 | News Release Corporate Communications |
| Media | Investors | |||
| Janis Smith | Bob Strickland | |||
| (415) 396-7711 | (415) 396-0523 |
Wednesday, January 16, 2008
WELLS FARGO REPORTS RECORD ANNUAL REVENUE
WITH DOUBLE-DIGIT REVENUE GROWTH
WELLS FARGO REPORTS RECORD ANNUAL REVENUE
WITH DOUBLE-DIGIT REVENUE GROWTH
Full Year 2007:
| • | Record revenue of $39.4 billion | |
| • | Positive operating leverage (revenue growth of 10.4 percent; expense growth of 9.5 percent) | |
| • | Net income of $8.06 billion, including previously announced $1.4 billion (pre tax) credit reserve build and $203 million (pre tax) Visa litigation expense | |
| • | Diluted earnings per share of $2.38, including credit reserve build ($0.27) and Visa litigation expense ($0.04) |
Fourth Quarter 2007:
| • | Record revenue of $10.2 billion | |
| • | Net income of $1.36 billion, including $1.4 billion (pre tax) credit reserve build | |
| • | Diluted earnings per share of $0.41, including $0.27 credit reserve build | |
| • | Strong loan growth |
| ○ | Average loans up 20 percent from prior year; up 27 percent (annualized) from prior quarter | ||
| ○ | Average commercial and commercial real estate loans up 24 percent from prior year; up 37 percent (annualized) from prior quarter |
| • | Average core deposits up 11 percent from prior year; up 11 percent (annualized) from prior quarter | |
| • | Net interest margin of 4.62 percent, up 7 basis points from prior quarter |
| Selected Financial Information | Full Year | Fourth Quarter | ||||||||||||||||||||||
| % | % | |||||||||||||||||||||||
| 2007 | 2006 | Change | 2007 | 2006 | Change | |||||||||||||||||||
| Diluted earnings per share | $ | 2.38 | $ | 2.47 | (4 | )% | $ | 0.41 | $ | 0.64 | (36 | )% | ||||||||||||
| Net income (in billions) | 8.06 | 8.42 | (4 | ) | 1.36 | 2.18 | (38 | ) | ||||||||||||||||
| Net charge-offs as % of avg. total loans | 1.03 | % | 0.73 | % | 41 | 1.28 | % | 0.92 | % | 39 | ||||||||||||||
| Nonperforming loans as % of total loans | 0.70 | 0.52 | 35 | 0.70 | 0.52 | 35 | ||||||||||||||||||
| Allowance as a % of total loans | 1.44 | 1.24 | 16 | 1.44 | 1.24 | 16 | ||||||||||||||||||
| Revenue (in billions) | $ | 39.39 | $ | 35.69 | 10 | $ | 10.21 | $ | 9.41 | 8 | ||||||||||||||
| Average loans (in billions) | 344.8 | 306.9 | 12 | 374.4 | 312.2 | 20 | ||||||||||||||||||
| Average core deposits (in billions) | 303.1 | 268.9 | 13 | 314.8 | 283.8 | 11 | ||||||||||||||||||
| Net interest margin | 4.74 | % | 4.83 | % | (2 | ) | 4.62 | % | 4.93 | % | (6 | ) | ||||||||||||
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SAN FRANCISCO — Wells Fargo & Company (NYSE:WFC) reported diluted earnings per common share of $2.38 for 2007 compared with $2.47 in 2006. Net income was $8.06 billion compared with $8.42 billion in 2006. Full year results included the impact of the previously announced $1.4 billion (pre tax) credit reserve build ($0.27 per share) and $203 million Visa litigation expense ($0.04 per share) for 2007 and $95 million ($0.02 per share) of Visa litigation expense for 2006. Net income was $1.36 billion, or $0.41 per share, for fourth quarter 2007 compared with $2.18 billion, or $0.64 per share, for fourth quarter 2006. Fourth quarter results included the impact of the $1.4 billion (pre tax) credit reserve build ($0.27 per share).
“Despite the industry headwinds and challenging economic environment, our outstanding team members produced record revenue for both the fourth quarter and full year,” said President and CEO John Stumpf. “We expect the environment to remain challenging in 2008, particularly in the consumer sector, but we’re as committed as ever to satisfying all our customers’ financial needs and believe we have the right strategy and team in place to do just that. Our talented team did exceptionally well in fundamental areas such as account, revenue and deposit growth and we expanded distribution and cross-sell to both consumer and commercial customers. Our diversified business model, financial strength and rigorous execution have enabled us to manage through challenging times better than most and 2007 proved that. It was also a productive year for acquisitions, including our acquisitions of Placer Sierra Bancorp and Greater Bay Bancorp. We also recently agreed to acquire the banking operations of United Bancorporation of Wyoming, which will make us the largest bank in our nation’s ninth fastest-growing state. This is not the first economic downturn our industry has seen and it won’t be the last. That’s why we’ve built our model and our team to meet customer needs as a priority through all economic conditions — a commitment every bit as strong today as it’s been over our 156-year history.”
Financial Performance
“Despite the challenging environment in 2007, Wells Fargo had a strong year and strong fourth quarter,” said Chief Financial Officer Howard Atkins. “We believe we will be among the few large banks in the U.S. that achieved both double-digit top line revenue growth as well as positive operating leverage (revenue growth of 10.4 percent exceeding expense growth of 9.5 percent). Our pre-tax pre-provision profit (revenue less noninterest expense) rose to an annual record of $16.6 billion, up 12 percent from the prior year, and, on a strong fourth quarter, to a quarterly record of $4.3 billion, up 8 percent year-over-year, and 12 percent (annualized) on a linked-quarter basis. The strength of these business results reflected record sales and double-digit growth in loans, deposits and fee income for the full year,” said Atkins.
“Despite the challenging environment in 2007, Wells Fargo had a strong year and strong fourth quarter,” said Chief Financial Officer Howard Atkins. “We believe we will be among the few large banks in the U.S. that achieved both double-digit top line revenue growth as well as positive operating leverage (revenue growth of 10.4 percent exceeding expense growth of 9.5 percent). Our pre-tax pre-provision profit (revenue less noninterest expense) rose to an annual record of $16.6 billion, up 12 percent from the prior year, and, on a strong fourth quarter, to a quarterly record of $4.3 billion, up 8 percent year-over-year, and 12 percent (annualized) on a linked-quarter basis. The strength of these business results reflected record sales and double-digit growth in loans, deposits and fee income for the full year,” said Atkins.
“While we were not immune to the unexpectedly sharp and rapid downturn in housing, and our earnings were reduced in the fourth quarter by the $1.4 billion credit reserve build, primarily for home equity losses, we largely avoided the problems and costly asset write-downs many large financial institutions incurred. We maintained one of the highest return on equity ratios among large bank holding companies, at 17.1 percent, as well as one of the strongest capital positions in the industry for 2007. With our strong capital position, the challenges facing the industry and the significant upward re-pricing of asset spreads, we are finding significantly more opportunities now for acquisitions, portfolio purchases, and attractive loan and asset purchases than we have seen in the past five years.”
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Revenue
Revenue for the year was a record $39.4 billion, up 10 percent from $35.7 billion in 2006. Revenue increased 8 percent in the fourth quarter to $10.2 billion, another record, up $792 million from a year ago. On a linked-quarter basis, revenue growth accelerated to 14 percent (annualized), up $352 million. “Our strong revenue growth was driven by solid, across the board volume growth in loans, deposits and fee-based products,” said Atkins. “Many of our businesses continued to post double-digit, year-over-year revenue growth, including business direct, wealth management, credit and debit card, global remittance services, personal credit management, home mortgage, asset-based lending, asset management, specialized financial services and international.”
Revenue for the year was a record $39.4 billion, up 10 percent from $35.7 billion in 2006. Revenue increased 8 percent in the fourth quarter to $10.2 billion, another record, up $792 million from a year ago. On a linked-quarter basis, revenue growth accelerated to 14 percent (annualized), up $352 million. “Our strong revenue growth was driven by solid, across the board volume growth in loans, deposits and fee-based products,” said Atkins. “Many of our businesses continued to post double-digit, year-over-year revenue growth, including business direct, wealth management, credit and debit card, global remittance services, personal credit management, home mortgage, asset-based lending, asset management, specialized financial services and international.”
Loans
Average loans of $374.4 billion in fourth quarter 2007 grew $62.2 billion, or 20 percent, from fourth quarter 2006. On a linked-quarter basis, average loans increased $23.7 billion, or 27 percent (annualized). Average commercial and commercial real estate loans increased $28.4 billion, or 24 percent, from fourth quarter 2006 and increased $12.6 billion, or 37 percent (annualized), on a linked-quarter basis. This was the 13th consecutive quarter of double-digit, year-over-year growth in average commercial and commercial real estate loans.
Average loans of $374.4 billion in fourth quarter 2007 grew $62.2 billion, or 20 percent, from fourth quarter 2006. On a linked-quarter basis, average loans increased $23.7 billion, or 27 percent (annualized). Average commercial and commercial real estate loans increased $28.4 billion, or 24 percent, from fourth quarter 2006 and increased $12.6 billion, or 37 percent (annualized), on a linked-quarter basis. This was the 13th consecutive quarter of double-digit, year-over-year growth in average commercial and commercial real estate loans.
Average consumer loans increased $32.8 billion, or 18 percent, from a year ago and increased $10.9 billion, or 21 percent (annualized), on a linked-quarter basis. Average real estate 1-4 family junior lien mortgage and credit card loans grew at double-digit rates from a year ago. The acquisition of Greater Bay Bancorp added $5.1 billion of average total loans in the fourth quarter, including $4.7 billion of commercial loans and $400 million of consumer loans.
Deposits
Average core deposits of $314.8 billion for fourth quarter 2007 increased $31.0 billion, or 11 percent, from fourth quarter 2006. On a linked-quarter basis, average core deposits grew $8.7 billion, or 11 percent (annualized). Average mortgage escrow deposits were $19.8 billion for fourth quarter 2007, down $392 million from fourth quarter 2006 and down $2.6 billion on a linked-quarter basis. Excluding mortgage escrow balances, total average core deposits grew 12 percent from fourth quarter 2006 and 16 percent (annualized) on a linked-quarter basis. Average retail core deposits grew $14.2 billion, or 6 percent, from fourth quarter 2006 and increased $5.6 billion, or 10 percent (annualized), on a linked-quarter basis. Average net new consumer checking accounts grew 4.7 percent from fourth quarter 2006, including 5.7 percent net new consumer account growth in California. The acquisition of Greater Bay Bancorp added $3.6 billion of average deposits in the fourth quarter, $3.4 billion of which were retail core deposits.
Average core deposits of $314.8 billion for fourth quarter 2007 increased $31.0 billion, or 11 percent, from fourth quarter 2006. On a linked-quarter basis, average core deposits grew $8.7 billion, or 11 percent (annualized). Average mortgage escrow deposits were $19.8 billion for fourth quarter 2007, down $392 million from fourth quarter 2006 and down $2.6 billion on a linked-quarter basis. Excluding mortgage escrow balances, total average core deposits grew 12 percent from fourth quarter 2006 and 16 percent (annualized) on a linked-quarter basis. Average retail core deposits grew $14.2 billion, or 6 percent, from fourth quarter 2006 and increased $5.6 billion, or 10 percent (annualized), on a linked-quarter basis. Average net new consumer checking accounts grew 4.7 percent from fourth quarter 2006, including 5.7 percent net new consumer account growth in California. The acquisition of Greater Bay Bancorp added $3.6 billion of average deposits in the fourth quarter, $3.4 billion of which were retail core deposits.
Net Interest Income
Net interest income increased $438 million, or 9 percent, from a year ago and increased $208 million, or 16 percent (annualized), from third quarter 2007 due to solid earning asset growth (up 16 percent year-over-year and up 10 percent (annualized) on a linked-quarter basis) combined with a 7 basis point expansion in the net interest margin to 4.62 percent on a linked-quarter basis. “The Company continued to have one of the highest net interest margins among large U.S. bank holding companies,” said Atkins. Net interest income was reduced by approximately $22 million in the quarter due to the impact of temporarily elevated short-term London Interbank Offered Rates (LIBOR).
Net interest income increased $438 million, or 9 percent, from a year ago and increased $208 million, or 16 percent (annualized), from third quarter 2007 due to solid earning asset growth (up 16 percent year-over-year and up 10 percent (annualized) on a linked-quarter basis) combined with a 7 basis point expansion in the net interest margin to 4.62 percent on a linked-quarter basis. “The Company continued to have one of the highest net interest margins among large U.S. bank holding companies,” said Atkins. Net interest income was reduced by approximately $22 million in the quarter due to the impact of temporarily elevated short-term London Interbank Offered Rates (LIBOR).
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Noninterest Income
Noninterest income increased $354 million, or 8 percent, from fourth quarter 2006 and increased 12 percent (annualized) on a linked-quarter basis. Noninterest income increased across the Company’s businesses from fourth quarter 2006, with double-digit increases in debit and credit card fees (up 22 percent), deposit service charges (up 13 percent) and insurance fees (up 24 percent), along with a solid increase in trust and investment fees (up 9 percent). Capital markets and equity investment results also were strong during the quarter. Mortgage banking noninterest income increased $154 million, or 23 percent, from fourth quarter 2006, because net servicing fee income growth exceeded the impact of a 20 percent decline in home mortgage originations.
Noninterest income increased $354 million, or 8 percent, from fourth quarter 2006 and increased 12 percent (annualized) on a linked-quarter basis. Noninterest income increased across the Company’s businesses from fourth quarter 2006, with double-digit increases in debit and credit card fees (up 22 percent), deposit service charges (up 13 percent) and insurance fees (up 24 percent), along with a solid increase in trust and investment fees (up 9 percent). Capital markets and equity investment results also were strong during the quarter. Mortgage banking noninterest income increased $154 million, or 23 percent, from fourth quarter 2006, because net servicing fee income growth exceeded the impact of a 20 percent decline in home mortgage originations.
The 12 percent annualized growth in noninterest income on a linked-quarter basis reflected, in part, strong double-digit annualized growth in trust and investment fees, card fees and insurance income. During the quarter, mortgage banking noninterest income was impacted by changes in interest rates, widening credit spreads and other housing/credit market conditions, including:
• ($268) million | Write-down of the mortgage warehouse/pipeline, write-down of mortgage loans repurchased during the quarter, an increase in the repurchase reserve for projected early payment defaults, and a decline in servicing value of loans held in the mortgage warehouse. | |
• $280 million | Increase in mortgage servicing income reflecting a $1.9 billion reduction in the value of mortgage servicing rights (MSRs) due to the decline in mortgage rates during the quarter, offset by a $2.2 billion gain on the financial instruments hedging the MSRs. The ratio of MSRs to related loans serviced for others was 1.20 percent, the lowest capitalization ratio in 10 quarters and 15 basis points below the third quarter. |
Unrealized net gains on securities available for sale were $680 million at December 31, 2007, up from $581 million at September 30, 2007. “We continued to maintain a relatively low-risk, highly liquid and very valuable available for sale portfolio,” said Atkins.
Noninterest Expense
Noninterest expense increased $489 million, or 9 percent, from fourth quarter 2006 and increased $229 million from third quarter 2007. Noninterest expense for fourth quarter 2007 included $43 million in integration and severance costs, as well as $33 million in expenses reflecting the Company’s proportionate share of Visa’s accrual for certain additional litigation matters. As previously reported, the Company revised its third quarter 2007 results to reflect $170 million of litigation expenses associated with indemnification obligations arising from the Company’s ownership interest in Visa. “We continued to invest in our people and our businesses in 2007, opening 87 regional banking stores,” said Atkins. “Despite these investments, our efficiency ratio was 57.8 percent in fourth quarter 2007, of which 60 basis points was due to the acquisition of Greater Bay Bancorp and related integration expense.”
Noninterest expense increased $489 million, or 9 percent, from fourth quarter 2006 and increased $229 million from third quarter 2007. Noninterest expense for fourth quarter 2007 included $43 million in integration and severance costs, as well as $33 million in expenses reflecting the Company’s proportionate share of Visa’s accrual for certain additional litigation matters. As previously reported, the Company revised its third quarter 2007 results to reflect $170 million of litigation expenses associated with indemnification obligations arising from the Company’s ownership interest in Visa. “We continued to invest in our people and our businesses in 2007, opening 87 regional banking stores,” said Atkins. “Despite these investments, our efficiency ratio was 57.8 percent in fourth quarter 2007, of which 60 basis points was due to the acquisition of Greater Bay Bancorp and related integration expense.”
Income Taxes
The Company’s effective tax rate for full year 2007 was 30.70 percent compared with 33.44 percent for 2006. Income tax expense for 2007 included FIN 48 tax benefits of $235 million, of which $130 million was in the fourth quarter, as well as the impact of lower pre-tax earnings in relation to the level of tax-exempt income and tax credits. The tax benefits recorded in 2007 primarily related to the resolution of certain matters with federal and state taxing authorities and statute expirations,
The Company’s effective tax rate for full year 2007 was 30.70 percent compared with 33.44 percent for 2006. Income tax expense for 2007 included FIN 48 tax benefits of $235 million, of which $130 million was in the fourth quarter, as well as the impact of lower pre-tax earnings in relation to the level of tax-exempt income and tax credits. The tax benefits recorded in 2007 primarily related to the resolution of certain matters with federal and state taxing authorities and statute expirations,
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reduced by accruals for uncertain tax positions, in accordance with FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes.
