

Dec 31,

2023

Dec 31,

2022

Required

Capital

Ratios (1)

Dec 31,

2023

Dec 31,

2022

Common Equity Tier 1 (A) $ 140,783 133,527 140,783 133,527

Tier 1 capital (B) 159,823 152,567 159,823 152,567

Total capital (C) 193,061 186,747 182,726 177,258

Risk-weighted assets (D) 1,231,668 1,259,889 1,114,281 1,112,307

Common Equity Tier 1 capital ratio (A)/(D) 8.90% 11.43 * 10.60 8.50 12.63 12.00

Tier 1 capital ratio (B)/(D) 10.40 12.98 * 12.11 10.00 14.34 13.72

Total capital ratio (C)/(D) 12.40 15.67 * 14.82 12.00 16.40 15.94

* Denotes the binding ratio under the Standardized and Advanced Approaches at December31, 2023.

(1) Represents the minimum ratios required to avoid restrictions on capital distributions and discretionary bonus payments at December31, 2023.

Wells Fargo & Company 51

Table 40 provides information regarding the calculation and

composition of our risk-based capital under the Standardized and

Advanced Approaches.

Table 40: Risk-Based Capital Calculation and Components

(in millions)

Dec 31,

2023

Dec 31,

2022

Total equity (1) $ 187,443 182,213

Effect of accounting policy change (1) — 338

Total equity (as reported) 187,443 181,875

Adjustments:

Preferred stock (19,448) (19,448)

Additional paid-in capital on preferred stock 157 173

Noncontrolling interests (1,708) (1,986)

Total common stockholders’ equity $ 166,444 160,614

Adjustments:

Goodwill (25,175) (25,173)

Certain identifiable intangible assets (other than MSRs) (118) (152)

Goodwill and other intangibles on investments in consolidated portfolio companies (included in other assets) (2) (878) (2,427)

Applicable deferred taxes related to goodwill and other intangible assets (3) 919 890

CECL transition provision (4) 120 180

Other (529) (405)

Common Equity Tier 1 under the Standardized and Advanced Approaches $ 140,783 133,527

Preferred stock 19,448 19,448

Additional paid-in capital on preferred stock (157) (173)

Other (251) (235)

Total Tier 1 capital under the Standardized and Advanced Approaches (A) $ 159,823 152,567

Long-term debt and other instruments qualifying as Tier 2 19,020 20,503

Qualifying allowance for credit losses (5) 14,805 13,959

Other (587) (282)

Total Tier 2 capital under the Standardized Approach (B) $ 33,238 34,180

Total qualifying capital under the Standardized Approach (A)+(B) $ 193,061 186,747

Long-term debt and other instruments qualifying as Tier 2 19,020 20,503

Qualifying allowance for credit losses (5) 4,470 4,470

Other (587) (282)

Total Tier 2 capital under the Advanced Approach (C) $ 22,903 24,691

Total qualifying capital under the Advanced Approach (A)+(C) $ 182,726 177,258

(1) In first quarter 2023, we adopted ASU 2018-12. We adopted this ASU with retrospective application, which required revision of prior period financial statements. Prior period risk-based capital and

certain other regulatory related metrics were not revised. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this Report.

(2) In third quarter 2023, we sold investments in certain private equity funds. As a result, we have removed the related goodwill and other intangible assets on investments in consolidated portfolio

companies.

(3) Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at

period-end.

(4) In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators related to the impact of the current expected credit loss accounting

standard (CECL) on regulatory capital. The rule permits certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the

allowance for credit losses (ACL) under CECL for each period until December 31, 2021, followed by a three-year phase-out period in which the benefit is reduced by 25% in year one, 50% in year two

and 75% in year three.

(5) Differences between the approaches are driven by the qualifying amounts of ACL includable in Tier 2 capital. Under the Advanced Approach, eligible credit reserves represented by the amount of

qualifying ACL in excess of expected credit losses (using regulatory definitions) is limited to 0.60% of Advanced credit RWAs, whereas the Standardized Approach includes ACL in Tier 2 capital up to

1.25% of Standardized credit RWAs. Under both approaches, any excess ACL is deducted from the respective total RWAs.

Capital Management (continued)

52 Wells Fargo & Company

Table 41 provides the composition and net changes in the

components of RWAs under the Standardized and Advanced

Approaches.

Table 41: Risk-Weighted Assets

Standardized Approach Advanced Approach (1)

(in millions)

Dec 31,

2023

Dec 31,

2022

$ Change

2023/

2022

Dec 31,

2023

Dec 31,

2022

$ Change

2023/

2022

Risk-weighted assets (RWAs):

Credit risk $ 1,182,805 1,218,006 (35,201) 756,905 757,436 (531)

Market risk 48,863 41,883 6,980 48,863 41,883 6,980

Operational risk N/A N/A N/A 308,513 312,988 (4,475)

Total RWAs $ 1,231,668 1,259,889 (28,221) 1,114,281 1,112,307 1,974

(1) RWAs calculated under the Advanced Approach utilize a risk-sensitive methodology, which relies upon the use of internal credit models based upon our experience with internal rating grades. The

Advanced Approach also includes an operational risk component, which reflects the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.

Table 42 provides an analysis of changes in CET1.

Table 42: Analysis of Changes in Common Equity Tier 1

(in millions)

Common Equity Tier 1 at December31, 2022 $ 133,527

Cumulative effect from change in accounting policy (1) 323

Net income applicable to common stock 17,982

Common stock dividends (4,796)

Common stock issued, repurchased, and stock compensation-related items (9,799)

Changes in accumulated other comprehensive income (loss) 1,784

Goodwill (2)

Certain identifiable intangible assets (other than MSRs) 34

Goodwill and other intangibles on investments in consolidated portfolio companies (included in other assets) (2) 1,549

Applicable deferred taxes related to goodwill and other intangible assets (3) 29

CECL transition provision (4) (60)

Other (5) 212

Change in Common Equity Tier 1 7,256

Common Equity Tier 1 at December31, 2023 $ 140,783

(1) Effective January 1, 2023, we adopted ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information, see Note 1

(Summary of Significant Accounting Policies) to Financial Statements in this Report.

(2) In third quarter 2023, we sold investments in certain private equity funds. As a result, we have removed the related goodwill and other intangible assets on investments in consolidated portfolio

companies.

(3) Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at

period-end.

(4) In second quarter 2020, the Company elected to apply a modified transition provision issued by federal banking regulators related to the impact of CECL on regulatory capital. The rule permits

certain banking organizations to exclude from regulatory capital the initial adoption impact of CECL, plus 25% of the cumulative changes in the allowance for credit losses (ACL) under CECL for each

period until December 31, 2021, followed by a three-year phase-out period in which the benefit is reduced by 25% in year one, 50% in year two and 75% in year three.

(5) Includes $338 million related to our first quarter 2023 adoption of ASU 2018-12. For additional information, see Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this

Report.

Wells Fargo & Company 53

TANGIBLE COMMON EQUITY We also evaluate our business based

on certain ratios that utilize tangible common equity. Tangible

common equity is a non-GAAP financial measure and represents

total equity less preferred equity, noncontrolling interests,

goodwill, certain identifiable intangible assets (other than MSRs)

and goodwill and other intangibles on investments in

consolidated portfolio companies, net of applicable deferred

taxes. The ratios are (i) tangible book value per common share,

which represents tangible common equity divided by common

shares outstanding; and (ii) return on average tangible common

equity (ROTCE), which represents our annualized earnings as a

percentage of tangible common equity. The methodology of

determining tangible common equity may differ among

companies. Management believes that tangible book value per

common share and return on average tangible common equity,

which utilize tangible common equity, are useful financial

measures because they enable management, investors, and

others to assess the Company’s use of equity.

Table 43 provides a reconciliation of these non-GAAP

financial measures to GAAP financial measures.

Table 43: Tangible Common Equity

Balance at period-end Average balance

Period ended Year ended

(in millions, except ratios)

Dec 31,

2023

Dec 31,

2022

Dec 31,

2021

Dec 31,

2023

Dec 31,

2022

Dec 31,

2021

Total equity $ 187,443 182,213 189,889 184,860 183,167 190,502

Adjustments:

Preferred stock (1) (19,448) (19,448) (20,057) (19,698) (19,930) (21,151)

Additional paid-in capital on preferred stock (1) 157 173 136 168 143 137

Unearned ESOP shares (1) — — 646 — 512 874

Noncontrolling interests (1,708) (1,986) (2,503) (1,844) (2,323) (1,601)

Total common stockholders’ equity (A) 166,444 160,952 168,111 163,486 161,569 168,761

Adjustments:

Goodwill (25,175) (25,173) (25,180) (25,173) (25,177) (26,087)

Certain identifiable intangible assets (other than MSRs) (118) (152) (225) (136) (190) (294)

Goodwill and other intangibles on investments in consolidated

portfolio companies (included in other assets) (2) (878) (2,427) (2,437) (2,083) (2,359) (2,226)

Applicable deferred taxes related to goodwill and other intangible

assets (3) 920 890 765 906 864 867

Tangible common equity (B) $ 141,193 134,090 141,034 137,000 134,707 141,021

Common shares outstanding (C) 3,598.9 3,833.8 3,885.8 N/A N/A N/A

Net income applicable to common stock (D) N/A N/A N/A $ 17,982 12,562 20,818

Book value per common share (A)/(C) $ 46.25 41.98 43.26 N/A N/A N/A

Tangible book value per common share (B)/(C) 39.23 34.98 36.29 N/A N/A N/A

Return on average common stockholders’ equity (ROE) (D)/(A)

N/A N/A N/A 11.00% 7.78 12.34

Return on average tangible common equity (ROTCE) (D)/(B) N/A N/A N/A 13.13 9.33 14.76

(1) In fourth quarter 2022, we redeemed all outstanding shares of our Employee Stock Ownership Plan (ESOP) Cumulative Convertible Preferred Stock in exchange for shares of the Company's common

stock.

(2) In third quarter 2023, we sold investments in certain private equity funds. As a result, we have removed the related goodwill and other intangible assets on investments in consolidated portfolio

companies.

(3) Determined by applying the combined federal statutory rate and composite state income tax rates to the difference between book and tax basis of the respective goodwill and intangible assets at

period-end.

LEVERAGE REQUIREMENTS As a BHC, we are required to maintain

a supplementary leverage ratio (SLR) to avoid restrictions on

capital distributions and discretionary bonus payments and

maintain a minimum Tier 1 leverage ratio. Table 44 presents the

leverage requirements applicable to the Company as of

December31, 2023.

Table 44: Leverage Requirements Applicable to the Company

5.00%

4.00%

3.00%

4.00%

2.00%

Minimum requirement

Supplementary leverage buffer

Supplementary leverage

ratio

Tier 1 leverage ratio

Capital Management (continued)

54 Wells Fargo & Company

In addition, our IDIs are required to maintain an SLR of at

least 6.00% to be considered well capitalized under applicable

regulatory capital adequacy rules and maintain a minimum Tier 1

leverage ratio of 4.00%.

Table 45 presents information regarding the calculation and

components of the Company’s SLR and Tier 1 leverage ratio. At

December31, 2023, each of our IDIs exceeded their applicable

SLR requirements.

Table 45: Leverage Ratios for the Company

($ in millions)

Quarter ended

December 31, 2023

Tier 1 capital (A) $ 159,823

Total average assets 1,907,654

Less: Goodwill and other permitted Tier 1 capital

deductions (net of deferred tax liabilities) 26,673

Total adjusted average assets 1,880,981

Plus adjustments for off-balance sheet exposures:

Derivatives (1) 56,377

Repo-style transactions (2) 4,264

Other (3) 312,311

Total off-balance sheet exposures 372,952

Total leverage exposure (B) $ 2,253,933

Supplementary leverage ratio (A)/(B) 7.09%

Tier 1 leverage ratio (4) 8.50%

(1) Adjustment represents derivatives and collateral netting exposures as defined for

supplementary leverage ratio determination purposes.

(2) Adjustment represents counterparty credit risk for repo-style transactions where

WellsFargo & Company is the principal counterparty facing the client.

(3) Adjustment represents credit equivalent amounts of other off-balance sheet exposures

not already included as derivatives and repo-style transactions exposures.

(4) The Tier 1 leverage ratio consists of Tier 1 capital divided by total average assets, excluding

goodwill and certain other items as determined under the rule.

TOTAL LOSS ABSORBING CAPACITY As a G-SIB, we are required to

have a minimum amount of equity and unsecured long-term

debt for purposes of resolvability and resiliency, often referred to

as Total Loss Absorbing Capacity (TLAC). U.S. G-SIBs are required

to have a minimum amount of TLAC (consisting of CET1 capital

and additional Tier 1 capital issued directly by the top-tier or

covered BHC plus eligible external long-term debt) to avoid

restrictions on capital distributions and discretionary bonus

payments as well as a minimum amount of eligible unsecured

long-term debt. The components used to calculate our minimum

TLAC and eligible unsecured long-term debt requirements as of

December31, 2023, are presented in Table 46.

Table 46: Components Used to Calculate TLAC and Eligible Unsecured

Long-Term Debt Requirements

TLAC requirement

Greater of:

18.00% of RWAs

TLAC buffer (equal to 2.50% of RWAs

+ method one G-SIB capital surcharge

+ any countercyclical buffer)

7.50% of total leverage exposure

(the denominator of the SLR

calculation)

External TLAC leverage buffer

(equal to 2.00% of total leverage

exposure)

Minimum amount of eligible unsecured long-term debt

Greater of:

6.00% of RWAs

Greater of method one and method

two G-SIB capital surcharge

4.50% of total leverage exposure

In August 2023, the FRB proposed rules that would, among

other things, modify the calculation of eligible long-term debt

that counts towards the TLAC requirements, which would reduce

our TLAC ratios.

Table 47 provides our TLAC and eligible unsecured long-

term debt and related ratios.

Table 47: TLAC and Eligible Unsecured Long-Term Debt

December 31, 2023

($ in millions) TLAC (1)

Regulatory

Minimum

(2)

Eligible

Unsecured

Long-term

Debt

Regulatory

Minimum

Total eligible amount $ 308,489 140,760

Percentage of RWAs (3) 25.05% 21.50 11.43 7.50

Percentage of total

leverage exposure 13.69 9.50 6.25 4.50

(1) TLAC ratios are calculated using the CECL transition provision issued by federal banking

regulators.

(2) Represents the minimum required to avoid restrictions on capital distributions and

discretionary bonus payments.

(3) Our minimum TLAC and eligible unsecured long-term debt requirements are calculated

based on the greater of RWAs determined under the Standardized and Advanced

Approaches.

OTHER REGULATORY CAPITAL AND LIQUIDITY MATTERS For

information regarding the U.S. implementation of the Basel III

LCR and NSFR, see the “Risk Management – Asset/ Liability

Management – Liquidity Risk and Funding – Liquidity Standards”

section in this Report.

Our principal U.S. broker-dealer subsidiaries, Wells Fargo

Securities, LLC, and Wells Fargo Clearing Services, LLC, are

subject to regulations to maintain minimum net capital

requirements. As of December31, 2023, these broker-dealer

subsidiaries were in compliance with their respective regulatory

minimum net capital requirements.

Capital Planning and Stress Testing

Our planned long-term capital structure is designed to meet

regulatory and market expectations. We believe that our long-

term targeted capital structure enables us to invest in and grow

our business, satisfy our customers’ financial needs in varying

environments, access markets, and maintain flexibility to return

capital to our shareholders. Our long-term targeted capital

structure also considers capital levels sufficient to exceed capital

requirements, including the G-SIB capital surcharge and the

stress capital buffer, as well as potential changes to regulatory

requirements for our capital ratios, planned capital actions,

changes in our risk profile and other factors. Accordingly, our

long-term target capital levels are set above their respective

regulatory minimums plus buffers.

The FRB capital plan rule establishes capital planning and

other requirements that govern capital distributions, including

dividends and share repurchases, by certain BHCs, including

WellsFargo. The FRB assesses, among other things, the overall

financial condition, risk profile, and capital adequacy of BHCs

when evaluating their capital plans.

As part of the annual CCAR, the FRB generates a supervisory

stress test. The FRB reviews the supervisory stress test results as

required under the Dodd-Frank Act using a common set of

capital actions for all large BHCs and also reviews the Company’s

proposed capital actions.

Federal banking regulators also require large BHCs and

banks to conduct their own stress tests to evaluate whether the

institution has sufficient capital to continue to operate during

periods of adverse economic and financial conditions.

Wells Fargo & Company 55

Securities Repurchases

On July 25, 2023 we announced that our Board authorized a

common stock repurchase program of up to $30billion. Unless

modified or revoked by the Board, this authorization does not

expire and is our only common stock repurchase program in

effect. At December31, 2023, we had remaining Board authority

to repurchase up to approximately $26.7billion of common

stock.

Various factors impact the amount and timing of our share

repurchases, including the earnings, cash requirements and

financial condition of the Company, the impact to our balance

sheet of expected customer activity, our capital requirements

and long-term targeted capital structure, the results of

supervisory stress tests, market conditions (including the trading

price of our stock), and regulatory and legal considerations,

including regulatory requirements under the FRB’s capital plan

rule. Although we announce when the Board authorizes a share

repurchase program, we typically do not give any public notice

before we repurchase our shares. Due to the various factors that

may impact the amount and timing of our share repurchases and

the fact that we may be in the market throughout the year, our

share repurchases occur at various prices. We may suspend share

repurchase activity at any time.

Furthermore, the Company has a variety of benefit plans in

which employees may own or obtain shares of our common

stock. The Company may buy shares from these plans to

accommodate employee preferences and these purchases are

subtracted from our repurchase authority.

For additional information about share repurchases during

fourth quarter 2023, see Part II, Item 5 in our 2023 Form 10-K.

Regulatory Matters

The U.S. financial services industry is subject to significant

regulation and regulatory oversight initiatives. This regulation

and oversight may continue to impact how U.S. financial services

companies conduct business and may continue to result in

increased regulatory compliance costs. The following highlights

the more significant regulations and regulatory oversight

initiatives that have affected or may affect our business. For

additional information about the regulatory matters discussed

below and other regulations and regulatory oversight matters,

see Part I, Item 1 “Regulation and Supervision” of our 2023 Form

10-K, and the “Overview,” “Capital Management,” “Forward-

Looking Statements” and “Risk Factors” sections and Note 26

(Regulatory Capital Requirements and Other Restrictions) to

Financial Statements in this Report.

Dodd-Frank Act

The Dodd-Frank Act is the most significant financial reform

legislation since the 1930s. The following provides additional

information on the Dodd-Frank Act, including certain of its

rulemaking initiatives.

• Enhanced supervision and regulation of systemically important

firms. The Dodd-Frank Act grants broad authority to federal

banking regulators to establish enhanced supervisory and

regulatory requirements for systemically important firms.

The FRB has finalized a number of regulations implementing

enhanced prudential requirements for large bank holding

companies (BHCs) like Wells Fargo regarding risk-based

capital and leverage, risk and liquidity management, single

counterparty credit limits, and imposing debt-to-equity

limits on any BHC that regulators determine poses a grave

threat to the financial stability of the United States. The FRB

and OCC have also finalized rules implementing stress

testing requirements for large BHCs and national banks.

Furthermore, to promote a BHC’s safety and soundness and

the financial and operational resilience of its operations, the

FRB has finalized guidance regarding effective boards of

directors of large BHCs. The OCC, under separate authority,

has finalized guidelines establishing heightened governance

and risk management standards for large national banks

such as Wells Fargo Bank, N.A. The OCC guidelines require

covered banks to establish and adhere to a written risk

governance framework to manage and control their risk-

taking activities. The guidelines also formalize roles and

responsibilities for risk management practices within

covered banks and create certain risk oversight

responsibilities for their boards of directors. In addition to

the authorization of enhanced supervisory and regulatory

requirements for systemically important firms, the Dodd-

Frank Act also established the Financial Stability Oversight

Council and the Office of Financial Research, which may

recommend new systemic risk management requirements

and require new reporting of systemic risks.

• Regulation of consumer financial products. The Dodd-Frank

Act established the Consumer Financial Protection Bureau

(CFPB) to ensure that consumers receive clear and accurate

disclosures regarding financial products and are protected

from unfair, deceptive or abusive practices. The CFPB has

issued and proposed a number of rules impacting consumer

financial products, including rules impacting residential

mortgage lending, credit cards, and other financial products

and banking related activities, as well as the fees that may be

charged for certain banking products and services. In

addition to these rulemaking activities, the CFPB is

continuing its ongoing supervisory examination activities of

the financial services industry with respect to a number of

consumer businesses and products, including mortgage

lending and servicing, fair lending requirements, and auto

finance.

• Regulation of swaps and other derivatives activities. The

Dodd-Frank Act established a comprehensive framework for

regulating over-the-counter derivatives, and, pursuant to

authority granted by the Dodd-Frank Act, the Commodity

Futures Trading Commission (CFTC) and the Securities and

Exchange Commission (SEC) have adopted comprehensive

sets of rules regulating swaps and security-based swaps,

respectively, and the OCC and other federal regulatory

agencies have adopted margin requirements for uncleared

swaps and security-based swaps. As a registered swap dealer

and a conditionally-registered security-based swap dealer,

Wells Fargo Bank, N.A., is subject to these rules. These rules,

as well as others adopted or under consideration by

regulators in the United States and other jurisdictions, may

negatively impact customer demand for over-the-counter

derivatives, impact our ability to offer customers new

derivatives or amendments to existing derivatives, and may

increase our costs for engaging in swaps, security-based

swaps, and other derivatives activities.

Regulatory Capital, Leverage, and Liquidity Requirements

The Company and each of our IDIs are subject to various

regulatory capital adequacy requirements administered by the

FRB and the OCC. For example, the Company is subject to rules

Capital Management (continued)

56 Wells Fargo & Company

issued by federal banking regulators to implement Basel III risk-

based capital requirements for U.S. banking organizations. The

Company and its IDIs are also required to maintain specified

leverage and supplementary leverage ratios. In addition, the

Company is required to have a minimum amount of total loss

absorbing capacity for purposes of resolvability and resiliency.

Federal banking regulators have also issued final rules requiring a

liquidity coverage ratio and a net stable funding ratio. For

additional information on the final risk-based capital, leverage

and liquidity rules, and additional capital requirements applicable

to us, see the “Capital Management” and “Risk Management –

Asset/Liability Management – Liquidity Risk and Funding –

Liquidity Standards” sections in this Report.

“Living Will” Requirements and Related Matters

Rules adopted by the FRB and the FDIC under the Dodd-Frank

Act require large financial institutions, including Wells Fargo, to

prepare and periodically submit resolution plans, also known as

“living wills,” designed to facilitate their rapid and orderly

resolution in the event of material financial distress or failure.

Under the rules, rapid and orderly resolution means a

reorganization or liquidation of the covered company under the

U.S. Bankruptcy Code that can be accomplished in a reasonable

period of time and in a manner that substantially mitigates the

risk that failure would have serious adverse effects on the

financial stability of the United States. In addition to the

Company’s resolution plan, our national bank subsidiary,

WellsFargo Bank, N.A. (the “Bank”), is also required to prepare

and periodically submit a resolution plan. If the FRB and/or FDIC

determine that our resolution plan has deficiencies, they may

impose more stringent capital, leverage or liquidity requirements

on us or restrict our growth, activities or operations until we

adequately remedy the deficiencies. If the FRB and/or FDIC

ultimately determine that we have been unable to remedy any

deficiencies, they could require us to divest certain assets or

operations. On June 27, 2023, we submitted our most recent

resolution plan to the FRB and FDIC.

If Wells Fargo were to fail, it may be resolved in a bankruptcy

proceeding or, if certain conditions are met, under the resolution

regime created by the Dodd-Frank Act known as the “orderly

liquidation authority.” The orderly liquidation authority allows for

the appointment of the FDIC as receiver for a systemically

important financial institution that is in default or in danger of

default if, among other things, the resolution of the institution

under the U.S. Bankruptcy Code would have serious adverse

effects on financial stability in the United States. If the FDIC is

appointed as receiver for the Parent, then the orderly liquidation

authority, rather than the U.S. Bankruptcy Code, would

determine the powers of the receiver and the rights and

obligations of our security holders. The FDIC’s orderly liquidation

authority requires that security holders of a company in

receivership bear all losses before U.S. taxpayers are exposed to

any losses. There are substantial differences in the rights of

creditors between the orderly liquidation authority and the U.S.

Bankruptcy Code, including the right of the FDIC to disregard the

strict priority of creditor claims under the U.S. Bankruptcy Code

in certain circumstances and the use of an administrative claims

procedure instead of a judicial procedure to determine creditors’

claims.

The strategy described in our most recent resolution plan is

a single point of entry strategy, in which the Parent would be the

only material legal entity to enter resolution proceedings.

However, the strategy described in our resolution plan is not

binding in the event of an actual resolution of Wells Fargo,

whether conducted under the U.S. Bankruptcy Code or by the

FDIC under the orderly liquidation authority. The FDIC has

announced that a single point of entry strategy may be a

desirable strategy under its implementation of the orderly

liquidation authority, but not all aspects of how the FDIC might

exercise this authority are known and additional rulemaking is

possible.

To facilitate the orderly resolution of systemically important

financial institutions in case of material distress or failure, federal

banking regulations require that institutions, such as Wells Fargo,

maintain a minimum amount of equity and unsecured debt to

absorb losses and recapitalize operating subsidiaries. Federal

banking regulators have also required measures to facilitate the

continued operation of operating subsidiaries notwithstanding

the failure of their parent companies, such as limitations on

parent guarantees, and have issued guidance encouraging

institutions to take legally binding measures to provide capital

and liquidity resources to certain subsidiaries to facilitate an

orderly resolution. In response to the regulators’ guidance and to

facilitate the orderly resolution of the Company, on June 28,

2017, the Parent entered into a support agreement, as amended

and restated on June 26, 2019 (the “Support Agreement”), with

WFC Holdings, LLC, an intermediate holding company and

subsidiary of the Parent (the “IHC”), the Bank, Wells Fargo

Securities, LLC (“WFS”), Wells Fargo Clearing Services, LLC

(“WFCS”), and certain other subsidiaries of the Parent designated

from time to time as material entities for resolution planning

purposes (the “Covered Entities”) or identified from time to time

as related support entities in our resolution plan (the “Related

Support Entities”). Pursuant to the Support Agreement, the

Parent transferred a significant amount of its assets, including

the majority of its cash, deposits, liquid securities and

intercompany loans (but excluding its equity interests in its

subsidiaries and certain other assets), to the IHC and will

continue to transfer those types of assets to the IHC from time

to time. In the event of our material financial distress or failure,

the IHC will be obligated to use the transferred assets to provide

capital and/or liquidity to the Bank, WFS, WFCS, and the Covered

Entities pursuant to the Support Agreement. Under the Support

Agreement, the IHC will also provide funding and liquidity to the

Parent through subordinated notes and a committed line of

credit, which, together with the issuance of dividends, is expected

to provide the Parent, during business as usual operating

conditions, with the same access to cash necessary to service its

debts, pay dividends, repurchase its shares, and perform its other

obligations as it would have had if it had not entered into these

arrangements and transferred any assets. If certain liquidity and/

or capital metrics fall below defined triggers, or if the Parent’s

board of directors authorizes it to file a case under the U.S.

Bankruptcy Code, the subordinated notes would be forgiven, the

committed line of credit would terminate, and the IHC’s ability to

pay dividends to the Parent would be restricted, any of which

could materially and adversely impact the Parent’s liquidity and

its ability to satisfy its debts and other obligations, and could

result in the commencement of bankruptcy proceedings by the

Parent at an earlier time than might have otherwise occurred if

the Support Agreement were not implemented. The respective

obligations under the Support Agreement of the Parent, the IHC,

the Bank, and the Related Support Entities are secured pursuant

to a related security agreement.

In addition to our resolution plans, we must also prepare and

periodically submit to the FRB a recovery plan that identifies a

range of options that we may consider during times of

idiosyncratic or systemic economic stress to remedy any financial

weaknesses and restore market confidence without

extraordinary government support. Recovery options include the

Wells Fargo & Company 57

possible sale, transfer or disposal of assets, securities, loan

portfolios or businesses. The Bank must also prepare and

periodically submit to the OCC a recovery plan that sets forth the

Bank’s plan to remain a going concern when the Bank is

experiencing considerable financial or operational stress, but has

not yet deteriorated to the point where liquidation or resolution

is imminent. If either the FRB or the OCC determines that our

recovery plan is deficient, they may impose fines, restrictions on

our business or ultimately require us to divest assets.

Other Regulatory Related Matters

• Regulatory actions. The Company is subject to a number of

consent orders and other regulatory actions, which may

require the Company, among other things, to undertake

certain changes to its business, operations, products and

services, and risk management practices, and include the

following:

◦ Consent Orders Discussed in the “Overview” Section in this

Report. For a discussion of certain consent orders

applicable to the Company, see the “Overview” section

in this Report.

◦ OCC approval of director and senior executive officer

appointments and certain post-termination payments.

Under the April 2018 consent order with the OCC,

WellsFargo Bank, N.A., remains subject to requirements

that were originally imposed in November 2016 to

provide prior written notice to, and obtain non-

objection from, the OCC with respect to changes in

directors and senior executive officers, and remains

subject to certain regulatory limitations on post-

termination payments to certain individuals and

employees.

• Regulatory Developments in Response to Climate Change.

Federal, state, and non-U.S. governments and government

agencies have demonstrated increased attention to the

impacts and potential risks associated with climate change.

For example, federal banking regulators are reviewing the

implications of climate change on the financial stability of

the United States and have issued guidance on the

identification and management by large banks of climate-

related financial risks. In addition, the SEC has proposed

rules that would require public companies to disclose certain

climate-related information, including greenhouse gas

emissions, climate-related targets and goals, and

governance of climate-related risks and relevant risk

management processes. Similarly, California’s state

legislature finalized climate-related disclosure laws, while

the European Union finalized its Corporate Sustainability

Reporting Directive. The approaches taken by various

governments and government agencies can vary

significantly, evolve over time, and sometimes conflict. Any

current or future rules, regulations, and guidance related to

climate change and its impacts could require us to change

certain of our business practices, reduce our revenue and

earnings, impose additional costs on us, subject us to legal or

regulatory proceedings, or otherwise adversely affect our

business operations and/or competitive position.

Regulatory Matters (continued)

58 Wells Fargo & Company

Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of

Significant Accounting Policies) to Financial Statements in this

Report) are fundamental to understanding our results of

operations and financial condition because they require that we

use estimates and assumptions that may affect the value of our

assets or liabilities and financial results. Six of these policies are

critical because they require management to make difficult,

subjective and complex judgments about matters that are

inherently uncertain and because it is likely that materially

different amounts would be reported under different conditions

or using different assumptions. These policies govern:

• the allowance for credit losses;

• the valuation of residential MSRs;

• the fair value of financial instruments;

• income taxes;

• liability for legal actions; and

• goodwill impairment.

Management has discussed these critical accounting policies

and the related estimates and judgments with the Board’s Audit

Committee.

Allowance for Credit Losses

We maintain an allowance for credit losses (ACL) for loans, which

is management’s estimate of the expected credit losses in the

loan portfolio and unfunded credit commitments, at the balance

sheet date, excluding loans and unfunded credit commitments

carried at fair value or held for sale. Additionally, we maintain an

ACL for debt securities classified as either HTM or AFS, other

financial assets measured at amortized cost, net investments in

leases, and other off-balance sheet credit exposures. For

additional information, see Note 1 (Summary of Significant

Accounting Policies) and Note 5 (Loans and Related Allowance

for Credit Losses) to Financial Statements in this Report.

For loans and HTM debt securities, the ACL is measured

based on the remaining contractual term of the financial asset

(including off-balance sheet credit exposures) adjusted, as

appropriate, for prepayments and permitted extension options

using historical experience, current conditions, and forecasted

information. For AFS debt securities, the ACL is measured using a

discounted cash flow approach and is limited to the difference

between the fair value of the security and its amortized cost.

Changes in the ACL and, therefore, in the related provision

for credit losses can materially affect net income. In applying the

judgment and review required to determine the ACL,

management considerations include the evaluation of past

events, historical experience, changes in economic forecasts and

conditions, customer behavior, collateral values, the length of the

initial loss forecast period, and other influences. From time to

time, changes in economic factors or assumptions, business or

investment strategy, or products or product mix may result in a

corresponding increase or decrease in our ACL. While our

methodology attributes portions of the ACL to specific financial

asset classes (loan and debt security portfolios) or loan portfolio

segments (commercial and consumer), the entire ACL is available

to absorb credit losses of the Company.

Judgment is specifically applied in:

• Economic assumptions and the length of the initial loss forecast

period. We forecast a wide range of economic variables to

estimate expected credit losses. Our key economic variables

include gross domestic product (GDP), unemployment rate,

and collateral asset prices. While many of these economic

variables are evaluated at the macro-economy level, some

economic variables are forecasted at more granular levels,

for example, using the metro statistical area (MSA) level for

unemployment rates, home prices and commercial real

estate prices. At least annually, we assess the length of the

initial loss forecast period and have currently set the period

to two years. For the initial loss forecast period, we forecast

multiple economic scenarios that generally include a base

scenario with an optimistic (upside) and one or more

pessimistic (downside) scenarios. Management exercises

judgment when assigning weight to the economic scenarios

that are used to estimate future credit losses.

•

Reversion to historical loss expectations. Our long-term

average loss expectations are estimated by reverting to the

long-term average, on a linear basis, for each of the

forecasted economic variables. These long-term averages

are based on observations over multiple economic cycles.

The reversion period, which may be up to two years, is

assessed on a quarterly basis.

• Credit risk ratings applied to individual commercial loans,

unfunded credit commitments, and debt securities. Individually

assessed credit risk ratings are considered key credit

variables in our modeled approaches to help assess

probability of default and loss given default. Borrower

quality ratings are aligned to the borrower’s financial

strength and contribute to forecasted probability of default

curves. Collateral quality ratings combined with forecasted

collateral prices (as applicable) contribute to the forecasted

severity of loss in the event of default. These credit risk

ratings are reviewed by experienced senior credit officers

and subjected to reviews by an internal team of credit risk

specialists.

• Usage of credit loss estimation models. We use internally

developed models that incorporate credit attributes and

economic variables to generate credit loss estimates.

Management uses judgment and quantitative analytics in

the determination of segmentation, modeling approach, and

variables that are leveraged in the models. These models are

independently validated in accordance with the Company’s

policies. We routinely assess our model performance and

apply adjustments when necessary to improve the accuracy

of loss estimation. We also assess our models for limitations

against the company-wide risk inventory to help

appropriately capture known and emerging risks in our

estimate of expected credit losses and apply overlays as

needed.

• Valuation of collateral. The current fair value of collateral is

utilized to assess the expected credit losses when a financial

asset is considered to be collateral dependent. We apply

judgment when valuing the collateral either through

appraisals, evaluation of the cash flows of the property, or

other quantitative techniques. Decreases in collateral

valuations support incremental ACL or charge-downs and

increases in collateral valuation are included in the ACL as a

negative allowance when the financial asset has been

previously written-down below current recovery value.

• Contractual term considerations. The remaining contractual

term of a loan is adjusted for expected prepayments and

certain expected extensions, renewals, or modifications. We

extend the contractual term when we are not able to

unconditionally cancel contractual renewals or extension

options. Credit card loans have indeterminate maturities,

Wells Fargo & Company 59

which requires that we determine a contractual life by

estimating the application of future payments to the

outstanding loan amount.

• Qualitative factors which may not be adequately captured in

the loss models. These amounts represent management’s

judgment of risks inherent in the processes and assumptions

used in establishing the ACL. We also consider economic

environmental factors, modeling assumptions and

performance, process risk, and other subjective factors,

including industry trends and emerging risk assessments.

Sensitivity The ACL for loans is sensitive to changes in key

assumptions which requires significant management judgment.

Future amounts of the ACL for loans will be based on a variety of

factors, including loan balance changes, portfolio credit quality,

and general forecasted economic conditions. The forecasted

economic variables used could have varying impacts on different

financial assets or portfolios. Additionally, throughout numerous

credit cycles, there are observed changes in economic variables

such as the unemployment rate, GDP and real estate prices which

may not move in a correlated manner as variables may move in

opposite directions or differ across portfolios or geography.

Our sensitivity analysis does not represent management’s

view of expected credit losses at the balance sheet date. We

applied a 100% weight to a more severe downside scenario in our

sensitivity analysis to reflect the potential for further economic

deterioration. The outcome of the scenario was influenced by the

duration, severity, and timing of changes in economic variables

within the scenario. The sensitivity analysis resulted in a

hypothetical increase in the ACL for loans of approximately

$6.2billion at December31, 2023. The hypothetical increase in

our ACL for loans does not incorporate the impact of

management judgment for qualitative factors applied in the

current ACL for loans, which may have a positive or negative

effect on the results. It is possible that others performing similar

sensitivity analyses could reach different conclusions or results.

The sensitivity analysis excludes the ACL for debt securities

and other financial assets given its size relative to the overall

ACL. Management believes that the estimate for the ACL for

loans was appropriate at the balance sheet date.

Valuation of Residential Mortgage Servicing Rights

(MSRs)

MSRs are assets that represent the rights to service mortgage

loans for others. We generally recognize MSRs when we retain

servicing rights in connection with the sale or securitization of

loans we originate. We carry our MSRs related to residential

mortgage loans at fair value. Periodic changes in our residential

MSRs and the economic hedges used to hedge our residential

MSRs are reflected in earnings.

We use models to estimate the fair value of our residential

MSRs. The models are independently validated in accordance

with Company policies. Collectively, the models are used to

calculate the present value of estimated future net servicing

income and incorporate inputs and assumptions that market

participants use in estimating fair value. Certain significant inputs

and assumptions generally are not observable in the market and

require judgment to determine. If observable market indications

do become available, these are factored into the estimates as

appropriate. Significant inputs and assumptions requiring

management judgement include:

• The mortgage loan prepayment rate used to estimate future

net servicing income. The prepayment rate is the annual rate

at which borrowers are forecasted to repay their mortgage

loan principal; this rate also includes estimated borrower

defaults. We use models to estimate prepayment rate and

borrower defaults which are influenced by changes in

mortgage interest rates and borrower behavior.

• The discount rate used to present value estimated future net

servicing income. The discount rate is the required rate of

return investors in the market would expect for an asset

with similar risk and is estimated using a dynamic

methodology for market curves and volatility. To determine

the discount rate, we consider the risk premium for

uncertainties in the cash flow estimates such as from

servicing operations (e.g., possible changes in future

servicing costs and earnings on escrow accounts).

• The expected cost to service loans used to estimate future net

servicing income. The cost to service loans includes

estimates for unreimbursed expenses, such as delinquency

and foreclosure costs, which considers the number of

defaulted loans as well as the incremental cost to service

loans in default and foreclosure. We use a market

participant’s view for our estimated cost to service and our

actual costs may vary from that estimate.

Both prepayment rate and discount rate assumptions can,

and generally will, change quarterly as market conditions and

mortgage interest rates change. For example, an increase in

either the prepayment rate or discount rate assumption results

in a decrease in the fair value of the MSRs, while a decrease in

either assumption would result in an increase in the fair value of

the MSRs. In recent years, there have been significant market-

driven fluctuations in loan prepayment rate and the discount

rate. These fluctuations can be rapid and may be significant in the

future. Additionally, future regulatory or investor changes in

servicing standards as well as changes in individual state

foreclosure legislation or changes in market participant

information regarding servicing cost assumptions, may have an

impact on our servicing cost assumption and our MSR valuation

in future periods. We periodically benchmark our MSR fair value

estimate to independent appraisals.

For a description of our valuation and sensitivity of MSRs,

see Note 1 (Summary of Significant Accounting Policies), Note 6

(Mortgage Banking Activities), Note 15 (Fair Values of Assets

and Liabilities) and Note 16 (Securitizations and Variable Interest

Entities) to Financial Statements in this Report.

Fair Value of Financial Instruments

Fair value represents the price that would be received to sell a

financial asset or paid to transfer a financial liability in an orderly

transaction between market participants at the measurement

date.

We use fair value measurements to comply with both

recognition and disclosure requirements. For example, assets and

liabilities held for trading purposes, marketable equity securities,

AFS debt securities, and derivatives are recorded at fair value on

our consolidated balance sheet each period. Other financial

instruments, such as loans held for investment and substantially

all nonmarketable equity securities are not recorded at fair value

each period but may require nonrecurring fair value adjustments

through the application of an accounting method such as lower

of cost or fair value (LOCOM), write-downs of individual assets,

or application of the measurement alternative for certain

nonmarketable equity securities. We also disclose our estimate

of fair value for financial instruments not recorded at fair value,

such as HTM debt securities, loans held for investment, and long-

term debt.

Disclosure of fair value measurements for assets and

liabilities are made using a three-level hierarchy. The

Critical Accounting Policies (continued)

60 Wells Fargo & Company

classification of assets and liabilities within the hierarchy is based

on whether the inputs to the valuation methodology used for

measurement are observable or unobservable. Observable inputs

reflect market-derived or market-based information obtained

from independent sources, while unobservable inputs reflect our

estimates about market data.

When developing fair value measurements, we maximize the

use of observable inputs and minimize the use of unobservable

inputs. When available, we use quoted prices in active markets to

measure fair value. If quoted prices in active markets are not

available, fair value measurement is based upon models that

generally use market-based or independently sourced market

parameters, including interest rate yield curves, prepayment

rates, option volatilities and currency rates. However, when

observable market data is limited or not available, fair value

estimates are typically determined using internal models based

on unobservable inputs. These models are independently

validated in accordance with the Company’s policies. Additionally,

we obtain pricing information from third-party vendors to record

fair values and to corroborate internal prices. Third-party

validation procedures are performed over the reasonableness of

prices received.

When using internal models based on unobservable inputs,

management judgment is necessary as we make judgments

about significant assumptions that market participants would

use to estimate fair value. Determination of these assumptions

includes consideration of many factors, including market

conditions and liquidity levels. Changes in the market conditions,

such as reduced liquidity in the capital markets or changes in

secondary market activities, may reduce the availability and

reliability of quoted prices or observable data used to determine

fair value. In such cases, adjustments to available quoted prices or

observable market data may be required. For example, we may

adjust a price received from a third-party pricing service using

internal models based on discounted cash flows when the impact

of illiquid markets has not already been incorporated in the fair

value measurement.

We continually assess the level and volume of market

activity in our debt and equity security classes in determining

adjustments, if any, to quoted prices. Given market conditions

can change over time, our determination of which securities

markets are considered active or inactive can change. If we

determine a market to be inactive, the degree to which quoted

prices require adjustment may also change.

Significant judgment is also applied in the determination of

whether certain assets measured at fair value are classified as

Level 2 or Level 3 of the fair value hierarchy. When making this

judgment, we consider available information, including

observable market data, indications of market liquidity and

orderliness, and our understanding of the valuation techniques

and significant inputs used to estimate fair value. The

classification as Level 2 or Level 3 is based upon the specific facts

and circumstances of each instrument or instrument category

and judgments are made regarding the significance of

unobservable inputs to each instrument’s fair value

measurement in its entirety. If unobservable inputs are

considered significant to the fair value measurement, the

instrument is classified as Level 3.

Table 48 presents our (i) assets and liabilities recorded at fair

value on a recurring basis and (ii) Level 3 assets and liabilities

recorded at fair value on a recurring basis, both presented as a

percentage of our total assets and total liabilities.

Table 48: Fair Value Level 3 Summary

December 31, 2023 December 31, 2022

($ in billions)

Total

balance Level 3 (1)

Total

balance Level 3 (1)

Assets recorded at fair

value on a recurring

basis

$ 276.2 9.5 264.4 11.5

As a percentage

of total assets

14 % * 14 *

Liabilities recorded at fair

value on a recurring

basis

$ 47.7 6.2 41.9 4.9

As a percentage of

total liabilities

3 % * 2 *

* Less than 1%.

(1) Before derivative netting adjustments.

See Note 15 (Fair Values of Assets and Liabilities) to

Financial Statements in this Report for a complete discussion on

our fair value of financial instruments, our related measurement

techniques and the impact to our financial statements.

Income Taxes

We file income tax returns in the jurisdictions in which we

operate and evaluate income tax expense in two components:

current and deferred income tax expense.Current income tax

expense represents our estimated taxes to be paid or refunded

for the current period and includes income tax expense related to

uncertain tax positions.Uncertain tax positions that meet the

more likely than not recognition threshold are measured to

determine the amount of benefit to recognize.An uncertain tax

position is measured at the largest amount of benefit that

management believes has a greater than 50% likelihood of

realization upon settlement.Tax benefits not meeting our

realization criteria represent unrecognized tax benefits.

Deferred income taxes are based on the balance sheet

method and deferred income tax expense results from changes

in deferred tax assets and liabilities between periods. Under the

balance sheet method, the net deferred tax asset or liability is

based on the tax effects of the differences between the book and

tax basis of assets and liabilities and recognizes enacted changes

in income tax rates and laws in the period in which they

occur.Deferred tax assets, including those related to net

operating losses and tax credit carryforwards, are recognized

subject to management’s judgment that realization is more likely

than not. When necessary, valuation allowances are established

to reduce deferred tax assets to the realizable amounts.

Theincome tax lawsof the jurisdictions in which we operate

are complex and subject to different interpretations by

management and the relevant government taxing authorities. In

establishing a provision for income tax expense, we must make

judgments about the application of these inherently complex tax

laws. We must also make estimates about when in the future

certain items will affect taxable income in the various tax

jurisdictions.Our interpretations may be subjected to review

during examination by taxing authorities and disputes may arise

over the respective tax positions.We attempt to resolve these

disputes during the tax examination and audit process and

ultimately through the court systems when applicable.

We monitor relevant tax authorities and may update our

estimate of accrued income taxes due to changes in income tax

laws and their interpretation by the courts and regulatory

authorities on a quarterly basis. Updates to our estimate of

accrued income taxes also may result from our own income tax

planning and from the resolution of income tax controversies.

Such updates to our estimates may be material to our operating

results for any given quarter.

Wells Fargo & Company 61

See Note 23 (Income Taxes) to Financial Statements in this

Report for a further description of our provision for income taxes

and related income tax assets and liabilities.

Liability for Legal Actions

The Company is involved in a number of judicial, regulatory,

governmental, arbitration and other proceedings or

investigations concerning matters arising from the conduct of its

business activities, and many of those proceedings and

investigations expose the Company to potential financial loss or

other adverse consequences. We establish accruals for legal

actions when potential losses associated with the actions

become probable and the costs can be reasonably estimated. For

such accruals, we record the amount we consider to be the best

estimate within a range of potential losses that are both

probable and estimable; however, if we cannot determine a best

estimate, then we record the low end of the range of those

potential losses. The actual costs of resolving legal actions may

be substantially higher or lower than the amounts accrued for

those actions.

We apply judgment when establishing an accrual for

potential losses associated with legal actions and in establishing

the range of reasonably possible losses in excess of the accrual.

Our judgment in establishing accruals and the range of

reasonably possible losses in excess of the Company’s accrual for

probable and estimable losses is influenced by our understanding

of information currently available related to the legal evaluation

and potential outcome of actions, including input and advice on

these matters from our internal counsel, external counsel and

senior management. These matters may be in various stages of

investigation, discovery or proceedings. They may also involve a

wide variety of claims across our businesses, legal entities and

jurisdictions. The eventual outcome may be a scenario that was

not considered or was considered remote in anticipated

occurrence. Accordingly, our estimate of potential losses will

change over time and the actual losses may vary significantly.

The outcomes of legal actions are unpredictable and subject

to significant uncertainties, and it is inherently difficult to

determine whether any loss is probable or even possible. It is also

inherently difficult to estimate the amount of any loss and there

may be matters for which a loss is probable or reasonably

possible but not currently estimable. Accordingly, actual losses

may be in excess of the established accrual or the range of

reasonably possible loss.

See Note 13 (Legal Actions) to Financial Statements in this

Report for additional information.

Goodwill Impairment

We test goodwill for impairment annually in the fourth quarter or

more frequently as macroeconomic and other business factors

warrant. These factors may include trends in short-term or long-

term interest rates, negative trends from reduced revenue

generating activities or increased costs, adverse actions by

regulators, or company specific factors such as a decline in

market capitalization.

We identify reporting units to be assessed for goodwill

impairment at the reportable operating segment level or one

level below. We calculate reporting unit carrying amounts as

allocated capital plus assigned goodwill and other intangible

assets. We allocate capital to the reporting units under a risk-

sensitive framework driven by our regulatory capital

requirements. We estimate fair value of the reporting units

based on a balanced weighting of fair values estimated using

both an income approach and a market approach which are

intended to reflect Company performance and expectations as

well as external market conditions. The methodologies for

calculating carrying amounts and estimating fair values are

periodically assessed by senior management and updated as

necessary.

The income approach is a discounted cash flow (DCF)

analysis, which estimates the present value of future cash flows

associated with each reporting unit. A DCF analysis requires

significant judgment to model financial forecasts for our

reporting units, which includes future expectations of economic

conditions and balance sheet changes, as well as considerations

related to future business activities. The forecasts are reviewed

by senior management. For periods after our financial forecasts,

we incorporate a terminal value estimate. We discount these

forecasted cash flows using a consistent rate derived from the

capital asset pricing model which produces an estimated cost of

equity for our reporting units, reflecting risks and uncertainties in

the financial markets and in our internally generated business

projections.

The market approach utilizes observable market data from

comparable publicly traded companies, such as price-to-earnings

or price-to-tangible book value ratios, to estimate a reporting

unit’s fair value. The results of the market approach include a

control premium to represent our expectation of a hypothetical

acquisition of the reporting unit. Management uses judgment in

the selection of comparable companies and includes those with

the most similar business activities.

The aggregate fair value of our reporting units exceeded our

market capitalization for our fourth quarter 2023 assessment.

Factors that we believe contributed to this difference included an

overall premium that would be paid to gain control of the

operating and financial decisions of the Company, as well as

short-term market volatility and other factors that may not be

reflected consistently between the Company’s market

capitalization and the fair value of individual reporting units.

Based on our fourth quarter 2023 assessment, there was no

impairment of goodwill at December31, 2023. The fair values of

each reporting unit exceeded their carrying amounts by

substantial amounts, with the exception of our Consumer

Lending reporting unit. Although the fair value of our Consumer

Lending reporting unit exceeded its carrying amount by more

than 10%, it was the most sensitive to changes in valuation

assumptions. We plan to continue the execution of our more

focused strategy for the home lending business in the near-term.

The credit card business has forecasted higher loan balances

driven by growth from new products and services. Significant

changes to these plans or forecasts or a significant increase in the

discount rate could result in an impairment for the Consumer

Lending reporting unit. The amount of goodwill assigned to the

Consumer Lending reporting unit was $7.1 billion at

December31, 2023.

Declines in our ability to generate revenue, significant

increases in credit losses or other expenses, or adverse actions

from regulators are factors that could result in material goodwill

impairment of any reporting unit in a future period.

For additional information on goodwill and our reportable

operating segments, see Note 1 (Summary of Significant

Accounting Policies), Note 7 (Intangible Assets and Other

Assets), and Note 20 (Operating Segments) to Financial

Statements in this Report.

Critical Accounting Policies (continued)

62 Wells Fargo & Company

Current Accounting Developments

Table 49 provides the significant accounting updates applicable

to us that have been issued by the Financial Accounting

Standards Board (FASB) but are not yet effective.

Table 49: Current Accounting Developments – Issued Standards

Description and Effective Date Financial statement impact

Accounting Standards Update (ASU) 2023-02 – Investments – Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

The Update, effective January 1, 2024,

expands the use of the proportional

amortization method of accounting for

tax credit investments. Upon adoption,

the Update permits entities to elect to

account for equity investments that

generate income tax credits and benefits

using the proportional amortization

method if certain eligibility criteria are

met.

We adopted the Update on January 1, 2024, on a modified retrospective basis with a cumulative effect

adjustment to retained earnings. Upon adoption, we elected to account for eligible investments in our

renewable energy tax credit portfolio using the proportional amortization method. These investments

were previously accounted for using the equity method. We also elected to continue use of the

proportional amortization method to account for our low-income housing tax credit investments. Under

the proportional amortization method, the cost of a tax credit investment is amortized in proportion to

the income tax credits and benefits received by the investor, with both amortization and the related

income tax credits and benefits recorded on a net basis within income tax expense.

We recorded the impact of this accounting change to the opening balance sheet as of January 1, 2024, as

an increase to total assets and total liabilities of approximately $2 billion. The adoption impact on

retained earnings was insignificant. Prior periods were not impacted.

ASU 2023-07 – Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

The Update, effective December 31,

2024 (with early adoption permitted),

enhances reportable segment disclosure

requirements, primarily through

enhanced disclosures related to

significant segment expenses and

additional interim disclosure

requirements.

The Update impacts disclosure only, and therefore does not have an impact on our consolidated financial

statements. We are currently evaluating the impact of the Update to our operating segment disclosures.

The following aspects of the Update may result in disclosure changes:

• Requirement to disclose significant segment expenses by reportable segment if they are regularly

provided to the chief operating decision maker (CODM) and included in the reported measure of

segment profit or loss.

• Requirement to disclose an amount for “other segment items” by reportable segment and provide a

description of its composition; other segment items is measured as the difference between

reported segment revenues less the significant segment expenses disclosed in accordance with the

principle described above and reported segment profit or loss.

• Requirement to disclose the CODM’s title and position and explain how the CODM uses the

reported segment profit or loss measure in assessing segment performance and deciding how to

allocate resources.

ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures

The Update, effective January 1, 2025

(with early adoption permitted),

enhances annual income tax disclosures

primarily to further disaggregate

existing disclosures related to the

effective income tax rate reconciliation

and income taxes paid.

The impact of the Update is limited to our annual income tax disclosures. We are currently evaluating the

impact of the Update to our income tax disclosures. Upon adoption, those disclosures may change as

follows:

• For the tabular effective income tax rate reconciliation, alignment to specific categories (where

applicable) and further disaggregation of certain categories (where applicable) by nature and/or

jurisdiction if the reconciling item is 5% or more of the statutory tax expense.

• Description of states and local jurisdictions that contribute the majority of the effect of the state

and local income tax category of the effective income tax rate reconciliation.

• Disaggregate the amount of income taxes paid (net of refunds) by federal, state, and non-U.S. taxes

and further disaggregate by individual jurisdictions where income taxes paid (net of refunds) is 5%

or more of total income taxes paid (net of refunds).

• Disaggregate net income (or loss) before income tax expense (or benefit) between domestic and

non-U.S.

Other Accounting Developments

The following Updates are applicable to us but are not expected

to have a material impact on our consolidated financial

statements:

• ASU 2022-03 – Fair Value Measurement (Topic 820): Fair

Value Measurement of Equity Securities Subject to Contractual

Sale Restrictions

• ASU 2023-08 - Intangibles - Goodwill and Other - Crypto

Assets (Subtopic 350-60): Accounting for and Disclosure of

Crypto Assets

Wells Fargo & Company 63

Forward-Looking Statements

This document contains forward-looking statements. In addition,

we may make forward-looking statements in our other

documents filed or furnished with the Securities and Exchange

Commission, 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

expectations regarding noninterest expense and our efficiency

ratio; (iii) future credit quality and performance, including our

expectations regarding future loan losses, our allowance for

credit losses, and the economic scenarios considered to develop

the allowance; (iv) our expectations regarding net interest

income and net interest margin; (v) loan growth or the reduction

or mitigation of risk in our loan portfolios; (vi) future capital or

liquidity levels, ratios or targets; (vii) our expectations regarding

our mortgage business and any related commitments or

exposures; (viii) the expected outcome and impact of legal,

regulatory and legislative developments, as well as our

expectations regarding compliance therewith; (ix) future

common stock dividends, common share repurchases and other

uses of capital; (x) our targeted range for return on assets, return

on equity, and return on tangible common equity; (xi)

expectations regarding our effective income tax rate; (xii) the

outcome of contingencies, such as legal actions; (xiii)

environmental, social and governance related goals or

commitments; and (xiv) 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:

• current and future economic and market conditions,

including the effects of declines in housing prices, high

unemployment rates, declines in commercial real estate

prices, U.S. fiscal debt, budget and tax matters, geopolitical

matters, and any slowdown in global economic growth;

• our capital and liquidity requirements (including under

regulatory capital standards, such as the Basel III capital

standards) and our ability to generate capital internally or

raise capital on favorable terms;

• current, pending or future legislation or regulation that

could have a negative effect on our revenue and businesses,

including rules and regulations relating to bank products and

financial services;

• our ability to realize any efficiency ratio or expense target as

part of our expense management initiatives, including as a

result of business and economic cyclicality, seasonality,

changes in our business composition and operating

environment, growth in our businesses and/or acquisitions,

and unexpected expenses relating to, among other things,

litigation and regulatory matters;

• the effect of the current interest rate environment or

changes in interest rates or in the level or composition of our

assets or liabilities on our net interest income, net interest

margin and our mortgage originations, mortgage servicing

rights and mortgage loans held for sale;

• significant turbulence or a disruption in the capital or

financial markets, which could result in, among other things,

reduced investor demand for mortgage loans, a reduction in

the availability of funding or increased funding costs, and

declines in asset values and/or recognition of impairment of

securities held in our debt securities and equity securities

portfolios;

• the effect of a fall in stock market prices on our investment

banking business and our fee income from our brokerage

and wealth management businesses;

• developments in our mortgage banking business, including

any negative effects relating to our mortgage servicing, loan

modification or foreclosure practices, and any changes in

industry standards, regulatory or judicial requirements, or

our strategic plans for the business;

• negative effects from instances where customers may have

experienced financial harm, including on our legal,

operational and compliance costs, our ability to engage in

certain business activities or offer certain products or

services, our ability to keep and attract customers, our

ability to attract and retain qualified employees, and our

reputation;

• regulatory matters, including the failure to resolve

outstanding matters on a timely basis and the potential

impact of new matters, litigation, or other legal actions,

which may result in, among other things, additional costs,

fines, penalties, restrictions on our business activities,

reputational harm, or other adverse consequences;

• a failure in or breach of our operational or security systems

or infrastructure, or those of our third-party vendors or

other service providers, including as a result of cyber attacks;

• the effect of changes in the level of checking or savings

account deposits on our funding costs and net interest

margin;

• fiscal and monetary policies of the Federal Reserve Board;

• changes to tax laws, regulations, and guidance as well as the

effect of discrete items on our effective income tax rate;

• our ability to develop and execute effective business plans

and strategies; and

• the other risk factors and uncertainties described under

“Risk Factors” in this Report.

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, the impact to our balance

sheet of expected customer activity, our capital requirements

and long-term targeted capital structure, the results of

supervisory stress tests, market conditions (including the trading

price of our stock), regulatory and legal considerations, including

64 Wells Fargo & Company

regulatory requirements under the Federal Reserve Board’s

capital plan rule, and other factors deemed relevant by the

Company, and may be subject to regulatory approval or

conditions.

For additional 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 this Report, 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.

Forward-looking Non-GAAP Financial Measures. From time to

time management may discuss forward-looking non-GAAP

financial measures, such as forward-looking estimates or targets

for return on average tangible common equity. We are unable to

provide a reconciliation of forward-looking non-GAAP financial

measures to their most directly comparable GAAP financial

measures because we are unable to provide, without

unreasonable effort, a meaningful or accurate calculation or

estimation of amounts that would be necessary for the

reconciliation due to the complexity and inherent difficulty in

forecasting and quantifying future amounts or when they may

occur. Such unavailable information could be significant to future

results.

We do not control this website. Wells Fargo has provided this link for

your convenience, but does not endorse and is not responsible for the

content, links, privacy policy, or security policy of this website.

Wells Fargo & Company 65

Risk Factors

An investment in the Company involves risk, including the

possibility that the value of the investment could fall

substantially and that dividends or other distributions on the

investment could be reduced or eliminated. We discuss below

risk factors that could adversely affect our financial results and

condition, and the value of, and return on, an investment in the

Company.

ECONOMIC, FINANCIAL MARKETS, INTEREST RATES, AND

LIQUIDITY RISKS

Our financial results have been, and will continue to be,

materially affected by generaleconomic conditions, and a

deterioration in economic conditions or in the financial

markets may materially adversely affect our lending and other

businesses and our financial results and condition. We

generate revenue from the interest and fees we charge on the

loans and other products and services we sell, and a substantial

amount of our revenue and earnings comes from the net interest

income and fee income that we earn from our consumer and

commercial lending and banking businesses. These businesses

have been, and will continue to be, materially affected by the

state of the U.S. economy, particularly unemployment levels and

home prices. The negative effects and continued uncertainty

stemming from U.S. fiscal, monetary and political matters,

including concerns about deficit and debt levels, inflation, taxes,

and U.S. debt ratings, have impacted and may continue to impact

the global economy. Moreover, geopolitical matters, including

international political unrest or disturbances, wars, and terrorist

activities, as well as continued concerns over commodity prices,

restrictions on international trade and corresponding retaliatory

measures, and global economic difficulties, may impact the

stability of financial markets and the global economy. Any

impacts to the global economy could have a similar impact to the

U.S. economy. A prolonged period of slow growth in the global

economy or any deterioration in general economic conditions

and/or the financial markets resulting from the above matters or

any other events or factors that may disrupt or weaken the U.S.

or global economy,could materially adversely affect our

financialresults and condition.

A weakening in business or economic conditions, including

higher unemployment levels or declines in home prices, as well as

higher interest rates, can also adversely affect our customers’

ability to repay their loans or other obligations, which can

increase our credit losses. If unemployment levels worsenor if

home prices fall we would expect to incur elevated charge-offs

and provision expense from increases in our allowance for credit

losses. These conditions may adversely affect not only consumer

loan performance but also commercial and CRE loans, especially

for those business borrowers that rely on the health of industries

that may experience deteriorating economic conditions. The

ability of these and other borrowers to repay their loans may

deteriorate, causing us, as one of the largest commercial and CRE

lenders in the U.S., to incur significantly higher credit losses. In

addition, weak or deteriorating economic conditions make it

more challenging for us to increase our consumer and

commercial loan portfolios by making loans to creditworthy

borrowers at attractive yields. Furthermore, weak economic

conditions, as well as competition and/or increases in interest

rates, could soften demand for our loans resulting in our

retaining a much higher amount of lower yielding liquid assets on

our consolidated balance sheet. If economic conditions worsen

and unemployment rises, which also would likely result in a

decrease in consumer and business confidence and spending, the

demand for our products, including our consumer and

commercial loans, may fall, reducing our interest and noninterest

income and our earnings.

A deterioration in business and economic conditions, which

may erode consumer and investor confidence levels, and/or

increased volatility of financial markets, also could adversely

affect financial results for our fee-based businesses, including our

investment advisory, securities brokerage, wealth management,

markets and investment banking businesses. For example,

because investment advisory fees are often based on the value of

assets under management, a fall in the market prices of those

assets could reduce our fee income. Changes in stock market

prices could affect the trading activity of investors, reducing

commissions and other fees we earn from our brokerage

business. In addition, adverse market conditions may negatively

affect the performance of products we have provided to

customers, which may expose us to legal actions or additional

costs. Poor economic conditions and volatile or unstable financial

markets also can negatively affect our debt and equity

underwriting and advisory businesses, as well as our venture

capital business and trading activities, including through

increased counterparty credit risk. Any deterioration in global

financial markets and economies, including as a result of any

geopolitical matters or unrest, may adversely affect the revenue

and earnings of our international operations, particularly our

global financial institution and correspondent banking services.

For additional information, see the “Risk Management –

Asset/Liability Management” and “– Credit Risk Management”

sections in this Report.

Changes in interest rates and financial market values could

reduce our net interest income and earnings, as well as our

other comprehensive income, including as a result of

recognizing losses on the debt and equity securities that we

hold in our portfolio or trade for our customers. Changes in

either our net interest margin or the amount or mix of earning

assets we hold, including as a result of the asset cap under the

February 2018 consent order with the FRB, could affect our net

interest income and our earnings. Changes in interest rates can

affect our net interest margin. Although the yield we earn on our

assets and the funding costs of our liabilities tend to move in the

same direction in response to changes in interest rates, one can

rise or fall faster than the other, causing our net interest margin

to expand or contract. If our funding costs rise faster than the

yield we earn on our assets or if the yield we earn on our assets

falls faster than our funding costs, our net interest margin tends

to contract.

The amount and type of earning assets we hold can affect

our yield and net interest income. We hold earning assets in the

form of loans and debt and equity securities, among other assets.

As noted above, if the economy worsens we may see lower

demand for loans by creditworthy customers, reducing our yield

and net interest income. In addition, our net interest income and

net interest margin can be negatively affected by a prolonged

period of low interest rates as it may result in us holding lower

yielding loans and securities on our consolidated balance sheet,

particularly if we are unable to replace the maturing higher

yielding assets with similar higher yielding assets. A prolonged

period of high interest rates, however, may continue to

negatively affect loan demand and could result in higher credit

66 Wells Fargo & Company

losses as borrowers may have more difficulty making higher

interest payments. Similarly, a prolonged period of high interest

rates may increase our funding costs, including the rates we pay

on customer deposits. As described below, changes in interest

rates also affect our mortgage business, including the value of

our MSRs. In an effort to address high inflation, the FRB

significantly raised its target range for the federal funds rate over

the last two years, however, the FRB could decide to further raise

it or lower it in 2024.

Changes in the slope of the yield curve – or the spread

between short-term and long-term interest rates – could also

reduce our net interest income and net interest margin.

