Exhibit 99.1
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Media | Investors | |||||
Mary Eshet | Jim Rowe | |||||
704-383-7777 | 415-396-8216 |
Tuesday, January 17, 2012
WELLS FARGO REPORTS RECORD QUARTERLY AND FULL YEAR NET INCOME
Q4 Net Income of $4.1 billion; Q4 Revenue of $20.6 billion
• | Continued strong financial results: |
o | Record Wells Fargo net income of $4.1 billion |
o | Record diluted earnings per common share of $0.73 |
o | Revenue of $20.6 billion, up 20 percent (annualized) from prior quarter |
o | Pre-tax pre-provision profit (PTPP)1 of $8.1 billion, up 7 percent (annualized) from prior quarter |
o | Return on equity of 11.97 percent, up 11 basis points from prior quarter |
o | Return on average assets of 1.25 percent |
o | Net interest margin of 3.89 percent, up 5 basis points from prior quarter |
• | Continued solid loan and deposit growth: |
o | Total loans of $769.6 billion at December 31, 2011, up $9.5 billion from September 30, 2011; core loan portfolios up $13.7 billion from September 30, 20112 |
o | Total average core checking and savings deposits up $30.8 billion from prior quarter |
• | Improved capital position: |
o | Tier 1 common equity increased $3.2 billion to $95.1 billion, with Tier 1 common equity ratio of 9.46 percent under Basel I at December 31, 2011. Under current Basel III capital proposals, Tier 1 common equity ratio estimated at 7.49 percent3 |
o | Purchased 27 million shares of common stock in fourth quarter 2011 and an additional estimated 6 million shares through a forward repurchase transaction that will settle in first quarter 2012 |
o | Redeemed $5.8 billion of trust preferred securities with an average coupon of 8.42 percent |
• | Strong credit quality, stable net loan charge-offs: |
o | Nonperforming assets declined to $26.0 billion, down $879 million from prior quarter; down $6.3 billion from prior year |
o | Net charge-offs were $2.6 billion, or 1.36 percent (annualized) of average loans, in line with third quarter net charge-offs |
1 See footnote (2) on page 17 for more information on pre-tax pre-provision profit.
2 See table on page 5 for more information on core and non-strategic/liquidating loan portfolios.
3 See tables on page 39 for more information on Tier 1 common equity.
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o | Reserve release1 of $600 million (pre-tax) reflected continued strong portfolio performance |
• | Wachovia banking conversions successfully completed: |
o | Retail bank store conversions complete with North Carolina integration in mid-October 2011 |
o | 50 million accounts involved, 4,600 locations converted |
o | On track for merger integration completion in first quarter 2012 |
• | Full Year 2011: |
o | Record Wells Fargo net income of $15.9 billion, up 28 percent from 2010 |
o | Diluted earnings per common share of $2.82, up 28 percent from 2010 |
o | Revenue of $80.9 billion, down 5 percent from 2010 |
o | Net interest margin of 3.94 percent, return on assets of 1.25 percent, and return on equity of 11.93 percent |
o | Returned more capital to shareholders through a higher common stock dividend, and resumed common stock repurchases; in addition, redeemed $9.2 billion of high cost trust preferred securities |
• | Committed to helping homeowners remain in their homes: |
o | As of November 30, 2011, 724,710 active trial or completed loan modifications had been initiated since the beginning of 2009; of this total, 84 percent were through Wells Fargo’s own modification programs and the remainder were through the federal government’s Home Affordable Modification Program (HAMP) |
o | Since September 2009, Wells Fargo participated in more than 640 home preservation workshops and met individually with more than 29,000 customers |
Selected Financial Information
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Dec. 31, | Sept. 30, | Dec. 31, | Year ended Dec. 31, | |||||||||||||||||
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2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
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Earnings | ||||||||||||||||||||
Diluted earnings per common share | $ | 0.73 | 0.72 | 0.61 | 2.82 | 2.21 | ||||||||||||||
Wells Fargo net income (in billions) | 4.11 | 4.06 | 3.41 | 15.87 | 12.36 | |||||||||||||||
Asset Quality | ||||||||||||||||||||
Net charge-offs as a % of avg. total loans | 1.36 | % | 1.37 | 2.02 | 1.49 | 2.30 | ||||||||||||||
Allowance as a % of total loans | 2.56 | 2.68 | 3.10 | 2.56 | 3.10 | |||||||||||||||
Allowance as a % of annualized net charge-offs | 188 | 197 | 154 | 174 | 132 | |||||||||||||||
Other | ||||||||||||||||||||
Revenue (in billions) | $ | 20.61 | 19.63 | 21.49 | 80.95 | 85.21 | ||||||||||||||
Average loans (in billions) | 768.6 | 754.5 | 753.7 | 757.1 | 770.6 | |||||||||||||||
Average core deposits (in billions) | 864.9 | 836.8 | 794.8 | 826.7 | 772.0 | |||||||||||||||
Net interest margin | 3.89 | % | 3.84 | 4.16 | 3.94 | 4.26 | ||||||||||||||
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1 Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.