Credit Quality
“2007 was a challenging year for credit,” said Chief Credit Officer Mike Loughlin. “We largely avoided many higher-risk wholesale and consumer loan products and practices that are problematic to the industry. However, we did not fully appreciate the severity of the residential real estate downturn and its impact on our home equity portfolio, particularly our third party-originated, higher loan-to-value second mortgages.” The fourth quarter 2007 provision was $2.6 billion, which included fourth quarter 2007 net charge-offs of $1.2 billion and the previously disclosed $1.4 billion fourth quarter credit reserve build, largely for losses in the National Home Equity Group (Home Equity) portfolio, particularly in discontinued third party origination channels.
“2007 was a challenging year for credit,” said Chief Credit Officer Mike Loughlin. “We largely avoided many higher-risk wholesale and consumer loan products and practices that are problematic to the industry. However, we did not fully appreciate the severity of the residential real estate downturn and its impact on our home equity portfolio, particularly our third party-originated, higher loan-to-value second mortgages.” The fourth quarter 2007 provision was $2.6 billion, which included fourth quarter 2007 net charge-offs of $1.2 billion and the previously disclosed $1.4 billion fourth quarter credit reserve build, largely for losses in the National Home Equity Group (Home Equity) portfolio, particularly in discontinued third party origination channels.
Net Charge-offs: Fourth Quarter 2007
Fourth quarter 2007 net charge-offs were $1.21 billion (1.28 percent of average total loans, annualized) compared with $892 million (1.01 percent) in third quarter 2007 and $726 million (0.92 percent) in fourth quarter 2006.
Fourth quarter 2007 net charge-offs were $1.21 billion (1.28 percent of average total loans, annualized) compared with $892 million (1.01 percent) in third quarter 2007 and $726 million (0.92 percent) in fourth quarter 2006.
| December 31, 2007 | September 30, 2007 | |||||||||||||||
| Net loan | As a % | Net loan | As a % | |||||||||||||
| charge-offs | of average | charge-offs | of average | |||||||||||||
| (in millions) | loans | (in millions) | loans | |||||||||||||
Commercial and commercial real estate: | ||||||||||||||||
| Commercial | $ | 186 | 0.85 | % | $ | 120 | 0.60 | % | ||||||||
| Other real estate mortgage | 3 | 0.02 | (2 | ) | 0.01 | |||||||||||
| Real estate construction | 9 | 0.19 | 2 | 0.06 | ||||||||||||
| Lease financing | 4 | 0.24 | 5 | 0.27 | ||||||||||||
Total commercial and commercial real estate | 202 | 0.54 | 125 | 0.37 | ||||||||||||
Consumer: | ||||||||||||||||
| Real estate 1-4 family first mortgage | 34 | 0.19 | 16 | 0.11 | ||||||||||||
| Real estate 1-4 family junior lien | 277 | 1.46 | 153 | 0.83 | ||||||||||||
| Credit card | 223 | 5.01 | 176 | 4.30 | ||||||||||||
| Other revolving credit and installment | 421 | 2.97 | 368 | 2.68 | ||||||||||||
Total consumer | 955 | 1.74 | 713 | 1.36 | ||||||||||||
Foreign | 55 | 2.81 | 54 | 2.86 | ||||||||||||
Total loans | $ | 1,212 | 1.28 | % | $ | 892 | 1.01 | % | ||||||||
“Credit performance within the overall portfolio varied by loan type,” said Loughlin. Commercial and commercial real estate charge-offs increased $77 million, almost entirely due to the commercial category, largely consisting of charge-offs on loans originated through our business direct channel. Business direct consists primarily of unsecured lines of credit to small firms and sole proprietors. These lines tend to perform in a manner similar to credit cards. The remaining balance of commercial (other real estate mortgage, real estate construction and lease financing) continued to have extremely low charge-off rates. While real estate 1-4 family first mortgage charge-off rates increased in the fourth quarter in the aggregate, total charge-offs were very low, only $34 million on a $71 billion portfolio. Credit card charge-offs increased $47 million in the quarter, about one-third of which was due to growth. After having been at uncharacteristically low levels, card charge-off rates increased to 5 percent in the fourth quarter and were largely in line with industry standards, reflecting some stress on the consumer. Charge-offs in other revolving credit and installment loans,
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largely in the auto portfolio, increased to $421 million in the fourth quarter. The $28 million increase in auto charge-offs in the fourth quarter was consistent with historical, second half of the year seasonal trends.
Charge-offs in the real estate 1-4 family junior lien category, primarily Home Equity loans, increased $124 million in the fourth quarter, primarily due to Home Equity losses. The large and rapid deterioration in residential real estate values in many markets led to greater loss severity in our higher loan-to-value portfolio segments. As previously disclosed, the Company identified approximately $12 billion of higher-loss content Home Equity loans, primarily sourced through third party originators, which were segregated into a liquidating portfolio for dedicated account management and collections. The liquidating portfolio produced $47.6 million in net charge-offs for the month of December, 2007 with an annualized loss rate of 4.80 percent compared with 0.86 percent for the remaining portfolio during December. Details are provided in the table below.
Home Equity Portfolios as of December 31, 2007
| Liquidating | Remaining | |||||||
| ($ in billions) | Portfolio | Portfolio | ||||||
| Outstanding balances | $11.9 | $72.3 | ||||||
| December 2007 loss rate (annualized) | 4.80 | % | 0.86 | % | ||||
| CLTV* > 90% | 55 | % | 25 | % | ||||
| Avg. FICO | 725 | 735 | ||||||
| Wells Fargo retail originated | < 1 | % | 98 | % | ||||
$ in 1st lien | $ 0.4 | $11.4 | ||||||
$ in 2nd lien behind a WF 1st | 3.4 | 38.1 | ||||||
| % in California | 38 | % | 36 | % | ||||
* Combined loan to value ratio greater than 90% based primarily on automated appraisal updates as of September 30, 2007
Net Charge-offs: 2007
Full year 2007 net charge-offs were $3.54 billion (1.03 percent of average total loans) compared with $2.25 billion (0.73 percent) during 2006. Total wholesale charge-offs (excluding business direct) were 0.08 percent of total loans, and remained at historically low levels. Total 2007 charge-offs increased $78 million from prior year, centered in residential real estate construction and industries related to home building. Home Equity charge-offs totaled $595 million (0.73 percent of average Home Equity loans) in 2007 compared with $110 million (0.14 percent) in 2006. “The majority of the Home Equity charge-offs were centered in the indirect origination and 90 percent or greater combined loan-to-value portfolios where we have discontinued activities and segregated the loans into the liquidating portfolio,” said Loughlin. “We also experienced increased charge-offs in our unsecured consumer portfolios, in part due to growth and in part due to increased economic stress in households. Full year 2007 auto charge-offs were $1.02 billion (3.45 percent of average auto loans) compared with $857 million (3.15 percent) in 2006. These results were consistent with our expectations and represent a stabilization of new business originations and collections activities within this business. Given the weakness in housing and overall state of the U.S. economy, it is likely that net charge-offs will be higher in 2008.”
Full year 2007 net charge-offs were $3.54 billion (1.03 percent of average total loans) compared with $2.25 billion (0.73 percent) during 2006. Total wholesale charge-offs (excluding business direct) were 0.08 percent of total loans, and remained at historically low levels. Total 2007 charge-offs increased $78 million from prior year, centered in residential real estate construction and industries related to home building. Home Equity charge-offs totaled $595 million (0.73 percent of average Home Equity loans) in 2007 compared with $110 million (0.14 percent) in 2006. “The majority of the Home Equity charge-offs were centered in the indirect origination and 90 percent or greater combined loan-to-value portfolios where we have discontinued activities and segregated the loans into the liquidating portfolio,” said Loughlin. “We also experienced increased charge-offs in our unsecured consumer portfolios, in part due to growth and in part due to increased economic stress in households. Full year 2007 auto charge-offs were $1.02 billion (3.45 percent of average auto loans) compared with $857 million (3.15 percent) in 2006. These results were consistent with our expectations and represent a stabilization of new business originations and collections activities within this business. Given the weakness in housing and overall state of the U.S. economy, it is likely that net charge-offs will be higher in 2008.”
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Nonperforming Assets
Total nonperforming assets were $3.87 billion (1.01 percent of loans) at December 31, 2007, and included $2.68 billion of nonperforming loans, $535 million of fully insured Government National Mortgage Association (GNMA) repurchases, and $649 million of foreclosed real estate and repossessed vehicles. This compares with $3.18 billion (0.88 percent) at September 30, 2007, consisting of $2.09 billion of nonperforming loans, $487 million of GNMA repurchases and $603 million of foreclosed and repossessed assets.
Total nonperforming assets were $3.87 billion (1.01 percent of loans) at December 31, 2007, and included $2.68 billion of nonperforming loans, $535 million of fully insured Government National Mortgage Association (GNMA) repurchases, and $649 million of foreclosed real estate and repossessed vehicles. This compares with $3.18 billion (0.88 percent) at September 30, 2007, consisting of $2.09 billion of nonperforming loans, $487 million of GNMA repurchases and $603 million of foreclosed and repossessed assets.
“The majority of the increase in nonperforming assets was concentrated in the first mortgage loan portfolio ($132 million in Wells Fargo Home Mortgage and $230 million in Wells Fargo Financial real estate) and was due to the national rise in foreclosure rates,” said Loughlin. “Additionally, due to illiquid market conditions, we have decided to hold more foreclosed properties than we have historically.”
Loans 90 days or more past due and still accruing totaled $6.39 billion, $5.53 billion, and $5.07 billion at December 31, 2007, September 30, 2007 and December 31, 2006, respectively. For the same periods, the total included $4.83 billion, $4.26 billion and $3.91 billion, respectively, in advances pursuant to our servicing agreement to GNMA mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veteran Affairs.
Loans 90 Days or More Past Due and Still Accruing
(Excluding Insured/Guaranteed GNMA Balances)
(Excluding Insured/Guaranteed GNMA Balances)
| Dec. 31, | Sept. 30, | Dec. 31, | ||||||||||||||||||||||
| (in millions) | 2007 | 2007 | 2006 | |||||||||||||||||||||
| Commercial and commercial real estate: | ||||||||||||||||||||||||
| Commercial | $ | 32 | $ | 14 | $ | 15 | ||||||||||||||||||
| Other real estate mortgage | 10 | 22 | 3 | |||||||||||||||||||||
| Real estate construction | 24 | 10 | 3 | |||||||||||||||||||||
| Total commercial and commercial real estate | 66 | 46 | 21 | |||||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||
| Real estate 1-4 family first mortgage | 286 | 225 | 154 | |||||||||||||||||||||
| Real estate 1-4 family junior lien mortgage | 201 | 127 | 63 | |||||||||||||||||||||
| Credit card | 402 | 303 | 262 | |||||||||||||||||||||
| Other revolving credit and installment | 552 | 520 | 616 | |||||||||||||||||||||
| Total consumer | 1,441 | 1,175 | 1,095 | |||||||||||||||||||||
| Foreign | 52 | 42 | 44 | |||||||||||||||||||||
| Total | $ | 1,559 | $ | 1,263 | $ | 1,160 | ||||||||||||||||||
Allowance for Credit Losses
The allowance for credit losses, including unfunded credit commitments, was $5.52 billion at December 31, 2007, an increase of $1.50 billion, or 37 percent, from the prior quarter, attributable to the $1.4 billion credit reserve build, and loan loss reserves from the Greater Bay Bancorp acquisition. “The $5.52 billion allowance provides increased coverage of loans outstanding,” said Loughlin. “We believe the allowance is adequate for losses inherent in the loan portfolio at December 31, 2007.”
The allowance for credit losses, including unfunded credit commitments, was $5.52 billion at December 31, 2007, an increase of $1.50 billion, or 37 percent, from the prior quarter, attributable to the $1.4 billion credit reserve build, and loan loss reserves from the Greater Bay Bancorp acquisition. “The $5.52 billion allowance provides increased coverage of loans outstanding,” said Loughlin. “We believe the allowance is adequate for losses inherent in the loan portfolio at December 31, 2007.”
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Business Segment Performance
Wells Fargo has three lines of business for management reporting: Community Banking, Wholesale Banking and Wells Fargo Financial. Net income of the three business segments was:
Wells Fargo has three lines of business for management reporting: Community Banking, Wholesale Banking and Wells Fargo Financial. Net income of the three business segments was:
| Full Year | Fourth Quarter | |||||||||||||||||||||||
| % | % | |||||||||||||||||||||||
| Net income (in millions) | 2007 | 2006 | Change | 2007 | 2006 | Change | ||||||||||||||||||
| Community Banking | $ | 5,293 | $ | 5,550 | (5 | ) | $ | 693 | $ | 1,532 | (55 | ) | ||||||||||||
| Wholesale Banking | 2,283 | 2,018 | 13 | 590 | 491 | 20 | ||||||||||||||||||
| Wells Fargo Financial | 481 | 852 | (44 | ) | 78 | 158 | (51 | ) | ||||||||||||||||
More financial information about the business segments is on pages 28 and 29.
Community Bankingoffers a complete line of diversified financial products and services for consumers and small businesses including investment, insurance and trust services primarily in 23 midwestern and western states, and mortgage and home equity loans in all 50 states.
| Selected Financial Information | Full Year | Fourth Quarter | ||||||||||||||||||||||
| % | % | |||||||||||||||||||||||
| (in millions) | 2007 | 2006 | Change | 2007 | 2006 | Change | ||||||||||||||||||
| Total revenue | $ | 25,538 | $ | 23,032 | 11 | $ | 6,660 | $ | 6,130 | 9 | ||||||||||||||
| Provision for credit losses | 3,187 | 887 | 259 | 2,082 | 275 | 657 | ||||||||||||||||||
| Noninterest expense | 15,000 | 13,917 | 8 | 3,904 | 3,558 | 10 | ||||||||||||||||||
| Net income | 5,293 | 5,550 | (5 | ) | 693 | 1,532 | (55 | ) | ||||||||||||||||
| Average loans (in billions) | 194.0 | 178.0 | 9 | 210.9 | 175.7 | 20 | ||||||||||||||||||
| Average assets (in billions) | 330.8 | 320.2 | 3 | 347.0 | 311.9 | 11 | ||||||||||||||||||
Community Banking reported net income of $5.29 billion for 2007 (including the $1.4 billion pre-tax credit reserve build), down from $5.55 billion for 2006. Pre-tax pre-provision profit (revenue less noninterest expense) increased $1.42 billion, or 16 percent, from 2006. Revenue growth of 11 percent was driven by loan growth of 9 percent and double-digit fee income growth. Noninterest expense for 2007 increased 8 percent (3 percentage points less than revenue, representing positive operating leverage) driven by investments in technology, distribution and sales staff. The provision for credit losses for 2007 increased $2.3 billion from 2006, including the $1.4 billion credit reserve build.
Regional Banking highlights
| • | Record core product solutions (sales) of 19.7 million, up 11 percent from 2006 on a comparable basis | |
| • | Core sales per platform sales banker FTE (active, full-time equivalent) of 4.93 per day, up from 4.75 in 2006 on a comparable basis | |
| • | Retail bank household cross-sell of 5.5 products per household | |
| • | Sales ofWells Fargo Packages® (a checking account and at least three other products) up 21 percent from 2006, purchased by 69 percent of new checking account customers | |
| • | Consumer checking accounts up a net 4.7 percent from prior year | |
| • | Team member engagement ratio (engaged to actively disengaged) over 8.5 to 1 improved from 7.1 to 1 in 2006 | |
| • | Store-based customer loyalty scores up 7 percent from 2006 | |
| • | Business Banking |
| ○ | Store-based business solutions up 16 percent from 2006 on a comparable basis | ||
| ○ | Loans to small businesses (loans primarily less than $100,000 on our business direct platform) up 19 percent from 2006 |
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| ○ | Business checking accounts up a net 3.6 percent from 2006 | ||
| ○ | Business Banking household cross-sell at 3.5, up from 3.3 in 2006 | ||
| ○ | Sales ofWells Fargo Business Services Packages(a business checking account and at least three other business products) up 30 percent from 2006, purchased by 45 percent of new business checking account customers |
“Thanks to our dedicated Regional Banking team, focused on our vision of earning all of our customers’ business, we provided a record 19.7 million core product solutions in 2007, up 11 percent from 2006 on a comparable basis,” said Carrie Tolstedt, senior EVP, Community Banking. “Our retail bank household cross-sell was 5.5, nearly 1 in 4 households have 8 or more products, and 69 percent of new checking account customers purchasedWells Fargo Packages. Sales of store-based business solutions increased 16 percent from 2006 on a comparable basis, and sales ofWells Fargo Business Services Packagesrose 30 percent. We know our talented and dedicated team members drive our success. In 2007, our team member engagement ratio rose to over 8.5 to 1, up from 7.1 to 1 in 2006. Five years ago, it was 2.5 to 1. We continue to focus on the customer experience, performing 50,000 store-based customer surveys per month. We've now completed over two million surveys since we began surveying four years ago. For customers transacting at the teller line, welcoming and wait time survey scores were up 11 percent and customer loyalty scores improved 7 percent from 2006. In 2007, we opened 87 banking stores and converted 39 stores from Placer Sierra Bancshares and 3 stores purchased from National City Bank, bringing our total retail store count to 3,298. We welcomed Greater Bay Bancorp to our team in the fourth quarter, with conversion to our network planned for early in 2008. To better serve our customers, we added 153webATM® machines and converted 908 toEnvelope-FreeSMwebATM machines bringing our total to 1,314 primarily in Northern California.”