Normally, the yield curve is upward sloping, meaning short-term

rates are lower than long-term rates. When the yield curve

flattens or inverts, our net interest income and net interest

margin could decrease if the cost of our short-term funding

increases relative to the yield we can earn on our long-term

assets. Moreover, a negative interest rate environment, in which

interest rates drop below zero, could reduce our net interest

income and net interest margin due to a likely decline in the

interest we could earn on loans and other earning assets, while

also likely requiring us to pay to maintain our deposits with

the FRB.

We assess our interest rate risk by estimating the effect on

our earnings under various scenarios that differ based on

assumptions about the direction, magnitude and speed of

interest rate changes and the slope of the yield curve. We may

hedge some of that interest rate risk with interest rate

derivatives. We also experience the somewhat offsetting effect

that our mortgage loan originations and servicing rights can

provide as their revenue impact tends to move in opposite

directions based on changes in interest rates.

We generally do not hedge all of our interest rate risk. There

is always the risk that changes in interest rates, credit spreads or

option volatility could reduce our net interest income and

earnings, as well as our other comprehensive income, in material

amounts, especially if actual conditions turn out to be materially

different than what we assumed. For example, if interest rates

rise or fall faster than we assumed or the slope of the yield curve

changes, we may experience significant losses, including

unrealized losses, on debt securities in our portfolio. To reduce

our interest rate risk, we may rebalance our portfolios of debt

securities and loans, refinance our debt and take other strategic

actions. We may incur losses when we take such actions. In

addition, changes in interest rates can result in increased basis

risk, which could limit the effectiveness of our hedging activities.

We have a significant number of assets and liabilities, such as

commercial loans, adjustable-rate mortgage loans, derivatives,

debt securities, and long-term debt, referenced to benchmark

rates, such as the Secured Overnight Financing Rate (SOFR), or

other financial metrics. If any such benchmark rate or other

referenced financial metric is significantly changed, replaced or

discontinued, or ceases to be recognized as an acceptable market

benchmark rate or financial metric, there may be uncertainty or

differences in the calculation of the applicable interest rate or

payment amount depending on the terms of the governing

instrument. This could impact the financial performance of

previously recorded transactions, result in losses on financial

instruments we hold, require different hedging strategies or

result in ineffective or increased basis risk on existing hedges,

impact the overall interest rate environment and the availability

or cost of funding transactions, affect our capital and liquidity

planning and management, or have other adverse financial

consequences. It may also result in significant operational,

systems, or other practical challenges, increased compliance and

operational costs, legal or regulatory proceedings, reputational

harm, or other adverse consequences. Because of changing

economic and market conditions, as well as credit ratings,

affecting issuers and the performance of any underlying

collateral, we may be required to recognize impairment in future

periods on the securities we hold. Furthermore, the value of the

debt securities we hold can fluctuate due to changes in interest

rates, issuer creditworthiness, and other factors. Our net income

also is exposed to changes in interest rates, credit spreads,

foreign exchange rates, and equity and commodity prices in

connection with our trading activities, which are conducted

primarily to accommodate the investment and risk management

activities of our customers, as well as when we execute economic

hedging to manage certain balance sheet risks. Trading debt

securities and equity securities held for trading are carried at fair

value with realized and unrealized gains and losses recorded in

noninterest income. As part of our business to support our

customers, we trade public debt and equity securities and other

financial instruments that are subject to market fluctuations with

gains and losses recognized in net income. In addition, although

high market volatility can increase our exposure to trading-

related losses, periods of low volatility may have an adverse

effect on our businesses as a result of reduced customer activity

levels. Although we have processes in place to measure and

monitor the risks associated with our trading activities, including

stress testing and hedging strategies, there can be no assurance

that our processes and strategies will be effective in avoiding

losses that could have a material adverse effect on our financial

results.

The value of our marketable and nonmarketable equity

securities can fluctuate from quarter to quarter.Marketable

equity securities are carried at fair value with unrealized gains and

losses reflected in earnings. Nonmarketable equity securities are

carried under the cost method, equity method, or measurement

alternative, while others are carried at fair value with unrealized

gains and losses reflected in earnings. Earnings from our equity

securities portfolio may be volatile and hard to predict, and may

have a significant effect on our earnings from period to period.

When, and if, we recognize gains may depend on a number of

factors, including general economic and market conditions, the

prospects of the companies in which we invest, when a company

goes public, the size of our position relative to the public float,

and whether we are subject to any resale restrictions.

Nonmarketable equity securities include our venture capital

and private equity investments that could result in significant

impairment losses for those investments carried under the

measurement alternative or equity method. If we recognize an

impairment for an investment, we write-down the carrying value

of the investment to fair value, resulting in a charge to earnings,

which could be significant.

For additional information, see the “Risk Management –

Asset/Liability Management – Interest Rate Risk,” “– Mortgage

Banking Interest Rate and Market Risk,” “– Market Risk – Trading

Activities,” and “– Market Risk – Equity Securities” and the

“Balance Sheet Analysis – Available-for-Sale and Held-to-

Maturity Debt Securities” sections in this Report and Note 2

(Trading Activities), Note 3 (Available-for-Sale and Held-to-

Maturity Debt Securities) and Note 4 (Equity Securities) to

Financial Statements in this Report.

Effective liquidity management is essential for the operation

of our business, and our financial results and condition could be

materially adversely affected if we do not effectively manage

our liquidity. We primarily rely on customer deposits to be a

low-cost and stable source of funding for the loans we make and

Wells Fargo & Company 67

the operation of our business. In addition to customer deposits,

our sources of liquidity include certain debt and equity securities,

our ability to sell or securitize loans in secondary markets and to

pledge loans to access secured borrowing facilities through the

FHLB and the FRB, and our ability to raise funds in domestic and

international money through capital markets.

Our liquidity and our ability to fund and run our business

could be materially adversely affected by a variety of conditions

and factors, including financial and credit market disruption and

volatility or a lack of market or customer confidence in financial

markets in general similar to what occurred during the financial

crisis in 2008 and early 2009, which may result in a loss of

customer deposits, outflows of cash or collateral, an inability to

access capital markets on favorable terms, or other adverse

effects on our liquidity and funding. The financial system also

experienced disruption and volatility in early 2023 due to the

failure of several banks, and episodes of disruption, volatility or

other adverse market conditions may continue to occur if there

are additional instances of actual or threatened bank failures.

Market disruption and volatility could also impact our credit

spreads, which are the amount in excess of the interest rate of

U.S. Treasury securities, or other benchmark securities, of the

same maturity that we need to pay to our funding providers.

Increases in interest rates and our credit spreads could

significantly increase our funding costs. Other conditions and

factors that could materially adversely affect our liquidity and

funding include a lack of market or customer confidence in the

Company or negative news about the Company or the financial

services industry generally which also may result in a loss of

deposits and/or negatively affect our ability to access the capital

markets; any inability to sell or securitize loans or other assets;

disruptions or volatility in the market for securities repurchase

agreements, or any inability to effectively access the market for

securities repurchase agreements, which also may increase our

short-term funding costs; regulatory requirements or

restrictions, including changes to regulatory capital or liquidity

requirements; unexpectedly high or accelerated customer draws

on lines of credit; any inability to access secured borrowing

facilities through the FHLB or FRB, or any negative perception in

the market created by accessing these facilities; and, as described

below, reductions in one or more of our credit ratings. Many of

the above conditions and factors may be caused by events over

which we have little or no control. Similarly, the speed with which

information is disseminated and the speed with which customers

can withdraw funds in response to information may also

contribute to a faster and greater loss of deposits, particularly

uninsured or non-operational deposits, as well as other adverse

effects on liquidity or funding, similar to what contributed to the

failure of several banks in early 2023. There can be no assurance

that significant disruption and volatility in the financial markets

will not occur in the future. For example, concerns over

geopolitical issues, commodity and currency prices, as well as

global economic conditions, may cause financial market volatility.

In addition, concerns regarding U.S. government debt levels,

including any potential failure to raise the debt limit, and any

associated downgrade of U.S. government debt ratings may

cause uncertainty and volatility as well. A downgrade of the

sovereign debt ratings of the U.S. government or the debt

ratings of related institutions, agencies or instrumentalities, as

well as other fiscal or political events could, in addition to causing

economic and financial market disruptions, materially adversely

affect the market value of the U.S. government securities or

federal agency mortgage-backed securities (MBS) that we hold,

the availability of those securities as collateral for borrowing, and

our ability to access capital markets on favorable terms, as well as

have other material adverse effects on the operation of our

business and our financial results and condition.

As noted above, we rely heavily on customer deposits for our

funding and liquidity. We compete with banks and other financial

services companies for deposits. If our competitors raise the

rates they pay on deposits our funding costs may increase, either

because we raise our rates to avoid losing deposits or because we

lose deposits and must rely on more expensive sources of

funding. Checking and savings account balances and other forms

of customer deposits may decrease when customers perceive

other investment opportunities, such as stocks, bonds, or money

market mutual funds, as providing a better risk/return tradeoff.

When customers move money out of bank deposits and into

other investments, we may lose a relatively low-cost source of

funds, increasing our funding costs and negatively affecting our

liquidity. In addition, we may continue to reduce certain deposit

balances in order to manage under the asset cap.

If we are unable to continue to fund our assets through

customer deposits or access capital markets on favorable terms,

if there are changes to our regulatory capital or liquidity

requirements, or if we suffer an increase in our borrowing costs

or otherwise fail to manage our liquidity effectively (including on

an intra-day or intra-affiliate basis), our liquidity, net interest

margin, and financial results and condition may be materially

adversely affected. As we did during the financial crisis in 2009,

we may also need, or be required by our regulators, to raise

additional capital through the issuance of common stock, which

could dilute the ownership of existing stockholders, or reduce or

even eliminate our common stock dividend to preserve capital or

to raise additional capital.

For additional information, see the “Risk Management –

Asset/Liability Management” section in this Report.

Adverse changes in our credit ratings could have a material

adverse effect on our liquidity, cash flows, and financial results

and condition. Our borrowing costs and ability to obtain funding

are influenced by our credit ratings. Reductions in one or more of

our credit ratings could adversely affect our ability to borrow

funds and raise the costs of our borrowings substantially and

could cause creditors and business counterparties to raise

collateral requirements or take other actions that could adversely

affect our ability to raise funding. Credit ratings and credit

ratings agencies’ outlooks are based on the ratings agencies’

analysis of many quantitative and qualitative factors, including

our capital adequacy, liquidity, asset quality, business mix, the

level and quality of our earnings, and rating agency assumptions

regarding the probability and extent of federal financial

assistance or support. In addition to credit ratings, our borrowing

costs are affected by various other external factors, including

market volatility and concerns or perceptions about the financial

services industry generally. There can be no assurance that we

will maintain our credit ratings and outlooks and that credit

ratings downgrades in the future would not have a material

adverse effect on our ability to borrow funds and borrowing

costs. Downgrades in our credit ratings also may trigger

additional collateral or funding obligations which, depending on

the severity of the downgrade, could have a material adverse

effect on our liquidity, including as a result of credit-related

contingent features in certain of our derivative contracts.

For information on our credit ratings, see the “Risk

Management – Asset/Liability Management – Liquidity Risk and

Funding – Credit Ratings” section and for information regarding

additional collateral and funding obligations required of certain

derivative instruments in the event our credit ratings were to fall

Risk Factors (continued)

68 Wells Fargo & Company

below investment grade, see Note 14 (Derivatives) to Financial

Statements in this Report.

We rely on dividends from our subsidiaries for liquidity, and

federal and state law, regulatory requirements, and certain

contractual arrangements can limit those dividends. Wells

Fargo & Company, the parent holding company (the “Parent”), is

a separate and distinct legal entity from its subsidiaries. It

receives substantially all of its funding and liquidity from

dividends and other distributions from its subsidiaries. We

generally use these dividends and distributions, among other

things, to pay dividends on our common and preferred stock and

interest and principal on our debt. Federal and state laws limit

the amount of dividends and distributions that our bank and

some of our nonbank subsidiaries, including our broker-dealer

subsidiaries, may pay to the Parent. Similarly, as part of their

supervisory authority, regulators may limit or restrict subsidiary

capital distributions. In addition, as part of our resolution

planning efforts, we have entered into a Support Agreement

dated June28, 2017, as amended and restated on June 26, 2019,

among the Parent, WFC Holdings, LLC, an intermediate holding

company and subsidiary of the Parent (the “IHC”), Wells Fargo

Bank, N.A. (the “Bank”), Wells Fargo Securities, LLC, Wells Fargo

Clearing Services, LLC, and certain other subsidiaries of the

Parent designated from time to time as material entities for

resolution planning purposes or identified from time to time as

related support entities in our resolution plan, pursuant to which

the IHC may be restricted from making dividend payments to the

Parent if certain liquidity and/or capital metrics fall below defined

triggers or if the Parent’s board of directors authorizes it to file a

case under the U.S. Bankruptcy Code. Also, our right to

participate in a distribution of assets upon a subsidiary’s

liquidation or reorganization is subject to the prior claims of the

subsidiary’s creditors.

For additional information, see the “Regulation and

Supervision – Dividend Restrictions” and “– Holding Company

Structure” sections in our 2023 Form 10-K and the “Regulatory

Matters” section and Note 26 (Regulatory Capital Requirements

and Other Restrictions) to Financial Statements in this Report.

REGULATORY RISKS

Current and future legislation and/or regulation could require

us to change certain of our business practices, reduce our

revenue and earnings, impose additional costs on us or

otherwise adversely affect our business operations and/or

competitive position. Our parent company, our subsidiary

banks and many of our nonbank subsidiaries such as those

related to our brokerage business, are subject to significant and

extensive regulation under state and federal laws in the U.S., as

well as the applicable laws of the various jurisdictions outside of

the U.S. where they conduct business. These regulations

generally protect depositors, federal deposit insurance funds,

consumers, investors, employees, or the banking and financial

system as a whole, not necessarily our security holders.

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. These laws

and regulations may continue to affect the manner in which we

do business and the products and services that we provide, affect

or restrict our ability to compete in our current businesses or our

ability to enter into or acquire new businesses, reduce or limit our

revenue, affect our compliance and risk management activities,

limit subsidiary capital distributions, increase our capital or

liquidity requirements, impose additional fines or assessments

on us, intensify the regulatory supervision of us and the financial

services industry, and adversely affect our business operations or

have other negative consequences. Our businesses and revenue

in non-U.S. jurisdictions are also subject to risks from political,

economic and social developments in those jurisdictions,

including sanctions or business restrictions, asset freezes or

confiscation, unfavorable political or diplomatic developments, or

financial or social instability. In addition, changes to tax laws,

regulations, and guidance may negatively impact our effective

income tax rate, financial results, or the amount of any tax assets

or liabilities. Furthermore, greater government oversight and

scrutiny of Wells Fargo, as well as financial services companies

generally, has increased our operational and compliance costs as

we must continue to devote substantial resources to enhancing

our procedures and controls and meeting heightened regulatory

standards and expectations. Any failure to meet regulatory

requirements, standards or expectations, either in the U.S. or in

non-U.S. jurisdictions, could continue to result in significant fines,

penalties, restrictions on certain business activities, reputational

harm, or other adverse consequences.

Our consumer businesses, including our mortgage, auto,

credit card and other consumer lending and non-lending

businesses, are subject to numerous and, in many cases, highly

complex consumer protection laws and regulations, as well as

enhanced regulatory scrutiny and more and expanded regulatory

examinations and/or investigations. In particular, the CFPB’s

rules and requirements may continue to increase our compliance

costs, limit the fees we can charge for certain products and

services, and require changes in our business practices, which

could limit or negatively affect our earnings as well as the

products and services that we offer our customers. If we fail to

meet enhanced regulatory requirements and expectations with

respect to our consumer businesses, we may be subject to

increased costs, fines, penalties, restrictions on our business

activities including the products and services we can provide,

reputational harm, or other adverse consequences.

In addition, the Dodd-Frank Act established a

comprehensive framework for regulating over-the-counter

derivatives, and the CFTC, SEC, and other federal regulatory

agencies have adopted rules regulating swaps, security-based

swaps, and derivatives activities. These rules may continue to

negatively impact customer demand for over-the-counter

derivatives, impact our ability to offer customers new derivatives

or amendments to existing derivatives, and increase our costs for

engaging in swaps, security-based swaps, and other derivatives

activities.

We are also subject to various rules and regulations related

to the prevention of financial crimes and combating terrorism,

including the USA PATRIOT Act of 2001. These rules and

regulations require us to, among other things, implement policies

and procedures related to anti-money laundering, anti-bribery

and corruption, economic sanctions, suspicious activities,

currency transaction reporting and due diligence on customers.

Although we have policies and procedures designed to comply

with these rules and regulations, to the extent they are not fully

effective or do not meet regulatory standards or expectations,

we may be subject to fines, penalties, restrictions on certain

business activities, reputational harm, or other adverse

consequences.

Our businesses are also subject to laws and regulations

enacted by U.S. and non-U.S. regulators and governmental

authorities relating to the privacy of the information of

customers, employees and others. These laws and regulations,

Wells Fargo & Company 69

among other things, increase our compliance obligations; have a

significant impact on our businesses’ collection, processing,

sharing, use, and retention of personal data and reporting of data

breaches; and provide for significant penalties for non-

compliance.

In addition, we are subject to a number of consent orders

and other regulatory actions, including a February 2018 consent

order with the FRB regarding the Board’s governance and

oversight of the Company, and the Company’s compliance and

operational risk management program. This consent order limits

the Company’s total consolidated assets as defined under the

consent order to the level as of December 31, 2017, until certain

conditions are met. This limitation could continue to adversely

affect our results of operations or financial condition. We are also

subject to April 2018 consent orders with the CFPB and OCC

regarding the Company’s compliance risk management program

and past practices involving certain automobile collateral

protection insurance policies and certain mortgage interest rate

lock extensions. In addition, we are subject to a September 2021

consent order with the OCC regarding loss mitigation activities in

the Company’s Home Lending business. Similarly, we are subject

to a December 2022 consent order with the CFPB regarding

multiple matters related to automobile lending, consumer

deposit accounts, and mortgage lending. We are also subject to

older consent orders including dating back to 2011. Addressing

these and other regulatory actions is expected to take multiple

years, and we are likely to continue to experience issues or delays

along the way in satisfying their requirements. We are also likely

to continue to identify more issues as we implement our risk and

control infrastructure, which may result in additional regulatory

actions.

Under the April 2018 consent order with the OCC, the Bank

remains subject to requirements that were originally imposed in

November 2016 to provide prior written notice to, and obtain

non-objection from, the OCC with respect to changes in directors

and senior executive officers, and remains subject to certain

regulatory limitations on post-termination payments to certain

individuals and employees.

The Company may be subject to further actions, including

the imposition of additional consent orders, regulatory

agreements or civil money penalties, by federal regulators

regarding similar or other issues. Regulators have indicated the

potential for escalating consequences for banks that do not

timely resolve open issues or have repeat issues. Furthermore,

issues or delays in satisfying the requirements of a regulatory

action could affect our progress on others. Failure to satisfy the

requirements of a regulatory action on a timely basis could result

in additional fines, penalties, business restrictions, limitations on

subsidiary capital distributions, increased capital or liquidity

requirements, enforcement actions, and other adverse

consequences, which could be significant. For example, in

September 2021, the OCC assessed a $250 million civil money

penalty against the Company related to insufficient progress in

addressing requirements under the OCC’s April 2018 consent

order and loss mitigation activities in the Company’s Home

Lending business. Compliance with the February 2018 FRB

consent order, the April 2018 CFPB and OCC consent orders, the

September 2021 OCC consent order, the December 2022 CFPB

consent order, older consent orders including dating back to

2011, and any other consent orders or regulatory actions, as well

as the implementation of their requirements, may continue to

increase the Company’s costs, require the Company to reallocate

resources away from growing its existing businesses, subject the

Company to business restrictions, negatively impact the

Company’s capital and liquidity, require the Company to undergo

significant changes to its business, operations, products and

services, and risk management practices, and subject the

Company to other adverse consequences. For additional

information on the Company’s consent orders, see the

“Overview” section in this Report.

Any future legislation, rule and/or regulation also could

significantly change our regulatory environment, increase our

cost of doing business, limit the activities we may pursue, affect

the competitive balance among banks and other financial

services companies, and have a material adverse effect on our

financial results and condition.

For additional information on the significant regulations and

regulatory oversight initiatives that have affected or may affect

our business, see the “Regulatory Matters” section in this Report

and the “Regulation and Supervision” section in our 2023 Form

10-K.

We could be subject to more stringent capital, leverage or

liquidity requirements or restrictions on our growth, activities

or operations if regulators determine that our resolution or

recovery plan is deficient. Pursuant to rules adopted by the FRB

and the FDIC, Wells Fargo prepares and periodically submits

resolution plans, also known as “living wills,” designed to facilitate

our rapid and orderly resolution in the event of material financial

distress or failure. There can be no assurance that the FRB or

FDIC will respond favorably to the Company’s resolution plans.

If the FRB and/or FDIC determine that a resolution plan has

deficiencies, they may impose more stringent capital, leverage or

liquidity requirements on us or restrict our growth, activities or

operations until we adequately remedy the deficiencies. If the

FRB and/or FDIC ultimately determine that we have been unable

to remedy any deficiencies, they could require us to divest certain

assets or operations.

In addition to our resolution plans, we must also prepare and

periodically submit to the FRB a recovery plan that identifies a

range of options that we may consider during times of

idiosyncratic or systemic economic stress to remedy any

financial weaknesses and restore market confidence without

extraordinary government support. The Bank must also prepare

and periodically submit to the OCC a recovery plan. If either the

FRB or the OCC determines that our recovery plan is deficient,

they may impose fines, restrictions on our business or ultimately

require us to divest assets.

Our security holders may suffer losses in a resolution of

WellsFargo even if creditors of our subsidiaries are paid in full.

If Wells Fargo were to fail, it may be resolved in a bankruptcy

proceeding or, if certain conditions are met, under the resolution

regime created by the Dodd-Frank Act known as the “orderly

liquidation authority,” which allows for the appointment of the

FDIC as receiver. The FDIC’s orderly liquidation authority requires

that security holders of a company in receivership bear all losses

before U.S. taxpayers are exposed to any losses. There are

substantial differences in the rights of creditors between the

orderly liquidation authority and the U.S. Bankruptcy Code,

including the right of the FDIC to disregard the strict priority of

creditor claims under the U.S. Bankruptcy Code in certain

circumstances and the use of an administrative claims procedure

instead of a judicial procedure to determine creditors’ claims.

The strategy described in our most recent resolution plan is

a single point of entry strategy, in which the Parent would be the

only material legal entity to enter resolution proceedings.

However, the strategy described in our resolution plan is not

binding in the event of an actual resolution of Wells Fargo.

Risk Factors (continued)

70 Wells Fargo & Company

To facilitate the orderly resolution of the Company, we

entered into the Support Agreement, pursuant to which the

Parent transferred a significant amount of its assets to the IHC

and will continue to transfer assets to the IHC from time to time.

In the event of our material financial distress or failure, the IHC

will be obligated to use the transferred assets to provide capital

and/or liquidity to the Bank and certain other direct and indirect

subsidiaries of the Parent. Under the Support Agreement, the

IHC will also provide funding and liquidity to the Parent through

subordinated notes and a committed line of credit. If certain

liquidity and/or capital metrics fall below defined triggers, or if

the Parent’s board of directors authorizes it to file a case under

the U.S. Bankruptcy Code, the subordinated notes would be

forgiven, the committed line of credit would terminate, and the

IHC’s ability to pay dividends to the Parent would be restricted,

any of which could materially and adversely impact the Parent’s

liquidity and its ability to satisfy its debts and other obligations,

and could result in the commencement of bankruptcy

proceedings by the Parent at an earlier time than might have

otherwise occurred if the Support Agreement were not

implemented.

Any resolution of the Company will likely impose losses on

shareholders, unsecured debt holders and other creditors of the

Parent, while the Parent’s subsidiaries may continue to operate.

Creditors of some or all of our subsidiaries may receive

significant or full recoveries on their claims, while the Parent’s

security holders could face significant or complete losses. This

outcome may arise whether the Company is resolved under the

U.S. Bankruptcy Code or by the FDIC under the orderly

liquidation authority, and whether the resolution is conducted

using a single point of entry strategy or using a multiple point of

entry strategy, in which the Parent and one or more of its

subsidiaries would each undergo separate resolution

proceedings. Furthermore, in a single point of entry or multiple

point of entry strategy, losses at some or all of our subsidiaries

could be transferred to the Parent and borne by the Parent’s

security holders. Moreover, if either resolution strategy proved

to be unsuccessful, our security holders could face greater losses

than if the strategy had not been implemented.

For additional information, see the “Regulatory Matters –

‘Living Will’ Requirements and Related Matters” section in this

Report.

Regulatory rules and requirements may impose higher capital

and liquidity levels, limiting our ability to pay common stock

dividends, repurchase our common stock, invest in our

business, or provide loans or other products and services to our

customers.The Company and each of our insured depository

institutions are subject to various regulatory capital adequacy

requirements administered by federal banking regulators. In

particular, the Company is subject to rules issued by federal

banking regulators to implement Basel III risk-based capital

requirements for U.S. banking organizations. These capital rules,

among other things, establish required minimum ratios relating

capital to different categories of assets and exposures. Federal

banking regulators have also imposed a leverage ratio and a

supplementary leverage ratio on large BHCs like WellsFargo and

our insured depository institutions. The FRB has also finalized

rules to address the amount of equity and unsecured long-term

debt a U.S. G-SIB must hold to improve its resolvability and

resiliency, often referred to as total loss absorbing capacity

(TLAC). Similarly, federal banking regulators have issued final

rules that implement a liquidity coverage ratio and a net stable

funding ratio.

In addition, as part of its obligation to impose enhanced

capital and risk-management standards on large financial firms

pursuant to the Dodd-Frank Act, the FRB has issued a capital

plan rule that establishes capital planning and other

requirements that govern capital distributions, including

dividends and share repurchases, by certain BHCs, including

WellsFargo. The FRB has also finalized a number of regulations

implementing enhanced prudential requirements for large BHCs

like Wells Fargo regarding risk-based capital and leverage, risk

and liquidity management, single counterparty credit limits, and

imposing debt-to-equity limits on any BHC that regulators

determine poses a grave threat to the financial stability of the

United States. The FRB and OCC have also finalized rules

implementing stress testing requirements for large BHCs and

national banks. Furthermore, the FRB has established

expectations regarding effective boards of directors of large

BHCs. The OCC, under separate authority, has also established

heightened governance and risk management standards for large

national banks, such as the Bank.

The Basel standards and federal regulatory capital, leverage,

liquidity, TLAC, capital planning, and other requirements may

limit or otherwise restrict how we utilize our capital, including

common stock dividends and stock repurchases, and may require

us to increase our capital and/or liquidity. Any requirement that

we increase our regulatory capital, regulatory capital ratios or

liquidity, including due to changes in regulatory requirements,

such as from the adoption of the current proposal to revise the

Basel standards in the U.S., changes in regulatory interpretations

regarding risk-weighted asset calculation methodologies,

including the impact from securitizations of credit risk, or as a

result of business growth, acquisitions or a change in our risk

profile, could increase our funding costs, reduce our flexibility to

source and deploy funding, or require us to liquidate assets or

otherwise change our business, product offerings and/or

investment plans, which may negatively affect our financial

results. Although not currently anticipated, new capital

requirements and/or our regulators may require us to raise

additional capital in the future. Issuing additional common stock

may dilute the ownership of existing stockholders. In addition,

federal banking regulations may continue to increase our

compliance costs as well as limit our ability to invest in our

business or provide loans or other products and services to our

customers.

For additional information, see the “Capital Management,”

“Risk Management – Asset/Liability Management – Liquidity Risk

and Funding – Liquidity Standards,” and “Regulatory Matters”

sections in this Report and the “Regulation and Supervision”

section in our 2023 Form10-K.

FRB policies, including policies on interest rates, can

significantly affect business and economic conditions and our

financial results and condition. The FRB regulates the supply of

money in the United States. Its policies determine in large part

our cost of funds for lending and investing and the return we

earn on those loans and investments, both of which affect our

net interest income and net interest margin. The FRB’s interest

rate policies also can materially affect the value of financial

instruments we hold, such as debt securities. In addition, its

policies can affect our borrowers, potentially increasing the risk

that they may fail to repay their loans. Changes in FRB policies,

including its target range for the federal funds rate or actions

taken to increase or decrease the size of its balance sheet, are

beyond our control and can be hard to predict. The FRB

significantly raised its target range for the federal funds rate over

the last two years to address high inflation, however, the FRB

Wells Fargo & Company 71

could decide to further raise it or lower it in 2024. As noted

above, changes in the interest rate environment and yield curve

which may result from the FRB’s actions could negatively affect

our net interest income and net interest margin.

CREDIT RISKS

Increased credit risk, including as a result of a deterioration in

economic conditions or changes in market conditions, could

require us to increase our provision for credit losses and

allowance for credit losses and could have a material adverse

effect on our results of operations and financial condition.

When we loan money or commit to loan money we incur credit

risk, or the risk of losses if our borrowers do not repay their loans.

As one of the largest lenders in the U.S., the credit performance

of our loan portfolios significantly affects our financial results

and condition. We also incur credit risk in connection with trading

and other activities. As noted above, if the economic

environment were to deteriorate, more of our customers and

counterparties may have difficulty in repaying their loans or

other obligations which could result in a higher level of credit

losses and provision for credit losses. We reserve for credit losses

by establishing an allowance through a charge to earnings. The

amount of this allowance is based on our assessment of expected

credit losses over the anticipated life of our loan portfolio

(including unfunded credit commitments). The process for

determining the amount of the allowance is critical to our

financial results and condition. It requires difficult, subjective, and

complex judgments about the future, including forecasts of

economic or market conditions that might impair the ability of

our borrowers to repay their loans. We might increase the

allowance because of changing economic conditions, including

falling home or commercial real estate values, higher

unemployment or inflation, significant loan growth, changes in

consumer behavior, or other market conditions that adversely

affect borrowers, or other factors. Additionally, the regulatory

environment or external factors, such as natural disasters,

disease pandemics such as COVID-19, political or social matters,

or trade policies, also can continue to influence recognition of

credit losses in our loan portfolios and impact our allowance for

credit losses.

Future allowance levels may increase or decrease based on a

variety of factors, including loan balance changes, portfolio credit

quality and mix changes, and changes in general economic

conditions. While we believe that our allowance for credit losses

was appropriate at December31, 2023, there is no assurance

that it will be sufficient to cover future credit losses. In the event

of significant deterioration in economic conditions or if we

experience significant loan growth, we may be required to

increase the allowance in future periods, which would reduce our

earnings.

For additional information, see the “Risk Management –

Credit Risk Management” and “Critical Accounting Policies –

Allowance for Credit Losses” sections in this Report.

We may have more credit risk and higher credit losses to the

extent our loans are concentrated by loan type, industry

segment, borrower type, or location of the borrower or

collateral. Our credit risk and credit losses can increase if our

loans are concentrated to borrowers engaged in the same or

similar activities or to borrowers who individually or as a group

may be uniquely or disproportionately affected by economic or

market conditions. Similarly, challenging economic or market

conditions, or trade policies, affecting a particular industry or

geography may also impact related or dependent industries or

the ability of borrowers living in such affected areas or working in

such industries to meet their financial obligations. We

experienced the effect of concentration risk in 2009 and 2010

when we incurred greater than expected losses in our residential

real estate loan portfolio due to a housing slowdown and greater

than expected deterioration in residential real estate values in

many markets, including the Central Valley California market and

several Southern California metropolitan statistical areas. As

California is our largest banking state in terms of loans,

deterioration in real estate values and underlying economic

conditions in those markets or elsewhere in California could

result in materially higher credit losses. In addition, changes in

consumer behavior or other market conditions may adversely

affect borrowers in certain industries or sectors, which may

increase our credit risk and reduce the demand by these

borrowers for our products and services. Moreover, deterioration

in macro-economic conditions generally across the country could

result in materially higher credit losses, including for our

residential real estate loan portfolio, which includes

nonconforming mortgage loans we retain on our balance sheet.

We may experience higher delinquencies and higher loss rates as

our consumer real estate secured lines of credit reach their

contractual end of draw period and begin to amortize.

We are currently one of the largest CRE lenders in the U.S.

A deterioration in economic conditions that negatively affects

the business performance of our CRE borrowers, including

increases in interest rates and related refinancing risks at

maturity, declines in commercial property values, and/or changes

in consumer behavior or other market conditions, such as a

continued decrease in the demand for office space, could result in

materially higher credit losses and have a material adverse effect

on our financial results and condition.

Challenges and/or changes in non-U.S. economic conditions

may increase our non-U.S. credit risk. Economic difficulties in

non-U.S. jurisdictions could also indirectly have a material

adverse effect on our credit performance and results of

operations and financial condition to the extent they negatively

affect the U.S. economy and/or our borrowers who have non-U.S.

operations.

Due to regulatory requirements, we must clear certain

derivative transactions through central counterparty

clearinghouses (CCPs), which results in credit exposure to these

CCPs. Similarly, because we are a member of various CCPs, we

may be required to pay a portion of any losses incurred by the

CCP in the event that one or more members of the CCP defaults

on its obligations. In addition, we are exposed to the risk of non-

performance by our clients for which we clear transactions

through CCPs to the extent such non-performance is not

sufficiently covered by available collateral.

For additional information regarding credit risk, see the

“Risk Management – Credit Risk Management” section and

Note 5 (Loans and Related Allowance for Credit Losses) to

Financial Statements in this Report.

OPERATIONAL, STRATEGIC, AND LEGAL RISKS

A failure in or breach of our operational or security systems,

controls or infrastructure, or those of our third-party vendors

and other service providers, could disrupt our businesses,

damage our reputation, increase our costs and cause losses. As

a large financial institution that serves customers through

numerous physicallocations, ATMs, the internet, mobile banking

and other distribution channels across the U.S. and

internationally, we depend on our ability to process, record and

monitor a large number of customer transactions on a

Risk Factors (continued)

72 Wells Fargo & Company

continuous basis. As our customer base and locations have a

broad geographic footprint throughout the U.S. and

internationally, as we have increasingly used the internet and

mobile banking to provide products and services to our

customers, as customer, public, legislative and regulatory

expectations regarding operational and information security

have increased, and as cyber and other information security

attacks have become more prevalent and complex, our

operational systems, controls and infrastructure must continue

to be safeguarded and monitored for potential failures,

disruptions and breakdowns. Our business, financial, accounting,

data processing systems or other operating systems and

facilities may stop operating properly, become insufficient based

on our evolving business needs, or become disabled or damaged

as a result of a number of factors including events that are wholly

or partially beyond our control. For example, there have been and

could in the future be sudden increases in customer transaction

volume; electrical or telecommunications outages; degradation

or loss of internet, website or mobile banking availability; natural

disasters such as earthquakes, tornados, and hurricanes; disease

pandemics such as COVID-19; events arising from local or larger

scale political or social matters, including terrorist acts; and, as

described below, cyber attacks or other information security

incidents. The COVID-19 pandemic or any new pandemic could

result in the occurrence of new, unanticipated adverse effects on

us or the recurrence of adverse effects similar to those already

experienced, including creating additional operational and

compliance risks, such as the need to comply with rapidly

changing regulatory requirements and to quickly implement new

measures to protect the functionality of our systems, networks,

and operations.

Furthermore, enhancements and upgrades to our

infrastructure or operating systems may be time-consuming,

entail significant costs, and create risks associated with

implementing new systems and integrating them with existing

ones. Due to the complexity and interconnectedness of our

systems, the process of enhancing our infrastructure and

operating systems, including their security measures and

controls, can itself create a risk of system disruptions and

security issues. Similarly, we may not be able to timely recover

critical business processes or operations that have been

disrupted, which may further increase any associated costs and

consequences of such disruptions. Although we have enterprise

incident response processes, business continuity plans and other

safeguards in place to help provide operational resiliency, our

business operations may be adversely affected by significant and

widespread disruption to our physical infrastructure or operating

systems that support our businesses and customers. For

example, we have experienced system issues caused by a variety

of factors that have resulted in intermittent service

interruptions, such as temporary disruptions to online and mobile

banking services, delays in posting transactions, and customer

difficulty signing into accounts.

As a result of financial institutions and technology systems

becoming more interconnected and complex, any operational

incident at a third party may increase the risk of loss or material

impact to us or the financial industry as a whole. Furthermore,

third parties on which we rely, including those that facilitate our

business activities or to which we outsource operations, such as

exchanges, clearing houses, financial intermediaries or vendors

that provide services or security solutions for our operations,

could continue to be sources of operational risk to us, including

from information breaches or loss, breakdowns, disruptions or

failures of their own systems or infrastructure, or any deficiencies

in the performance of their responsibilities. These risks are

increased to the extent we rely on a single third party or on third

parties in a single geographic area. We are also exposed to the

risk that a disruption or other operational incident at a common

service provider to our third parties could impede their ability to

provide services or perform their responsibilities for us. In

addition, we must meet regulatory requirements and

expectations regarding our use of third-party service providers,

and any failure by our third-party service providers to meet their

obligations to us or to comply with applicable laws, rules,

regulations, or Wells Fargo policies could result in fines, penalties,

restrictions on our business, or other adverse consequences.

Disruptions or failures in the physical infrastructure, controls

or operating systems that support our businesses and

customers, failures of the third parties on which we rely to

adequately or appropriately provide their services or perform

their responsibilities, or our failure to effectively manage or

oversee our third-party relationships, could result in business

disruptions, loss of revenue or customers, legal or regulatory

proceedings, remediation and other costs, violations of

applicable privacy and other laws, reputational damage, customer

harm, or other adverse consequences, any of which could

materially adversely affect our results of operations or financial

condition.

A cyber attack or other information security incident could

have a material adverse effect on our results of operations,

financial condition, or reputation. Information security risks for

large financial institutions such as Wells Fargo have generally

increased in recent years in part because of the proliferation of

new technologies, the use of the internet, mobile devices, and

cloud technologies to conduct financial transactions, the

increased prevalence and availability of artificial intelligence, the

increase in remote work arrangements, and the increased

sophistication and activities of organized crime, hackers,

terrorists, activists, and other external parties, including foreign

state-sponsored parties. Those parties also may continue to

attempt to misrepresent personal or financial information to

commit fraud, obtain loans or other financial products from us, or

attempt to fraudulently induce employees, customers, or other

users of our systems to disclose confidential, proprietary, or

other information to gain access to our data or that of our

customers. Geopolitical matters may also elevate the risk of an

information security threat, particularly by foreign state-

sponsored parties or their supporters. As noted above, our

operations rely on the secure processing, transmission and

storage of confidential, proprietary, and other information in our

computer systems and networks. Our banking, brokerage,

investment advisory, and capital markets businesses rely on our

digital technologies, computer and email systems, software,

hardware, and networks to conduct their operations. In addition,

to access our products and services, our customers may use

personal smartphones, tablets, and other mobile devices that are

beyond our control systems. Our technologies, systems,

software, networks, and our customers’ devices continue to be

the target of cyber attacks or other information security threats,

which could materially adversely affect us, including as a result of

fraudulent activity, the unauthorized release, gathering,

monitoring, misuse, loss or destruction of Wells Fargo’s or our

customers’ confidential, proprietary and other information, or

the disruption of Wells Fargo’s or our customers’ or other third

parties’ business operations. For example, various retailers have

reported they were victims of cyber attacks in which large

amounts of their customers’ data, including debit and credit card

information, was obtained. In these situations, we generally incur

costs to replace compromised cards and address fraudulent

Wells Fargo & Company 73

transaction activity affecting our customers. We are also exposed

to the risk that an employee or other person acting on behalf of

the Company fails to comply with applicable policies and

procedures and inappropriately circumvents information security

controls for personal gain or other improper purposes.

Due to the increasing interconnectedness and complexity of

financial institutions and technology systems, an information

security incident at a third party or a third party’s downstream

service providers may increase the risk of loss or material impact

to us or the financial industry as a whole. In addition, third parties

(including their downstream service providers) on which we rely,

including those that facilitate our business activities or to which

we outsource operations, such as internet, mobile technology,

hardware, software, and cloud service providers, continue to be

sources of information security risk to us. We could suffer

material harm, including business disruptions, losses or

remediation costs, reputational damage, legal or regulatory

proceedings, or other adverse consequences as a result of the

failure of those third parties to adequately or appropriately

safeguard their technologies, systems, networks, hardware, and

software, or as a result of our or our customers’ data being

compromised due to information security incidents affecting

those third parties.

Our risk and exposure to information security threats

remains heightened because of, among other things, the

persistent and evolving nature of these threats, the prominent

size and scale of Wells Fargo and its role in the financial services

industry, our plans to continue to implement our digital and

mobile banking channel strategies and develop additional remote

connectivity solutions to serve our customers when and how

they want to be served, our geographic footprint and

international presence, our use of third parties, the outsourcing

of some of our business operations, and the current global

economic and political environment. For example, WellsFargo

and other financial institutions, as well as our third-party service

providers, continue to be the target of various evolving and

adaptive information security threats, including cyber attacks,

malware, ransomware, other malicious software intended to

exploit hardware or software vulnerabilities, phishing, credential

validation, and distributed denial-of-service, in an effort to

disrupt the operations of financial institutions, test their

cybersecurity capabilities, commit fraud, or obtain confidential,

proprietary or other information. Cyber attacks have also

focused on targeting online applications and services, such as

online banking, as well as cloud-based and other products and

services provided by third parties, and have targeted the

infrastructure of the internet, causing the widespread

unavailability of websites and degrading website performance. As

a result, information security and the continued development

and enhancement of our controls, processes and systems

designed to protect our networks, computers, software and data

from attack, damage or unauthorized access remain a priority for

Wells Fargo. We are also involved in industry cybersecurity

efforts and working with other parties, including our third-party

service providers and governmental agencies, to continue to

enhance defenses and improve resiliency to information security

threats. As these threats continue to evolve, we expect to

continue to be required to expend significant resources to

develop and enhance our protective measures or to investigate

and remediate any information security vulnerabilities or

incidents. Because the investigation of any information security

breach is inherently unpredictable and would require time to

complete, we may not be able to immediately address the

consequences of a breach, which may further increase any

associated costs and consequences. Moreover, to the extent our

insurance covers aspects of information security risk, such

insurance may not be sufficient to cover all liabilities or losses

associated with an information security breach.

Cyber attacks or other information security incidents

affecting us or third parties (including their downstream service

providers) on which we rely, including those that facilitate our

business activities or to which we outsource operations, or

affecting the networks, systems or devices that our customers

use to access our products and services, could result in business

disruptions, loss of revenue or customers, legal or regulatory

proceedings, compliance, remediation and other costs, violations

of applicable privacy and other laws, reputational damage, or

other adverse consequences, any of which could materially

adversely affect our results of operations or financial condition.

Our framework for managing risks may not be fully effective in

mitigating risk and loss to us. Our risk management framework

seeks to mitigate risk and loss to us. We have established

processes and procedures intended to identify, measure,

monitor, report and analyze the types of risk to which we are

subject, including liquidity risk, credit risk, market risk, interest

rate risk, operational risk, legal and compliance risk, and

reputational risk, among others. However, as with any risk

management framework, there are inherent limitations to our

risk management strategies as there may exist, or develop in the

future, risks that we have not appropriately anticipated,

identified or managed. Our risk management framework is also

dependent on ensuring that effective operational controls and an

appropriate risk mindset exist throughout the Company. The

inability to develop effective operational controls or to foster the

appropriate culture throughout the Company, including the

inability to align performance management and compensation to

achieve the desired culture, could adversely impact the

effectiveness of our risk management framework. Similarly, if we

are unable to effectively manage our business or operations, we

may be exposed to increased risks or unexpected losses. We

process a large number of transactions each day and could

continue to experience increased costs, regulatory investigations,

or other adverse consequences if we do not accurately or

completely execute a process or transaction, whether due to

human error or otherwise; if we are unable to detect and prevent

fraudulent activity; or if an employee or third-party service

provider fails to comply with applicable policies and procedures,

inappropriately circumvents controls, or engages in other

misconduct.

In certain instances, we rely on models to measure, monitor

and predict risks, such as market, interest rate, liquidity and

credit risks, as well as to help inform business decisions; however,

there is no assurance that these models will appropriately or

sufficiently capture all relevant risks or accurately predict future

events or exposures. Furthermore, certain of our models are

subject to regulatory review and approval, and any failure to

meet regulatory standards or expectations could result in fines,

penalties, restrictions on certain business activities, or other

adverse consequences, and any required modifications or

changes to these models can impact our capital ratios and

requirements and result in increased operational and compliance

costs. In addition, we rely on data to aggregate and assess our

various risk exposures and business activities, and any issues with

the quality or effectiveness of our data, including our

aggregation, management, and validation procedures, could

result in ineffective risk management practices, business

decisions or customer service, inefficient use of resources, or

inaccurate regulatory or other risk reporting.

Risk Factors (continued)

74 Wells Fargo & Company

We also use artificial intelligence to help further inform or

automate certain business decisions, operations, and risk

management practices, as well as to improve our customer

service, but there is no assurance that artificial intelligence will

appropriately or sufficiently replicate certain outcomes or human

assessment or accurately predict future events or exposures. For

example, the algorithms or datasets underlying our artificial

intelligence may be inaccurate or include other weaknesses that

could result in deficient or biased data outputs or other

unintended consequences. Accordingly, even though we may

have controls, our use of artificial intelligence could result in

ineffective business decisions, operations, risk management

practices, or customer service, legal or regulatory proceedings,

reputational harm, or other adverse effects on our business or

financial results.

Previous financial and credit crises and resulting regulatory

reforms highlighted both the importance and some of the

limitations of managing unanticipated risks, and our regulators

remain focused on ensuring that financial institutions, and Wells

Fargo in particular, maintain risk management policies and

practices.If our risk management framework proves ineffective,

we could suffer unexpected losses which could materially

adversely affect our results of operations or financial condition.

We may be exposed to additional legal or regulatory

proceedings, costs, and other adverse consequences related to

instances where customers may have experienced financial

harm. We have identified and may in the future identify areas or

instances where customers may have experienced financial harm,

including as a result of our continuing efforts to strengthen our

risk and control infrastructure. For example, we identified certain

issues related to past practices involving certain automobile

collateral protection insurance policies and certain issues related

to the unused portion of guaranteed automobile protection

waiver or insurance agreements. We also previously entered into

settlements to resolve inquiries or investigations by various

government entities and lawsuits by non-government parties

arising out of certain retail sales practices of the Company.

Negative publicity or public opinion resulting from instances

where customers may have experienced financial harm may

continue to increase the risk of reputational harm to our

business. Similarly, the identification of areas or instances where

customers may have experienced financial harm could lead to,

and in some cases has already resulted in, significant remediation

costs, loss of revenue or customers, legal or regulatory

proceedings, compliance and other costs, or other adverse

consequences.

For additional information, see the “Overview – Retail Sales

Practices Matters” and “Overview – Customer Remediation

Activities” sections in this Report.

We may incur fines, penalties, business restrictions, and other

adverse consequences from regulatory violations or from any

failure to meet regulatory standards or expectations. We

maintain systems and procedures designed to ensure that we

comply with applicable laws and regulations. However, we are

subject to heightened compliance and regulatory oversight and

expectations, particularly due to the evolving and increasingly

complex regulatory landscape we operate in. We are also subject

to consent orders and other regulatory actions that subject us to

various conditions and restrictions. In addition, a single event or

issue may give rise to numerous and overlapping investigations

and proceedings, either by multiple federal and state agencies in

the U.S. or by multiple regulators and other governmental

entities in different jurisdictions. Also, the laws and regulations in

jurisdictions in which we operate may be different or even

conflict with each other, such as differences between U.S. federal

and state law or differences between U.S. and non-U.S. laws as to

the products and services we may offer or other business

activities we may engage in, which can lead to compliance

difficulties or issues. Additionally, regulatory or compliance issues

at other financial institutions could result in regulatory scrutiny

for us. We could also be subject to regulatory actions, including

fines, penalties, business restrictions, or other adverse

consequences, if we fail to obtain applicable licensing or

registration in any jurisdiction in which we offer our products and

services. Furthermore, many legal and regulatory regimes require

us to report transactions and other information to regulators and

other governmental authorities, self-regulatory organizations,

exchanges, clearing houses and customers. We may be subject to

fines, penalties, business restrictions, or other adverse

consequences if we do not timely, completely, or accurately

provide regulatory reports, customer notices, or disclosures.

Moreover, some legal/regulatory frameworks provide for

the imposition of fines, penalties, business restrictions, or other

adverse consequences for noncompliance even though the

noncompliance was inadvertent or unintentional and even

though there were systems and procedures in place at the time

designed to ensure compliance. For example, we are subject to

regulations issued by the Office of Foreign Assets Control

(OFAC) that prohibit financial institutions from participating in

the transfer of property belonging to the governments of certain

non-U.S. countries and designated nationals of those countries.

OFAC may impose fines, penalties, or restrictions on certain

business activities for inadvertent or unintentional violations

even if reasonable processes are in place to prevent the

violations. Any violation of these or other applicable laws or

regulatory requirements, even if inadvertent or unintentional, or

any failure to meet regulatory standards or expectations,

including any failure to satisfy the conditions of any consent

orders or other regulatory actions, could result in significant

fines, penalties, restrictions on certain business activities,

negative impacts to our capital and liquidity, requirements to

undergo significant changes to our business, operations,

products and services, and risk management practices,

reputational harm, loss of customers, or other adverse

consequences. Furthermore, these consequences may escalate

to the extent issues are not timely resolved or are repeated.

Reputational harm, including as a result of our actual or alleged

conduct or public opinion of the financial services industry

generally, could adversely affect our business, results of

operations, and financial condition. Reputation risk, or the risk

to our business, earnings and capital from negative public

opinion, is inherent in our business and has increased

substantially because of our size and profile in the financial

services industry, sales practices related matters, and instances

where customers may have experienced financial harm. Negative

public opinion about the financial services industry generally or

Wells Fargo specifically could adversely affect our reputation and

our ability to keep and attract customers. Negative public opinion

could result from our actual or alleged conduct in any number of

activities, including sales practices; mortgage, auto or other

consumer lending practices; loan origination or servicing

activities; mortgage foreclosure actions; management of client

accounts or investments; lending, investing or other business

relationships; identification and management of potential

conflicts of interest from transactions, obligations and interests

with and among our customers; environmental, social and

governance practices; regulatory compliance; risk management;

Wells Fargo & Company 75

incentive compensation practices; and disclosure, sharing or

inadequate protection or improper use of customer information,

and from actions taken by government regulators and

community or other organizations in response to that conduct.

Although we have policies and procedures in place intended to

detect and prevent conduct by employees and third-party

service providers that could potentially harm customers or our

reputation, there is no assurance that such policies and

procedures will be fully effective in preventing such conduct.

Furthermore, our actual or perceived failure to address or

prevent any such conduct or otherwise to effectively manage our

business or operations could result in significant reputational

harm. In addition, because we conduct most of our businesses

under the “Wells Fargo” brand, negative public opinion about one

business also could affect our other businesses. Moreover,

actions by the financial services industry generally or by certain

members or individuals in the industry also can adversely affect

our reputation. The proliferation of social media websites utilized

by Wells Fargo and other third parties, as well as the personal use

of social media by our employees and others, including personal

blogs and social network profiles, also may increase the risk that

negative, inappropriate or unauthorized information may be

posted or released publicly that could harm our reputation or

have other negative consequences, including as a result of our

employees interacting with our customers in an unauthorized

manner in various social media outlets.

Wells Fargo and other financial institutions have been

targeted from time to time by protests and demonstrations,

which have included disrupting the operation of our retail

banking locations, and have been subject to negative public

commentary, including with respect to certain business practices

and the fees charged for various products and services. Wells

Fargo and other financial institutions have also been subject to

negative publicity as a result of providing or reducing financial

services to or making investments in industries or organizations

subject to stakeholder concerns. There can be no assurance that

continued protests or negative public opinion of the Company

specifically or large financial institutions generally will not harm

our reputation and adversely affect our business, results of

operations, and financial condition.

If we are unable to develop and execute effective business

plans or strategies or manage change effectively, our

competitive standing and results of operations could suffer. In

order to advance our business goals, we may undertake business

plans or strategies related to, among other things, our

organizational structure, our compliance and risk management

framework, our expenses and efficiency, the types of products

and services we offer, the types of businesses we engage in, the

geographies in which we operate, the manner in which we serve

our clients and customers, the third parties with which we do

business, and the methods and distribution channels by which we

offer our products and services. Accomplishing these business

plans or strategies may be complex, time intensive, require

significant financial, technological, management and other

resources, may divert management attention and resources away

from other areas of the Company, and may impact our expenses

and ability to generate revenue. There is no guarantee that any

business plans or strategies, including our current efficiency

initiatives, will ultimately be successful. To the extent we are

unable to develop or execute effective business plans or

strategies or manage change effectively, our competitive

position, reputation, prospects for growth, and results of

operations may be adversely affected.

In addition, from time to time, we may decide to divest

certain businesses or assets. Difficulties in executing a divestiture

may cause us not to realize any expected cost savings or other

benefits from the divestiture, or may result in higher than

expected losses of employees or harm our ability to retain

customers. The divestiture or winding down of certain businesses

or assets may also result in the impairment of goodwill or other

long-lived assets related to those businesses or assets, which

could adversely affect our financial results.

Similarly, we may explore opportunities to expand our

products, services, and assets through strategic acquisitions of

companies or businesses in the financial services industry. We

generally must receive federal regulatory approvals before we

can acquire a bank, bank holding company, or certain other

financial services businesses. We cannot be certain when or if, or

on what terms and conditions, any required regulatory approvals

will be granted. We might be required to sell banks, branches

and/or business units or assets or issue additional equity as a

condition to receiving regulatory approval for an acquisition.

When we do announce an acquisition, our stock price may fall

depending on the size of the acquisition, the type of business to

be acquired, the purchase price, and the potential dilution to

existing stockholders or our earnings per share if we issue

common stock in connection with the acquisition. Furthermore,

difficulty in integrating an acquired company or business may

cause us not to realize expected revenue increases, cost savings,

increases in geographic or product presence, and other projected

benefits from the acquisition. The integration could result in

higher than expected deposit attrition, loss of key employees, an

increase in our compliance costs or risk profile, disruption of our

business or the acquired business, or otherwise harm our ability

to retain customers and employees or achieve the anticipated

benefits of the acquisition. Time and resources spent on

integration may also impair our ability to grow our existing

businesses. Many of the foregoing risks may be increased if the

acquired company or business operates internationally or in a

geographic location where we do not already have significant

business operations and/or employees.

Our operations and business could be adversely affected by the

impacts of climate change. The physical effects of climate

change, including the increased prevalence and severity of

extreme weather events and natural disasters, such as

hurricanes, droughts, and wildfires, could damage or interfere

with our operations or those of our third-party service providers,

which could disrupt our business, increase our costs, or cause

losses. Climate change related impacts could also negatively

affect the financial condition of our customers, increase the

credit risk associated with those customers, or result in the

deterioration of the value of the collateral we hold. In addition,

changes in consumer behavior or other market conditions on

account of climate considerations or due to the transition to a

low carbon economy may adversely affect customers in certain

industries, sectors or geographies, which may increase our credit

risk and reduce the demand by these customers for our products

and services. Furthermore, the transition to a low carbon

economy could affect our business practices or result in

additional costs or other adverse consequences to our business

operations. Legislation and/or regulation in connection with

climate change, as well as stakeholder perceptions and

expectations related to climate change and its impacts, could

require us to change certain of our business and/or risk

management practices, impose additional costs on us, reduce our

revenue or business opportunities, subject us to legal or

regulatory proceedings, or otherwise adversely affect our

Risk Factors (continued)

76 Wells Fargo & Company

operations and business. Additionally, climate-related data may

be based on emerging practices that are subject to measurement

uncertainties or may be available only from third-parties, which

can impact the quality and consistency of the data and make it

difficult to collect, validate, and analyze, impact the effectiveness

of our related models, projections, strategies, and decisions, or

result in legal actions or other adverse consequences. Moreover,

our reputation may be damaged and we may lose business

opportunities as a result of our response to climate change or our

strategy for the transition to a low carbon economy, including if

we are unable or perceived to be unable to achieve our objectives

or if our response is disliked or perceived to be ineffective or

insufficient. Similarly, any overstatement or mislabeling of the

environmental benefits of our products, services or activities may

subject us to legal actions, reputational harm, or other adverse

consequences. For additional information on regulatory

developments in response to climate change, see the

“Regulatory Matters” section in this Report.

We are exposed to potential financial loss or other adverse

consequences from legal actions. Wells Fargo and some of its

subsidiaries are involved in judicial, regulatory, governmental,

arbitration, and other proceedings or investigations concerning

matters arising from the conduct of our business activities, and

many of those proceedings and investigations expose

WellsFargo to potential financial loss or other adverse

consequences. There can be no assurance as to the ultimate

outcome of any of these legal actions. We establish accruals for

legal actions when potential losses associated with the actions

become probable and the costs can be reasonably estimated. We

may still incur costs for a legal action even if we have not

established an accrual. In addition, the actual cost of resolving a

legal action may be substantially higher than any amounts

accrued for that action. The ultimate resolution of a pending legal

action, depending on the remedy sought and granted, could

materially adversely affect our results of operations and financial

condition.

As noted above, we are subject to heightened regulatory

oversight and scrutiny, which may lead to regulatory

investigations, proceedings or enforcement actions. In addition

to imposing potentially significant fines, penalties, business

restrictions, and other adverse consequences, regulatory

authorities may require criminal pleas or other admissions of

wrongdoing and compliance with other conditions in connection

with settling such matters, which can lead to reputational harm,

loss of customers, restrictions on the ability to access capital

markets, limitations on capital distributions, the inability to

engage in certain business activities or offer certain products or

services, and/or other direct and indirect adverse effects.

For additional information, see Note 13 (Legal Actions) to

Financial Statements in this Report.

MORTGAGE BUSINESS RISKS

Our mortgage banking revenue can be volatile from quarter to

quarter, including from the impact of changes in interest rates,

and we rely on the GSEs to purchase our conforming loans to

reduce our credit risk and provide liquidity to fund new

mortgage loans. We earn revenue from fees we receive for

originating mortgage loans and for servicing mortgage loans.

Changes in interest rates can affect these fees, as well as the fair

value of our MSRs. When rates rise, the demand for mortgage

loans usually tends to fall, reducing the revenue we receive from

loan originations. Under the same conditions, revenue from our

MSRs usually tends to increase due to a decline in the likelihood

of prepayments, which increases the fair value of our MSRs.

When rates fall, mortgage originations usually tend to increase

and the value of our MSRs usually tends to decline, also with

some offsetting revenue effect. Even though changes in interest

rates can cause this offsetting effect, the effect is not perfect,

either in amount or timing.

We typically use derivatives and other instruments to hedge

our mortgage banking interest rate risk. We may not hedge all of

our risk, and we may not be successful in hedging any of the risk.

Hedging is not a perfect science, and we could incur significant

losses from our hedging activities.

We rely on the GSEs to purchase mortgage loans that meet

their conforming loan requirements and on government insuring

agencies, such as the Federal Housing Administration (FHA) and

the Department of Veterans Affairs (VA), to insure or guarantee

loans that meet their policy requirements. If the GSEs or

government insuring agencies were to limit or reduce their

purchasing, insuring or guaranteeing of loans, our ability to fund,

and thus originate, new mortgage loans, could be reduced. We

cannot assure that the GSEs or government insuring agencies will

not materially limit their purchases, insuring or guaranteeing of

conforming loans or change their criteria for what constitutes a

conforming loan. Similarly, there have been various proposals to

reform the housing finance market in the U.S., including the role

of the GSEs, which, depending on any ultimate reforms enacted,

could have an adverse impact on our mortgage banking business.

In addition, to meet customer needs, we also originate loans that

do not conform to either the GSEs’ or government insuring

agencies’ standards, which are generally retained on our balance

sheet and therefore do not generate sale proceeds that could be

used to originate new loans.

For additional information, see the “Risk Management –

Asset/Liability Management – Mortgage Banking Interest Rate

and Market Risk,” “Critical Accounting Policies – Valuation of

Residential Mortgage Servicing Rights (MSRs)” and “Critical

Accounting Policies – Fair Value of Financial Instruments”

sections in this Report.

We may suffer losses, penalties, or other adverse

consequences if we fail to satisfy our obligations with respect

to the residential mortgage loans or other assets we originate

or service. For residential mortgage loans that we originate, we

could become subject to monetary damages and other civil

penalties, including the loss of certain contractual payments or

the inability to exercise certain remedies under the loans such as

foreclosure proceedings, if it is alleged or determined that the

loans were not originated in accordance with applicable laws or

regulations.

Additionally, for residential mortgage loans that we

originate and sell, we may be required to repurchase the loans or

indemnify or reimburse the securitization trust, investor or

insurer for credit losses incurred on loans in the event of a breach

of contractual representations or warranties in the agreements

under which we sell the loans or in the insurance or guaranty

agreements that we enter into with the FHA and VA. If economic

conditions or the housing market worsen, we could have

increased repurchase obligations and increased loss severity on

repurchases. We may also have repurchase or other obligations

to the extent we originate and securitize other assets, such as

credit card loans.

Furthermore, if we fail to satisfy our servicing obligations for

the mortgage loans we service, we may be terminated as servicer

or master servicer, required to indemnify the securitization

trustee against losses, and/or contractually obligated to

repurchase a mortgage loan or reimburse investors for credit

Wells Fargo & Company 77

losses, any of which could significantly reduce our net servicing

income.

We may also incur costs, liabilities to borrowers and/or

securitization investors, legal actions, or other adverse

consequences if we fail to meet our servicing obligations,

including our obligations with respect to mortgage foreclosure

actions or if we experience delays in the foreclosure process. Our

mortgage banking revenue may be negatively affected to the

extent our servicing costs increase because of higher foreclosure

or other servicing related costs. In addition, we may continue to

be subject to fines, penalties, business restrictions, reputational

harm, and other adverse consequences as a result of actual or

perceived deficiencies in our mortgage servicing practices,

including with respect to our compliance with existing consent

order requirements, our foreclosure practices, our loss mitigation

activities such as loan modifications or forbearances, or our

servicing of flood zone properties. We may also face risks,

including regulatory, compliance, and market risks, as we pursue

our previously announced plans to reduce the amount of

residential mortgage loans we service.

For additional information, see the “Overview,” “Risk

Management – Credit Risk Management – Mortgage Banking

Activities,” and “Critical Accounting Policies – Valuation of

Residential Mortgage Servicing Rights (MSRs)” sections and

Note 13 (Legal Actions) and Note 17 (Guarantees and Other

Commitments) to Financial Statements in this Report.

COMPETITIVE RISKS

We face significant and increasing competition in the rapidly

evolving financial services industry. We compete with other

financial institutions in a highly competitive industry that is

undergoing significant changes as a result of financial regulatory

reform, technological advances, increased public scrutiny, and

economic conditions. Our success depends on, among other

things, our ability to develop and maintain deep and enduring

relationships with our customers based on the quality of our

customer service, the wide variety of products and services that

we can offer our customers and the ability of those products and

services to satisfy our customers’ needs and preferences, the

pricing of our products and services, the extensive distribution

channels available for our customers, our innovation, and our

reputation. Continued or increased competition in any one or all

of these areas may negatively affect our customer relationships,

market share and results of operations and/or cause us to

increase our capital investment in our businesses in order to

remain competitive. In addition, our ability to reposition or

reprice our products and services from time to time may be

limited and could be influenced significantly by the economic,

regulatory and political environment for large financial

institutions as well as by the actions of our competitors.

Furthermore, any changes in the types of products and services

that we offer our customers and/or the pricing for those

products and services could result in a loss of customer

relationships and market share and could materially adversely

affect our results of operations.

Continued technological advances and the growth of

e-commerce have made it possible for non-depository

institutions to offer products and services that traditionally were

banking products, and for financial institutions and other

companies to provide electronic and internet-based financial

solutions, including electronic securities trading, lending and

payment solutions. In addition, technological advances, including

digital currencies and alternative payment methods, may

diminish the importance of depository institutions and other

financial intermediaries in the transfer of funds between parties.

We may not respond effectively to these and other competitive

threats from existing and new competitors and may be forced to

offer products and services at lower prices, increase our

investment in our business to modify or adapt our existing

products and services, and/or develop new products and services

to respond to our customers’ needs and preferences. To the

extent we are not successful in developing and introducing new

products and services or responding or adapting to the

competitive landscape or to changes in customer preferences, we

may lose customer relationships and our growth prospects and

results of operations may be materially adversely affected.

Our ability to attract and retain qualified employees is critical

to the success of our business and failure to do so could

adversely affect our business performance, competitive

position and future prospects. The success of Wells Fargo is

heavily dependent on the talents and efforts of our employees,

including our senior leaders, and in many areas of our business,

including commercial banking, brokerage, investment advisory,

capital markets, risk management, and technology, the

competition for highly qualified personnel is intense. We also

seek to retain a pipeline of employees to provide continuity of

succession for our senior leadership positions. In order to attract

and retain highly qualified employees, we must provide

competitive compensation, benefits and work arrangements,

effectively manage employee performance and development,

and foster a diverse and inclusive environment. As a large

financial institution and additionally to the extent we remain

subject to consent orders we may be subject to limitations on

compensation by our regulators that may adversely affect our

ability to attract and retain these qualified employees, especially

if some of our competitors may not be subject to these same

compensation limitations. Similarly, union organizing activity,

some of which has been successful, could continue to increase

our operational complexity and costs. In addition, our response to

this activity could be perceived negatively and harm our

reputation and business, subject us to legal actions, or adversely

affect our ability to attract and retain qualified employees. If we

are unable to continue to attract and retain qualified employees,

including successors for senior leadership positions, our business

performance, competitive position and future prospects may be

adversely affected.