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SAN FRANCISCO – Wells Fargo & Company (NYSE: WFC) reported record net income of $4.1 billion, or $0.73 per diluted common share, for fourth quarter 2011, compared with $3.4 billion, or $0.61 per share, for fourth quarter 2010, and $4.1 billion, or $0.72 per share, for third quarter 2011. Full year 2011 Wells Fargo net income was $15.9 billion, or $2.82 per share, up 28 percent from 2010.
“I’m extremely pleased with Wells Fargo’s performance in 2011 – including strong deposit and loan growth, record cross-sell and record earnings,” said Chairman and CEO John Stumpf. “We achieved these results while completing the conversion of Wachovia’s retail banking stores – the largest such conversion in banking history – and now all of our 6,239 retail banking stores are on a single platform serving customers coast to coast. At the time of the merger, we said the integration of Wachovia would take three years and we are right on track. I couldn’t be prouder of how our two companies have come together as one, thanks to the important and tireless work of our more than 260,000 team members.
“In 2012, we are focused on Wells Fargo’s many opportunities, including continuing to provide our customers with award winning service, welcoming new customers as we grow market share throughout our many businesses and geographies, achieving efficiency improvements across the company and returning even more capital to our shareholders.”
“The fourth quarter of 2011 was a very strong quarter for Wells Fargo, with record earnings, solid linked quarter growth in loans, deposits and capital, and continued strong credit quality,” said Chief Financial Officer Tim Sloan. “Revenue was up 5 percent from the third quarter despite a full quarter’s impact of the new debit interchange rules. As expected, expenses were higher in the quarter and we are maintaining our target of $11 billion in noninterest expense in the fourth quarter of 2012.”
Revenue
Revenue was $20.6 billion, up from $19.6 billion in third quarter 2011. “We are pleased with revenue performance in the quarter. Both net interest income, which benefited from the growth in earning assets and an increase in the net interest margin, and noninterest income, which was bolstered by strong mortgage banking and capital markets results, were up this quarter,” said Sloan. Businesses generating linked-quarter revenue growth included asset-backed finance, capital markets, commercial banking, commercial real estate, corporate banking, corporate trust, credit card, equipment finance, government and institutional banking, insurance, international, merchant services, mortgage, real estate capital markets and retail sales finance.
Net Interest Income
Net interest income was $10.9 billion, up from $10.5 billion in third quarter 2011. Average earning assets increased $24.3 billion from third quarter 2011, driven by growth in loans, securities and mortgages held for sale. Continued success in generating low-cost deposits enabled the Company to fund the asset growth while at the same time reducing long-term debt, including the redemption of $5.8 billion of higher-cost trust preferred securities. The net interest margin increased to 3.89 percent from 3.84 percent in third quarter
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2011. Lower deposit costs, less long-term debt, and the redeployment of short-term investments into higher-yielding assets such as securities and loans contributed to the increase in the margin.
Noninterest Income
Noninterest income was $9.7 billion, compared with $9.1 billion in third quarter 2011. The $627 million increase was driven by increases of $531 million in mortgage banking and $337 million in trading, debt and equity gains. Card fees declined $333 million from third quarter due to a $365 million decline in debit interchange fees partially offset by improved credit card fee revenue. Other income included a $153 million gain on sale from H.D. Vest.
Mortgage banking noninterest income was $2.4 billion, up $531 million from third quarter 2011, on $120 billion of originations compared with $89 billion of originations in third quarter. Mortgage banking noninterest income in fourth quarter included a $404 million provision for mortgage loan repurchase losses compared with $390 million in third quarter (included in net gains from mortgage loan origination/sales activities). Net mortgage servicing rights (MSRs) results were a $201 million gain compared with a $607 million gain in third quarter 2011. The ratio of MSRs to related loans serviced for others was 76 basis points and the average note rate on the servicing portfolio was 5.14 percent. The unclosed pipeline at December 31, 2011, was $72 billion compared with $84 billion at September 30, 2011.
The Company had net unrealized securities gains of $7.0 billion at December 31, 2011, compared with a net unrealized gain of $6.8 billion at September 30, 2010. Period-end securities available for sale balances were up $15.4 billion, reflecting continued investment activity.
