Risk Management. Mike Loughlin, Senior EVP, Chief Risk Officer. May 24, Wells Fargo & Company. All rights reserved.

Transcription

1 Risk Management Mike Loughlin, Senior EVP, Chief Risk Officer May 24, Wells Fargo & Company. All rights reserved.

2 Every team member is responsible for managing risk Effective Risk Management enables us to: Better serve and retain our customers Maintain and improve our position in the market Protect the long-term safety, soundness and reputation of Wells Fargo Wells Fargo 2016 Investor Day Risk Management 1

3 Wells Fargo s statement of risk appetite Relationship Focus Understanding Risk Reputation We take only as much risk as is appropriate to efficiently, effectively, and prudently serve our customers We are willing to take risks when we understand them, and avoid or minimize risks when we have no competitive advantage or limited experience Our reputation is paramount. We will not engage in activities or business practices that could cause damage to our reputation Price for Risk We price our business to cover risk to capital and will retain risk only if priced for a sufficient risk-adjusted return Conservatism We have a significant bias for conservatism Operational Excellence Our customers expect that we will be a reliable provider of services Clear Accountability Business decision makers have primary accountability for risk, while the corporate risk function sets limits, provides oversight, an enterprise-wide view and credible challenge to both strategy and performance of all risk taking activities Wells Fargo 2016 Investor Day Risk Management 2

4 Corporate Risk leadership team Michael Loughlin Senior EVP, Chief Risk Officer 36 years at Wells Fargo Rich Baich Keb Byers Lisa Finer Derek Flowers Kerri Grosslight Chief Information Security Officer 4 years at WFC Head of Enterprise Risk 25 years at WFC Head of Corporate Risk Program 26 years at WFC Chief Credit Officer 18 years at WFC GRO Technology, Data & Operations 27 years at WFC Yvette Hollingsworth Clark Chief Compliance Officer 4 years at WFC Zac Maufe Head of Cyber Defense Program 15 years at WFC Kevin Oden Chief Market & Institutional Risk Officer 10 years at WFC Joseph Rice Chief Operational Risk Officer 24 years at WFC Jim Richards BSA Officer, Head of Financial Crimes 11 years at WFC Vic Albrecht Wealth & Investment Management 35 years at WFC Teddy DeRivera Corporate Staff Groups 17 years at WFC Line of Business Risk David Marks Consumer Lending 29 years at WFC Claudia Russ Anderson Community Banking 36 years at WFC Dave Weber Wholesale Banking 31 years at WFC Wells Fargo 2016 Investor Day Risk Management 3

5 Evolution of Corporate Risk We ve consolidated areas of risk into Corporate Risk and enhanced risk oversight across all areas of risk management External Fraud Investigations transferred to Risk Created Wells Fargo Home Lending MSR and Hedging oversight team Created Information Technology oversight Created Enterprise Risk Management currently responsible for oversight of areas including Corporate Finance, Treasury and Investment Portfolio International Compliance team and High Risk Business Process team created Information Security and Corporate Internal Fraud Investigations transferred to Risk Technology, Data & Operations Oversight Group Risk Office transferred to Risk Transferred Market Risk Oversight to Risk Creation of Corporate Risk Program Office, Corporate Staff Group Risk Officer and Credit Risk Economics team Transferred Fair Lending Group into Risk Cyber Defense Program Office created Transferred Risk and Insurance Division from Treasury into Risk Wells Fargo 2016 Investor Day Risk Management 4

6 Significant investment in Corporate Risk We ve continued to invest and currently expect to increase team members by ~20% in 2016 Corporate Risk Team Members 4,656 3,987 3,247 2,773 2,865 2,454 Significant investments include oversight of: Model Risk Cyber Security Compliance Data Analytics Financial Crimes Risk Aggregation Operational Risk Prior periods have been adjusted for teams that have transferred into Risk Management. Wells Fargo 2016 Investor Day Risk Management 5

7 More balanced loan portfolio We ve grown our total loan portfolio while reducing our non-strategic/liquidating loans (1) while becoming more balanced between consumer and commercial loans Period-end Loans Outstanding ($ in billions) Mix Consumer vs. Commercial % 55% 55% 54% 52% 50% 48% % 45% 45% 46% 48% 50% 52% Q16 Core loans Non-strategic/liquidating loans (1) Q16 % Commercial % Consumer (1) See page 25 of our 1Q16 Quarterly Supplement and pages in our 2015 Annual Report for additional information regarding the non-strategic/liquidating portfolio, which consists of Pick-a-Pay, liquidating home equity, legacy Wells Fargo Financial debt consolidation, and certain other legacy Wachovia portfolios. Wells Fargo 2016 Investor Day Risk Management 6

8 Reduction in higher risk portfolios We ve significantly reduced our higher risk portfolios Real Estate 1-4 family junior lien mortgage % 2015 $96.2 $ Pick-a-Pay Mortgage 48% 2015 $74.8 $39.1 Wells Fargo Financial Debt Consolidation % $ $10.0 Wells Fargo Financial Indirect Auto % $6.0 $0 $ in billions, period end loans outstanding Wells Fargo 2016 Investor Day Risk Management 7

9 Improved credit quality Credit quality has improved across our portfolios, driven primarily by residential real estate Net Charge-offs ($ in billions) Net Charge-off Rate % % 1.17% 0.56% 0.35% 0.33% 0.38% Commercial Residential Real estate All Other Consumer Q16 Wells Fargo 2016 Investor Day Risk Management 8

10 Actively managing risk cyber security Efforts since 2012 have laid the foundation to improve our cyber security capabilities Chief Information Security Officer hired External Cyber Defense Capability Assessment completed Added Board Member with cyber security and technology expertise Realigned and integrated remaining business technology functions under enterprise technology group Significant new cyber detection tools deployed to increase risk discovery capabilities Information Security moved to Corporate Risk External Penetration Testing program expanded Cyber Operations Centers launched to improve intrusion detection and incident response Cyber Defense Program Office created to enhance cross-functional coordination Developed a multi-year plan to enhance Information Security 2016 Wells Fargo 2016 Investor Day Risk Management 9

11 Strong risk management is the cornerstone of our long-term success

12 Biography

13 Mike Loughlin Senior Executive Vice President, Chief Risk Officer Michael (Mike) J. Loughlin, Senior Executive Vice President and Chief Risk Officer, assumed his role in He oversees all risk-taking activities at Wells Fargo, including credit, market, operational, compliance, information security, and financial crimes risk management. He is also involved in a broad range of enterprise matters including liquidity, capital, profit planning, and compensation. He was previously responsible for credit approval, policy and reporting for Wholesale Banking. A banking professional with 36 years of experience, he joined the company in 1986 after Wells Fargo acquired Crocker Bank. Before serving as head of credit for Wholesale Banking, he was responsible for the private banking business of Private Client Services, headed systems and operations for the Wholesale Banking unit, and held other positions within Commercial and Corporate Banking including head of U.S. Corporate Banking and Regional Vice President in the Santa Clara Valley Regional Commercial Banking Office. He received his bachelor s degree from the University of California at Berkeley. Wells Fargo 2016 Investor Day Risk Management 12