FINANCIAL REPORTING RISKS

Changes in accounting standards, and changes in how

accounting standards are interpreted or applied, could

materially affect our financial results and condition. From time

to time the FASB and the SEC update the financial accounting

and reporting standards that govern the preparation of our

external financial statements. In addition, accounting standard

setters and those who interpret the accounting standards (such

as the FASB, SEC, and banking regulators) may update their

previous interpretations or positions on how these standards

should be applied. Changes in financial accounting and reporting

standards and changes in current interpretations are typically

beyond our control, can be hard to predict, and could materially

affect our financial results and condition, including requiring a

retrospective restatement of prior period financial statements.

Similarly, any change in our accounting policies could also

materially affect our financial statements. For additional

information, see the “Current Accounting Developments” section

in this Report.

Risk Factors (continued)

78 Wells Fargo & Company

Our financial statements require certain assumptions,

judgments, and estimates and rely on the effectiveness of our

internal control over financial reporting. Pursuant to U.S.

GAAP, we are required to use certain assumptions, judgments,

and estimates in preparing our financial statements, including,

among other items, in determining the allowance for credit

losses, the liability for legal actions, goodwill impairment, and the

fair value of certain assets and liabilities. Several of our

accounting policies are critical because they require management

to make difficult, subjective, and complex judgments about

matters that are inherently uncertain and because it is likely that

materially different amounts would be reported under different

conditions or using different assumptions. If the assumptions,

judgments, or estimates underlying our financial results are

incorrect or different from actual results, we could experience

unexpected losses or other adverse impacts, some of which could

be significant. For a description of our critical accounting policies,

see the “Critical Accounting Policies” section in this Report.

The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) requires

our management to evaluate the Company’s disclosure controls

and procedures and its internal control over financial reporting

and requires our auditors to issue a report on our internal control

over financial reporting. We are required to disclose, in our annual

report on Form 10-K, the existence of any “material weaknesses”

in our internal controls. We cannot assure that we will not

identify one or more material weaknesses as of the end of any

given quarter or year, nor can we predict the effect on our

reputation or stock price of disclosure of a material weakness.

We could also be required to devote significant resources to

remediate any material weakness. In addition, our customers may

rely on the effectiveness of certain of our operational and

internal controls as a service provider, and any deficiency in those

controls could affect our customers and damage our reputation

or business. Sarbanes-Oxley also limits the types of non-audit

services our outside auditors may provide to us in order to

preserve their independence from us. If our auditors were found

not to be independent of us, we could be required to engage new

auditors and re-file financial statements and audit reports with

the SEC. We could be out of compliance with SEC rules until new

financial statements and audit reports were filed, limiting our

ability to raise capital and resulting in other adverse

consequences.

* * *

Any factor described in this Report or in any of our other SEC

filings could by itself, or together with other factors, adversely

affect our financial results and condition. Refer to our quarterly

reports on Form 10-Q filed with the SEC in 2024 for material

changes to the above discussion of risk factors. There are factors

not discussed above or elsewhere in this Report that could

adversely affect our financial results and condition.

Wells Fargo & Company 79

Controls and Procedures

Disclosure Controls and Procedures

The Company’s management evaluated the effectiveness, as of December31, 2023, of the Company’s disclosure controls and

procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the

Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were

effective as of December31, 2023.

Internal Control Over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process

designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the

Company’s Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and

the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles (GAAP)

and includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of

assets of the Company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations

of management and directors of the Company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the

Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during fourth quarter

2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s report on internal control over financial reporting is set forth below and should be read with these limitations

in mind.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the

Company. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December31, 2023,

using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control –

Integrated Framework (2013). Based on this assessment, management concluded that as of December31, 2023, the Company’s internal

control over financial reporting was effective.

KPMG LLP, the independent registered public accounting firm that audited the Company’s financial statements included in this

Annual Report, issued an audit report on the Company’s internal control over financial reporting. KPMG’s audit report appears on the

following page.

80 Wells Fargo & Company

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

WellsFargo & Company:

Opinion on Internal Control Over Financial Reporting

We have audited WellsFargo & Company and subsidiaries’ (the Company) internal control over financial reporting as of December31,

2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control

over financial reporting as of December31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued

by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),

the consolidated balance sheet of the Company as of December31, 2023 and 2022, the related consolidated statement of income,

comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December31, 2023, and

the related notes (collectively, the consolidated financial statements), and our report dated February20, 2024 expressed an unqualified

opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of

the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control

Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on

our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company

in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting,

assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control

based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting

principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the

company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in

accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect

on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections

of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Charlotte, North Carolina

February20, 2024

Wells Fargo & Company 81

Financial Statements

Wells Fargo & Company and Subsidiaries

Consolidated Statement of Income

Year ended December 31,

(in millions, except per share amounts) 2023 2022 2021

Interest income

Debt securities $ 16,108 11,781 9,253

Loans held for sale 363 513 865

Loans 57,155 37,715 28,634

Equity securities 682 707 608

Other interest income 10,810 3,308 334

Total interest income 85,118 54,024 39,694

Interest expense

Deposits 16,503 2,349 388

Short-term borrowings 3,848 582 (41)

Long-term debt 11,572 5,505 3,173

Other interest expense 820 638 395

Total interest expense 32,743 9,074 3,915

Net interest income 52,375 44,950 35,779

Noninterest income

Deposit and lending-related fees 6,140 6,713 6,920

Investment advisory and other asset-based fees 8,670 9,004 11,011

Commissions and brokerage services fees 2,375 2,242 2,299

Investment banking fees 1,649 1,439 2,354

Card fees 4,256 4,355 4,175

Mortgage banking 829 1,383 4,956

Net gains from trading and securities 4,368 1,461 7,264

Other (1) 1,935 2,821 4,408

Total noninterest income 30,222 29,418 43,387

Total revenue 82,597 74,368 79,166

Provision for credit losses 5,399 1,534 (4,155)

Noninterest expense

Personnel 35,829 34,340 35,541

Technology, telecommunications and equipment 3,920 3,375 3,227

Occupancy 2,884 2,881 2,968

Operating losses 1,183 6,984 1,568

Professional and outside services 5,085 5,188 5,723

Advertising and promotion 812 505 600

Other (1) 5,849 3,932 4,131

Total noninterest expense 55,562 57,205 53,758

Income before income tax expense 21,636 15,629 29,563

Income tax expense (1) 2,607 2,251 5,764

Net income before noncontrolling interests 19,029 13,378 23,799

Less: Net income (loss) from noncontrolling interests (113) (299) 1,690

Wells Fargo net income (1) $ 19,142 13,677 22,109

Less: Preferred stock dividends and other 1,160 1,115 1,291

Wells Fargo net income applicable to common stock $ 17,982 12,562 20,818

Per share information

Earnings per common share $ 4.88 3.30 5.13

Diluted earnings per common share 4.83 3.27 5.08

Average common shares outstanding 3,688.3 3,805.2 4,061.9

Diluted average common shares outstanding 3,720.4 3,837.0 4,096.2

(1) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see

Note1 (Summary of Significant Accounting Policies).

82 Wells Fargo & Company

The accompanying notes are an integral part of these statements.

Wells Fargo & Company and Subsidiaries

Consolidated Statement of Comprehensive Income

Year ended December 31,

(in millions) 2023 2022 2021

Net income before noncontrolling interests (1) $ 19,029 13,378 23,799

Other comprehensive income (loss), after tax:

Net change in debt securities 1,271 (10,500) (2,374)

Net change in derivatives and hedging activities 411 (1,090) 159

Defined benefit plans adjustments 68 154 349

Other (1) 34 (178) (94)

Other comprehensive income (loss), after tax 1,784 (11,614) (1,960)

Total comprehensive income before noncontrolling interests 20,813 1,764 21,839

Less: Other comprehensive income from noncontrolling interests 2 2 —

Less: Net income (loss) from noncontrolling interests (113) (299) 1,690

Wells Fargo comprehensive income $ 20,924 2,061 20,149

Note1 (Summary of Significant Accounting Policies).

The accompanying notes are an integral part of these statements.

Wells Fargo & Company 83

Wells Fargo & Company and Subsidiaries

Consolidated Balance Sheet

(in millions, except shares)

Dec 31,

2023

Dec 31,

2022

Assets

Cash and due from banks $ 33,026 34,596

Interest-earning deposits with banks 204,193 124,561

Federal funds sold and securities purchased under resale agreements 80,456 68,036

Debt securities:

Trading, at fair value (includes assets pledged as collateral of $62,537 and $26,932) 97,302 86,155

Available-for-sale, at fair value (amortized cost of $137,155 and $121,725, and includes assets pledged as collateral of $5,055 and $0) 130,448 113,594

Held-to-maturity, at amortized cost (fair value $227,316 and $255,521) 262,708 297,059

Loans held for sale (includes $2,892 and $4,220 carried at fair value) 4,936 7,104

Loans 936,682 955,871

Allowance for loan losses (14,606) (12,985)

Net loans 922,076 942,886

Mortgage servicing rights (includes $7,468 and $9,310 carried at fair value) 8,508 10,480

Premises and equipment, net 9,266 8,350

Goodwill 25,175 25,173

Derivative assets 18,223 22,774

Equity securities (includes $19,841 and $28,383 carried at fair value; and assets pledged as collateral of $2,683 and $747) 57,336 64,414

Other assets (1) 78,815 75,838

Total assets (2) $ 1,932,468 1,881,020

Liabilities

Noninterest-bearing deposits $ 360,279 458,010

Interest-bearing deposits (includes $1,297 and $0 carried at fair value) 997,894 925,975

Total deposits 1,358,173 1,383,985

Short-term borrowings (includes $219 and $181 carried at fair value) 89,559 51,145

Derivative liabilities (1) 18,495 20,067

Accrued expenses and other liabilities (includes $25,335 and $20,290 carried at fair value) (1) 71,210 68,740

Long-term debt (includes $2,308 and $1,346 carried at fair value) 207,588 174,870

Total liabilities (3) 1,745,025 1,698,807

Equity

Wells Fargo stockholders’ equity:

Preferred stock – aggregate liquidation preference of $20,216 and $20,216 19,448 19,448

Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,481,811,474 shares 9,136 9,136

Additional paid-in capital 60,555 60,319

Retained earnings (1) 201,136 187,968

Accumulated other comprehensive loss (1) (11,580)

(13,362)

Treasury stock, at cost – 1,882,948,892 shares and 1,648,007,022 shares (92,960) (82,853)

Unearned ESOP shares — (429)

Total Wells Fargo stockholders’ equity 185,735 180,227

Noncontrolling interests 1,708 1,986

Total equity 187,443 182,213

Total liabilities and equity $ 1,932,468 1,881,020

Note 1 (Summary of Significant Accounting Policies).

(2) Our consolidated assets at December 31, 2023 and 2022, include the following assets of certain variable interest entities (VIEs) that can only be used to settle the liabilities of those VIEs: Debt

securities, $0 million and $71 million; Loans, $4.9 billion and $4.8 billion; All other assets, $435 million and $191 million; and Total assets, $5.3 billion and $5.1 billion, respectively.

(3) Our consolidated liabilities at December 31, 2023 and 2022, include $115 million and $201 million, respectively, of VIE liabilities for which the VIE creditors do not have recourse to WellsFargo.

The accompanying notes are an integral part of these statements.

84 Wells Fargo & Company

Wells Fargo & Company and Subsidiaries

Consolidated Statement of Changes in Equity

Wells Fargo stockholders’ equity

Preferred stock Common stock

($ and shares inmillions) Shares Amount Shares Amount

Additional

paid-in

capital

Retained

earnings

Accumulated

other

comprehensive

income (loss)

Treasury

stock

Unearned

ESOP

Noncontrolling

interests

Total

equity

Balance December 31, 2020 5.5 $ 21,136 4,144.0 $ 9,136 60,197 162,683 194 (67,791) (875) 1,032 185,712

Cumulative effect from change in

accounting policy (1) (738) 20 (718)

Balance January 1, 2021 5.5 21,136 4,144.0 9,136 60,197 161,945 214 (67,791) (875) 1,032 184,994

Net income (1) 22,109 1,690 23,799

Other comprehensive loss,

net of tax (1) (1,960) — (1,960)

Noncontrolling interests (219) (219)

Common stock issued 43.8 (7) (162) 2,265 2,096

Common stock repurchased (306.4) (14,464) (14,464)

Preferred stock issued 0.2 5,810 (54) 5,756

Preferred stock redeemed (2) (0.2) (6,676) 86 (86) — (6,676)

Preferred stock issued to ESOP — — — — — — —

Preferred stock released by ESOP (16) 229 213

Preferred stockconverted to

common shares (0.2) (213) 4.4 (8) 221 —

Common stock dividends 29 (2,455) (2,426)

Preferred stock dividends (1,205) (1,205)

Stock-based compensation 1,043 1,043

Net change in deferred compensation

and related plans (1,074) 12 (1,062)

Net change (0.2) (1,079) (258.2) — (1) 18,201 (1,960) (11,966) 229 1,471 4,895

Balance December 31, 2021 5.3 $ 20,057 3,885.8 $ 9,136 60,196 180,146

(1,746) (79,757) (646) 2,503 189,889

Net income (loss) (1) 13,677 (299) 13,378

Other comprehensive income (loss),

net of tax (1) (11,616) 2 (11,614)

Noncontrolling interests (220) (220)

Common stock issued 43.5 129 (497) 2,181 1,813

Common stock repurchased (110.4) (6,033) (6,033)

Preferred stock issued — — — —

Preferred stock redeemed (3) (0.6) (609) (37) — 646 —

Common stock issued to ESOP (3) — — 14.9 (129) 747 (618) —

Common stock released by ESOP (1) 189 188

Preferred stockconverted to

common shares — — — — — —

Common stock dividends 59 (4,243) (4,184)

Preferred stockdividends (1,115) (1,115)

Stock-based compensation 1,002 1,002

Net change in deferred compensation

and related plans (900) 9 (891)

Net change (0.6) (609) (52.0) — 123 7,822 (11,616) (3,096) 217 (517) (7,676)

Balance December 31, 2022 4.7 $ 19,448 3,833.8 $ 9,136 60,319 187,968 (13,362) (82,853) (429) 1,986 182,213

Note1 (Summary of Significant Accounting Policies).

(2) Represents the impact of the redemption of Preferred Stock, Series I, Series P and Series W, in first quarter 2021; Preferred Stock, Series N, in second quarter 2021; and Preferred Stock, Series O and

Series X, in third quarter 2021.

(3) In fourth quarter 2022, we redeemed all outstanding shares of our ESOP Preferred Stock in exchange for shares of the Company’s common stock.

The accompanying notes are an integral part of these statements.

Wells Fargo & Company 85

Wells Fargo & Company and Subsidiaries

Wells Fargo stockholders’ equity

Preferred stock Common stock

($ and shares inmillions) Shares Amount Shares Amount

Additional

paid-in

capital

Retained

earnings

Accumulated

other

comprehensive

income (loss)

Treasury

stock

Unearned

ESOP

Noncontrolling

interests

Total

equity

Balance December 31, 2022 4.7 $ 19,448 3,833.8 $ 9,136 60,319 187,968 (13,362) (82,853) (429) 1,986 182,213

Cumulative effect from change in

accounting policy (1) 323 323

Balance January 1, 2023 4.7 19,448 3,833.8 9,136 60,319 188,291 (13,362) (82,853) (429) 1,986 182,536

Net income (loss) 19,142 (113) 19,029

Other comprehensive income,

net of tax 1,782 2 1,784

Noncontrolling interests (167) (167)

Common stock issued 37.2 — (258) 1,892 1,634

Common stock repurchased (272.1) (11,954) (11,954)

Preferred stock issued 0.1 1,725 (3) 1,722

Preferred stock redeemed (2) (0.1) (1,725) 19 (19) — (1,725)

Common stock issued to ESOP — — — — — — —

Common stock released by ESOP (3) 1 429 430

Preferred stockconverted to

common shares — — — — — —

Common stock dividends 83 (4,879) (4,796)

Preferred stock dividends (1,141) (1,141)

Stock-based compensation 1,122 1,122

Net change in deferred

compensation and related plans (986) (45) (1,031)

Net change — — (234.9) — 236 12,845 1,782 (10,107) 429 (278) 4,907

Balance December 31, 2023 4.7 $ 19,448 3,598.9 $ 9,136 60,555 201,136 (11,580) (92,960) —

1,708 187,443

(1) Effective January 1, 2023, we adopted ASU 2022-02 – Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.For additional information, see Note 1

(Summary of Significant Accounting Policies).

(2) Represents the impact of the redemption of Preferred Stock, Series Q, in third quarter 2023.

(3) For additional information, see the “Employee Stock Ownership Plan” section of Note 12 (Common Stock and Stock Plans).

The accompanying notes are an integral part of these statements.

86 Wells Fargo & Company

Consolidated Statement of Changes in Equity

Wells Fargo & Company and Subsidiaries

Consolidated Statement of Cash Flows

Year ended December 31,

(in millions) 2023 2022 2021

Cash flows from operating activities:

Net income before noncontrolling interests (1) $ 19,029 13,378 23,799

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses 5,399 1,534 (4,155)

Changes in fair value of MSRs and LHFS carried at fair value 851 (1,326) (1,188)

Depreciation, amortization and accretion 6,271 6,832 7,890

Deferred income tax expense (benefit) (1) (50) 1,239 (1,106)

Other, net 7,149 (14,524) (12,194)

Originations and purchases of loans held for sale (30,365) (74,910) (158,923)

Proceeds from sales of and paydowns on loans originally classified as held for sale 26,793 65,418 101,293

Net change in:

Debt and equity securities, held for trading 3,349 31,579 19,334

Derivative assets and liabilities (1) 4,155 7,850 (2,484)

Other assets (1) (6,838) (9,162) 15,477

Other accrued expenses and liabilities (1) 4,615 (860) 732

Net cash provided (used) by operating activities 40,358 27,048 (11,525)

Cash flows from investing activities:

Net change in:

Federal funds sold and securities purchased under resale agreements (12,729) (704) (551)

Available-for-sale debt securities:

Proceeds from sales 14,651 16,895 17,958

Paydowns and maturities 14,872 19,791 75,701

Purchases (26,051) (40,104) (110,431)

Held-to-maturity debt securities:

Paydowns and maturities 18,372 27,666 79,517

Purchases (4,225) (2,360) (71,245)

Equity securities, not held for trading:

Proceeds from sales and capital returns 2,244 4,326 4,933

Purchases (5,811) (6,984) (7,680)

Loans:

Loans originated by banking subsidiaries, net of principal collected 10,296 (74,861) (28,809)

Proceeds from sales of loans originally classified as held for investment 4,275 12,446 31,847

Purchases of loans (1,637) (741) (389)

Principal collected on nonbank entities’ loans 4,871 5,173 8,985

Loans originated by nonbank entities (3,476) (3,824) (11,237)

Other, net 391 805 3,782

Net cash provided (used) by investing activities 16,043 (42,476) (7,619)

Cash flows from financing activities:

Net change in:

Deposits (25,812) (98,494) 78,582

Short-term borrowings 38,414 16,564 (24,590)

Long-term debt:

Proceeds from issuance 49,071 53,737 1,275

Repayment (22,886) (19,587) (47,134)

Preferred stock:

Proceeds from issuance 1,722 — 5,756

Redeemed (1,725) — (6,675)

Cash dividends paid (1,141) (1,115) (1,205)

Common stock:

Repurchased (11,851) (6,033) (14,464)

Cash dividends paid (4,789) (4,178) (2,422)

Other, net (509) (539) (361)

Net cash provided (used) by financing activities 20,494 (59,645) (11,238)

Net change in cash, cash equivalents, and restricted cash 76,895 (75,073) (30,382)

Cash, cash equivalents, and restricted cash at beginning of period (2) 159,157 234,230 264,612

Cash, cash equivalents, and restricted cash at end of period (2) $ 236,052 159,157 234,230

Supplemental cash flow disclosures:

Cash paid for interest $ 30,431 8,289 4,384

Net cash paid (refunded) for income taxes (1,786) 3,376 3,166

Note1 (Summary of Significant Accounting Policies).

(2) Includes Cash and due from banks and Interest-earning deposits with banks on our consolidated balance sheet and excludes time deposits, which are included in Interest-earning deposits with banks.

The accompanying notes are an integral part of these statements. See Note 1 (Summary of Significant Accounting Policies) for noncash activities.

Wells Fargo & Company 87

Notes to Financial Statements

-See the “Glossary of Acronyms” at the end of this Report for terms used throughout the Financial Statements and related Notes.

Note 1: Summary of Significant Accounting Policies

WellsFargo & Company is a diversified financial services

company. We provide banking, investment and mortgage

products and services, as well as consumer and commercial

finance, through banking locations and offices, the internet and

other distribution channels to individuals, businesses and

institutions in all 50states, the District of Columbia, and in

countries outside the U.S. When we refer to “WellsFargo,” “the

Company,” “we,” “our” or “us,” we mean WellsFargo & Company

and Subsidiaries (consolidated). WellsFargo & Company (the

Parent) is a financial holding company and a bank holding

company. We also hold a majority interest in a real estate

investment trust, which has publicly traded preferred stock

outstanding.

Our accounting and reporting policies conform with U.S.

generally accepted accounting principles (GAAP) and practices in

the financial services industry. To prepare the financial

statements in conformity with GAAP, management must make

estimates based on assumptions about future economic and

market conditions (for example, unemployment, market liquidity,

real estate prices, etc.) that affect the reported amounts of

assets and liabilities at the date of the financial statements,

income and expenses during the reporting period and the related

disclosures. Although our estimates contemplate current

conditions and how we expect them to change in the future, it is

reasonably possible that actual conditions could be worse than

anticipated in those estimates, which could materially affect our

results of operations and financial condition. Management has

made significant estimates in several areas, including:

• allowance for credit losses (Note 5 (Loans and Related

Allowance for Credit Losses and Note 3 (Available-for-Sale

and Held-to-Maturity Debt Securities));

• valuations of residential mortgage servicing rights (MSRs)

(Note 6 (Mortgage Banking Activities) and Note 16

(Securitizations and Variable Interest Entities));

• valuations of financial instruments (Note 15 (Fair Values of

Assets and Liabilities));

• liability for legal actions (Note 13 (Legal Actions));

• income taxes; and

• goodwill impairment (Note 7 (Intangible Assets and Other

Assets)).

Actual results could differ from those estimates.

Accounting Standards Adopted in 2023

In 2023, we adopted the following new accounting guidance:

• Accounting Standards Update (ASU) 2022-02, Financial

Instruments – Credit Losses (Topic 326): Troubled Debt

Restructurings and Vintage Disclosures

• ASU 2022-01, Derivatives and Hedging (Topic 815): Fair

Value Hedging – Portfolio Layer Method

• ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from

Contracts with Customers

• ASU 2018-12, Financial Services – Insurance (Topic 944):

Targeted Improvements to the Accounting for Long-Duration

Contracts and subsequent related updates

ASU 2022-02 eliminates the accounting and reporting for

troubled debt restructurings (TDRs) by creditors and introduces

new required disclosures for loan modifications made to

borrowers experiencing financial difficulty. The new required

disclosures include information about modifications granted to

borrowers experiencing financial difficulty in the form of principal

forgiveness, interest rate reductions, other-than-insignificant

payment delays, term extensions, or a combination of these

modifications. The ASU also requires new disclosures for the

financial effects of these modifications and for loan performance

in the twelve months following the modification. The Update also

amends the guidance for vintage disclosures to require disclosure

of current period gross charge-offs by year of origination. See

Note 5 (Loans and Related Allowance for Credit Losses) for

additional information related to the new disclosures for loan

modifications to borrowers experiencing financial difficulty and

for gross charge-offs by year of origination, which are provided

on a prospective basis.

The Update eliminates the requirement to use a discounted

cash flow (DCF) approach to measure the allowance for credit

losses (ACL) for TDRs and instead allows for the use of a current

expected credit loss approach for all loans. Under a current

expected credit loss approach, the impact of loan modifications

and the subsequent performance of modified loans, including

defaults, is reflected in the historical loss data used to calculate

expected lifetime credit losses. Upon adoption on January 1,

2023, we discontinued utilizing a DCF approach to measure

credit impairment for consumer loans and certain commercial

loans previously modified in a TDR and we removed the interest

concession component recognized in the ACL. We elected to

apply the modified-retrospective transition approach method,

resulting in a cumulative effect adjustment to retained earnings

upon adoption, which reflects the difference between the pre-

modification and post-modification effective interest rates that

would have been recognized over the remaining life of the loans

as interest income. Upon adoption, we recognized a decrease in

our ACL of $429 million, pre-tax, and an increase to our retained

earnings of $323 million, after tax. We continue to use a DCF

approach for certain non-accruing, non-collateral dependent

commercial loans.

ASU 2022-01 establishes the portfolio layer method, which

expands an entity’s ability to achieve fair value hedge accounting

for interest rate risk hedges of closed portfolios of financial

assets. The Update also provides guidance on the accounting for

hedged item basis adjustments under the portfolio layer method.

We adopted ASU 2022-01 on January 1, 2023, on a

prospective basis. No cumulative effect adjustment to the

opening balance of stockholders’ equity was required upon

adoption, as impacts to us were reflected prospectively. The

portfolio layer method improves our ability to use derivatives to

hedge interest rate risk exposures associated with portfolios of

financial assets, such as fixed-rate available-for-sale (AFS) debt

securities and loans. The Update allows us to hedge a larger

proportion of these portfolios by expanding the number and type

of derivatives permitted as eligible hedges, as well as by

increasing the scope of eligible hedged items to include both

prepayable and nonprepayable assets. Unlike other fair value

hedging relationships where basis adjustments adjust the

carrying amount of the individual hedged item, basis adjustments

related to active portfolio layer method hedges are maintained at

a portfolio level and not allocated to the individual assets in the

portfolio.

Upon adoption, any election to designate portfolio layer

method hedges is applied prospectively. Additionally, the Update

88 Wells Fargo & Company

permits a one-time reclassification of debt securities from held-

to-maturity (HTM) to AFS classification as long as the securities

are designated in a portfolio layer method hedge no later than 30

days after the adoption date.

In January 2023, we reclassified fixed-rate debt securities

with an aggregate fair value of $23.2 billion and amortized cost

of $23.9 billion from HTM to AFS and designated interest rate

swaps with notional amounts of $20.1 billion as fair value hedges

using the portfolio layer method. The transfer of debt securities

was recorded at fair value and resulted in approximately

$566million of unrealized losses associated with AFS debt

securities being recorded to other comprehensive income, net of

deferred taxes.

See Note 3 (Available-for-Sale and Held-to-Maturity Debt

Securities) for additional information about the Company’s

portfolio layer method hedge basis adjustments and HTM to AFS

transfers in connection with adoption of the Update and Note 14

(Derivatives) for disclosures regarding our portfolio layer method

hedging relationships.

ASU 2021-08 amends Accounting Standards Codification (ASC)

805 – Business Combinations to require entities to recognize and

measure contract assets and contract liabilities in a business

combination in accordance with ASC 606 – Revenue Recognition.

Prior to ASU 2021-08, there was diversity in practice related to

recognition treatment, and acquirers generally measured such

items at acquisition date fair value. We adopted this Update

prospectively on January 1, 2023. This Update did not have a

material impact to our consolidated financial statements.

ASU 2018-12 changes the accounting for long-duration

insurance contracts or contract features that provide benefits to

the policyholder in addition to the policyholder’s account value.

These features, which the ASU defines as market risk benefits,

protect the policyholder to some degree from capital markets

risk and expose the insurer or reinsurer to that risk. The ASU

requires all market risk benefits to be measured at fair value

through earnings with changes in fair value attributable to our

own credit risk recognized in other comprehensive income. We

reinsure certain variable annuity products for a limited number of

insurance clients with guaranteed minimum benefits which are

accounted for as market risk benefits under the ASU. Our

reinsurance business is no longer entering into new contracts.

We utilize a discounted cash flow model to value our market

risk benefits. Market risk benefits are level 3 fair value liabilities

because they are valued using significant unobservable inputs.

The fair value of our market risk benefits is sensitive to changes

in fixed income and equity markets, as well as policyholder

behavior (e.g., withdrawals, lapses, utilization rate) and changes in

mortality assumptions. Beginning first quarter 2023, we use

derivative instruments, where feasible, to economically hedge

the interest rate and equity markets volatility. The fair value of

market risk benefits is measured at the contract level and is

recognized in accrued expenses and other liabilities. We

recognize changes in fair value for our market risk benefits,

excluding the change in fair value related to our own credit risk, in

noninterest income along with the changes in fair value of

economic hedges. Changes in fair value attributable to our own

credit risk are recorded in other comprehensive income. Upon

adoption on January 1, 2023, as required under the ASU, we

implemented the accounting changes for market risk benefits

retrospectively, to the earliest period presented, which resulted

in an after-tax cumulative effect adjustment to reduce retained

earnings and increase accumulated other comprehensive income

by $738million and $20million, respectively, as of January 1,

2021.

The ASU also requires more frequent updates for insurance

assumptions, mandates the use of a standardized discount rate

for traditional long-duration contracts, and simplifies the

amortization of deferred acquisition costs. The accounting

changes for the liability of future policyholder benefits for

traditional long-duration contracts (included in accrued expenses

and other liabilities) and deferred acquisition costs (included in

other assets) did not have a material impact upon adoption.

Table 1.1 presents the impact of adoption to prior period

financial statement line items within our consolidated statement

of income for the twelve months ended December31, 2022, and

December 31, 2021, and the consolidated balance sheet as of

December31, 2022. These adjustments are also reflected in our

consolidated statement of changes in equity and consolidated

statement of cash flows.

Table 1.1: Impact of Adoption of ASU 2018-12

Year ended December 31, 2022 Year ended December 31, 2021

($ in millions, except per share amounts) As reported

Effect of

adoption As revised As reported

Effect of

adoption As revised

Selected Income Statement Data

Noninterest income 28,835 583 29,418 42,713 674 43,387

Noninterest expense 57,282 (77) 57,205 53,831 (73) 53,758

Income tax expense 2,087 164 2,251 5,578 186 5,764

Net income 13,182 495 13,677 21,548 561 22,109

Diluted earnings per common share 3.14 0.13 3.27 4.95 0.13 5.08

At December 31, 2022

As reported

Effect of

adoption As revised

Selected Balance Sheet Data

Other assets $ 75,834 4 75,838

Derivative liabilities 20,085 (18) 20,067

Accrued expenses and other liabilities 69,056 (316) 68,740

Retained earnings 187,649 319 187,968

Accumulated other comprehensive income (loss) (13,381) 19 (13,362)

Wells Fargo & Company 89

Table 1.2 presents the transition adjustments required upon

the adoption of ASU 2018-12 as of January 1, 2021.

Table 1.2: Transition Adjustment of ASU 2018-12

Dec 31,

2020

Transition

adjustment

upon

adoption Jan 1, 2021

Selected Balance Sheet Data

Other assets $ 87,337 159 87,496

Derivative liabilities 16,509 (27) 16,482

Accrued expenses and other liabilities 74,360 903 75,263

Retained earnings 162,683 (738) 161,945

Accumulated other comprehensive income 194 20 214

Consolidation

Our consolidated financial statements include the accounts of

the Parent and our subsidiaries in which we have a controlling

financial interest. When our consolidated subsidiaries follow

specialized industry accounting, that accounting is retained in

consolidation.

We are also a variable interest holder in certain entities in

which equity investors do not have the characteristics of a

controlling financial interest or where the entity does not have

enough equity at risk to finance its activities without additional

subordinated financial support from other parties (collectively

referred to as variable interest entities (VIEs)). Our variable

interest arises from contractual, ownership or other monetary

interests in the entity, which change with fluctuations in the fair

value of the entity’s net assets. We consolidate a VIE if we are the

primary beneficiary, which is when we have both the power to

direct the activities that most significantly impact the VIE and a

variable interest that could potentially be significant to the VIE.

To determine whether or not a variable interest we hold could

potentially be significant to the VIE, we consider both qualitative

and quantitative factors regarding the nature, size and form of

our involvement with the VIE. We assess whether or not we are

the primary beneficiary of a VIE on an ongoing basis.

Significant intercompany accounts and transactions are

eliminated in consolidation. When we have significant influence

over operating and financing decisions for a company but do not

own a majority of the voting equity interests, we account for the

investment using the equity method of accounting, which

requires us to recognize our proportionate share of the

company’s earnings. If we do not have significant influence, we

account for the equity security under the fair value method, cost

method or measurement alternative.

Noncontrolling interests represent the portion of net

income and equity attributable to third-party owners of

consolidated subsidiaries that are not wholly-owned by

WellsFargo. Substantially all of our noncontrolling interests

relate to our affiliated venture capital businesses.

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents and restricted cash are included in cash

and due from banks and interest-earning deposits from banks on

our consolidated balance sheet. Amounts are recorded at

amortized cost and include cash on hand, cash items in transit,

and amounts due from or held with other depository institutions.

See Note 26 (Regulatory Capital Requirements and Other

Restrictions) for additional information on the restrictions on

cash and cash equivalents.

Trading Activities

We engage in trading activities to accommodate the investment

and risk management activities of our customers. These

activities predominantly occur in our Corporate and Investment

Banking reportable operating segment. Trading assets and

liabilities include debt securities, equity securities, loans held for

sale, derivatives, and short sales, which are reported within our

consolidated balance sheet based on the accounting

classification of the instrument. In addition, certain instruments

that we have elected to account for under the fair value method,

such as debt securities that are held for investment purposes and

structured debt liabilities, are classified as trading.

Our trading assets and liabilities are carried on our

consolidated balance sheet at fair value with changes in fair value

recognized in net gains from trading and securities within

noninterest income. Interest income and interest expense are

recognized in net interest income.

Customer accommodation trading activities include our

actions as an intermediary to buy and sell financial instruments

and market-making activities. We also take positions to manage

our exposure to customer accommodation activities. We hold

financial instruments for trading in long positions, as well as short

positions, to facilitate our trading activities. As an intermediary,

we interact with market buyers and sellers to facilitate the

purchase and sale of financial instruments to meet the

anticipated or current needs of our customers. For example, we

may purchase or sell a derivative to a customer who wants to

manage interest rate risk exposure. We typically enter into an

offsetting derivative or security position to manage our exposure

to the customer transaction. We earn income based on the

transaction price difference between the customer transaction

and the offsetting position, which is reflected in earnings where

the fair value changes and related interest income and expense of

the positions are recorded.

Our market-making activities include taking long and short

trading positions to facilitate customer order flow. These

activities are typically executed on a short-term basis. As a

market-maker we earn income due to: (1) the difference

between the price paid or received for the purchase and sale of

the security (bid-ask spread), (2) the net interest income of the

positions, and (3) the changes in fair value of the trading

positions held on our consolidated balance sheet. Additionally, we

may enter into separate derivative or security positions to

manage our exposure related to our long and short trading

positions taken in our market-making activities. Income earned

on these market-making activities are reflected in earnings

where the fair value changes and related interest income and

expense of the positions are recorded.

Note 1: Summary of Significant Accounting Policies

Wells Fargo & Company 90

(continued)

Available-for-Sale and Held-to-Maturity Debt Securities

Our investments in debt securities that are not held for trading

purposes are classified as either available-for-sale (AFS) or held-

to-maturity (HTM).

Investments in debt securities not held for trading purposes,

for which the Company does not have the positive intent and

ability to hold to maturity, are classified as AFS. AFS debt

securities are measured at fair value, with unrealized gains and

losses reported in accumulated other comprehensive income

(AOCI). The amount reported in other comprehensive income

(OCI) is net of the allowance for credit losses (ACL) and

applicable income taxes. Investments in debt securities for which

the Company has the positive intent and ability to hold to

maturity are classified as HTM. HTM debt securities are

measured at amortized cost, net of ACL. See Note 3 (Available-

for-Sale and Held-to-Maturity Debt Securities) for additional

information.

INTEREST INCOME AND GAIN/LOSS RECOGNITION Unamortized

premiums and discounts are recognized in interest income over

the contractual life of the security using the effective interest

method, except for purchased callable debt securities carried at a

premium. For purchased callable debt securities carried at a

premium, the premium is amortized into interest income to the

next call date using the effective interest method. As principal

repayments are received on securities (e.g., mortgage-backed

securities (MBS)), a proportionate amount of the related

premium or discount is recognized in income such that the

effective interest rate on the remaining portion of the security

continues unchanged.

We recognize realized gains and losses on the sale of debt

securities in net gains from trading and securities within

noninterest income using the specific identification method.

IMPAIRMENT AND CREDIT LOSSES Unrealized losses on AFS debt

securities are driven by a number of factors, including changes in

interest rates and credit spreads which impact most types of

debt securities, and prepayment rates which impact MBS and

collateralized loan obligations (CLO). Additional considerations

for certain types of AFS debt securities include:

• Debt securities of U.S. Treasury and federal agencies,

including federal agency MBS, are not impacted by credit

movements given the explicit or implicit guarantees

provided by the U.S. government.

• Debt securities of U.S. states and political subdivisions are

most impacted by changes in the relationship between

municipal and term funding credit curves rather than by

changes in the credit quality of the underlying securities.

• Structured securities, such as MBS and CLO, are also

impacted by changes in projected collateral losses of assets

underlying the security.

For AFS debt securities where fair value is less than

amortized cost basis, we recognize impairment in earnings if we

have the intent to sell the security or if it is more likely than not

that we will be required to sell the security before recovery of its

amortized cost basis. Impairment is recognized in net gains on

trading and securities within noninterest income equal to the

difference between the amortized cost basis, net of ACL, and the

fair value of the AFS debt security. Following the recognition of

this impairment, the AFS debt security’s new amortized cost

basis is fair value.

For AFS debt securities where fair value is less than

amortized cost basis where we did not recognize impairment in

earnings, we record an ACL as of the balance sheet date to the

extent unrealized loss is due to credit losses. See the “Allowance

for Credit Losses” section in this Note for our accounting policies

relating to the ACL for debt securities, which also includes debt

securities classified as HTM.

TRANSFERS BETWEEN CATEGORIES OF DEBT SECURITIES Transfers

of debt securities from the AFS to HTM classification are

recorded at fair value, and accordingly the amortized cost of the

security transferred to HTM is adjusted to fair value. Unrealized

gains or losses reported in AOCI at the transfer date are

amortized into earnings over the same period as the unamortized

premiums and discounts using the effective interest method.

Any ACL previously recorded under the AFS debt security model

is reversed and an ACL under the HTM debt security model is re-

established. The reversal and re-establishment of the ACL are

recorded in provision for credit losses.

Transfers of debt securities from the HTM to AFS

classification are recorded at fair value. The HTM amortized cost

(excluding any ACL previously recorded under the HTM debt

security model) becomes the AFS amortized cost, and the debt

security is remeasured at fair value with the unrealized gains and

losses reported in OCI. Any ACL previously recorded under the

HTM debt security model is reversed and an ACL under the AFS

debt security model is re-established. The reversal and re-

establishment of the ACL are recorded in provision expense.

Transfers from HTM to AFS are only expected to occur under

limited circumstances.

NONACCRUAL AND PAST DUE, AND CHARGE-OFF POLICIES We

generally place debt securities on nonaccrual status using factors

similar to those described for loans. When we place a debt

security on nonaccrual status, we reverse the accrued unpaid

interest receivable against interest income and suspend the

amortization of premiums and accretion of discounts. If the

ultimate collectability of the principal is in doubt on a nonaccrual

debt security, any cash collected is first applied to reduce the

security’s amortized cost basis to zero, followed by recovery of

amounts previously charged off, and subsequently to interest

income. Generally, we return a debt security to accrual status

when all delinquent interest and principal become current under

the contractual terms of the security and collectability of

remaining principal and interest is no longer doubtful.

Our debt securities are considered past due when

contractually required principal or interest payments have not

been made on the due dates.

Our charge-off policy for debt securities is similar to our

charge-off policy for loans. Subsequent to charge-off, the debt

security will be designated as nonaccrual and follow the process

described above for any cash received.

Securities and Other Collateralized Financing

Agreements

Resale and repurchase agreements, as well as securities

borrowing and lending agreements, are accounted for as

collateralized financing transactions and are recorded at the

acquisition or sale price plus accrued interest. We monitor the

fair value of securities or other assets purchased and sold as well

as the collateral pledged and received. Additional collateral is

pledged or returned to maintain the appropriate collateral

position for the transactions. These financing transactions do not

create material credit risk given the collateral provided and the

related monitoring process.

We include securities purchased under securities financing

agreements in federal funds sold and securities purchased under

resale agreements on our consolidated balance sheet. We include

Wells Fargo & Company 91

collateral other than securities purchased under resale

agreements in loans on our consolidated balance sheet. We

include securities sold under securities financing agreements in

short-term borrowings on our consolidated balance sheet. At

December31, 2023 and 2022, short-term borrowings were

primarily federal funds purchased and securities sold under

agreements to repurchase.

Assets and liabilities arising from securities and other

collateralized financing transactions with a single counterparty

are presented net on the balance sheet provided they meet

certain criteria that permit balance sheet netting. See Note 18

(Securities and Other Collateralized Financing Activities) for

additional information on our offsetting policy.

Loans Held for Sale

Loans held for sale (LHFS) generally includes originated or

purchased commercial and residential mortgage loans for sale in

the securitization or whole loan market. Residential mortgage

LHFS are accounted for at either fair value or the lower of cost or

fair value (LOCOM) and may be measured on an individual or pool

level basis. Commercial LHFS are generally measured at LOCOM,

except for certain commercial LHFS in our trading business that

are used in market-making activities where we have elected the

fair value option. Commercial LHFS are generally measured on an

individual basis. See Note 15 (Fair Values of Assets and

Liabilities) for additional information regarding LHFS fair value

measurements.

Gains and losses on residential and commercial mortgage

LHFS are generally recorded in mortgage banking noninterest

income. Gains and losses on trading LHFS are recognized in net

gains from trading activities. Gains and losses on other LHFS are

recognized in other noninterest income. Direct loan origination

costs and fees for LHFS under the fair value option are

recognized in earnings at origination. For LHFS recorded at

LOCOM, direct loan origination costs and fees are deferred at

origination and are recognized in earnings at time of sale.

Interest income on LHFS is calculated based upon the note rate

of the loan and is recorded in interest income.

Interest rate lock commitments to originate mortgage LHFS

are accounted for as derivatives and are measured at fair value.

When a determination is made at the time of commitment to

originate loans as held for investment, it is our intent to hold

these loans to maturity or for the foreseeable future, subject to

periodic review under our management evaluation processes,

including corporate asset/liability management. If subsequent

changes occur, including changes in interest rates, our business

strategy, or other market conditions, we may change our intent

to hold these loans. When management makes this

determination, we immediately transfer these loans to the LHFS

portfolio at LOCOM.

Loans

Loans are reported at their outstanding principal balances net of

any unearned income, cumulative charge-offs, unamortized

deferred fees and costs on originated loans and unamortized

premiums or discounts on purchased loans.

Unearned income, deferred fees and costs, and discounts

and premiums are amortized to interest income generally over

the contractual life of the loan using the effective interest

method. Loan commitment fees collected at closing are deferred

and amortized to noninterest income on a straight-line basis

over the commitment period if loan funding is unlikely. Upon

funding, deferred loan commitment fees are amortized to

interest income over the contractual life of the loan.

Loans also include financing leases where we are the lessor

(see the “Leasing Activity” section in this Note for our accounting

policy for leases) and resale agreements involving collateral other

than securities (see “Securities and Other Collateralized

Financing Agreements” section in this Note for our accounting

policy for other collateralized financing agreements).

See Note 5 (Loans and Related Allowance for Credit Losses)

for additional information regarding our accounting for loans.

NONACCRUAL AND PAST DUE LOANS We generally place loans on

nonaccrual status when:

• the full and timely collection of interest or principal becomes

uncertain (generally based on an assessment of the

borrower’s financial condition and the adequacy of collateral,

if any), such as in bankruptcy or other circumstances;

• they are 90 days (120 days with respect to residential

mortgage loans) past due for interest or principal, unless the

loan is both well-secured and in the process of collection;

• part of the principal balance has been charged off; or

• for junior lien mortgage loans, we have evidence that the

related first lien mortgage may be 120 days past due or in

the process of foreclosure regardless of the junior lien

delinquency status.

Credit card loans are not placed on nonaccrual status, but are

generally fully charged off when the loan reaches 180 days past

due.

When we place a loan on nonaccrual status, we reverse the

accrued unpaid interest receivable against interest income and

suspend amortization of any net deferred fees. If the ultimate

collectability of the recorded loan balance is in doubt on a

nonaccrual loan, the cost recovery method is used and cash

collected is applied to first reduce the carrying value of the loan

to zero and then as a recovery of prior charge-offs. Otherwise,

interest income may be recognized to the extent cash is received.

Generally, we return a loan to accrual status when all delinquent

interest and principal become current under the terms of the

loan agreement and collectability of remaining principal and

interest is no longer doubtful.

We may re-underwrite modified loans at the time of a

restructuring to determine if there is sufficient evidence of

sustained repayment capacity based on the borrower’s financial

strength, including documented income, debt to income ratios

and other factors. If the borrower has demonstrated

performance under the previous terms and the underwriting

process shows the capacity to continue to perform under the

restructured terms, the loan will generally remain in accruing

status. Loans will be placed on nonaccrual status and we may

record a charge-off if the re-underwriting did not include an

evaluation of the borrower’s ability to repay or we believe it is

probable that principal and interest contractually due under the

modified terms of the agreement will not be collectible. Modified

loans that are placed on nonaccrual status will generally return to

accrual status when repayment of principal and interest is

reasonably assured and the borrower has demonstrated a

sustained period of performance (generally six consecutive

months of payments, or equivalent, inclusive of payments made

prior to a modification, if applicable).

Our loans are considered past due when contractually

required principal or interest payments have not been made on

the due dates.

LOAN CHARGE-OFF POLICIES For commercial loans, we generally

fully charge off or charge down to net realizable value (fair value

Wells Fargo & Company 92

(continued) Summary of Significant Accounting Policies Note 1:

of collateral, less estimated costs to sell) for loans secured by

collateral when:

• management judges the loan to be uncollectible;

• repayment is deemed to be protracted beyond reasonable

time frames;

• the loan has been classified as a loss by either our internal

loan review process or our banking regulatory agencies;

• the customer has filed bankruptcy and the loss becomes

evident owing to a lack of assets;

• the loan is 180 days past due unless both well-secured and in

the process of collection; or

• the loan is probable of foreclosure, and we have received an

appraisal of less than the recorded loan balance.

For consumer loans, we fully charge off or charge down to

net realizable value when deemed uncollectible due to

bankruptcy or other factors, or no later than reaching a defined

number of days past due, as follows:

• Residential mortgage loans – We generally charge down to

net realizable value when the loan is 180 days past due and

fully charge-off when the loan exceeds extended

delinquency dates.

• Auto loans – We generally fully charge off when the loan is

120 days past due.

• Credit card loans – We generally fully charge off when the

loan is 180 days past due.

• Unsecured loans – We generally fully charge off when the

loan is 120 days past due.

• Unsecured lines – We generally fully charge off when the

loan is 180 days past due.

• Other secured loans – We generally fully or partially charge

down to net realizable value when the loan is 120 days past

due.

FORECLOSED ASSETS Foreclosedassets obtained through our

lending activities primarily include real estate. Generally, loans

have been written down to their net realizable value prior to

foreclosure. Any further reduction to their net realizable value is

recorded with a charge to the ACL at foreclosure. We allow up to

90 days after foreclosure to finalize determination of net

realizable value. Thereafter, changes in net realizable value are

recorded to noninterest expense. The net realizable value of

these assets is reviewed and updated periodically depending on

the type of property. Certain government-guaranteed mortgage

loans upon foreclosure are included in accounts receivable, not

foreclosed assets. These receivables were loans insured by the

Federal Housing Administration (FHA) or guaranteed by the

Department of Veterans Affairs (VA) and are measured based on

the balance expected to be recovered from the FHA or VA.

Allowance for Credit Losses

The ACL is management’s estimate of the current expected life-

time credit losses in the loan portfolio and unfunded credit

commitments, at the balance sheet date, excluding loans and

unfunded credit commitments carried at fair value or held for

sale. Additionally, we maintain an ACL for AFS and HTM debt

securities, other financing receivables measured at amortized

cost, and other off-balance sheet credit exposures. While we

attribute portions of the allowance to specific financial asset

classes (loan and debt security portfolios), loan portfolio

segments (commercial and consumer) or major security type, the

entire ACL is available to absorb credit losses of the Company.

Our ACL process involves procedures to appropriately

consider the unique risk characteristics of our financial asset

classes, portfolio segments, and major security types. For each

loan portfolio segment and each major HTM debt security type,

losses are estimated collectively for groups of loans or securities

with similar risk characteristics. For loans and securities that do

not share similar risk characteristics with other financial assets,

the losses are estimated individually, which generally includes our

nonperforming large commercial loans and non-accruing HTM

debt securities. For AFS debt securities, losses are estimated at

the individual security level.

Our ACL amounts are influenced by a variety of factors,

including changes in loan and debt security volumes, portfolio

credit quality, and general economic conditions. General

economic conditions are forecasted using economic variables

which will create volatility as those variables change over time.

See Table 1.3 for key economic variables used for our loan

portfolios.

Table 1.3: Key Economic Variables

Loan Portfolio Key economic variables

Total commercial • Gross domestic product

• Commercial real estate asset prices, where applicable

• Unemployment rate

Residential mortgage • Home price index

• Unemployment rate

Other consumer (including credit card, auto, and other consumer) • Unemployment rate

Our approach for estimating expected life-time credit losses

for loans and debt securities includes the following key

components:

• An initial loss forecast period of two years for all portfolio

segments and classes of financing receivables and off-

balance-sheet credit exposures. This period reflects

management’s expectation of losses based on forward-

looking economic scenarios over that time. We forecast

multiple economic scenarios that generally include a base

scenario with an optimistic (upside) and one or more

pessimistic (downside) scenarios, which are weighted by

management to estimate future credit losses.

• Long-term average loss expectations estimated by reverting

to the long-term average, on a linear basis, for each of the

economic variables forecasted during the initial loss forecast

period. These long-term averages are based on observations

over multiple economic cycles. The reversion period, which

may be up to two years, is assessed on a quarterly basis.

• The remaining contractual term of a loan is adjusted for

expected prepayments and certain expected extensions,

renewals, or modifications. We extend the contractual term

when we are not able to unconditionally cancel contractual

renewals or extension options. Credit card loans have

indeterminate maturities, which requires that we determine

93 Wells Fargo & Company

a contractual life by estimating the application of future

payments to the outstanding loan amount.

• For AFS debt securities and certain beneficial interests

classified as HTM, we utilize DCF methods to measure the

ACL, which incorporate expected credit losses using the

conceptual components described above. For most HTM

debt securities, the ACL is measured using an expected loss

model, similar to the methodology used for loans.

The ACL for financial assets held at amortized cost is a

valuation account that is deducted from, or added to, the

amortized cost basis of the financial assets to present the net

amount expected to be collected. When credit expectations

change, the valuation account is adjusted with changes reported

in provision for credit losses. If amounts previously charged off

are subsequently expected to be collected, we may recognize a

negative allowance, which is limited to the amount that was

previously charged off. For financial assets with an ACL

estimated using DCF methods, changes in the ACL due to the

passage of time are recorded in interest income. The ACL for AFS

debt securities reflects the amount of unrealized loss related to

expected credit losses, limited by the amount that fair value is

less than the amortized cost basis (fair value floor) and cannot

have an associated negative allowance.

For certain financial assets, such as residential real estate

loans guaranteed by the Government National Mortgage

Association (GNMA), an agency of the federal government, U. S.

Treasury and Agency mortgage-backed debt securities and

certain sovereign debt securities, the Company has not

recognized an ACL as our expectation of loss is zero, based on

historical losses and consideration of current and forecasted

conditions.

For financial assets that are collateral-dependent, we use the

fair value of the collateral to measure the ACL. If we intend to sell

the underlying collateral, we will measure the ACL based on the

collateral’s net realizable value. In most situations, based on our

charge-off policies, we will immediately write-down the financial

asset to the fair value of the collateral or net realizable value. For

consumer loans, collateral-dependent financial assets may have

collateral in the form of residential real estate, autos or other

personal assets. For commercial loans, collateral-dependent

financial assets may have collateral in the form of commercial

real estate or other business assets.

We do not generally record an ACL for accrued interest

receivables because uncollectible accrued interest is reversed

through interest income in a timely manner in line with our non-

accrual and past due policies for loans and debt securities. For

consumer credit card and certain consumer lines of credit, we

include an ACL for accrued interest and fees since these loans are

neither placed on nonaccrual status nor written off until the loan

is 180 days past due. Accrued interest receivables are included in

other assets, except for certain revolving loans, such as credit

card loans.

COMMERCIAL LOAN PORTFOLIO SEGMENT ACL METHODOLOGY

Generally, commercial loans, which include net investments in

lease financing, are assessed for estimated losses by grading each

loan using various risk factors as identified through periodic

reviews. Our estimation approach for the commercial portfolio

reflects the estimated probability of default in accordance with

the borrower’s financial strength and the severity of loss in the

event of default, considering the quality of any underlying

collateral. Probability of default, loss severity at the time of

default, and exposure at default are statistically derived through

historical observations of default and losses after default within

each credit risk rating. These estimates are adjusted as

appropriate for risks identified from current and forecasted

economic conditions and credit quality trends. Unfunded credit

commitments are evaluated based on a conversion factor to

derive a funded loan equivalent amount. The estimated

probability of default and loss severity at the time of default are

applied to the funded loan equivalent amount to estimate losses

for unfunded credit commitments.

CONSUMER LOAN PORTFOLIO SEGMENT ACL METHODOLOGY For

consumer loans, we determine the allowance using a pooled

approach based on the individual risk characteristics of the loans

within those pools. Quantitative modeling methodologies that

estimate probability of default, loss severity at the time of

default and exposure at default are typically leveraged to

estimate expected loss. These methodologies pool loans,

generally by product types with similar risk characteristics, such

as residential real estate mortgages, auto loans and credit cards.

As appropriate and to achieve greater accuracy, we may further

stratify selected portfolios by sub-product, risk pool, loss type,

geographic location and other predictive characteristics. We use

attributes such as delinquency status, Fair Isaac Corporation

(FICO) scores, and loan-to-value ratios (where applicable) in the

development of our consumer loan models, in addition to home

price trends, unemployment trends, and other economic

variables that may influence the frequency and severity of losses

in the consumer portfolio.

OTHER QUALITATIVE FACTORS The ACL includes amounts for

qualitative factors which may not be adequately reflected in our

loss models. These amounts represent management’s judgment

of risks in the processes and assumptions used in establishing the

ACL. Generally, these amounts are established at a granular level

below our loan portfolio segments. We also consider economic

environmental factors, modeling assumptions and performance,

process risk, and other subjective factors, including industry

trends and emerging risk assessments.

OFF-BALANCE SHEET CREDIT EXPOSURES Our off-balance sheet

credit exposures include unfunded loan commitments (generally

in the form of revolving lines of credit), financial guarantees not

accounted for as insurance contracts or derivatives, including

standby letters of credit, and other similar instruments. For off-

balance sheet credit exposures, we recognize an ACL associated

with the unfunded amounts. We do not recognize an ACL for

commitments that are unconditionally cancelable at our

discretion. Additionally, we recognize an ACL for financial

guarantees that create off-balance sheet credit exposure, such as

loans sold with credit recourse and factoring guarantees. ACL for

off-balance sheet credit exposures are reported as a liability in

accrued expenses and other liabilities on our consolidated

balance sheet.

OTHER FINANCIAL ASSETS Other financial assets are evaluated

for expected credit losses. These other financial assets include

accounts receivable for fees, receivables from government-

sponsored entities, such as Federal National Mortgage

Association (FNMA) and Federal Home Loan Mortgage

Corporation (FHLMC), and GNMA, and other accounts

receivables from high-credit quality counterparties, such as

central clearing counterparties. Many of these financial assets are

generally not expected to have an ACL as there is a zero loss

expectation (e.g., government guarantee) based on no historical

credit losses and consideration of current and forecasted

conditions. Some financial assets, such as loans to employees,

Wells Fargo & Company 94

(continued) Summary of Significant Accounting Policies Note 1:

maintain an ACL that is presented on a net basis with the related

amortized cost amounts in other assets on our consolidated

balance sheet. A provision for credit losses is not recognized

separately from the regular income or expense associated with

these financial assets.

Securities purchased under resale agreements are generally

over-collateralized by securities or cash and are generally short-

term in nature. We have elected the practical expedient for these

financial assets given collateral maintenance provisions. These

provisions require that we monitor the collateral value and

customers are required to replenish collateral, if needed.

Accordingly, we generally do not maintain an ACL for these

financial assets.

See Note 5 (Loans and Related Allowance for Credit Losses)

for additional information.

Purchased Credit Deteriorated Financial Assets

Financial assets acquired that are of poor credit quality and with

more than an insignificant evidence of credit deterioration since

their origination or issuance are purchased credit deteriorated

(PCD) assets. PCD assets include HTM and AFS debt securities

and loans. PCD assets are recorded at their purchase price plus an

ACL estimated at the time of acquisition. Under this approach,

there is no provision for credit losses recognized at acquisition;

rather, there is a gross-up of the purchase price of the financial

asset for the estimate of expected credit losses and a

corresponding ACL recorded. Changes in estimates of expected

credit losses after acquisition are recognized as provision for

credit losses in subsequent periods. In general, interest income

recognition for PCD financial assets is consistent with interest

income recognition for the similar non-PCD financial asset.

Leasing Activity

AS LESSOR We lease equipment to our customers under

financing or operating leases. Financing leases, which includes

both direct financing and sales-type leases, are presented in

loans and are recorded at the discounted amounts of lease

payments receivable plus the estimated residual value of the

leased asset. Leveraged leases, which are a form of financing

leases, are reduced by related non-recourse debt from third-

party investors. Lease payments receivable reflect contractual

lease payments adjusted for renewal or termination options that

we believe the customer is reasonably certain to exercise. The

residual value reflects our best estimate of the expected sales

price for the equipment at lease termination based on sales

history adjusted for recent trends in the expected exit markets.

Many of our leases allow the customer to extend the lease at

prevailing market terms or purchase the asset for fair value at

lease termination.

Our allowance for loan losses for financing leases considers

both the collectability of the lease payments receivable as well as

the estimated residual value of the leased asset. We typically

purchase residual value insurance on our financing leases to

reduce the risk of loss at lease termination.

In connection with a lease, we may finance the customer’s

purchase of other products or services from the equipment

vendor and allocate the contract consideration between the use

of the asset and the purchase of those products or services.

Amounts allocated are reported in loans as commercial and

industrial loans, rather than as lease financing.

Our primary income from financing leases is interest income

recognized using the effective interest method. Variable lease

revenue, such as reimbursement for property taxes, are included

in lease income within noninterest income.

Operating lease assets are presented in other assets, net of

accumulated depreciation. Periodic depreciation expense is

recorded on a straight-line basis over the estimated useful life of

the leased asset and are included in other noninterest expense.

Operating lease assets are reviewed periodically for impairment

and an impairment loss is recognized if the carrying amount of

operating lease assets exceeds fair value and is not recoverable.

Recoverability is evaluated by comparing the carrying amount of

the leased assets to undiscounted cash flows expected through

the operation or sale of the asset. Impairment charges for

operating lease assets are included in other noninterest income.

Operating lease rental income for leased assets is recognized

in lease income within noninterest income on a straight-line basis

over the lease term. Variable revenue on operating leases include

reimbursements of costs, including property taxes, which

fluctuate over time, as well as rental revenue based on usage. For

leases of railcars, revenue for maintenance services provided

under the lease is recognized in lease income.

We elected to exclude from revenue and expenses any sales

tax incurred on lease payments which are reimbursed by the

lessee. Substantially all of our leased assets are protected against

casualty loss through third-party insurance.

AS LESSEE We enter into lease agreements to obtain the right to

use assets for our business operations, substantially all of which

are real estate. Lease liabilities and right-of-use (ROU) assets are

recognized when we enter into operating or financing leases and

represent our obligations and rights to use these assets over the

period of the leases and may be re-measured for certain

modifications.

Operating lease liabilities include fixed and in-substance

fixed payments for the contractual duration of the lease,

adjusted for renewals or terminations which were considered

probable of exercise when measured. The lease payments are

discounted using a rate that approximates a collateralized

borrowing rate for the estimated duration of the lease as the

implicit discount rate is typically not known. The discount rate is

updated when re-measurement events occur. The related

operating lease ROU assets may differ from operating lease

liabilities due to initial direct costs, deferred or prepaid lease

payments and lease incentives.

We present operating lease liabilities in accrued expenses

and other liabilities and the related operating lease ROU assets in

other assets. The amortization of operating lease ROU assets

and the accretion of operating lease liabilities are reported

together as fixed lease expense and are included in occupancy

expense within noninterest expense. The fixed lease expense is

recognized on a straight-line basis over the life of the lease.

Some operating leases include variable lease payments and

are recognized as incurred in net occupancy expense within

noninterest expense.

For substantially all of our leased assets, we account for

consideration paid under the contract for maintenance or other

services as lease payments. We exclude certain asset classes, with

original terms of less than one year from the operating lease

ROU assets and lease liabilities. The related short-term lease

expense is included in net occupancy expense.

Finance lease liabilities are presented in long-term debt and

the associated finance ROU assets are presented in premises and

equipment.

See Note 8 (Leasing Activity) for additional information.

95 Wells Fargo & Company

Deposits, Short-term Borrowings and Long-term Debt

Customer deposits, short-term borrowings, and long-term debt

are recorded at amortized cost, unless we have elected the fair

value option for these items. For example, we may elect the fair

value option for certain structured notes. We generally report

borrowings with original maturities of one year or less as short-

term borrowings and borrowings with original maturities of

greater than one year as long-term debt on our consolidated

balance sheet. We do not reclassify long-term debt to short-

term borrowings within a year of maturity.

Refer to Note 9 (Deposits) for further information on

deposits, Note 10 (Long-Term Debt) for further information on

long-term debt, and Note 15 (Fair Values of Assets and

Liabilities) for additional information on fair value, including fair

value option elections.

Securitizations and Beneficial Interests

Securitizations are transactions in which financial assets are sold

to a Special Purpose Entity (SPE), which then issues beneficial

interests collateralized by the transferred financial assets.

Beneficial interests are generally issued in the form of senior and

subordinated interests, and in some cases, we may obtain

beneficial interests issued by the SPE. Additionally, from time to

time, we may re-securitize certain financial assets in a new

securitization transaction. See Note 16 (Securitizations and

Variable Interest Entities) for additional information about our

involvement with SPEs.

The assets and liabilities transferred to a SPE are excluded

from our consolidated balance sheet if the transfer qualifies

as a sale and we are not required to consolidate the SPE.

For transfers of financial assets recorded as sales, we

recognize and initially measure at fair value all assets obtained

(including beneficial interests or mortgage servicing rights) and

all liabilities incurred. We record a gain or loss in noninterest

income for the difference between assets obtained (net of

liabilities incurred) and the carrying amount of the assets sold.

Beneficial interests obtained from, and liabilities incurred in,

securitizations with off-balance sheet entities may include debt

and equity securities, loans, MSRs, derivative assets and

liabilities, other assets, and other obligations such as liabilities

for mortgage repurchase losses or long-term debt and are

accounted for as described within this Note.

Mortgage Servicing Rights

We recognize MSRs resulting from a sale or securitization of

mortgage loans that we originate or through a direct purchase of

such rights. We initially record all of our MSRs at fair value.

Subsequently, residential loan MSRs are carried at fair value.

Commercial MSRs are subsequently measured at LOCOM. The

valuation and sensitivity of MSRs is discussed further in Note 6

(Mortgage Banking Activities), Note 15 (Fair Values of Assets

and Liabilities) and Note 16 (Securitizations and Variable Interest

Entities).

For MSRs carried at fair value, changes in fair value are

reported in mortgage banking noninterest income in the period

in which the change occurs. MSRs subsequently measured at

LOCOM are amortized in proportion to, and over the period of,

estimated net servicing income. The amortization of MSRs is

reported in mortgage banking noninterest income, analyzed

monthly and adjusted to reflect changes in prepayment rates, as

well as other factors.

MSRs accounted for at LOCOM are periodically evaluated

for impairment based on the fair value of those assets. For

purposes of impairment evaluation and measurement, we

stratify MSRs based on the predominant risk characteristics of

the underlying loans, including investor and product type. If, by

individual stratum, the carrying amount of these MSRs exceeds

fair value, a valuation allowance is established. The valuation

allowance is adjusted as the fair value changes.

Premises and Equipment

Premises and equipment are carried at cost less accumulated

depreciation and amortization. We use the straight-line method

of depreciation and amortization. Depreciation and amortization

expense for premises and equipment was $1.3 billion in 2023,

$1.2 billion in 2022, and $1.4billion in 2021. Estimated useful

lives range up to 40 years for buildings and improvements, up to

10 years for furniture and equipment, and the shorter of the

estimated useful life (up to 8 years) or the lease term for

leasehold improvements.