Home Mortgage and Home Equity highlights
| • | Mortgage originations of $272 billion in 2007, down 7 percent from prior year | |
| • | Record $1.53 trillion owned mortgage servicing portfolio, up 12 percent from prior year | |
| • | Mortgage servicing customers of 10 million | |
| • | Mortgage application pipeline of $43 billion, compared with $48 billion at December 31, 2006 | |
| • | National Home Equity Group portfolio of $84 billion, up 6 percent from December 31, 2006 |
“Despite the sharp downturn in housing and the disruption in the secondary markets, our home mortgage businesses performed relatively well compared with many of the players in the industry,” said Mark Oman, senior EVP, Home and Consumer Finance Group. “During the year, our teams have taken the appropriate actions to reduce credit and capital markets risk, lower our cost structures, and strengthen our mortgage sales force by selectively hiring highly-successful sales representatives from our competitors. Total fourth quarter originations declined 20 percent from 2006 to $56 billion, primarily reflecting actions we took to exit or reduce volume in third party channels for non-prime, non-conforming and home equity products. Retail mortgage originations declined only 3 percent in the quarter. In 2007, we again benefited from a balanced business model. As origination volumes have slowed, so have servicing prepayments. As a result, we continued to grow the servicing business, with our owned servicing portfolio reaching $1.53 trillion at year-end, up 12 percent from 2006. We also continued to work hard to keep customers in their homes. Our foreclosure rate remained well below industry averages, and we were a leader in HOPE NOW, a new national alliance of mortgage counselors, mortgage servicers, capital markets, investors and the group government to help at-risk homeowners facing foreclosure or higher adjustable rate mortgage resets.”
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Wealth Management Group highlights
| • | Wells Fargo Wealth Management Group named among top 10 wealth managers in U.S. byBarron’s | |
| • | Revenue up 14 percent in fourth quarter from prior year, up 10 percent (annualized) from prior quarter | |
| • | Average loans up 21 percent in fourth quarter from prior year, up 24 percent (annualized) from prior quarter | |
| • | Brokerage assets under administration of $103 billion, up 17 percent from prior year |
Internet highlights
| • | 9.68 million active online consumer customers, up 13 percent from prior year, serving 65 percent of all consumer checking accounts | |
| • | 4.84 million online money movement customers, up 18 percent from prior year | |
| • | 981,000 active online small business customers, up 18 percent from prior year |
Wholesale Bankingserves customers coast to coast,including middle market banking, corporate banking, commercial real estate, treasury management, asset-based lending, insurance brokerage, foreign exchange, trade services, specialized lending, equipment finance, capital markets activities and asset management.
| Selected Financial Information | Full Year | Fourth Quarter | ||||||||||||||||||||||
| % | % | |||||||||||||||||||||||
| (in millions) | 2007 | 2006 | Change | 2007 | 2006 | Change | ||||||||||||||||||
| Total revenue | $ | 8,341 | $ | 7,234 | 15 | $ | 2,142 | $ | 1,883 | 14 | ||||||||||||||
| Provision for credit losses | 69 | 16 | 331 | 36 | 25 | 44 | ||||||||||||||||||
| Noninterest expense | 4,772 | 4,114 | 16 | 1,212 | 1,105 | 10 | ||||||||||||||||||
| Net income | 2,283 | 2,018 | 13 | 590 | 491 | 20 | ||||||||||||||||||
| Average loans (in billions) | 85.6 | 71.4 | 20 | 95.1 | 75.0 | 27 | ||||||||||||||||||
| Average assets (in billions) | 113.1 | 97.1 | 16 | 128.1 | 97.9 | 31 | ||||||||||||||||||
| • | Double-digit growth in revenue, earnings, loans and deposits from prior year | |
| • | Record net income of $2.28 billion in 2007, up 13 percent from 2006, 9th consecutive year of record earnings | |
| • | Asset Management Group revenue up 13 percent from prior year, up 15 percent (annualized) from prior quarter | |
| • | Acquired 16 commercial insurance brokerages in 2007, 4 in fourth quarter | |
| • | Active users ofCommercial Electronic Office® internet portal up 26 percent from same period last year |
“Our Wholesale Banking team achieved outstanding results,” said Dave Hoyt, senior EVP, Wholesale Banking Group. “For the 14th consecutive quarter, we achieved double-digit, year-over-year growth in loans. Despite unsettled financial market conditions, we continued to build deeper relationships with our customers, with an average of 6.1 products per wholesale relationship and over 7.6 products per middle market commercial relationship. We continued to grow market share by adding more offices, introducing new products and services, and attracting talented professionals to help our customers succeed financially. We achieved record revenue in sales of foreign exchange and interest rate risk management products.
“Many of our customers are experiencing benefits of electronically scanning and sending their checks via internet for deposit with us safely and securely, surpassing the volume of paper check
- 11 -
deposits for the first time. On several days in October, we processed electronically more than one million check images and more than $2 billion in deposits in a single day. We received 106 million checks electronically in 2007, more than three times 2006, and $254 billion was deposited electronically in 2007, more than double the volume in 2006.”
Wholesale Banking’s net income was $590 million and $2.3 billion in fourth quarter and full year 2007, respectively, up 20 percent and 13 percent, for the same periods from a year ago. Fourth quarter 2007 revenue increased 14 percent to $2.1 billion and full year revenue was up 15 percent, driven by strong loan and deposit growth and higher fee income. Average loans grew to $95.1 billion, up 27 percent from a year ago, including $2.6 billion from the CIT Construction acquisition, as well as double-digit increases across nearly all wholesale lending businesses. Average core deposits were $61.5 billion, up 40 percent from a year ago, all in interest-bearing balances. Noninterest income increased $113 million from fourth quarter 2006 due to higher trust and investment income (reflecting a 16 percent increase in assets under management), deposit service charges, foreign exchange and insurance, partially offset by a lower level of capital markets and commercial real estate brokerage activity given challenges in certain sectors of the market environment. Noninterest expense increased $107 million from a year ago, mainly due to higher personnel-related costs, including additional team members and higher incentive expenses, as well as commissions and other expenses directly related to higher sales volumes, continued investments, and acquisitions.
Wells Fargo Financialoffers consumer loans primarily through real estate-secured debt consolidation products, automobile financing, consumer and private-label credit cards and commercial services to consumers and businesses throughout the United States, Canada, Puerto Rico and the Pacific Rim.
| Selected Financial Information | Full Year | Fourth Quarter | ||||||||||||||||||||||
| % | % | |||||||||||||||||||||||
| (in millions) | 2007 | 2006 | Change | 2007 | 2006 | Change | ||||||||||||||||||
| Total revenue | $ | 5,511 | $ | 5,425 | 2 | $ | 1,403 | $ | 1,400 | — | ||||||||||||||
| Provision for credit losses | 1,683 | 1,301 | 29 | 494 | 426 | 16 | ||||||||||||||||||
| Noninterest expense | 3,052 | 2,806 | 9 | 784 | 748 | 5 | ||||||||||||||||||
| Net income | 481 | 852 | (44 | ) | 78 | 158 | (51 | ) | ||||||||||||||||
| Average loans (in billions) | 65.2 | 57.5 | 13 | 68.4 | 61.5 | 11 | ||||||||||||||||||
| Average assets (in billions) | 71.1 | 62.9 | 13 | 74.7 | 67.0 | 11 | ||||||||||||||||||
| • | Average loans up 13 percent from prior year |
| ○ | Real estate-secured receivables up 25 percent to $27.3 billion | |
| ○ | Auto finance receivables flat at $27.4 billion |
Wells Fargo Financial’s net income in the fourth quarter was $78 million, down $80 million from a year ago when the Company completed the final portion of its divestiture of some of its Latin American operations. For the full year, net income was $481 million, down from $852 million last year, in part as a result of the Latin American sale and a $50 million reversal of Hurricane Katrina-related reserves both in 2006, while 2007 included higher losses and slower growth in the auto portfolio.
“Our real estate-secured portfolio, largely consisting of $24 billion of debt-consolidation loans in the U.S., continued to experience solid growth, in part due to lower levels of prepayments,” said Tom Shippee, president and CEO of Wells Fargo Financial. “Overall credit quality on this real estate-secured portfolio remained good, with losses of only $18 million in the fourth quarter,
- 12 -
although delinquencies and nonaccrual loans did increase in the quarter, reflecting some signs of consumer stress.
“Results in 2007 were significantly impacted by the auto business stemming from a decision in late 2006 to slow the growth rate of this business in order to concentrate on reducing losses, delinquencies, and to improve the loan collection process. Growth in losses did slow in 2007, delinquencies remained lower than a year ago - although they increased somewhat late in the year primarily due to seasonality - and the targeted improvements in the collection process have now been completed. While overall risk in this business has been reduced, revenue growth has moderated as we slowed the business down.
“As the year progressed, we focused on aggressively managing costs on several fronts, including closing 89 consumer stores in the U.S. and 16 in Canada, representing a 9 percent reduction in our store network. This was made possible by the consolidation of our auto lending and consumer lending platforms in 2006, which helped eliminate redundancies and provided for more efficient use of store space, without reducing the total sales force. Full year expenses grew only 9 percent, with a 5 percent increase in the fourth quarter compared with a year ago, which was less than half the rate of our fourth quarter receivables growth.”
Recorded Message
A recorded message reviewing Wells Fargo’s results is available at 5:30 a.m. Pacific Time through January 19, 2008. Dial 877-660-6853 (domestic) or 201-612-7415 (international). Enter account number 286 and conference ID 266655. The call is also available on the internet atwww.wellsfargo.com/ir andhttp://www.vcall.com/IC/CEPage.asp?ID=124308.
A recorded message reviewing Wells Fargo’s results is available at 5:30 a.m. Pacific Time through January 19, 2008. Dial 877-660-6853 (domestic) or 201-612-7415 (international). Enter account number 286 and conference ID 266655. The call is also available on the internet atwww.wellsfargo.com/ir andhttp://www.vcall.com/IC/CEPage.asp?ID=124308.
The following appears in accordance with the Private Securities Litigation Reform Act of 1995:
This news release contains forward-looking statements about the Company, including the statements that we believe the allowance for credit losses was adequate for losses inherent in the loan portfolio at December 31, 2007 and that net charge-offs will likely be higher in 2008 than they were in 2007. Do not unduly rely on forward-looking statements. They give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date.
There are a number of factors that could cause results to differ significantly from our expectations, including further deterioration in the credit quality of our home equity, real estate, auto or other loan portfolios, or in the value of the collateral securing those loans, due to higher interest rates, increased unemployment, declining home or auto values, or other economic factors. For a discussion of factors that may cause actual results to differ from expectations, refer to our Annual Report on Form 10-K for the year ended December 31, 2006, as updated by our Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, filed with the Securities and Exchange Commission (SEC) and available on the SEC’s website atwww.sec.gov.
Any factor described in this news release or in any document referred to in this news release could, by itself or together with one or more other factors, adversely affect the Company’s business, earnings and/or financial condition.
Wells Fargo & Company is a diversified financial services company with $575 billion in assets, providing banking, insurance, investments, mortgage and consumer finance to more than 23 million customers from almost 6,000 stores and the internet (wellsfargo.com) across North America and elsewhere internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of two banks worldwide, to have the highest possible credit rating from both Moody’s Investors Service, “Aaa,” and Standard & Poor’s Ratings Services, “AAA.”
# # #
-13-
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||||||||||
| SUMMARY FINANCIAL DATA (1) | |||||||||||||||||||||||||
| Quarter ended December 31, | % | Year ended December 31, | % | ||||||||||||||||||||||
| ($ in millions, except per share amounts) | 2007 | 2006 | Change | 2007 | 2006 | Change | |||||||||||||||||||
For the Period | |||||||||||||||||||||||||
| Net income | $ | 1,361 | $ | 2,181 | (38 | ) % | $ | 8,057 | $ | 8,420 | (4 | ) | % | ||||||||||||
| Diluted earnings per common share | 0.41 | 0.64 | (36 | ) | 2.38 | 2.47 | (4 | ) | |||||||||||||||||
| Profitability ratios (annualized): | |||||||||||||||||||||||||
| Net income to average total assets (ROA) | 0.97 | % | 1.79 | % | (46 | ) | 1.55 | % | 1.73 | % | (10 | ) | |||||||||||||
| Net income to average stockholders’ equity (ROE) | 11.25 | 19.02 | (41 | ) | 17.12 | 19.52 | (12 | ) | |||||||||||||||||
| Efficiency ratio (2) | 57.8 | 57.5 | 1 | 57.9 | 58.4 | (1 | ) | ||||||||||||||||||
| Total revenue | $ | 10,205 | $ | 9,413 | 8 | $ | 39,390 | $ | 35,691 | 10 | |||||||||||||||