Noninterest Expense
Noninterest expense increased in the quarter, to $12.5 billion, compared with $11.7 billion in third quarter. Third quarter expense included a $210 million benefit due to lower deferred compensation expenses associated with an offsetting trading loss. In addition to this factor, the increase in fourth quarter expenses was primarily driven by the following:
• | higher personnel expense associated with stronger mortgage and capital markets revenue in the quarter (approximately $300 million); |
• | seasonally higher costs for equipment and foreclosed assets expense (approximately $200 million); and |
• | higher costs associated with the mortgage servicing regulatory consent orders (approximately $100 million). |
The Company expects first quarter 2012 noninterest expense to remain elevated due to seasonally high personnel expenses offset by lower integration expenses and continued gains from efficiency and cost save initiatives. Starting in second quarter 2012, total expenses are expected to decline over the remainder of the
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year, driven by the benefit from ongoing efficiency initiatives and the conclusion of integration activities. The Company continues to target fourth quarter 2012 noninterest expense of $11 billion.
Loans
Total loans were $769.6 billion at December 31, 2011, up $9.5 billion from $760.1 billion at September 30, 2011. Increased balances in many loan portfolios more than offset the continued planned reduction in the non-strategic/liquidating portfolios, which declined $4.2 billion in the quarter. Period-end core loans grew $13.7 billion and included $2.1 billion of U.S.-based commercial real estate (CRE) loans purchased in the quarter, as well as an additional $5.6 billion of consumer real estate 1-4 family loans related to the consolidation of previously sold reverse mortgage loans. Organic loan growth of $6.0 billion linked quarter was driven by commercial and industrial growth from expanding relationships with existing customers and new customer loans. Additional growth came from a 4 percent increase in foreign loans and a 5 percent increase in credit card balances, reflecting higher purchase dollar volumes and transactions, as well as new account growth.
Many loan portfolios had linked-quarter growth in average balances, including asset-backed finance, capital finance, commercial banking, commercial real estate, corporate banking, credit card, government and institutional banking, international, mortgage, real estate capital markets, and retail sales finance.
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December 31, 2011 | September 30, 2011 | |||||||||||||||||||||||
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(in millions) | Core | Liquidating (1) | Total | Core | Liquidating (1) | Total | ||||||||||||||||||
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Commercial | $ | 339,755 | 5,695 | 345,450 | 333,513 | 6,321 | 339,834 | |||||||||||||||||
Consumer | 317,550 | 106,631 | 424,181 | 310,084 | 110,188 | 420,272 | ||||||||||||||||||
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Total loans | $ | 657,305 | 112,326 | 769,631 | 643,597 | 116,509 | 760,106 | |||||||||||||||||
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Change from prior quarter: | $ | 13,708 | (4,183 | ) | 9,525 | 13,429 | (5,244 | ) | 8,185 | |||||||||||||||
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(1) | See table on page 35 for additional information on non-strategic/liquidating loan portfolios. Management believes that the above information provides useful disclosure regarding the Company’s ongoing loan portfolios. |
Deposits
Average core deposits were $864.9 billion, up 9 percent from a year ago and up 13 percent (annualized) from third quarter 2011. Consumer checking accounts grew a net 3.2 percent from December 31, 2010. Average core checking and savings deposits were $800 billion, up 12 percent from a year ago and up 16 percent (annualized) from third quarter 2011. Average mortgage escrow deposits were $34.9 billion compared with $36.0 billion a year ago and $28.3 billion in third quarter 2011. Average core checking and savings deposits were 93 percent of average core deposits, up from 90 percent a year ago. Deposit costs for fourth quarter 2011 were 22 basis points compared with 25 basis points in third quarter 2011. Average core deposits were 113 percent of average loans, up from 111 percent in third quarter 2011.
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Capital
Capital increased in the fourth quarter, with Tier 1 common equity reaching $95.1 billion under Basel I, or 9.46 percent of risk-weighted assets. Under current Basel III proposals, the Tier 1 common equity ratio was an estimated 7.49 percent. The Company redeemed $5.8 billion of trust preferred securities in the quarter, repurchased 27 million shares of its common stock, plus an additional estimated 6 million shares through a forward repurchase transaction that will settle in first quarter 2012, and paid a quarterly common stock dividend of $0.12 per share.
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(as a percent of total risk-weighted assets) | 2011 | 2011 | 2010 | |||||||||
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Ratios under Basel I (1): | ||||||||||||
Tier 1 common equity (2) | 9.46 | % | 9.34 | 8.30 | ||||||||
Tier 1 capital | 11.33 | 11.26 | 11.16 | |||||||||
Tier 1 leverage | 9.03 | 8.97 | 9.19 | |||||||||
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(1) | December 31, 2011, ratios are preliminary. |
(2) | See table on page 39 for more information on Tier 1 common equity. |
Credit Quality
“Credit remained strong and within expectations in the fourth quarter. Consumer losses were essentially flat from third quarter while commercial losses increased slightly as we experienced normal period-to-period fluctuation. Based on our current forecasts, we expect continued improvement in credit in 2012,” said Chief Risk Officer Mike Loughlin.