Goodwill and Identifiable Intangible Assets

Goodwill is recorded for business combinations when the

purchase price is higher than the fair value of the acquired net

assets, including identifiable intangible assets.

We assess goodwill for impairment at a reporting unit level

on an annual basis or more frequently in certain circumstances.

We have determined that our reporting units are at the

reportable operating segment level or one level below. We

identify the reporting units based on how the segments and

reporting units are managed, taking into consideration the

economic characteristics, nature of the products and services,

and customers of the segments and reporting units. We allocate

goodwill to applicable reporting units based on their relative fair

value at the time we acquire a business and when we have a

significant business reorganization. If we sell a business, a portion

of goodwill is included with the carrying amount of the divested

business.

We have the option of performing a qualitative assessment

of goodwill. We may also elect to bypass the qualitative test and

proceed directly to a quantitative test. If we perform a qualitative

assessment of goodwill to test for impairment and conclude it is

more likely than not that a reporting unit’s fair value is greater

than its carrying amount, quantitative tests are not required.

However, if we determine it is more likely than not that a

reporting unit’s fair value is less than its carrying amount, we

complete a quantitative assessment to determine if there is

goodwill impairment. We apply various quantitative valuation

methodologies, including discounted cash flow and earnings

multiple approaches, to determine the estimated fair value,

which is compared with the carrying value of each reporting unit.

A goodwill impairment loss is recognized if the fair value is less

than the carrying amount, including goodwill. The goodwill

impairment loss is limited to the amount of goodwill allocated to

the reporting unit. We recognize impairment losses as a charge

to other noninterest expense and a reduction to the carrying

value of goodwill. Subsequent reversals of goodwill impairment

are prohibited.

We amortize customer relationship intangible assets on an

accelerated basis over useful lives not exceeding 10 years. We

review intangible assets for impairment whenever events or

changes in circumstances indicate that their carrying amounts

may not be recoverable. Impairment is indicated if the sum of

undiscounted estimated future net cash flows is less than the

carrying value of the asset. Impairment is permanently

recognized by writing down the asset to the extent that the

carrying value exceeds the estimated fair value.

Wells Fargo & Company 96

(continued) Summary of Significant Accounting Policies Note 1:

Derivatives and Hedging Activities

DERIVATIVES We recognize all derivatives on our consolidated

balance sheet at fair value. On the date we enter into a derivative

contract, we categorize the derivative as either an accounting

hedge, economic hedge, or part of our customer accommodation

trading portfolio.

Accounting hedges are either fair value or cash flow hedges.

Fair value hedges represent the hedge of the fair value of a

recognized asset or liability or an unrecognized firm

commitment, including hedges of foreign currency exposure.

Cash flow hedges represent the hedge of a forecasted

transaction or the variability of cash flows to be paid or received

related to a recognized asset or liability.

Economic hedges and customer accommodation trading

derivatives do not qualify for, or we have elected not to apply,

hedge accounting. Economic hedges are derivatives we

use to manage interest rate, foreign currency and certain other

risks associated with our non-trading activities. Our customer

accommodation trading portfolio represents derivatives related

to our trading business activities. We report changes in the fair

values of these derivatives in noninterest income or noninterest

expense.

FAIR VALUE HEDGES We record changes in the fair value of the

derivative in income, except for certain derivatives in which a

portion is recorded to OCI. We record basis adjustments to the

amortized cost of the hedged asset or liability due to the changes

in fair value related to the hedged risk, except for basis

adjustments related to active portfolio layer method hedges

which are maintained at a portfolio level and not allocated to the

individual assets in the portfolio. The offset to fair value hedge

basis adjustments is recorded in earnings. We present derivative

gains or losses in the same income statement category as the

hedged asset or liability, as follows:

• For fair value hedges of interest rate risk, amounts are

reflected in net interest income;

• For hedges of foreign currency risk, amounts representing

the fair value changes less the accrual for periodic cash flow

settlements are reflected in noninterest income. The

periodic cash flow settlements are reflected in net interest

income;

• For hedges of both interest rate risk and foreign currency

risk, amounts representing the fair value change less the

accrual for periodic cash flow settlements is attributed to

both net interest income and noninterest income. The

periodic cash flow settlements are reflected in net interest

income.

The entire derivative gain or loss is included in the

assessment of hedge effectiveness for all fair value hedge

relationships, except for hedges of foreign-currency

denominated AFS debt securities and long-term debt liabilities

hedged with cross-currency swaps. The change in fair value of

these swaps attributable to cross-currency basis spread changes

is excluded from the assessment of hedge effectiveness. The

initial fair value of the excluded component is amortized to net

interest income and the difference between changes in fair value

of the excluded component and the amount recorded in earnings

is recorded in OCI.

CASH FLOW HEDGES We record changes in the fair value of the

derivative in OCI. We subsequently reclassify gains and losses

from these changes in fair value from OCI to earnings in the same

period(s) that the hedged transaction affects earnings and in the

same income statement category as the hedged item. The entire

gain or loss on these derivatives is included in the assessment of

hedge effectiveness.

DOCUMENTATION AND EFFECTIVENESS ASSESSMENT FOR

ACCOUNTING HEDGES

For fair value and cash flow hedges

qualifying for hedge accounting, we formally document at

inception the relationship between hedging instruments and

hedged items, our risk management objective, strategy and our

evaluation of effectiveness for our hedge transactions. This

process includes linking all derivatives designated as fair value or

cash flow hedges to specific assets and liabilities on our

consolidated balance sheet or to specific forecasted transactions.

We assess hedge effectiveness using regression analysis, both at

inception of the hedging relationship and on an ongoing basis.

For fair value hedges, the regression analysis involves regressing

the periodic change in fair value of the hedging instrument

against the periodic changes in fair value of the asset or liability

being hedged due to changes in the hedged risk(s). For cash flow

hedges, the regression analysis involves regressing the periodic

changes in fair value of the hedging instrument against the

periodic changes in fair value of a hypothetical derivative. The

hypothetical derivative has terms that identically match and

offset the cash flows of the forecasted transaction being hedged

due to changes in the hedged risk(s). The initial assessment for

fair value and cash flow hedges includes an evaluation of the

quantitative measures of the regression results used to validate

the conclusion of high effectiveness. Periodically, as required, we

also formally assess whether the derivative we designated in

each hedging relationship is expected to be and has been highly

effective in offsetting changes in fair values or cash flows of the

hedged item using the regression analysis method.

For portfolio layer method fair value hedges, an assessment

test is also performed at inception of the hedging relationship

and on an ongoing basis to support our expectation that the

hedged item is anticipated to be outstanding for the designated

hedge period.

DISCONTINUING HEDGE ACCOUNTING We discontinue hedge

accounting prospectively when (1) a derivative is no longer highly

effective in offsetting changes in the fair value or cash flows of a

hedged item, (2) a derivative expires or is sold, terminated or

exercised, (3) we elect to discontinue hedge accounting, (4) the

forecasted transaction is no longer probable of occurring in a

cash flow hedge, or (5) the hedged item is no longer anticipated

to be outstanding for the designated hedge period in a portfolio

layer method hedge.

When we discontinue fair value hedge accounting for

portfolio layer method hedges, the associated portfolio level

basis adjustment is allocated to the remaining securities in the

portfolio on a proportionate basis. Upon discontinuance of all

other fair value hedges, we no longer adjust the previously

hedged asset or liability for changes in fair value.

The remaining cumulative adjustments to the hedged item

and accumulated amounts reported in OCI are accounted for in

the same manner as other components of the carrying amount

of the asset or liability. For example, for financial debt

instruments such as AFS debt securities, loans or long-term debt,

these amounts are amortized into net interest income over the

remaining life of the asset or liability similar to other amortized

cost basis adjustments. If the hedged item is derecognized, the

accumulated amounts reported in OCI are immediately

reclassified to net interest income. If the derivative continues to

be held after fair value hedge accounting ceases, we carry the

derivative on the consolidated balance sheet at its fair value with

changes in fair value included in noninterest income.

97 Wells Fargo & Company

When we discontinue cash flow hedge accounting and it is

probable that the forecasted transaction will occur, the

accumulated amount reported in OCI at the de-designation date

continues to be reported in OCI until the forecasted transaction

affects earnings at which point the related OCI amount is

reclassified to net interest income. If cash flow hedge accounting

is discontinued and it is no longer probable the forecasted

transaction will occur, the accumulated gains and losses reported

in OCI at the de-designation date is immediately reclassified to

noninterest income. If the derivative continues to be held after

cash flow hedge accounting ceases, we carry the derivative on our

consolidated balance sheet at its fair value with changes in fair

value included in noninterest income.

EMBEDDED DERIVATIVES We may purchase or originate financial

instruments that contain an embedded derivative. At inception

of the financial instrument, we assess (1) if the economic

characteristics of the embedded derivative are not clearly and

closely related to the economic characteristics of the host

contract, (2) if the financial instrument that embodies both the

embedded derivative and the host contract is not measured at

fair value with changes in fair value reported in earnings, and (3) if

a separate instrument with the same terms as the embedded

instrument would meet the definition of a derivative. If the

embedded derivative meets all of these conditions, we separate

it from the hybrid contract by recording the bifurcated derivative

at fair value and the remaining host contract at the difference

between the basis of the hybrid instrument and the fair value of

the bifurcated derivative. The bifurcated derivative is carried at

fair value and accounted for in accordance with its categorization

as an accounting hedge, economic hedge, or customer

accommodation trading derivative. The accounting for the

remaining host contract is the same as other assets and liabilities

of a similar type and reported on our consolidated balance sheet

based upon the accounting classification of the instrument.

COUNTERPARTY CREDIT RISK AND NETTING By using derivatives,

we are exposed to counterparty credit risk, which is the risk that

counterparties to the derivative contracts do not perform as

expected. If a counterparty fails to perform, our counterparty

credit risk is equal to the amount reported as a derivative asset

on our consolidated balance sheet. The amounts reported as a

derivative asset are derivative contracts in a gain position, and to

the extent subject to legally enforceable master netting

arrangements, net of derivatives in a loss position with the same

counterparty and cash collateral received. We minimize

counterparty credit risk through credit approvals, limits,

monitoring procedures, executing master netting arrangements

and obtaining collateral, where appropriate. Counterparty credit

risk related to derivatives is considered in determining fair value

and our assessment of hedge effectiveness. To the extent

derivatives subject to master netting arrangements meet the

applicable requirements, including determining the legal

enforceability of the arrangement, it is our policy to present

derivative balances and related cash collateral amounts net on

our consolidated balance sheet. We incorporate adjustments to

reflect counterparty credit risk (credit valuation adjustments

(CVA)) in determining the fair value of our derivatives. CVA,

which considers the effects of enforceable master netting

agreements and collateral arrangements, reflects market-based

views of the credit quality of each counterparty. We estimate

CVA based on observed credit spreads in the credit default swap

market and indices indicative of the credit quality of the

counterparties to our derivatives.

Cash collateral exchanged related to our interest rate

derivatives, and certain commodity and equity derivatives, with

centrally cleared counterparties is recorded as a reduction of the

derivative fair value asset and liability balances, as opposed to

separate non-derivative receivables or payables. This cash

collateral, also referred to as variation margin, is exchanged

based upon derivative fair value changes, typically on a one-day

lag. For additional information on our derivatives and hedging

activities, see Note 14 (Derivatives).

Equity Securities

Equity securities exclude investments that represent a

controlling interest in the investee. Marketable equity securities

have readily determinable fair values and are predominantly used

in our trading activities. Marketable equity securities are

recorded at fair value with realized and unrealized gains and

losses recognized in net gains from trading and securities in

noninterest income. Dividend income from marketable equity

securities is recognized in interest income.

Nonmarketable equity securities do not have readily

determinable fair values. These securities are accounted for

under one of the following accounting methods:

• Fair value through net income: This method is an election.

The securities are recorded at fair value with unrealized gains

or losses recognized in net gains from trading and securities

in noninterest income;

• Equity method: This method is applied when we have the

ability to exert significant influence over the investee. The

securities are recorded at cost and adjusted for our share of

the investee’s earnings or losses, less any dividends received

and/or impairment. Equity method adjustments for our

share of the investee’s earnings or losses are recognized in

other noninterest income and dividends are recognized as a

reduction of the investment carrying value;

• Proportional amortization method: This method is applied to

certain low-income housing tax credit (LIHTC) investments.

The investments are initially recorded at cost and amortized

in proportion to the tax credits received. The amortization of

the investments and the related tax impacts are recognized

in income tax expense;

• Cost method: This method is required for specific securities,

such as Federal Reserve Bank stock and Federal Home Loan

Bank stock. These securities are held at cost less any

impairment;

• Measurement alternative: This method is followed by all

remaining nonmarketable equity securities. These securities

are initially recorded at cost and are remeasured to fair value

as of the date of an orderly observable transaction of the

same or similar security of the same issuer. These securities

are also adjusted for impairment.

All realized and unrealized gains and losses, including

impairment losses, from nonmarketable equity securities are

recognized in net gains from trading and securities in noninterest

income. Dividend income from all nonmarketable equity

securities, other than equity method securities, is recognized in

interest income.

Our review for impairment for nonmarketable equity

securities not carried at fair value includes an analysis of the facts

and circumstances of each security, the intent or requirement to

sell the security, the expectations of cash flows, capital needs and

the viability of its business model. When the fair value of an

equity method or cost method investment is less than its

Wells Fargo & Company 98

(continued) Summary of Significant Accounting Policies Note 1:

carrying value, we write-down the asset to fair value when we

consider declines in value to be other than temporary. When

the fair value of an investment accounted for using the

measurement alternative is less than its carrying value, we write-

down the asset to fair value, without the consideration of

anticipated recovery.

See Note 4 (Equity Securities) for additional information.

Pension Accounting

We sponsor a frozen noncontributory qualified defined benefit

retirement plan, the Wells Fargo & Company Cash Balance Plan

(Cash Balance Plan), which covers eligible employees of

WellsFargo. We also sponsor nonqualified defined benefit plans

that provide supplemental defined benefit pension benefits to

certain eligible employees. We account for our defined benefit

pension plans using an actuarial model. Principal assumptions

used in determining the net periodic pension cost and the

pension obligation include the discount rate, the expected long-

term rate of return on plan assets and projected mortality rates.

A single weighted-average discount rate is used to estimate

the present value of our future pension benefit obligations. We

determine the discount rate using a yield curve derived from a

broad-based population of high-quality corporate bonds with

maturity dates that closely match the estimated timing of the

expected benefit payments.

We use the full year curve approach to estimate the interest

cost component of pension expense for our principal defined

benefit and postretirement plans. The full yield curve approach

aligns specific spot rates along the yield curve to the projected

benefit payment cash flows.

The determination of our expected long-term rate of return

on plan assets is highly quantitative by nature. We evaluate the

current asset allocations and expected returns using forward-

looking capital market assumptions. We use the resulting

projections to derive a baseline expected rate of return for the

Cash Balance Plan’s prescribed asset mix.

Mortality rate assumptions are based on mortality tables

published by the Society of Actuaries adjusted to reflect our

specific experience.

At year end, we re-measure our defined benefit plan

liabilities and related plan assets and recognize any resulting

actuarial gain or loss in OCI. We generally amortize net actuarial

gain or loss in excess of a 5% corridor from AOCI into net periodic

pension cost over the estimated average remaining participation

period, which at December31, 2023, is 17 years. See Note 22

(Employee Benefits) for additional information on our pension

accounting.

Income Taxes

We file income tax returns in the jurisdictions in which we

operate and evaluate income tax expense in two components:

current and deferred income tax expense. Current income tax

expense represents our estimated taxes to be paid or refunded

for the current period and includes income tax expense related to

uncertain tax positions. Uncertain tax positions that meet the

more likely than not recognition threshold are measured to

determine the amount of benefit to recognize.An uncertain tax

position is measured at the largest amount of benefit that

management believes has a greater than 50% likelihood of

realization upon settlement.Tax benefits not meeting our

realization criteria represent unrecognized tax benefits.

Deferred income taxes are based on the balance sheet

method and deferred income tax expense results from changes

in deferred tax assets and liabilities between periods. Under the

balance sheet method, the net deferred tax asset or liability is

based on the tax effects of the differences between the book and

tax basis of assets and liabilities, and enacted changes in tax rates

and laws are recognized in the period in which they occur.

Deferred tax assets are recognized subject to management’s

judgment that realization is more likely than not. A valuation

allowance reduces deferred tax assets to the realizable amount.

See Note 23 (Income Taxes) to Financial Statements in this

Report for a further description of our provision for income taxes

and related income tax assets and liabilities.

Stock-Based Compensation

Our long-term incentive plans provide awards for employee

services in various forms, such as restricted share rights (RSRs)

and performance share awards (PSAs).

Stock-based awards are measured at fair value on the grant

date. The cost is recognized in personnel expense, net of actual

forfeitures, in our consolidated statement of income normally

over the vesting period of the award; awards with graded vesting

are expensed on a straight-line method. Awards to employees

who are retirement eligible at the grant date are subject to

immediate expensing upon grant. Awards to employees who

become retirement eligible before the final vesting date are

expensed between the grant date and the date the employee

becomes retirement eligible. Except for retirement and other

limited circumstances, RSRs are canceled when employment

ends.

For PSAs, compensation expense fluctuates based on the

estimated outcome of meeting the performance conditions.The

total expense that will be recognized on these awards is finalized

upon the completion of the performance period.

For additional information on our stock-based employee

compensation plans, see Note 12 (Common Stock and Stock

Plans).

Earnings Per Common Share

We compute earnings per common share by dividing net income

applicable to common stock (net income less dividends on

preferred stock and the excess of consideration transferred over

carrying value of preferred stock redeemed, if any) by the

average number of common shares outstanding during the

period. We compute diluted earnings per common share using

net income applicable to common stock and adding the effect of

common stock equivalents (e.g., restricted share rights) that are

dilutive to the average number of common shares outstanding

during the period.

Fair Value of Assets and Liabilities

Fair value represents the price that would be received to sell an

asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date. Fair

value is based on an exit price notion that maximizes the use of

observable inputs and minimizes the use of unobservable inputs.

We measure our assets and liabilities at fair value when we

are required to record them at fair value, when we have elected

the fair value option, and to fulfill fair value disclosure

requirements. Assets and liabilities are recorded at fair value on a

recurring or nonrecurring basis. Assets and liabilities that are

recorded at fair value on a recurring basis require a fair value

measurement at each reporting period. Assets and liabilities that

are recorded at fair value on a nonrecurring basis are adjusted to

fair value only as required through the application of an

accounting method such as LOCOM, write-downs of individual

assets, or application of the measurement alternative for certain

nonmarketable equity securities.

Wells Fargo & Company 99

We classify our assets and liabilities measured at fair value

based upon a three-level hierarchy that assigns the highest

priority to unadjusted quoted prices in active markets and the

lowest priority to unobservable inputs. The three levels are as

follows:

• Level 1 – Valuation is based upon quoted prices for identical

instruments traded in active markets.

• Level 2 – Valuation is based upon quoted prices for similar

instruments in active markets, quoted prices for identical or

similar instruments in markets that are not active, and

model-based valuation techniques for which all significant

assumptions are observable in the market.

• Level 3 – Valuation is generated from techniques that use

significant assumptions that are not observable in the

market. These unobservable assumptions reflect our

estimates of assumptions that market participants would

use in pricing the asset or liability. Valuation techniques

include use of discounted cash flow models, market

comparable pricing, option pricing models, and similar

techniques.

We monitor the availability of observable market data to

assess the appropriate classification of financial instruments

within the fair value hierarchy and transfers between Level 1,

Level 2, and Level 3 accordingly. Observable market data includes

but is not limited to quoted prices and market transactions.

Changes in economic conditions or market liquidity generally will

drive changes in availability of observable market data. Changes

in availability of observable market data, which also may result in

changing the valuation technique used, are generally the cause of

transfers between Level 1, Level 2, and Level 3. The amounts

reported as transfers represent the fair value as of the beginning

of the quarter in which the transfer occurred.

See Note 15 (Fair Values of Assets and Liabilities) for a more

detailed discussion of the valuation methodologies that we apply

to our assets and liabilities.

Supplemental Cash Flow Information

Significant noncash activities are presented in Table 1.4.

Table 1.4: Supplemental Cash Flow Information

Year ended December 31,

(in millions) 2023 2022 2021

Held-to-maturity debt securities purchased from securitization of loans held for sale $ 94 745 20,265

Transfers from loans to loans held for sale 1,920 6,586 19,297

Transfers from available-for-sale debt securities to held-to-maturity debt securities 3,687 50,132 55,993

Transfers from held-to-maturity debt securities to available-for-sale debt securities (1) 23,919 — —

(1) In first quarter 2023, we reclassified HTM debt securities to AFS debt securities in connection with the adoption of ASU 2022-01.

Subsequent Events

We have evaluated the effects of events that have occurred

subsequent to December31, 2023, and there have been no

material events that would require recognition in our 2023

consolidated financial statements or disclosure in the Notes to

the consolidated financial statements.

Wells Fargo & Company 100

(continued) Summary of Significant Accounting Policies Note 1:

Note 2: Trading Activities

Table 2.1 presents a summary of our trading assets and liabilities

measured at fair value through earnings.

Table 2.1: Trading Assets and Liabilities

(in millions)

Dec 31,

2023

Dec 31,

2022

Trading assets:

Debt securities $ 97,302 86,155

Equity securities 18,449 26,910

Loans held for sale 1,793 1,466

Gross trading derivative assets 71,990 77,148

Netting (1) (54,069) (54,922)

Total trading derivative assets 17,921 22,226

Total trading assets 135,465 136,757

Trading liabilities:

Short sale and other liabilities 25,471 20,304

Interest-bearing deposits 1,297 —

Long-term debt 2,308 1,346

Gross trading derivative liabilities 77,807 77,698

Netting (1) (60,366) (59,232)

Total trading derivative liabilities 17,441 18,466

Total trading liabilities $ 46,517 40,116

(1) Represents balance sheet netting for trading derivative asset and liability balances, and trading portfolio level counterparty valuation adjustments.

Table 2.2 provides net interest income earned from trading

securities, and net gains and losses due to the realized and

unrealized gains and losses from trading activities.

Net interest income also includes dividend income on

trading securities and dividend expense on trading securities we

have sold, but not yet purchased.

Table 2.2: Net Interest Income and Net Gains (Losses) from Trading Activities

Year ended December 31,

(in millions) 2023 2022 2021

Net interest income:

Interest income (1) $ 4,229 3,011 2,567

Interest expense 643 592 405

Total net interest income 3,586 2,419 2,162

Net gains (losses) from trading activities, by risk type:

Interest rate 444 456 (587)

Commodity 372 345 10

Equity 1,106 883 52

Foreign exchange 2,124 1,168 839

Credit 753 (736) (30)

Total net gains from trading activities 4,799 2,116 284

Total trading-related net interest and noninterest income $ 8,385 4,535 2,446

(1) Substantially all relates to interest income on debt and equity securities.

101 Wells Fargo & Company

Note 3: Available-for-Sale and Held-to-Maturity Debt Securities

Table 3.1 provides the amortized cost, net of the allowance for

credit losses (ACL) for debt securities, and fair value by major

categories of available-for-sale (AFS) debt securities, which are

carried at fair value, and held-to-maturity (HTM) debt securities,

which are carried at amortized cost, net of the ACL. The net

unrealized gains (losses) for AFS debt securities are reported as a

component of accumulated other comprehensive income (AOCI),

net of the ACL and applicable income taxes. Information on debt

securities held for trading is included in Note 2 (Trading

Activities).

Outstanding balances exclude accrued interest receivable on

AFS and HTM debt securities, which are included in other assets.

See Note 7 (Intangible Assets and Other Assets) for additional

information on accrued interest receivable. Amounts considered

to be uncollectible are reversed through interest income. The

interest income reversed for the years ended December 31, 2023

and 2022, was insignificant.

Table 3.1: Available-for-Sale and Held-to-Maturity Debt Securities Outstanding

(in millions)

Amortized

cost, net (1)

Gross

unrealized gains

Gross

unrealized losses

Net unrealized

gains (losses) Fair value

December 31, 2023

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies $ 47,351 2 (1,886) (1,884) 45,467

Non-U.S. government securities 164 — — — 164

Securities of U.S. states and political subdivisions (2) 20,654 36 (624) (588) 20,066

Federal agency mortgage-backed securities 63,741 111 (4,274) (4,163) 59,578

Non-agency mortgage-backed securities (3) 2,892 1 (144) (143) 2,749

Collateralized loan obligations 1,538 — (5) (5) 1,533

Other debt securities 861 46 (16) 30 891

Total available-for-sale debt securities, excluding portfolio

level basis adjustments 137,201 196 (6,949) (6,753) 130,448

Portfolio level basis adjustments (4) (46) 46 —

Total available-for-sale debt securities 137,155 196 (6,949) (6,707) 130,448

Held-to-maturity debt securities:

Securities of U.S. Treasury and federal agencies 3,790 — (1,503) (1,503) 2,287

Securities of U.S. states and political subdivisions 18,624 3 (2,939) (2,936) 15,688

Federal agency mortgage-backed securities 209,170 136 (30,918) (30,782) 178,388

Non-agency mortgage-backed securities (3) 1,276 18 (120) (102) 1,174

Collateralized loan obligations 28,122 75 (63) 12 28,134

Other debt securities 1,726 — (81) (81) 1,645

Total held-to-maturity debt securities 262,708 232 (35,624) (35,392) 227,316

Total $ 399,863 428 (42,573) (42,099) 357,764

December 31, 2022

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies $ 47,536 9 (2,260) (2,251) 45,285

Non-U.S. government securities 162 —

— — 162

Securities of U.S. states and political subdivisions (2) 10,958 20 (533) (513) 10,445

Federal agency mortgage-backed securities 53,302 2 (5,167) (5,165) 48,137

Non-agency mortgage-backed securities (3) 3,423 1 (140) (139) 3,284

Collateralized loan obligations 4,071 — (90) (90) 3,981

Other debt securities 2,273 75 (48) 27 2,300

Total available-for-sale debt securities 121,725 107 (8,238) (8,131) 113,594

Held-to-maturity debt securities:

Securities of U.S. Treasury and federal agencies 16,202 — (1,917) (1,917) 14,285

Securities of U.S. states and political subdivisions 30,985 8 (4,385) (4,377) 26,608

Federal agency mortgage-backed securities 216,966 30 (34,252) (34,222) 182,744

Non-agency mortgage-backed securities (3) 1,253 — (147) (147) 1,106

Collateralized loan obligations 29,926 1 (727) (726) 29,200

Other debt securities 1,727 — (149) (149) 1,578

Total held-to-maturity debt securities 297,059 39 (41,577) (41,538) 255,521

Total $ 418,784 146 (49,815) (49,669) 369,115

(1) Represents amortized cost of the securities, net of the ACL of $1 million and $6 million related to AFS debt securities and $93million and $85million related to HTM debt securities at December31,

2023 and 2022, respectively.

(2) Includes investments in tax-exempt preferred debt securities issued by investment funds or trusts that predominantly invest in tax-exempt municipal securities. The amortized cost, net of the ACL,

and fair value of these types of securities, was $5.5 billion at December31, 2023, and $5.1 billion at December31, 2022.

(3) Predominantly consists of commercial mortgage-backed securities at both December31, 2023 and 2022.

(4) Represents fair value hedge basis adjustments related to active portfolio layer method hedges of AFS debt securities, which are not allocated to individual securities in the portfolio. For additional

information, see Note 14 (Derivatives).

Wells Fargo & Company 102

Table 3.2 details the breakout of purchases of and transfers

to HTM debt securities by major category of security. The table

excludes the transfer of HTM debt securitieswith a fair value of

$23.2 billion to AFS debt securities in first quarter 2023 in

connection with the adoption of ASU 2022-01. For additional

information, see Note 1 (Summary of Significant Accounting

Policies).

Table 3.2: Held-to-Maturity Debt Securities Purchases and Transfers

Year ended December 31,

(in millions) 2023 2022 2021

Purchases of held-to-maturity debt securities (1):

Securities of U.S. states and political subdivisions $ — 843 5,198

Federal agency mortgage-backed securities 4,225 2,051 76,010

Non-agency mortgage-backed securities 94 211 235

Collateralized loan obligations — — 9,379

Total purchases of held-to-maturity debt securities 4,319 3,105 90,822

Transfers from available-for-sale debt securities to held-to-maturity debt securities (2):

Securities of U.S. states and political subdivisions — — 2,954

Federal agency mortgage-backed securities 3,687 50,132 41,298

Collateralized loan obligations — — 10,003

Other debt securities — — 1,738

Total transfers from available-for-sale debt securities to held-to-maturity debt securities $ 3,687 50,132 55,993

(1) Inclusive of securities purchased but not yet settled and noncash purchases from securitization of loans held for sale (LHFS).

(2) Represents fair value as of the date of the transfers. Debt securities transferred from available-for-sale to held-to-maturity had pre-tax unrealized losses recorded in AOCI of $320 million,

$4.5billion, and $529million for the years ended December31, 2023, 2022 and 2021, respectively, at the time of the transfers.

Table 3.3 shows the composition of interest income,

provision for credit losses, and gross realized gains and losses

from sales and impairment write-downs included in earnings

related to AFS and HTM debt securities (pre-tax).

Table 3.3: Income Statement Impacts for Available-for-Sale and Held-to-Maturity Debt Securities

Year ended December 31,

(in millions) 2023 2022 2021

Interest income (1):

Available-for-sale $ 5,202 3,095 2,808

Held-to-maturity 7,118 6,220 4,359

Total interest income 12,320 9,315 7,167

Provision for credit losses:

Available-for-sale (26) 1 (2)

Held-to-maturity 7 (11) 54

Total provision for credit losses (19) (10) 52

Realized gains and losses (2):

Gross realized gains 37 276 571

Gross realized losses (27) (125) (10)

Impairment write-downs — — (8)

Net realized gains $ 10 151 553

(1) Excludes interest income from trading debt securities, which is disclosed in Note 2 (Trading Activities).

(2) Realized gains and losses relate to AFS debt securities. There were no realized gains or losses from HTM debt securities in all periods presented.

Credit Quality

We monitor credit quality of debt securities by evaluating various

attributes and utilize such information in our evaluation of the

appropriateness of the ACL for debt securities. The credit quality

indicators that we most closely monitor include credit ratings

and delinquency status and are based on information as of our

financial statement date.

CREDIT RATINGS Credit ratings express opinions about the credit

quality of a debt security. We determine the credit rating of a

security according to the lowest credit rating made available by

national recognized statistical rating organizations (NRSROs).

Debt securities rated investment grade, that is those with ratings

similar to BBB-/Baa3 or above, as defined by NRSROs, are

generally considered by the rating agencies and market

participants to be low credit risk. Conversely, debt securities

rated below investment grade, labeled as “speculative grade” by

the rating agencies, are considered to be distinctively higher

credit risk than investment grade debt securities. For debt

securities not rated by NRSROs, we determine an internal credit

grade of the debt securities (used for credit risk management

purposes) equivalent to the credit ratings assigned by major

credit agencies. Substantially all of our debt securities were rated

by NRSROs at December31, 2023 and 2022.

Table 3.4 shows the percentage of fair value of AFS debt

securities and amortized cost of HTM debt securities determined

to be rated investment grade, inclusive of securities rated based

on internal credit grades.

103 Wells Fargo & Company

Table 3.4: Investment Grade Debt Securities

Available-for-Sale Held-to-Maturity

($ in millions) Fair value % investment grade Amortized cost % investment grade

December 31, 2023

Total portfolio (1) $ 130,448 99% $ 262,801 99%

Breakdown by category:

Securities of U.S. Treasury and federal agencies (2) $ 105,045 100% $ 212,960 100%

Securities of U.S. states and political subdivisions 20,066 99 18,635 100

Collateralized loan obligations (3) 1,533 100 28,154 100

All other debt securities (4) 3,804 95 3,052 64

December 31, 2022

Total portfolio (1) $ 113,594 99% $ 297,144 99%

Breakdown by category:

Securities of U.S. Treasury and federal agencies (2) $ 93,422 100% $ 233,169 100%

Securities of U.S. states and political subdivisions 10,445 99 31,000 100

Collateralized loan obligations (3) 3,981 100 29,972 100

All other debt securities (4) 5,746 89 3,003 63

(1) 99% were rated AA- and above at both December31, 2023 and 2022.

(2) Includes federal agency mortgage-backed securities.

(3) 100% were rated AA- and above at both December31, 2023 and 2022.

(4) Includes non-U.S. government, non-agency mortgage-backed, and all other debt securities.

DELINQUENCY STATUS AND NONACCRUAL DEBT SECURITIES Debt

security issuers that are delinquent in payment of amounts due

under contractual debt agreements have a higher probability of

recognition of credit losses. As such, as part of our monitoring of

the credit quality of the debt security portfolio, we consider

whether debt securities we own are past due in payment of

principal or interest payments and whether any securities have

been placed into nonaccrual status.

Debt securities that are past due and still accruing or in

nonaccrual status were insignificant at both December31, 2023

and 2022. Net charge-offs on debt securities were insignificant

for the years ended December31, 2023 and 2022.

Purchased debt securities with credit deterioration (PCD)

are not considered to be in nonaccrual status, as payments from

issuers of these securities remain current. PCD securities were

insignificant for the years ended December31, 2023 and 2022.

Wells Fargo & Company 104

(continued)  Available-for-Sale and Held-to-Maturity Debt Securities Note 3:

Unrealized Losses of Available-for-Sale Debt Securities

Table 3.5 shows the gross unrealized losses and fair value of AFS

debt securities by length of time those individual securities in

each category have been in a continuous loss position. Debt

securities on which we have recorded credit impairment are

categorized as being “less than 12 months” or “12months or

more” in a continuous loss position based on the point in time

that the fair value declined to below the amortized cost basis, net

of allowance for credit losses.

Table 3.5: Gross Unrealized Losses and Fair Value – Available-for-Sale Debt Securities

Less than 12 months 12 months or more Total

(in millions)

Gross

unrealized

losses (1) Fair value

Gross

unrealized

losses (1) Fair value

Gross

unrealized

losses (1) Fair value

December 31, 2023

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies $ (5) 942 (1,881) 43,722 (1,886) 44,664

Securities of U.S. states and political subdivisions (12) 1,405 (612) 11,247 (624) 12,652

Federal agency mortgage-backed securities (76) 7,149 (4,198) 41,986 (4,274) 49,135

Non-agency mortgage-backed securities (1) 42 (143) 2,697 (144) 2,739

Collateralized loan obligations — — (5) 979 (5) 979

Other debt securities — — (16) 420 (16) 420

Total available-for-sale debt securities $ (94) 9,538 (6,855) 101,051 (6,949) 110,589

December 31, 2022

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies $ (291) 9,870 (1,969) 27,899 (2,260) 37,769

Securities of U.S. states and political subdivisions (72) 2,154 (461) 2,382 (533) 4,536

Federal agency mortgage-backed securities (3,580) 39,563 (1,587) 8,481 (5,167) 48,044

Non-agency mortgage-backed securities (43) 1,194 (97) 2,068 (140) 3,262

Collateralized loan obligations (65) 3,195 (25) 786 (90) 3,981

Other debt securities (31) 1,591 (17) 471 (48) 2,062

Total available-for-sale debt securities $ (4,082) 57,567 (4,156) 42,087 (8,238) 99,654

(1) In connection with the adoption of ASU 2022-01, gross unrealized losses exclude portfolio level basis adjustments. For additional information, see Note 1 (Summary of Significant Accounting

Policies).

We have assessed each debt security with gross unrealized

losses included in the previous table for credit impairment. As

part of that assessment we evaluated and concluded that we do

not intend to sell any of the debt securities, and that it is more

likely than not that we will not be required to sell, prior to

recovery of the amortized cost basis. We evaluate, where

necessary, whether credit impairment exists by comparing the

present value of the expected cash flows to the debt securities’

amortized cost basis. Credit impairment is recorded as an ACL for

debt securities.

For descriptions of the factors we consider when analyzing

debt securities for impairment as well as methodology and

significant inputs used to measure credit losses, see Note 1

(Summary of Significant Accounting Policies) in this Report.

105 Wells Fargo & Company

Contractual Maturities

Table 3.6 and Table 3.7 show the remaining contractual

maturities, amortized cost, net of the ACL, fair value and

weighted average effective yields of AFS and HTM debt

securities, respectively. The remaining contractual principal

maturities for mortgage-backed securities (MBS) do not

consider prepayments.Remaining expected maturities will differ

from contractual maturities because borrowers may have the

right to prepay obligations before the underlying mortgages

mature.

Table 3.6: Contractual Maturities – Available-for-Sale Debt Securities

By remaining contractual maturity ($ in millions) Total

Within

one year

After

one year

through

five years

After

five years

through

ten years

After

ten years

December 31, 2023

Available-for-sale debt securities (1)(2):

Securities of U.S. Treasury and federal agencies

Amortized cost, net $ 47,351 16,750 27,577 1,545 1,479

Fair value 45,467 16,485 26,142 1,422 1,418

Weighted average yield 1.62% 1.91 1.46 1.48 1.44

Non-U.S. government securities

Amortized cost, net $ 164 2 138 24 —

Fair value 164 2 138 24 —

Weighted average yield 4.80% 5.80 4.64 5.61 —

Securities of U.S. states and political subdivisions

Amortized cost, net $ 20,654 1,124 5,311 4,738 9,481

Fair value 20,066 1,120 5,278 4,420 9,248

Weighted average yield 3.08% 2.87 3.73 2.97 2.81

Federal agency mortgage-backed securities

Amortized cost, net $ 63,741 5 160 731 62,845

Fair value 59,578 5 155 690 58,728

Weighted average yield 3.69% 2.92 2.09 2.54 3.71

Non-agency mortgage-backed securities

Amortized cost, net $ 2,892 — — 105 2,787

Fair value 2,749 — — 73 2,676

Weighted average yield 5.28% — — 4.60 5.31

Collateralized loan obligations

Amortized cost, net $ 1,538 — — 1,113 425

Fair value 1,533 — — 1,110 423

Weighted average yield 7.08% — — 7.10 7.02

Other debt securities

Amortized cost, net $ 861 3 44 470 344

Fair value 891 3 45 472 371

Weighted average yield 6.74% 7.02 9.14 5.87 7.62

Total available-for-sale debt securities

Amortized cost, net $ 137,201 17,884 33,230 8,726 77,361

Fair value 130,448 17,615 31,758 8,211 72,864

Weighted average yield 2.97% 1.97 1.83 3.36 3.65

(1) Weighted average yields displayed by maturity bucket are weighted based on amortized cost without effect for any related hedging derivatives and are shown pre-tax.

(2) Amortized cost, net excludes portfolio level basis adjustments of $(46) million.

Wells Fargo & Company 106

(continued)  Available-for-Sale and Held-to-Maturity Debt Securities Note 3:

Table 3.7: Contractual Maturities – Held-to-Maturity Debt Securities

By remaining contractual maturity ($ in millions) Total

Within

one year

After

one year

through

five years

After

five years

through

ten years

After

ten years

December 31, 2023

Held-to-maturity debt securities (1):

Securities of U.S. Treasury and federal agencies

Amortized cost, net $ 3,790 — — — 3,790

Fair value 2,287 — — — 2,287

Weighted average yield 1.59% — — — 1.59

Securities of U.S. states and political subdivisions

Amortized cost, net $ 18,624 132 491 704 17,297

Fair value 15,688 132 475 691 14,390

Weighted average yield 2.37% 2.40 1.66 2.84 2.37

Federal agency mortgage-backed securities

Amortized cost, net $ 209,170 — — — 209,170

Fair value 178,388 — — — 178,388

Weighted average yield 2.36% — — — 2.36

Non-agency mortgage-backed securities

Amortized cost, net $ 1,276 — 30 36 1,210

Fair value 1,174 — 34 35 1,105

Weighted average yield 3.27% — 4.62 4.34 3.21

Collateralized loan obligations

Amortized cost, net $ 28,122 — 5 15,199 12,918

Fair value 28,134 — 5 15,226 12,903

Weighted average yield 7.07% — 6.66 7.18 6.94

Other debt securities

Amortized cost, net $ 1,726 — 1,726 — —

Fair value 1,645 — 1,645 — —

Weighted average yield 4.47% — 4.47 — —

Total held-to-maturity debt securities

Amortized cost, net $ 262,708 132

2,252 15,939 244,385

Fair value 227,316 132 2,159 15,952 209,073

Weighted average yield 2.87% 2.40 3.87 6.99 2.59

(1) Weighted average yields displayed by maturity bucket are weighted based on amortized cost, excluding unamortized basis adjustments related to the transfer of certain debt securities from AFS to

HTM, and are shown pre-tax.

107Wells Fargo & Company

Note 4: Equity Securities

Table 4.1 provides a summary of our equity securities by business

purpose and accounting method.

Table 4.1: Equity Securities

(in millions)

Dec 31,

2023

Dec 31,

2022

Held for trading at fair value:

Marketable equity securities $ 9,509 17,180

Nonmarketable equity securities (1) 8,940 9,730

Total equity securities held for trading (2) 18,449 26,910

Not held for trading:

Fair value:

Marketable equity securities 1,355 1,436

Nonmarketable equity securities 37 37

Total equity securities not held for trading at fair value 1,392 1,473

Equity method:

Private equity 3,130 2,836

Tax-advantaged renewable energy (3) 6,840 6,535

New market tax credit and other 278 298

Total equity method 10,248 9,669

Other methods:

Low-income housing tax credit (LIHTC) investments (3) 12,898 12,186

Private equity (4) 9,073 9,276

Federal Reserve Bank stock and other at cost (5)

5,276 4,900

Total equity securities not held for trading 38,887 37,504

Total equity securities $ 57,336 64,414

(1) Represents securities economically hedged with equity derivatives.

(2) Represents securities held as part of our customer accommodation trading activities. For additional information on these activities, see Note 2 (Trading Activities).

(3) See Note 16 (Securitizations and Variable Interest Entities) for information about tax credit investments.

(4) Represents nonmarketable equity securities accounted for under the measurement alternative, which were predominantly securities associated with our venture capital investments.

(5) Includes $3.5 billion of investments in Federal Reserve Bank stock at both December31, 2023 and 2022 and $1.7 billion and $1.4 billion of investments in Federal Home Loan Bank stock at

December31, 2023 and 2022, respectively.

Net Gains and Losses Not Held for Trading

Table 4.2 provides a summary of the net gains and losses from

equity securities not held for trading, which excludes equity

method adjustments for our share of the investee’s earnings or

losses that are recognized in other noninterest income. Gains and

losses for securities held for trading are reported in net gains

from trading and securities.

Table 4.2: Net Gains (Losses) from Equity Securities Not Held for Trading

Year ended December 31,

(in millions) 2023 2022 2021

Net gains (losses) from equity securities carried at fair value:

Marketable equity securities $ 86 (225) (202)

Nonmarketable equity securities (2) (82) (188)

Total equity securities carried at fair value 84 (307) (390)

Net gains (losses) from nonmarketable equity securities not carried at fair value (1):

Impairment write-downs (1,307) (2,452) (121)

Net unrealized gains (2)(3) 578 1,101 4,862

Net realized gains from sale (3) 204 852 1,581

Total nonmarketable equity securities not carried at fair value (525) (499) 6,322

Net gains from economic hedge derivatives — — 495

Total net gains (losses) from equity securities not held for trading $ (441) (806) 6,427

(1) Includes amounts related to venture capital and private equity investments in consolidated portfolio companies, which are not reported in equity securities on our consolidated balance sheet.

(2) Includes unrealized gains (losses) due to observable price changes from equity securities accounted for under the measurement alternative.

(3) During the year ended December31, 2021, we recognized $442 million of gains (including $293 million of unrealized gains) related to the partial sale of a nonmarketable equity investment to an

unrelated third-party that resulted in the deconsolidation of a consolidated portfolio company. Our retained investment in nonmarketable equity securities of the formerly consolidated portfolio

company was remeasured to fair value.

Wells Fargo & Company 108

Measurement Alternative

Table 4.3 provides additional information about the impairment

write-downs and observable price changes from nonmarketable

equity securities accounted for under the measurement

alternative. Gains and losses related to these adjustments are

also included in Table 4.2.

Table 4.3: Net Gains (Losses) from Measurement Alternative Equity Securities

Year ended December 31,

(in millions) 2023 2022 2021

Net gains (losses) recognized in earnings during the period:

Gross unrealized gains from observable price changes $ 607 1,115 4,569

Gross unrealized losses from observable price changes (29) (14) —

Impairment write-downs (1,113) (2,263) (109)

Net realized gains from sale 42 98 456

Total net gains (losses) recognized during the period $ (493) (1,064) 4,916

Table 4.4 presents cumulative carrying value adjustments to

nonmarketable equity securities accounted for under the

measurement alternative that were still held at the end of each

reporting period presented.

Table 4.4: Measurement Alternative Cumulative Gains (Losses)

Year ended December 31,

(in millions) 2023 2022 2021

Cumulative gains (losses):

Gross unrealized gains from observable price changes $ 7,614 7,141 6,278

Gross unrealized losses from observable price changes (44) (14) (3)

Impairment write-downs (3,772) (2,896) (821)

Wells Fargo & Company 109

Note 5: Loans and Related Allowance for Credit Losses

Table 5.1 presents total loans outstanding by portfolio segment

and class of financing receivable. Outstanding balances include

unearned income, net deferred loan fees or costs, and

unamortized discounts and premiums. These amounts were less

than 1% of our total loans outstanding at both December31,

2023 and 2022.

Outstanding balances exclude accrued interest receivable on

loans, except for certain revolving loans, such as credit card loans.

See Note 7 (Intangible Assets and Other Assets) for additional

information on accrued interest receivable. Amounts considered

to be uncollectible are reversed through interest income. During

2023, we reversed accrued interest receivable of $39million for

our commercial portfolio segment and $275million for our

consumer portfolio segment, compared with $29 million and

$143 million, respectively, for 2022.

Table 5.1: Loans Outstanding

(in millions)

Dec 31,

2023

Dec 31,

2022

Commercial and industrial $ 380,388 386,806

Commercial real estate 150,616 155,802

Lease financing 16,423 14,908

Total commercial 547,427 557,516

Residential mortgage 260,724 269,117

Credit card 52,230 46,293

Auto 47,762 53,669

Other consumer (1) 28,539 29,276

Total consumer 389,255 398,355

Total loans $ 936,682 955,871

(1) Includes $18.3 billion and $19.4 billion at December31, 2023 and 2022, respectively, of securities-based loans originated by the Wealth and Investment Management (WIM) operating segment.

Our non-U.S. loans are reported by respective class of

financing receivable in the table above. Substantially all of our

non-U.S. loan portfolio is commercial loans. Table 5.2 presents

total non-U.S. commercial loans outstanding by class of financing

receivable.

Table 5.2: Non-U.S. Commercial Loans Outstanding

(in millions)

Dec 31,

2023

Dec 31,

2022

Commercial and industrial $ 72,215 78,981

Commercial real estate 6,916 7,619

Lease financing 697 670

Total non-U.S. commercial loans $ 79,828 87,270

Loan Concentrations

Loan concentrations may exist when there are amounts loaned to

borrowers engaged in similar activities or similar types of loans

extended to a diverse group of borrowers that would cause them

to be similarly impacted by economic or other conditions.

Commercial and industrial loans and lease financing to borrowers

in the financials except banks industry represented 16% and 15%

of total loans at December31, 2023 and 2022, respectively. At

December31, 2023 and 2022, we did not have concentrations

representing 10% or more of our total loan portfolio in the

commercial real estate (CRE) portfolios (real estate mortgage

and real estate construction) by state or property type.

Residential mortgage loans to borrowers in the state of

California represented 12% of total loans at both December31,

2023 and 2022. These California loans are generally diversified

among the larger metropolitan areas in California, with no single

area consisting of more than 4% of total loans at both

December31, 2023 and 2022. We continuously monitor changes

in real estate values and underlying economic or market

conditions for the geographic areas of our residential mortgage

portfolio as part of our credit risk management process.

Some of our residential mortgage loans include an interest-

only feature as part of the loan terms.These interest-only loans

were approximately 2% of total loans at both December31, 2023

and 2022. Substantially all of these interest-only loans at

origination were considered to be prime or near prime. We do not

offer option adjustable-rate mortgage (ARM) products, nor do

we offer variable-rate mortgage products with fixed payment

amounts, commonly referred to within the financial services

industry as negative amortizing mortgage loans.

110 Wells Fargo & Company

Loan Purchases, Sales, and Transfers

Table 5.3 presents the proceeds paid or received for purchases

and sales of loans and transfers from loans held for investment

to mortgages/loans held for sale. The table excludes loans for

which we have elected the fair value option and government

insured/guaranteed residential mortgage – first lien loans

because their loan activity normally does not impact the ACL.

Table 5.3: Loan Purchases, Sales, and Transfers

Year ended December 31,

2023 2022

(in millions) Commercial Consumer Total Commercial Consumer Total

Purchases $ 1,340 306 1,646 740 5 745

Sales and net transfers (to)/from LHFS (3,313) (917) (4,230) (3,182) (1,135) (4,317)

Unfunded Credit Commitments

Unfunded credit commitments are legally binding agreements to

lend to customers with terms covering usage of funds,

contractual interest rates, expiration dates, and any required

collateral. Our commercial lending commitments include, but are

not limited to, (i) commitments for working capital and general

corporate purposes, (ii) financing to customers who warehouse

financial assets secured by real estate, consumer, or corporate

loans, (iii) financing that is expected to be syndicated or replaced

with other forms of long-term financing, and (iv) commercial real

estate lending. We also originate multipurpose lending

commitments under which commercial customers have the

option to draw on the facility in one of several forms, including

the issuance of letters of credit, which reduces the unfunded

commitment amounts of the facility.

The maximum credit risk for these commitments will

generally be lower than the contractual amount because these

commitments may expire without being used or may be

cancelled at the customer’s request. We may reduce or cancel

lines of credit in accordance with the contracts and applicable

law. Our credit risk monitoring activities include managing the

amount of commitments, both to individual customers and in

total, and the size and maturity structure of these commitments.

We do not recognize an ACL for commitments that are

unconditionally cancellable at our discretion.

We issue commercial letters of credit to assist customers in

purchasing goods or services, typically for international trade. At

December31, 2023 and 2022, we had $1.1billion and

$1.8billion, respectively, of outstanding issued commercial

letters of credit. See Note 17 (Guarantees and Other

Commitments) for additional information on issued standby

letters of credit.

We may be a fronting bank, whereby we act as a

representative for other lenders, and advance funds or provide

for the issuance of letters of credit under syndicated loan or

letter of credit agreements. Any advances are generally repaid in

less than a week and would normally require default of both the

customer and another lender to expose us to loss.

The contractual amount of our unfunded credit

commitments, including unissued letters of credit, is summarized

in Table 5.4. The table is presented net of commitments

syndicated to others, including the fronting arrangements

described above, and excludes issued letters of credit and

discretionary amounts where our approval or consent is required

prior to any loan funding or commitment increase.

Table 5.4: Unfunded Credit Commitments

(in millions)

Dec 31,

2023

Dec 31,

2022

Commercial and industrial (1) $ 388,043 388,504

Commercial real estate 20,851 29,518

Total commercial 408,894 418,022

Residential mortgage (2) 29,754 39,155

Credit card 156,012 145,526

Other consumer (3) 8,847 69,244

Total consumer 194,613 253,925

Total unfunded credit commitments $ 603,507 671,947

(1) Effective first quarter 2023, unfunded credit commitments exclude discretionary amounts

where our approval or consent is required prior to any loan funding or commitment

increase. Prior period balances have been revised to conform with the current period

presentation.

(2)

Includes lines of credit totaling $28.6billion and $35.5billion as of December31, 2023 and

2022, respectively.

(3) In fourth quarter 2023, we updated certain securities-based line of credit agreements to be

discretionary, which requires our approval prior to lending. Accordingly, we removed the

associated unfunded credit commitments.

Wells Fargo & Company 111

Allowance for Credit Losses

Table 5.5 presents the allowance for credit losses (ACL) for loans,

which consists of the allowance for loan losses and the allowance

for unfunded credit commitments. The ACL for loans increased

$1.5billion from December31, 2022, reflecting increases for

commercial real estate loans, primarily office loans, as well as for

increases in credit card loan balances, partially offset by a

decrease for residential mortgage loans related to the adoption

of ASU 2022-02.

Table 5.5: Allowance for Credit Losses for Loans

Year ended December 31,

($ in millions) 2023 2022

Balance, beginning of period $ 13,609 13,788

Cumulative effect from change in accounting policy (1) (429) —

Balance, beginning of period, adjusted 13,180 13,788

Provision for credit losses 5,385 1,544

Interest income on certain loans (2) — (108)

Loan charge-offs:

Commercial and industrial (510) (307)

Commercial real estate (593) (21)

Lease financing (31) (27)

Total commercial (1,134) (355)

Residential mortgage (136) (175)

Credit card (2,009) (1,195)

Auto (832) (734)

Other consumer (485) (407)

Total consumer (3,462) (2,511)

Total loan charge-offs (4,596) (2,866)

Loan recoveries:

Commercial and industrial 165 224

Commercial real estate 27 32

Lease financing 19 20

Total commercial 211 276

Residential mortgage 160 238

Credit card 329 344

Auto 354 312

Other consumer 72 88

Total consumer 915 982

Total loan recoveries 1,126 1,258

Net loan charge-offs (3,470) (1,608)

Other (7) (7)

Balance, end of period $ 15,088 13,609

Components:

Allowance for loan losses $ 14,606 12,985

Allowance for unfunded credit commitments 482 624

Allowance for credit losses $ 15,088 13,609

Net loan charge-offs as a percentage of average total loans 0.37% 0.17

Allowance for loan losses as a percentage of total loans 1.56 1.36

Allowance for credit losses for loans as a percentage of total loans 1.61 1.42

(1) Represents the change in our allowance for credit losses for loans as a result of our adoption of ASU 2022–02. For additional information, see Note 1 (Summary of Significant Accounting Policies).

(2) Prior to the adoption of ASU 2022–02, loans with an allowance measured by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognized

changes in allowance attributable to the passage of time as interest income.

Note 5: Loans and Related Allowance for Credit Losses (continued)

112 Wells Fargo & Company

Table 5.6 summarizes the activity in the ACL by our

commercial and consumer portfolio segments.

Table 5.6: Allowance for Credit Losses for Loans Activity by Portfolio Segment

Year ended December 31,

2023 2022

(in millions) Commercial Consumer Total Commercial Consumer Total

Balance, beginning of period $ 6,956 6,653 13,609 7,791 5,997 13,788

Cumulative effect from change in accounting policy (1) 27 (456) (429) — — —

Balance, beginning of period, adjusted 6,983 6,197 13,180 7,791 5,997 13,788

Provision for credit losses 2,365 3,020 5,385 (721) 2,265 1,544

Interest income on certain loans (2) — — — (29) (79) (108)

Loan charge-offs (1,134) (3,462) (4,596) (355) (2,511) (2,866)

Loan recoveries 211 915 1,126 276 982 1,258

Net loan charge-offs (923) (2,547) (3,470) (79) (1,529) (1,608)

Other (13) 6 (7) (6) (1) (7)

Balance, end of period $ 8,412 6,676 15,088 6,956 6,653 13,609

changes in allowance attributable to the passage of time as interest income.

Credit Quality

We monitor credit quality by evaluating various attributes and

utilize such information in our evaluation of the appropriateness

of the ACL for loans. The following sections provide the credit

quality indicators we most closely monitor. The credit quality

indicators are generally based on information as of our financial

statement date.

COMMERCIAL CREDIT QUALITY INDICATORS We manage a

consistent process for assessing commercial loan credit quality.

Commercial loans are generally subject to individual risk

assessment using our internal borrower and collateral quality

ratings, which is our primary credit quality indicator. Our ratings

are aligned to regulatory definitions of pass and criticized

categories with the criticized segmented among special mention,

substandard, doubtful, and loss categories.

Table 5.7 provides the outstanding balances of our

commercial loan portfolio by risk category and credit quality

information by origination year for term loans. Revolving loans

may convert to term loans as a result of a contractual provision in

the original loan agreement or if modified for a borrower

experiencing financial difficulty. At December31, 2023, we had

$514.5billion and $33.0 billion of pass and criticized commercial

loans, respectively. Gross charge-offs by loan class are included in

the following table for the year ended December 31, 2023, which

we monitor as part of our credit risk management practices;

however, charge-offs are not a primary credit quality indicator

for our loan portfolio.

Wells Fargo & Company 113

Table 5.7: Commercial Loan Categories by Risk Categories and Vintage

Term loans by origination year

(in millions) 2023 2022 2021 2020 2019 Prior

Revolving

loans

Revolving

loans

converted to

term loans Total

December 31, 2023

Commercial and industrial

Pass $ 40,966 38,756 21,702 7,252 10,024 8,342 239,456 348 366,846

Criticized 892 1,594 1,237 160 204 480 8,975 — 13,542

Total commercial and industrial 41,858 40,350 22,939 7,412 10,228 8,822 248,431 348 380,388

Gross charge-offs (1) 102 22 53 11 8 7 307 — 510

Commercial real estate

Pass 18,181 33,557 30,629 12,001 11,532 19,686 6,537 163 132,286

Criticized 2,572 4,091 4,597 1,822 2,748 2,141 359 — 18,330

Total commercial real estate 20,753 37,648 35,226 13,823 14,280 21,827 6,896 163 150,616

Gross charge-offs 20 107 32 134 197 103 — — 593

Lease financing

Pass 5,593 3,846 2,400 1,182 798 1,518 — — 15,337

Criticized 345 292 182 98 84 85 — — 1,086

Total lease financing 5,938 4,138 2,582 1,280 882 1,603 — — 16,423

Gross charge-offs 3 8 8 5 4 3 — — 31

Total commercial loans $ 68,549 82,136 60,747 22,515 25,390 32,252 255,327 511 547,427

Term loans by origination year

2022 2021 2020 2019 2018 Prior

Revolving

loans

Revolving

loans

converted to

term loans Total

December 31, 2022

Commercial and industrial

Pass $ 61,646 31,376 11,128 13,656 3,285 5,739 247,594 842 375,266

Criticized 872 1,244 478 505 665 532 7,244 — 11,540

Total commercial and industrial 62,518 32,620 11,606 14,161 3,950 6,271 254,838 842 386,806

Commercial real estate

Pass 38,022 38,709 16,564 16,409 10,587 16,159 6,765 150 143,365

Criticized 2,785 2,794 965 2,958 1,088 1,688 159 — 12,437

Total commercial real estate 40,807 41,503 17,529 19,367 11,675 17,847 6,924 150 155,802

Lease financing

Pass 4,543 3,336 1,990 1,427 765 1,752 — — 13,813

Criticized 330 275 190 169 94 37 — — 1,095

Total lease financing 4,873 3,611 2,180 1,596 859 1,789 — — 14,908

Total commercial loans $ 108,198 77,734 31,315 35,124 16,484 25,907 261,762 992 557,516

(1) Includes charge-offs on overdrafts, which are generally charged-off at 60 days past due.

Note 5: Loans and Related Allowance for Credit Losses (continued)

114 Wells Fargo & Company

Table 5.8 provides days past due (DPD) information for

commercial loans, which we monitor as part of our credit risk

management practices; however, delinquency is not a primary

credit quality indicator for commercial loans.

Table 5.8: Commercial Loan Categories by Delinquency Status

Still accruing

(in millions) Current-29 DPD 30-89 DPD 90+ DPD Nonaccrual loans

Total

commercial loans

December 31, 2023

Commercial and industrial $ 379,099 584 43 662 380,388

Commercial real estate 145,721 562 145 4,188 150,616

Lease financing 16,177 182 — 64 16,423

Total commercial loans $ 540,997 1,328 188 4,914 547,427

December 31, 2022

Commercial and industrial $ 384,164 1,313 583 746 386,806

Commercial real estate 153,877 833 134 958 155,802

Lease financing 14,623 166 — 119 14,908

Total commercial loans $ 552,664 2,312 717 1,823 557,516

CONSUMER CREDIT QUALITY INDICATORS We have various classes

of consumer loans that present unique credit risks. Loan

delinquency, Fair Isaac Corporation (FICO) credit scores and loan-

to-value (LTV) for residential mortgage loans are the primary

credit quality indicators that we monitor and utilize in our

evaluation of the appropriateness of the ACL for the consumer

loan portfolio segment.

Many of our loss estimation techniques used for the ACL for

loans rely on delinquency-based models; therefore, delinquency

is an important indicator of credit quality in the establishment of

our ACL for consumer loans.

We obtain FICO scores at loan origination and the scores are

generally updated at least quarterly, except in limited

circumstances, including compliance with the Fair Credit

Reporting Act (FCRA). FICO scores are not available for certain

loan types or may not be required if we deem it unnecessary due

to strong collateral and other borrower attributes.

LTV is the ratio of the outstanding loan balance divided by

the property collateral value. For junior lien mortgages, we use

the total combined loan balance of first and junior lien mortgages

(including unused line of credit amounts). We obtain LTVs using a

cascade approach which first uses values provided by automated

valuation models (AVMs) for the property. If an AVM is not

available, then the value is estimated using the original appraised

value adjusted by the change in Home Price Index (HPI) for the

property location. If an HPI is not available, the original appraised

value is used. The HPI value is normally the only method

considered for high value properties, generally with an original

value of $1.5 million or more as of December31, 2023, and

$1.0million or more as of December 31, 2022, as the AVM values

have proven less accurate for these properties. Generally, we

update LTVs on a quarterly basis. Certain loans do not have an

LTV due to a lack of industry data availability and portfolios

acquired from or serviced by other institutions.

Gross charge-offs by loan class are included in the following

table for the year ended December31, 2023, which we monitor

as part of our credit risk management practices; however,

charge-offs are not a primary credit quality indicator for our loan

portfolio.

Credit quality information is provided with the year of

origination for term loans. Revolving loans may convert to term

loans as a result of a contractual provision in the original loan

agreement or if modified for a borrower experiencing financial

difficulty.

Table 5.9 provides the outstanding balances of our

residential mortgage loans by our primary credit quality

indicators.

Wells Fargo & Company 115

Table 5.9: Credit Quality Indicators for Residential Mortgage Loans by Vintage

Term loans by origination year

(in millions) 2023 2022 2021 2020 2019 Prior

Revolving

loans

Revolving

loans

converted

to term

loans Total

December 31, 2023

By delinquency status:

Current-29 DPD $ 13,192 46,065 62,529 35,124 19,364 60,391 8,044 6,735 251,444

30-89 DPD 6 70 58 28 30 724 41 151 1,108

90+ DPD — 18 12 8 14 327 24 201 604

Government insured/guaranteed loans (1) 5 15 39 97 112 7,300 — — 7,568

Total residential mortgage $ 13,203 46,168 62,638 35,257 19,520 68,742 8,109 7,087 260,724

By updated FICO:

740+ $ 12,243 42,550 58,827 33,232 18,000 50,938 6,291 4,092 226,173

700-739 679 2,324 2,510 1,219 888 4,478 883 979 13,960

660-699 185 843 861 422 310 2,261 417 601 5,900

620-659 45 227 179 110 66 978 150 322 2,077

<620 11 122 100 64 46 1,245 174 464 2,226

No FICO available 35 87 122 113 98 1,542 194 629 2,820

Government insured/guaranteed loans (1)

5 15 39 97 112 7,300 — — 7,568

Total residential mortgage $ 13,203 46,168 62,638 35,257 19,520 68,742 8,109 7,087 260,724

By updated LTV:

0-80% $ 12,434 39,624 61,421 34,833 19,123 61,043 7,903 6,923 243,304

80.01-100% 687 6,286 1,065 232 203 207 103 114 8,897

>100% (2) 51 193 57 33 31 38 21 24 448

No LTV available 26 50 56 62 51 154 82 26 507

Government insured/guaranteed loans (1)

5 15 39 97 112 7,300 — — 7,568

Total residential mortgage $ 13,203 46,168 62,638 35,257 19,520 68,742 8,109 7,087 260,724

Gross charge-offs $ — 1 — — 2 63 4 66 136

Term loans by origination year

(in millions) 2022 2021 2020 2019 2018 Prior

Revolving

loans

Revolving

loans

converted

to term

loans Total

December 31, 2022

By delinquency status:

Current-29 DPD $ 48,581 65,705 37,289 20,851 6,190 61,680 11,031 6,913 258,240

30-89 DPD 65 66 32 33 21 683 58 159 1,117

90+ DPD 6 17 15 25 15 530 32 260 900

Government insured/guaranteed loans (1) 9 59 133 148 200 8,311 — — 8,860

Total residential mortgage $ 48,661 65,847 37,469 21,057 6,426 71,204 11,121 7,332 269,117

By updated FICO:

740+ $ 43,976 61,450 35,221 19,437 5,610 51,551 8,664 4,139 230,048

700-739 3,245 2,999 1,419 941 314 4,740 1,159 1,021 15,838

660-699 1,060 851 438 306 169 2,388 567 656 6,435

620-659 211 248 106 82 50 1,225 223 349 2,494

<620 59 81 44 46 28 1,323 227 466 2,274

No FICO available 101 159 108 97 55 1,666 281 701 3,168

Government insured/guaranteed loans (1) 9 59 133 148 200 8,311 — — 8,860

Total residential mortgage $ 48,661 65,847 37,469 21,057 6,426 71,204 11,121 7,332 269,117

By updated LTV:

0-80% $ 40,869 64,613 37,145 20,744 6,155 62,593 10,923 7,188 250,230

80.01-100% 7,670 1,058 112 97 30 107 109 97 9,280

>100% (2) 48 20 13 6 3 23 28 16 157

No LTV available 65 97 66 62 38 170 61 31 590

Government insured/guaranteed loans (1) 9 59 133 148 200 8,311 — — 8,860

Total residential mortgage $ 48,661 65,847 37,469 21,057 6,426 71,204 11,121 7,332 269,117

(1) Government insured or guaranteed loans represent loans whose repayments are predominantly insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans

Affairs (VA). Loans insured/guaranteed by the FHA/VA and 90+ DPD totaled $2.6 billion and $3.2 billion at December31, 2023 and 2022, respectively.