| Dividends declared per common share | 0.31 | 0.28 | 11 | 1.18 | 1.08 | 9 | |||||||||||||||||||
| Average common shares outstanding | 3,327.6 | 3,379.4 | (2 | ) | 3,348.5 | 3,368.3 | (1 | ) | |||||||||||||||||
| Diluted average common shares outstanding | 3,352.2 | 3,424.0 | (2 | ) | 3,382.8 | 3,410.1 | (1 | ) | |||||||||||||||||
| Average loans | $ | 374,372 | $ | 312,166 | 20 | $ | 344,775 | $ | 306,911 | 12 | |||||||||||||||
| Average assets | 555,647 | 482,585 | 15 | 520,752 | 486,023 | 7 | |||||||||||||||||||
| Average core deposits (3) | 314,808 | 283,790 | 11 | 303,091 | 268,853 | 13 | |||||||||||||||||||
| Average retail core deposits (4) | 234,210 | 220,025 | 6 | 228,667 | 215,788 | 6 | |||||||||||||||||||
| Net interest margin | 4.62 | % | 4.93 | % | (6 | ) | 4.74 | % | 4.83 | % | (2 | ) | |||||||||||||
At Period End | |||||||||||||||||||||||||
| Securities available for sale | $ | 72,951 | $ | 42,629 | 71 | $ | 72,951 | $ | 42,629 | 71 | |||||||||||||||
| Loans | 382,195 | 319,116 | 20 | 382,195 | 319,116 | 20 | |||||||||||||||||||
| Allowance for loan losses | 5,307 | 3,764 | 41 | 5,307 | 3,764 | 41 | |||||||||||||||||||
| Goodwill | 13,106 | 11,275 | 16 | 13,106 | 11,275 | 16 | |||||||||||||||||||
| Assets | 575,442 | 481,996 | 19 | 575,442 | 481,996 | 19 | |||||||||||||||||||
| Core deposits (3) | 311,731 | 288,068 | 8 | 311,731 | 288,068 | 8 | |||||||||||||||||||
| Stockholders’ equity | 47,628 | 45,814 | 4 | 47,628 | 45,814 | 4 | |||||||||||||||||||
| Capital ratios: | |||||||||||||||||||||||||
| Stockholders’ equity to assets | 8.28 | % | 9.51 | % | (13 | ) | 8.28 | % | 9.51 | % | (13 | ) | |||||||||||||
| Risk-based capital (5) | |||||||||||||||||||||||||
| Tier 1 capital | 7.59 | 8.93 | (15 | ) | 7.59 | 8.93 | (15 | ) | |||||||||||||||||
| Total capital | 10.68 | 12.49 | (14 | ) | 10.68 | 12.49 | (14 | ) | |||||||||||||||||
| Tier 1 leverage (5) | 6.83 | 7.88 | (13 | ) | 6.83 | 7.88 | (13 | ) | |||||||||||||||||
| Book value per common share | $ | 14.45 | $ | 13.57 | 6 | $ | 14.45 | $ | 13.57 | 6 | |||||||||||||||
| Team members (active, full-time equivalent) | 159,800 | 158,000 | 1 | 159,800 | 158,000 | 1 | |||||||||||||||||||
Common Stock Price | |||||||||||||||||||||||||
| High | $ | 37.78 | $ | 36.99 | 2 | $ | 37.99 | $ | 36.99 | 3 | |||||||||||||||
| Low | 29.29 | 34.90 | (16 | ) | 29.29 | 30.31 | (3 | ) | |||||||||||||||||
| Period end | 30.19 | 35.56 | (15 | ) | 30.19 | 35.56 | (15 | ) | |||||||||||||||||
| (1) | Results for third quarter 2007 and second quarter 2006 have been revised to reflect $170 million and $95 million, respectively, of litigation expenses associated with indemnification obligations arising from the Company’s ownership interest in Visa. | |
| (2) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). | |
| (3) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). | |
| (4) | Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. | |
| (5) | The December 31, 2007, ratios are preliminary. |
-14-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||
| FIVE QUARTER SUMMARY FINANCIAL DATA (1) | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| ($ in millions, except per share amounts) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
For the Quarter | ||||||||||||||||||||
| Net income | $ | 1,361 | $ | 2,173 | $ | 2,279 | $ | 2,244 | $ | 2,181 | ||||||||||
| Diluted earnings per common share | 0.41 | 0.64 | 0.67 | 0.66 | 0.64 | |||||||||||||||
| Profitability ratios (annualized): | ||||||||||||||||||||
| Net income to average total assets (ROA) | 0.97 | % | 1.59 | % | 1.82 | % | 1.89 | % | 1.79 | % | ||||||||||
| Net income to average stockholders’ equity (ROE) | 11.25 | 18.22 | 19.57 | 19.68 | 19.02 | |||||||||||||||
| Efficiency ratio (2) | 57.8 | 57.5 | 57.9 | 58.5 | 57.5 | |||||||||||||||
| Total revenue | $ | 10,205 | $ | 9,853 | $ | 9,891 | $ | 9,441 | $ | 9,413 | ||||||||||
| Dividends declared per common share | 0.31 | 0.31 | 0.28 | 0.28 | 0.28 | |||||||||||||||
| Average common shares outstanding | 3,327.6 | 3,339.6 | 3,351.2 | 3,376.0 | 3,379.4 | |||||||||||||||
| Diluted average common shares outstanding | 3,352.2 | 3,374.0 | 3,389.3 | 3,416.1 | 3,424.0 | |||||||||||||||
| Average loans | $ | 374,372 | $ | 350,683 | $ | 331,970 | $ | 321,429 | $ | 312,166 | ||||||||||
| Average assets | 555,647 | 541,533 | 502,686 | 482,105 | 482,585 | |||||||||||||||
| Average core deposits (3) | 314,808 | 306,135 | 300,535 | 290,586 | 283,790 | |||||||||||||||
| Average retail core deposits (4) | 234,210 | 228,633 | 228,006 | 223,729 | 220,025 | |||||||||||||||
| Net interest margin | 4.62 | % | 4.55 | % | 4.89 | % | 4.95 | % | 4.93 | % | ||||||||||
At Quarter End | ||||||||||||||||||||
| Securities available for sale | $ | 72,951 | $ | 57,440 | $ | 72,179 | $ | 45,443 | $ | 42,629 | ||||||||||
| Loans | 382,195 | 362,922 | 342,800 | 325,487 | 319,116 | |||||||||||||||
| Allowance for loan losses | 5,307 | 3,829 | 3,820 | 3,772 | 3,764 | |||||||||||||||
| Goodwill | 13,106 | 12,018 | 11,983 | 11,275 | 11,275 | |||||||||||||||
| Assets | 575,442 | 548,727 | 539,865 | 485,901 | 481,996 | |||||||||||||||
| Core deposits (3) | 311,731 | 303,853 | 300,602 | 296,469 | 288,068 | |||||||||||||||
| Stockholders’ equity | 47,628 | 47,566 | 47,239 | 46,073 | 45,814 | |||||||||||||||
| Capital ratios: | ||||||||||||||||||||
| Stockholders’ equity to assets | 8.28 | % | 8.67 | % | 8.75 | % | 9.48 | % | 9.51 | % | ||||||||||
| Risk-based capital (5) | ||||||||||||||||||||
| Tier 1 capital | 7.59 | 8.17 | 8.55 | 8.68 | 8.93 | |||||||||||||||
| Total capital | 10.68 | 11.07 | 11.71 | 12.09 | 12.49 | |||||||||||||||
| Tier 1 leverage (5) | 6.83 | 7.26 | 7.89 | 7.81 | 7.88 | |||||||||||||||
| Book value per common share | $ | 14.45 | $ | 14.30 | $ | 14.05 | $ | 13.75 | $ | 13.57 | ||||||||||
| Team members (active, full-time equivalent) | 159,800 | 158,800 | 158,700 | 159,600 | 158,000 | |||||||||||||||
Common Stock Price | ||||||||||||||||||||
| High | $ | 37.78 | $ | 37.99 | $ | 36.49 | $ | 36.64 | $ | 36.99 | ||||||||||
| Low | 29.29 | 32.66 | 33.93 | 33.01 | 34.90 | |||||||||||||||
| Period end | 30.19 | 35.62 | 35.17 | 34.43 | 35.56 | |||||||||||||||
| (1) | Results for third quarter 2007 and second quarter 2006 have been revised to reflect $170 million and $95 million, respectively, of litigation expenses associated with indemnification obligations arising from the Company’s ownership interest in Visa. | |
| (2) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). | |
| (3) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). | |
| (4) | Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. | |
| (5) | The December 31, 2007, ratios are preliminary. |
-15-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF INCOME | ||||||||||||||||||||||||||
| Quarter ended December 31, | % | Year ended December 31, | % | |||||||||||||||||||||||
| (in millions, except per share amounts) | 2007 | 2006 | Change | 2007 | 2006 | Change | ||||||||||||||||||||
INTEREST INCOME | ||||||||||||||||||||||||||
| Trading assets | $ | 36 | $ | 46 | (22 | )% | $ | 173 | $ | 225 | (23 | ) | % | |||||||||||||
| Securities available for sale | 981 | 726 | 35 | 3,451 | 3,278 | 5 | ||||||||||||||||||||
| Mortgages held for sale | 456 | 627 | (27 | ) | 2,150 | 2,746 | (22 | ) | ||||||||||||||||||
| Loans held for sale | 19 | 13 | 46 | 70 | 47 | 49 | ||||||||||||||||||||
| Loans | 7,699 | 6,701 | 15 | 29,040 | 25,611 | 13 | ||||||||||||||||||||
| Other interest income | 51 | 118 | (57 | ) | 293 | 332 | (12 | ) | ||||||||||||||||||
| Total interest income | 9,242 | 8,231 | 12 | 35,177 | 32,239 | 9 | ||||||||||||||||||||
INTEREST EXPENSE | ||||||||||||||||||||||||||
| Deposits | 2,136 | 1,901 | 12 | 8,152 | 7,174 | 14 | ||||||||||||||||||||
| Short-term borrowings | 380 | 162 | 135 | 1,245 | 992 | 26 | ||||||||||||||||||||
| Long-term debt | 1,238 | 1,118 | 11 | 4,806 | 4,122 | 17 | ||||||||||||||||||||
| Total interest expense | 3,754 | 3,181 | 18 | 14,203 | 12,288 | 16 | ||||||||||||||||||||
NET INTEREST INCOME | 5,488 | 5,050 | 9 | 20,974 | 19,951 | 5 | ||||||||||||||||||||
| Provision for credit losses | 2,612 | 726 | 260 | 4,939 | 2,204 | 124 | ||||||||||||||||||||
| Net interest income after provision for credit losses | 2,876 | 4,324 | (33 | ) | 16,035 | 17,747 | (10 | ) | ||||||||||||||||||
NONINTEREST INCOME | ||||||||||||||||||||||||||
| Service charges on deposit accounts | 788 | 695 | 13 | 3,050 | 2,690 | 13 | ||||||||||||||||||||
| Trust and investment fees | 802 | 735 | 9 | 3,149 | 2,737 | 15 | ||||||||||||||||||||
| Card fees | 588 | 481 | 22 | 2,136 | 1,747 | 22 | ||||||||||||||||||||
| Other fees | 577 | 550 | 5 | 2,292 | 2,057 | 11 | ||||||||||||||||||||
| Mortgage banking | 831 | 677 | 23 | 3,133 | 2,311 | 36 | ||||||||||||||||||||
| Operating leases | 153 | 190 | (19 | ) | 703 | 783 | (10 | ) | ||||||||||||||||||
| Insurance | 370 | 299 | 24 | 1,530 | 1,340 | 14 | ||||||||||||||||||||
| Net gains (losses) on debt securities available for sale | 60 | 51 | 18 | 209 | (19 | ) | — | |||||||||||||||||||
| Net gains from equity investments | 222 | 256 | (13 | ) | 734 | 738 | (1 | ) | ||||||||||||||||||
| Other | 326 | 429 | (24 | ) | 1,480 | 1,356 | 9 | |||||||||||||||||||
| Total noninterest income | 4,717 | 4,363 | 8 | 18,416 | 15,740 | 17 | ||||||||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||||||||
| Salaries | 2,055 | 1,812 | 13 | 7,762 | 7,007 | 11 | ||||||||||||||||||||
| Incentive compensation | 840 | 793 | 6 | 3,284 | 2,885 | 14 | ||||||||||||||||||||
| Employee benefits | 558 | 501 | 11 | 2,322 | 2,035 | 14 | ||||||||||||||||||||
| Equipment | 370 | 339 | 9 | 1,294 | 1,252 | 3 | ||||||||||||||||||||
| Net occupancy | 413 | 367 | 13 | 1,545 | 1,405 | 10 | ||||||||||||||||||||
| Operating leases | 124 | 157 | (21 | ) | 561 | 630 | (11 | ) | ||||||||||||||||||
| Other | 1,540 | 1,442 | 7 | 6,056 | 5,623 | 8 | ||||||||||||||||||||
| Total noninterest expense | 5,900 | 5,411 | 9 | 22,824 | 20,837 | 10 | ||||||||||||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 1,693 | 3,276 | (48 | ) | 11,627 | 12,650 | (8 | ) | ||||||||||||||||||
| Income tax expense | 332 | 1,095 | (70 | ) | 3,570 | 4,230 | (16 | ) | ||||||||||||||||||
NET INCOME | $ | 1,361 | $ | 2,181 | (38 | ) | $ | 8,057 | $ | 8,420 | (4 | ) | ||||||||||||||
EARNINGS PER COMMON SHARE | $ | 0.41 | $ | 0.65 | (37 | ) | $ | 2.41 | $ | 2.50 | (4 | ) | ||||||||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.41 | $ | 0.64 | (36 | ) | $ | 2.38 | $ | 2.47 | (4 | ) | ||||||||||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.31 | $ | 0.28 | 11 | $ | 1.18 | $ | 1.08 | 9 | ||||||||||||||||
| Average common shares outstanding | 3,327.6 | 3,379.4 | (2 | ) | 3,348.5 | 3,368.3 | (1 | ) | ||||||||||||||||||
| Diluted average common shares outstanding | 3,352.2 | 3,424.0 | (2 | ) | 3,382.8 | 3,410.1 | (1 | ) | ||||||||||||||||||
-16-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||
| FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| (in millions, except per share amounts) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
INTEREST INCOME | ||||||||||||||||||||
| Trading assets | $ | 36 | $ | 37 | $ | 47 | $ | 53 | $ | 46 | ||||||||||
| Securities available for sale | 981 | 1,032 | 752 | 686 | 726 | |||||||||||||||
| Mortgages held for sale | 456 | 586 | 578 | 530 | 627 | |||||||||||||||
| Loans held for sale | 19 | 19 | 17 | 15 | 13 | |||||||||||||||
| Loans | 7,699 | 7,477 | 7,100 | 6,764 | 6,701 | |||||||||||||||
| Other interest income | 51 | 72 | 79 | 91 | 118 | |||||||||||||||
| Total interest income | 9,242 | 9,223 | 8,573 | 8,139 | 8,231 | |||||||||||||||
INTEREST EXPENSE | ||||||||||||||||||||
| Deposits | 2,136 | 2,218 | 1,941 | 1,857 | 1,901 | |||||||||||||||
| Short-term borrowings | 380 | 464 | 265 | 136 | 162 | |||||||||||||||
| Long-term debt | 1,238 | 1,261 | 1,171 | 1,136 | 1,118 | |||||||||||||||
| Total interest expense | 3,754 | 3,943 | 3,377 | 3,129 | 3,181 | |||||||||||||||
NET INTEREST INCOME | 5,488 | 5,280 | 5,196 | 5,010 | 5,050 | |||||||||||||||
| Provision for credit losses | 2,612 | 892 | 720 | 715 | 726 | |||||||||||||||
| Net interest income after provision for credit losses | 2,876 | 4,388 | 4,476 | 4,295 | 4,324 | |||||||||||||||
NONINTEREST INCOME | ||||||||||||||||||||
| Service charges on deposit accounts | 788 | 837 | 740 | 685 | 695 | |||||||||||||||
| Trust and investment fees | 802 | 777 | 839 | 731 | 735 | |||||||||||||||
| Card fees | 588 | 561 | 517 | 470 | 481 | |||||||||||||||
| Other fees | 577 | 566 | 638 | 511 | 550 | |||||||||||||||
| Mortgage banking | 831 | 823 | 689 | 790 | 677 | |||||||||||||||
| Operating leases | 153 | 171 | 187 | 192 | 190 | |||||||||||||||
| Insurance | 370 | 329 | 432 | 399 | 299 | |||||||||||||||
| Net gains (losses) on debt securities available for sale | 60 | 160 | (42 | ) | 31 | 51 | ||||||||||||||
| Net gains from equity investments | 222 | 173 | 242 | 97 | 256 | |||||||||||||||
| Other | 326 | 176 | 453 | 525 | 429 | |||||||||||||||
| Total noninterest income | 4,717 | 4,573 | 4,695 | 4,431 | 4,363 | |||||||||||||||
NONINTEREST EXPENSE | ||||||||||||||||||||
| Salaries | 2,055 | 1,933 | 1,907 | 1,867 | 1,812 | |||||||||||||||
| Incentive compensation | 840 | 802 | 900 | 742 | 793 | |||||||||||||||
| Employee benefits | 558 | 518 | 581 | 665 | 501 | |||||||||||||||
| Equipment | 370 | 295 | 292 | 337 | 339 | |||||||||||||||
| Net occupancy | 413 | 398 | 369 | 365 | 367 | |||||||||||||||
| Operating leases | 124 | 136 | 148 | 153 | 157 | |||||||||||||||
| Other | 1,540 | 1,589 | 1,530 | 1,397 | 1,442 | |||||||||||||||
| Total noninterest expense | 5,900 | 5,671 | 5,727 | 5,526 | 5,411 | |||||||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 1,693 | 3,290 | 3,444 | 3,200 | 3,276 | |||||||||||||||
| Income tax expense | 332 | 1,117 | 1,165 | 956 | 1,095 | |||||||||||||||
NET INCOME | $ | 1,361 | $ | 2,173 | $ | 2,279 | $ | 2,244 | $ | 2,181 | ||||||||||
EARNINGS PER COMMON SHARE | $ | 0.41 | $ | 0.65 | $ | 0.68 | $ | 0.66 | $ | 0.65 | ||||||||||
DILUTED EARNINGS PER COMMON SHARE | $ | 0.41 | $ | 0.64 | $ | 0.67 | $ | 0.66 | $ | 0.64 | ||||||||||
DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.31 | $ | 0.31 | $ | 0.28 | $ | 0.28 | $ | 0.28 | ||||||||||
| Average common shares outstanding | 3,327.6 | 3,339.6 | 3,351.2 | 3,376.0 | 3,379.4 | |||||||||||||||
| Diluted average common shares outstanding | 3,352.2 | 3,374.0 | 3,389.3 | 3,416.1 | 3,424.0 | |||||||||||||||
-17-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
| December 31, | % | ||||||||||||
| (in millions, except shares) | 2007 | 2006 | Change | ||||||||||
ASSETS | |||||||||||||
| Cash and due from banks | $ | 14,757 | $ | 15,028 | (2 | ) | % | ||||||
| Federal funds sold, securities purchased under resale agreements and other short-term investments | 2,754 | 6,078 | (55 | ) | |||||||||
| Trading assets | 7,727 | 5,607 | 38 | ||||||||||
| Securities available for sale | 72,951 | 42,629 | 71 | ||||||||||
| Mortgages held for sale (includes $24,998 carried at fair value at December 31, 2007) | 26,815 | 33,097 | (19 | ) | |||||||||
| Loans held for sale | 948 | 721 | 31 | ||||||||||
| Loans | 382,195 | 319,116 | 20 | ||||||||||
| Allowance for loan losses | (5,307 | ) | (3,764 | ) | 41 | ||||||||
| Net loans | 376,888 | 315,352 | 20 | ||||||||||
| Mortgage servicing rights: | |||||||||||||
| Measured at fair value (residential MSRs) | 16,763 | 17,591 | (5 | ) | |||||||||
| Amortized | 466 | 377 | 24 | ||||||||||
| Premises and equipment, net | 5,122 | 4,698 | 9 | ||||||||||
| Goodwill | 13,106 | 11,275 | 16 | ||||||||||
| Other assets | 37,145 | 29,543 | 26 | ||||||||||
| Total assets | $ | 575,442 | $ | 481,996 | 19 | ||||||||
LIABILITIES | |||||||||||||
| Noninterest-bearing deposits | $ | 84,348 | $ | 89,119 | (5 | ) | |||||||
| Interest-bearing deposits | 260,112 | 221,124 | 18 | ||||||||||
| Total deposits | 344,460 | 310,243 | 11 | ||||||||||
| Short-term borrowings | 53,255 | 12,829 | 315 | ||||||||||
| Accrued expenses and other liabilities | 30,706 | 25,965 | 18 | ||||||||||
| Long-term debt | 99,393 | 87,145 | 14 | ||||||||||
| Total liabilities | 527,814 | 436,182 | 21 | ||||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||
| Preferred stock | 450 | 384 | 17 | ||||||||||
| Common stock — $1-2/3 par value, authorized 6,000,000,000 shares; issued 3,472,762,050 shares | 5,788 | 5,788 | — | ||||||||||
| Additional paid-in capital | 8,212 | 7,739 | 6 | ||||||||||
| Retained earnings | 38,970 | 35,215 | 11 | ||||||||||
| Cumulative other comprehensive income | 725 | 302 | 140 | ||||||||||
| Treasury stock — 175,659,842 shares and 95,612,189 shares | (6,035 | ) | (3,203 | ) | 88 | ||||||||
| Unearned ESOP shares | (482 | ) | (411 | ) | 17 | ||||||||
| Total stockholders’ equity | 47,628 | 45,814 | 4 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 575,442 | $ | 481,996 | 19 | ||||||||
-18-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
FIVE QUARTER CONSOLIDATED BALANCE SHEET
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 14,757 | $ | 12,200 | $ | 12,714 | $ | 12,485 | $ | 15,028 | ||||||||||
| Federal funds sold, securities purchased under resale agreements and other short-term investments | 2,754 | 4,546 | 5,163 | 4,668 | 6,078 | |||||||||||||||
| Trading assets | 7,727 | 7,298 | 7,289 | 6,525 | 5,607 | |||||||||||||||
| Securities available for sale | 72,951 | 57,440 | 72,179 | 45,443 | 42,629 | |||||||||||||||
| Mortgages held for sale | 26,815 | 29,699 | 34,580 | 32,286 | 33,097 | |||||||||||||||
| Loans held for sale | 948 | 1,011 | 887 | 829 | 721 | |||||||||||||||
| Loans | 382,195 | 362,922 | 342,800 | 325,487 | 319,116 | |||||||||||||||
| Allowance for loan losses | (5,307 | ) | (3,829 | ) | (3,820 | ) | (3,772 | ) | (3,764 | ) | ||||||||||
| Net loans | 376,888 | 359,093 | 338,980 | 321,715 | 315,352 | |||||||||||||||
| Mortgage servicing rights: | ||||||||||||||||||||
| Measured at fair value (residential MSRs) | 16,763 | 18,223 | 18,733 | 17,779 | 17,591 | |||||||||||||||
| Amortized | 466 | 460 | 418 | 400 | 377 | |||||||||||||||
| Premises and equipment, net | 5,122 | 5,002 | 4,973 | 4,864 | 4,698 | |||||||||||||||
| Goodwill | 13,106 | 12,018 | 11,983 | 11,275 | 11,275 | |||||||||||||||
| Other assets | 37,145 | 41,737 | 31,966 | 27,632 | 29,543 | |||||||||||||||
| Total assets | $ | 575,442 | $ | 548,727 | $ | 539,865 | $ | 485,901 | $ | 481,996 | ||||||||||
LIABILITIES | ||||||||||||||||||||
| Noninterest-bearing deposits | $ | 84,348 | $ | 82,365 | $ | 89,809 | $ | 89,067 | $ | 89,119 | ||||||||||
| Interest-bearing deposits | 260,112 | 252,591 | 234,934 | 222,090 | 221,124 | |||||||||||||||
| Total deposits | 344,460 | 334,956 | 324,743 | 311,157 | 310,243 | |||||||||||||||
| Short-term borrowings | 53,255 | 41,729 | 40,838 | 13,181 | 12,829 | |||||||||||||||
| Accrued expenses and other liabilities | 30,706 | 28,884 | 33,215 | 25,163 | 25,965 | |||||||||||||||
| Long-term debt | 99,393 | 95,592 | 93,830 | 90,327 | 87,145 | |||||||||||||||
| Total liabilities | 527,814 | 501,161 | 492,626 | 439,828 | 436,182 | |||||||||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Preferred stock | 450 | 545 | 637 | 740 | 384 | |||||||||||||||
| Common stock | 5,788 | 5,788 | 5,788 | 5,788 | 5,788 | |||||||||||||||
| Additional paid-in capital | 8,212 | 8,089 | 8,027 | 7,875 | 7,739 | |||||||||||||||
| Retained earnings | 38,970 | 38,645 | 37,603 | 36,377 | 35,215 | |||||||||||||||
| Cumulative other comprehensive income (loss) | 725 | 291 | (236 | ) | 289 | 302 | ||||||||||||||
| Treasury stock | (6,035 | ) | (5,209 | ) | (3,898 | ) | (4,204 | ) | (3,203 | ) | ||||||||||
| Unearned ESOP shares | (482 | ) | (583 | ) | (682 | ) | (792 | ) | (411 | ) | ||||||||||
| Total stockholders’ equity | 47,628 | 47,566 | 47,239 | 46,073 | 45,814 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 575,442 | $ | 548,727 | $ | 539,865 | $ | 485,901 | $ | 481,996 | ||||||||||
-19-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||
| FIVE QUARTER AVERAGE BALANCES | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
EARNING ASSETS | ||||||||||||||||||||
| Federal funds sold, securities purchased under resale agreements and other short-term investments | $ | 2,972 | $ | 4,219 | $ | 4,849 | $ | 5,867 | $ | 7,751 | ||||||||||
| Trading assets | 4,248 | 4,043 | 4,572 | 4,305 | 3,950 | |||||||||||||||
| Debt securities available for sale: | ||||||||||||||||||||
| Securities of U.S. Treasury and federal agencies | 926 | 871 | 839 | 753 | 786 | |||||||||||||||
| Securities of U.S. states and political subdivisions | 5,995 | 5,021 | 4,383 | 3,532 | 3,406 | |||||||||||||||
| Mortgage-backed securities: | ||||||||||||||||||||
| Federal agencies | 35,434 | 52,681 | 35,406 | 30,640 | 31,718 | |||||||||||||||
| Private collateralized mortgage obligations | 14,270 | 4,026 | 3,816 | 3,993 | 5,130 | |||||||||||||||
| Total mortgage-backed securities | 49,704 | 56,707 | 39,222 | 34,633 | 36,848 | |||||||||||||||
| Other debt securities (1) | 8,465 | 5,822 | 5,090 | 5,778 | 6,406 | |||||||||||||||
| Total debt securities available for sale (1) | 65,090 | 68,421 | 49,534 | 44,696 | 47,446 | |||||||||||||||
| Mortgages held for sale (2) | 28,327 | 35,552 | 36,060 | 32,343 | 37,878 | |||||||||||||||
| Loans held for sale (2) | 965 | 960 | 864 | 794 | 659 | |||||||||||||||
| Loans: | ||||||||||||||||||||
| Commercial and commercial real estate: | ||||||||||||||||||||
| Commercial | 86,958 | 79,713 | 73,932 | 71,063 | 68,402 | |||||||||||||||
| Other real estate mortgage | 35,863 | 32,641 | 31,736 | 30,590 | 29,882 | |||||||||||||||
| Real estate construction | 18,510 | 16,914 | 16,393 | 15,892 | 15,775 | |||||||||||||||
| Lease financing | 6,583 | 6,026 | 5,559 | 5,503 | 5,500 | |||||||||||||||
| Total commercial and commercial real estate | 147,914 | 135,294 | 127,620 | 123,048 | 119,559 | |||||||||||||||
| Consumer: | ||||||||||||||||||||
| Real estate 1-4 family first mortgage | 69,262 | 63,929 | 58,283 | 54,444 | 50,836 | |||||||||||||||
| Real estate 1-4 family junior lien mortgage | 75,272 | 73,476 | 70,390 | 69,079 | 68,208 | |||||||||||||||
| Credit card | 17,689 | 16,261 | 14,950 | 14,557 | 13,737 | |||||||||||||||
| Other revolving credit and installment | 56,546 | 54,165 | 53,464 | 53,539 | 53,206 | |||||||||||||||
| Total consumer | 218,769 | 207,831 | 197,087 | 191,619 | 185,987 | |||||||||||||||
| Foreign | 7,689 | 7,558 | 7,263 | 6,762 | 6,620 | |||||||||||||||
| Total loans (2) | 374,372 | 350,683 | 331,970 | 321,429 | 312,166 | |||||||||||||||
| Other | 1,552 | 1,396 | 1,329 | 1,327 | 1,333 | |||||||||||||||
| Total earning assets | $ | 477,526 | $ | 465,274 | $ | 429,178 | $ | 410,761 | $ | 411,183 | ||||||||||
FUNDING SOURCES | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Interest-bearing checking | $ | 5,254 | $ | 5,160 | $ | 5,193 | $ | 4,615 | $ | 4,477 | ||||||||||
| Market rate and other savings | 156,260 | 149,194 | 145,185 | 140,934 | 135,673 | |||||||||||||||
| Savings certificates | 42,560 | 41,080 | 39,729 | 38,514 | 36,382 | |||||||||||||||
| Other time deposits | 10,874 | 10,948 | 4,574 | 9,312 | 19,838 | |||||||||||||||
| Deposits in foreign offices | 44,991 | 41,326 | 32,841 | 27,647 | 24,425 | |||||||||||||||
| Total interest-bearing deposits | 259,939 | 247,708 | 227,522 | 221,022 | 220,795 | |||||||||||||||
| Short-term borrowings | 34,074 | 36,415 | 21,066 | 11,498 | 13,470 | |||||||||||||||
| Long-term debt | 98,012 | 94,686 | 90,931 | 89,027 | 85,809 | |||||||||||||||
| Total interest-bearing liabilities | 392,025 | 378,809 | 339,519 | 321,547 | 320,074 | |||||||||||||||
| Portion of noninterest-bearing funding sources | 85,501 | 86,465 | 89,659 | 89,214 | 91,109 | |||||||||||||||
| Total funding sources | $ | 477,526 | $ | 465,274 | $ | 429,178 | $ | 410,761 | $ | 411,183 | ||||||||||
NONINTEREST-EARNING ASSETS | ||||||||||||||||||||
| Cash and due from banks | $ | 12,127 | $ | 11,579 | $ | 11,655 | $ | 11,862 | $ | 12,379 | ||||||||||
| Goodwill | 13,091 | 12,008 | 11,435 | 11,274 | 11,259 | |||||||||||||||
| Other | 52,903 | 52,672 | 50,418 | 48,208 | 47,764 | |||||||||||||||
| Total noninterest-earning assets | $ | 78,121 | $ | 76,259 | $ | 73,508 | $ | 71,344 | $ | 71,402 | ||||||||||
NONINTEREST-BEARING FUNDING SOURCES | ||||||||||||||||||||
| Deposits | $ | 86,632 | $ | 88,991 | $ | 91,256 | $ | 88,769 | $ | 91,259 | ||||||||||
| Other liabilities | 29,019 | 26,413 | 25,221 | 25,536 | 25,749 | |||||||||||||||
| Stockholders’ equity | 47,971 | 47,320 | 46,690 | 46,253 | 45,503 | |||||||||||||||
| Noninterest-bearing funding sources used to fund earning assets | (85,501 | ) | (86,465 | ) | (89,659 | ) | (89,214 | ) | (91,109 | ) | ||||||||||
| Net noninterest-bearing funding sources | $ | 78,121 | $ | 76,259 | $ | 73,508 | $ | 71,344 | $ | 71,402 | ||||||||||
TOTAL ASSETS | $ | 555,647 | $ | 541,533 | $ | 502,686 | $ | 482,105 | $ | 482,585 | ||||||||||
| (1) | Includes certain preferred securities. | |
| (2) | Nonaccrual loans are included in their respective loan categories. |
-20-
| Wells Fargo & Company and Subsidiaries | ||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY | ||||||||
| Year ended December 31, | ||||||||
| (in millions) | 2007 | 2006 | ||||||
Balance, beginning of period | $ | 45,814 | $ | 40,660 | ||||
| Cumulative effect from adoption of: | ||||||||
| FAS 156 (1) | — | 101 | ||||||
| FSP 13-2 (2) | (71 | ) | — | |||||
| Net income | 8,057 | 8,420 | ||||||
| Other comprehensive income (loss), net of tax, related to: | ||||||||
| Translation adjustments | 23 | — | ||||||
| Investment securities and other interests held | (164 | ) | (31 | ) | ||||
| Derivative instruments and hedging activities | 322 | 70 | ||||||
| Defined benefit pension plans | 242 | — | ||||||
| Common stock issued | 1,876 | 1,764 | ||||||
| Common stock issued for acquisitions | 2,125 | — | ||||||
| Common stock repurchased | (7,418 | ) | (1,965 | ) | ||||
| Preferred stock released to ESOP | 418 | 355 | ||||||
| Common stock dividends | (3,955 | ) | (3,641 | ) | ||||
| Adoption of FAS 158 (3) | — | (402 | ) | |||||
| Other, net | 359 | 483 | ||||||
Balance, end of period | $ | 47,628 | $ | 45,814 | ||||
| (1) | Financial Accounting Standard No. 156,Accounting for Servicing of Financial Assets — an amendment of FASB Statement No. 140. | |
| (2) | FASB Staff Position 13-2,Accounting for a Change or Projected Change in the Timing of Cash Flows Related to Income Taxes Generated by a Leveraged Lease Transaction. | |
| (3) | Financial Accounting Standard No. 158,Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R). |
-21-
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||||||
| FIVE QUARTER LOANS | |||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
| Commercial and commercial real estate: | |||||||||||||||||||||
| Commercial | $ | 90,468 | $ | 82,598 | $ | 77,560 | $ | 72,268 | $ | 70,404 | |||||||||||
| Other real estate mortgage | 36,747 | 33,227 | 32,336 | 31,542 | 30,112 | ||||||||||||||||
| Real estate construction | 18,854 | 17,301 | 16,552 | 15,869 | 15,935 | ||||||||||||||||
| Lease financing | 6,772 | 6,089 | 5,979 | 5,494 | 5,614 | ||||||||||||||||
| Total commercial and commercial real estate | 152,841 | 139,215 | 132,427 | 125,173 | 122,065 | ||||||||||||||||
| Consumer: | |||||||||||||||||||||
| Real estate 1-4 family first mortgage | 71,415 | 66,877 | 61,177 | 55,982 | 53,228 | ||||||||||||||||
| Real estate 1-4 family junior lien mortgage | 75,565 | 74,632 | 72,398 | 69,489 | 68,926 | ||||||||||||||||
| Credit card | 18,762 | 17,129 | 15,567 | 14,594 | 14,697 | ||||||||||||||||
| Other revolving credit and installment | 56,171 | 57,180 | 53,701 | 53,445 | 53,534 | ||||||||||||||||
| Total consumer | 221,913 | 215,818 | 202,843 | 193,510 | 190,385 | ||||||||||||||||
| Foreign | 7,441 | 7,889 | 7,530 | 6,804 | 6,666 | ||||||||||||||||
| Total loans (net of unearned income) | $ | 382,195 | $ | 362,922 | $ | 342,800 | $ | 325,487 | $ | 319,116 | |||||||||||
| FIVE QUARTER NONACCRUAL LOANS AND OTHER ASSETS | |||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
| Nonaccrual loans: | |||||||||||||||||||||
| Commercial and commercial real estate: | |||||||||||||||||||||
| Commercial | $ | 432 | $ | 399 | $ | 395 | $ | 350 | $ | 331 | |||||||||||
