Wells Fargo (WFC) Investor update summary

Consent order and timeline

• Federal Reserve order covers governance, oversight, compliance and operational risk management tied to prior issues; it acknowledged 17 months of improvements, with further work still required.

• Plans are due to the Fed within 60 days; independent third-party review must be completed by Sep. 30, 2018, and the asset cap remains until the Fed is satisfied.

• From Q2, consolidated assets are capped at the Dec. 31, 2017 level of about $2T, measured on a two-quarter daily average.

Governance and risk progress

• Six new independent directors joined over the past year; plans include refreshing four additional directors in 2018, with three retiring by the annual meeting.

• Risk spending was $3.9B in 2017; risk functions were centralized and more than 2,000 external risk staff were hired over the past two years.

• Dedicated teams and functions focus on credit risk, resolution planning, cyber defense, conduct management, enterprise data and customer remediation.

Asset-cap and financial implications

• Preliminary 2018 scenario estimates a $300M-$400M after-tax net income reduction, assuming average reductions of $50B-$75B in selected assets and deposits; actual impact depends on business trends and actions.

• Scenario assumes a 70-75 bps average NIM on reduced categories; selected reductions are intended to create a buffer while allowing core lending and deposit-taking to grow.

• Year-end non-operational commercial deposits were about $200B; reductions would focus on higher-cost, lower-liquidity-value deposits, with a modest NII impact and lower deposit costs and betas.

• FY18 total expense guidance remains $53.5B-$54.5B, including ongoing risk-management investment; the $4B expense-reduction target remains in place.

• Year-end CET1 capital was 190 bps above the 10% internal target; returning more capital to shareholders remains a priority.