(2) Reflects total loan balances with LTV amounts in excess of 100%. In the event of default, the loss content would generally be limited to only the amount in excess of 100% LTV.

Note 5: Loans and Related Allowance for Credit Losses (continued)

116 Wells Fargo & Company

Table 5.10 provides the outstanding balances of our credit

card loan portfolio by primary credit quality indicators.

The revolving loans converted to term loans in the credit

card loan category represent credit card loans with modified

terms that require payment over a specific term.

For the year ended December 31, 2023, we had gross

charge-offs in the credit card portfolio of $1.9 billion for

revolving loans and $100million for revolving loans converted to

term loans.

Table 5.10: Credit Quality Indicators for Credit Card Loans

December 31, 2023 December 31, 2022

(in millions) Revolving loans

Revolving loans

converted to

term loans Total Revolving loans

Revolving loans

converted to

term loans Total

By delinquency status:

Current-29 DPD $ 50,428 350 50,778 45,131 223 45,354

30-89 DPD 660 49 709 457 27 484

90+ DPD 717 26 743 441 14 455

Total credit cards $ 51,805 425 52,230 46,029 264 46,293

By updated FICO:

740+ $ 19,153 21 19,174 16,681 19 16,700

700-739 11,727 51 11,778 10,640 37 10,677

660-699 10,592 84 10,676 9,573 55 9,628

620-659 5,273 76 5,349 4,885 45 4,930

<620 4,861 192 5,053 4,071 107 4,178

No FICO available 199 1 200 179 1 180

Total credit cards $ 51,805 425 52,230 46,029 264 46,293

Wells Fargo & Company 117

Table 5.11 provides the outstanding balances of our Auto

loan portfolio by primary credit quality indicators.

Table 5.11: Credit Quality Indicators for Auto Loans by Vintage

Term loans by origination year

(in millions) 2023 2022 2021 2020 2019 Prior Total

December 31, 2023

By delinquency status:

Current-29 DPD $ 14,022 13,052 12,376 4,335 2,161 448 46,394

30-89 DPD 43 328 545 195 106 40 1,257

90+ DPD 4 34 49 14 7 3 111

Total auto $ 14,069 13,414 12,970 4,544 2,274 491 47,762

By updated FICO:

740+ $ 9,460 6,637 5,487 1,853 963 176 24,576

700-739 2,232 1,969 1,861 701 347 68 7,178

660-699 1,405 1,745 1,729 623 295 61 5,858

620-659 572 1,162 1,228 425 195 46 3,628

<620 388 1,876 2,621 915 452 130 6,382

No FICO available 12 25 44 27 22 10 140

Total auto $ 14,069 13,414 12,970 4,544 2,274 491 47,762

Gross charge-offs $ 15 265 392 99 52 9 832

Term loans by origination year

(in millions) 2022 2021 2020 2019 2018 Prior Total

December 31, 2022

By delinquency status:

Current-29 DPD $ 19,101 19,126 7,507 4,610 1,445 421 52,210

30-89 DPD 218 585 253 167 69 45

1,337

90+ DPD 23 56 22 13 4 4 122

Total auto $ 19,342 19,767 7,782 4,790 1,518 470 53,669

By updated FICO:

740+ $ 9,361 8,233 3,193 2,146 664 166 23,763

700-739 3,090 3,033 1,287 788 238 64 8,500

660-699 2,789 2,926 1,163 641 192 58 7,769

620-659 2,021 2,156 796 421 130 47 5,571

<620 2,062 3,389 1,316 756 263 126 7,912

No FICO available 19 30 27 38 31 9 154

Total auto $ 19,342 19,767 7,782 4,790 1,518 470 53,669

Note 5: Loans and Related Allowance for Credit Losses (continued)

118 Wells Fargo & Company

Table 5.12 provides the outstanding balances of our Other

consumer loans portfolio by primary credit quality indicators.

Table 5.12: Credit Quality Indicators for Other Consumer Loans by Vintage

Term loans by origination year

(in millions) 2023 2022 2021 2020 2019 Prior

Revolving

loans

Revolving

loans

converted to

term loans Total

December 31, 2023

By delinquency status:

Current-29 DPD $ 3,273 2,132 571 167 93 61 21,988 106 28,391

30-89 DPD 24 32 9 1 1 2 17 6 92

90+ DPD 9 14 3 1 — 1 15 13 56

Total other consumer $ 3,306 2,178 583 169 94 64 22,020 125 28,539

By updated FICO:

740+ $ 1,911 926 265 85 36 28 1,152 27 4,430

700-739 642 409 107 27 14 10 507 16 1,732

660-699 403 365 93 16 11 8 395 16 1,307

620-659 129 166 45 6 6 5 147 11 515

<620 75 152 49 8 8 6 152 17 467

No FICO available (1) 146 160 24 27 19 7 19,667 38 20,088

Total other consumer $ 3,306 2,178 583 169 94 64 22,020 125 28,539

Gross charge-offs (2) $ 178 158 52 9 9 6 62

11 485

Term loans by origination year

(in millions) 2022 2021 2020 2019 2018 Prior

Revolving

loans

Revolving

loans

converted to

term loans Total

December 31, 2022

By delinquency status:

Current-29 DPD $ 3,718 1,184 341 240 63 83 23,431 117 29,177

30-89 DPD 17 12 2 3 1 2 14 8 59

90+ DPD 5 5 1 1 — 1 13 14 40

Total other consumer $ 3,740 1,201 344 244 64 86 23,458 139 29,276

By updated FICO:

740+ $ 1,908 546 174 112 21 50 1,660 43 4,514

700-739 726 216 62 44 10 13 568 18 1,657

660-699 527 177 34 33 9 8 449 19 1,256

620-659 204 81 13 14 4 5 181 11 513

<620 89 64 14 16 5 5 154 18 365

No FICO available (1) 286 117 47 25 15 5 20,446 30 20,971

Total other consumer $ 3,740 1,201 344 244 64 86 23,458 139 29,276

(1) Substantially all loans do not require a FICO score and are revolving securities-based loans originated by the WIM operating segment.

(2) Includes charge-offs on overdrafts, which are generally charged-off at 60 days past due.

Wells Fargo & Company 119

NONACCRUAL LOANS Table 5.13 provides loans on nonaccrual

status. Nonaccrual loans may have an ACL or a negative

allowance for credit losses from expected recoveries of amounts

previously written off.

Table 5.13: Nonaccrual Loans

Amortized cost Recognized interest income

Nonaccrual loans

Nonaccrual loans without related

allowance for credit losses (1) Year ended December 31,

(in millions)

Dec 31,

2023

Dec 31,

2022

Dec 31,

2023

Dec 31,

2022 2023 2022

Commercial and industrial $ 662 746 149 174 17 63

Commercial real estate 4,188 958 107 134 29 54

Lease financing 64 119 10 5 — —

Total commercial 4,914 1,823 266 313 46 117

Residential mortgage 3,192 3,611 2,047 2,316 192 211

Auto 115 153 — — 18 26

Other consumer 35 39 — — 4 4

Total consumer 3,342 3,803 2,047 2,316 214 241

Total nonaccrual loans $ 8,256 5,626 2,313 2,629 260 358

(1) Nonaccrual loans may not have an allowance for credit losses if the loss expectations are zero given the related collateral value.

LOANS IN PROCESS OF FORECLOSURE Our recorded investment in

consumer mortgage loans collateralized by residential real estate

property that are in process of foreclosure was $837 million and

$1.0 billion at December31, 2023 and 2022, respectively, which

included $660 million and $771 million, respectively, of loans

that are government insured/guaranteed. Under the Consumer

Financial Protection Bureau guidelines, we do not commence the

foreclosure process on residential mortgage loans until after the

loan is 120 days delinquent. Foreclosure procedures and

timelines vary depending on whether the property address

resides in a judicial or non-judicial state. Judicial states require

the foreclosure to be processed through the state’s courts while

non-judicial states are processed without court intervention.

Foreclosure timelines vary according to state law.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING Certain

loans 90 days or more past due are still accruing, because they

are (1) well-secured and in the process of collection or (2)

residential mortgage or consumer loans exempt under regulatory

rules from being classified as nonaccrual until later delinquency,

usually 120 days past due.

Table 5.14 shows loans 90 days or more past due and still

accruing by class for loans not government insured/guaranteed.

Table 5.14: Loans 90 Days or More Past Due and Still Accruing

(in millions)

Dec 31,

2023

Dec 31,

2022

Total: $ 3,751 4,340

Less:FHA insured/VA guaranteed (1) 2,646 3,005

Total, not government insured/guaranteed $ 1,105 1,335

By segment and class, not government insured/

guaranteed:

Commercial and industrial $ 43 583

Commercial real estate 145 134

Total commercial 188 717

Residential mortgage 31 28

Credit card 743 455

Auto 101 111

Other consumer 42 24

Total consumer 917 618

Total, not government insured/guaranteed $ 1,105 1,335

(1) Represents loans whose repayments are predominantly insured by the FHA or guaranteed

by the VA.

Note 5: Loans and Related Allowance for Credit Losses (continued)

120 Wells Fargo & Company

LOAN MODIFICATIONS TO BORROWERS EXPERIENCING FINANCIAL

DIFFICULTY

 We may agree to modify the contractual terms of a

loan to a borrower experiencing financial difficulty.

Our commercial loan modifications may include principal

forgiveness, interest rate reductions, payment delays, term

extensions, or a combination of these modifications. Commercial

loan term extensions have terms that vary based on the

borrower’s request and are evaluated by our credit teams on an

individual basis.

Our consumer loan modifications vary based upon the loan

product and the modification program offered to the borrower,

and may include interest rate reductions, payment delays, term

extensions, principal forbearance or forgiveness, or a

combination of these modifications. Generally, our consumer

loan modification programs modify the loan terms to achieve

payment terms that are more affordable to the borrower and, as

a result, increase the likelihood of full repayment of principal and

interest.

Our residential mortgage loan modification programs may

offer a short-term payment deferral based upon the borrower’s

demonstrated hardship, up to 12 months. If additional assistance

is needed after 12 months, the borrower may request another

loan modification. Modifications may also include a trial payment

period of three months to determine if the borrower can perform

in accordance with the proposed permanent loan modification

terms. Loans in a trial payment period continue to advance

through delinquency status and accrue interest according to their

original terms. Loans in a trial payment period are excluded from

our loan modification disclosures until the borrower has

successfully completed the trial period and the loan modification

is formally executed. Residential mortgage loans in a trial

payment period totaled $109million at December31, 2023.

Credit card loan modifications result in a reduction in the

credit card interest rate and may be offered on a short-term or

long-term basis. A short-term interest rate reduction program

reduces the borrower’s interest rate for 12 months. A long-term

interest rate reduction program provides a reduction of the

interest rate over a fixed five-year term. During the modification

period, the borrower’s revolving charge privileges are revoked.

Auto loan modifications generally include insignificant (e.g.,

three months or less) payment deferrals over the loan term.

The following disclosures provide information on loan

modifications granted to borrowers experiencing financial

difficulty in the form of principal forgiveness, interest rate

reductions, other-than-insignificant (e.g., greater than three

months) payment delays, term extensions or a combination of

these modifications, as well as the financial effects of these

modifications, and loan performance in the twelve months

following the modification. Loans that both modify and are paid

off or charged-off during the period, resulting in an amortized

cost balance of zero at the end of the period, are not included in

the disclosures below. Additionally, where amortized cost

balances are presented below, accrued interest receivable is

excluded. See Note 7 (Intangible Assets and Other Assets) for

additional information on accrued interest receivable. Borrowers

experiencing financial difficulty with modified terms mandated

by a bankruptcy court are considered contractually modified

loans and are included in these disclosures. These disclosures do

not include loans discharged by a bankruptcy court as the only

concession, which were insignificant for the year ended

December 31, 2023.

Table 5.15 presents the amortized cost of modified

commercial loans by class of financing receivable and by

modification type.

Table 5.15: Commercial Loan Modifications

Modification type (1)

($ in millions)

Interest

rate

reduction

Payment

delay

Term

extension

Term

extension &

payment

delay

All other

modifications

and

combinations Total

Modifications

as a % of

loan class

Year ended December 31, 2023

Commercial and industrial $ 18 25 286 100 1 430 0.11%

Commercial real estate 7 1 458 — 1 467 0.31

Total commercial $ 25 26 744 100 2 897 0.17

(1) There were no principal forgiveness modifications for the year ended December31, 2023.

Table 5.15a presents the financial effects of modifications

made to commercial loans presented by class of financing

receivable.

Table 5.15a: Financial Effects of Commercial Loan Modifications

Weighted average interest

rate reduction

Weighted average

payments deferred

(months)

Weighted average term

extension (months)

Year ended December 31, 2023

Commercial and industrial 15.17% 11 15

Commercial real estate 3.50 6 24

Wells Fargo & Company 121

Commercial loans that received a modification during the

year ended December 31, 2023, and subsequently defaulted

were insignificant. Defaults that occur on commercial

modifications are reported based on a payment default definition

of 90 days past due.

Table 5.15b provides past due information for modified

commercial loans. For loan modifications that include a payment

deferral, payment performance is not included in the table below

until the loan exits the deferral period and payments resume. The

table also includes the amount of gross charge-offs that

occurred during the year ended December 31, 2023, inclusive of

charge-offs to loans with no amortized cost remaining at period

end.

Table 5.15b: Payment Performance of Commercial Loan Modifications

By delinquency status Gross charge-offs

(in millions)

Current-29 days

past due (DPD) 30-89 DPD 90+ DPD Total Year ended

December 31, 2023

Commercial and industrial $ 308 8 8 324 45

Commercial real estate 380 87 — 467 2

Total commercial $ 688 95 8 791 47

Table 5.16 presents the amortized cost of modified

consumer loans by class of financing receivable and by

modification type.

Table 5.16: Consumer Loan Modifications

Modification type

($ in millions)

Interest

rate

reduction

Payment

delay (1)

Term

extension

Interest

rate

reduction

& term

extension

Term

extension

& payment

delay

Interest rate

reduction,

term

extension &

payment

delay

All other

modifications

and

combinations

(2)

Total

Modifications

as a % of loan

class

Year ended December 31, 2023

Residential mortgage $ 10 472 67 40 88 80 7 764 0.29%

Credit card 459 — — — — — — 459 0.88

Auto 4 20 — — — — — 24 0.05

Other consumer 11 2 — 31 — — — 44 0.15

Total consumer $ 484 494 67 71 88 80 7 1,291 0.33

(1) Includes residential mortgage loan modifications that defer a set amount of principal to the end of the loan term.

(2) Includes principal forgiveness and other combinations of modifications.

Table 5.16a presents the financial effects of modifications

made to consumer loans by class of financing receivable.

Table 5.16a: Financial Effects of Consumer Loan Modifications (1)

Weighted average interest

rate reduction

Weighted average payments

deferred (months)

Weighted average term

extension (years)

Year ended December 31, 2023

Residential mortgage (2) 1.65% 5 9.8

Credit card 21.63 N/A N/A

Auto 4.09 6 N/A

Other consumer 11.09 4 2.1

(1) Principal forgiven was insignificant for the year ended December 31, 2023.

(2) Excludes the financial effects of residential mortgage loans with a set amount of principal deferred to the end of the loan term. The weighted average period of principal deferred was 25.4 years for

the year ended December31, 2023.

Note 5: Loans and Related Allowance for Credit Losses (continued)

122 Wells Fargo & Company

Consumer loans that received a modification during the year

ended December 31, 2023, and subsequently defaulted during

the period totaled $280 million, and primarily related to payment

delay modifications in the residential mortgage loan portfolio.

Defaults that occur on consumer modifications are reported

based on a payment default definition of 60 days past due.

Table 5.16b provides past due information for modified

consumer loans. For loan modifications that include a payment

delay, payment performance is not included in the table below

until the loan exits the deferral period and payments resume. The

table also includes the amount of gross charge-offs that

occurred during the year ended December 31, 2023, inclusive of

charge-offs to loans with no amortized cost remaining at period

end.

Table 5.16b: Payment Performance of Consumer Loan Modifications

By delinquency status Gross charge-offs

(in millions)

Current-29 days

past due (DPD) 30-89 DPD 90+ DPD Total Year ended

December 31, 2023

Residential mortgage (1) $ 460 120 180 760 9

Credit card (2) 344 68 47 459 82

Auto 19 4 1 24 3

Other consumer 37 5 2 44 4

Total $ 860 197 230 1,287 98

(1) Includes loans that were past due prior to entering a payment delay modification. Delinquency advancement is paused during the deferral period and resumes upon exit.

(2) Credit card loans that are past due at the time of the modification do not become current until they have three months of consecutive payment performance.

Commitments to lend additional funds on commercial loans

modified during the year ended December 31, 2023, were

$233million, substantially all of which were in the commercial

and industrial portfolio. Commitments to lend additional funds

on consumer loans modified during the year ended December 31,

2023, were insignificant.

TROUBLED DEBT RESTRUCTURINGS (TDRs) In January 2023, we

adopted ASU 2022-02, which eliminated the accounting and

reporting guidance for TDRs. For additional information, see

Note 1 (Summary of Significant Accounting Policies). The

following disclosures present TDR information for the periods

ended December31, 2022, and December31, 2021, where

applicable. When, for economic or legal reasons related to a

borrower’s financial difficulties, we grant a concession for other

than an insignificant period of time to a borrower that we would

not otherwise consider, the related loan is classified as a TDR, the

balance of which totaled $9.2 billion at December31, 2022.We

do not consider loan resolutions such as foreclosure or short sale

to be a TDR.

We may require some consumer borrowers experiencing

financial difficulty to make trial payments, generally for a period

of three to four months according to the terms of a planned

permanent modification, to determine if they can perform

according to those terms. These arrangements represent trial

modifications, which we classified and accounted for as TDRs

through December31, 2022, prior to the adoption of ASU

2022-02. While loans are in trial payment programs, their original

terms are not considered modified and they continue to advance

through delinquency status and accrue interest according to their

original terms.

Commitments to lend additional funds on loans whose

terms have been modified in a TDR amounted to $434million at

December31, 2022.

Table 5.17 summarizes our TDR modifications by primary

modification type and includes the financial effects of these

modifications. For those loans that modify more than once, the

table reflects each modification that occurred during the period.

Loans that both modify and are paid off or written-off within the

period, as well as changes in recorded investment during the

period for loans modified in prior periods, are not included in the

table.

Wells Fargo & Company 123

Table 5.17: TDR Modifications

Primary modification type (1) Financial effects of modifications

($ in millions)

Principal

forgiveness

Interest

rate

reduction

Other

concessions (2) Total

Charge-

offs (3)

Weighted

average

interest

rate

reduction

Recorded

investment

related to

interest rate

reduction (4)

Year ended December 31, 2022

Commercial and industrial $ 24 24 349 397 — 10.69% $ 24

Commercial real estate — 12 112 124 — 0.92 12

Lease financing — — 2 2 — — —

Total commercial 24 36 463 523 — 7.51 36

Residential mortgage 1 369 1,357 1,727 6 1.61 369

Credit card — 311 — 311 — 20.33 311

Auto 2 7 63 72 16 4.33 7

Other consumer — 19 3 22 1 11.48 19

Trial modifications (5) — — 228 228 — — —

Total consumer 3 706 1,651 2,360 23 10.14 706

Total $ 27 742 2,114 2,883 23 10.02% $ 742

Year ended December 31, 2021

Commercial and industrial $ 2 9 879 890 20 0.81% $ 9

Commercial real estate 41 15 259 315 — 1.28 14

Lease financing — — 7 7 — — —

Total commercial 43 24 1,145 1,212 20 1.11 23

Residential mortgage — 70 1,324 1,394 3 1.80 70

Credit card — 106 — 106 — 19.12 106

Auto 1 4 131 136 54 3.82 4

Other consumer — 18 1 19 — 11.83 18

Trial modifications (5) — — (3) (3) — — —

Total consumer 1 198 1,453 1,652 57 12.01 198

Total $ 44 222 2,598 2,864 77 10.84% $ 221

(1) Amounts represent the recorded investment in loans after recognizing the effects of the TDR, if any. TDRs may have multiple types of concessions, but are presented only once in the first

modification type based on the order presented in the table above. The reported amounts include loans remodified of $445 million, and $737 million for the years ended December31, 2022 and

2021, respectively.

(2) Other concessions include loans with payment (principal and/or interest) deferral, loans discharged in bankruptcy, loan renewals, term extensions and other interest and noninterest adjustments, but

exclude modifications that also forgive principal and/or reduce the contractual interest rate.

(3) Charge-offs include write-downs of the investment in the loan in the period it is contractually modified. The amount of charge-off will differ from the modification terms if the loan has been charged

down prior to the modification based on our policies. In addition, there may be cases where we have a charge-off/down with no legal principal modification.

(4) Recorded investment related to interest rate reduction reflects the effect of reduced interest rates on loans with an interest rate concession as one of their concession types, which includes loans

reported as a principal primary modification type that also have an interest rate concession.

(5) Trial modifications are granted a delay in payments due under the original terms during the trial payment period. However, these loans continue to advance through delinquency status and accrue

interest according to their original terms. Any subsequent permanent modification generally includes interest rate related concessions; however, the exact concession type and resulting financial

effect are usually not known until the loan is permanently modified. Trial modifications for the period are presented net of previously reported trial modifications that became permanent in the

current period.

Table 5.18 summarizes permanent modification TDRs that

defaulted during the period presented within 12 months of their

permanent modification date. We are reporting these defaulted

TDRs based on a payment default definition of 90 days past due

for the commercial portfolio segment and 60 days past due for

the consumer portfolio segment.

Table 5.18: Defaulted TDRs

Recorded investment of defaults

Year ended December 31,

(in millions) 2022 2021

Commercial and industrial $ 55 132

Commercial real estate 14 34

Lease financing — 1

Total commercial 69 167

Residential mortgage 142 13

Credit card 43 25

Auto 21 43

Other consumer 2 3

Total consumer 208 84

Total $ 277 251

Note 5: Loans and Related Allowance for Credit Losses (continued)

124 Wells Fargo & Company

Note 6: Mortgage Banking Activities

Mortgage banking activities consist of residential and

commercial mortgage originations, sales and servicing.

We apply the fair value method to residential mortgage

servicing rights (MSRs) and apply the amortization method to

commercial MSRs. Table 6.1 presents MSRs, including the

changes in MSRs measured using the fair value method and the

amortization method.

Table 6.1: Mortgage Servicing Rights

Year ended December 31,

(in millions) 2023 2022 2021

Residential MSRs at fair value, beginning of period $ 9,310 6,920 6,125

Originations/purchases 161 1,003 1,645

Sales and other (1) (902) (614) (8)

Net additions (741) 389 1,637

Changes in fair value:

Due to valuation inputs or assumptions:

Market interest rates (2) 228 3,417 1,625

Servicing and foreclosure costs (14) (17) (9)

Discount rates (149) 42 (56)

Prepayment estimates and other (3) 21 (188) (390)

Net changes in valuation inputs or assumptions 86 3,254 1,170

Changes due to collection/realization of expected cash flows (4) (1,187) (1,253) (2,012)

Total changes in fair value (1,101) 2,001 (842)

Residential MSRs at fair value, end of period 7,468 9,310 6,920

Commercial MSRs at amortized cost, end of period (5) 1,040 1,170 1,269

Total MSRs $ 8,508 10,480 8,189

(1) For the year ended December 31, 2022, residential MSRs decreased $611 million due to the sale of interest-only strips related to excess servicing cash flows from agency residential mortgage-

backed securitizations.

(2) Includes prepayment rate changes due to changes in market interest rates. Residential MSRs are economically hedged with derivative instruments to reduce exposure to changes in market interest

rates.

(3) Represents other changes in valuation model inputs or assumptions, including prepayment rate estimation changes that are independent of mortgage interest rate changes.

(4) Represents the reduction in the residential MSR fair value for the cash flows expected to be collected during the period, net of income accreted due to the passage of time.

(5) The estimated fair value of commercial MSRs was $1.6 billion, $2.1 billion, and $1.5 billion at December 31, 2023, 2022 and 2021, respectively.

Table 6.2 provides key weighted-average assumptions used

in the valuation of residential MSRs and sensitivity of the current

fair value of residential MSRs to immediate adverse changes in

those assumptions. See Note 15 (Fair Values of Assets and

Liabilities) for additional information on key assumptions for

residential MSRs.

Table 6.2: Assumptions and Sensitivity of Residential MSRs

($ in millions, except cost to service amounts)

Dec 31,

2023

Dec 31,

2022

Fair value of interests held $ 7,468 9,310

Expected weighted-average life (in years) 6.3 6.3

Key assumptions:

Prepayment rate assumption (1) 8.9% 9.4

Impact on fair value from 10% adverse change $ 224 288

Impact on fair value from 25% adverse change 538 688

Discount rate assumption 9.4% 9.1

Impact on fair value from 100 basis point increase $ 294 368

Impact on fair value from 200 basis point increase 565 707

Cost to service assumption ($ per loan) 105 102

Impact on fair value from 10% adverse change 148 171

Impact on fair value from 25% adverse change 369 427

(1) Includes a blend of prepayment speeds and expected defaults.Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

The sensitivities in the preceding table are hypothetical and

caution should be exercised when relying on this data. Changes in

value based on variations in assumptions generally cannot be

extrapolated because the relationship of the change in the

assumption to the change in value may not be linear. Also, the

effect of a variation in a particular assumption on the value of the

other interests held is calculated independently without changing

any other assumptions. In reality, changes in one factor may

result in changes in others, which might magnify or counteract

the sensitivities.

Wells Fargo & Company 125

We present the components of our managed servicing

portfolio in Table 6.3 at unpaid principal balance for loans

serviced and subserviced for others and at carrying value for

owned loans serviced.

Table 6.3: Managed Servicing Portfolio

(in billions)

Dec 31,

2023

Dec 31,

2022

Residential mortgage servicing:

Serviced and subserviced for others $ 560 681

Owned loans serviced 262 273

Total residential servicing 822 954

Commercial mortgage servicing:

Serviced and subserviced for others 548 577

Owned loans serviced 128 133

Total commercial servicing 676 710

Total managed servicing portfolio $ 1,498 1,664

Total serviced for others, excluding subserviced for others $ 1,099 1,246

MSRs as a percentage of loans serviced for others

0.77% 0.84

Weighted average note rate (mortgage loans serviced for others)

4.50 4.30

At December31, 2023 and 2022, we had servicer advances,

net of an allowance for uncollectible amounts, of $2.1billion and

$2.5 billion, respectively. As the servicer of loans for others, we

advance certain payments of principal, interest, taxes, insurance,

and default-related expenses which are generally reimbursed

within a short timeframe from cash flows from the trust,

government-sponsored entities (GSEs), insurer or borrower.

The credit risk related to these advances is limited since the

reimbursement is generally senior to cash payments to investors.

We also advance payments of taxes and insurance for our owned

loans which are collectible from the borrower. We maintain an

allowance for uncollectible amounts for advances on loans

serviced for others that may not be reimbursed if the payments

were not made in accordance with applicable servicing

agreements or if the insurance or servicing agreements contain

limitations on reimbursements. Servicing advances on owned

loans are written-off when deemed uncollectible.

Table 6.4 presents the components of mortgage banking

noninterest income.

Table 6.4: Mortgage Banking Noninterest Income

Year ended December 31,

(in millions) 2023 2022 2021

Contractually specified servicing fees, late charges and ancillary fees $ 2,124 2,475 2,801

Unreimbursed servicing costs (1) (115) (189) (332)

Amortization for commercial MSRs (2)

(238) (247) (225)

Changes due to collection/realization of expected cash flows (3) (A) (1,187) (1,253) (2,012)

Net servicing fees 584 786 232

Changes in fair value of MSRs due to valuation inputs or assumptions (4) (B) 86 3,254 1,170

Net derivative losses from economic hedges (5) (234) (3,507) (1,208)

Market-related valuation changes to residential MSRs, net of hedge results (148) (253) (38)

Total net servicing income 436 533 194

Net gains on mortgage loan originations/sales (6) 393 850 4,762

Total mortgage banking noninterest income $ 829 1,383 4,956

Total changes in residential MSRs carried at fair value (A)+(B) $ (1,101) 2,001 (842)

(1) Includes costs associated with foreclosures, unreimbursed interest advances to investors, other interest costs, and transaction costs associated with sales of residential MSRs.

(2) Estimated future amortization expense for commercial MSRs was $228 million, $197 million, $159 million, $126 million, and $103 million for the years ended December 31, 2024, 2025, 2026, 2027

and 2028, respectively.

(3) Represents the reduction in the cash flows expected to be collected during the period, net of income accreted due to the passage of time, for residential MSRs measured using the fair value method.

(4) Refer to the analysis of changes in residential MSRs presented in Table 6.1 in this Note for more detail.

(5) See Note 14 (Derivatives) for additional information on economic hedges for residential MSRs.

(6) Includes net gains (losses) of $95 million, $2.5 billion, and $1.2 billion at December 31, 2023, 2022 and 2021, respectively, related to derivatives used as economic hedges of mortgage loans held for

sale and derivative loan commitments.

Note 6: Mortgage Banking Activities(continued)

126 Wells Fargo & Company

Note 7: Intangible Assets and Other Assets

Intangible assets include mortgage servicing rights (MSRs),

goodwill, and customer relationship and other intangibles. For

additional information on MSRs, see Note 6 (Mortgage Banking

Activities). Customer relationship and other intangibles, which

are included in other assets on our consolidated balance sheet,

had a net carrying value of $118million and $152 million at

December31, 2023 and 2022, respectively.

Table 7.1 shows the allocation of goodwill to our reportable

operating segments.

Table 7.1: Goodwill

(in millions)

Consumer

Banking and

Lending

Commercial

Banking

Corporate and

Investment

Banking

Wealth and

Investment

Management Corporate

Consolidated

Company

December 31, 2021 $ 16,418 2,938 5,375 344 105 25,180

Foreign currency translation — (7) — — — (7)

December 31, 2022 16,418 2,931 5,375 344 105 25,173

Foreign currency translation — 2 — — — 2

December 31, 2023 $ 16,418 2,933 5,375 344 105 25,175

Table 7.2 presents the components of other assets.

Table 7.2: Other Assets

(in millions) Dec 31, 2023 Dec 31, 2022

Corporate/bank-owned life insurance (1) $ 19,705 20,807

Accounts receivable (2) 30,541 23,646

Interest receivable:

AFS and HTM debt securities 1,616 1,572

Loans 3,933 3,470

Trading and other 1,211 767

Operating lease assets (lessor) 5,558 5,790

Operating lease ROU assets (lessee) 3,412 3,837

Other (3)(4) 12,839 15,949

Total other assets $ 78,815 75,838

(1) Corporate/bank-owned life insurance is recorded at cash surrender value.

(2) Primarily includes derivatives clearinghouse receivables, trade date receivables, and servicer advances, which are recorded at amortized cost.

(3) Primarily includes income tax receivables, prepaid expenses, foreclosed assets, and venture capital and private equity investments in consolidated portfolio companies.

(4) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see

Note1 (Summary of Significant Accounting Policies).

Wells Fargo & Company 127

Note 8: Leasing Activity

The information below provides a summary of our leasing

activities as a lessor and lessee.

As a Lessor

Table 8.1 presents the composition of our leasing revenue and

Table 8.2 provides the components of our investment in lease

financing. Noninterest income on leases, included in Table 8.1 is

included in other noninterest income on our consolidated

statement of income. Lease expense, included in other

noninterest expense on our consolidated statement of income,

was $697 million, $750 million, and $867 million for the years

ended December31, 2023, 2022 and 2021, respectively.

In 2021, we recognized an impairment charge of

$268million due to weakening demand for certain rail cars used

for transportation of coal products. There was no material

impairment of rail cars as of December 31, 2023 and 2022. Our

rail car leasing business is in Corporate for our operating segment

disclosures. For additional information on the accounting for

impairment of operating lease assets, see Note 1 (Summary of

Significant Accounting Policies).

Table 8.1: Leasing Revenue

Year ended December 31,

(in millions) 2023 2022 2021

Interest income on lease financing $ 740 600 683

Other lease revenue:

Variable revenue on lease financing 97 114 101

Fixed revenue on operating leases 968 972 995

Variable revenue on operating leases 43 58 64

Other lease-related revenue (1) 129 125 (164)

Noninterest income on leases 1,237 1,269 996

Total leasing revenue $ 1,977 1,869 1,679

(1) Includes net gains (losses) on disposition of assets leased under operating leases or lease

financings, and impairment charges.

Table 8.2: Investment in Lease Financing

(in millions) Dec 31, 2023 Dec 31, 2022

Lease receivables $ 15,142 13,139

Residual asset values 3,678 3,554

Unearned income (2,397) (1,785)

Lease financing $ 16,423 14,908

Our net investment in financing and sales-type leases

included $640 million and $789 million of leveraged leases at

December31, 2023 and 2022, respectively.

As shown in Table 7.2, included in Note 7 (Intangible Assets

and Other Assets), we had $5.6 billion and $5.8billion in

operating lease assets at December31, 2023 and 2022,

respectively, which was net of $3.0 billion and $3.1 billion of

accumulated depreciation for 2023 and 2022, respectively.

Depreciation expense for the operating lease assets was

$453million, $477 million, and $604million in 2023, 2022 and

2021, respectively.

Table 8.3 presents future lease payments owed by our

lessees.

Table 8.3: Maturities of Lease Receivables

December 31, 2023

(in millions)

Direct financing and

sales- type leases Operating leases

2024 $ 4,470 577

2025 3,663 453

2026 2,489 308

2027 1,593 216

2028 905 133

Thereafter 2,022 219

Total lease receivables $ 15,142 1,906

As a Lessee

Substantially all of our leases are operating leases. Table 8.4

presents balances for our operating leases.

Table 8.4: Operating Lease Right-of-Use (ROU) Assets and Lease

Liabilities

(in millions) Dec 31, 2023 Dec 31, 2022

ROU assets $ 3,412 3,837

Lease liabilities 4,060 4,465

Table 8.5 provides the composition of our lease costs, which

are predominantly included in occupancy expense.

Table 8.5: Lease Costs

Year ended December 31,

(in millions) 2023 2022 2021

Fixed lease expense – operating leases $ 990 1,022 1,048

Variable lease expense 268 277 289

Other (1) (52) (37) (93)

Total lease costs $ 1,206 1,262 1,244

(1) Predominantly includes gains recognized from sale leaseback transactions and sublease

rental income.

128 Wells Fargo & Company

Table 8.6 provides the future lease payments under

operating leases as well as information on the remaining average

lease term and discount rate as of December31, 2023.

Table 8.6: Lease Payments on Operating Leases

(in millions, except for weighted averages) Dec 31, 2023

2024 $ 875

2025 887

2026 747

2027 598

2028 453

Thereafter 930

Total lease payments 4,490

Less: imputed interest 430

Total operating lease liabilities $ 4,060

Weighted average remaining lease term (in years) 6.5

Weighted average discount rate 3.0 %

Our operating leases predominantly expire within the next

15 years, with the longest lease expiring in 2105. We do not

include renewal or termination options in the establishment of

the lease term when we are not reasonably certain that we will

exercise them. As of December31, 2023, we had additional

operating leases commitments of $691 million, predominantly

for real estate, which leases had not yet commenced. These

leases are expected to commence during 2025 and have lease

terms of 1 year to 20 years.

Wells Fargo & Company 129

Note 9: Deposits

Table 9.1 presents a summary of both time certificates of

deposit (CDs) and other time deposits issued by domestic and

non-U.S. offices.

Table 9.1: Time Deposits

December 31,

(in millions) 2023 2022

Total domestic and Non-U.S. $ 192,267 66,887

Time deposits in excess of $250,000 57,489 9,133

The contractual maturities of time deposits are presented in

Table 9.2.

Table 9.2: Contractual Maturities of Time Deposits

(in millions) December 31, 2023

2024 $ 163,235

2025 22,565

2026 1,962

2027 1,582

2028 2,579

Thereafter 344

Total $ 192,267

Demand deposit overdrafts of $225 million and $339million

were included as loan balances at December31, 2023 and 2022,

respectively.

130 Wells Fargo & Company

Note 10: Long-Term Debt

We issue long-term debt denominated in multiple currencies,

predominantly in U.S. dollars. Our issuances, which are generally

unsecured, have both fixed and floating interest rates. Principal is

repaid upon contractual maturity, unless redeemed at our option

at an earlier date. Interest is paid primarily on either a semi-

annual or annual basis.

As a part of our overall interest rate risk management

strategy, we often use derivatives to manage our exposure to

interest rate risk. We also use derivatives to manage our

exposure to foreign currency risk. As a result, a majority of the

long-term debt presented below is hedged in a hedge accounting

relationship.

Table 10.1 presents a summary of our long-term debt

carrying values, reflecting unamortized debt discounts and

premiums, and hedge basis adjustments; unless we have elected

the fair value option. See Note 14 (Derivatives) for additional

information on qualifying hedge contracts and Note 15 (Fair

Values of Assets and Liabilities) for additional information on fair

value option elections. The interest rates displayed represent the

range of contractual rates in effect at December31, 2023. These

interest rates do not include the effects of any associated

derivatives designated in a hedge accounting relationship.

Table 10.1: Long-Term Debt

December 31,

2023 2022

(in millions) Maturity date(s) Stated interest rate(s)

Wells Fargo & Company (Parent only)

Senior

Fixed-rate notes 2024-2045 0.50-6.75% $ 42,384 43,749

Floating-rate notes 2026-2048 5.38-6.65% 1,046 1,046

FixFloat notes 2025-2053 0.81-6.49% 77,958 60,752

Structured notes (1) 6,900 6,305

Total senior debt – Parent 128,288 111,852

Subordinated

Fixed-rate notes(2) 2024-2046 3.87-7.57% 18,841 21,379

Total subordinated debt – Parent 18,841 21,379

Junior subordinated

Fixed-rate notes 2029-2036 5.95-7.95% 828 827

Floating-rate notes 2027 6.16-6.66% 355 343

Total junior subordinated debt – Parent (3) 1,183 1,170

Total long-term debt – Parent (2) 148,312 134,401

Wells Fargo Bank, N.A., and other bank entities (Bank)

Senior

Fixed-rate notes 2025-2026 5.25-5.55% 6,506 —

Floating-rate notes 2025-2053 5.32-6.40% 1,416 117

Floating-rate advances – Federal Home Loan Bank (FHLB) (4) 2024-2028 5.63-6.32% 38,000 27,000

Structured notes (1) 1,137 262

Finance leases 2024-2029 1.13-2.87% 19 22

Total senior debt – Bank 47,078 27,401

Subordinated

Fixed-rate notes 2025-2038 5.85-7.74% 3,416 4,305

Total subordinated debt – Bank 3,416 4,305

Junior subordinated

Floating-rate notes 2027 6.21-6.31% 414 401

Total junior subordinated debt – Bank (3) 414 401

Other bank debt (5) 2024-2063 0.50-9.00% 7,558 7,082

Total long-term debt – Bank $ 58,466 39,189

(continued on following page)

Wells Fargo & Company 131

(continued from previous page)

December 31,

2023 2022

(in millions) Maturity date(s) Stated interest rate(s)

Other consolidated subsidiaries

Senior

Fixed-rate notes $ — 369

Structured notes (1) 810 911

Total long-term debt – Other consolidated subsidiaries 810 1,280

Total long-term debt (6) $ 207,588 174,870

(1) Includes certain structured notes that have coupon or repayment terms linked to the performance of debt or equity securities, an embedded equity, commodity, or currency index, or basket of

indices, for which the maturity may be accelerated based on the value of a referenced index or security. In addition, a major portion consists of zero coupon notes where interest is paid as part of the

final redemption amount.

(2) Includes fixed-rate subordinated notes issued by the Parent at a discount of $118 million and $121 million at December31, 2023 and 2022, respectively, and debt issuance costs of $2million at both

December31, 2023 and 2022, to effect a modification of Wells Fargo Bank, N.A., notes. These subordinated notes are carried at their par amount on the consolidated balance sheet of the Parent

presented in Note 27 (Parent-Only Financial Statements). In addition, Parent long-term debt presented in Note 27 also includes affiliate related issuance costs of $379million and $365 million at

December31, 2023 and 2022, respectively.

(3) Includes $414 million and $401 million of junior subordinated debentures held by unconsolidated wholly-owned trust preferred security VIEs at December31, 2023 and 2022, respectively. See Note

16 (Securitizations and Variable Interest Entities) for additional information about trust preferred security VIEs.

(4) We pledge certain assets as collateral to secure advances from the FHLB. For additional information, see Note 19 (Pledged Assets and Collateral).

(5) Primarily relates to unfunded commitments for LIHTC investments. For additional information, see Note 16 (Securitizations and Variable Interest Entities).

(6) The majority of long-term debt is redeemable at our option at one or more dates prior to contractual maturity.

The aggregate carrying value of long-term debt that

matures (based on contractual payment dates) as of

December31, 2023, in each of the following five years and

thereafter is presented in Table 10.2.

Table 10.2: Maturity of Long-Term Debt

December 31, 2023

(in millions) 2024 2025 2026 2027 2028 Thereafter Total

Wells Fargo & Company (Parent Only)

Senior debt $ 8,721 14,546 24,229 7,843 13,659 59,290 128,288

Subordinated debt 722 978 2,662 2,384 — 12,095 18,841

Junior subordinated debt — — — 355 — 828 1,183

Total long-term debt – Parent 9,443 15,524 26,891 10,582 13,659 72,213 148,312

Wells Fargo Bank, N.A., and other bank entities (Bank)

Senior debt 17,741 3,696 5,475 3 20,003 160 47,078

Subordinated debt — 149 — 27 196 3,044 3,416

Junior subordinated debt — — — 414 — — 414

Other bank debt 2,843 1,082 712 518 62 2,341 7,558

Total long-term debt – Bank 20,584 4,927 6,187 962 20,261 5,545 58,466

Other consolidated subsidiaries

Senior debt 72 403 220 — 5 110 810

Total long-term debt – Other consolidated subsidiaries 72 403 220 — 5 110 810

Total long-term debt $ 30,099 20,854 33,298 11,544 33,925 77,868 207,588

As part of our long-term and short-term borrowing

arrangements, we are subject to various financial and operational

covenants. Some of the agreements under which debt has been

issued have provisions that may limit the merger or sale of

certain subsidiary banks and the issuance of capital stock or

convertible securities by certain subsidiary banks. At

December31, 2023, we were in compliance with all the

covenants.

Note 10: Long-Term Debt (continued)

132 Wells Fargo & Company

Note 11: Preferred Stock

We are authorized to issue 20 million shares of preferred stock,

without par value. Outstanding preferred shares rank senior to

common shares both as to the payment of dividends and

liquidation preferences but have no general voting rights. All

outstanding preferred stock with a liquidation preference value,

except for Series L Preferred Stock, may be redeemed for the

liquidation preference value, plus any accrued but unpaid

dividends, on any dividend payment date on or after the earliest

redemption date for that series. Additionally, these same series

of preferred stock may be redeemed following a “regulatory

capital treatment event,” as described in the terms of each series.

Capital actions, including redemptions of our preferred stock,

may be subject to regulatory approval or conditions.

In addition, we are authorized to issue 4 million shares of

preference stock, without par value. We have not issued any

preference shares under this authorization. If issued, preference

shares would be limited to one vote per share.

In July 2023, we issued $1.725 billion of our Preferred Stock,

Series EE. In September 2023, we redeemed our Preferred Stock,

Series Q, for a cost of $1.725 billion.

Table 11.1 summarizes information about our preferred

stock.

Table 11.1: Preferred Stock

December 31, 2023 December 31, 2022

(in millions, except shares)

Earliest

redemption

date

authorized

and

designated

issued and

outstanding

Liquidation

preference

value

Carrying

value

authorized

and

designated

issued and

outstanding

Liquidation

preference

value

Carrying

value

DEP Shares

Dividend Equalization Preferred Shares (DEP) Currently

redeemable

97,000 96,546 $ — — 97,000 96,546 $ — —

Preferred Stock:

Series L (1)

7.50% Non-Cumulative Perpetual Convertible Class A — 4,025,000 3,967,981 3,968 3,200 4,025,000 3,967,986 3,968 3,200

Series Q

5.85% Fixed-to-Floating Non-Cumulative Perpetual Class A Redeemed — — — — 69,000 69,000 1,725 1,725

Series R

6.625% Fixed-to-Floating Non-Cumulative Perpetual Class A 3/15/2024 34,500 33,600 840 840 34,500 33,600 840 840

Series S

5.90% Fixed-to-Floating Non-Cumulative Perpetual Class A 6/15/2024 80,000 80,000 2,000 2,000 80,000 80,000 2,000 2,000

Series U

5.875% Fixed-to-Floating Non-Cumulative Perpetual Class A 6/15/2025 80,000 80,000 2,000 2,000 80,000 80,000 2,000 2,000

Series Y

5.625% Non-Cumulative Perpetual Class A Currently

redeemable

27,600 27,600 690 690 27,600 27,600 690 690

Series Z

4.75% Non-Cumulative Perpetual Class A 3/15/2025 80,500 80,500 2,013 2,013 80,500 80,500 2,013 2,013

Series AA

4.70% Non-Cumulative Perpetual Class A 12/15/2025 46,800 46,800 1,170 1,170 46,800 46,800 1,170 1,170

Series BB

3.90% Fixed-Reset Non-Cumulative Perpetual Class A 3/15/2026 140,400 140,400 3,510 3,510 140,400 140,400 3,510 3,510

Series CC

4.375% Non-Cumulative Perpetual Class A 3/15/2026 46,000 42,000 1,050 1,050 46,000 42,000 1,050

1,050

Series DD

4.25% Non-Cumulative Perpetual Class A 9/15/2026 50,000 50,000 1,250 1,250 50,000 50,000 1,250 1,250

Series EE

7.625% Fixed-Reset Non-Cumulative Perpetual Class A 9/15/2028 69,000 69,000 1,725 1,725 — — — —

Total 4,776,800 4,714,427 $ 20,216 19,448 4,776,800 4,714,432 $ 20,216 19,448

(1) At the option of the holder, each share of Series L Preferred Stock may be converted at any time into 6.3814 shares of common stock, plus cash in lieu of fractional shares, subject to anti-dilution

adjustments. If converted within 30 days of certain liquidation or change of control events, the holder may receive up to 16.5916 additional shares, or, at our option, receive an equivalent amount of

cash in lieu of common stock. We may convert some or all of the Series L Preferred Stock into shares of common stock if the closing price of our common stock exceeds 130 percent of the

conversion price of the Series L Preferred Stock for 20 trading days during any period of 30 consecutive trading days. We declared dividends of $298 million on Series L Preferred Stock in each of the

years ended December 31, 2023, 2022 and 2021.

Wells Fargo & Company 133

Note 12: Common Stock and Stock Plans

Common Stock

Table 12.1 presents our reserved, issued and authorized shares of

common stock at December31, 2023.

Table 12.1: Common Stock Shares

Number of shares

Shares reserved (1) 259,837,463

Shares issued 5,481,811,474

Shares not reserved or issued 3,258,351,063

Total shares authorized 9,000,000,000

(1) Shares reserved for employee stock plans (employee restricted share rights, performance

share awards, 401(k), and deferred compensation plans), convertible securities, dividend

reinvestment and common stock purchase plans, and director plans.

Dividend Reinvestment and Common Stock

Purchase Plans

Participants in our dividend reinvestment and common stock

direct purchase plans may purchase shares of our common stock

at fair market value by reinvesting dividends and/or making

optional cash payments under the plan’s terms.

Employee Stock Plans

We offer stock-based employee compensation plans as

described below. For additional information on our accounting

for stock-based compensation plans, see Note 1 (Summary of

Significant Accounting Policies).

LONG-TERM INCENTIVE PLANS We have granted restricted share

rights (RSRs) and performance share awards (PSAs) as our

primary long-term incentive awards.

Holders of RSRs and PSAs may be entitled to receive

additional RSRs and PSAs (dividend equivalents) or cash

payments equal to the cash dividends that would have been paid

had the RSRs or PSAs been issued and outstanding shares of

common stock. RSRs and PSAs granted as dividend equivalents

are subject to the same vesting schedule and conditions as the

underlying award.

Table 12.2 summarizes the major components of stock

compensation expense and the related recognized tax benefit.

Table 12.2: Stock Compensation Expense

Year ended December 31,

(in millions)

2023

2022 2021

RSRs $ 1,069 947 931

Performance shares (1) 53 31 74

Total stock compensation expense $ 1,122 978 1,005

Related recognized tax benefit

$ 277 242 248

(1) Compensation expense fluctuates with the estimated outcome of satisfying performance

conditions and, for certain awards, changes in our stock price.

The total number of shares of common stock available for

grant under the plans at December31, 2023, was 101 million.

Restricted Share Rights

Holders of RSRs are entitled to the related shares of common

stock at no cost generally vesting over three to five years after

the RSRs are granted. A summary of the status of our RSRs at

December31, 2023, and changes during 2023 is presented in

Table 12.3.

Table 12.3: Restricted Share Rights

Number

Weighted-

average

grant-date

fair value

Nonvested at January 1, 2023 53,237,143 $ 42.44

Granted 29,938,962 44.15

Vested (21,562,727) 42.92

Canceled or forfeited (2,066,131) 43.91

Nonvested at December 31, 2023 59,547,247 43.07

The weighted-average grant date fair value of RSRs granted

during 2022 and 2021 was $51.80 and $32.99, respectively.

At December31, 2023, there was $1.1 billion of total

unrecognized compensation cost related to nonvested RSRs. The

cost is expected to be recognized over a weighted-average

period of 2.4 years. The total fair value of RSRs that vested

during 2023, 2022 and 2021 was $954 million, $1.0 billion and

$902million, respectively.

Performance Share Awards

Holders of PSAs are entitled to the related shares of common

stock at no cost subject to the Company’s achievement of

specified performance criteria over a three-year period. PSAs

are granted at a target number based on the Company’s

performance. The number of awards that vest can be adjusted

downward to zero and upward to a maximum of 150% of target.

The awards vest in the quarter after the end of the performance

period. For PSAs whose performance period ended December31,

2023, the determination of the number of performance shares

that will vest will occur in first quarter 2024 after review of the

Company’s performance by the Human Resources Committee of

the Board.

A summary of the status of our PSAs at December31, 2023,

and changes during 2023 is in Table 12.4, based on the

performance adjustments recognized as of December 2023.

Table 12.4: Performance Share Awards

Number

Weighted-

average

grant-date

fair value(1)

Nonvested at January 1, 2023 4,508,337 $ 36.81

Granted 1,193,556 44.33

Vested (766,527) 42.67

Canceled or forfeited (647,543) 45.73

Nonvested at December 31, 2023 4,287,823 36.51

(1) Reflects approval date fair value for grants subject to variable accounting.

134 Wells Fargo & Company

The weighted-average grant date fair value of performance

awards granted during 2022 and 2021 was $52.80 and $32.76,

respectively.

At December31, 2023, there was $38 million of total

unrecognized compensation cost related to nonvested

performance awards. The cost is expected to be recognized over

a weighted-average period of 1.6 years. The total fair value of

PSAs that vested during 2023, 2022 and 2021 was $31 million,

$19 million and $31million, respectively.

Stock Options

Stock options have not been issued in the last three years and no

stock options were outstanding at December31, 2023, 2022 and

2021.

Director Awards

We granted common stock awards to non-employee directors

elected or re-elected at the annual meeting of stockholders on

April 25, 2023. These stock awards vest immediately.

Employee Stock Ownership Plan

The Wells Fargo & Company 401(k) Plan (401(k) Plan) is a

defined contribution plan with an Employee Stock Ownership

Plan (ESOP) feature. We have previously loaned money to the

401(k) Plan to purchase ESOP Preferred Stock that was

convertible into common stock over time as the loans were

repaid. The Company’s annual contribution to the 401(k) Plan, as

well as dividends received on unreleased shares, are used to make

payments on the loans. As the loans are repaid, shares are

released from the unallocated reserve of the 401(k) Plan.

In October 2022, we redeemed all outstanding shares of our

ESOP Preferred Stock in exchange for shares of the Company’s

common stock. In October 2023, the 401(k) Plan fully repaid all

loans to the Company, which resulted in the release of the shares

from the unallocated reserve of the 401(k) Plan. Released

common stock is allocated to the 401(k) Plan participants and

invested in the Wells Fargo ESOP Fund within the 401(k) Plan.

Dividends on the allocated common shares reduce retained

earnings, and the shares are considered outstanding for

computing earnings per share.

Unreleased shares were reflected on our consolidated

balance sheet as unearned ESOP shares. Also, dividends on

unreleased common stock or ESOP Preferred Stock did not

reduce retained earnings, and the unreleased shares were not

considered to be common stock equivalents for computing

earnings per share.

Table 12.5 presents the information related to the

WellsFargo ESOP Fund and the dividends paid to the 401(k)

Plan.

Table 12.5: Wells Fargo ESOP Fund

December 31,

(in millions, except shares)

2023

2022 2021

Allocated shares outstanding (common) 144,140,446 152,438,152 149,638,081

Unreleased shares outstanding (common) — 10,329,650 —

Fair value of unreleased shares outstanding (common)

$ — 427 —

Unreleased shares outstanding (preferred) — — 609,434

Conversion value of unreleased ESOP preferred shares

$ — — 609

Fair value of unreleased ESOP preferred shares based on redemption

— — 700

Year ended December 31,

Dividends paid on (in millions):

2023

2022 2021

Allocated shares (common) $ 161 134 74

Unreleased shares (common) (1)

13 4 —

Unreleased shares (preferred)

— 36 66

(1) Included dividends paid in fourth quarter 2023 after shares were released and prior to allocation to participants.

Wells Fargo & Company 135

Note 13: Legal Actions

Wells Fargo and certain of our subsidiaries are involved in a

number of judicial, regulatory, governmental, arbitration, and

other proceedings or investigations concerning matters arising

from the conduct of our business activities, and many of those

proceedings and investigations expose Wells Fargo to potential

financial loss or other adverse consequences. These proceedings

and investigations include actions brought against Wells Fargo

and/or our subsidiaries with respect to corporate-related

matters and transactions in which Wells Fargo and/or our

subsidiaries were involved. In addition, Wells Fargo and our

subsidiaries may be requested to provide information to or

otherwise cooperate with government authorities in the conduct

of investigations of other persons or industry groups.

We establish accruals for legal actions when potential losses

associated with the actions become probable and the costs can

be reasonably estimated. For such accruals, we record the

amount we consider to be the best estimate within a range of

potential losses that are both probable and estimable; however, if

we cannot determine a best estimate, then we record the low

end of the range of those potential losses. There can be no

assurance as to the ultimate outcome of legal actions, including

the matters described below, and the actual costs of resolving

legal actions may be substantially higher or lower than the

amounts accrued for those actions.

ADVISORY ACCOUNT CASH SWEEP INVESTIGATION The United

States Securities and Exchange Commission (SEC) has

undertaken an investigation regarding the cash sweep options

that the Company provides to investment advisory clients at

account opening.

COMPANY 401(K) PLAN MATTERS Federal government agencies,

including the United States Department of Labor (Department

of Labor), have undertaken reviews of certain transactions

associated with the Employee Stock Ownership Plan feature of

the Company’s 401(k) plan, including the manner in which the

401(k) plan purchased certain securities used in connection with

the Company’s contributions to the 401(k) plan. As previously

disclosed, the Company entered into an agreement to resolve

the Department of Labor’s review. On September 26, 2022,

participants in the Company’s 401(k) plan filed a putative class

action in the United States District Court for the District of

Minnesota alleging that the Company violated the Employee

Retirement Income Security Act of 1974 in connection with

certain of these transactions.

HIRING PRACTICES MATTERS Government agencies, including the

United States Department of Justice and the SEC, have

undertaken formal or informal inquiries or investigations

regarding the Company’s hiring practices related to diversity. The

United States Department of Justice and the SEC have since

closed their investigations without taking action. A putative

securities fraud class action has also been filed in the United

States District Court for the Northern District of California

alleging that the Company and certain of its executive officers

made false or misleading statements about the Company’s hiring

practices related to diversity. Allegations related to the

Company’s hiring practices related to diversity are also among

the subjects of shareholder derivative lawsuits pending in the

United States District Court for the Northern District of

California and in the Delaware Court of Chancery.

INTERCHANGE LITIGATION Plaintiffs representing a class of

merchants have filed putative class actions, and individual

merchants have filed individual actions, against WellsFargo Bank,

N.A., WellsFargo & Company, Wachovia Bank, N.A., and

Wachovia Corporation regarding the interchange fees associated

with Visa and MasterCard payment card transactions. Visa,

MasterCard, and several other banks and bank holding

companies are also named as defendants in these actions. These

actions have been consolidated in the United States District

Court for the Eastern District of New York. The amended and

consolidated complaint asserts claims against defendants based

on alleged violations of federal and state antitrust laws and seeks

damages as well as injunctive relief. Plaintiff merchants allege

that Visa, MasterCard, and payment card issuing banks unlawfully

colluded to set interchange rates. Plaintiffs also allege that

enforcement of certain Visa and MasterCard rules and alleged

tying and bundling of services offered to merchants are

anticompetitive. Wells Fargo and Wachovia, along with other

defendants and entities, are parties to Loss and Judgment

Sharing Agreements, which provide that they, along with other

entities, will share, based on a formula, in any losses from the

Interchange Litigation. On July13, 2012, Visa, MasterCard, and

the financial institution defendants, including Wells Fargo, signed

a memorandum of understanding with plaintiff merchants to

resolve the consolidated class action and reached a separate

settlement in principle of the consolidated individual actions. The

settlement payments to be made by all defendants in the

consolidated class and individual actions totaled approximately

$6.6 billion before reductions applicable to certain merchants

opting out of the settlement. The class settlement also provided

for the distribution to class merchants of 10 basis points of

default interchange across all credit rate categories for a period

of eight consecutive months. The district court granted final

approval of the settlement, which was appealed to the United

States Court of Appeals for the Second Circuit by settlement

objector merchants.Other merchants opted out of the

settlement and are pursuing several individual actions. On

June30, 2016, the Second Circuit vacated the settlement

agreement and reversed and remanded the consolidated action

to the United States District Court for the Eastern District of

New York for further proceedings. On November 30, 2016, the

district court appointed lead class counsel for a damages class

and an equitable relief class. The parties have entered into a

settlement agreement to resolve the damages class claims

pursuant to which defendants will pay a total of approximately

$6.2 billion, which includes approximately $5.3billion of funds

remaining from the 2012 settlement and $900 million in

additional funding. The Company’s allocated responsibility for

the additional funding is approximately $94.5million. The court

granted final approval of the settlement on December 13, 2019,

which was appealed to the United States Court of Appeals for the

Second Circuit by settlement objector merchants. On March 15,

2023, the Second Circuit affirmed the damages class settlement.

On September 27, 2021, the district court granted the plaintiffs’

motion for class certification in the equitable relief case. Several

of the opt-out and direct action litigations have been settled

while others remain pending.

136 Wells Fargo & Company

RMBS TRUSTEE LITIGATION In December 2014, Phoenix Light SF

Limited (Phoenix Light) and certain related entities filed a

complaint in the United States District Court for the Southern

District of New York alleging claims against Wells Fargo Bank,

N.A., in its capacity as trustee for a number of residential

mortgage-backed securities (RMBS) trusts. Complaints raising

similar allegations have been filed by Commerzbank AG in the

Southern District of New York, IKB International and IKB

Deutsche Industriebank (together, IKB) in New York state court,

and Park Royal I LLC and Park Royal II LLC in New York state

court. In each case, the plaintiffs allege that WellsFargo Bank,

N.A., as trustee, caused losses to investors, and plaintiffs assert

causes of action based upon, among other things, the trustee’s

alleged failure to notify and enforce repurchase obligations of

mortgage loan sellers for purported breaches of representations

and warranties, notify investors of alleged events of default, and

abide by appropriate standards of care following alleged events

of default. In July2022, the district court dismissed Phoenix

Light’s claims and certain of the claims asserted by

Commerzbank AG, and subsequently entered judgment in each

case in favor of Wells Fargo Bank, N.A. In August 2022, Phoenix

Light and Commerzbank AG each appealed the district court’s

decision to the United States Court of Appeals for the Second

Circuit. Phoenix Light dismissed its appeal in May 2023,

terminating its case. In November 2023, the Company entered

into an agreement with IKB to resolve IKB’s claims. The Company

previously settled two class actions filed by institutional

investors and an action filed by the National Credit Union

Administration with similar allegations.

SEMINOLE TRIBE TRUSTEE LITIGATION The Seminole Tribe of

Florida filed a complaint in Florida state court alleging that

WellsFargo, as trustee, charged excess fees in connection with

the administration of a minor’s trust and failed to invest the

assets of the trust prudently. The complaint was later amended

to include three individual current and former beneficiaries as

plaintiffs and to remove the Tribe as a party to the case.

OUTLOOK As described above, the Company establishes accruals

for legal actions when potential losses associated with the

actions become probable and the costs can be reasonably

estimated. The high end of the range of reasonably possible

losses in excess of the Company’s accrual for probable and

estimable losses was approximately $1.7 billion as of

December31, 2023. The outcomes of legal actions are

unpredictable and subject to significant uncertainties, and it is

inherently difficult to determine whether any loss is probable or

even possible. It is also inherently difficult to estimate the

amount of any loss and there may be matters for which a loss is

probable or reasonably possible but not currently estimable.

Accordingly, actual losses may be in excess of the established

accrual or the range of reasonably possible loss. Based on

information currently available, advice of counsel, available

insurance coverage, and established reserves, Wells Fargo

believes that the eventual outcome of the actions against Wells

Fargo and/or its subsidiaries will not, individually or in the

aggregate, have a material adverse effect on Wells Fargo’s

consolidated financial condition. However, it is possible that the

ultimate resolution of a matter, if unfavorable, may be material

to Wells Fargo’s results of operations for any particular period.

Wells Fargo & Company 137

Note 14: Derivatives

We use derivatives to manage exposure to market risk, including

interest rate risk, credit risk and foreign currency risk, and to

assist customers with their risk management objectives. We

designate certain derivatives as hedging instruments in

qualifying hedge accounting relationships (fair value or cash flow

hedges). Our remaining derivatives consist of economic hedges

that do not qualify for hedge accounting and derivatives held for

customer accommodation trading purposes.

Risk Management Derivatives

Our asset/liability management approach to interest rate,

foreign currency and certain other risks includes the use of

derivatives, which are typically designated as fair value or cash

flow hedges, or economic hedges. We use derivatives to help

minimize significant, unplanned fluctuations in earnings, fair

values of assets and liabilities, and cash flows caused by interest

rate, foreign currency and other market risk volatility. This

approach involves modifying the repricing characteristics of

certain assets and liabilities so that changes in interest rates,

foreign currency and other exposures, which may cause the

hedged assets and liabilities to gain or lose fair value, do not have

a significant adverse effect on the net interest margin, cash flows

and earnings.

Customer Accommodation Trading

We also use various derivatives, including interest rate,

commodity, equity, credit and foreign exchange contracts,

as an accommodation to our customers as part of our trading

businesses. These derivative transactions, which involve

engaging in market-making activities or acting as an

intermediary, are conducted in an effort to help customers

manage their market risks. We usually offset our exposure from

such derivatives by entering into other financial contracts, such

as separate derivative or security transactions.

Table 14.1 presents the total notional or contractual amounts

and fair values for our derivatives. Derivative transactions can be

measured in terms of the notional amount, but this amount is

not recorded on our consolidated balance sheet and is not, when

viewed in isolation, a meaningful measure of the risk profile of

the instruments. The notional amount is generally not

exchanged, but is used only as the basis on which derivative cash

flows are determined.

Table 14.1: Notional or Contractual Amounts and Fair Values of Derivatives

December 31, 2023 December 31, 2022

Fair value Fair value

(in millions)

Notional

orcontractual

amount

Derivative

assets

Derivative

liabilities

Notional

orcontractual

amount

Derivative

assets

Derivative

liabilities

Derivatives designated as hedging instruments

Interest rate contracts $ 357,096 639 570 263,876 670 579

Commodity contracts 2,600 24 12 1,681 9 25

Foreign exchange contracts 4,193 60 395 15,544 161 1,015

Total derivatives designated as qualifying hedging instruments 723 977 840 1,619

Derivatives not designated as hedging instruments

Interest rate contracts 10,409,720 31,806 36,312 10,222,027 40,416 42,894

Commodity contracts 88,491 2,717 2,734 96,001 5,991 3,420

Equity contracts (1) 438,458 13,305 13,810 393,753 9,573 8,254

Foreign exchange contracts 2,273,383 24,707 26,762 1,513,363 22,052 25,671

Credit contracts 60,439 113 44 45,649 66 36

Total derivatives not designated as hedging instruments 72,648 79,662 78,098 80,275

Total derivatives before netting 73,371 80,639 78,938 81,894

Netting (55,148) (62,144) (56,164) (61,827)

Total $ 18,223 18,495 22,774 20,067

Note1 (Summary of Significant Accounting Policies).