Fourth quarter net charge-offs were $2.6 billion, or 1.36 percent (annualized) of average loans, essentially flat from third quarter net charge-offs of $2.6 billion (1.37 percent). The provision for credit losses was $600 million less than net charge-offs, compared with $800 million less than net charge-offs in the prior quarter, reflecting our expected continued improvement. “We have seen significant improvement in credit performance over the past eight quarters, and expect continued but slower improvement in 2012 as portfolio quality approaches a stable, more normal level,” said Loughlin. “Absent significant deterioration in the economy, we continue to expect future reserve releases in 2012.”
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Net Loan Charge-Offs
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As a | As a | As a | ||||||||||||||||||||||
Net loan | % of | Net loan | % of | Net loan | % of | |||||||||||||||||||
charge- | average | charge- | average | charge- | average | |||||||||||||||||||
($ in millions) | offs | loans (1) | offs | loans (1) | offs | loans (1) | ||||||||||||||||||
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Commercial: | ||||||||||||||||||||||||
Commercial and industrial | $ | 310 | 0.74 | % | $ | 261 | 0.65 | % | $ | 254 | 0.66 | % | ||||||||||||
Real estate mortgage | 117 | 0.44 | 96 | 0.37 | 128 | 0.50 | ||||||||||||||||||
Real estate construction | (5) | (0.09 | ) | 55 | 1.06 | 72 | 1.32 | |||||||||||||||||
Lease financing | 4 | 0.13 | 3 | 0.11 | 1 | 0.01 | ||||||||||||||||||
Foreign | 45 | 0.45 | 8 | 0.08 | 47 | 0.52 | ||||||||||||||||||
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Total commercial | 471 | 0.54 | 423 | 0.50 | 502 | 0.62 | ||||||||||||||||||
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Consumer: | ||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 844 | 1.46 | 821 | 1.46 | 909 | 1.62 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 800 | 3.64 | 842 | 3.75 | 909 | 3.97 | ||||||||||||||||||
Credit card | 256 | 4.63 | 266 | 4.90 | 294 | 5.63 | ||||||||||||||||||
Other revolving credit and installment | 269 | 1.24 | 259 | 1.19 | 224 | 1.03 | ||||||||||||||||||
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Total consumer | 2,169 | 2.02 | 2,188 | 2.06 | 2,336 | 2.21 | ||||||||||||||||||
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Total | $ | 2,640 | 1.36 | % | $ | 2,611 | 1.37 | % | $ | 2,838 | 1.52 | % | ||||||||||||
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(1) | Quarterly net charge-offs as a percentage of average loans are annualized. See explanation on page 31 of the accounting for purchased credit-impaired (PCI) loans and the impact on selected financial ratios. |
Nonperforming Assets
Nonperforming assets ended the quarter at $26.0 billion, down 3 percent from $26.8 billion in the third quarter. Nonaccrual loans declined to $21.3 billion from $21.9 billion in the third quarter, with reductions across the majority of our larger loan portfolios, resulting from stable inflows. Foreclosed assets decreased to $4.7 billion from $4.9 billion in third quarter.
Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)
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As a | As a | As a | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
Total | total | Total | total | Total | total | |||||||||||||||||||
($ in millions) | balances | loans | balances | loans | balances | loans | ||||||||||||||||||
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Commercial: | ||||||||||||||||||||||||
Commercial and industrial | $ | 2,142 | 1.28 | % | $ | 2,128 | 1.29 | % | $ | 2,393 | 1.52 | % | ||||||||||||
Real estate mortgage | 4,085 | 3.85 | 4,429 | 4.24 | 4,691 | 4.62 | ||||||||||||||||||
Real estate construction | 1,890 | 9.75 | 1,915 | 9.71 | 2,043 | 9.56 | ||||||||||||||||||
Lease financing | 53 | 0.40 | 71 | 0.55 | 79 | 0.61 | ||||||||||||||||||
Foreign | 47 | 0.12 | 68 | 0.18 | 59 | 0.16 | ||||||||||||||||||
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Total commercial | 8,217 | 2.38 | 8,611 | 2.53 | 9,265 | 2.80 | ||||||||||||||||||
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Consumer: | ||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 10,913 | 4.77 | 11,024 | 4.93 | 11,427 | 5.13 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 1,975 | 2.30 | 2,035 | 2.31 | 2,098 | 2.33 | ||||||||||||||||||
Other revolving credit and installment | 199 | 0.23 | 230 | 0.27 | 255 | 0.29 | ||||||||||||||||||
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Total consumer | 13,087 | 3.09 | 13,289 | 3.16 | 13,780 | 3.27 | ||||||||||||||||||
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Total nonaccrual loans | 21,304 | 2.77 | 21,900 | 2.88 | 23,045 | 3.06 | ||||||||||||||||||
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Foreclosed assets: | ||||||||||||||||||||||||
GNMA | 1,319 | 1,336 | 1,320 | |||||||||||||||||||||
Non GNMA | 3,342 | 3,608 | 3,541 | |||||||||||||||||||||
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Total foreclosed assets | 4,661 | 4,944 | 4,861 | |||||||||||||||||||||
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Total nonperforming assets | $ | 25,965 | 3.37 | % | $ | 26,844 | 3.53 | % | $ | 27,906 | 3.71 | % | ||||||||||||
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Change from prior quarter: | ||||||||||||||||||||||||
Total nonaccrual loans | $ | (596) | $ | (1,145) | $ | (1,920) | ||||||||||||||||||
Total nonperforming assets | (879) | (1,062) | (2,571) | |||||||||||||||||||||
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Loans 90 Days or More Past Due and Still Accruing
Loans 90 days or more past due and still accruing (excluding government insured/guaranteed) totaled $2.0 billion at December 31, 2011, compared with $1.9 billion at September 30, 2011. Loans 90 days or more past due and still accruing whose repayments are insured by the Federal Housing Administration (FHA) or predominantly guaranteed by the Department of Veterans Affairs (VA) for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program were $20.5 billion at December 31, 2011, up from $17.7 billion at September 30, 2011, due primarily to growth in the FHA/VA portfolio over the past two years and the subsequent seasoning of those loans.
Allowance for Credit Losses
The allowance for credit losses, including the allowance for unfunded commitments, totaled $19.7 billion at December 31, 2011, down from $20.4 billion at September 30, 2011. The allowance coverage to total loans was 2.56 percent compared with 2.68 percent in the prior quarter. The allowance covered 1.88 times annualized fourth quarter net charge-offs compared with 1.97 times in the prior quarter. The allowance coverage to nonaccrual loans was 92 percent at December 31, 2011, compared with 93 percent at September 30, 2011. “We believe the allowance was appropriate for losses inherent in the loan portfolio at December 31, 2011,” said Loughlin.
Additional detail on credit quality is included in the quarterly supplement, available on the Investor Relations page atwww.wellsfargo.com/invest_relations/investor_relations/.
Business Segment Performance
Wells Fargo defines its operating segments by product type and customer segment. Segment net income for each of the three business segments was:
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(in millions) | 2011 | 2011 | 2010 | |||||||||
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Community Banking | $ | 2,503 | 2,315 | 1,924 | ||||||||
Wholesale Banking | 1,641 | 1,813 | 1,690 | |||||||||
Wealth, Brokerage and Retirement | 325 | 291 | 197 | |||||||||
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More financial information about the business segments is on pages 40 and 41.
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Community Bankingoffers a complete line of diversified financial products and services for consumers and small businesses including investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C. through its Regional Banking and Wells Fargo Home Mortgage business units.
Selected Financial Information
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Dec. 31, | Sept. 30, | Dec. 31, | ||||||||||
(in millions) | 2011 | 2011 | 2010 | |||||||||
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Total revenue | $ | 13,004 | 12,496 | 13,472 | ||||||||
Provision for credit losses | 2,031 | 1,978 | 2,785 | |||||||||
Noninterest expense | 7,310 | 6,901 | 7,855 | |||||||||
Segment net income | 2,503 | 2,315 | 1,924 | |||||||||
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Average loans | 493.9 | 491.0 | 514.1 | |||||||||
Average assets | 756.0 | 754.4 | 771.6 | |||||||||
Average core deposits | 568.3 | 556.3 | 544.4 | |||||||||
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Community Banking reported net income of $2.5 billion, up $188 million, or 8 percent, from third quarter 2011 and up $579 million, or 30 percent, from fourth quarter 2010. Revenue increased $508 million, or 4 percent, from third quarter 2011 driven by higher volume-related mortgage banking income, noninterest bearing deposit growth and gains on deferred compensation plan investments (offset in employee benefits expense and therefore neutral to the income statement), mitigated by the impact of lower debit card revenues and smaller bond and equity sale gains. Noninterest expense increased $409 million, or 6 percent, from third quarter 2011, reflecting higher personnel costs (revenue-related incentive compensation in Home Mortgage and increased deferred compensation benefits expense), seasonal increase in foreclosed assets expense, an increase in Home Mortgage related to the mortgage servicing regulatory consent orders, and seasonally higher equipment purchases. Noninterest expense decreased $545 million, or 7 percent, from fourth quarter 2010, as last year’s fourth quarter included a two-year charitable donation commitment of $400 million. Contributing to lower expenses this year were reduced foreclosed asset expense and efficiency and cost save initiatives. The provision for credit losses increased $53 million from third quarter 2011 and decreased $754 million from fourth quarter 2010. Charge-offs increased $41 million from third quarter 2011 and decreased $966 million from fourth quarter 2010. The reserve release was $438 million in fourth quarter 2011, compared with releases of $450 million and $650 million in third quarter 2011 and fourth quarter 2010, respectively.