| Other real estate mortgage | 128 | 133 | 129 | 114 | 105 | ||||||||||||||||
| Real estate construction | 293 | 188 | 81 | 82 | 78 | ||||||||||||||||
| Lease financing | 45 | 38 | 29 | 31 | 29 | ||||||||||||||||
| Total commercial and commercial real estate | 898 | 758 | 634 | 577 | 543 | ||||||||||||||||
| Consumer: | |||||||||||||||||||||
| Real estate 1-4 family first mortgage (1) | 1,272 | 886 | 663 | 701 | 688 | ||||||||||||||||
| Real estate 1-4 family junior lien mortgage | 280 | 238 | 228 | 233 | 212 | ||||||||||||||||
| Other revolving credit and installment | 184 | 160 | 155 | 195 | 180 | ||||||||||||||||
| Total consumer | 1,736 | 1,284 | 1,046 | 1,129 | 1,080 | ||||||||||||||||
| Foreign | 45 | 46 | 53 | 46 | 43 | ||||||||||||||||
| Total nonaccrual loans | 2,679 | 2,088 | 1,733 | 1,752 | 1,666 | ||||||||||||||||
| As a percentage of total loans | 0.70 | % | 0.58 | % | 0.51 | % | 0.54 | % | 0.52 | % | |||||||||||
| Foreclosed assets: | |||||||||||||||||||||
| GNMA loans (2) | 535 | 487 | 423 | 381 | 322 | ||||||||||||||||
| Other | 649 | 603 | 554 | 528 | 423 | ||||||||||||||||
| Real estate and other nonaccrual investments (3) | 5 | 5 | 5 | 5 | 5 | ||||||||||||||||
| Total nonaccrual loans and other assets | $ | 3,868 | $ | 3,183 | $ | 2,715 | $ | 2,666 | $ | 2,416 | |||||||||||
| As a percentage of total loans | 1.01 | % | 0.88 | % | 0.79 | % | 0.82 | % | 0.76 | % | |||||||||||
| (1) | Includes nonaccrual mortgages held for sale. | ||
| (2) | Consistent with regulatory reporting requirements, foreclosed real estate securing Government National Mortgage Association (GNMA) loans is classified as nonperforming. Both principal and interest for GNMA loans secured by the foreclosed real estate are fully collectible because the GNMA loans are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. | ||
| (3) | Includes real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if these assets were recorded as loans. |
-22-
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||||||
| CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES | |||||||||||||||||||||
| Quarter ended | Year ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||||||||||||
| (in millions) | 2007 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||
Balance, beginning of period | $ | 4,018 | $ | 4,007 | $ | 3,978 | $ | 3,964 | $ | 4,057 | |||||||||||
| Provision for credit losses | 2,612 | 892 | 726 | 4,939 | 2,204 | ||||||||||||||||
| Loan charge-offs: | |||||||||||||||||||||
| Commercial and commercial real estate: | |||||||||||||||||||||
| Commercial | (221 | ) | (155 | ) | (139 | ) | (629 | ) | (414 | ) | |||||||||||
| Other real estate mortgage | (4 | ) | — | (2 | ) | (6 | ) | (5 | ) | ||||||||||||
| Real estate construction | (9 | ) | (3 | ) | (1 | ) | (14 | ) | (2 | ) | |||||||||||
| Lease financing | (9 | ) | (8 | ) | (8 | ) | (33 | ) | (30 | ) | |||||||||||
| Total commercial and commercial real estate | (243 | ) | (166 | ) | (150 | ) | (682 | ) | (451 | ) | |||||||||||
| Consumer: | |||||||||||||||||||||
| Real estate 1-4 family first mortgage | (38 | ) | (22 | ) | (22 | ) | (109 | ) | (103 | ) | |||||||||||
| Real estate 1-4 family junior lien mortgage | (291 | ) | (167 | ) | (56 | ) | (648 | ) | (154 | ) | |||||||||||
| Credit card | (253 | ) | (205 | ) | (154 | ) | (832 | ) | (505 | ) | |||||||||||
| Other revolving credit and installment | (532 | ) | (473 | ) | (513 | ) | (1,913 | ) | (1,685 | ) | |||||||||||
| Total consumer | (1,114 | ) | (867 | ) | (745 | ) | (3,502 | ) | (2,447 | ) | |||||||||||
| Foreign | (70 | ) | (69 | ) | (59 | ) | (265 | ) | (281 | ) | |||||||||||
| Total loan charge-offs | (1,427 | ) | (1,102 | ) | (954 | ) | (4,449 | ) | (3,179 | ) | |||||||||||
| Loan recoveries: | |||||||||||||||||||||
| Commercial and commercial real estate: | |||||||||||||||||||||
| Commercial | 35 | 35 | 27 | 119 | 111 | ||||||||||||||||
| Other real estate mortgage | 1 | 2 | 5 | 8 | 19 | ||||||||||||||||
| Real estate construction | — | 1 | 1 | 2 | 3 | ||||||||||||||||
| Lease financing | 5 | 3 | 5 | 17 | 21 | ||||||||||||||||
| Total commercial and commercial real estate | 41 | 41 | 38 | 146 | 154 | ||||||||||||||||
| Consumer: | |||||||||||||||||||||
| Real estate 1-4 family first mortgage | 4 | 6 | 6 | 22 | 26 | ||||||||||||||||
| Real estate 1-4 family junior lien mortgage | 14 | 14 | 9 | 53 | 36 | ||||||||||||||||
| Credit card | 30 | 29 | 24 | 120 | 96 | ||||||||||||||||
| Other revolving credit and installment | 111 | 105 | 136 | 504 | 537 | ||||||||||||||||
| Total consumer | 159 | 154 | 175 | 699 | 695 | ||||||||||||||||
| Foreign | 15 | 15 | 15 | 65 | 76 | ||||||||||||||||
| Total loan recoveries | 215 | 210 | 228 | 910 | 925 | ||||||||||||||||
| Net loan charge-offs | (1,212 | ) | (892 | ) | (726 | ) | (3,539 | ) | (2,254 | ) | |||||||||||
| Allowances related to business combinations/other | 100 | 11 | (14 | ) | 154 | (43 | ) | ||||||||||||||
Balance, end of period | $ | 5,518 | $ | 4,018 | $ | 3,964 | $ | 5,518 | $ | 3,964 | |||||||||||
| Components: | |||||||||||||||||||||
| Allowance for loan losses | $ | 5,307 | $ | 3,829 | $ | 3,764 | $ | 5,307 | $ | 3,764 | |||||||||||
| Reserve for unfunded credit commitments | 211 | 189 | 200 | 211 | 200 | ||||||||||||||||
| Allowance for credit losses | $ | 5,518 | $ | 4,018 | $ | 3,964 | $ | 5,518 | $ | 3,964 | |||||||||||
| Net loan charge-offs (annualized) as a percentage of average total loans | 1.28 | % | 1.01 | % | 0.92 | % | 1.03 | % | 0.73 | % | |||||||||||
-23-
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||||||
| FIVE QUARTER CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES | |||||||||||||||||||||
| Quarter ended | |||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
Balance, beginning of quarter | $ | 4,018 | $ | 4,007 | $ | 3,965 | $ | 3,964 | $ | 3,978 | |||||||||||
| Provision for credit losses | 2,612 | 892 | 720 | 715 | 726 | ||||||||||||||||
| Loan charge-offs: | |||||||||||||||||||||
| Commercial and commercial real estate: | |||||||||||||||||||||
| Commercial | (221 | ) | (155 | ) | (127 | ) | (126 | ) | (139 | ) | |||||||||||
| Other real estate mortgage | (4 | ) | — | (1 | ) | (1 | ) | (2 | ) | ||||||||||||
| Real estate construction | (9 | ) | (3 | ) | (2 | ) | — | (1 | ) | ||||||||||||
| Lease financing | (9 | ) | (8 | ) | (9 | ) | (7 | ) | (8 | ) | |||||||||||
| Total commercial and commercial real estate | (243 | ) | (166 | ) | (139 | ) | (134 | ) | (150 | ) | |||||||||||
| Consumer: | |||||||||||||||||||||
| Real estate 1-4 family first mortgage | (38 | ) | (22 | ) | (25 | ) | (24 | ) | (22 | ) | |||||||||||
| Real estate 1-4 family junior lien mortgage | (291 | ) | (167 | ) | (107 | ) | (83 | ) | (56 | ) | |||||||||||
| Credit card | (253 | ) | (205 | ) | (191 | ) | (183 | ) | (154 | ) | |||||||||||
| Other revolving credit and installment | (532 | ) | (473 | ) | (434 | ) | (474 | ) | (513 | ) | |||||||||||
| Total consumer | (1,114 | ) | (867 | ) | (757 | ) | (764 | ) | (745 | ) | |||||||||||
| Foreign | (70 | ) | (69 | ) | (64 | ) | (62 | ) | (59 | ) | |||||||||||
| Total loan charge-offs | (1,427 | ) | (1,102 | ) | (960 | ) | (960 | ) | (954 | ) | |||||||||||
| Loan recoveries: | |||||||||||||||||||||
| Commercial and commercial real estate: | |||||||||||||||||||||
| Commercial | 35 | 35 | 25 | 24 | 27 | ||||||||||||||||
| Other real estate mortgage | 1 | 2 | 3 | 2 | 5 | ||||||||||||||||
| Real estate construction | — | 1 | — | 1 | 1 | ||||||||||||||||
| Lease financing | 5 | 3 | 4 | 5 | 5 | ||||||||||||||||
| Total commercial and commercial real estate | 41 | 41 | 32 | 32 | 38 | ||||||||||||||||
| Consumer: | |||||||||||||||||||||
| Real estate 1-4 family first mortgage | 4 | 6 | 6 | 6 | 6 | ||||||||||||||||
| Real estate 1-4 family junior lien mortgage | 14 | 14 | 16 | 9 | 9 | ||||||||||||||||
| Credit card | 30 | 29 | 30 | 31 | 24 | ||||||||||||||||
| Other revolving credit and installment | 111 | 105 | 139 | 149 | 136 | ||||||||||||||||
| Total consumer | 159 | 154 | 191 | 195 | 175 | ||||||||||||||||
| Foreign | 15 | 15 | 17 | 18 | 15 | ||||||||||||||||
| Total loan recoveries | 215 | 210 | 240 | 245 | 228 | ||||||||||||||||
| Net loan charge-offs | (1,212 | ) | (892 | ) | (720 | ) | (715 | ) | (726 | ) | |||||||||||
| Allowances related to business combinations/other | 100 | 11 | 42 | 1 | (14 | ) | |||||||||||||||
Balance, end of quarter | $ | 5,518 | $ | 4,018 | $ | 4,007 | $ | 3,965 | $ | 3,964 | |||||||||||
| Components: | |||||||||||||||||||||
| Allowance for loan losses | $ | 5,307 | $ | 3,829 | $ | 3,820 | $ | 3,772 | $ | 3,764 | |||||||||||
| Reserve for unfunded credit commitments | 211 | 189 | 187 | 193 | 200 | ||||||||||||||||
| Allowance for credit losses | $ | 5,518 | $ | 4,018 | $ | 4,007 | $ | 3,965 | $ | 3,964 | |||||||||||
| Net loan charge-offs (annualized) as a percentage of average total loans | 1.28 | % | 1.01 | % | 0.87 | % | 0.90 | % | 0.92 | % | |||||||||||
| Allowance for loan losses as a percentage of: | |||||||||||||||||||||
| Total loans | 1.39 | % | 1.06 | % | 1.11 | % | 1.16 | % | 1.18 | % | |||||||||||
| Nonaccrual loans | 198 | 183 | 220 | 215 | 226 | ||||||||||||||||
| Nonaccrual loans and other assets | 137 | 120 | 141 | 141 | 156 | ||||||||||||||||
| Allowance for credit losses as a percentage of: | |||||||||||||||||||||
| Total loans | 1.44 | % | 1.11 | % | 1.17 | % | 1.22 | % | 1.24 | % | |||||||||||
| Nonaccrual loans | 206 | 192 | 231 | 226 | 238 | ||||||||||||||||
| Nonaccrual loans and other assets | 143 | 126 | 148 | 149 | 164 | ||||||||||||||||
-24-
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||||||||||
| NONINTEREST INCOME | |||||||||||||||||||||||||
| Quarter ended December 31, | % | Year ended December 31, | % | ||||||||||||||||||||||
| (in millions) | 2007 | 2006 | Change | 2007 | 2006 | Change | |||||||||||||||||||
| Service charges on deposit accounts | $ | 788 | $ | 695 | 13 | % | $ | 3,050 | $ | 2,690 | 13 | % | |||||||||||||
| Trust and investment fees: | |||||||||||||||||||||||||
| Trust, investment and IRA fees | 585 | 525 | 11 | 2,305 | 2,033 | 13 | |||||||||||||||||||
| Commissions and all other fees | 217 | 210 | 3 | 844 | 704 | 20 | |||||||||||||||||||
| Total trust and investment fees | 802 | 735 | 9 | 3,149 | 2,737 | 15 | |||||||||||||||||||
| Card fees | 588 | 481 | 22 | 2,136 | 1,747 | 22 | |||||||||||||||||||
| Other fees: | |||||||||||||||||||||||||
| Cash network fees | 47 | 44 | 7 | 193 | 184 | 5 | |||||||||||||||||||
| Charges and fees on loans | 274 | 241 | 14 | 1,011 | 976 | 4 | |||||||||||||||||||
| All other fees | 256 | 265 | (3 | ) | 1,088 | 897 | 21 | ||||||||||||||||||
| Total other fees | 577 | 550 | 5 | 2,292 | 2,057 | 11 | |||||||||||||||||||
| Mortgage banking: | |||||||||||||||||||||||||
| Servicing income, net | 543 | 314 | 73 | 1,511 | 893 | 69 | |||||||||||||||||||
| Net gains on mortgage loan origination/sales activities | 220 | 305 | (28 | ) | 1,289 | 1,116 | 16 | ||||||||||||||||||
| All other | 68 | 58 | 17 | 333 | 302 | 10 | |||||||||||||||||||
| Total mortgage banking | 831 | 677 | 23 | 3,133 | 2,311 | 36 | |||||||||||||||||||
| Operating leases | 153 | 190 | (19 | ) | 703 | 783 | (10 | ) | |||||||||||||||||
| Insurance | 370 | 299 | 24 | 1,530 | 1,340 | 14 | |||||||||||||||||||
| Net gains from trading activities | 62 | 213 | (71 | ) | 544 | 544 | — | ||||||||||||||||||
| Net gains (losses) on debt securities available for sale | 60 | 51 | 18 | 209 | (19 | ) | — | ||||||||||||||||||
| Net gains from equity investments | 222 | 256 | (13 | ) | 734 | 738 | (1 | ) | |||||||||||||||||
| All other | 264 | 216 | 22 | 936 | 812 | 15 | |||||||||||||||||||
| Total | $ | 4,717 | $ | 4,363 | 8 | $ | 18,416 | $ | 15,740 | 17 | |||||||||||||||
| NONINTEREST EXPENSE | |||||||||||||||||||||||||
| Quarter ended December 31, | % | Year ended December 31, | % | ||||||||||||||||||||||
| (in millions) | 2007 | 2006 | Change | 2007 | 2006 | Change | |||||||||||||||||||
| Salaries | $ | 2,055 | $ | 1,812 | 13 | % | $ | 7,762 | $ | 7,007 | 11 | % | |||||||||||||
| Incentive compensation | 840 | 793 | 6 | 3,284 | 2,885 | 14 | |||||||||||||||||||
| Employee benefits | 558 | 501 | 11 | 2,322 | 2,035 | 14 | |||||||||||||||||||
| Equipment | 370 | 339 | 9 | 1,294 | 1,252 | 3 | |||||||||||||||||||
| Net occupancy | 413 | 367 | 13 | 1,545 | 1,405 | 10 | |||||||||||||||||||
| Operating leases | 124 | 157 | (21 | ) | 561 | 630 | (11 | ) | |||||||||||||||||
| Outside professional services | 250 | 273 | (8 | ) | 899 | 942 | (5 | ) | |||||||||||||||||
| Outside data processing | 127 | 113 | 12 | 482 | 437 | 10 | |||||||||||||||||||
| Travel and entertainment | 134 | 141 | (5 | ) | 474 | 542 | (13 | ) | |||||||||||||||||
| Contract services | 114 | 165 | (31 | ) | 448 | 579 | (23 | ) | |||||||||||||||||
| Operating losses | 68 | 40 | 70 | 437 | 275 | 59 | |||||||||||||||||||
| Insurance | 59 | 39 | 51 | 416 | 257 | 62 | |||||||||||||||||||
| Advertising and promotion | 100 | 102 | (2 | ) | 412 | 456 | (10 | ) | |||||||||||||||||
| Postage | 85 | 77 | 10 | 345 | 312 | 11 | |||||||||||||||||||
| Telecommunications | 80 | 66 | 21 | 321 | 279 | 15 | |||||||||||||||||||
| Stationery and supplies | 61 | 60 | 2 | 220 | 223 | (1 | ) | ||||||||||||||||||
| Security | 47 | 49 | (4 | ) | 176 | 179 | (2 | ) | |||||||||||||||||
| Core deposit intangibles | 32 | 27 | 19 | 113 | 112 | 1 | |||||||||||||||||||
| All other | 383 | 290 | 32 | 1,313 | 1,030 | 27 | |||||||||||||||||||
| Total | $ | 5,900 | $ | 5,411 | 9 | $ | 22,824 | $ | 20,837 | 10 | |||||||||||||||
-25-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||
| FIVE QUARTER NONINTEREST INCOME | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
| Service charges on deposit accounts | $ | 788 | $ | 837 | $ | 740 | $ | 685 | $ | 695 | ||||||||||
| Trust and investment fees: | ||||||||||||||||||||
| Trust, investment and IRA fees | 585 | 573 | 610 | 537 | 525 | |||||||||||||||
| Commissions and all other fees | 217 | 204 | 229 | 194 | 210 | |||||||||||||||
| Total trust and investment fees | 802 | 777 | 839 | 731 | 735 | |||||||||||||||
| Card fees | 588 | 561 | 517 | 470 | 481 | |||||||||||||||