Balance Sheet Offsetting

We execute substantially all of our derivative transactions under

master netting arrangements. Where legally enforceable, these

master netting arrangements give the ability, in the event of

default by the counterparty, to liquidate securities held as

collateral and to offset receivables and payables with the same

counterparty. We reflect all derivative balances and related cash

collateral subject to enforceable master netting arrangements on

a net basis on our consolidated balance sheet. We do not net

non-cash collateral that we receive or pledge against derivative

balances on our consolidated balance sheet.

For disclosure purposes, we present “Total Derivatives, net”

which represents the aggregate of our net exposure to each

counterparty after considering the balance sheet netting

adjustments and any non-cash collateral. We manage derivative

exposure by monitoring the credit risk associated with each

counterparty using counterparty-specific credit risk limits, using

master netting arrangements and obtaining collateral.

Table 14.2 provides information on the fair values of

derivative assets and liabilities subject to enforceable master

netting arrangements, the balance sheet netting adjustments

and the resulting net fair value amount recorded on our

consolidated balance sheet, as well as the non-cash collateral

associated with such arrangements. In addition to the netting

amounts included in the table, we also have balance sheet netting

related to resale and repurchase agreements that are disclosed

138 Wells Fargo & Company

within Note 18 (Securities and Other Collateralized Financing

Activities).

Table 14.2: Offsetting of Derivative Assets and Liabilities

December 31, 2023 December 31, 2022

(in millions) Derivative Assets Derivative Liabilities Derivative Assets Derivative Liabilities

Interest rate contracts

Over-the-counter (OTC) $ 29,040 31,809 37,000 37,598

OTC cleared 1,581 1,397 649 845

Exchange traded 195 201 262 193

Total interest rate contracts 30,816 33,407 37,911 38,636

Commodity contracts

OTC 2,014 2,254 4,833 2,010

Exchange traded 512 356 876 1,134

Total commodity contracts 2,526 2,610 5,709 3,144

Equity contracts

OTC 5,375 8,501 4,269 4,475

Exchange traded 4,790 3,970 3,742 2,409

Total equity contracts 10,165 12,471 8,011 6,884

Foreign exchange contracts

OTC 24,511 26,961 21,537 26,127

Total foreign exchange contracts 24,511 26,961 21,537 26,127

Credit contracts

OTC 77 39 39 22

Total credit contracts 77 39 39 22

Total derivatives subject to enforceable master netting arrangements,

gross 68,095 75,488 73,207 74,813

Less: Gross amounts offset

Counterparty netting (1) (50,692) (50,606) (49,115) (49,073)

Cash collateral netting (4,456) (11,538) (7,049) (12,754)

Total derivatives subject to enforceable master netting arrangements,

net 12,947 13,344 17,043 12,986

Derivatives not subject to enforceable master netting arrangements (2) 5,276 5,151 5,731 7,081

Total derivatives recognized in consolidated balance sheet, net 18,223 18,495 22,774 20,067

Non-cash collateral (2,587) (4,388) (3,517) (582)

Total Derivatives, net $ 15,636 14,107 19,257 19,485

(1) Represents amounts with counterparties subject to enforceable master netting arrangements that have been offset in our consolidated balance sheet, including portfolio level counterparty valuation

adjustments related to customer accommodation and other trading derivatives. Counterparty valuation adjustments related to derivative assets were $292 million and $372 million and debit

valuation adjustments related to derivative liabilities were $222 million and $331 million as of December31, 2023 and 2022, respectively, and were primarily related to interest rate contracts.

(2) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see

Note1 (Summary of Significant Accounting Policies).

Fair Value and Cash Flow Hedges

For fair value hedges, we use interest rate swaps to convert

certain of our fixed-rate long-term debt and time certificates of

deposit to floating rates to hedge our exposure to interest rate

risk. We also enter into cross-currency swaps, cross-currency

interest rate swaps and forward contracts to hedge our exposure

to foreign currency risk and interest rate risk associated with the

issuance of non-U.S. dollar denominated long-term debt. We also

enter into futures contracts, forward contracts, and swap

contracts to hedge our exposure to the price risk of physical

commodities included in other assets on our consolidated

balance sheet. In addition, we use interest rate swaps, cross-

currency swaps, cross-currency interest rate swaps and forward

contracts to hedge against changes in fair value of certain

investments in available-for-sale (AFS) debt securities due to

changes in interest rates, foreign currency rates, or both. For

certain fair value hedges of interest rate risk, we use the portfolio

layer method to hedge stated amounts of closed portfolios of

AFS debt securities. For certain fair value hedges of foreign

currency risk, changes in fair value of cross-currency swaps

attributable to changes in cross-currency basis spreads are

excluded from the assessment of hedge effectiveness and

recorded in other comprehensive income (OCI). See Note 25

(Other Comprehensive Income) for the amounts recognized in

other comprehensive income.

For cash flow hedges, we use interest rate swaps to hedge

the variability in interest payments received on certain interest-

earning deposits with banks and certain floating-rate commercial

loans. We also use cross-currency swaps to hedge variability in

interest payments on fixed-rate foreign currency-denominated

long-term debt due to changes in foreign exchange rates.

We estimate $698 million pre-tax of deferred net losses

related to cash flow hedges in OCI at December31, 2023, will be

reclassified into net interest income during the next twelve

months. For cash flow hedges as of December31, 2023, we are

hedging our interest rate and foreign currency exposure to the

variability of future cash flows for all forecasted transactions for

a maximum of approximately 9 years. For additional information

on our accounting hedges, see Note 1 (Summary of Significant

Accounting Policies).

Wells Fargo & Company 139

Table 14.3 and Table 14.4 show the net gains (losses) related

to derivatives in cash flow and fair value hedging relationships,

respectively.

Table 14.3: Gains (Losses) Recognized on Cash Flow Hedging Relationships

Net interest income

Total

recorded

in net

income

Total

recorded

in OCI

(in millions) Loans

Other

interest

income

Long-

term debt

Derivative

gains

(losses)

Derivative

gains

(losses)

Year ended December 31, 2023

Total amounts presented in the consolidated statement of income and other comprehensive income $ 57,155 10,810 (11,572) N/A 545

Interest rate contracts:

Realized gains (losses) (pre-tax) reclassified from OCI into net income (267) (449) — (716) 716

Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A N/A (201)

Total gains (losses) (pre-tax) on interest rate contracts (267) (449) — (716) 515

Foreign exchange contracts:

Realized gains (losses) (pre-tax) reclassified from OCI into net income — — (8) (8) 8

Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A N/A —

Total gains (losses) (pre-tax) on foreign exchange contracts — — (8) (8) 8

Total gains (losses) (pre-tax) recognized on cash flow hedges $ (267) (449) (8) (724) 523

Year ended December 31, 2022

Total amounts presented in the consolidated statement of income and other comprehensive income $ 37,715 3,308 (5,505) N/A (1,448)

Interest rate contracts:

Realized gains (losses) (pre-tax) reclassified from OCI into net income (20) 24 — 4 (4)

Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A N/A (1,524)

Total gains (losses) (pre-tax) on interest rate contracts (20) 24 — 4 (1,528)

Foreign exchange contracts:

Realized gains (losses) (pre-tax) reclassified from OCI into net income — — (10) (10) 10

Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A N/A (17)

Total gains (losses) (pre-tax) on foreign exchange contracts — — (10) (10) (7)

Total gains (losses) (pre-tax) recognized on cash flow hedges $ (20) 24 (10) (6) (1,535)

Year ended December 31, 2021

Total amounts presented in the consolidated statement of income and other comprehensive income $ 28,634 334 (3,173) N/A 212

Interest rate contracts:

Realized gains (losses) (pre-tax) reclassified from OCI into net income (137) — — (137) 137

Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A N/A 7

Total gains (losses) (pre-tax) on interest rate contracts (137) —

— (137) 144

Foreign exchange contracts:

Realized gains (losses) (pre-tax) reclassified from OCI into net income — — (6) (6) 6

Net unrealized gains (losses) (pre-tax) recognized in OCI N/A N/A N/A N/A (19)

Total gains (losses) (pre-tax) on foreign exchange contracts — — (6) (6) (13)

Total gains (losses) (pre-tax) recognized on cash flow hedges $ (137) — (6) (143) 131

Note 14: Derivatives (continued)

140 Wells Fargo & Company

Table 14.4: Gains (Losses) Recognized on Fair Value Hedging Relationships

Net interest income

Noninterest

income

Total

recorded in

net income

Total

recorded in

OCI

(in millions)

Debt

securities Deposits

Long-term

debt Other

Derivative

gains

(losses)

Derivative

gains

(losses)

Year ended December 31, 2023

Total amounts presented in the consolidated statement of income and other

comprehensive income $ 16,108 (16,503) (11,572) 1,935 N/A 545

Interest contracts

Amounts related to cash flows on derivatives 1,137 (346) (3,490) — (2,699) N/A

Recognized on derivatives (536) 312 2,634 — 2,410 —

Recognized on hedged items 534 (304) (2,631) — (2,401) N/A

Total gains (losses) (pre-tax) on interest rate contracts 1,135 (338) (3,487) — (2,690) —

Foreign exchange contracts

Amounts related to cash flows on derivatives — — (223) — (223) N/A

Recognized on derivatives — — 75 108 183 22

Recognized on hedged items — — (98) (99) (197) N/A

Total gains (losses) (pre-tax) on foreign exchange contracts — — (246) 9 (237) 22

Commodity contracts

Recognized on derivatives — — — 34 34 —

Recognized on hedged items — — — 45 45 N/A

Total gains (losses) (pre-tax) on commodity contracts — — — 79 79 —

Total gains (losses) (pre-tax) recognized on fair value hedges $ 1,135 (338) (3,733) 88 (2,848) 22

Year ended December 31, 2022

Total amounts presented in the consolidated statement of income and other

comprehensive income $ 11,781 (2,349) (5,505) 2,821 N/A (1,448)

Interest contracts

Amounts related to cash flows on derivatives 143 65 313 — 521 N/A

Recognized on derivatives 3,616 (345) (18,056) — (14,785) —

Recognized on hedged items (3,576)

350 17,919 — 14,693 N/A

Total gains (losses) (pre-tax) on interest rate contracts 183 70 176 — 429 —

Foreign exchange contracts

Amounts related to cash flows on derivatives — — (189) — (189) N/A

Recognized on derivatives — — (1,120) (1,021) (2,141)

Recognized on hedged items — — 1,097 1,005 2,102 N/A

Total gains (losses) (pre-tax) on foreign exchange contracts — — (212) (16) (228) 87

Commodity contracts

Recognized on derivatives — — — 57 57 —

Recognized on hedged items — — — (43) (43) N/A

Total gains (losses) (pre-tax) on commodity contracts — — — 14 14 —

Total gains (losses) (pre-tax) recognized on fair value hedges $ 183 70 (36) (2) 215 87

Year ended December 31, 2021

Total amounts presented in the consolidated statement of income and other

comprehensive income $ 9,253 (388) (3,173) 4,408 N/A 212

Interest contracts

Amounts related to cash flows on derivatives (253) 289 2,136 — 2,172 N/A

Recognized on derivatives 1,129 (336) (6,351) — (5,558) —

Recognized on hedged items (1,117) 333 6,288 — 5,504 N/A

Total gains (losses) (pre-tax) on interest rate contracts (241) 286 2,073 — 2,118 —

Foreign exchange contracts

Amounts related to cash flows on derivatives 57 — 10 — 67 N/A

Recognized on derivatives 4 — (516) (99) (611) 81

Recognized on hedged items (3) — 438 82 517 N/A

Total gains (losses) (pre-tax) on foreign exchange contracts 58 — (68) (17)

(27) 81

Commodity contracts

Recognized on derivatives — — — 113 113 —

Recognized on hedged items — — — (124) (124) N/A

Total gains (losses) (pre-tax) on commodity contracts — — — (11) (11) —

Total gains (losses) (pre-tax) recognized on fair value hedges $ (183) 286 2,005 (28) 2,080 81

Wells Fargo & Company 141

Table 14.5 shows the carrying amount and associated

cumulative basis adjustment related to the application of hedge

accounting that is included in the carrying amount of hedged

assets and liabilities in fair value hedging relationships.

Table 14.5: Hedged Items in Fair Value Hedging Relationships

Hedged items currently designated Hedged items no longer designated

(in millions)

Carrying amount of assets/

(liabilities) (1)(2)

Hedge accounting

basis adjustment

assets/(liabilities) (3)

Carrying amount of assets/

(liabilities) (2)

Hedge accounting basis

adjustment

assets/(liabilities)

December 31, 2023

Available-for-sale debt securities (4)(5) $ 55,898 (2,384) 13,418 504

Other assets 2,262 67 — —

Deposits (89,641) (101) — —

Long-term debt (146,940) 10,990 — —

December 31, 2022

Available-for-sale debt securities (4) $ 39,423 (3,859) 16,100 722

Other assets 1,663 38 — —

Deposits (41,687) 205 (10) —

Long-term debt (130,997) 13,862 (5) —

(1) Does not include the carrying amount of hedged items where only foreign currency risk is the designated hedged risk. The carrying amount excluded $404 million and $739 million for available-for-

sale (AFS) debt securities where only foreign currency risk is the designated hedged risk as of December31, 2023 and 2022, respectively.

(2) Represents the full carrying amount of the hedged asset or liability item as of the balance sheet date, except for circumstances in which only a portion of the asset or liability was designated as the

hedged item in which case only the portion designated is presented.

(3) The balance includes $32 million and $731 million of debt securities and long-term debt cumulative basis adjustments, respectively, as of December31, 2023, and $39 million and $334million of

debt securities and long-term debt cumulative basis adjustments, respectively, as of December31, 2022, on terminated hedges whereby the hedged items have subsequently been re-designated

into existing hedges.

(4) Carrying amount represents the amortized cost.

(5) The balance includes cumulative basis adjustments of $(46) million as of December31, 2023, related to certain AFS debt securities designated as the hedged item in a fair value hedge using the

portfolio layer method. At December31, 2023, the aggregated designated hedged items using the portfolio layer method had a carrying amount of $25.8billion from closed portfolios of financial

assets totaling $28.2 billion.

Derivatives Not Designated as Hedging Instruments

Derivatives not designated as hedging instruments include

economic hedges and derivatives entered into for customer

accommodation trading purposes.

We use economic hedge derivatives to manage our exposure

to interest rate risk, equity price risk, foreign currency risk, and

credit risk. We also use economic hedge derivatives to mitigate

the periodic earnings volatility caused by mismatches between

the changes in fair value of the hedged item and hedging

instrument recognized on our fair value accounting hedges.

Mortgage Banking Activities

We use economic hedge derivatives in our mortgage banking

business to hedge the risk of changes in the fair value of

(1)certain residential MSRs measured at fair value, (2) residential

mortgage LHFS, (3) derivative loan commitments, and (4) other

interests held. The types of derivatives used include swaps,

swaptions, constant maturity mortgages, forwards, Eurodollar

and Treasury futures and options contracts. Loan commitments

for mortgage loans that we intend to sell are considered

derivatives. Residential MSRs, derivative loan commitments,

certain residential mortgage LHFS, and our economic hedge

derivatives are carried at fair value.

Customer Accommodation Trading

For customer accommodation trading purposes, we use swaps,

futures, forwards, spots and options to assist our customers in

managing their own risks, including interest rate, commodity,

equity, foreign exchange, and credit contracts. These derivatives

are not linked to specific assets and liabilities on our consolidated

balance sheet or to forecasted transactions in an accounting

hedge relationship and, therefore, do not qualify for hedge

accounting. Changes in the fair value of customer

accommodation trading derivatives are recorded in net gains

from trading and securities.

Table 14.6 shows the net gains (losses) related to derivatives

not designated as hedging instruments. Gains (losses) on

customer accommodation trading derivatives are excluded from

the following table. For additional information, see Note 2

(Trading Activities)

Table 14.6: Gains (Losses) on Derivatives Not Designated as Hedging Instruments

Year ended December 31,

(in millions) 2023 2022 2021

Interest rate contracts (1) $ (321) (2,202) —

Equity contracts (2)(3) (177) (1,147) 647

Foreign exchange contracts (4) (824) 547 335

Credit contracts (5) 13 6 (12)

Net gains (losses) recognized related to derivatives not designated as hedging instruments $ (1,309) (2,796) 970

(1) Derivative gains and (losses) related to mortgage banking activities were recorded in mortgage banking noninterest income. Other derivative gains and (losses) not related to mortgage banking were

recorded in other noninterest income. For additional information on our mortgage banking interest rate contracts, see Note 6 (Mortgage Banking Activities).

Note1 (Summary of Significant Accounting Policies).

(3) Includes derivative gains and (losses) used to economically hedge the deferred compensation plan, which were recorded in personnel noninterest expense, and derivative instruments related to the

retained litigation risk associated with our previous sales of Visa Class B shares, which were recorded in other noninterest income.

(4) Includes derivatives used to mitigate foreign exchange risk of specified foreign currency-denominated assets and liabilities. Gains and (losses) were recorded in other noninterest income.

(5) Includes credit derivatives used to mitigate credit risk associated with lending exposure. Gains and (losses) were recorded in other noninterest income.

Note 14: Derivatives (continued)

142 Wells Fargo & Company

Credit Derivatives

Credit derivative contracts are arrangements whose value is

derived from the transfer of credit risk of a reference asset or

entity from one party (the purchaser of credit protection) to

another party (the seller of credit protection). We generally use

credit derivatives to assist customers with their risk

management objectives by purchasing and selling credit

protection on corporate debt obligations through the use of

credit default swaps or through risk participation swaps to help

manage counterparty exposure. We would be required to

perform under the credit derivatives we sold in the event of

default by the referenced obligors. Events of default include

events such as bankruptcy, capital restructuring or lack of

principal and/or interest payment.

Table 14.7 provides details of sold credit derivatives.

Table 14.7: Sold Credit Derivatives

Notional amount

(in millions) Protection sold

Protection sold –

non-investment

grade

December 31, 2023

Credit default swaps $ 18,453 1,399

Risk participation swaps 6,632 6,485

Total credit derivatives $ 25,085 7,884

December 31, 2022

Credit default swaps $ 12,733 1,860

Risk participation swaps 6,728 6,518

Total credit derivatives $ 19,461 8,378

Protection sold represents the estimated maximum

exposure to loss that would be incurred if, upon an event of

default, the value of our interests and any associated collateral

declined to zero, and does not take into consideration any

recovery value from the referenced obligation or offset from

collateral held or any economic hedges.

The amounts under non-investment grade represent the

notional amounts of those credit derivatives on which we have a

higher risk of being required to perform under the terms of the

credit derivative and are a function of the underlying assets.

We consider the credit risk to be low if the underlying assets

under the credit derivative have an external rating that is

investment grade. If an external rating is not available, we classify

the credit derivative as non-investment grade.

Our maximum exposure to sold credit derivatives is

managed through posted collateral and purchased credit

derivatives with identical or similar reference positions in order

to achieve our desired credit risk profile. The credit risk

management is designed to provide an ability to recover a

significant portion of any amounts that would be paid under sold

credit derivatives.

Credit-Risk Contingent Features

Certain of our derivative contracts contain provisions whereby if

the credit rating of our debt were to be downgraded by certain

major credit rating agencies, the counterparty could demand

additional collateral or require termination or replacement of

derivative instruments in a net liability position. Table 14.8

illustrates our exposure to OTC bilateral derivative contracts with

credit-risk contingent features, collateral we have posted, and

the additional collateral we would be required to post if the credit

rating of our debt was downgraded below investment grade.

Table 14.8: Credit-Risk Contingent Features

(in billions)

Dec 31,

2023

Dec 31,

2022

Net derivative liabilities with credit-risk

contingent features $ 23.7 20.7

Collateral posted 21.4 17.4

Additional collateral to be posted upon a below

investment grade credit rating (1) 2.3 3.3

(1) Any credit rating below investment grade requires us to post the maximum amount of

collateral.

Wells Fargo & Company 143

Note 15: Fair Values of Assets and Liabilities

We use fair value measurements to record fair value adjustments

to certain assets and liabilities and to fulfill fair value disclosure

requirements. Assets and liabilities recorded at fair value on a

recurring basis, such as derivatives, residential MSRs, and trading

or AFS debt securities, are presented in Table 15.1 in this Note.

Additionally, from time to time, we record fair value adjustments

on a nonrecurring basis. These nonrecurring adjustments

typically involve application of lower of cost or fair value

(LOCOM) accounting, write-downs of individual assets or

application of the measurement alternative for nonmarketable

equity securities. Assets recorded at fair value on a nonrecurring

basis are presented in Table 15.4 in this Note. We provide in

Table 15.9 estimates of fair value for financial instruments that

are not recorded at fair value, such as loans and debt liabilities

carried at amortized cost.

FAIR VALUE HIERARCHY We classify our assets and liabilities

recorded at fair value as either Level 1, 2, or 3 in the fair value

hierarchy. The highest priority (Level 1) is assigned to valuations

based on unadjusted quoted prices in active markets and the

lowest priority (Level 3) is assigned to valuations based on

significant unobservable inputs. See Note 1 (Summary of

Significant Accounting Policies) in this Report for a detailed

description of the fair value hierarchy.

In the determination of the classification of financial

instruments in Level 2 or Level 3 of the fair value hierarchy, we

consider all available information, including observable market

data, indications of market liquidity and orderliness, and our

understanding of the valuation techniques and significant inputs

used. This determination is ultimately based upon the specific

facts and circumstances of each instrument or instrument

category and judgments are made regarding the significance of

the unobservable inputs to the instruments’ fair value

measurement in its entirety. If unobservable inputs are

considered significant, the instrument is classified as Level 3.

We do not classify nonmarketable equity securities in the

fair value hierarchy if we use the non-published net asset value

(NAV) per share (or its equivalent) as a practical expedient to

measure fair value. Marketable equity securities with published

NAVs are classified in the fair value hierarchy.

Assets

TRADING DEBT SECURITIES Trading debt securities are recorded

at fair value on a recurring basis. These securities are valued using

internal trader prices that are subject to independent price

verification procedures, which includes comparing internal trader

prices against multiple independent pricing sources, such as

prices obtained from third-party pricing services, observed

trades, and other approved market data. These pricing services

compile prices from various sources and may apply matrix pricing

for similar securities when no price is observable. We review

pricing methodologies provided by pricing services to determine

if observable market information is being used versus

unobservable inputs. When evaluating the appropriateness of an

internal trader price, compared with other independent pricing

sources, considerations include the range and quality of available

information and observability of trade data. These sources are

used to evaluate the reasonableness of a trader price; however,

valuing financial instruments involves judgments acquired from

knowledge of a particular market. Substantially all of our trading

debt securities are recorded using internal trader prices.

AVAILABLE-FOR-SALE DEBT SECURITIES AFS debt securities are

recorded at fair value on a recurring basis. Fair value

measurement for AFS debt securities is based upon various

sources of market pricing. Where available, we use quoted prices

in active markets. When instruments are traded in secondary

markets and quoted prices in active markets do not exist for such

securities, we use prices obtained from third-party pricing

services and, to a lesser extent, may use prices obtained from

independent broker-dealers (brokers), collectively vendor prices.

Substantially all of our AFS debt securities are recorded using

vendor prices. See the “Level 3 Asset and Liability Valuation

Processes – Vendor Developed Valuations” section in this Note

for additional discussion of our processes when using vendor

prices to record fair value of AFS debt securities, which includes

those classified as Level 2 or Level 3 within the fair value

hierarchy.

When vendor prices are deemed inappropriate, they may be

adjusted based on other market data or internal models. We also

use internal models when no vendor prices are available. Internal

models use discounted cash flow techniques or market

comparable pricing techniques.

LOANS HELD FOR SALE (LHFS) LHFS generally includes originated

or purchased commercial and residential mortgage loans for sale

in the securitization or whole loan market. A significant portion

of residential LHFS, and our portfolio of commercial LHFS in our

trading business, are recorded at fair value on a recurring basis.

The remaining LHFS are held at LOCOM which may be written

down to fair value on a nonrecurring basis. Fair value for LHFS

that are not part of our trading business is based on quoted

market prices, where available, or the prices for other mortgage

whole loans with similar characteristics. We may use

securitization prices that are adjusted for typical securitization

activities including servicing value, portfolio composition, market

conditions and liquidity. Fair value for LHFS in our trading

business is based on pending transactions when available. Where

market pricing data or pending transactions are not available, we

use a discounted cash flow model to estimate fair value.

LOANS Although loans are recorded at amortized cost, we record

nonrecurring fair value adjustments to reflect write-downs that

are based on the observable market price of the loan or current

appraised value of the collateral less costs to sell.

MORTGAGE SERVICING RIGHTS (MSRs) Residential MSRs are

carried at fair value on a recurring basis. Commercial MSRs are

carried at LOCOM and may be written down to fair value on a

nonrecurring basis. MSRs do not trade in an active market with

readily observable prices. We determine the fair value of MSRs

using a valuation model that estimates the present value of

expected future net servicing income. The model incorporates

assumptions that market participants may use in estimating

future net servicing income cash flows, including estimates of

prepayment rates (including housing price volatility for

residential MSRs), discount rates, and cost to service (including

delinquency and foreclosure costs).

144 Wells Fargo & Company

DERIVATIVES Derivatives are recorded at fair value on a recurring

basis. Other than certain exchange-traded derivatives that are

actively traded and valued using quoted market prices,

derivatives are measured using internal valuation techniques.

These instruments, which include derivatives traded in over-the-

counter (OTC) markets, with clearinghouses, and on exchanges,

are classified as Level 2 or Level 3 of the fair value hierarchy,

depending on the significance of unobservable inputs in the

valuation. Valuation techniques and inputs to internal models

depend on the type of derivative and nature of the underlying

rate, price or index upon which the value of the derivative is

based. Key inputs can include yield curves, credit curves, foreign

exchange rates, prepayment rates, volatility measurements and

correlation of certain of these inputs.

EQUITY SECURITIES Marketable equity securities and certain

nonmarketable equity securities that we have elected to account

for at fair value are recorded at fair value on a recurring basis. Our

remaining nonmarketable equity securities are accounted for

using the equity method, cost method or measurement

alternative and can be subject to nonrecurring fair value

adjustments to record impairment. Additionally, the carrying

value of equity securities accounted for under the measurement

alternative is also remeasured to fair value upon the occurrence

of orderly observable transactions of the same or similar

securities of the same issuer.

We use quoted prices to determine the fair value of

marketable equity securities, as the securities are publicly traded.

Quoted prices are typically not available for nonmarketable

equity securities. We therefore use other methods, generally

market comparable pricing techniques, to determine fair value

for such securities. We use all available information in making this

determination, which includes observable transaction prices for

the same or similar security, prices from third-party pricing

services, broker quotes, trading multiples of comparable public

companies, and discounted cash flow models. Where appropriate,

we make adjustmentsto observed market data to reflect the

comparative differences between the market data and the

attributes of our equity security, such as differences with public

companies and other investment-specific considerations like

liquidity, marketability or differences in terms of the

instruments.

OTHER ASSETS Other assets are generally recorded at amortized

cost, with the exception of market risk benefit assets which are

recorded at fair value on a recurring basis and valued at the

contract level using a discounted cash flow model. For the

remaining other assets recorded at amortized cost, we also

record nonrecurring fair value adjustments to reflect impairment

or the impact of certain lease modifications. Other assets subject

to nonrecurring fair value measurements include operating lease

ROU assets, foreclosed assets and physical commodities. For

these assets, fair value is generally based upon independent

market prices or appraised values less costs to sell, or the use of a

discounted cash flow model.

Liabilities

SHORT-SALE AND OTHER LIABILITIES Short-sale trading liabilities

in our trading business are recorded at fair value on a recurring

basis and are measured using quoted prices in active markets,

where available. When quoted prices for the same instruments

are not available or markets are not active, fair values are

estimated using recent trades of similar securities. Other

liabilities include market risk benefit liabilities, which are recorded

at fair value on a recurring basis and valued at the contract level

using a discounted cash flow model.

INTEREST-BEARING DEPOSITS AND LONG-TERM DEBT Although

interest-bearing deposits and long-term debt are generally

recorded at amortized cost, we have elected the fair value option

for certain structured notes issued by our trading business. Fair

values for these instruments are estimated using a discounted

cash flow model that includes both the embedded derivative and

debt portions of the notes. The discount rate used in these

discounted cash flow models also incorporates the impact of our

credit spread, which is generally based on observable spreads in

the secondary bond market.

Wells Fargo & Company 145

Level 3 Asset and Liability Valuation Processes

We generally determine fair value of our Level 3 assets and

liabilities by using internal models and, to a lesser extent, prices

obtained from vendors. Our valuation processes vary depending

on which approach is utilized.

INTERNAL MODEL VALUATIONS Certain Level 3 fair value

estimates are based on internal models, such as discounted cash

flow or market comparable pricing techniques. Some of the

inputs used in these valuations are unobservable. Unobservable

inputs are generally derived from or can be correlated to historic

performance of similar portfolios or previous market trades in

similar instruments where particular unobservable inputs may be

implied. We attempt to correlate each unobservable input to

historical experience and other third-party data where available.

Internal models are subject to review prescribed within our

model risk management policies and procedures, which include

model validation. Model validation helps ensure our models are

appropriate for their intended use and appropriate controls exist

to help mitigate risk of invalid valuations. Model validation

assesses the adequacy and appropriateness of our models,

including reviewing its key components, such as inputs,

processing components, logic or theory, output results and

supporting model documentation. Validation also includes

ensuring significant unobservable model inputs are appropriate

given observable market transactions or other market data

within the same or similar asset classes. We also have ongoing

monitoring procedures in place for our Level 3 assets and

liabilities that use internal valuation models. These procedures,

which are designed to provide reasonable assurance that models

continue to perform as expected, include:

• ongoing analysis and benchmarking to market transactions

and other independent market data (including pricing

vendors, if available);

• back-testing of modeled fair values to actual realized

transactions; and

• review of modeled valuation results against expectations,

including review of significant or unusual fluctuations in

value.

We update model inputs and methodologies periodically to

reflect these monitoring procedures. Additionally, existing

models are subject to periodic reviews and we perform full model

revalidations as necessary.

Internal valuation models are subject to ongoing review by

the appropriate principal line of business or enterprise function

and monitoring oversight by Independent Risk Management.

Independent Risk Management, through its Model Risk function,

provides independent oversight of model risk management, and

its responsibilities include governance, validation, periodic review,

and monitoring of model risk across the Company and providing

periodic reports to management and the Board’s Risk

Committee.

VENDOR-DEVELOPED VALUATIONS We routinely obtain pricing

from third-party vendors to value our assets or liabilities. In

certain limited circumstances, this includes assets and liabilities

that we classify as Level 3. We have processes in place to approve

and periodically review third-party vendors to assess whether

information obtained and valuation techniques used are

appropriate. This review may consist of, among other things,

obtaining and evaluating control reports issued and pricing

methodology materials distributed. We monitor and review

vendor prices on an ongoing basis to evaluate whether the fair

values are reasonable and in line with market experience in

similar asset classes. While the inputs used to determine fair

value are not provided by the pricing vendors, and therefore

unavailable for our review, we perform one or more of the

following procedures to validate the pricing information and

determine appropriate classification within the fair value

hierarchy:

• comparison to other pricing vendors (if available);

• variance analysis of prices;

• corroboration of pricing by reference to other independent

market data, such as market transactions and relevant

benchmark indices;

• review of pricing by Company personnel familiar with market

liquidity and other market-related conditions; and

• investigation of prices on a specific instrument-by-

instrument basis.

Note 15: Fair Values of Assets and Liabilities (continued)

146 Wells Fargo & Company

Assets and Liabilities Recorded at Fair Value on a

Recurring Basis

Table 15.1 presents the balances of assets and liabilities recorded

at fair value on a recurring basis.

Table 15.1: Fair Value on a Recurring Basis

December 31, 2023 December 31, 2022

(in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Trading debt securities:

Securities of U.S. Treasury and federal agencies $ 32,178 3,027 — 35,205 28,844 4,530 — 33,374

Collateralized loan obligations — 762 64 826 — 540 150 690

Corporate debt securities — 12,859 82 12,941 — 10,344 23 10,367

Federal agency mortgage-backed securities — 42,944 — 42,944 — 34,447 — 34,447

Non-agency mortgage-backed securities — 1,477 10 1,487 — 1,243 12 1,255

Other debt securities — 3,898 1 3,899 — 6,022 — 6,022

Total trading debt securities 32,178 64,967 157 97,302 28,844 57,126 185 86,155

Available-for-sale debt securities:

Securities of U.S. Treasury and federal agencies 45,467 — — 45,467 45,285 — — 45,285

Non-U.S. government securities — 164 — 164 — 162 — 162

Securities of U.S. states and political subdivisions — 20,009 57 20,066 — 10,332 113 10,445

Federal agency mortgage-backed securities — 59,578 — 59,578 — 48,137 — 48,137

Non-agency mortgage-backed securities — 2,748 1 2,749 — 3,284 — 3,284

Collateralized loan obligations — 1,533 — 1,533 — 3,981 — 3,981

Other debt securities — 728 163

891 — 2,137 163 2,300

Total available-for-sale debt securities 45,467 84,760 221 130,448 45,285 68,033 276 113,594

Loans held for sale — 2,444 448 2,892 — 3,427 793 4,220

Mortgage servicing rights (residential) — — 7,468 7,468 — — 9,310 9,310

Derivative assets (gross):

Interest rate contracts 195 31,434 816 32,445 262 40,503 321 41,086

Commodity contracts — 2,723 18 2,741 — 5,866 134 6,000

Equity contracts 71 13,041 193 13,305 112 9,051 410 9,573

Foreign exchange contracts — 24,730 37 24,767 27 22,175 11 22,213

Credit contracts — 74 39 113 — 44 22 66

Total derivative assets (gross) 266 72,002 1,103 73,371 401 77,639 898 78,938

Equity securities:

Marketable 10,849 9 6 10,864 18,527 86 3 18,616

Nonmarketable — 8,940 37 8,977 — 9,750 17 9,767

Total equity

Derivative netting (2)

securities 10,849 8,949 43 19,841 18,527 9,836 20 28,383

Other assets (1) — — 49 49 — — — —

Total assets prior to derivative netting $ 88,760 233,122 9,489 331,371 93,057

216,061 11,482 320,600

Derivative netting (2) (55,148) (56,164)

Total assets after derivative netting $ 276,223 264,436

Derivative liabilities (gross):

Interest rate contracts $ (201) (32,298) (4,383) (36,882) (193) (40,377) (2,903) (43,473)

Commodity contracts — (2,719) (27) (2,746) — (3,325) (120) (3,445)

Equity contracts (1) (35) (12,108) (1,667) (13,810) (118) (6,502) (1,634) (8,254)

Foreign exchange contracts — (27,138) (19) (27,157) (29) (26,622) (35) (26,686)

Credit contracts — (39) (5) (44) — (33) (3) (36)

Total derivative liabilities (gross) (236) (74,302) (6,101) (80,639) (340) (76,859) (4,695) (81,894)

Short-sale and other liabilities (1) (19,695) (5,776) (83) (25,554) (14,791) (5,513) (167) (20,471)

Interest-bearing deposits — (1,297) — (1,297)

— — —

—

Long-term debt — (2,308) — (2,308) — (1,346) — (1,346)

Total liabilities prior to derivative netting $ (19,931) $ (83,683) (6,184) (109,798) (15,131) (83,718) (4,862) (103,711)

62,144 61,827

Total liabilities after derivative netting $ (47,654) (41,884)

Note1 (Summary of Significant Accounting Policies).

(2) Represents balance sheet netting of derivative asset and liability balances, related cash collateral, and portfolio level counterparty valuation adjustments. See Note 14 (Derivatives) for additional

information.

Wells Fargo & Company 147

Level 3 Assets and Liabilities Recorded at Fair Value

on a Recurring Basis

Table 15.2 presents the changes in Level 3 assets and

liabilities measured at fair value on a recurring basis.

Table 15.2: Changes in Level 3 Fair Value Assets and Lia bilities on a Recurring Ba sis

(in millions)

Balance,

beginning

of period

Net gains/

(losses) (1) Purchases (2) Sales Settlements

Transfers

into

Level 3 (3)

Transfers

out of

Level 3 (4)

Balance,

end of

period

Net unrealized

gains (losses)

related to

assets and

liabilities held

at period end (5)

Year ended December 31, 2023

Trading debt securities $ 185 (14) 141 (167) (11) 104 (81) 157 (12) (6)

Available-for-sale debt securities 276 (8) 113 (31) (19) 304 (414) 221 (32) (6)

Loans held for sale 793 1 298 (373) (120) 126 (277) 448 (17) (7)

Mortgage servicing rights (residential) (8) 9,310 (1,101) 161 (902) — — — 7,468 86 (7)

Net derivative assets and liabilities:

Interest rate contracts (2,582) (2,062) 3 (3) 2,548 (1,493) 22 (3,567) 93

Equity contracts (1,224) (801) — — 521 (108) 138 (1,474) (314)

Other derivative contracts 9 (52) 14 (4) 81 (3) (2) 43 42

Total derivative contracts (3,797) (2,915) 17 (7) 3,150 (1,604) 158 (4,998) (179) (9)

Equity securities 20 (2) 10 (8) — 23 — 43 (1) (6)

Other assets and liabilities (167) 133 — — — — — (34) 133 (10)

Year ended December 31, 2022

Trading debt securities $ 241 (72) 218 (186) (6) 22 (32) 185 (73) (6)

Available-for-sale debt securities

186 (36) 327 (26) (25) 460 (610) 276 (10) (6)

Loans held for sale 1,033 (252) 389 (391) (207) 237 (16) 793 (170) (7)

Mortgage servicing rights (residential) (8) 6,920 2,001 1,003 (614) — — — 9,310 3,254 (7)

Net derivative assets and liabilities:

Interest rate contracts 127 (3,280) — — 994 (435) 12 (2,582) (2,073)

Equity contracts (11) (417) 35 — (9) 718 (584) (967) (1,224) 276

Other derivative contracts 5 (68) 19 (9) 118 (16) (40) 9 (16)

Total derivative contracts (285) (3,313) 19 (18) 1,830 (1,035) (995) (3,797) (1,813) (9)

Equity securities 8,910 4 1 (2) — 3 (8,896) 20 (2) (6)

Other assets and liabilities (11) (791) 624 — — — — — (167) 624 (10)

Year ended December 31, 2021

Trading debt securities $ 173 7 518 (448) (12) 34 (31) 241 (8) (6)

Available-for-sale debt securities 2,994 21 809 (112) (278) 353 (3,601) 186 (4) (6)

Loans held for sale 1,234 (25) 477 (534) (377) 394 (136) 1,033 (26) (7)

Mortgage servicing rights (residential) (8) 6,125 (842) 1,645 (8) — — — 6,920 1,170 (7)

Net derivative assets and liabilities:

Interest rate contracts 446 27 — — (340) (5) (1) 127 (75)

Equity contracts (11) (288) (482) — — 379 (228) 202 (417) (280)

Other derivative contracts 39 (114) 3 (3) 77 — 3 5 (36)

Total derivative contracts 197 (569) 3 (3) 116 (233) 204 (285) (391) (9)

Equity securities 9,233 (267) 1 (68) — 11 — 8,910 (316) (6)

Other assets and liabilities (11) (1,483) 771 — — (79) — — (791) 645 (10)

(1) All amounts represent net gains (losses) included in net income except for AFS debt securities and other assets and liabilities which also included net gains (losses) in other comprehensive income.

Net gains (losses) included in other comprehensive income for AFS debt securities were $(27) million, $(37) million and $41 million for the years ended December31, 2023, 2022 and 2021,

respectively. Net gains (losses) included in other comprehensive income for other assets and liabilities were $(12) million, $71 million, and $83 million for the years ended December31, 2023, 2022

and 2021, respectively.

(2) Includes originations of mortgage servicing rights and loans held for sale.

(3) All assets and liabilities transferred into Level 3 were previously classified within Level 2.

(4) All assets and liabilities transferred out of Level 3 are classified as Level 2. During first quarter 2022, we transferred $8.9 billion of non-marketable equity securities and $1.4 billion of related

economic hedging derivative assets (equity contracts) out of Level 3 due to our election to measure fair value of these instruments as a portfolio. Under this election, the unit of valuation is the

portfolio-level, rather than each individual instrument. The unobservable inputs previously significant to the valuation of the instruments individually are no longer significant, as those unobservable

inputs offset under the portfolio election.

(5) All amounts represent net unrealized gains (losses) related to assets and liabilities held at period end included in net income except for AFS debt securities and other assets and liabilities which also

included net unrealized gains (losses) related to assets and liabilities held at period end in other comprehensive income. Net unrealized gains (losses) included in other comprehensive income for AFS

debt securities were $(28) million, $(9) million and $(1) million for the years ended December31, 2023, 2022 and 2021, respectively. Net unrealized gains (losses) included in other comprehensive

income for other assets and liabilities were $(12) million, $71 million and $78 million for the years ended December31, 2023, 2022 and 2021, respectively.

(6) Included in net gains from trading and securities on our consolidated statement of income.

(7) Included in mortgage banking income on our consolidated statement of income.

(8) For additional information on the changes in mortgage servicing rights, see Note 6 (Mortgage Banking Activities).

(9) Included in mortgage banking income, net gains from trading and securities, and other noninterest income on our consolidated statement of income.

(10) Included in other noninterest income on our consolidated statement of income.

(11) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see

Note1 (Summary of Significant Accounting Policies).

Note 15: Fair Values of Assets and Liabilities (continued)

148 Wells Fargo & Company

Table 15.3 provides quantitative information about the

valuation techniques and significant unobservable inputs used in

the valuation of our Level 3 assets and liabilities measured at fair

value on a recurring basis.

The significant unobservable inputs for Level 3 assets

inherent in the fair values obtained from third-party vendors are

not included in the table, as the specific inputs applied are not

provided by the vendor (see discussion in the “Level 3 Asset and

Liability Valuation Processes” section within this Note regarding

vendor-developed valuations).

Weighted averages of inputs are calculated using

outstanding unpaid principal balance for cash instruments, such

as loans and securities, and notional amounts for derivative

instruments.

Table 15.3: Valuation Techniques – Recurring Basis

($ in millions, except cost to service amounts)

Fair Value

Level 3 Valuation Technique

Significant

Unobservable Input Range of Inputs

Weighted

Average

December 31, 2023

Trading and available-for-sale debt securities $ 60 Discounted cash flow Discount rate 2.7 - 7.3 % 4.7

157 Market comparable pricing Comparability adjustment (27.1) - 20.1 (1.9)

161 Market comparable pricing Multiples 1.2x - 10.3x 5.6x

Loans held for sale 359 Discounted cash flow Default rate 0.0 - 28.0 % 1.1

Discount rate 1.7 - 15.4 9.8

Loss severity 0.0 - 58.1 15.7

Prepayment rate 2.6 - 12.1 10.6

89 Market comparable pricing Comparability adjustment (6.4) - 1.1 (1.1)

Mortgage servicing rights (residential) 7,468 Discounted cash flow Cost to service per loan (1) $ 52 - 527 105

Discount rate 8.9 - 13.9 % 9.4

Prepayment rate (2) 7.3 - 24.3 8.9

Net derivative assets and (liabilities):

Interest rate contracts (3,501) Discounted cash flow Discount rate 3.6 - 5.4 4.2

(36) Discounted cash flow Default rate 0.4 - 5.0 1.2

Loss severity 50.0 - 50.0 50.0

Prepayment rate 22.0 - 22.0 22.0

Interest rate contracts: derivative loan

commitments (30) Discounted cash flow Fall-out factor 1.0 - 99.0 30.2

Initial-value servicing (5.5) - 141.0 bps 10.0

Equity contracts (1,020) Discounted cash flow Conversion factor (6.9) - 0.0 % (6.4)

Weighted average life 0.5 - 2.0 yrs 1.1

(454) Option model Correlation factor (67.0) - 99.0 % 73.8

Volatility factor 6.5 - 147.0 38.6

Insignificant Level 3 assets, net of liabilities (3) 52

Total Level 3 assets, net of liabilities $ 3,305 (4)

December 31, 2022

Trading and available-for-sale debt securities $ 157 Discounted cash flow Discount rate 2.7 - 12.5 % 6.4

185 Market comparable pricing Comparability adjustment (33.6) - 14.1 (4.8)

119 Market comparable pricing Multiples 1.1x - 7.4x 4.0x

Loans held for sale 793 Discounted cash flow Default rate 0.0 - 25.0 % 0.7

Discount rate 2.9 - 13.4 9 . 5

Loss severity 0.0 - 53.6 15.7

Prepayment rate 3 . 5 - 14.2 10.7

Mortgage servicing rights (residential) 9,310 Discounted cash flow Cost to service per loan (1) $ 52 - 550 102

Discount rate 8.7 - 14.1 % 9.1

Prepayment rate (2) 8.1 - 21.9 9.4

Net derivative assets and (liabilities):

Interest rate contracts (2,411) Discounted cash flow Discount rate 3.2 - 4.9 4.2

(63) Discounted cash flow Default rate 0.4 - 5 . 0 2.3

Loss severity 50.0 - 50.0 50.0

Prepayment rate 2.8 - 22.0 18.7

Interest rate contracts: derivative loan

commitments (108) Discounted cash flow Fall-out factor 1.0 - 99.0 41.0

Initial-value servicing (9.3) - 141.0 bps 11.5

Equity contracts (3) (1,000) Discounted cash flow Conversion factor (12.2) - 0.0 % (9.9)

Weighted average life 0.5 - 1.5 yrs 0.8

(224) Option model Correlation factor (77.0) - 99.0 %

49.5

Volatility factor 6 . 5 - 96.5 37.3

Insignificant Level 3 liabilities, net of assets (3) (138)

Total Level 3 assets, net of liabilities $ 6,620 (4)

(1) The high end of the range of inputs is for servicing modified loans. For non-modified loans, the range is $52 - $167 at December31, 2023, and $52 - $178 at December31, 2022.

(2) Includes a blend of prepayment speeds and expected defaults. Prepayment speeds are influenced by mortgage interest rates as well as our estimation of drivers of borrower behavior.

(3) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see

Note1 (Summary of Significant Accounting Policies).

(4) Consists of total Level 3 assets of $9.5 billion and $11.5 billion and total Level 3 liabilities of $6.2billion and $4.9 billion, before netting of derivative balances, at December31, 2023 and 2022,

respectively.

Wells Fargo & Company 149

The internal valuation techniques used for our Level 3 assets

and liabilities, as presented in Table 15.3, are described as

follows:

• Discounted cash flow – Discounted cash flow valuation

techniques generally consist of developing an estimate of

future cash flows that are expected to occur over the life of

an instrument and then discounting those cash flows at a

rate of return that results in the fair value amount.

• Market comparable pricing – Market comparable pricing

valuation techniques are used to determine the fair value of

certain instruments by incorporating known inputs, such as

recent transaction prices, pending transactions, financial

metrics of comparable companies, or prices of other similar

investments that require significant adjustment to reflect

differences in instrument characteristics.

• Option model

– Option model valuation techniques are

generally used for instruments in which the holder has a

contingent right or obligation based on the occurrence of a

future event, such as the price of a referenced asset going

above or below a predetermined strike price. Option models

estimate the likelihood of the specified event occurring by

incorporating assumptions such as volatility estimates, price

of the underlying instrument and expected rate of return.

The unobservable inputs presented in the previous tables are

those we consider significant to the fair value of the Level 3 asset

or liability. We consider unobservable inputs to be significant if

by their exclusion the fair value of the Level 3 asset or liability

would be impacted by a predetermined percentage change. We

also consider qualitative factors, such as nature of the

instrument, type of valuation technique used, and the

significance of the unobservable inputs relative to other inputs

used within the valuation. Following is a description of the

significant unobservable inputs provided in the table.

• Comparability adjustment

– is an adjustment made to

observed market data, such as a transaction price to reflect

dissimilarities in underlying collateral, issuer, rating, or other

factors used within a market valuation approach, expressed

as a percentage of an observed price.

• Conversion factor

– is the risk-adjusted rate in which a

particular instrument may be exchanged for another

instrument upon settlement, expressed as a percentage

change from a specified rate.

• Correlation factor

– is the likelihood of one instrument

changing in price relative to another based on an established

relationship expressed as a percentage of relative change in

price over a period over time.

• Cost to service

– is the expected cost per loan of servicing a

portfolio of loans, which includes estimates for

unreimbursed expenses (including delinquency and

foreclosure costs) that may occur as a result of servicing

such loan portfolios.

• Default rate – is an estimate of the likelihood of not

collecting contractual amounts owed expressed as a

constant default rate (CDR).

• Discount rate

– is a rate of return used to calculate the

present value of the future expected cash flow to arrive at

the fair value of an instrument. The discount rate consists

of a benchmark rate component and a risk premium

component. The benchmark rate component, for example,

Secured Overnight Financing Rate (SOFR) or U.S. Treasury

rates, is generally observable within the market and is

necessary to appropriately reflect the time value of money.

The risk premium component reflects the amount

of compensation market participants require due to the

uncertainty inherent in the instruments’ cash flows resulting

from risks such as credit and liquidity.

• Fall-out factor

– is the expected percentage of loans

associated with our interest rate lock commitment portfolio

that are likely of not funding.

• Initial-value servicing

– is the estimated value of the

underlying loan, including the value attributable to the

embedded servicing right, expressed in basis points of

outstanding unpaid principal balance.

• Loss severity

– is the estimated percentage of contractual

cash flows lost in the event of a default.

• Multiples

– are financial ratios of comparable public

companies, such as ratios of enterprise value or market value

of equity to earnings before interest, depreciation, and

amortization (EBITDA), revenue, net income or book value,

adjusted to reflect dissimilarities in operational, financial, or

marketability to the comparable public company used in a

market valuation approach.

• Prepayment rate

– is the estimated rate at which forecasted

prepayments of principal of the related loan or debt

instrument are expected to occur, expressed as a constant

prepayment rate (CPR).

• Volatility factor

– is the extent of change in price an item is

estimated to fluctuate over a specified period of time

expressed as a percentage of relative change in price over a

period over time.

• Weighted average life

– is the weighted average number of

years an investment is expected to remain outstanding

based on its expected cash flows reflecting the estimated

date the issuer will call or extend the maturity of the

instrument or otherwise reflecting an estimate of the timing

of an instrument’s cash flows whose timing is not

contractually fixed.

Interrelationships and Uncertainty of Inputs Used in

Recurring Level 3 Fair Value Measurements

Usage of the valuation techniques presented in Table 15.3

requires determination of relevant inputs and assumptions, some

of which represent significant unobservable inputs. Accordingly,

changes in these unobservable inputs may have a significant

impact on fair value.

Certain of these unobservable inputs will (in isolation) have a

directionally consistent impact on the fair value of the

instrument for a given change in that input. Alternatively, the fair

value of the instrument may move in an opposite direction for a

given change in another input. Where multiple inputs are used

within the valuation technique of an asset or liability, a change in

one input in a certain direction may be offset by an opposite

change in another input having a potentially muted impact to the

overall fair value of that particular instrument. Additionally, a

change in one unobservable input may result in a change to

another unobservable input (that is, changes in certain inputs are

interrelated to one another), which may counteract or magnify

the fair value impact.

DEBT SECURITIES AND LOANS HELD FOR SALE The internal models

used to determine fair value for these Level 3 instruments use

certain significant unobservable inputs within a discounted cash

flow or market comparable pricing valuation technique. Such

inputs include discount rate, prepayment rate, default rate, loss

severity, multiples, and comparability adjustment.

These Level 3 assets would decrease (increase) in value

based upon an increase (decrease) in discount rate, default rate

or loss severity inputs and would generally decrease (increase) in

Note 15: Fair Values of Assets and Liabilities (continued)

150 Wells Fargo & Company

value based upon an increase (decrease) in prepayment rate.

Conversely, these Level 3 assets would increase (decrease) in

value based upon an increase (decrease) in multiples. The

comparability adjustment input may have a positive or negative

impact on fair value depending on the change in fair value of the

item the comparability adjustment references.

Generally, a change in the assumption used for the default

rate is accompanied by a directionally similar change in the risk

premium component of the discount rate (specifically, the

portion related to credit risk) and a directionally opposite change

in the assumption used for prepayment rates. Unobservable

inputs for comparability adjustment, multiples, and loss severity

do not increase or decrease based on movements in the other

significant unobservable inputs for these Level 3 assets.

MORTGAGE SERVICING RIGHTS The discounted cash flow models

used to determine fair value of Level 3 residential MSRs utilize

certain significant unobservable inputs including prepayment

rate, discount rate and costs to service. An increase in any of

these unobservable inputs will reduce the fair value of the MSRs

and alternatively, a decrease in any one of these inputs would

result in the MSRs increasing in value. Generally, a decrease in

discount rates increases the value of MSRs, unless accompanied

by a related update to our prepayment rates. The cost to service

assumption generally does not increase or decrease based on

movements in the discount rate or the prepayment rate. The

sensitivity to key assumptions of our residential MSRs is

discussed further in Note 6 (Mortgage Banking Activities).

DERIVATIVE INSTRUMENTS Level 3 derivative instruments are

valued using market comparable pricing, option pricing and

discounted cash flow valuation techniques which use certain

unobservable inputs to determine fair value. Such inputs consist

of prepayment rate, default rate, loss severity, initial-value

servicing, fall-out factor, volatility factor, weighted average life,

conversion factor, and correlation factor.

Level 3 derivative assets (liabilities) where we are long the

underlying would decrease (increase) in value upon an increase

(decrease) in default rate, fall-out factor, conversion factor, or

loss severity inputs. Conversely, Level 3 derivative assets

(liabilities) would generally increase (decrease) in value upon an

increase (decrease) in prepayment rate, initial-value servicing,

weighted average life or volatility factor inputs. The inverse of

the above relationships would occur for instruments when we are

short the underlying. The correlation factor input may have a

positive or negative impact on the fair value of derivative

instruments depending on the change in fair value of the item

the correlation factor references.

Generally, for derivative instruments for which we are

subject to changes in the value of the underlying referenced

instrument, a change in the assumption used for default rate is

accompanied by directionally similar change in the risk premium

component of the discount rate (specifically, the portion related

to credit risk) and a directionally opposite change in the

assumption used for prepayment rates. Unobservable inputs for

loss severity, initial-value servicing, fall-out factor, volatility

factor, weighted average life, conversion factor, and correlation

factor do not increase or decrease based on movements in other

significant unobservable inputs for these Level 3 instruments.

Assets and Liabilities Recorded at Fair Value on a

Nonrecurring Basis

We may be required, from time to time, to measure certain

assets at fair value on a nonrecurring basis in accordance with

GAAP. These adjustments to fair value usually result from

application of LOCOM accounting, write-downs of individual

assets, or application of the measurement alternative for certain

nonmarketable equity securities.

Table 15.4 provides the fair value hierarchy and fair value at

the date of the nonrecurring fair value adjustment for all assets

that were still held as of December31, 2023and 2022, and for

which a nonrecurring fair value adjustment was recorded during

the years then ended.

Table 15.4: Fair Value on a Nonrecurring Basis

December 31, 2023 December 31, 2022

(in millions) Level 2 Level 3 Total Level 2 Level 3 Total

Loans held for sale (1) $ 326 297 623 838 554 1,392

Loans:

Commercial 1,565 — 1,565 285 — 285

Consumer 97 — 97 512 — 512

Total loans 1,662 — 1,662 797 — 797

Mortgage servicing rights (commercial) — — — — 75 75

Nonmarketable equity securities 2,086 2,354 4,440 1,926 2,818 4,744

Other assets 2,451 58 2,509 1,862 296 2,158

Total assets at fair value on a nonrecurring basis $ 6,525 2,709 9,234 5,423 3,743 9,166

(1) Consists of commercial mortgages and residential mortgage – first lien loans.

Wells Fargo & Company 151

Table 15.5 presents the gains (losses) on certain assets held

at the end of the reporting periods presented for which a

nonrecurring fair value adjustment was recognized in earnings

during the respective periods.

Table 15.5: Gains (Losses) on Assets with Nonrecurring Fair Value

Adjustment

Year ended December 31,

(in millions) 2023 2022 2021

Loans held for sale $ (9) (120) 33

Loans:

Commercial (716) (96) (230)

Consumer (706) (739) (564)

Total loans (1,422) (835) (794)

Mortgage servicing rights

(commercial) — 4 33

Nonmarketable equity securities (1) (718) (1,191) 4,407

Other assets (2)

(122) (275) (388)

Total $ (2,271) (2,417) 3,291

(1) Includes impairment of nonmarketable equity securities and observable price changes

related to nonmarketable equity securities accounted for under the measurement

alternative.

(2) Includes impairment of operating lease ROU assets, valuation of physical commodities,

valuation losses on foreclosed real estate and other collateral owned, and impairment of

venture capital and private equity investments in consolidated portfolio companies.

Table 15.6 provides quantitative information about the

valuation techniques and significant unobservable inputs used in

the valuation of our Level 3 assets that are measured at fair value

on a nonrecurring basis and determined using an internal model.

The table is limited to financial instruments that had

nonrecurring fair value adjustments during the periods

presented. Weighted averages of inputs are calculated using

outstanding unpaid principal balance for cash instruments, such

as loans, and carrying value prior to the nonrecurring fair value

measurement for nonmarketable equity securities and venture

capital and private equity investments in consolidated portfolio

companies.

Table 15.6: Valuation Techniques – Nonrecurring Basis

($ in millions)

Fair Value

Level 3

Valuation

Technique (1)

Significant

Unobservable Input (1)

Range of Inputs

Positive (Negative)

Weighted

Average

December 31, 2023

Loans held for sale $ 297 Discounted cash flow Default rate 0.1 - 95.8% 17.5

Discount rate 3.0 - 13.2 5.8

Loss severity 5.4 - 58.6 16.6

Prepayment rate 2.1 - 33.8 11.8

Nonmarketable equity securities 591 Market comparable pricing Comparability adjustment (100.0) - (11.5) (42.9)

1,721 Market comparable pricing Multiples 0.7x - 27.1x 8.4x

42 Discounted cash flow Discount rate 5.0 - 5.0 % 5.0

Insignificant Level 3 assets 58

Total $ 2,709

December 31, 2022

Loans held for sale $ 143 Discounted cash flow Default rate 0.1 - 86.1% 13.8

Discount rate 3.8 - 13.8 9.0

Loss severity 8.1 - 43.8 18.6

Prepayment rate 2.3 - 23.4 18.6

411 Market comparable pricing Comparability adjustment (8.2) - (0.9) (4.3)

Mortgage servicing rights (commercial) 75 Discounted cash flow Cost to service per loan $ 3,775 - 3,775 3,775

Discount rate 5.2 - 5.2% 5.2

Prepayment rate 0.0 - 20.6 6.7

Nonmarketable equity securities 1,461 Market comparable pricing Comparability adjustment (100.0) - (4.0) (30.1)

1,352 Market comparable pricing Multiples 0.8x - 18.7x 9.9x

Other assets (2) 234 Market comparable pricing Multiples 6.4 - 8.0 7.1

Insignificant Level 3 assets 67

Total $ 3,743

(1) Refer to the narrative following Table 15.3 for a definition of the valuation technique(s) and significant unobservable inputs used in the valuation of loans held for sale, mortgage servicing rights,

certain nonmarketable equity securities, and other assets.

(2) Represents venture capital and private equity investments in consolidated portfolio companies.

Note 15: Fair Values of Assets and Liabilities (continued)

152 Wells Fargo & Company

Fair Value Option

The fair value option is an irrevocable election, generally only

permitted upon initial recognition of financial assets or liabilities,

to measure eligible financial instruments at fair value with

changes in fair value reflected in earnings. We may elect the fair

value option to align the measurement model with how the

financial assets or liabilities are managed or to reduce complexity

or accounting asymmetry. Following is a discussion of the

portfolios for which we elected the fair value option.

LOANS HELD FOR SALE (LHFS) LHFS measured at fair value include

residential mortgage loan originations for which an active

secondary market and readily available market prices exist to

reliably support our valuations. Loan origination fees on these

loans are recorded when earned, and relateddirect loan

origination costs are recognized when incurred. We believe fair

value measurement for LHFS reduces certain timing differences

and better matches changes in the value of these assets with

changes in the value of derivatives used as economic hedges for

these assets.

Additionally, we purchase loans for market-making purposes

to support the buying and selling demands of our customers in

our trading business. These loans are generally held for a short

period of time and managed within parameters of internally

approved market risk limits. Fair value measurement best aligns

with our risk management practices. Fair value for these loans is

generally determined using readily available market data based

on recent transaction prices for similar loans.

INTEREST-BEARING DEPOSITS AND LONG-TERM DEBT We have

elected to account for certain structured debt liabilities under

the fair value option. These exposures relate to our trading

activities and fair value accounting better aligns with our risk

management practices and reduces complexity.

For interest-bearing deposits and long-term debt carried at

fair value, the change in fair value attributable to instrument-

specific credit risk is recorded in OCI and all other changes in fair

value are recorded in earnings.

Table 15.7 reflects differences between the fair value

carrying amount of the assets and liabilities for which we have

elected the fair value option and the contractual aggregate

unpaid principal amount at maturity.

Table 15.7: Fair Value Option

December 31, 2023 December 31, 2022

(in millions)

Fair value

carrying

amount

Aggregate

unpaid

principal

Fair value

carrying

amountless

aggregate

unpaid

principal

Fair value

carrying

amount

Aggregate

unpaid

principal

Fair value

carrying

amountless

aggregate

unpaid

principal

Loans held for sale (1) $ 2,892 3,119 (227) 4,220 4,614 (394)

Interest-bearing deposits (1,297) (1,298) 1 — — —

Long-term debt (2) (2,308) (2,864) 556 (1,346) (1,775) 429

(1) Nonaccrual loans and loans 90 days or more past due and still accruing included in LHFS for which we have elected the fair value option were insignificant at December31, 2023 and 2022.

(2) Includes zero coupon notes for which the aggregate unpaid principal amount reflects the contractual principal due at maturity.

Table 15.8 reflects amounts included in earnings related to

initial measurement and subsequent changes in fair value, by

income statement line item, for assets and liabilities for which

the fair value option was elected. Amounts recorded in net

interest income are excluded from the table below.

Table 15.8: Gains (Losses) on Changes in Fair Value Included in Earnings

Year ended December 31,

2023 2022 2021

(in millions)

Mortgage

banking

noninterest

income

Net gains

from trading

and

securities

Other

noninterest

income

Mortgage

banking

noninterest

income

Net gains

from trading

and

securities

Other

noninterest

income

Mortgage

banking

noninterest

income

Net gains

from trading

and

securities

Other

noninterest

income

Loans held for sale $ 230 46 (26) (681) 6 — 1,972 54 2

Interest-bearing deposits

— (22) — — — —

— — —

Long-term debt

— (81) — — 52 —

— — —

For performing loans, instrument-specific credit risk gains or

losses are derived principally by determining the change in fair

value of the loans due to changes in the observable or implied

credit spread. Credit spread is the market yield on the loans less

the relevant risk-free benchmark interest rate. For

nonperforming loans, we attribute all changes in fair value to

instrument-specific credit risk. For LHFS accounted for under the

fair value option, instrument-specific credit gains or losses were

insignificant for the years ended December31, 2023, 2022 and

2021.

For interest-bearing deposits and long-term debt,

instrument-specific credit risk gains or losses represent the

impact of changes in fair value due to changes in our credit

spread and are generally derived using observable secondary

bond market information. These impacts are recorded within the

debit valuation adjustments (DVA) in OCI. See Note 25 (Other

Comprehensive Income) for additional information.

Wells Fargo & Company 153

Disclosures about Fair Value of Financial Instruments

Table 15.9 presents a summary of fair value estimates for

financial instruments that are not carried at fair value on a

recurring basis. Some financial instruments are excluded from

the scope of this table, such as certain insurance contracts,

certain nonmarketable equity securities, and leases. This table

also excludes assets and liabilities that are not financial

instruments such as the value of the long-term relationships with

our deposit, credit card and trust customers, MSRs, premises and

equipment, goodwill and deferred taxes.

Loan commitments, standby letters of credit and

commercial and similar letters of credit are not included in

Table 15.9. A reasonable estimate of the fair value of these

instruments is the carrying value of deferred fees plus the

allowance for unfunded credit commitments, which totaled

$575million and $737 million at December31, 2023 and 2022,

respectively.

The total of the fair value calculations presented does not

represent, and should not be construed to represent, the

underlying fair value of the Company.