Regional Banking Highlights
• | Continued franchise growth in 2011 from December 31, 2010 (combined Regional Banking) |
o | Consumer checking accounts up a net 3.2 percent |
o | Business checking accounts up a net 3.7 percent |
o | Consumer credit card, lines of credit and loan product solutions (sales) in the retail banking stores were up by double digits from 2010 |
o | Insurance referrals in the retail banking stores were more than two-and-a-half times those done in 2010 |
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• | Record solutions in 2011 |
o | West |
— | Record core product solutions (sales) of 33.7 million, up 14 percent from 2010 |
— | Core sales per platform banker FTE (active, full-time equivalent) of 6.69 per day, up from 5.95 in 2010 |
— | Sales ofWells Fargo Packages® (a checking account and three other products) up 16 percent from 2010, purchased by 86 percent of new checking account customers |
o | East |
— | Eastern core product solutions grew by double digits from 2010 |
— | For eastern stores converted to the Wells Fargo systems, 82 percent of new checking account customers purchasedWells Fargo Packages® in 2011 |
— | Platform banker FTE grew by over 670, or 6 percent, from 2010 |
• | Retail Bank household cross-sell ratio for combined company of 5.92 products per household, up from 5.70 in fourth quarter 2010; cross-sell in the West of 6.29, compared with 5.43 in the East, represents the opportunity to earn more business from customers in the East |
• | Wells Fargo’s retail bank ranked No. 1 again in customer satisfaction according to the American Customer Satisfaction Index (ACSI) for customers of large banks (tied with Citigroup, third quarter 2011 results released in December) |
• | Small Business/Business Banking |
o | Store-based business solutions up 15 percent from 2010 (West) |
o | Sales ofWells Fargo Business Services Packages (a business checking account and at least three other business products) up 37 percent from 2010, purchased by 75 percent of new business checking account customers (West) |
o | Wells Fargo, America’s #1 small business lender, made $13.9 billion in new loan commitments to its small business customers in 2011, an 8 percent increase in new dollars lent from 2010 |
• | Online and Mobile Banking |
o | 19.8 million combined active online customers |
o | 7.3 million combined active mobile customers |
o | Wells Fargo AssistSM, an online financial assistance center, launched and provides information for customers who are facing payment challenges |
Wells Fargo Home Mortgage (Home Mortgage)
• | Home Mortgage applications of $157 billion, compared with $169 billion in prior quarter |
• | Home Mortgage application pipeline of $72 billion at quarter end, compared with $84 billion at September 30, 2011 |
• | Home Mortgage originations of $120 billion, up from $89 billion in prior quarter |
• | Residential mortgage servicing portfolio of $1.8 trillion |
- 11 -
Wholesale Bankingprovides financial solutions to businesses across the United States and globally with annual sales generally in excess of $20 million. Products & business segments include Middle Market Commercial Banking, Government & Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Investment Banking & Capital Markets, Securities Investment Portfolio, Asset Backed Finance, and Asset Management.
Selected Financial Information
| ||||||||||||
Quarter ended | ||||||||||||
|
| |||||||||||
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | Dec. 31, 2010 | |||||||||
| ||||||||||||
Total revenue | $ | 5,425 | 5,150 | 5,840 | ||||||||
Provision (reversal of provision) for credit losses | 32 | (178 | ) | 195 | ||||||||
Noninterest expense | 2,939 | 2,689 | 2,992 | |||||||||
Segment net income | 1,641 | 1,813 | 1,690 | |||||||||
(in billions) | ||||||||||||
Average loans | 264.8 | 253.4 | 229.6 | |||||||||
Average assets | 458.3 | 438.0 | 384.4 | |||||||||
Average core deposits | 223.2 | 209.3 | 185.1 | |||||||||
|
Wholesale Banking reported net income of $1.6 billion, down $172 million or 9 percent from the third quarter and $49 million or 3 percent from fourth quarter 2010. Revenue increased $275 million or 5 percent from the third quarter primarily due to strong loan and deposit growth across most businesses, including commercial banking, commercial real estate, corporate banking, government banking and international. Revenue also benefited from capital markets and investment banking results which rebounded from prior quarter depressed levels. Revenue decreased $415 million, or 7 percent from fourth quarter 2010 as broad based growth among many businesses, including strong loan and deposit growth, was offset by lower PCI resolutions and other gains. Noninterest expense increased $250 million, or 9 percent, from the third quarter due to higher variable compensation related to higher revenue and increased operating losses and foreclosed asset expenses. Expenses decreased $53 million, or 2 percent, from fourth quarter 2010 related to lower operating losses. The provision for credit losses was $32 million and increased $210 million from the third quarter primarily due to lower reserve release. Provision declined $163 million from fourth quarter 2010. The decrease included a $150 million reserve release in fourth quarter 2011 compared with a $200 million reserve release in the fourth quarter a year ago along with a $213 million improvement in net charge-offs.