| Other fees: | ||||||||||||||||||||
| Cash network fees | 47 | 51 | 50 | 45 | 44 | |||||||||||||||
| Charges and fees on loans | 274 | 246 | 253 | 238 | 241 | |||||||||||||||
| All other fees | 256 | 269 | 335 | 228 | 265 | |||||||||||||||
| Total other fees | 577 | 566 | 638 | 511 | 550 | |||||||||||||||
| Mortgage banking: | ||||||||||||||||||||
| Servicing income, net | 543 | 797 | (45 | ) | 216 | 314 | ||||||||||||||
| Net gains (losses) on mortgage loan origination/sales activities | 220 | (61 | ) | 635 | 495 | 305 | ||||||||||||||
| All other | 68 | 87 | 99 | 79 | 58 | |||||||||||||||
| Total mortgage banking | 831 | 823 | 689 | 790 | 677 | |||||||||||||||
| Operating leases | 153 | 171 | 187 | 192 | 190 | |||||||||||||||
| Insurance | 370 | 329 | 432 | 399 | 299 | |||||||||||||||
| Net gains (losses) from trading activities | 62 | (43 | ) | 260 | 265 | 213 | ||||||||||||||
| Net gains (losses) on debt securities available for sale | 60 | 160 | (42 | ) | 31 | 51 | ||||||||||||||
| Net gains from equity investments | 222 | 173 | 242 | 97 | 256 | |||||||||||||||
| All other | 264 | 219 | 193 | 260 | 216 | |||||||||||||||
| Total | $ | 4,717 | $ | 4,573 | $ | 4,695 | $ | 4,431 | $ | 4,363 | ||||||||||
| FIVE QUARTER NONINTEREST EXPENSE | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
| Salaries | $ | 2,055 | $ | 1,933 | $ | 1,907 | $ | 1,867 | $ | 1,812 | ||||||||||
| Incentive compensation | 840 | 802 | 900 | 742 | 793 | |||||||||||||||
| Employee benefits | 558 | 518 | 581 | 665 | 501 | |||||||||||||||
| Equipment | 370 | 295 | 292 | 337 | 339 | |||||||||||||||
| Net occupancy | 413 | 398 | 369 | 365 | 367 | |||||||||||||||
| Operating leases | 124 | 136 | 148 | 153 | 157 | |||||||||||||||
| Outside professional services | 250 | 222 | 235 | 192 | 273 | |||||||||||||||
| Outside data processing | 127 | 123 | 121 | 111 | 113 | |||||||||||||||
| Travel and entertainment | 134 | 113 | 118 | 109 | 141 | |||||||||||||||
| Contract services | 114 | 103 | 113 | 118 | 165 | |||||||||||||||
| Operating losses | 68 | 225 | 57 | 87 | 40 | |||||||||||||||
| Insurance | 59 | 81 | 148 | 128 | 39 | |||||||||||||||
| Advertising and promotion | 100 | 108 | 113 | 91 | 102 | |||||||||||||||
| Postage | 85 | 88 | 85 | 87 | 77 | |||||||||||||||
| Telecommunications | 80 | 79 | 81 | 81 | 66 | |||||||||||||||
| Stationery and supplies | 61 | 54 | 52 | 53 | 60 | |||||||||||||||
| Security | 47 | 42 | 44 | 43 | 49 | |||||||||||||||
| Core deposit intangibles | 32 | 28 | 27 | 26 | 27 | |||||||||||||||
| All other | 383 | 323 | 336 | 271 | 290 | |||||||||||||||
| Total | $ | 5,900 | $ | 5,671 | $ | 5,727 | $ | 5,526 | $ | 5,411 | ||||||||||
-26-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||||||
| AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2) | ||||||||||||||||||||||||
| Quarter ended December 31, | ||||||||||||||||||||||||
| 2007 | 2006 | |||||||||||||||||||||||
| Interest | Interest | |||||||||||||||||||||||
| Average | Yields/ | income/ | Average | Yields/ | income/ | |||||||||||||||||||
| (in millions) | balance | rates | expense | balance | rates | expense | ||||||||||||||||||
EARNING ASSETS | ||||||||||||||||||||||||
| Federal funds sold, securities purchased under resale agreements and other short-term investments | $ | 2,972 | 4.45 | % | $ | 34 | $ | 7,751 | 5.19 | % | $ | 102 | ||||||||||||
| Trading assets | 4,248 | 3.39 | 37 | 3,950 | 5.12 | 50 | ||||||||||||||||||
| Debt securities available for sale (3): | ||||||||||||||||||||||||
| Securities of U.S. Treasury and federal agencies | 926 | 4.18 | 9 | 786 | 4.28 | 9 | ||||||||||||||||||
| Securities of U.S. states and political subdivisions | 5,995 | 7.41 | 110 | 3,406 | 7.62 | 62 | ||||||||||||||||||
| Mortgage-backed securities: | ||||||||||||||||||||||||
| Federal agencies | 35,434 | 6.15 | 534 | 31,718 | 6.20 | 483 | ||||||||||||||||||
| Private collateralized mortgage obligations | 14,270 | 5.99 | 214 | 5,130 | 6.19 | 78 | ||||||||||||||||||
| Total mortgage-backed securities | 49,704 | 6.11 | 748 | 36,848 | 6.20 | 561 | ||||||||||||||||||
| Other debt securities (4) | 8,465 | 7.45 | 161 | 6,406 | 7.20 | 115 | ||||||||||||||||||
| Total debt securities available for sale (4) | 65,090 | 6.38 | 1,028 | 47,446 | 6.40 | 747 | ||||||||||||||||||
| Mortgages held for sale (5) | 28,327 | 6.44 | 456 | 37,878 | 6.62 | 627 | ||||||||||||||||||
| Loans held for sale (5) | 965 | 7.72 | 19 | 659 | 7.60 | 13 | ||||||||||||||||||
| Loans: | ||||||||||||||||||||||||
| Commercial and commercial real estate: | ||||||||||||||||||||||||
| Commercial | 86,958 | 7.88 | 1,726 | 68,402 | 8.27 | 1,426 | ||||||||||||||||||
| Other real estate mortgage | 35,863 | 7.22 | 652 | 29,882 | 7.49 | 563 | ||||||||||||||||||
| Real estate construction | 18,510 | 7.35 | 343 | 15,775 | 8.07 | 321 | ||||||||||||||||||
| Lease financing | 6,583 | 5.92 | 97 | 5,500 | 5.66 | 78 | ||||||||||||||||||
| Total commercial and commercial real estate | 147,914 | 7.57 | 2,818 | 119,559 | 7.93 | 2,388 | ||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||
| Real estate 1-4 family first mortgage | 69,262 | 7.12 | 1,235 | 50,836 | 7.53 | 961 | ||||||||||||||||||
| Real estate 1-4 family junior lien mortgage | 75,272 | 7.92 | 1,503 | 68,208 | 8.16 | 1,403 | ||||||||||||||||||
| Credit card | 17,689 | 12.79 | 565 | 13,737 | 13.30 | 457 | ||||||||||||||||||
| Other revolving credit and installment | 56,546 | 9.54 | 1,359 | 53,206 | 9.67 | 1,297 | ||||||||||||||||||
| Total consumer | 218,769 | 8.48 | 4,662 | 185,987 | 8.80 | 4,118 | ||||||||||||||||||
| Foreign | 7,689 | 11.55 | 224 | 6,620 | 11.97 | 199 | ||||||||||||||||||
| Total loans (5) | 374,372 | 8.18 | 7,704 | 312,166 | 8.54 | 6,705 | ||||||||||||||||||
| Other | 1,552 | 4.95 | 17 | 1,333 | 5.17 | 18 | ||||||||||||||||||
| Total earning assets | $ | 477,526 | 7.75 | 9,295 | $ | 411,183 | 8.01 | 8,262 | ||||||||||||||||
FUNDING SOURCES | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Interest-bearing checking | $ | 5,254 | 2.96 | 39 | $ | 4,477 | 3.11 | 35 | ||||||||||||||||
| Market rate and other savings | 156,260 | 2.63 | 1,035 | 135,673 | 2.69 | 918 | ||||||||||||||||||
| Savings certificates | 42,560 | 4.33 | 465 | 36,382 | 4.33 | 398 | ||||||||||||||||||
| Other time deposits | 10,874 | 4.45 | 122 | 19,838 | 5.27 | 264 | ||||||||||||||||||
| Deposits in foreign offices | 44,991 | 4.19 | 475 | 24,425 | 4.65 | 286 | ||||||||||||||||||
| Total interest-bearing deposits | 259,939 | 3.26 | 2,136 | 220,795 | 3.42 | 1,901 | ||||||||||||||||||
| Short-term borrowings | 34,074 | 4.42 | 380 | 13,470 | 4.77 | 162 | ||||||||||||||||||
| Long-term debt | 98,012 | 5.06 | 1,245 | 85,809 | 5.20 | 1,120 | ||||||||||||||||||
| Total interest-bearing liabilities | 392,025 | 3.81 | 3,761 | 320,074 | 3.95 | 3,183 | ||||||||||||||||||
| Portion of noninterest-bearing funding sources | 85,501 | — | — | 91,109 | — | — | ||||||||||||||||||
| Total funding sources | $ | 477,526 | 3.13 | 3,761 | $ | 411,183 | 3.08 | 3,183 | ||||||||||||||||
Net interest margin and net interest income on a taxable-equivalent basis (6) | 4.62 | % | $ | 5,534 | 4.93 | % | $ | 5,079 | ||||||||||||||||
NONINTEREST-EARNING ASSETS | ||||||||||||||||||||||||
| Cash and due from banks | $ | 12,127 | $ | 12,379 | ||||||||||||||||||||
| Goodwill | 13,091 | 11,259 | ||||||||||||||||||||||
| Other | 52,903 | 47,764 | ||||||||||||||||||||||
| Total noninterest-earning assets | $ | 78,121 | $ | 71,402 | ||||||||||||||||||||
NONINTEREST-BEARING FUNDING SOURCES | ||||||||||||||||||||||||
| Deposits | $ | 86,632 | $ | 91,259 | ||||||||||||||||||||
| Other liabilities | 29,019 | 25,749 | ||||||||||||||||||||||
| Stockholders’ equity | 47,971 | 45,503 | ||||||||||||||||||||||
| Noninterest-bearing funding sources used to fund earning assets | (85,501 | ) | (91,109 | ) | ||||||||||||||||||||
| Net noninterest-bearing funding sources | $ | 78,121 | $ | 71,402 | ||||||||||||||||||||
TOTAL ASSETS | $ | 555,647 | $ | 482,585 | ||||||||||||||||||||
| (1) | Our average prime rate was 7.52% and 8.25% for the quarters ended December 31, 2007 and 2006, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.03% and 5.37% for the same quarters, respectively. | |
| (2) | Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. | |
| (3) | Yields are based on amortized cost balances computed on a settlement date basis. | |
| (4) | Includes certain preferred securities. | |
| (5) | Nonaccrual loans and related income are included in their respective loan categories. | |
| (6) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented. |
-27-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||||||
| AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2) | ||||||||||||||||||||||||
| Year ended December 31, | ||||||||||||||||||||||||
| 2007 | 2006 | |||||||||||||||||||||||
| Interest | Interest | |||||||||||||||||||||||
| Average | Yields/ | income/ | Average | Yields/ | income/ | |||||||||||||||||||
| (in millions) | balance | rates | expense | balance | rates | expense | ||||||||||||||||||
EARNING ASSETS | ||||||||||||||||||||||||
| Federal funds sold, securities purchased under resale agreements and other short-term investments | $ | 4,468 | 4.99 | % | $ | 223 | $ | 5,515 | 4.80 | % | $ | 265 | ||||||||||||
| Trading assets | 4,291 | 4.37 | 188 | 4,958 | 4.95 | 245 | ||||||||||||||||||
| Debt securities available for sale (3): | ||||||||||||||||||||||||
| Securities of U.S. Treasury and federal agencies | 848 | 4.26 | 36 | 875 | 4.36 | 39 | ||||||||||||||||||
| Securities of U.S. states and political subdivisions | 4,740 | 7.37 | 342 | 3,192 | 7.98 | 245 | ||||||||||||||||||
| Mortgage-backed securities: | ||||||||||||||||||||||||
| Federal agencies | 38,592 | 6.10 | 2,328 | 36,691 | 6.04 | 2,206 | ||||||||||||||||||
| Private collateralized mortgage obligations | 6,548 | 6.12 | 399 | 6,640 | 6.57 | 430 | ||||||||||||||||||
| Total mortgage-backed securities | 45,140 | 6.10 | 2,727 | 43,331 | 6.12 | 2,636 | ||||||||||||||||||
| Other debt securities (4) | 6,295 | 7.52 | 477 | 6,204 | 7.10 | 439 | ||||||||||||||||||
| Total debt securities available for sale (4) | 57,023 | 6.34 | 3,582 | 53,602 | 6.31 | 3,359 | ||||||||||||||||||
| Mortgages held for sale (5) | 33,066 | 6.50 | 2,150 | 42,855 | 6.41 | 2,746 | ||||||||||||||||||
| Loans held for sale (5) | 896 | 7.76 | 70 | 630 | 7.40 | 47 | ||||||||||||||||||
| Loans: | ||||||||||||||||||||||||
| Commercial and commercial real estate: | ||||||||||||||||||||||||
| Commercial | 77,965 | 8.17 | 6,367 | 65,720 | 8.13 | 5,340 | ||||||||||||||||||
| Other real estate mortgage | 32,722 | 7.38 | 2,414 | 29,344 | 7.32 | 2,148 | ||||||||||||||||||
| Real estate construction | 16,934 | 7.80 | 1,321 | 14,810 | 7.94 | 1,175 | ||||||||||||||||||
| Lease financing | 5,921 | 5.84 | 346 | 5,437 | 5.72 | 311 | ||||||||||||||||||
| Total commercial and commercial real estate | 133,542 | 7.82 | 10,448 | 115,311 | 7.78 | 8,974 | ||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||
| Real estate 1-4 family first mortgage | 61,527 | 7.25 | 4,463 | 57,509 | 7.27 | 4,182 | ||||||||||||||||||
| Real estate 1-4 family junior lien mortgage | 72,075 | 8.12 | 5,851 | 64,255 | 7.98 | 5,126 | ||||||||||||||||||
| Credit card | 15,874 | 13.58 | 2,155 | 12,571 | 13.29 | 1,670 | ||||||||||||||||||
| Other revolving credit and installment | 54,436 | 9.71 | 5,285 | 50,922 | 9.60 | 4,889 | ||||||||||||||||||
| Total consumer | 203,912 | 8.71 | 17,754 | 185,257 | 8.57 | 15,867 | ||||||||||||||||||
| Foreign | 7,321 | 11.68 | 855 | 6,343 | 12.39 | 786 | ||||||||||||||||||
| Total loans (5) | 344,775 | 8.43 | 29,057 | 306,911 | 8.35 | 25,627 | ||||||||||||||||||
| Other | 1,402 | 5.07 | 71 | 1,357 | 4.97 | 68 | ||||||||||||||||||
| Total earning assets | $ | 445,921 | 7.93 | 35,341 | $ | 415,828 | 7.79 | 32,357 | ||||||||||||||||
FUNDING SOURCES | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Interest-bearing checking | $ | 5,057 | 3.16 | 160 | $ | 4,302 | 2.86 | 123 | ||||||||||||||||
| Market rate and other savings | 147,939 | 2.78 | 4,105 | 134,248 | 2.40 | 3,225 | ||||||||||||||||||
| Savings certificates | 40,484 | 4.38 | 1,773 | 32,355 | 3.91 | 1,266 | ||||||||||||||||||
| Other time deposits | 8,937 | 4.87 | 435 | 32,168 | 4.99 | 1,607 | ||||||||||||||||||
| Deposits in foreign offices | 36,761 | 4.57 | 1,679 | 20,724 | 4.60 | 953 | ||||||||||||||||||
| Total interest-bearing deposits | 239,178 | 3.41 | 8,152 | 223,797 | 3.21 | 7,174 | ||||||||||||||||||
| Short-term borrowings | 25,854 | 4.81 | 1,245 | 21,471 | 4.62 | 992 | ||||||||||||||||||
| Long-term debt | 93,193 | 5.18 | 4,824 | 84,035 | 4.91 | 4,124 | ||||||||||||||||||
| Total interest-bearing liabilities | 358,225 | 3.97 | 14,221 | 329,303 | 3.73 | 12,290 | ||||||||||||||||||
| Portion of noninterest-bearing funding sources | 87,696 | — | — | 86,525 | — | — | ||||||||||||||||||
| Total funding sources | $ | 445,921 | 3.19 | 14,221 | $ | 415,828 | 2.96 | 12,290 | ||||||||||||||||
Net interest margin and net interest income on a taxable-equivalent basis (6) | 4.74 | % | $ | 21,120 | 4.83 | % | $ | 20,067 | ||||||||||||||||
NONINTEREST-EARNING ASSETS | ||||||||||||||||||||||||
| Cash and due from banks | $ | 11,806 | $ | 12,466 | ||||||||||||||||||||
| Goodwill | 11,957 | 11,114 | ||||||||||||||||||||||
| Other | 51,068 | 46,615 | ||||||||||||||||||||||
| Total noninterest-earning assets | $ | 74,831 | $ | 70,195 | ||||||||||||||||||||
NONINTEREST-BEARING FUNDING SOURCES | ||||||||||||||||||||||||
| Deposits | $ | 88,907 | $ | 89,117 | ||||||||||||||||||||
| Other liabilities | 26,557 | 24,467 | ||||||||||||||||||||||
| Stockholders’ equity | 47,063 | 43,136 | ||||||||||||||||||||||
| Noninterest-bearing funding sources used to fund earning assets | (87,696 | ) | (86,525 | ) | ||||||||||||||||||||
| Net noninterest-bearing funding sources | $ | 74,831 | $ | 70,195 | ||||||||||||||||||||
TOTAL ASSETS | $ | 520,752 | $ | 486,023 | ||||||||||||||||||||
| (1) | Our average prime rate was 8.05% and 7.96% for the years ended December 31, 2007 and 2006, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.30% and 5.20% for the same periods, respectively. | |