Table 15.9: Fair Value Estimates for Financial Instruments

Estimated fair value

(in millions)

Carrying

amount Level 1 Level 2 Level 3 Total

December 31, 2023

Financial assets

Cash and due from banks (1) $ 33,026 33,026 — — 33,026

Interest-earning deposits with banks (1) 204,193 203,960 233 — 204,193

Federal funds sold and securities purchased under resale agreements (1)

80,456 — 80,456 — 80,456

Held-to-maturity debt securities 262,708 2,288 222,209 2,819 227,316

Loans held for sale 2,044 — 848 1,237 2,085

Loans, net (2) 905,764 — 52,127 818,358 870,485

Nonmarketable equity securities (cost method) 5,276 — — 5,344 5,344

Total financial assets $ 1,493,467 239,274 355,873 827,758 1,422,905

Financial liabilities

Deposits (3) $ 190,970 — 127,738 62,372 190,110

Short-term borrowings 89,340 — 89,340 — 89,340

Long-term debt (4) 205,261 — 205,705 2,028 207,733

Total financial liabilities $ 485,571 — 422,783 64,400 487,183

December 31, 2022

Financial assets

Cash and due from banks (1) $ 34,596 34,596 — — 34,596

Interest-earning deposits with banks (1)

124,561 124,338 223 — 124,561

Federal funds sold and securities purchased under resale agreements (1) 68,036 — 68,036 — 68,036

Held-to-maturity debt securities 297,059 14,285 238,552 2,684 255,521

Loans held for sale 2,884 — 2,208 719 2,927

Loans, net (2) 928,049 — 57,532 836,831 894,363

Nonmarketable equity securities (cost method) 4,900 — — 4,961 4,961

Total financial assets $ 1,460,085 173,219 366,551 845,195 1,384,965

Financial liabilities

Deposits (3)

$ 66,887 — 46,745 18,719 65,464

Short-term borrowings 50,964 — 50,970 — 50,970

Long-term debt (4)

173,502 — 172,783 999 173,782

Total financial liabilities $ 291,353 — 270,498 19,718 290,216

(1) Amounts consist of financial instruments for which carrying value approximates fair value.

(2) Excludes lease financing with a carrying amount of $16.2 billion and $14.7 billion at December31, 2023 and 2022, respectively.

(3) Excludes deposit liabilities with no defined or contractual maturity of $1.2 trillion and $1.3 trillion at December31, 2023 and 2022, respectively.

(4) Excludes obligations under finance leases of $19 million and $22 million at December31, 2023 and 2022, respectively.

Note 15: Fair Values of Assets and Liabilities (continued)

154 Wells Fargo & Company

Note 16: Securitizations and Variable Interest Entities

Involvement with Variable Interest Entities (VIEs)

In the normal course of business, we enter into various types of

on- and off-balance sheet transactions with special purpose

entities (SPEs), which are corporations, trusts, limited liability

companies or partnerships that are established for a limited

purpose. SPEs are often formed in connection with securitization

transactions whereby financial assets are transferred to an SPE.

SPEs formed in connection with securitization transactions are

generally considered variable interest entities (VIEs). The VIE

may alter the risk profile of the asset by entering into derivative

transactions or obtaining credit support, and issues various

forms of interests in those assets to investors. When we transfer

financial assets from our consolidated balance sheet to a VIE in

connection with a securitization, we typically receive cash and

sometimes other interests in the VIE as proceeds for the assets

we transfer. In certain transactions with VIEs, we may retain the

right to service the transferred assets and repurchase the

transferred assets if the outstanding balance of the assets falls

below the level at which the cost to service the assets exceed the

benefits. In addition, we may purchase the right to service loans

transferred to a VIE by a third party.

In connection with our securitization or other VIE activities,

we have various forms of ongoing involvement with VIEs, which

may include:

• underwriting securities issued by VIEs and subsequently

making markets in those securities;

• providing credit enhancement on securities issued by VIEs

through the use of letters of credit or financial guarantees;

• entering into other derivative contracts with VIEs;

• holding senior or subordinated interests in VIEs;

• acting as servicer or investment manager for VIEs;

• providing administrative or trustee services to VIEs; and

• providing seller financing to VIEs.

Loan Sales and Securitization Activity

We periodically transfer consumer and commercial loans and

other types of financial assets in securitization and whole loan

sale transactions.

MORTGAGE LOANS SOLD TO U.S. GOVERNMENT SPONSORED

ENTITIES AND TRANSACTIONS WITH GINNIE MAE

In the normal

course of business we sell residential and commercial mortgage

loans to government-sponsored entities (GSEs). These loans are

generally transferred into securitizations sponsored by the GSEs,

which provide certain credit guarantees to investors and

servicers. We also transfer mortgage loans into securitization

pools pursuant to Government National Mortgage Association

(GNMA) guidelines which are insured by the Federal Housing

Administration (FHA) or guaranteed by the Department of

Veterans Affairs (VA). Mortgage loans eligible for securitization

with the GSEs or GNMA are considered conforming loans. The

GSEs or GNMA design the structure of these securitizations,

sponsor the involved VIEs, and have power over the activities

most significant to the VIE.

We account for loans transferred in conforming mortgage

loan securitization transactions as sales and do not consolidate

the VIEs as we are not the primary beneficiary. In exchange for

the transfer of loans, we typically receive securities issued by the

VIEs which we sell to third parties for cash or hold for investment

purposes as HTM or AFS securities. We also retain servicing

rights on the transferred loans. As a servicer, we retain the option

to repurchase loans from certain loan securitizations, which

becomes exercisable based on delinquency status such as when

three scheduled loan payments are past due. When we have the

unilateral option to repurchase a loan, we recognize the loan and

a corresponding liability on our balance sheet regardless of our

intent to repurchase the loan, and the loans remain pledged to

the securitization. At December31, 2023 and 2022, we recorded

assets and related liabilities of $1.0billion and $743million,

respectively, where we did not exercise our option to repurchase

eligible loans. During the years ended December31, 2023, 2022

and 2021, we repurchased loans of $293million, $2.2 billion, and

$4.6 billion, respectively.

Upon transfers of loans, we also provide indemnification for

losses incurred due to material breaches of contractual

representations and warranties as well as other recourse

arrangements. At December31, 2023 and 2022, our liability for

these repurchase and recourse arrangements was $229million

and $167million, respectively, and the maximum exposure to

loss was $13.6 billion and $13.8 billion at December31, 2023 and

2022, respectively.

Substantially all residential servicing activity is related to

assets transferred to GSE and GNMA securitizations. See Note 6

(Mortgage Banking Activities) for additional information about

residential and commercial servicing rights, advances and

servicing fees.

NONCONFORMING MORTGAGE LOAN SECURITIZATIONS In the

normal course of business, we sell nonconforming mortgage

loans in securitization transactions that we design and sponsor.

Nonconforming mortgage loan securitizations do not involve a

government credit guarantee, and accordingly, beneficial interest

holders are subject to credit risk of the underlying assets held by

the securitization VIE. We typically originate the transferred

loans and account for the transfers as sales. We also typically

retain the right to service the loans and may hold other beneficial

interests issued by the VIE, such as debt securities held for

investment purposes. Our servicing role related to

nonconforming commercial mortgage loan securitizations is

limited to primary or master servicer. We do not consolidate the

VIE because the most significant decisions impacting the

performance of the VIE are generally made by the special servicer

or the controlling class security holder. For our residential

nonconforming mortgage loan securitizations accounted for as

sales, we either do not hold variable interests that we consider

potentially significant or are not the primary servicer for a

majority of the VIE assets.

WHOLE LOAN SALE TRANSACTIONS We may also sell whole loans

to VIEs where we have continuing involvement in the form of

financing. We account for these transfers as sales, and do not

consolidate the VIEs as we do not have the power to direct the

most significant activities of the VIEs.

Table 16.1 presents information about transfers of assets during

the periods presented for which we recorded the transfers as

sales and have continuing involvement with the transferred

assets. In connection with these transfers, we received proceeds

and recorded servicing assets, securities, and loans. Each of these

interests are initially measured at fair value. Servicing rights are

classified as Level 3 measurements, and generally securities are

classified as Level 2. The majority of our transfers relate to

residential mortgage securitizations with the GSEs or GNMA and

generally result in no gain or loss because the loans are measured

Wells Fargo & Company 155

at fair value on a recurring basis. Additionally, we may transfer

certain government insured loans that we previously

repurchased. These loans are carried at the lower of cost or

market, and we recognize gains on such transfers when the

market value is greater than the carrying value of the loan when

it is sold.

Table 16.1: Transfers with Continuing Involvement

Year ended December 31,

2023 2022 2021

(in millions)

Residential

mortgages

Commercial

mortgages

Residential

mortgages

Commercial

mortgages

Residential

mortgages

Commercial

mortgages

Assets sold $ 13,823 8,872 75,582 13,735 157,063 18,247

Proceeds from transfer (1) 13,823 9,017 75,634 13,963 157,852 18,563

Net gains (losses) on sale — 145 52 228 789 316

Continuing involvement (2):

Servicing rights recognized $ 157 73 966 128 1,636 166

Securities recognized (3)

— 94 2,062 189 23,188 173

Loans recognized — — — — 926 —

(1) Represents cash proceeds and the fair value of non-cash beneficial interests recognized at securitization settlement.

(2) Represents assets or liabilities recognized at securitization settlement date related to our continuing involvement in the transferred assets.

(3) Represents debt securities obtained at securitization settlement held for investment purposes that are classified as available-for-sale or held-to-maturity. In 2022 and 2021, these predominantly

related to agency securities. Excludes trading debt securities held temporarily for market-marking purposes, which are sold to third parties at or shortly after securitization settlement, of $6.0 billion,

$19.0 billion, and $40.7billion, during the years ended December31, 2023, 2022 and 2021, respectively.

In the normal course of business, we purchase certain

non-agency securities at initial securitization or subsequently in

the secondary market, which we hold for investment. We also

provide seller financing in the form of loans. During the years

ended December31, 2023, 2022 and 2021, we received cash

flows of $263 million, $456million, and $686 million,

respectively, related to principal and interest payments on these

securities and loans, which exclude cash flows related to trading

activities and to the sale of our student loan portfolio.

Table 16.2 presents the key weighted-average assumptions

we used to initially measure residential MSRs recognized during

the periods presented.

Table 16.2: Residential MSRs – Assumptions at Securitization Date

Year ended December 31,

2023 2022 2021

Prepayment rate (1) 16.8% 12.4 13.7

Discount rate 9.7 8.0 5.9

Cost to service ($ per loan) $ 178 110 91

(1) Includes a blend of prepayment speeds and expected defaults.Prepayment speeds are

influenced by mortgage interest rates as well as our estimation of drivers of borrower

behavior.

See Note 15 (Fair Values of Assets and Liabilities) and

Note 6 (Mortgage Banking Activities) for additional information

on key assumptions for residential MSRs.

RESECURITIZATION ACTIVITIES We enter into resecuritization

transactions as part of our trading activities to accommodate the

investment and risk management activities of our customers. In

resecuritization transactions, we transfer trading debt securities

to VIEs in exchange for new beneficial interests that are sold to

third parties at or shortly after securitization settlement. This

activity is performed for customers seeking a specific return or

risk profile. Substantially all of our transactions involve the

resecuritization of conforming mortgage-backed securities

issued by the GSEs or guaranteed by GNMA. We do not

consolidate the resecuritization VIEs as we share in the decision-

making power with third parties and do not hold significant

economic interests in the VIEs other than for market-making

activities. During the years ended December31, 2023, 2022 and

2021, we transferred securities of $12.7 billion, $17.0 billion, and

$39.6billion, respectively, to resecuritization VIEs, and retained

$239 million, $428 million, and $607 million, respectively. These

amounts are not included in Table 16.1. Related total VIE assets

were $110.4 billion and $112.0 billion at December31, 2023 and

2022, respectively. As of December31, 2023 and 2022, we held

$984 million and $793 million of securities, respectively.

Note 16: Securitizations and Variable Interest Entities (continued)

156 Wells Fargo & Company

Sold or Securitized Loans Serviced for Others

Table 16.3 presents information about loans that we have

originated and sold or securitized in which we have ongoing

involvement as servicer. For loans sold or securitized where

servicing is our only form of continuing involvement, we

generally experience a loss only if we were required to repurchase

a delinquent loan or foreclosed asset due to a breach in

representations and warranties associated with our loan sale or

servicing contracts. Table 16.3 excludes mortgage loans sold to

and held or securitized by GSEs or GNMA of $592.5 billion and

$704.5 billion at December31, 2023 and 2022, respectively.

Delinquent loans include loans 90 days or more past due and

loans in bankruptcy, regardless of delinquency status. Delinquent

loans and foreclosed assets related to loans sold to and held or

securitized by GSEs and GNMA were $3.4 billion and $4.6 billion

at December31, 2023 and 2022, respectively.

Table 16.3: Sold or Securitized Loans Serviced for Others

Net charge-offs

Total loans

Delinquent loans

and foreclosed assets (1) Year ended December 31,

(in millions) Dec 31, 2023 Dec 31, 2022 Dec 31, 2023 Dec 31, 2022 2023 2022

Commercial $ 67,232 67,029 1,000 912 114 49

Residential 8,311 9,201 393 501 19 14

Total off-balance sheet sold or securitized loans $ 75,543 76,230 1,393 1,413 133 63

(1) Includes $163 million and $274 million of commercial foreclosed assets and $22 million and $25 million of residential foreclosed assets at December31, 2023 and 2022, respectively.

Transactions with Unconsolidated VIEs

MORTGAGE LOAN SECURITIZATIONS Table 16.4 includes

nonconforming mortgage loan securitizations where we

originate and transfer the loans to the unconsolidated

securitization VIEs that we sponsor. For additional information

about these VIEs, see the “Loan Sales and Securitization Activity”

section within this Note. Nonconforming mortgage loan

securitizations also include commercial mortgage loan

securitizations sponsored by third parties where we did not

originate or transfer the loans but serve as master servicer and

invest in securities that could be potentially significant to the

VIE.

Conforming loan securitization and resecuritization

transactions involving the GSEs and GNMA are excluded from

Table 16.4 because we are not the sponsor or we do not have

power over the activities most significant to the VIEs.

Additionally, due to the nature of the guarantees provided by the

GSEs and the FHA and VA, our credit risk associated with these

VIEs is limited. For additional information about conforming

mortgage loan securitizations and resecuritizations, see the

“Loan Sales and Securitization Activity” and “Resecuritization

Activities” sections within this Note.

COMMERCIAL REAL ESTATE LOANS We may transfer purchased

industrial development bonds and GSE credit enhancements to

VIEs in exchange for beneficial interests. We may also acquire

such beneficial interests in transactions where we do not act as a

transferor. We own all of the beneficial interests and may also

service the underlying mortgages that serve as collateral to the

bonds. The GSEs have the power to direct the servicing and

workout activities of the VIE in the event of a default, therefore

we do not have control over the key decisions of the VIEs.

OTHER VIE STRUCTURES We engage in various forms of

structured finance arrangements with other VIEs, including

asset-backed finance structures and other securitizations

collateralized by asset classes other than mortgages. Collateral

may include rental properties, asset-backed securities, student

loans and mortgage loans. We may participate in structuring or

marketing the arrangements as well as provide financing, service

one or more of the underlying assets, or enter into derivatives

with the VIEs. We may also receive fees for those services. We

are not the primary beneficiary of these structures because we

do not have power to direct the most significant activities of the

VIEs.

Table 16.4 provides a summary of our exposure to the

unconsolidated VIEs described above, which includes

investments in securities, loans, guarantees, liquidity

agreements, commitments and certain derivatives. We exclude

certain transactions with unconsolidated VIEs when our

continuing involvement is temporary or administrative in nature

or insignificant in size.

In Table 16.4, “Total VIE assets” represents the remaining

principal balance of assets held by unconsolidated VIEs using the

most current information available. “Carrying value” is the

amount in our consolidated balance sheet related to our

involvement with the unconsolidated VIEs. “Maximum exposure

to loss” is determined as the carrying value of our investment in

the VIEs excluding the unconditional repurchase options that

have not been exercised, plus the remaining undrawn liquidity

and lending commitments, the notional amount of net written

derivative contracts, and generally the notional amount of, or

stressed loss estimate for, other commitments and guarantees.

Debt, guarantees and other commitments include amounts

related to lending arrangements, liquidity agreements, and

certain loss sharing obligations associated with loans originated,

sold, and serviced under certain GSE programs.

“Maximum exposure to loss” represents estimated loss that

would be incurred under severe, hypothetical circumstances, for

which we believe the possibility is extremely remote, such as

where the value of our interests and any associated collateral

declines to zero, without any consideration of recovery or offset

from any economic hedges. Accordingly, this disclosure is not an

indication of expected loss.

Wells Fargo & Company 157

Table 16.4: Unconsolidated VIEs

Carrying value – asset (liability)

(in millions)

Total

VIE assets Loans

Debt

securities (1)

Equity

securities

All other

assets (2)

Debt and other

liabilities Net assets

December 31, 2023

Nonconforming mortgage loan securitizations

$ 154,730 — 2,471 — 591 (8) 3,054

Commercial real estate loans 5,588 5,571 — — 17 — 5,588

Other 1,898 213 — 47 17 — 277

Total $ 162,216 5,784 2,471 47 625 (8) 8,919

Maximum exposure to loss

Loans

Debt

securities (1)

Equity

securities

All other

assets (2)

Debt,

guarantees,

and other

commitments

Total

exposure

Nonconforming mortgage loan securitizations

$ — 2,471 — 591 8 3,070

Commercial real estate loans 5,571 — — 17 700 6,288

Other 213 — 47 17 158 435

Total $ 5,784 2,471 47 625 866 9,793

Carrying value – asset (liability)

(in millions)

Total

VIE assets Loans

Debt

securities (1)

Equity

securities

All other

assets (2)

Debt and other

liabilities Net assets

December31, 2022

Nonconforming mortgage loan securitizations $ 154,464 — 2,420 — 617 (13) 3,024

Commercial real estate loans 5,627 5,611 — — 16 — 5,627

Other 2,174 292 1 43 21 — 357

Total $ 162,265 5,903 2,421 43

654 (13) 9,008

Maximum exposure to loss

Loans

Debt

securities (1)

Equity

securities

All other

assets (2)

Debt,

guarantees,

and other

commitments

Total

exposure

Nonconforming mortgage loan securitizations $ — 2,420 — 617 13 3,050

Commercial real estate loans 5,611 — — 16 705 6,332

Other 292 1 43 21 228 585

Total $ 5,903 2,421 43 654 946 9,967

(1) Includes $301 million and $172 million of securities classified as trading at December31, 2023 and 2022, respectively.

(2) All other assets includes mortgage servicing rights, derivative assets, and other assets (predominantly servicing advances).

INVOLVEMENT WITH TAX CREDIT VIES In addition to the

unconsolidated VIEs in Table 16.4, we may invest in or provide

funding to affordable housing, renewable energy or similar

projects that are designed to generate a return primarily through

the realization of federal tax credits and other tax benefits. The

projects are typically managed by third-party sponsors who have

the power over the VIE’s assets, therefore, we do not consolidate

the VIEs. The carrying value of our equity investments in tax

credit VIEs was $19.7 billion and $18.7 billion at December31,

2023 and 2022, respectively. We also had loans to tax credit VIEs

with a carrying value of $2.1 billion and $2.0billion at

December31, 2023 and 2022, respectively.

Our maximum exposure to loss for tax credit VIEs at

December31, 2023 and 2022, was $30.6 billion and

$28.0billion, respectively. Our maximum exposure to loss

included total unfunded equity and lending commitments of

$8.7 billion and $7.3 billion at December31, 2023 and 2022,

respectively. See Note 17 (Guarantees and Other Commitments)

for additional information about commitments to purchase

equity securities.

Our affordable housing equity investments qualify for the

low-income housing tax credit (LIHTC). For these investments

we are periodically required to provide additional financial

support during the investment period, or at the discretion of

project sponsors. A liability is recognized for unfunded

commitments that are both legally binding and probable of

funding. These commitments are predominantly funded within

three years of initial investment. Our liability for affordable

housing equity investment unfunded commitments was

$4.9billion at December31, 2023 and $4.8billion at

December31, 2022, and was included in long-term debt on our

consolidated balance sheet.

Table 16.5 summarizes the amortization of our LIHTC

investments and the related tax credits and other tax benefits

that are recognized in income tax expense/(benefit) on our

consolidated statement of income.

Table 16.5: LIHTC Investments

Year ended December 31,

(in millions) 2023 2022 2021

Proportional amortization of investments $ 1,650 1,549 1,545

Tax credits and other tax benefits (1,899) (1,834) (1,783)

Net expense/(benefit) recognized within income tax expense $ (249) (285) (238)

Note 16: Securitizations and Variable Interest Entities (continued)

158 Wells Fargo & Company

Consolidated VIEs

We consolidate VIEs where we are the primary beneficiary. We

are the primary beneficiary of the following structure types:

COMMERCIAL AND INDUSTRIAL LOANS AND LEASES We may

securitize dealer floor plan loans in a revolving master trust

entity. As servicer and residual interest holder, we control the key

decisions of the trust and consolidate the entity. The total VIE

assets held by the master trust represent a majority of the total

VIE assets presented for this category in Table 16.6. In a separate

transaction structure, we may provide the majority of debt and

equity financing to an SPE that engages in lending and leasing to

specific vendors and service the underlying collateral.

OTHER VIE STRUCTURES Other VIEs relate to total return swaps

and municipal tender option bond (MTOB) transactions.

Table 16.6 presents a summary of financial assets and liabilities

of our consolidated VIEs. The carrying value represents assets

and liabilities recorded on our consolidated balance sheet. “Total

VIE assets” includes affiliate balances that are eliminated upon

consolidation, and therefore in some instances will differ from

the carrying value of assets.

On our consolidated balance sheet, we separately disclose

(1) the consolidated assets of certain VIEs that can only be used

to settle the liabilities of those VIEs, and (2) the consolidated

liabilities of certain VIEs for which the VIE creditors do not have

recourse to Wells Fargo.

Table 16.6: Transactions with Consolidated VIEs

Carrying value – asset (liability)

(in millions)

Total

VIE assets Loans

Debt

securities

All other

assets (1) Liabilities (2)

December 31, 2023

Commercial and industrial loans and leases $ 7,579 4,880 — 203 (115)

Other 232 — — 232 —

Total consolidated VIEs $ 7,811 4,880 — 435 (115)

December 31, 2022

Commercial and industrial loans and leases $ 7,148 4,802 — 190 (129)

Other 72 — 71 1 (72)

Total consolidated VIEs $ 7,220 4,802 71 191 (201)

(1) All other assets includes loans held for sale and other assets.

(2) Liabilities include short-term borrowings, and accrued expenses and other liabilities.

Other Transactions

In addition to the transactions included in the previous tables, we

have used wholly-owned trust preferred security VIEs to issue

debt securities or preferred equity exclusively to third-party

investors. As the sole assets of the VIEs are receivables from us,

we do not consolidate the VIEs even though we own all of the

voting equity shares of the VIEs, have fully guaranteed the

obligations of the VIEs, and may have the right to redeem the

third-party securities under certain circumstances. On our

consolidated balance sheet, we reported the debt securities

issued to the VIEs as long-term junior subordinated debt. See

Note 10 (Long-Term Debt) for additional information about the

trust preferred securities.

Wells Fargo & Company 159

Note 17: Guarantees and Other Commitments

Guarantees are contracts that contingently require us to make

payments to a guaranteed party based on an event or a change in

an underlying asset, liability, rate or index. Table 17.1 shows

carrying value and maximum exposure to loss on our guarantees.

Table 17.1: Guarantees – Carrying Value and Maximum Exposure to Loss

Maximum exposure to loss

(in millions)

Carrying

valueof

obligation

Expires in one

year or less

Expires after

one year

through three

years

Expires after

three years

through five

years

Expires after

five years Total

Non-

investment

grade

December 31, 2023

Standby letters of credit (1) $ 90 14,211 5,209 2,931 105 22,456 7,711

Direct pay letters of credit (1)

8 1,446 2,268 247 5 3,966 957

Loans and LHFS sold with recourse 72 249 2,957 3,385 7,228 13,819 10,612

Exchange and clearing house guarantees — 13,550 — — — 13,550 —

Other guarantees and indemnifications (2)

22 687 854 116 463 2,120 634

Total guarantees $ 192 30,143 11,288 6,679 7,801 55,911 19,914

December 31, 2022

Standby letters of credit (1)

$ 112 14,014 4,694 3,058 53 21,819 7,071

Direct pay letters of credit (1) 13 1,593 2,734 465 5 4,797 1,283

Loans and LHFS sold with recourse 16 322 1,078 3,408 8,906 13,714 11,399

Exchange and clearing house guarantees — 4,623 — — — 4,623 —

Other guarantees and indemnifications (2) — 548 1 10 201 760 515

Total guarantees $ 141 21,100 8,507 6,941 9,165 45,713 20,268

(1) Standby and direct pay letters of credit are reported net of syndications and participations.

(2) Includes indemnifications provided to certain third-party clearing agents. Estimated maximum exposure to loss was $7 million and $157 million with related collateral of $27 million and $1.3billion

as of December31, 2023 and 2022, respectively.

Maximum exposure to loss represents the estimated loss

that would be incurred under an assumed hypothetical

circumstance, despite what we believe is a remote possibility,

where the value of our interests and any associated collateral

declines to zero. Maximum exposure to loss estimates in Table

17.1 do not reflect economic hedges or collateral we could use to

offset or recover losses we may incur under our guarantee

agreements. Accordingly, these amounts are not an indication of

expected loss. We believe the carrying value is more

representative of our current exposure to loss than maximum

exposure to loss. The carrying value represents the fair value of

the guarantee, if any, and also includes an ACL for guarantees, if

applicable. In determining the ACL for guarantees, we consider

the credit risk of the related contingent obligation.

For our guarantees in Table 17.1, non-investment grade

represents those guarantees on which we have a higher risk of

performance under the terms of the guarantee, which is

determined based on an external rating or an internal credit

grade that is below investment grade, if applicable.

STANDBY LETTERS OF CREDIT We issue standby letters of credit,

which include performance and financial guarantees, for

customers in connection with contracts between our customers

and third parties. Standby letters of credit are conditional lending

commitments where we are obligated to make payment to a

third party on behalf of a customer if the customer fails to meet

their contractual obligations. Total maximum exposure to loss

includes the portion of multipurpose lending facilities for which

we have issued standby letters of credit under the commitments.

DIRECT PAY LETTERS OF CREDIT We issue direct pay letters of

credit to serve as credit enhancements for certain bond

issuances. Beneficiaries (bond trustees) may draw upon these

instruments to make scheduled principal and interest payments,

redeem all outstanding bonds because a default event has

occurred, or for other reasons as permitted by the agreement.

LOANS AND LHFS SOLD WITH RECOURSE For certain sales and

securitizations of loans, predominantly to GSEs, we provide

recourse to the buyer for certain losses. Certain arrangements

require that we share in the credit risk of the loans, substantially

all of which are commercial real estate mortgage loans, where we

provide recourse up to 33.33% of actual losses incurred on a pro-

rata basis in the event of borrower default. The maximum

exposure to loss represents the outstanding principal balance of

the loans sold or securitized that are subject to recourse

provisions or the maximum losses per the contractual

agreements. However, we believe the likelihood of loss of the

entire balance due to these recourse agreements is remote, and

amounts paid can be recovered in whole or in part from the sale

of collateral.

EXCHANGE AND CLEARING HOUSE GUARANTEES We are members

of several securities and derivatives exchanges and clearing

houses, both in the U.S. and in countries outside the U.S., that we

use to clear our trades and those of our customers, including

customers for whom we act as sponsoring member. It is common

that all members in these organizations are required to

collectively guarantee the performance of other members of the

organization. Our obligations under the guarantees are generally

a pro-rata share based on either a fixed amount or a multiple of

the guarantee fund we are required to maintain with these

organizations. Some membership rules require members to

assume a pro-rata share of losses resulting from another

member’s default or from non-member default losses after

applying the guarantee fund. We have not recorded a liability for

these arrangements as of the dates presented in Table 17.1

because we believe the likelihood of loss is remote. In 2023, we

began acting as a sponsoring member under the Fixed Income

160 Wells Fargo & Company

Clearing Corporation’s (FICC) sponsored repo service, where we

guarantee the performance of our clients’ obligations to the

FICC. We minimize our liability under these guarantees by

obtaining a secured interest in the collateral that our clients place

with the FICC.

OTHER GUARANTEES AND INDEMNIFICATIONS We have

contingent performance arrangements related to various

customer relationships and lease transactions. We are required

to pay the counterparties to these agreements if third parties

default on certain obligations.

Under certain factoring arrangements, we may be required

to purchase trade receivables from third parties, if receivable

debtors default on their payment obligations.

We use certain third-party clearing agents to clear and settle

transactions on behalf of some of our institutional brokerage

customers. We indemnify the clearing agents against loss that

could occur for non-performance by our customers on

transactions that are not sufficiently collateralized. Transactions

subject to the indemnifications may include customer obligations

related to the settlement of margin accounts and short

positions, such as written call options and securities borrowing

transactions.

We record a liability for mortgage loans that we expect to

repurchase pursuant to various representations or warranties.

See Note 16 (Securitizations and Variable Interest Entities) for

further discussion and related amounts. Additionally, when we

sell MSRs, we may provide indemnification for losses incurred

due to material breaches of contractual representations or

warranties as well as other recourse arrangements.

When we sell renewable energy tax credits, we indemnify the

buyers for potential future losses incurred due to the

disallowance or recapture of the transferred tax credits or

material breaches of representations and warranties. Our

maximum exposure for these tax credit indemnifications is

capped at the amount of the transferred credits.

We also enter into other types of indemnification

agreements in the ordinary course of business under which we

agree to indemnify third parties against any damages, losses and

expenses incurred in connection with legal and other proceedings

arising from relationships or transactions with us. These

relationships or transactions include those arising from service as

a director or officer of the Company, underwriting agreements

relating to our securities, acquisition agreements and various

other business transactions or arrangements. Because the extent

of our obligations under these agreements depends entirely

upon the occurrence of future events, we are unable to

determine our potential future liability under these agreements.

WRITTEN OPTIONS We enter into written foreign currency

options and over-the-counter written equity put options that are

derivative contracts that have the characteristics of a guarantee.

Written put options give the counterparty the right to sell to us

an underlying instrument held by the counterparty at a specified

price by a specified date. While these derivative transactions

expose us to risk if the option is exercised, we manage this risk by

entering into offsetting trades or by taking short positions in the

underlying instrument. We offset market risk related to options

written to customers with cash securities or other offsetting

derivative transactions. Additionally, for certain of these

contracts, we require the counterparty to pledge the underlying

instrument as collateral for the transaction. Our ultimate

obligation under written options is based on future market

conditions and is only quantifiable at settlement. The fair value of

written options represents our view of the probability that we

will be required to perform under the contract. The fair value of

these written options was an asset of $178 million and a liability

of $15 million at December31, 2023 and 2022, respectively. The

fair value may be an asset as a result of deferred premiums on

certain option trades. The maximum exposure to loss represents

the notional value of these derivative contracts. At December31,

2023, the maximum exposure to loss was $34.0billion, with

$31.9billion expiring in three years or less compared with

$23.4billion and $21.3 billion, respectively, at December31,

2022. See Note 14 (Derivatives) for additional information

regarding written derivative contracts.

MERCHANT PROCESSING SERVICES We provide debit and credit

card transaction processing services through payment networks

directly for merchants and as a sponsor for merchant processing

servicers, including our joint venture with a third party that is

accounted for as an equity method investment. In our role as the

merchant acquiring bank, we have a potential obligation in

connection with payment and delivery disputes between the

merchant and the cardholder that are resolved in favor of the

cardholder, referred to as a charge-back transaction. If we are

unable to collect the amounts from the merchant, we incur a loss

for the refund to the cardholder. We are secondarily obligated to

make a refund for transactions involving sponsored merchant

processing servicers. We generally have a low likelihood of loss in

connection with our merchant processing services because most

products and services are delivered when purchased and

amounts are generally refunded when items are returned to the

merchant. In addition, we may reduce our risk in connection with

these transactions by withholding future payments and requiring

cash or other collateral. We estimate our potential maximum

exposure to be the total merchant transaction volume processed

in the preceding four months, which is generally the lifecycle for a

charge-back transaction. As of December31, 2023, our potential

maximum exposure was approximately $761.9 billion, and

related losses, including those from our joint venture entity, were

insignificant.

GUARANTEES OF SUBSIDIARIES In the normal course of business,

the Parent may provide counterparties with guarantees related

to its subsidiaries’ obligations. These obligations are included in

the Company’s consolidated balance sheet or are reflected as

off-balance sheet commitments, and therefore, the Parent has

not recognized a separate liability for these guarantees.

Additionally, the Parent fully and unconditionally guarantees

the payment of principal, interest, and any other amounts that

may be due on securities that its 100% owned finance subsidiary,

Wells Fargo Finance LLC, may issue. These securities are not

guaranteed by any other subsidiary of the Parent. The

guaranteed liabilities were $834 million and $948 million at

December31, 2023 and 2022, respectively. These guarantees

rank on parity with all of the Parent’s other unsecured and

unsubordinated indebtedness.

The assets of the Parent consist primarily of equity in its

subsidiaries, and the Parent is a separate and distinct legal entity

from its subsidiaries. As a result, the Parent’s ability to address

claims of holders of these debt securities against the Parent

under the guarantee depends on the Parent’s receipt of

dividends, loan payments and other funds from its subsidiaries. If

any of the Parent’s subsidiaries becomes insolvent, the direct

creditors of that subsidiary will have a prior claim on that

subsidiary’s assets. The rights of the Parent and the rights of the

Parent’s creditors will be subject to that prior claim unless the

Parent is also a direct creditor of that subsidiary. For additional

information regarding other restrictions on the Parent’s ability to

Wells Fargo & Company 161

receive dividends, loan payments and other funds from its

subsidiaries, see Note 26 (Regulatory Capital Requirements and

Other Restrictions).

OTHER COMMITMENTS We may enter into commitments to

purchase debt and equity securities for various business or

investment purposes. As of December31, 2023 and 2022, we

had commitments to purchase debt securities of $0 and

$100million, respectively, and commitments to purchase equity

securities of $9.2 billion and $3.8 billion, respectively. As of

December31, 2023, our commitments to purchase equity

securities predominantly included Federal Reserve Bank stock

and renewable energy investments.

As part of maintaining our memberships in certain clearing

organizations, we are required to stand ready to provide liquidity

to sustain market clearing activity in the event unforeseen

events occur or are deemed likely to occur. Certain of these

obligations are guarantees of other members’ performance and

accordingly are included in Table 17.1 in Other guarantees and

indemnifications.

We have commitments to enter into resale and securities

borrowing agreements as well as repurchase and securities

lending agreements with certain counterparties, including central

clearing organizations. The amount of our unfunded contractual

commitments for resale and securities borrowing agreements

was $17.5billion and $19.9 billion as of December31, 2023 and

2022, respectively. The amount of our unfunded contractual

commitments for repurchase and securities lending agreements

was $746million and $1.6 billion as of December31, 2023 and

2022, respectively.

Given the nature of these commitments, they are excluded

from Table 5.4 (Unfunded Credit Commitments) in Note 5

(Loans and Related Allowance for Credit Losses).

Note 17: Guarantees and Other Commitments (continued)

162 Wells Fargo & Company

Note 18: Securities and Other Collateralized Financing Activities

We enter into resale and repurchase agreements and securities

borrowing and lending agreements (collectively, “securities

financing activities”) typically to finance trading positions

(including securities and derivatives), acquire securities to cover

short trading positions, accommodate customers’ financing

needs, and settle other securities obligations. These activities are

conducted through our broker-dealer subsidiaries and, to a lesser

extent, through other bank entities. Our securities financing

activities primarily involve high-quality, liquid securities such as

U.S. Treasury securities and government agency securities and,

to a lesser extent, less liquid securities, including equity

securities, corporate bonds and asset-backed securities. We

account for these transactions as collateralized financings in

which we typically receive or pledge securities as collateral. We

believe these financing transactions generally do not have

material credit risk given the collateral provided and the related

monitoring processes. We also enter into resale agreements

involving collateral other than securities, such as loans, as part of

our commercial lending business activities.

OFFSETTING OF SECURITIES AND OTHER COLLATERALIZED

FINANCING ACTIVITIES

Table 18.1 presents resale and repurchase

agreements subject to master repurchase agreements (MRA)

and securities borrowing and lending agreements subject to

master securities lending agreements (MSLA). Where legally

enforceable, these master netting arrangements give the ability,

in the event of default by the counterparty, to liquidate securities

held as collateral and to offset receivables and payables with the

same counterparty. Collateralized financings with the same

counterparty are presented net on our consolidated balance

sheet, provided certain criteria are met that permit balance sheet

netting. The majority of transactions subject to these

agreements do not meet those criteria and thus are not eligible

for balance sheet netting.

Collateral we pledged consists of non-cash instruments,

such as securities or loans, and is not netted on our consolidated

balance sheet against the related liability. Collateral we received

includes securities or loans and is not recognized on our

consolidated balance sheet. Collateral pledged or received may

be increased or decreased over time to maintain certain

contractual thresholds, as the assets underlying each

arrangement fluctuate in value. For additional information on

collateral pledged and accepted, see Note 19(Pledged Assets

and Collateral). Generally, these agreements require collateral to

exceed the asset or liability recognized on the balance sheet. The

following table includes the amount of collateral pledged or

received related to exposures subject to enforceable MRAs or

MSLAs. While these agreements are typically over-collateralized,

the disclosure in this table is limited to the reported amount of

such collateral to the amount of the related recognized asset or

liability foreach counterparty.

In addition to the amounts included in Table 18.1, we also

have balance sheet netting related to derivatives that is disclosed

in Note 14 (Derivatives).

Table 18.1: Offsetting – Securities and Other Collateralized Financing Activities

(in millions)

Dec 31,

2023

Dec 31,

2022

Assets:

Resale and securities borrowing agreements

Gross amounts recognized $ 129,282 114,729

Gross amounts offset in consolidated balance sheet (1) (28,402) (24,464)

Net amounts in consolidated balance sheet (2) 100,880 90,265

Collateral received not recognized in consolidated balance sheet (3)

(99,970) (89,592)

Net amount (4)

$ 910 673

Liabilities:

Repurchase and securities lending agreements

Gross amounts recognized $ 106,060 55,054

Gross amounts offset in consolidated balance sheet (1) (28,402) (24,464)

Net amounts in consolidated balance sheet (5) 77,658 30,590

Collateral pledged but not netted in consolidated balance sheet (6) (77,529) (30,383)

Net amount (4) $ 129 207

(1) Represents recognized amount of resale and repurchase agreements with counterparties subject to enforceable MRAs that have been offset within our consolidated balance sheet.

(2) Includes $80.4 billion and $68.0 billion classified on our consolidated balance sheet in federal funds sold and securities purchased under resale agreements at December31, 2023 and 2022,

respectively. Also includes $20.5 billion and $22.3 billion classified on our consolidated balance sheet in loans at December31, 2023 and 2022, respectively.

(3) Represents the fair value of collateral we have received under enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized asset due from each counterparty.

(4) Represents the amount of our exposure (assets) or obligation (liabilities) that is not collateralized and/or is not subject to an enforceable MRA or MSLA.

(5) Amount is classified in short-term borrowings on our consolidated balance sheet.

(6) Represents the fair value of collateral we have pledged, related to enforceable MRAs or MSLAs, limited in the table above to the amount of the recognized liability owed to each counterparty.

Wells Fargo & Company 163

REPURCHASE AND SECURITIES LENDING AGREEMENTS Securities

sold under repurchase agreements and securities lending

arrangements are effectively short-term collateralized

borrowings. In these transactions, we receive cash in exchange

for transferring securities as collateral and recognize an

obligation to reacquire the securities for cash at the transaction’s

maturity. These types of transactions create risks, including

(1)the counterparty may fail to return the securities at maturity,

(2) the fair value of the securities transferred may decline below

the amount of our obligation to reacquire the securities, and

therefore create an obligation for us to pledge additional

amounts, and (3) the counterparty may accelerate the maturity

on demand, requiring us to reacquire the security prior to

contractual maturity. We attempt to mitigate these risks in

various ways. Our collateral primarily consists of highly liquid

securities. In addition, we underwrite and monitor the financial

strength of our counterparties, monitor the fair value of

collateral pledged relative to contractually required repurchase

amounts, and monitor that our collateral is properly returned

through the clearing and settlement process in advance of our

cash repayment. Table 18.2 provides the gross amounts

recognized on our consolidated balance sheet (before the effects

of offsetting) of our liabilities for repurchase and securities

lending agreements disaggregated by underlying collateral type.

Table 18.2: Gross Obligations by Underlying Collateral Type

(in millions)

Dec 31,

2023

Dec 31,

2022

Repurchase agreements:

Securities of U.S. Treasury and federal agencies $ 38,742 27,857

Securities of U.S. States and political subdivisions 579 83

Federal agency mortgage-backed securities 48,019 8,386

Non-agency mortgage-backed securities 1,889 682

Corporate debt securities 7,925 6,541

Asset-backed securities 2,176 1,529

Equity securities 635 711

Other 541 300

Total repurchases 100,506 46,089

Securities lending arrangements:

Securities of U.S. Treasury and federal agencies 251 278

Federal agency mortgage-backed securities 31 58

Corporate debt securities 293 206

Equity securities (1) 4,965 8,356

Other 14 67

Total securities lending 5,554 8,965

Total repurchases and securities lending $ 106,060 55,054

(1) Equity securities are generally exchange traded and represent collateral received from third parties that has been repledged. We received the collateral through either margin lending agreements or

contemporaneous securities borrowing transactions with other counterparties.

Table 18.3 provides the contractual maturities of our gross

obligations under repurchase and securities lending agreements.

Securities lending is executed under agreements that allow either

party to terminate the transaction without notice, while

repurchase agreements have a term structure to them that

technically matures at a point in time. The overnight agreements

require election of both parties to roll the trade, while continuous

agreements require the election of either party to terminate the

agreement.

Table 18.3: Contractual Maturities of Gross Obligations

(in millions)

Repurchase

agreements

Securities lending

agreements

December 31, 2023

Overnight/continuous $ 54,810 4,903

Up to 30 days 13,704 —

30-90 days 23,264 200

>90 days 8,728 451

Total gross obligation 100,506 5,554

December 31, 2022

Overnight/continuous $ 36,251 8,965

Up to 30 days 734 —

30-90 days 2,884 —

>90 days 6,220 —

Total gross obligation 46,089 8,965

Note 18: Securities and Other Collateralized Financing Activities (continued)

164 Wells Fargo & Company

Note 19: Pledged Assets and Collateral

Pledged Assets

We pledge financial assets that we own to counterparties for the

collateralization of securities and other collateralized financing

activities, to secure trust and public deposits, and to collateralize

derivative contracts. See Note 18 (Securities and Other

Collateralized Financing Activities) for additional information on

securities financing activities. As part of our liquidity

management strategy, we may also pledge assets to secure

borrowings and letters of credit from Federal Home Loan Banks

(FHLBs), to maintain potential borrowing capacity at discount

windows with the Board of Governors of the Federal Reserve

System (FRB) and FHLBs, and for other purposes as required or

permitted by law or insurance statutory requirements. The

collateral that we pledge may include our own collateral as well as

collateral that we have received from third parties and have the

right to repledge.

Table 19.1 provides the carrying values of assets recognized

on our consolidated balance sheet that we have pledged to third

parties. Assets pledged in transactions where our counterparty

has the right to sell or repledge those assets are presented

parenthetically on our consolidated balance sheet.

VIE RELATED We also pledge assets in connection with various

types of transactions entered into with VIEs, which are excluded

from Table 19.1. These pledged assets can only be used to settle

the liabilities of those entities. We also have loans recorded on

our consolidated balance sheet which represent certain

delinquent loans that are eligible for repurchase from GNMA loan

securitizations. See Note 16 (Securitizations and Variable

Interest Entities) for additional information on consolidated and

unconsolidated VIE assets.

Table 19.1: Pledged Assets

(in millions)

Dec 31,

2023

Dec 31,

2022

Pledged to counterparties that had the right to sell or repledge:

Debt securities:

Trading $ 62,537 26,932

Available-for-sale 5,055 —

Equity securities 2,683 747

All other assets 495 784

Total assets pledged to counterparties that had the right to sell or repledge 70,770 28,463

Pledged to counterparties that did not have the right to sell or repledge:

Debt securities:

Trading 2,757 1,129

Available-for-sale 64,511 50,465

Held-to-maturity 246,218 17,477

Loans 445,092 343,289

Equity securities 1,502 871

All other assets 1,195 223

Total assets pledged to counterparties that did not have the right to sell or repledge 761,275 413,454

Total pledged assets $ 832,045 441,917

Collateral Accepted

We receive financial assets as collateral that we are permitted to

sell or repledge. This collateral is obtained in connection with

securities purchased under resale agreements and securities

borrowing transactions, customer margin loans, and derivative

contracts. We may use this collateral in connection with

securities sold under repurchase agreements and securities

lending transactions, derivative contracts, and short sales. At

December31, 2023 and 2022, the fair value of this collateral

received that we have the right to sell or repledge was

$216.6billion and $136.6billion, respectively, of which

$103.3billion and $59.1billion, respectively, were sold or

repledged.

Wells Fargo & Company 165

Note 20: Operating Segments

Our management reporting is organized into four reportable

operating segments: Consumer Banking and Lending;

Commercial Banking; Corporate and Investment Banking; and

Wealth and Investment Management. All other business

activities that are not included in the reportable operating

segments have been included in Corporate. We define our

reportable operating segments by type of product and customer

segment, and their results are based on our management

reporting process. The management reporting process measures

the performance of the reportable operating segments based on

the Company’s management structure, and the results are

regularly reviewed with our Chief Executive Officer and relevant

senior management. The management reporting process is

based on U.S. GAAP and includes specific adjustments, such as

funds transfer pricing for asset/liability management, shared

revenue and expenses, and taxable-equivalent adjustments to

consistently reflect income from taxable and tax-exempt

sources, which allows management to assess performance

consistently across the operating segments.

Consumer Banking and Lending offers diversified financial

products and services for consumers and small businesses with

annual sales generally up to $10 million. These financial products

and services include checking and savings accounts, credit and

debit cards as well as home, auto, personal, and small business

lending.

Commercial Banking provides financial solutions to private,

family owned and certain public companies. Products and

services include banking and credit products across multiple

industry sectors and municipalities, secured lending and lease

products, and treasury management.

Corporate and Investment Banking delivers a suite of capital

markets, banking, and financial products and services to

corporate, commercial real estate, government and institutional

clients globally. Products and services include corporate banking,

investment banking, treasury management, commercial real

estate lending and servicing, equity and fixed income solutions as

well as sales, trading, and research capabilities.

Wealth and Investment Management provides personalized

wealth management, brokerage, financial planning, lending,

private banking, trust and fiduciary products and services to

affluent, high-net worth and ultra-high-net worth clients. We

operate through financial advisors in our brokerage and wealth

offices, consumer bank branches, independent offices, and

digitally through WellsTrade

® and Intuitive Investor®.

Corporate includes corporate treasury and enterprise functions,

net of allocations (including funds transfer pricing, capital,

liquidity and certain expenses), in support of the reportable

operating segments, as well as our investment portfolio and

venture capital and private equity investments. Corporate also

includes certain lines of business that management has

determined are no longer consistent with the long-term

strategic goals of the Company as well as results for previously

divested businesses. In third quarter 2023, we sold investments

in certain private equity funds, which had a minimal impact to net

income.

Basis of Presentation

FUNDS TRANSFER PRICING Corporate treasury manages a funds

transfer pricing methodology that considers interest rate risk,

liquidity risk, and other product characteristics. Operating

segments pay a funding charge for their assets and receive a

funding credit for their deposits, both of which are included in

net interest income. The net impact of the funding charges or

credits is recognized in corporate treasury.

REVENUE AND EXPENSE SHARING When lines of business jointly

serve customers, the line of business that is responsible for

providing the product or service recognizes revenue or expense

with a referral fee paid or an allocation of cost to the other line of

business based on established internal revenue-sharing

agreements.

When a line of business uses a service provided by another

line of business or enterprise function (included in Corporate),

expense is generally allocated based on the cost and use of the

service provided. We periodically assess and update our revenue

and expense allocation methodologies.

TAXABLE-EQUIVALENT ADJUSTMENTS Taxable-equivalent

adjustments related to tax-exempt income on certain loans and

debt securities are included in net interest income, while taxable-

equivalent adjustments related to income tax credits for low-

income housing and renewable energy investments are included

in noninterest income, in each case with corresponding impacts

to income tax expense (benefit). Adjustments are included in

Corporate, Commercial Banking, and Corporate and Investment

Banking and are eliminated to reconcile to the Company’s

consolidated financial results.

166 Wells Fargo & Company

Table 20.1 presents our results by operating segment.

Table 20.1: Operating Segments

(in millions)

Consumer

Banking and

Lending

Commercial

Banking

Corporate and

Investment

Banking

Wealth and

Investment

Management Corporate (1)

Reconciling

Items (2)

Consolidated

Company

Year ended December 31, 2023

Net interest income (3) $ 30,185 10,034 9,498 3,966 (888) (420) 52,375

Noninterest income 7,734 3,415 9,693 10,725 431 (1,776) 30,222

Total revenue 37,919 13,449 19,191 14,691 (457) (2,196) 82,597

Provision for credit losses 3,299 75 2,007 6 12 — 5,399

Noninterest expense 24,024 6,555 8,618 12,064 4,301 — 55,562

Income (loss) before income tax expense

(benefit) 10,596 6,819 8,566 2,621 (4,770) (2,196) 21,636

Income tax expense (benefit) 2,657 1,704 2,140 657 (2,355) (2,196) 2,607

Net income (loss) before noncontrolling interests 7,939 5,115 6,426 1,964 (2,415) — 19,029

Less: Net income (loss) from noncontrolling

interests — 11 — — (124) — (113)

Net income (loss) $ 7,939 5,104 6,426 1,964 (2,291) — 19,142

Year ended December 31, 2022

Net interest income (3) $ 27,044 7,289 8,733 3,927 (1,607) (436) 44,950

Noninterest income 8,766 3,631 6,509 10,895 1,192 (1,575) 29,418

Total revenue 35,810 10,920 15,242 14,822 (415) (2,011) 74,368

Provision for credit losses 2,276 (534) (185) (25) 2 — 1,534

Noninterest expense 26,277 6,058 7,560 11,613 5,697 — 57,205

Income (loss) before income tax expense (benefit) 7,257 5,396 7,867 3,234 (6,114) (2,011) 15,629

Income tax expense (benefit) 1,816 1,366 1,989 812 (1,721) (2,011) 2,251

Net income (loss) before noncontrolling interests 5,441 4,030 5,878 2,422 (4,393) — 13,378

Less: Net income (loss) from noncontrolling

interests — 12 — — (311) — (299)

Net income (loss) $ 5,441 4,018 5,878 2,422 (4,082) — 13,677

Year ended December 31, 2021

Net interest income (3) $ 22,807 4,960 7,410 2,570 (1,541) (427) 35,779

Noninterest income 12,070 3,589 6,429 11,776 10,710 (1,187) 43,387

Total revenue 34,877 8,549 13,839 14,346 9,169 (1,614) 79,166

Provision for credit losses (1,178) (1,500) (1,439) (95) 57 — (4,155)

Noninterest expense 24,648 5,862 7,200 11,734 4,314 — 53,758

Income (loss) before income tax expense (benefit) 11,407 4,187 8,078 2,707 4,798 (1,614) 29,563

Income tax expense (benefit) 2,852 1,045 2,019 680 782 (1,614) 5,764

Net income before noncontrolling interests 8,555 3,142 6,059 2,027 4,016 — 23,799

Less: Net income (loss) from noncontrolling

interests — 8 (3) — 1,685 — 1,690

Net income $ 8,555 3,134 6,062 2,027 2,331 — 22,109

Year ended December 31, 2023

Loans (average) $ 335,920 224,102 291,975 82,755 9,164 — 943,916

Assets (average) 377,434 245,520

553,722 89,797 619,002 — 1,885,475

Deposits (average) 811,091 165,235 162,062 112,069 95,825 — 1,346,282

Loans (period-end) 332,867 224,774 287,432 82,555 9,054 — 936,682

Assets (period-end) 375,484 245,568 547,203 90,138 674,075 — 1,932,468

Deposits (period-end) 782,309 162,526 185,142 103,902 124,294 — 1,358,173

Year ended December 31, 2022

Loans (average) $ 332,433 206,032 296,984 85,228 9,143 — 929,820

Assets (average) 379,213 227,935 557,396 91,748 638,011 — 1,894,303

Deposits (average) 883,130 186,079 161,720 164,883 28,457 — 1,424,269

Loans (period-end) 340,529 223,529 298,377 84,273 9,163 — 955,871

Assets (period-end) 387,710 250,198 550,177 91,717 601,218 — 1,881,020

Deposits (period-end) 859,695 173,942 157,217 138,760 54,371 — 1,383,985

Note1 (Summary of Significant Accounting Policies).

(2) Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax

credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are

included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.

(3) Net interest income is interest earned on assets minus the interest paid on liabilities to fund those assets. Segment interest earned includes actual interest income on segment assets as well as a

funding credit for their deposits. Segment interest paid on liabilities includes actual interest expense on segment liabilities as well as a funding charge for their assets.

Wells Fargo & Company 167

Note 21: Revenue and Expenses

Revenue

Our revenue includes net interest income on financial

instruments and noninterest income. Table 21.1 presents our

revenue by operating segment. For additional description of our

operating segments, including additional financial information

and the underlying management accounting process, see

Note 20 (Operating Segments).

Table 21.1: Revenue by Operating Segment

(in millions)

Consumer

Banking and

Lending

Commercial

Banking

Corporate and

Investment

Banking

Wealth and

Investment

Management Corporate

Reconciling

Items (1)

Consolidated

Company

Year ended December 31, 2023

Net interest income (2) $ 30,185 10,034 9,498 3,966 (888) (420) 52,375

Noninterest income:

Deposit-related fees 2,702 998 976 22 (4) — 4,694

Lending-related fees (2) 117 531 790 8 — — 1,446

Investment advisory and other asset-based

fees (3)

— 74 150 8,446 — — 8,670

Commissions and brokerage services fees — — 317 2,058 — — 2,375

Investment banking fees (6) 61 1,738 — (144) — 1,649

Card fees:

Card interchange and network revenue (4)

3,540 223 60 4 2 — 3,829

Other card fees (2) 427 — — — — — 427

Total card fees 3,967 223 60 4 2 — 4,256

Mortgage banking (2) 512 — 329 (12) — — 829

Net gains (losses) from trading activities (2) — (10) 4,553 162 94 — 4,799

Net gains (losses) from debt securities (2)

— 25 — — (15) — 10

Net losses from equity securities (2)

— (58) (4) (2) (377) — (441)

Lease income (2) — 644 57 — 536 — 1,237

Other (2) 442 927 727 39 339 (1,776) 698

Total noninterest income 7,734 3,415 9,693 10,725 431 (1,776) 30,222

Total revenue $ 37,919 13,449 19,191 14,691 (457) (2,196) 82,597

Year ended December 31, 2022

Net interest income (2)

$ 27,044 7,289 8,733 3,927 (1,607) (436) 44,950

Noninterest income:

Deposit-related fees 3,093 1,131 1,068 24 — — 5,316

Lending-related fees (2)

129 491 769 8 — — 1,397

Investment advisory and other asset-based

fees (3) — 42 107 8,847 8 — 9,004

Commissions and brokerage services fees — — 311 1,931 — — 2,242

Investment banking fees (3) 60 1,492 — (110) — 1,439

Card fees:

Card interchange and network revenue (4) 3,590 224 60 4 — — 3,878

Other card fees (2)

477 — — — — — 477

Total card fees 4,067 224 60 4 — — 4,355

Mortgage banking (2)

1,100 — 296 (12) (1) — 1,383

Net gains (losses) from trading activities (2)

— (6) 1,886 58 178 — 2,116

Net gains from debt securities (2)

— 5 — — 146 — 151

Net gains (losses) from equity securities (2)

(5) 64 (5) (2) (858) — (806)

Lease income (2)

— 710 15 — 544 — 1,269

Other (2)(5) 385 910 510 37 1,285 (1,575) 1,552

Total noninterest income 8,766 3,631 6,509 10,895 1,192 (1,575) 29,418

Total revenue $ 35,810 10,920 15,242 14,822 (415) (2,011) 74,368

(continued on following page)

168 Wells Fargo & Company

(continued from previous page)

(in millions)

Consumer

Banking and

Lending

Commercial

Banking

Corporate and

Investment

Banking

Wealth and

Investment

Management Corporate

Reconciling

Items (1)

Consolidated

Company

Year ended December 31, 2021

Net interest income (2) $ 22,807 4,960 7,410 2,570 (1,541) (427) 35,779

Noninterest income:

Deposit-related fees 3,045 1,285 1,112 28 5 — 5,475

Lending-related fees (2) 145 532 761 8 (1) — 1,445

Investment advisory and other asset-based

fees (3) — 10 52 9,574 1,375 — 11,011

Commissions and brokerage services fees — — 290 2,010 (1) — 2,299

Investment banking fees (11) 53 2,405 1 (94) — 2,354

Card fees:

Card interchange and network revenue (4) 3,426 196 45 4 — — 3,671

Other card fees (2) 504 — — — — — 504

Total card fees 3,930 196 45 4 — — 4,175

Mortgage banking (2) 4,490 — 480 (12) (2) — 4,956

Net gains (losses) from trading activities (2) — — 272 21 (9) — 284

Net gains from debt securities (2) — 44 — — 509 — 553

Net gains (losses) from equity securities (2) (2) 132 289 79 5,929 — 6,427

Lease income (2) — 682 33 — 281 — 996

Other (2)(5) 473 655 690 63 2,718

(1,187) 3,412

Total noninterest income 12,070 3,589 6,429 11,776 10,710 (1,187) 43,387

Total revenue $ 34,877 8,549 13,839 14,346 9,169 (1,614) 79,166

(1) Taxable-equivalent adjustments related to tax-exempt income on certain loans and debt securities are included in net interest income, while taxable-equivalent adjustments related to income tax

credits for low-income housing and renewable energy investments are included in noninterest income, in each case with corresponding impacts to income tax expense (benefit). Adjustments are

included in Corporate, Commercial Banking, and Corporate and Investment Banking and are eliminated to reconcile to the Company’s consolidated financial results.

(2) These revenue types are related to financial assets and liabilities, including loans, leases, securities and derivatives, with additional details included in other footnotes to our financial statements.

(3) We earned trailing commissions of $904 million, $989 million, and $1.2 billion for the years ended December31, 2023, 2022 and 2021, respectively.

(4) The cost of credit card rewards and rebates of $2.6 billion, $2.2 billion and $1.6 billion for the years ended December31, 2023, 2022 and 2021, respectively, are presented net against the related

revenue.

(5) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional information, see

Note1 (Summary of Significant Accounting Policies).

We provide services to customers which have related

performance obligations that we complete to recognize revenue.

Our revenue is generally recognized either immediately upon the

completion of our service or over time as we perform services.

Any services performed over time generally require that we

render services each period and therefore we measure our

progress in completing these services based upon the passage of

time.

DEPOSIT-RELATED FEES are earned in connection with depository

accounts for commercial and consumer customers and include

fees for account charges, overdraft services, cash network fees,

wire transfer and other remittance fees, and safe deposit box

fees. Account charges include fees for periodic account

maintenance activities and event-driven services such as stop

payment fees. Our obligation for event-driven services is

satisfied at the time of the event when the service is delivered,

while our obligation for maintenance services is satisfied over the

course of each month. Our obligation for overdraft services is

satisfied at the time of the overdraft. Cash network fees are

earned for processing ATM transactions, and our obligation is

completed upon settlement of ATM transactions. Wire transfer

and other remittance fees consist of fees earned for providing

funds transfer services and issuing cashier’s checks and money

orders. Our obligation is satisfied at the time of the performance

of the funds transfer service or upon issuance of the cashier’s

check or money order. Safe deposit box fees are generally

recognized over time as we provide the services.

INVESTMENT ADVISORY AND OTHER ASSET-BASED FEES are earned

for providing brokerage advisory, asset management and trust

services. These fees were impacted by the sales of our Corporate

Trust Services business and Wells Fargo Asset Management,

which closed in fourth quarter 2021.

Fees from advisory account relationships with brokerage

customers are charged based on a percentage of the market

value of the client’s assets. Services and obligations related to

providing investment advice, active management of client assets,

and assistance with selecting and engaging a third-party advisory

manager are generally satisfied over a month or quarter. Trailing

commissions are earned for selling shares to investors and our

obligation is satisfied at the time shares are sold. However, these

fees are received and recognized over time during the period the

customer owns the shares and we remain the broker of record.

The amount of trailing commissions is variable based on the

length of time the customer holds the shares and on changes in

the value of the underlying assets.

Asset management services include managing and

administering assets, including mutual funds, and institutional

separate accounts. Fees for these services are generally

determined based on a tiered scale relative to the market value

of assets under management (AUM). In addition to AUM, we

have client assets under administration (AUA) that earn various

administrative fees which are generally based on the extent of

the services provided to administer the account. Services with

AUM and AUA-based fees are generally satisfied over time.

Trust services include acting as a trustee or agent for

personal trust and agency assets. Obligations for trust services

are generally satisfied over time; however, obligations for

Wells Fargo & Company 169

activities that are transitional in nature are satisfied at the time

of the transaction.

COMMISSIONS AND BROKERAGE SERVICES FEES are earned for

providing brokerage services.

Commissions from transactional accounts with brokerage

customers are earned for executing transactions at the client’s

direction. Our obligation is generally satisfied upon the execution

of the transaction and the fees are based on the size and number

of transactions executed.

Fees earned from other brokerage services include securities

clearance, omnibus and networking fees received from mutual

fund companies in return for providing record keeping and other

administrative services, and annual account maintenance fees

charged to customers. Our obligation is satisfied at the time we

provide the service which is generally at the time of the

transaction.

INVESTMENT BANKING FEES are earned for underwriting debt and

equity securities, arranging syndicated loan transactions and

performing other advisory services. Our obligation for these

services is generally satisfied at closing of the transaction.

CARD FEES include credit and debit card interchange and network

revenue and various card-related fees. Credit and debit card

interchange and network revenue is earned on credit and debit

card transactions conducted through payment networks such as

Visa, MasterCard, and American Express.Our obligation is

satisfied concurrently with the delivery of services on a daily

basis. Other card fees represent late fees, cash advance fees,

balance transfer fees, and annual fees.

Expenses

PERSONNEL EXPENSE Personnel expense included severance

expense of $1.5billion, $397million, and $97million for the

years ended December31, 2023, 2022 and 2021, respectively.

OPERATING LOSSES Operating losses consist of expenses related

to:

• Legal actions such as litigation and regulatory matters. For

additional information on legal actions, see Note 13 (Legal

Actions);

• Customer remediation activities, which are associated with

our efforts to identify areas or instances where customers

may have experienced financial harm and provide

remediation as appropriate. We have accrued for the

probable and estimable costs related to our customer

remediation activities, which amounts may change based on

additional facts and information, as well as ongoing reviews

and communications with our regulators; and

• Other business activities such as deposit overdraft losses,

fraud losses, and isolated instances of customer redress.

Table 21.2 provides the components of our operating losses

included in our consolidated statement of income.

Table 21.2: Operating Losses

Year ended December 31,

($ in millions)

2023 2022 2021

Legal actions $ 179 3,308

341

Customer remediation 207 2,691

536

Other 797 985

691

Total operating losses $ 1,183 6,984 1,568

Operating losses may have significant variability given the

inherent and unpredictable nature of legal actions and customer

remediation activities. The timing and determination of the

amount of any associated losses for these matters depends on a

variety of factors, some of which are outside of our control.

RESTRUCTURING CHARGES The Company began pursuing various

initiatives to reduce expenses and create a more efficient and

streamlined organization in third quarter 2020. Substantially all

of the restructuring charges were personnel expenses related to

severance costs associated with headcount reductions with

payments made over time in accordance with our severance plan

as well as payments for other employee benefit costs such as

incentive compensation.

Restructuring charges are recorded as a component of other

noninterest expense on our consolidated statement of income.

Changes in estimates represent adjustments to noninterest

expense based on refinements to previously estimated amounts,

which may reflect trends such as higher voluntary employee

attrition as well as changes in business activities.

Table 21.3 provides details on our restructuring charges.

Table 21.3: Accruals for Restructuring Charges

Year ended December 31,

(in millions) 2023 2022 2021

Balance, beginning of period $ 166 565 1,214

Restructuring charges:

Current period restructuring charges — — 726

Changes in estimates — 5 (650)

Total restructuring charges — 5 76

Payments and utilization (166) (404) (725)

Balance, end of period $ — 166 565

OTHER EXPENSES Regulatory Charges and Assessments expense,

which is included in other noninterest expense, was $3.1 billion,

$860 million, and $842 million in 2023, 2022 and 2021

respectively, and predominantly consisted of Federal Deposit

Insurance Corporation (FDIC) deposit assessment expense.

In November 2023, the FDIC finalized a rule to recover

losses to the FDIC deposit insurance fund as a result of bank

failures in the first half of 2023. Under the rule, the FDIC will

collect a special assessment based on a calculation using an

insured depository institution’s (IDI) estimated amount of

uninsured deposits. Upon the FDIC’s finalization of the rule, we

expensed the entire estimated amount of our special assessment

of $1.9billion (pre-tax), which will be paid over eight quarters

beginning in June 2024. The amount of our special assessment

may change as the FDIC determines the actual losses to the

deposit insurance fund and evaluates any amendments by IDIs to

uninsured deposit amounts reported for December 31, 2022.

Note 21: Revenue and Expenses

Wells Fargo & Company

(continued)

170

Note 22: Employee Benefits

Pension and Postretirement Plans

We sponsor a frozen noncontributory qualified defined benefit

retirement plan, the Wells Fargo & Company Cash Balance Plan

(Cash Balance Plan), which covers eligible employees of

WellsFargo. The Cash Balance Plan was frozen on July 1, 2009,

and no new benefits accrue after that date.