• | 15 percent year-over-year and 4 percent linked quarter average loan growth in almost all portfolios including asset backed finance, capital finance, commercial banking, commercial real estate, corporate banking, government banking and international from both new and existing customer activity |
• | Stable level of net charge-offs and lower nonperforming assets |
• | Average core deposits up 21 percent from prior year |
• | U.S. investment banking 2011 market share of 5.1 percent, up from 4.2 percent for full year 2010 (source: Dealogic fee-based league tables) |
• | Ending loans include $2.1 billion of U.S.-based CRE loans purchased in the quarter |
- 12 -
Wealth, Brokerage and Retirementprovides a full range of financial advisory services to clients using a planning approach to meet each client’s needs. Wealth Management provides affluent and high net worth clients with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and trust. Family Wealth (to be rebranded as Abbot Downing, A Wells Fargo Business, in April 2012) meets the unique needs of the ultra high net worth customers. Brokerage serves customers’ advisory, brokerage and financial needs as part of one of the largest full-service brokerage firms in the United States. Retirement is a national leader in providing institutional retirement and trust services (including 401(k) and pension plan record keeping) for businesses, retail retirement solutions for individuals, and reinsurance services for the life insurance industry.
Selected Financial Information
| ||||||||||||
Quarter ended | ||||||||||||
|
| |||||||||||
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | Dec. 31, 2010 | |||||||||
| ||||||||||||
Total revenue | $ | 3,065 | 2,887 | 3,041 | ||||||||
Provision for credit losses | 20 | 48 | 113 | |||||||||
Noninterest expense | 2,521 | 2,368 | 2,608 | |||||||||
Segment net income | 325 | 291 | 197 | |||||||||
(in billions) | ||||||||||||
Average loans | 42.7 | 43.1 | 43.0 | |||||||||
Average assets | 159.3 | 155.1 | 140.2 | |||||||||
Average core deposits | 136.6 | 133.4 | 121.5 | |||||||||
|
Wealth, Brokerage and Retirement reported net income of $325 million, up $34 million from third quarter 2011 and up $128 million from fourth quarter 2010. Revenue was $3.1 billion, up 6 percent from third quarter 2011 driven by $59 million in gains on deferred compensation plan investments (offset in expense compared with $128 million in losses in third quarter 2011) and a $153 million gain on the sale of the H.D. Vest business. Excluding deferred compensation and H.D. Vest gains, revenue was down 5 percent due to lower asset-based fees, reduced brokerage transaction revenue and lower securities gains in the brokerage business. Total provision for credit losses decreased $28 million for the quarter, including a reserve release of $12 million in fourth quarter 2011. Noninterest expense increased 6 percent from third quarter 2011 primarily due to higher deferred compensation expense, $52 million in fourth quarter 2011 compared to a $125 million benefit in third quarter 2011. Excluding the $177 million increase in deferred compensation expense, noninterest expense decreased 1 percent primarily due to reduced broker commissions on lower production levels. Revenue was up 1 percent from fourth quarter 2010; excluding the impact of the H.D. Vest gain, revenue was down 4 percent due to lower brokerage transaction revenue. Total provision for credit losses decreased $93 million from fourth quarter 2010. Noninterest expense was down 3 percent from fourth quarter 2010 driven by a decline in personnel costs largely due to decreased broker commissions, driven by lower production levels, and decreased non-personnel costs. Average core deposits increased $3.2 billion from third quarter 2011 and $15.1 billion from fourth quarter 2010.