| (2) | Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. | |
| (3) | Yields are based on amortized cost balances computed on a settlement date basis. | |
| (4) | Includes certain preferred securities. | |
| (5) | Nonaccrual loans and related income are included in their respective loan categories. | |
| (6) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented. |
-28-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||||||||||||||
| OPERATING SEGMENT RESULTS (1) | ||||||||||||||||||||||||||||||||
| (income/expense in millions, | Community | Wholesale | Wells Fargo | Consolidated | ||||||||||||||||||||||||||||
| average balances in billions) | Banking | Banking | Financial | Company | ||||||||||||||||||||||||||||
| Quarter ended December 31, | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||||||||
| Net interest income | $ | 3,475 | $ | 3,248 | $ | 933 | $ | 787 | $ | 1,080 | $ | 1,015 | $ | 5,488 | $ | 5,050 | ||||||||||||||||
| Provision for credit losses | 2,082 | 275 | 36 | 25 | 494 | 426 | 2,612 | 726 | ||||||||||||||||||||||||
| Noninterest income | 3,185 | 2,882 | 1,209 | 1,096 | 323 | 385 | 4,717 | 4,363 | ||||||||||||||||||||||||
| Noninterest expense | 3,904 | 3,558 | 1,212 | 1,105 | 784 | 748 | 5,900 | 5,411 | ||||||||||||||||||||||||
| Income before income tax expense | 674 | 2,297 | 894 | 753 | 125 | 226 | 1,693 | 3,276 | ||||||||||||||||||||||||
| Income tax expense (benefit) | (19 | ) | 765 | 304 | 262 | 47 | 68 | 332 | 1,095 | |||||||||||||||||||||||
| Net income | $ | 693 | $ | 1,532 | $ | 590 | $ | 491 | $ | 78 | $ | 158 | $ | 1,361 | $ | 2,181 | ||||||||||||||||
| Average loans | $ | 210.9 | $ | 175.7 | $ | 95.1 | $ | 75.0 | $ | 68.4 | $ | 61.5 | $ | 374.4 | $ | 312.2 | ||||||||||||||||
| Average assets (2) | 347.0 | 311.9 | 128.1 | 97.9 | 74.7 | 67.0 | 555.6 | 482.6 | ||||||||||||||||||||||||
| Average core deposits | 253.3 | 239.8 | 61.5 | 44.0 | — | — | 314.8 | 283.8 | ||||||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 13,365 | $ | 13,117 | $ | 3,382 | $ | 2,924 | $ | 4,227 | $ | 3,910 | $ | 20,974 | $ | 19,951 | ||||||||||||||||
| Provision for credit losses | 3,187 | 887 | 69 | 16 | 1,683 | 1,301 | 4,939 | 2,204 | ||||||||||||||||||||||||
| Noninterest income | 12,173 | 9,915 | 4,959 | 4,310 | 1,284 | 1,515 | 18,416 | 15,740 | ||||||||||||||||||||||||
| Noninterest expense | 15,000 | 13,917 | 4,772 | 4,114 | 3,052 | 2,806 | 22,824 | 20,837 | ||||||||||||||||||||||||
| Income before income tax expense | 7,351 | 8,228 | 3,500 | 3,104 | 776 | 1,318 | 11,627 | 12,650 | ||||||||||||||||||||||||
| Income tax expense | 2,058 | 2,678 | 1,217 | 1,086 | 295 | 466 | 3,570 | 4,230 | ||||||||||||||||||||||||
| Net income | $ | 5,293 | $ | 5,550 | $ | 2,283 | $ | 2,018 | $ | 481 | $ | 852 | $ | 8,057 | $ | 8,420 | ||||||||||||||||
| Average loans | $ | 194.0 | $ | 178.0 | $ | 85.6 | $ | 71.4 | $ | 65.2 | $ | 57.5 | $ | 344.8 | $ | 306.9 | ||||||||||||||||
| Average assets (2) | 330.8 | 320.2 | 113.1 | 97.1 | 71.1 | 62.9 | 520.8 | 486.0 | ||||||||||||||||||||||||
| Average core deposits | 249.8 | 233.5 | 53.3 | 35.3 | — | 0.1 | 303.1 | 268.9 | ||||||||||||||||||||||||
| (1) | The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment. If the management structure and/or the allocation process changes, allocations, transfers and assignments may change. To reflect a change in the allocation of income taxes for management reporting adopted in second quarter 2007, results for prior periods have been revised. | |
| (2) | The Consolidated Company balance includes unallocated goodwill held at the enterprise level of $5.8 billion for all periods presented. |
-29-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||
| FIVE QUARTER OPERATING SEGMENT RESULTS (1) | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| (income/expense in millions, average balances in billions) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
COMMUNITY BANKING | ||||||||||||||||||||
| Net interest income | $ | 3,475 | $ | 3,367 | $ | 3,299 | $ | 3,224 | $ | 3,248 | ||||||||||
| Provision for credit losses | 2,082 | 446 | 353 | 306 | 275 | |||||||||||||||
| Noninterest income | 3,185 | 3,110 | 3,031 | 2,847 | 2,882 | |||||||||||||||
| Noninterest expense | 3,904 | 3,789 | 3,667 | 3,640 | 3,558 | |||||||||||||||
| Income before income tax expense | 674 | 2,242 | 2,310 | 2,125 | 2,297 | |||||||||||||||
| Income tax expense (benefit) | (19 | ) | 747 | 757 | 573 | 765 | ||||||||||||||
| Net income | $ | 693 | $ | 1,495 | $ | 1,553 | $ | 1,552 | $ | 1,532 | ||||||||||
| Average loans | $ | 210.9 | $ | 197.4 | $ | 186.6 | $ | 180.8 | $ | 175.7 | ||||||||||
| Average assets | 347.0 | 348.2 | 320.0 | 307.0 | 311.9 | |||||||||||||||
| Average core deposits | 253.3 | 250.6 | 250.9 | 243.9 | 239.8 | |||||||||||||||
WHOLESALE BANKING | ||||||||||||||||||||
| Net interest income | $ | 933 | $ | 854 | $ | 814 | $ | 781 | $ | 787 | ||||||||||
| Provision for credit losses | 36 | 19 | 1 | 13 | 25 | |||||||||||||||
| Noninterest income | 1,209 | 1,149 | 1,336 | 1,265 | 1,096 | |||||||||||||||
| Noninterest expense | 1,212 | 1,154 | 1,269 | 1,137 | 1,105 | |||||||||||||||
| Income before income tax expense | 894 | 830 | 880 | 896 | 753 | |||||||||||||||
| Income tax expense | 304 | 287 | 310 | 316 | 262 | |||||||||||||||
| Net income | $ | 590 | $ | 543 | $ | 570 | $ | 580 | $ | 491 | ||||||||||
| Average loans | $ | 95.1 | $ | 87.5 | $ | 81.4 | $ | 77.9 | $ | 75.0 | ||||||||||
| Average assets | 128.1 | 115.8 | 107.1 | 101.0 | 97.9 | |||||||||||||||
| Average core deposits | 61.5 | 55.5 | 49.6 | 46.7 | 44.0 | |||||||||||||||
WELLS FARGO FINANCIAL | ||||||||||||||||||||
| Net interest income | $ | 1,080 | $ | 1,059 | $ | 1,083 | $ | 1,005 | $ | 1,015 | ||||||||||
| Provision for credit losses | 494 | 427 | 366 | 396 | 426 | |||||||||||||||
| Noninterest income | 323 | 314 | 328 | 319 | 385 | |||||||||||||||
| Noninterest expense | 784 | 728 | 791 | 749 | 748 | |||||||||||||||
| Income before income tax expense | 125 | 218 | 254 | 179 | 226 | |||||||||||||||
| Income tax expense | 47 | 83 | 98 | 67 | 68 | |||||||||||||||
| Net income | $ | 78 | $ | 135 | $ | 156 | $ | 112 | $ | 158 | ||||||||||
| Average loans | $ | 68.4 | $ | 65.8 | $ | 64.0 | $ | 62.7 | $ | 61.5 | ||||||||||
| Average assets | 74.7 | 71.7 | 69.8 | 68.3 | 67.0 | |||||||||||||||
CONSOLIDATED COMPANY | ||||||||||||||||||||
| Net interest income | $ | 5,488 | $ | 5,280 | $ | 5,196 | $ | 5,010 | $ | 5,050 | ||||||||||
| Provision for credit losses | 2,612 | 892 | 720 | 715 | 726 | |||||||||||||||
| Noninterest income | 4,717 | 4,573 | 4,695 | 4,431 | 4,363 | |||||||||||||||
| Noninterest expense | 5,900 | 5,671 | 5,727 | 5,526 | 5,411 | |||||||||||||||
| Income before income tax expense | 1,693 | 3,290 | 3,444 | 3,200 | 3,276 | |||||||||||||||
| Income tax expense | 332 | 1,117 | 1,165 | 956 | 1,095 | |||||||||||||||
| Net income | $ | 1,361 | $ | 2,173 | $ | 2,279 | $ | 2,244 | $ | 2,181 | ||||||||||
| Average loans | $ | 374.4 | $ | 350.7 | $ | 332.0 | $ | 321.4 | $ | 312.2 | ||||||||||
| Average assets (2) | 555.6 | 541.5 | 502.7 | 482.1 | 482.6 | |||||||||||||||
| Average core deposits | 314.8 | 306.1 | 300.5 | 290.6 | 283.8 | |||||||||||||||
| (1) | The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment. If the management structure and/or the allocation process changes, allocations, transfers and assignments may change. To reflect a change in the allocation of income taxes for management reporting adopted in second quarter 2007, results for prior periods have been revised. | |
| (2) | The Consolidated Company balance includes unallocated goodwill held at the enterprise level of $5.8 billion for all periods presented. |
-30-
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||
| FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
Residential MSRs measured using the fair value method: | ||||||||||||||||||||
| Fair value, beginning of quarter | $ | 18,223 | $ | 18,733 | $ | 17,779 | $ | 17,591 | $ | 17,712 | ||||||||||
| Purchases | 314 | 188 | 142 | 159 | 222 | |||||||||||||||
| Servicing from securitizations or asset transfers | 872 | 951 | 1,029 | 828 | 843 | |||||||||||||||
| Sales | — | (292 | ) | (1,422 | ) | — | (469 | ) | ||||||||||||
| Net additions (reductions) | 1,186 | 847 | (251 | ) | 987 | 596 | ||||||||||||||
| Changes in fair value: | ||||||||||||||||||||
| Due to changes in valuation model inputs or assumptions (1) | (1,935 | ) | (638 | ) | 2,013 | (11 | ) | 66 | ||||||||||||
| Other changes in fair value (2) | (711 | ) | (719 | ) | (808 | ) | (788 | ) | (783 | ) | ||||||||||
| Total changes in fair value | (2,646 | ) | (1,357 | ) | 1,205 | (799 | ) | (717 | ) | |||||||||||
| Fair value, end of quarter | $ | 16,763 | $ | 18,223 | $ | 18,733 | $ | 17,779 | $ | 17,591 | ||||||||||
| (1) Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. | ||||||||||||||||||||
| (2) Represents changes due to collection/realization of expected cash flows over time. | ||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | |||||||||||||||
Amortized MSRs: | ||||||||||||||||||||
| Balance, beginning of quarter | $ | 460 | $ | 418 | $ | 400 | $ | 377 | $ | 328 | ||||||||||
| Purchases | 19 | 46 | 26 | 29 | 53 | |||||||||||||||
| Servicing from securitizations or asset transfers | 7 | 12 | 11 | 10 | 9 | |||||||||||||||
| Amortization | (20 | ) | (16 | ) | (19 | ) | (16 | ) | (13 | ) | ||||||||||
| Balance, end of quarter (1) | $ | 466 | $ | 460 | $ | 418 | $ | 400 | $ | 377 | ||||||||||
Fair value of amortized MSRs: | ||||||||||||||||||||
| Beginning of quarter | $ | 602 | $ | 561 | $ | 484 | $ | 457 | $ | 440 | ||||||||||
| End of quarter | 573 | 602 | 561 | 484 | 457 | |||||||||||||||
| (1) There was no valuation allowance recorded for the periods presented. | ||
-31-
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||||||
| FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED) | |||||||||||||||||||||
| Quarter ended | |||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||||
| (in millions) | 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
Servicing income, net: | |||||||||||||||||||||
| Servicing fees (1) | $ | 994 | $ | 970 | $ | 1,007 | $ | 1,054 | $ | 1,011 | |||||||||||
| Changes in fair value of residential MSRs: | |||||||||||||||||||||
| Due to changes in valuation model inputs or assumptions (2) | (1,935 | ) | (638 | ) | 2,013 | (11 | ) | 66 | |||||||||||||
| Other changes in fair value (3) | (711 | ) | (719 | ) | (808 | ) | (788 | ) | (783 | ) | |||||||||||
| Total changes in fair value of residential MSRs | (2,646 | ) | (1,357 | ) | 1,205 | (799 | ) | (717 | ) | ||||||||||||
| Amortization | (20 | ) | (16 | ) | (19 | ) | (16 | ) | (13 | ) | |||||||||||
| Net derivative gains (losses) from economic hedges (4) | 2,215 | 1,200 | (2,238 | ) | (23 | ) | 33 | ||||||||||||||
| Total servicing income, net | $ | 543 | $ | 797 | $ | (45 | ) | $ | 216 | $ | 314 | ||||||||||
| Market-related valuation changes to MSRs, net of hedge results (2) + (4) | $ | 280 | $ | 562 | $ | (225 | ) | $ | (34 | ) | $ | 99 | |||||||||
| (1) Includes contractually specified servicing fees, late charges and other ancillary revenues. | |||||||||||||||||||||
| (2) Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. | |||||||||||||||||||||
| (3) Represents changes due to collection/realization of expected cash flows over time. | |||||||||||||||||||||
| (4) Represents results from free-standing derivatives (economic hedges) used to hedge the risk of changes in fair value of MSRs. | |||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||||
| (in billions) | 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
Managed servicing portfolio: | |||||||||||||||||||||
| Loans serviced for others (1) | $ | 1,430 | $ | 1,380 | $ | 1,347 | $ | 1,309 | $ | 1,280 | |||||||||||
| Owned loans serviced (2) | 98 | 97 | 96 | 88 | 86 | ||||||||||||||||
| Total owned servicing | 1,528 | 1,477 | 1,443 | 1,397 | 1,366 | ||||||||||||||||
| Sub-servicing | 23 | 22 | 24 | 26 | 19 | ||||||||||||||||
| Total managed servicing portfolio | $ | 1,551 | $ | 1,499 | $ | 1,467 | $ | 1,423 | $ | 1,385 | |||||||||||
| Ratio of MSRs to related loans serviced for others | 1.20 | % | 1.35 | % | 1.42 | % | 1.39 | % | 1.41 | % | |||||||||||
| Weighted-average note rate (owned servicing only) | 6.01 | % | 5.98 | % | 5.95 | % | 5.93 | % | 5.92 | % | |||||||||||
| (1) Consists of 1-4 family first mortgage and commercial mortgage loans. | |||||||||||||||||||||
| (2) Consists of mortgages held for sale and 1-4 family first mortgage loans. | |||||||||||||||||||||
-32-
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||||||
| SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA | |||||||||||||||||||||
| Quarter ended | |||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||||
| (in billions) | 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
Application Data: | |||||||||||||||||||||
| Wells Fargo Home Mortgage first mortgage quarterly applications | $ | 91 | $ | 95 | $ | 114 | $ | 113 | $ | 90 | |||||||||||
| Refinances as a percentage of applications | 52 | % | 40 | % | 40 | % | 46 | % | 50 | % | |||||||||||
| Wells Fargo Home Mortgage first mortgage unclosed pipeline, at quarter end | $ | 43 | $ | 45 | $ | 56 | $ | 57 | $ | 48 | |||||||||||
| Quarter ended | |||||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||||||
| (in billions) | 2007 | 2007 | 2007 | 2007 | 2006 | ||||||||||||||||
Residential Real Estate Originations: (1) | |||||||||||||||||||||
| Quarter: | |||||||||||||||||||||
| Wells Fargo Home Mortgage first mortgage loans: | |||||||||||||||||||||
| Retail | $ | 28 | $ | 29 | $ | 32 | $ | 26 | $ | 29 | |||||||||||
| Correspondent/Wholesale | 22 | 29 | 36 | 31 | 29 | ||||||||||||||||
| Home equity loans and lines | 4 | 7 | 9 | 8 | 9 | ||||||||||||||||
| Wells Fargo Financial | 2 | 3 | 3 | 3 | 3 | ||||||||||||||||
| Total | $ | 56 | $ | 68 | $ | 80 | $ | 68 | $ | 70 | |||||||||||
| Year-to-date | $ | 272 | $ | 216 | $ | 148 | $ | 68 | $ | 294 | |||||||||||
| (1) | Consists of residential real estate originations from all Wells Fargo channels. |