Prior to July 1, 2009, eligible employees’ Cash Balance Plan

accounts were allocated a compensation credit based on a

percentage of their certified compensation; the freeze

discontinued the allocation of compensation credits after

June 30, 2009. Investment credits continue to be allocated to

participants’ accounts based on their accumulated balances.

We did not make a contribution to our Cash Balance Plan in

2023. We do not expect that we will be required to make a

contribution to the Cash Balance Plan in 2024. For the

nonqualified pension plans and postretirement benefit plans,

there is no minimum required contribution beyond the amount

needed to fund benefit payments.

We recognize settlement losses for our Cash Balance Plan

based on an assessment of whether lump sum benefit payments

will, in aggregate for the year, exceed the sum of its annual

service and interest cost (threshold). Settlement losses of

$221million were recognized during 2022, representing the pro

rata portion of the net loss in accumulated other comprehensive

income (AOCI) based on the percentage reduction in the Cash

Balance Plan’s projected benefit obligation attributable to 2022

lump sum payments (included in the “Benefits paid” line in Table

22.1). There were no settlement losses recognized during 2023.

Additionally, we sponsored the Wells Fargo Canada

Corporation Pension Plan to employees in Canada (Canada

Pension Plan), a defined benefit retirement plan. In June 2022, an

annuity contract was entered into that effected a full settlement

of this Canada Pension Plan, resulting in a plan settlement of

$29million and a settlement loss of $5 million.

Our nonqualified defined benefit plans are unfunded and

provide supplemental defined benefit pension benefits to certain

eligible employees. The benefits under these plans were frozen in

prior years.

Other benefits include health care and life insurance benefits

provided to certain retired employees. We reserve the right to

amend, modify or terminate any of these benefits at any time.

The information set forth in the following tables is based on

current actuarial reports using the measurement date of

December 31 for our pension and postretirement benefit plans.

Table 22.1 presents the changes in the benefit obligation

and the fair value of plan assets, the funded status, and the

amounts recognized on our consolidated balance sheet. Changes

in the benefit obligation for the qualified plans were driven by the

amounts of benefits paid and changes in the actuarial loss (gain)

amounts, which are driven by changes in the discount rates at

December 31, 2023 and 2022, respectively.

Table 22.1: Changes in Benefit Obligation and Fair Value of Plan Assets

December 31, 2023 December 31, 2022

Pension benefits Pension benefits

(in millions) Qualified

Non-

qualified

Other

benefits Qualified

Non-

qualified

Other

benefits

Change in benefit obligation:

Benefit obligation at beginning of period $ 8,141 391 309 11,032 501 439

Service cost 25 — — 19 — —

Interest cost 403 18 15 348 12 9

Plan participants’ contributions — — 37 — — 39

Actuarial loss (gain) 191 8 (8) (2,256) (76) (103)

Benefits paid (634) (42) (66) (966) (46) (75)

Settlements, Curtailments, and Amendments — — — (29) — —

Foreign exchange impact — — — (7) — —

Benefit obligation at end of period 8,126 375 287 8,141 391 309

Change in plan assets:

Fair value of plan assets at beginning of period 8,600 — 476 11,581 — 550

Actual return on plan assets 653 — 44 (1,998) — (45)

Employer contribution 15 42 6 16 46 7

Plan participants’ contributions — — 37 — — 39

Benefits paid (634) (42) (66) (966) (46) (75)

Settlement — — — (29) — —

Foreign exchange impact — — — (4) — —

Fair value of plan assets at end of period 8,634 — 497 8,600

— 476

Funded status at end of period $ 508 (375) 210 459 (391) 167

Amounts recognized on the consolidated balance sheet at end of period:

Assets $ 585 — 224 522 — 181

Liabilities (77) (375) (14) (63) (391) (14)

Wells Fargo & Company 171

Table 22.2 provides information for pension and

postretirement plans with benefit obligations in excess of plan

assets.

Table 22.2: Plans with Benefit Obligations in Excess of Plan Assets

December 31, 2023 December 31, 2022

(in millions) Pension Benefits Other Benefits Pension Benefits Other Benefits

Projected benefit obligation $ 549 — 539 —

Accumulated benefit obligation 511 14 509 14

Fair value of plan assets 97 — 86 —

Table 22.3 presents the components of net periodic benefit

cost and OCI. Service cost is reported in personnel expense and

all other components of net periodic benefit cost are reported in

other noninterest expense on our consolidated statement of

income.

Table 22.3: Net Periodic Benefit Cost and Other Comprehensive Income

December 31, 2023 December 31, 2022 December 31, 2021

Pension benefits Pension benefits Pension benefits

(in millions) Qualified

Non-

qualified

Other

benefits Qualified

Non-

qualified

Other

benefits Qualified

Non-

qualified

Other

benefits

Service cost $ 25 — — 19 — — 17 — —

Interest cost 403 18 15 348 12 9 296 12 11

Expected return on plan assets (503) — (25) (511) — (22) (598) — (19)

Amortization of net actuarial loss (gain) 139 5 (25) 136 11 (22) 140 15 (20)

Amortization of prior service cost (credit) — — (10) 1 — (10) — — (10)

Settlement loss — — — 226 1 — 134 2 —

Net periodic benefit cost 64 23 (45) 219 24 (45) (11) 29 (38)

Other changes in plan assets and benefit obligations

recognized in other comprehensive income:

Net actuarial loss (gain) 41 8 (27) 253 (76) (36) (142) (18) (40)

Amortization of net actuarial gain (loss) (139) (5) 25 (136) (11) 22 (140) (15) 20

Amortization of prior service credit (cost) — — 10 (1) — 10 — — 10

Settlement (loss) — — — (226) (1) — (134) (2) —

Total recognized in other comprehensive income (98) 3 8 (110) (88) (4) (416) (35) (10)

Total recognized in net periodic benefit cost and

other comprehensive income $ (34) 26 (37) 109 (64) (49) (427) (6) (48)

Table 22.4 provides the amounts recognized in AOCI

(pre-tax).

Table 22.4: Benefits Recognized in Accumulated OCI

December 31, 2023 December 31, 2022

Pension benefits Pension benefits

(in millions) Qualified

Non-

qualified

Other

benefits Qualified

Non-

qualified

Other

benefits

Net actuarial loss (gain) $ 2,842 74 (406) 2,940 71 (404)

Net prior service cost (credit) — — (106) — — (116)

Total $ 2,842 74 (512) 2,940 71 (520)

Note 22: Employee Benefits

Wells Fargo & Company 172

(continued)

Plan Assumptions

For additional information on our pension accounting

assumptions, see Note 1 (Summary of Significant Accounting

Policies). Table 22.5 presents the weighted-average assumptions

used to estimate the projected benefit obligation.

Table 22.5: Weighted-Average Assumptions Used to Estimate Projected Benefit Obligation

December 31, 2023 December 31, 2022

Pension benefits Pension benefits

Qualified

Non-

qualified

Other

benefits Qualified

Non-

qualified

Other

benefits

Discount rate 4.99 % 4.87 4.90 5.18 5.08 5.12

Interest crediting rate

3.91 3.39 N/A 4.10 3.58 N/A

Table 22.6 presents the weighted-average assumptions

used to determine the net periodic benefit cost, including the

impact of interim re-measurements as applicable.

Table 22.6: Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost

December 31, 2023 December 31, 2022 December 31, 2021

Pension benefits Pension benefits Pension benefits

Qualified

Non-

qualified

Other

benefits Qualified

Non-

qualified

Other

benefits Qualified

Non-

qualified

Other

benefits

Discount rate 5.12 % 5.04 5.06 3.93 2.34 2.11 2.63 2.32 2.31

Interest crediting rate 4.10 3.58 N/A 3.37 1.51 N/A 2.68 1.08 N/A

Expected return on plan assets 6.09 N/A 5.34 5.35 N/A 4.00 5.17 N/A 3.50

To account for postretirement health care plans, we used

health care cost trend rates to recognize the effect of expected

changes in future health care costs due to medical inflation,

utilization changes, new technology, regulatory requirements

and Medicare cost shifting. In determining the end of year

benefit obligation, we assumed an average annual increase of

approximately 16.50% for health care costs in 2024. This rate is

assumed to trend down 0.30%-3.20% per year until the trend

rate reaches an ultimate rate of 4.50% in 2033. The 2023

periodic benefit cost was determined using an initial annual trend

rate of 13.90%. This rate was assumed to decrease 0.60%-1.50%

per year until the trend rate reached an ultimate rate of 4.50% in

2032.

Investment Strategy and Asset Allocation

We seek to achieve the expected long-term rate of return with a

prudent level of risk, given the benefit obligations of the pension

plans and their funded status. Our overall investment strategy is

designed to provide our Cash Balance Plan with a moderate

amount of long-term growth opportunities while ensuring that

risk is mitigated through diversification across numerous asset

classes and various investment strategies, coupled with an

investment strategy for the fixed income assets that is generally

designed to match the interest rate sensitivity of the Cash

Balance Plan’s benefit obligations. The Cash Balance Plan

currently has a target asset allocation mix of the following

ranges: 75%-85% fixed income, 10%-20% equities, and 0%-10%

in real estate, private equity and other investments. The

Employee Benefit Review Committee (EBRC), which includes

several members of senior management, formally reviews the

investment risk and performance of our Cash Balance Plan on a

quarterly basis. Annual Plan liability analysis and periodic asset/

liability evaluations are also conducted.

Other benefit plan assets include (1) assets held in a 401(h)

trust, which are invested with a target mix of 50%-60% equities

and 40%-50% fixed income, and (2) assets held in the Retiree

Medical Plan Voluntary Employees’ Beneficiary Association

(VEBA) trust, which are primarily invested in fixed income

securities and cash. Members of the EBRC formally review the

investment risk and performance of these assets on a quarterly

basis.

Projected Benefit Payments

Future benefits that we expect to pay under the pension and

other benefit plans are presented in Table 22.7.

Table 22.7: Projected Benefit Payments

Pension benefits

(in millions) Qualified

Non-

qualified

Other

benefits

Period ended December 31,

2024 $ 751 42 30

2025 679 40 29

2026 646 38 28

2027 639 37 26

2028 632 35 25

2029-2033 2,991 147 109

Wells Fargo & Company 173

Fair Value of Plan Assets

Table 22.8 presents the classification of the fair value of the

pension plan and other benefit plan assets in the fair value

hierarchy. See Note 15 (Fair Values of Assets and Liabilities) for a

description of the fair value hierarchy.

Table 22.8: Pension and Other Benefit Plan Assets

Carrying value at period-end

Pension plan assets Other benefits plan assets

(in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

December 31, 2023

Cash and cash equivalents $ 199 2 — 201 47 135 — 182

Long duration fixed income (1) 1,618 4,884 — 6,502 — — — —

Intermediate (core) fixed income — 159 — 159 — 161 — 161

High-yield fixed income — 102 — 102 — — — —

International fixed income — 99 — 99 — — — —

Domestic large-cap stocks 261 85 — 346 — 68 — 68

Domestic mid-cap stocks 37 20 — 57 — 18 — 18

Domestic small-cap stocks 37 1 — 38 — 6 — 6

Global stocks — 129 — 129 — — — —

International stocks 117 156 — 273 10 21 — 31

Emerging market stocks 33 70 — 103 — — — —

Real estate 45 — — 45 — — — —

Hedge funds/absolute return — 32 — 32 — — — —

Other 21 22

10 53 7 — 24 31

Plan investments – excluding investments at NAV $ 2,368 5,761 10 8,139 64 409 24 497

Investments at NAV (2) 264 —

Net receivables 231 —

Total plan assets $ 8,634 497

December 31, 2022

Cash and cash equivalents $ 214 4 — 218 41 135 — 176

Long duration fixed income (1) 1,398 4,919 — 6,317 — — — —

Intermediate (core) fixed income — 227 — 227 — 154 — 154

High-yield fixed income — 91 — 91 — — — —

International fixed income — 84 — 84 — — — —

Domestic large-cap stocks 232 35 — 267 — 60 — 60

Domestic mid-cap stocks 74 40 — 114 — 16 — 16

Domestic small-cap stocks 64 4 — 68 — 9 — 9

Global stocks — 152 — 152 — — — —

International stocks 105 141 — 246 9 19 — 28

Emerging market stocks 29 57 — 86 — — — —

Real estate 46 — — 46 — — —

—

Hedge funds/absolute return — 42 — 42 — — — —

Other 90 23 10 123 6 — 24 30

Plan investments – excluding investments at NAV $ 2,252 5,819 10 8,081 56 393 24 473

Investments at NAV (2) 415 —

Net receivables 104 3

Total plan assets $ 8,600 476

(1) This category includes a diversified mix of assets, which are being managed in accordance with a duration target of approximately 10 years and 9 years for December31, 2023 and 2022, respectively,

and an emphasis on corporate credit bonds combined with investments in U.S. Treasury securities and other U.S. agency and non-agency bonds.

(2) Consists of certain investments that are measured at fair value using NAV per share (or its equivalent) as a practical expedient and are excluded from the fair value hierarchy.

Note 22: Employee Benefits

Wells Fargo & Company

(continued)

174

Table 22.9 presents the changes in Level 3 pension plan and

other benefit plan assets measured at fair value.

Table 22.9: Fair Value Level 3 Pension and Other Benefit Plan Assets

(in millions)

Balance

beginning

of period

Gains

(losses) (1)

Purchases,

sales and

settlements

(net)

Transfer into/

(out of) Level 3

Balance

end of

period

December31, 2023

Pension plan assets $ 10 — — — 10

Other benefits plan assets 24 — — — 24

December31, 2022

Pension plan assets $ 11 — — (1) 10

Other benefits plan assets 24 — — — 24

(1) Represents unrealized and realized gains (losses).

VALUATION METHODOLOGIES Following is a description of the

valuation methodologies used for assets measured at fair value.

Cash and Cash Equivalents – includes investments in

collective investment funds valued at fair value based upon the

fund’s NAV per share held at year end. The NAV per share is

quoted on a private market that is not active; however, the NAV

per share is based on underlying investments traded on an active

market. This group of assets also includes investments in

registered investment companies valued at the NAV per share

held at year end and in interest-bearing bank accounts.

Long Duration, Intermediate (Core), High-Yield, and

International Fixed Income – includes investments traded on the

secondary markets; prices are measured by using quoted market

prices for similar securities, pricing models, and discounted cash

flow analyses using significant inputs observable in the market

where available, or a combination of multiple valuation

techniques. This group of assets also includes highly liquid

government securities such as U.S. Treasuries, limited

partnerships valued at the NAV, registered investment

companies, and collective investment funds described above.

Domestic, Global, International and Emerging Market Stocks –

investments in exchange-traded equity securities are valued at

quoted market values. This group of assets also includes

investments in registered investment companies and collective

investment funds described above.

Real Estate –includes investments in exchange-traded equity

securities, and registered investment companies described

above.

Hedge Funds / Absolute Return – includes investments in

collective investment funds as described above.

Other – insurance contracts that are stated at cash surrender

value. This group of assets also includes investments in

registered investment companies and collective investment

funds described above.

The methods described above may produce a fair value

calculation that may not be indicative of net realizable value or

reflective of future fair values. While we believe our valuation

methods are appropriate and consistent with other market

participants, the use of different methodologies or assumptions

to determine the fair value of certain financial instruments could

result in a different fair value measurement at the reporting date.

Defined Contribution Retirement Plans

We sponsor a qualified defined contribution retirement plan, the

Wells Fargo & Company 401(k) Plan (401(k) Plan). Under the

401(k) Plan, after 1 month of service, eligible employees may

contribute up to 50% of their certified compensation, subject to

statutory limits.

With some exceptions, employees with one year of service

who are employed in a benefit-eligible position on December 15

are eligible to receive matching contributions, which are dollar for

dollar up to 6% of certified compensation. The 401(k) Plan also

includes a non-discretionary base contribution of 1% of certified

compensation for employees with annual compensation of less

than $75,000. Eligible employees are 100% vested in their

matching contributions and base contributions after three years

of service. Base and matching contributions are made annually at

year end. The 401(k) Plan provides installment payment options

to the existing lump sum and partial lump sum distribution

options and offers optional investment advisory services.

Total defined contribution retirement plan expenses were

$1.0 billion in both 2023 and 2022, and $1.1 billion in 2021.

Wells Fargo & Company 175

Note 23: Income Taxes

Table 23.1 presents the components of income tax expense

(benefit).

Table 23.1: Income Tax Expense (Benefit)

Year ended December 31,

(in millions) 2023 2022 2021

Current:

U.S. Federal $ 2,883 888 5,850

U.S. State and local (453) (45) 849

Non-U.S. 227 169 171

Total current 2,657 1,012 6,870

Deferred:

U.S. Federal (1) (662) 767 (1,296)

U.S. State and local (1) 586 481 236

Non-U.S. 26 (9) (46)

Total deferred (50) 1,239 (1,106)

Total $ 2,607 2,251 5,764

Note1 (Summary of Significant Accounting Policies).

Table 23.2 reconciles the statutory federal income tax rate

to the effective income tax rate. Our effective tax rate is

calculated by dividing income tax expense (benefit) by income

before income tax expense (benefit) less the net income (loss)

from noncontrolling interests.

Table 23.2: Effective Income Tax Expense (Benefit) and Rate (1)

December 31,

2023 2022 2021

(in millions) Amount Rate Amount Rate Amount Rate

Statutory federal income tax expense and rate $ 4,567 21.0 % $ 3,345 21.0 % $ 5,854 21.0 %

Change in tax rate resulting from:

State and local taxes on income, net of federal income tax benefit 855 3.9 581 3.7 1,075 3.9

Tax-exempt interest (308) (1.4) (321) (2.0) (316) (1.1)

Tax credits, net of amortization (2) (1,546) (7.1) (1,264) (8.0) (1,001) (3.6)

Nondeductible expenses (3) 214 1.0 560 3.5 368 1.3

Changes in prior year unrecognized tax benefits, inclusive of interest (1,009) (4.6) (503) (3.2) (122) (0.4)

Other (166) (0.8) (147) (0.9) (94) (0.4)

Effective income tax expense and rate $ 2,607 12.0 % $ 2,251 14.1 % $ 5,764 20.7 %

Note1 (Summary of Significant Accounting Policies).

(2) Includes LIHTC proportional amortization expense, net of tax of $1.2 billion in each of 2023, 2022 and 2021.

(3) Includes amounts related to nondeductible litigation and regulatory accruals in all years presented as well as a nondeductible goodwill impairment in 2021.

176 Wells Fargo & Company

The tax effects of our temporary differences that gave rise

to significant portions of our deferred tax assets and liabilities

are presented in Table 23.3.

Table 23.3: Net Deferred Taxes

(in millions)

Dec 31,

2023

Dec 31,

2022

Deferred tax assets

Net operating loss and tax credit

carryforwards $ 4,369 5,513

Allowance for credit losses 3,648 3,393

Deferred compensation and employee

benefits 3,201 2,799

Net unrealized losses on debt securities 2,784 3,193

Accrued expenses 1,416 1,843

Capitalized research expenses (1) 1,389 938

Lease liabilities 1,011 1,132

Other (1) 962 1,106

Total deferred tax assets 18,780 19,917

Deferred tax assets valuation allowance (222) (232)

Deferred tax liabilities

Mark to market, net (12,571) (11,081)

Leasing and fixed assets (2,794) (2,792)

Mortgage servicing rights (1,552) (2,153)

Intangible assets (874) (753)

Right-of-use assets (818) (935)

Basis difference in investments (60) (1,095)

Other (2) (520) (1,119)

Total deferred tax liabilities (19,189) (19,928)

Net deferred tax liability (3) $ (631) (243)

(1) Prior period amounts have been reclassified to conform with the current period

presentation.

(2) In first quarter 2023, we adopted ASU 2018-12 – Financial Services – Insurance (Topic

944): Targeted Improvements to the Accounting for Long-Duration Contracts. For additional

information, see Note1 (Summary of Significant Accounting Policies).

(3) The net deferred tax liability is included in accrued expenses and other liabilities.

Deferred taxes related to net unrealized gains (losses) on

debt securities, net unrealized gains (losses) on derivatives,

foreign currency translation, and employee benefit plan

adjustments are recorded in accumulated OCI. See Note 25

(Other Comprehensive Income) for additional information.

We have determined that a valuation allowance is required

for 2023 in the amount of $222 million, attributable to deferred

tax assets in various state and non-U.S. jurisdictions where we

believe it is more likely than not that these deferred tax assets

will not be realized due to lack of sources of taxable income,

limitations on carryback of losses or credits and the inability to

implement tax planning to realize these deferred tax assets. We

have concluded that it is more likely than not that the remaining

deferred tax assets will be realized based on our history of

earnings, sources of taxable income in carryback periods, and our

ability to implement tax planning strategies.

Table 23.4 presents the components of the deferred tax

assets related to net operating loss (NOL) and tax credit

carryforwards at December31, 2023. If not utilized,

carryforwards mostly expire in varying amounts through

December31, 2043, with the exception of U.S. Federal corporate

alternative minimum tax credits that do not expire.

Table 23.4: Deferred Tax Assets Related To Net Operating Loss and

Tax Credit Carryforwards

(in millions) Dec 31, 2023

U.S. Federal tax credits $ 3,978

U.S. State NOLs and credits 309

Non-U.S. NOLs and credits 82

Total net operating loss and tax credit carryforwards $ 4,369

We do not intend to distribute earnings of certain non-U.S.

subsidiaries in a taxable manner, and therefore intend to limit

distributions to non-U.S. earnings previously taxed in the U.S.,

that would qualify for the 100% dividends received deduction,

and that would not result in any significant state or non-U.S.

taxes. All other undistributed non-U.S. earnings will continue to

be permanently reinvested outside the U.S. and the related tax

liability on these earnings is insignificant.

Wells Fargo & Company 177

Table 23.5 presents the change in unrecognized tax benefits.

Table 23.5: Change in Unrecognized Tax Benefits

Year ended

December 31,

(in millions) 2023 2022

Balance, beginning of period $ 5,437 5,218

Additions:

For tax positions related to the current year 246 695

For tax positions related to prior years 352 358

Reductions:

For tax positions related to prior years (765) (514)

Lapse of statute of limitations (389) (13)

Settlements with tax authorities (767) (307)

Balance, end of period $ 4,114 5,437

Of the $4.1 billion of unrecognized tax benefits at

December31, 2023, approximately $2.3 billion would, if

recognized, affect the effective tax rate. The remaining

$1.8billion of unrecognized tax benefits relates to income tax

positions on temporary differences.

We account for interest and penalties related to income tax

liabilities as a component of income tax expense. As of

December31, 2023 and 2022, we have accrued expense

(benefit) of approximately $(29) million and $436 million,

respectively, for interest and penalties. In 2023 and 2022, we

recognized income tax benefit, net of tax, of $325million and

$385 million, respectively, related to interest and penalties.

We are subject to U.S. federal income tax as well as income

tax in numerous state and non-U.S. jurisdictions. We are routinely

examined by tax authorities in these various jurisdictions. With

few exceptions, Wells Fargo and its subsidiaries are not subject to

federal, state, local and non-U.S. income tax examinations for

taxable years prior to 2015. It is reasonably possible that one or

more of the examinations or appeals may be resolved within the

next twelve months resulting in a decrease of up to $1.2billion of

our gross unrecognized tax benefits.

Table 23.6 summarizes our major tax jurisdiction

examination status as of December31, 2023.

Table 23.6: Tax Examination Status

Jurisdiction Tax Year(s) Status

United States 2015-2016 Administrative appeals

United States 2017-2020 Field examination

California 2015-2020 Field examination

New York State 2017-2019 Field examination

New York City 2015-2019 Field examination

178 Wells Fargo & Company

Note 23: Income Taxes(continued)

Note 24: Earnings and Dividends Per Common Share

Table 24.1 shows earnings per common share and diluted

earnings per common share and reconciles the numerator and

denominator of both earnings per common share calculations.

See the Consolidated Statement of Changes in Equity and

Note 12 (Common Stock and Stock Plans) for information about

stock and options activity.

Table 24.1: Earnings Per Common Share Calculations

Year ended December 31,

(in millions, except per share amounts) 2023 2022 2021

Wells Fargo net income (1) $ 19,142 13,677 22,109

Less: Preferred stock dividends and other (2) 1,160 1,115 1,291

Wells Fargo net income applicable to common stock (numerator) $ 17,982 12,562 20,818

Earnings per common share

Average common shares outstanding (denominator) 3,688.3 3,805.2 4,061.9

Per share $ 4.88 3.30 5.13

Diluted earnings per common share

Average common shares outstanding 3,688.3 3,805.2 4,061.9

Add: Restricted share rights (3) 32.1 31.8 34.3

Diluted average common shares outstanding (denominator) 3,720.4 3,837.0 4,096.2

Per share $ 4.83 3.27 5.08

Note1 (Summary of Significant Accounting Policies).

(2) The balance for the years ended December 31, 2023, 2022 and 2021, includes $19 million, $0 million and $86 million, respectively, from the elimination of discounts or issuance costs associated with

redemptions of preferred stock.

(3) Calculated using the treasury stock method.

Table 24.2 presents the outstanding securities that were

anti-dilutive and therefore not included in the calculation of

diluted earnings per common share.

Table 24.2: Outstanding Anti-Dilutive Securities

Weighted-average shares

Year ended December 31,

(in millions) 2023 2022 2021

Convertible Preferred Stock, Series L (1) 25.3 25.3 25.3

Restricted share rights (2) 0.1 0.2 0.2

(1) Calculated using the if-converted method.

(2) Calculated using the treasury stock method.

Table 24.3 presents dividends declared per common share.

Table 24.3: Dividends Declared Per Common Share

Year ended December 31,

2023 2022 2021

Per common share $ 1.30 1.10 0.60

Wells Fargo & Company 179

Note 25: Other Comprehensive Income

Table 25.1 provides the components of other comprehensive

income (OCI), reclassifications to net income by income

statement line item, and the related tax effects.

Table 25.1: Summary of Other Comprehensive Income

Twelve months ended December 31,

2023 2022 2021

(in millions)

Before

tax

Tax

effect

Net of

tax

Before

tax

Tax

effect

Net of

tax

Before

tax

Tax

effect

Net of

tax

Debt securities:

Net unrealized gains (losses) arising during the period $ 1,136 (278) 858 (14,320) 3,526 (10,794) (3,069) 759 (2,310)

Reclassification of net (gains) losses to net income 549 (136) 413 391 (97) 294 (82) 18 (64)

Net change 1,685 (414) 1,271 (13,929) 3,429 (10,500) (3,151) 777 (2,374)

Derivatives and hedging activities:

Fair Value Hedges:

Change in fair value of excluded components on fair value hedges

(1) 22 (6) 16 87 (21) 66 81 (20) 61

Cash Flow Hedges:

Net unrealized gains (losses) arising during the period on cash flow

hedges (201) 50 (151) (1,541) 381 (1,160) (12) 3 (9)

Reclassification of net (gains) losses to net income 724 (178) 546 6 (2) 4 143 (36) 107

Net change 545 (134) 411 (1,448) 358 (1,090) 212 (53) 159

Defined benefit plans adjustments:

Net actuarial and prior service gains (losses) arising during the

period (22) 5 (17) (141) 35 (106) 200 (50) 150

Reclassification of amounts to noninterest expense (2) 109 (24) 85 343 (83) 260 261 (62) 199

Net change 87 (19) 68 202 (48) 154 461 (112) 349

Debit valuation adjustments (DVA) and other:

Net unrealized gains (losses) arising during the period (3) (38) 9 (29) 73 (15) 58

(81) 17 (64)

Reclassification of net (gains) losses to net income — — — — — — — — —

Net change (38) 9 (29) 73 (15) 58 (81) 17 (64)

Foreign currency translation adjustments:

Net unrealized gains (losses) arising during the period 65 (2) 63 (233) (3) (236) (30) 1 (29)

Reclassification of net (gains) losses to net income — — — — — — (1) — (1)

Net change 65 (2) 63 (233) (3) (236) (31) 1 (30)

Other comprehensive income (loss) $ 2,344 (560) 1,784 (15,335) 3,721 (11,614) (2,590) 630 (1,960)

Less: Other comprehensive income from noncontrolling interests, net

of tax 2 2 —

Wells Fargo other comprehensive income (loss), net of tax $ 1,782 (11,616) (1,960)

(1) Represents changes in fair value of cross-currency swaps attributable to changes in cross-currency basis spreads, which are excluded from the assessment of hedge effectiveness and recorded in

other comprehensive income.

(2) These items are included in the computation of net periodic benefit cost (see Note 22 (Employee Benefits) for additional information).

Note1 (Summary of Significant Accounting Policies).

180 Wells Fargo & Company

Table 25.2 provides the accumulated OCI (AOCI) balance

activity on an after-tax basis.

Table 25.2: Accumulated OCI Balances

(in millions)

Debt

securities

Fair value

hedges (1)

Cash flow

hedges (2)

Defined

benefit

plans

adjustments

Debit

valuation

adjustments

(DVA)

and other

Foreign

currency

translation

adjustments

Accumulated

other

comprehensive

income(loss)

Balance, December 31, 2020 $ 3,039 (204) (125) (2,404) — (112) 194

Transition adjustment — — — — 20 — 20

Balance, January 1, 2021 3,039 (204) (125) (2,404) 20 (112) 214

Net unrealized gains (losses) arising during the period (2,310) 61 (9) 150 (64) (29) (2,201)

Amounts reclassified from accumulated other

comprehensive income (64) — 107 199 — (1) 241

Net change (2,374) 61 98 349 (64) (30) (1,960)

Less: Other comprehensive income from noncontrolling

interests — — — — — — —

Balance, December 31, 2021 665 (143) (27) (2,055) (44) (142) (1,746)

Net unrealized gains (losses) arising during the period (10,794) 66 (1,160) (106) 58 (236) (12,172)

Amounts reclassified from accumulated other

comprehensive income 294 — 4 260 — — 558

Net change (10,500) 66 (1,156) 154 58 (236) (11,614)

Less: Other comprehensive loss from noncontrolling

interests — — — — — 2 2

Balance, December 31, 2022 (3)(4) (9,835) (77) (1,183) (1,901) 14 (380) (13,362)

Net unrealized gains (losses) arising during the period 858 16 (151) (17) (29) 63 740

Amounts reclassified from accumulated other

comprehensive income 413 — 546 85 —

— 1,044

Net change 1,271 16 395 68 (29) 63 1,784

Less: Other comprehensive income from

noncontrolling interests — — — — — 2 2

Balance, December 31, 2023 (3)(4) $ (8,564) (61) (788) (1,833) (15) (319) (11,580)

(1) Substantially all of the amounts for fair value hedges are foreign exchange contracts.

(2) Substantially all of the amounts for cash flow hedges are interest rate contracts.

Note1 (Summary of Significant Accounting Policies).

(4) AOCI related to debt securities includes after-tax unrealized gains or losses associated with the transfer of securities from AFS to HTM of $3.5 billion and $3.7 billion at December31, 2023 and 2022,

respectively. These amounts are subsequently amortized from AOCI into earnings over the same period as the related unamortized premiums and discounts.

Wells Fargo & Company 181

Note 26: Regulatory Capital Requirements and Other Restrictions

Regulatory Capital Requirements

The Company and each of its subsidiary banks are subject to

regulatory capital adequacy requirements promulgated by

federal banking regulators. The FRB establishes capital

requirements for the consolidated financial holding company,

and the Office of the Comptroller of the Currency (OCC) has

similar requirements for the Company’s national banks, including

Wells Fargo Bank, N.A. (the Bank).

Table 26.1 presents regulatory capital information for the

Company and the Bank in accordance with Basel III capital

requirements. We must calculate our risk-based capital ratios

under both the Standardized and Advanced Approaches. The

Standardized Approach applies assigned risk weights to broad

risk categories, while the calculation of risk-weighted assets

(RWAs) under the Advanced Approach differs by requiring

applicable banks to utilize a risk-sensitive methodology, which

relies upon the use of internal credit models, and includes an

operational risk component.

At December31, 2023, the Bank and our other insured

depository institutions were considered well-capitalized under

the requirements of the Federal Deposit Insurance Act.

Table 26.1: Regulatory Capital Information

Wells Fargo & Company Wells Fargo Bank, N.A.

Standardized Approach Advanced Approach Standardized Approach Advanced Approach

(in millions, except ratios)

December

31, 2023

December

31, 2022

December

31, 2023

December

31, 2022

December

31, 2023

December

31, 2022

December

31, 2023

December

31, 2022

Regulatory capital:

Common Equity Tier 1 $ 140,783 133,527 140,783 133,527 142,108 140,644 142,108 140,644

Tier 1 159,823 152,567 159,823 152,567 142,108 140,644 142,108 140,644

Total 193,061 186,747 182,726 177,258 165,634 163,885 155,560 154,292

Assets:

Risk-weighted assets 1,231,668 1,259,889 1,114,281 1,112,307 1,137,605 1,177,300 956,545 977,713

Adjusted average assets (1) 1,880,981 1,846,954 1,880,981 1,846,954 1,682,199 1,685,401 1,682,199 1,685,401

Regulatory capital ratios:

Common Equity Tier 1 capital 11.43% * 10.60 12.63 12.00 12.49 * 11.95 14.86 14.39

Tier 1 capital 12.98 * 12.11 14.34 13.72 12.49 * 11.95 14.86 14.39

Total capital 15.67

* 14.82 16.40 15.94 14.56 * 13.92 16.26 15.78

Required minimum capital ratios:

Common Equity Tier 1 capital 8.90 9.20 8.50 8.50 7.00 7.00 7.00 7.00

Tier 1 capital 10.40 10.70 10.00 10.00 8.50 8.50 8.50 8.50

Total capital 12.40 12.70 12.00 12.00 10.50 10.50 10.50 10.50

Wells Fargo & Company Wells Fargo Bank, N.A.

December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Regulatory leverage:

Total leverage exposure (1) $ 2,253,933 2,224,789 2,048,633 2,058,568

Supplementary leverage ratio (1) 7.09% 6.86 6.94 6.83

Tier 1 leverage ratio (2) 8.50 8.26 8.45 8.34

Required minimum leverage:

Supplementary leverage ratio 5.00 5.00 6.00 6.00

Tier 1 leverage ratio 4.00 4.00 4.00 4.00

* Denotes the binding ratio under the Standardized and Advanced Approaches at December31, 2023.

(1) The supplementary leverage ratio consists of Tier 1 capital divided by total leverage exposure. Total leverage exposure consists of adjusted average assets plus certain off-balance sheet exposures.

Adjusted average assets consists of total quarterly average assets less goodwill and other permitted Tier 1 capital deductions (net of deferred tax liabilities).

(2) The Tier 1 leverage ratio consists of Tier 1 capital divided by total quarterly average assets, excluding goodwill and certain other items as determined under the rule.

At December31, 2023, the Common Equity Tier 1 (CET1),

Tier 1 and total capital ratio requirements for the Company

included a global systemically important bank (G-SIB) surcharge

of 1.50%. The G-SIB surcharge is not applicable to the Bank. In

addition, the CET1, Tier 1 and total capital ratio requirements for

the Company included a stress capital buffer of 2.90% under the

Standardized Approach and a capital conservation buffer of

2.50% under the Advanced Approach. The capital ratio

requirements for the Bank included a capital conservation buffer

of 2.50% under both the Standardized and Advanced

Approaches. The Company is required to maintain these risk-

based capital ratios and to maintain a supplementary leverage

ratio (SLR) of at least 5.00% (composed of a 3.00% minimum

requirement plus a supplementary leverage buffer of 2.00%) to

avoid restrictions on capital distributions and discretionary bonus

payments. The Bank is required to maintain an SLR of at least

6.00% to be considered well-capitalized under applicable

regulatory capital adequacy rules.

Capital Planning Requirements

The FRB’s capital plan rule establishes capital planning and other

requirements that govern capital distributions, including

dividends and share repurchases, by certain large bank holding

companies (BHCs), including Wells Fargo. The FRB conducts an

annual Comprehensive Capital Analysis and Review exercise and

has also published guidance regarding its supervisory

expectations for capital planning, including capital policies

182 Wells Fargo & Company

regarding the process relating to common stock dividend and

repurchase decisions in the FRB’s SR Letter 15-18. The Parent’s

ability to make certain capital distributions is subject to the

requirements of the capital plan rule and is also subject to the

Parent meeting or exceeding certain regulatory capital

minimums.

Loan and Dividend Restrictions

Federal law restricts the amount and the terms of both credit

and non-credit transactions between a bank and its nonbank

affiliates. These covered transactions may not exceed 10% of the

bank’s capital and surplus (which for this purpose represents Tier

1 and Tier 2 capital, as calculated under the risk-based capital

rules, plus the balance of the ACL excluded from Tier 2 capital)

with any single nonbank affiliate and 20% of the bank’s capital

and surplus with all its nonbank affiliates. Covered transactions

that are extensions of credit may require collateral to be pledged

to provide added security to the bank.

Additionally, federal laws and regulations limit, and

regulators can impose additional limitations on, the dividends

that a national bank may pay. Dividends that may be paid by a

national bank without the express approval of the OCC are

generally limited to that bank’s retained net income for the

preceding two calendar years plus net income up to the date of

any dividend declaration in the current calendar year. Retained

net income, as defined by the OCC, consists of net income less

dividends declared during the period. Our national bank

subsidiaries could have declared additional dividends of

$4.1billion at December31, 2023, without obtaining prior

regulatory approval. We have elected to retain higher capital at

our national bank subsidiaries to meet internal capital targets,

which are set above regulatory requirements.

Our nonbank subsidiaries are also limited by certain federal

and state statutory provisions and regulations covering the

amount of dividends that may be paid in any given year. In

addition, we have entered into a Support Agreement dated June

28, 2017, as amended and restated on June 26, 2019, among

WellsFargo & Company, the parent holding company (Parent),

WFC Holdings, LLC, an intermediate holding company and

subsidiary of the Parent (IHC), the Bank, Wells Fargo Securities,

LLC, Wells Fargo Clearing Services, LLC, and certain other

subsidiaries of the Parent designated from time to time as

material entities for resolution planning purposes or identified

from time to time as related support entities in our resolution

plan, pursuant to which the IHC may be restricted from making

dividend payments to the Parent if certain liquidity and/or capital

metrics fall below defined triggers or if the Parent’s board of

directors authorizes it to file a case under the U.S. Bankruptcy

Code. Based on retained earnings at December31, 2023, our

nonbank subsidiaries could have declared additional dividends of

$26.5 billion at December31, 2023, without obtaining prior

regulatory approval.

Cash Restrictions

Cash and cash equivalents may be restricted as to usage or

withdrawal. Table 26.2 provides a summary of restrictions on

cash and cash equivalents.

Table 26.2: Nature of Restrictions on Cash and Cash Equivalents

(in millions)

Dec 31,

2023

Dec 31,

2022

Reserve balance for non-U.S. central banks $ 230 238

Segregated for benefit of brokerage customers

under federal and other brokerage regulations 986 898

Wells Fargo & Company 183

Note 27: Parent-Only Financial Statements

The following tables present Parent-only condensed financial

statements.

Table 27.1: Parent-Only Statement of Income

Year ended December 31,

(in millions) 2023 2022 2021

Income

Dividends from subsidiaries (1) $ 22,300 14,590 17,895

Interest income from subsidiaries 10,845 4,759 3,934

Other interest income 6 2 1

Other income 211 (53) (418)

Total income 33,362 19,298 21,412

Expense

Interest expense:

Indebtedness to nonbank subsidiaries 2,567 1,124 89

Long-term debt 9,909 4,994 2,823

Noninterest expense 504 2,043 309

Total expense 12,980 8,161 3,221

Income before income tax benefit and equity in undistributed income of subsidiaries 20,382 11,137 18,191

Income tax benefit (2) (1,076) (1,497) (816)

Equity in undistributed income of subsidiaries (2) (2,316) 1,043 3,102

Net income (2) $ 19,142 13,677 22,109

(1) Includes dividends paid from indirect bank subsidiaries of $22.3 billion, $14.5 billion and $15.2 billion in 2023, 2022 and 2021, respectively.

Note1 (Summary of Significant Accounting Policies).

Table 27.2: Parent-Only Statement of Comprehensive Income

Year ended December 31,

(in millions) 2023 2022 2021

Net income (1) $ 19,142 13,677 22,109

Other comprehensive income (loss), after tax:

Debt securities 2 34

Derivatives and hedging activities 22 57 49

Defined benefit plans adjustments 70 145 347

Debit valuation adjustments (DVA) and other (18) (6) —

Equity in other comprehensive income (loss) of subsidiaries (1) 1,706 (11,846) (2,361)

Other comprehensive income (loss), after tax 1,782 (11,616) (1,960)

Total comprehensive income (1) $ 20,924 2,061 20,149

Note1 (Summary of Significant Accounting Policies).

184 Wells Fargo & Company

Table 27.3: Parent-Only Balance Sheet

(in millions)

Dec 31,

2023

Dec 31,

2022

Assets

Cash, cash equivalents, and restricted cash due from subsidiary banks $ 15,856 16,171

Loans to nonbank subsidiaries 187,306 182,656

Investments in subsidiaries (1) (2) 161,698 161,970

Equity securities 120 143

Other assets (2) 11,207 9,409

Total assets $ 376,187 370,349

Liabilities and equity

Accrued expenses and other liabilities (2) $ 8,933 8,264

Long-term debt 148,053 134,159

Indebtedness to nonbank subsidiaries 33,466 47,699

Total liabilities 190,452 190,122

Stockholders’ equity (2) 185,735 180,227

Total liabilities and equity $ 376,187 370,349

(1) The years ended December31, 2023 and 2022, include indirect ownership of bank subsidiaries with equity of $166.3 billion and $163.9 billion, respectively.

Note1 (Summary of Significant Accounting Policies).

Table 27.4: Parent-Only Statement of Cash Flows

Year ended December 31,

(in millions) 2023 2022 2021

Cash flows from operating activities:

Net cash provided (used) by operating activities $ 25,972 (4,575) 11,938

Cash flows from investing activities:

Equity securities, not held for trading:

Proceeds from sales and capital returns 44 3 11

Purchases (13) (8) (18)

Loans:

Capital notes and term loans made to subsidiaries (5,420) (3,567) (3,500)

Principal collected on notes/loans made to subsidiaries 1,730 4,062 2,618

Other, net 9 (263) 14

Net cash provided (used) by investing activities (3,650) 227 (875)

Cash flows from financing activities:

Net increase (decrease) in short-term borrowings and indebtedness to subsidiaries (14,238) 8,153 35,958

Long-term debt:

Proceeds from issuance 19,070 26,520 1,001

Repayment (9,311) (17,618) (28,331)

Preferred stock:

Proceeds from issuance 1,722 — 5,756

Redeemed (1,725) — (6,675)

Cash dividends paid (1,141) (1,115) (1,205)

Common stock:

Repurchased (11,851) (6,033) (14,464)

Cash dividends paid (4,789) (4,178) (2,422)

Other, net (374) (344) (364)

Net cash provided (used) by financing activities (22,637) 5,385 (10,746)

Net change in cash, cash equivalents, and restricted cash (315) 1,037 317

Cash, cash equivalents, and restricted cash at beginning of period 16,171 15,134 14,817

Cash, cash equivalents, and restricted cash at end of period $ 15,856 16,171 15,134

Wells Fargo & Company 185

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

WellsFargo & Company:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of WellsFargo & Company and subsidiaries (the Company) as of

December31, 2023 and 2022, the related consolidated statement of income, comprehensive income, changes in equity, and cash flows

for each of the years in the three-year period ended December31, 2023, and the related notes (collectively, the consolidated financial

statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the

Company as of December31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year

period ended December31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),

the Company’s internal control over financial reporting as of December31, 2023, based on criteria established in Internal Control –

Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated

February20, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an

opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and

are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to

obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to

error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial

statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining,

on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial

statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or

disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex

judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements,

taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit

matters or on the accounts or disclosures to which they relate.

Assessment of the allowance for credit losses for loans (ACL)

As discussed in Notes 1 and 5 to the consolidated financial statements, the Company’s ACL as of December31, 2023 was

$15.1billion. The ACL includes the measurement of expected credit losses on a collective basis for those loans that share similar risk

characteristics and on an individual basis for those loans that do not share similar risk characteristics. The Company estimated the

ACL for collectively evaluated commercial loans by applying probability of default and severity of loss estimates to an expected

exposure at default. The probability of default and severity of loss estimates are statistically derived utilizing credit loss models

based on historical observations of default and losses after default for each credit risk rating. The Company estimated the ACL for

collectively evaluated consumer loans utilizing credit loss models which estimate expected credit losses in the portfolio based on

historical experience of probability of default and severity of loss estimates. The Company’s credit loss models utilize economic

variables, including economic assumptions forecast over a reasonable and supportable forecast period. The Company forecasts

multiple economic scenarios and applies weighting to the scenarios that are used to estimate expected credit losses. After the

reasonable and supportable forecast period, the Company reverts over the reversion period to the long-term average for the

forecasted economic variables based on historical observations over multiple economic cycles. The Company estimated the ACL for

individually evaluated commercial loans using discounted cash flow (DCF) or fair value of collateral methods. A portion of the ACL is

comprised of adjustments for qualitative factors which may not be adequately captured in the loss models.

We identified the assessment of the ACL as a critical audit matter. A high degree of audit effort, including specialized skills and

knowledge, and subjective and complex auditor judgment was involved in the assessment of the ACL. Specifically, the assessment

encompassed the evaluation of the ACL methodology for collectively evaluated loans, including the methods and models used to

estimate (1) probability of default and severity of loss estimates, significant economic assumptions, the reasonable and supportable

forecast period, the historical observation period, and credit risk ratings for commercial loans, and (2) the adjustments for

qualitative factors that may not be adequately captured in the loss models. The assessment included an evaluation of the

186 Wells Fargo & Company

conceptual soundness and performance of certain credit loss and economic forecasting models. The assessment also encompassed

the evaluation of the DCF and fair value of collateral methods and assumptions used to estimate the ACL for individually evaluated

commercial real estate (CRE) loans. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence

obtained.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the measurement of the ACL

estimate, including controls over the:

• development of certain credit loss models

• continued use and appropriateness of changes made to certain credit loss and economic forecasting models

• performance monitoring of certain credit loss and economic forecasting models

• identification and determination of the significant assumptions used in certain credit loss and economic forecasting models

• development of the qualitative factors, including significant assumptions used in the measurement of certain qualitative

factors

• evaluation of the DCF and fair value of collateral assessments used to determine the expected credit losses for individually

evaluated CRE loans

• analysis of the ACL results, trends, and ratios.

We evaluated the Company’s process to develop the estimate by testing certain sources of data and assumptions that the Company

used and considered the relevance and reliability of such data and assumptions. In addition, we involved credit risk professionals

with specialized skills and knowledge, who assisted in:

• evaluating the Company’s ACL methodology for compliance with U.S. generally accepted accounting principles

• evaluating judgments made by the Company relative to the development, assessment and performance testing of certain

credit loss models by comparing them to relevant Company-specific metrics and trends and the applicable industry and

regulatory practices

• assessing the conceptual soundness of the credit loss models, including the selection of certain assumptions, by inspecting the

model documentation to determine whether the models are suitable for their intended use

• evaluating the methodology used to develop the forecasted economic scenarios, the selection of underlying assumptions and

the weighting of scenarios by comparing them to the Company’s business environment

• assessing the forecasted economic scenarios through comparison to publicly available forecasts

• testing the historical observation period and reasonable and supportable forecast periods to evaluate the length of each period

• testing individual credit risk ratings for a selection of commercial loans by evaluating the financial performance of the borrower,

sources of repayment, and any relevant guarantees or underlying collateral

• evaluating the methods and assumptions used to develop certain qualitative factors and the effect of those factors on the ACL

compared with relevant credit risk factors and consistency with credit trends and identified limitations of the underlying

quantitative models

• evaluating the methods and assumptions used by the Company in the DCF and fair value of collateral assessments for

individually evaluated CRE loans by evaluating the financial performance of the borrower, sources of repayment, and any

relevant guarantees or underlying collateral.

We also assessed the sufficiency of the audit evidence obtained related to the ACL estimate by evaluating the:

• cumulative results of the audit procedures

• qualitative aspects of the Company’s accounting practices

• potential bias in the accounting estimates.

Wells Fargo & Company 187

Assessment of the residential mortgage servicing rights (MSRs)

As discussed in Notes 1, 6, 15, and 16 to the consolidated financial statements, the Company’s residential MSR asset as of

December31, 2023 was $7.5 billion on an underlying loan servicing portfolio of $560 billion. The Company recognizes MSRs when it

retains servicing rights in connection with the sale or securitization of loans it originated or purchases servicing rights from third

parties and has elected to carry its residential MSRs at fair value with periodic changes reflected in earnings. The Company uses a

valuation model for determining fair value that calculates the present value of estimated future net servicing income cash flows,

which incorporates assumptions that market participants use in estimating future net servicing income cash flows. These

assumptions include estimates of prepayment rates (including estimated borrower defaults), discount rates, cost to service

(including delinquency and foreclosure costs), escrow account earnings, contractual servicing fee income, ancillary income and late

fees. The estimated fair value of MSRs is periodically benchmarked to independent appraisals.

We identified the assessment of the valuation of residential MSRs as a critical audit matter. A high degree of audit effort, including

specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the MSRs.

Specifically, there was a high degree of subjectivity used to evaluate the valuation model and the following assumptions because

they are unobservable and the sensitivity of changes to those assumptions had a significant effect on the valuation (1) prepayment

rates, (2) discount rates, and (3) cost to service. There was also a high degree of subjectivity and potential for management bias

related to updates made to significant assumptions due to changes in market conditions, mortgage interest rates, or servicing

standards.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested

the operating effectiveness of certain internal controls related to the assessment of residential MSRs, including controls over the:

• assessment of the valuation model

• evaluation of the significant assumptions (prepayment rates, discount rates, and cost to service) used in determining the MSR

fair value

• comparison of the MSR fair value to independent appraisals.

We evaluated the Company’s process to develop the MSR fair value by testing certain sources of data and assumptions that the

Company used and considered the relevance and reliability of such data and assumptions. In addition, we involved valuation

professionals with specialized skills and knowledge, who assisted in:

• evaluating the design of the valuation model used to estimate the MSR fair value in accordance with relevant U.S. generally

accepted accounting principles

• evaluating significant assumptions based on an analysis of backtesting results and a comparison of significant assumptions to

available data for comparable entities and independent appraisals

• assessing significant assumption updates made during the year by considering backtesting results, market events, independent

appraisals, and other circumstances that a market participant would have expected to be incorporated in the valuation that

were not incorporated.

Assessment of goodwill impairment

As discussed in Notes 1 and 7 to the consolidated financial statements, the Company’s goodwill balance as of December31, 2023

was $25.2 billion. The Company tests goodwill for impairment annually in the fourth quarter, or more frequently if events or

circumstances indicate that the carrying value of goodwill may be impaired, by comparing the fair value of the reporting unit with its

carrying amount, including goodwill. Management estimates the fair value of its reporting units using both an income approach and

a market approach. The income approach is a discounted cash flow (DCF) analysis that incorporates assumptions including financial

forecasts, a terminal value based on an assumed long-term growth rate, and a discount rate. The financial forecasts include future

expectations of economic conditions and balance sheet changes, and considerations related to future business activities. The

forecasted cash flows are discounted using a rate derived from a capital asset pricing model which produces an estimated cost of

equity to the reporting unit. The market approach utilizes observable market data from comparable publicly traded companies and

incorporates assumptions including the selection of comparable companies and a control premium representative of management’s

expectation of a hypothetical acquisition of the reporting unit.

We identified the assessment of goodwill impairment for the Consumer Lending reporting unit, which had $7.1 billion of allocated

goodwill as of December31, 2023, as a critical audit matter. A high degree of audit effort, including specialized skills and knowledge,

and subjective and complex auditor judgment was involved in the assessment. Specifically, the assessment encompassed the

evaluation of certain assumptions used in the DCF analysis to estimate the fair value of the reporting unit, including (1) the future

expectations of balance sheet changes and business activities used in the financial forecast and (2) the discount rate.

188 Wells Fargo & Company

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested

the operating effectiveness of certain internal controls related to the Company’s determination of the estimated fair value of the

Consumer Lending reporting unit, including controls related to the:

• evaluation of the future expectations of balance sheet changes and business activities used in the financial forecast assumption

and

• evaluation of the discount rate assumption.

We evaluated the reasonableness of the financial forecast assumption for the reporting unit by evaluating historical performance

and economic trends. We also evaluated the consistency of the financial forecast assumption by comparing the forecast to other

analyses used by the Company and inquiries performed of senior management regarding the strategic plans for the reporting unit,

including future expectations of balance sheet changes and business activities. We compared historical financial forecasts to actual

results to assess the Company’s ability to accurately forecast. In addition, we involved valuation professionals with specialized skills

and knowledge, who assisted in:

• evaluating the reasonableness of the financial forecast assumption for the reporting unit by comparing certain growth trends

for the reporting unit to publicly available data for comparable entities

• evaluating the discount rate assumption used in the fair value determination by comparing the inputs to the discount rate to

publicly available data for comparable entities and assessing the resulting discount rate and

• evaluating the reasonableness of the total fair value through comparison to the Company’s market capitalization and analysis

of the resulting premium to applicable market transactions.

We have served as the Company’s auditor since 1931.

Charlotte, North Carolina

February20, 2024

Wells Fargo & Company 189

Quarterly Financial Data

Condensed Consolidated Statement of Income – Quarterly (Unaudited)

2023

Quarter ended

2022

Quarter ended

(in millions, except per share amounts) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,

Interest income $ 22,839 22,093 20,830 19,356 17,793 14,494 11,556 10,181

Interest expense 10,068 8,988 7,667 6,020 4,360 2,396 1,358 960

Net interest income 12,771 13,105 13,163 13,336 13,433 12,098 10,198 9,221

Noninterest income

Deposit and lending-related fees 1,568 1,551 1,517 1,504 1,522 1,647 1,729 1,815

Investment advisory and other asset-based fees 2,169 2,224 2,163 2,114 2,049 2,111 2,346 2,498

Commissions and brokerage services fees 619 567 570 619 601 562 542 537

Investment banking fees 455 492 376 326 331 375 286 447

Card fees 1,027 1,098 1,098 1,033 1,095 1,119 1,112 1,029

Mortgage banking 202 193 202 232 79 324 287 693

Net gains (losses) from trading and securities 1,105 1,246 1,032 985 (181) 872 (26) 796

Other 562 381 412 580 1,105 458 566 692

Total noninterest income 7,707 7,752 7,370 7,393 6,601 7,468 6,842 8,507

Total revenue 20,478 20,857 20,533 20,729 20,034 19,566 17,040 17,728

Provision for credit losses 1,282 1,197

1,713 1,207 957 784 580 (787)

Noninterest expense

Personnel 9,181 8,627 8,606 9,415 8,415 8,212 8,442 9,271

Technology, telecommunications and equipment 1,076 975 947 922 902 798 799 876

Occupancy 740 724 707 713 722 732 705 722

Operating losses 355 329 232 267 3,517 2,218 576 673

Professional and outside services 1,242 1,310 1,304 1,229 1,357 1,235 1,310 1,286

Advertising and promotion 259 215 184 154 178 126 102 99

Other 2,933 933 1,007 976 1,095 985 928 924

Total noninterest expense 15,786 13,113 12,987 13,676 16,186 14,306 12,862 13,851

Income before income tax expense (benefit) 3,410 6,547 5,833 5,846 2,891 4,476 3,598 4,664

Income tax expense (benefit) (100) 811 930 966 (29) 912 622 746

Net income before noncontrolling interests 3,510 5,736 4,903 4,880 2,920 3,564 2,976 3,918

Less: Net income (loss) from noncontrolling interests 64 (31) (35) (111) (235) (28) (166) 130

Wells Fargo net income $ 3,446 5,767 4,938 4,991 3,155 3,592 3,142 3,788

Less: Preferred stock dividends and other 286 317 279 278 278 279 279 279

Wells Fargo net income applicable to common stock

$ 3,160 5,450 4,659 4,713 2,877 3,313 2,863 3,509

Per share information

Earnings per common share $ 0.87 1.49 1.26 1.24 0.76 0.87 0.75 0.92

Diluted earnings per common share 0.86 1.48 1.25 1.23 0.75 0.86 0.75 0.91

Average common shares outstanding 3,620.9 3,648.8 3,699.9 3,785.6 3,799.9 3,796.5 3,793.8 3,831.1

Diluted average common shares outstanding 3,657.0 3,680.6 3,724.9 3,818.7 3,832.7 3,825.1 3,819.6 3,868.9

190 Wells Fargo & Company

Glossary of Acronyms

ACL Allowance for credit losses

AFS Available-for-sale

AOCI Accumulated other comprehensive income

ARM Adjustable-rate mortgage

ASC Accounting Standards Codification

ASU Accounting Standards Update

AVM Automated valuation model

BCBS Basel Committee on Banking Supervision

BHC Bank holding company

CCAR Comprehensive Capital Analysis and Review

CD Certificate of deposit

CECL Current expected credit loss

CET1 Common Equity Tier 1

CFPB Consumer Financial Protection Bureau

CLO Collateralized loan obligation

CRE Commercial real estate

DPD Days past due

ESOP Employee Stock Ownership Plan

FASB Financial Accounting Standards Board

FDIC Federal Deposit Insurance Corporation

FHA Federal Housing Administration

FHLB Federal Home Loan Bank

FHLMC Federal Home Loan Mortgage Corporation

FICO Fair Isaac Corporation (credit rating)

FNMA Federal National Mortgage Association

FRB Board of Governors of the Federal Reserve System

GAAP Generally accepted accounting principles

GNMA Government National Mortgage Association

GSE Government-sponsored entity

G-SIB Global systemically important bank

HQLA High-quality liquid assets

HTM Held-to-maturity

LCR Liquidity coverage ratio

LHFS Loans held for sale

LIHTC Low-income housing tax credit

LOCOM Lower of cost or fair value

LTV Loan-to-value

MBS Mortgage-backed securities

MSR Mortgage servicing right

NAV Net asset value

NPA Nonperforming asset

NSFR Net stable funding ratio

OCC Office of the Comptroller of the Currency

OCI Other comprehensive income

OTC Over-the-counter

PCD Purchased credit-deteriorated

RMBS Residential mortgage-backed securities

ROA Return on average assets

ROE Return on average equity

ROTCE Return on average tangible common equity

RWAs Risk-weighted assets

SEC Securities and Exchange Commission

S&P Standard & Poor’s Global Ratings

SLR Supplementary leverage ratio

SOFR Secured Overnight Financing Rate

SPE Special purpose entity

TDR Troubled debt restructuring

TLAC Total Loss Absorbing Capacity

VA Department of Veterans Affairs

VaR Value-at-Risk

VIE Variable interest entity

WIM Wealth and Investment Management

Wells Fargo & Company 191

Operating Committee

William M. Daley

Vice Chair

Public Affairs

Kristy Fercho

Senior EVP

Head of Diverse Segments,

Representation and Inclusion

Derek A. Flowers

Senior EVP

Chief Risk Officer

Kyle G. Hranicky

Senior EVP

CEO of Commercial Banking

Tracy Kerrins

Senior EVP

Head of Technology

Bei Ling

Senior EVP

Head of Human Resources

Ellen R. Patterson

Senior EVP

General Counsel

Scott E. Powell

Senior EVP

Chief Operating Officer

Paul Ricci

Senior EVP

Chief Auditor, Internal Audit

Michael P. Santomassimo

Senior EVP

Chief Financial Officer

Kleber R. Santos

Senior EVP

CEO of Consumer Lending

Charles W. Scharf

Chief Executive Officer

and President

Barry Sommers

Senior EVP

CEO of Wealth and

InvestmentManagement

Saul Van Beurden

Senior EVP

CEO of Consumer, Small and Business

Banking

Jonathan G. Weiss

Senior EVP

CEO of Corporate and

InvestmentBanking

Ather Williams III

Senior EVP

Head of Strategy, Digital,

andInnovation

____________________

As of March 4, 2024

Except for Paul Ricci, all members of

the Operating Committee are

executive officers according to

Securities and Exchange Commission

rules. Muneera S. Carr, EVP, Chief

Accounting Officer and Controller,

also is an executive officer.

Board of Directors

Steven D. Black (Chair)

Former Co-CEO

Bregal Investments, Inc.,

an international private equity firm

Mark A. Chancy

Former Vice Chair and Co-COO

SunTrust Banks, Inc., a bank

holdingcompany

Celeste A. Clark

Principal, Abraham Clark

Consulting, LLC,

a health and regulatory policy

consulting firm

Theodore F. Craver, Jr.

Former Chair,

President and CEO

Edison International, an electric utility

holding company

Richard K. Davis

Former President and CEO

Make-A-Wish America, a non-profit

organization

Wayne M. Hewett

Senior Advisor

Permira, a global private equity firm

CeCelia G. Morken

Former CEO

Headspace, an online wellness

company

Maria R. Morris

Former EVP and Head,

Global Employee Benefits business

MetLife, a global financial

servicescompany

Felicia F. Norwood

EVP and President,

Government Health Benefits

Elevance Health, Inc.,

a health company

Richard B. Payne, Jr.

Former Vice Chair,

Wholesale Banking

U.S. Bancorp, a U.S. bank holding

company

Ronald L. Sargent

Former CEO and Chair

Staples, Inc., a workplace

productsretailer

Charles W. Scharf

Chief Executive Officer

and President

Wells Fargo & Company

Suzanne M. Vautrinot

President

Kilovolt Consulting, Inc.,

a cybersecurity strategy and

technology consulting firm

____________________

As of March 4, 2024

Stock Performance

This graph compares the cumulative total stockholder return and total compound annual growth rate (CAGR) for our common stock

(NYSE: WFC) for the five-year period ended December 31, 2023, with the cumulative total stockholder return for the same period for

the Keefe, Bruyette and Woods (KBW) Total Return Bank Index (KBW Nasdaq Bank Index (BKX)) and the S&P 500 Index.

The cumulative total stockholder returns (including reinvested dividends) in the graph assume the investment of $100 in Wells Fargo’s

common stock, the KBW Nasdaq Bank Index, and the S&P 500 Index.

FIVE YEAR PERFORMANCE GRAPH

Wells Fargo (WFC)

S&P 500

KBW Nasdaq Bank Index

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

2018 2019 2020 2021 2022 2023 5-year

CAGR

$100 $121 $71 $114 $101 $123 4% Wells Fargo

100 131 156 200 164 207 16% S&P 500

100 136 122 169 133 132 6% KBW Nasdaq Bank

Index

General Information

Common Stock

Wells Fargo & Company is listed and trades on the New York

Stock Exchange: WFC. At February 9, 2024, there were

218,547 holders of record of the Company’s common stock

and the closing price reported on the New York Stock Exchange

for the common stock was $48.06 pershare.

3,598,862,582 common shares outstanding (12/31/23)

Stock Purchase and Dividend Reinvestment

You can buy Wells Fargo stock directly from Wells Fargo, even

if you’re not a Wells Fargo shareholder, through optional cash

payments or automatic monthly deductions from a bank

account. You can also have your dividends reinvested

automatically. It’s a convenient, economical way to increase

your Wells Fargo investment.

Call 1-877-840-0492 for an enrollment kit, which includes a

plan prospectus.

Form 10-K

We will send Wells Fargo’s 2023 Annual Report on Form 10-K

(including the financial statements filed with the U.S.

Securities and Exchange Commission) free to any

shareholder who asks for a copy in writing.

Shareholders also can ask for copies of any exhibit to the Form

10-K. We will charge a fee to cover expenses to prepare and

send any exhibits.

SEC Filings

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 free of charge on our website

(www.wellsfargo.com) as soon as practical after they are

electronically filed with or furnished to the SEC. Those reports

and amendments are also available free of charge on the SEC’s

website at www.sec.gov¹.

Forward-Looking Statements

This Annual Report contains forward-looking statements about

our future financial performance and business. Because

forward-looking statements are based on our current

expectations and assumptions regarding the future, they are

subject to inherent risks and uncertainties. Do not unduly rely

on forward-looking statements, as actual results could differ

materially from expectations. Forward-looking statements

speak only as of the date made, and we do not undertake to

update them to reflect changes or events that occur after that

date. For information about factors that could cause actual

results to differ materially from our expectations, refer to the

discussion under “Forward-Looking Statements” and “Risk

Factors” in the Financial Review portion of this AnnualReport.

Please send requests to: Corporate Secretary, Wells Fargo &

Company, MAC J0193-610, 30 Hudson Yards, New York, NY

10001-2170

Investor Relations

1-415-371-2921

[email protected]

Shareowner Services and

TransferAgent

EQ Shareowner Services

P.O. Box 64874

St. Paul, Minnesota

55164-0874

1-877-840-0492

www.shareowneronline.com¹

Annual Shareholders’ Meeting

10:00 a.m. Eastern Daylight Time

Tuesday,April 30, 2024

See Wells Fargo’s 2024 Proxy Statement

for more information about the annual

shareholders’ meeting.

We do not control this website. Wells Fargo has provided this link for your convenience, but does not endorse and is not responsible for the content, links, privacy

policy, or security policy of this website.

Wells Fargo & Company

420 Montgomery Street

San Francisco, CA 94104

wellsfargo.com

Deposit products offered through Wells Fargo Bank, N.A. Member FDIC.

CCM7565 (Rev 00, 1/each)