Retail Brokerage
• | Strong deposit growth, with average balances up $14 billion, or 17 percent, from prior year |
• | Client assets of $1.1 trillion, down 3 percent from prior year |
• | Managed account assets increased $19 billion, or 8 percent, from prior year driven by strong net flows |
- 13 -
Wealth Management
• | Average deposit balances up 3 percent from prior year |
• | Client assets of $198 billion, down 2 percent from prior year |
Retirement
• | Institutional Retirement plan assets of $236 billion, up $5 billion, or 2 percent, from prior year |
• | IRA assets of $268 billion, down $10 billion, or 4 percent, from prior year |
Conference Call
The Company will host a live conference call on Tuesday, January 17, at 6:30 a.m. PST (9:30 a.m. EST). To access the call, please dial 866-872-5161 (U.S. and Canada) or 706-643-1962 (international). No password is required. The call is also available online atwellsfargo.com/invest_relations/earnings andhttp://us.reg.meeting-stream.com/wellsfargocompany_011712/.
A replay of the conference call will be available beginning at approximately noon PST (3 p.m. EST) on January 17 through Tuesday, January 24. Please dial 800-642-1687 (U.S. and Canada) or 706-645-9291 (international) and enter Conference ID #29256540. The replay will also be available online atwellsfargo.com/invest_relations/earnings.
- 14 -
Cautionary Statement about Forward-Looking Information
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about our future financial performance and business. We make forward-looking statements when we use words such as “believe,” “expect,” “anticipate,” “estimate,” “target,” “should,” “may,” “can,” “will,” “outlook,” “project,” “appears” or similar expressions. Forward-looking statements in this news release include, among others, statements about: (i) future credit quality and performance, and the adequacy of the allowance for loan losses, including our current expectation of future reductions in the allowance for loan losses; (ii) our expectations regarding elevated first quarter 2012 noninterest expense and declines in noninterest expense beginning in second quarter 2012, as well as our targeted noninterest expense for fourth quarter 2012 as part of our expense management initiatives; (iii) our estimates regarding our Tier 1 common equity ratio under proposed Basel III capital regulations and our expectations regarding returning more capital to our shareholders; and (iv) the timing of remaining integration activities related to the Wachovia merger.
Do not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. Several factors could cause actual results to differ materially from expectations including: current and future economic and market conditions, including the effects of further declines in housing prices, high unemployment rates, U.S. fiscal debt and budget matters and the sovereign debt crisis in Europe; our capital requirements (including under regulatory capital standards as determined and interpreted by applicable regulatory authorities such as the proposed Basel III capital regulations) and our ability to generate capital internally or raise capital on favorable terms; financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses (including the Dodd-Frank Wall Street Reform and Consumer Protection Act); the extent of success in our loan modification efforts, including the effects of regulatory requirements, or changes in regulatory requirements, relating to loan modifications; the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties; negative effects relating to mortgage foreclosures, including changes in our procedures or practices and/or industry standards or practices, regulatory or judicial requirements, penalties or fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures; our ability to realize our noninterest expense target as part of our expense management initiatives when and in the amount targeted, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters; our ability to successfully complete the remaining Wachovia integration activities, as well as realize the expected benefits of the Wachovia merger; a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors and other service providers; recognition of other-than-temporary impairment on securities held in our available-for-sale portfolio; the effect of changes in interest rates on our net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale; hedging gains or losses; disruptions in the capital markets and reduced investor demand for mortgage loans; our ability to sell more products to our customers; the effect of the economic recession on the demand for our products and services; the effect of fluctuations in stock market prices on fee income from our brokerage, asset and wealth management businesses; our election to provide support to our mutual funds for structured credit products they may hold; changes in the value of our venture capital investments; changes in our accounting policies or in accounting standards or in how accounting standards are to be applied; changes in our credit ratings and changes in the credit ratings of our customers or counterparties; mergers and acquisitions; federal and state regulations; reputational damage from negative publicity, fines, penalties and other negative consequences from regulatory violations; the loss of checking and saving account deposits to other investments such as the stock market; and fiscal and monetary policies of the Federal Reserve Board. There is no assurance that our allowance for credit losses will be adequate to cover future credit losses, especially if housing prices and unemployment do not improve. Increases in loan charge-offs or in the allowance for credit losses and related provision expense could materially adversely affect our financial results and condition. For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Quarterly Reports on Form 10-Q for the quarters ended June 30, 2011, and September 30, 2011, as filed with the SEC and available on the SEC’s website at www.sec.gov. Any factor described above or in our SEC reports could, by itself or together with one or more other factors, adversely affect our financial results and condition.
- 15 -
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.3 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (wellsfargo.com), and other distribution channels across North America and internationally. With more than 272,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked No. 23 on Fortune’s 2011 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.
# # #
Wells Fargo & Company and Subsidiaries
QUARTERLY FINANCIAL DATA
TABLE OF CONTENTS
Pages | ||||
Summary Information | ||||
Summary Financial Data | 17-18 | |||
Income | ||||
Consolidated Statement of Income | 19-20 | |||
Average Balances, Yields and Rates Paid | 21-22 | |||
Noninterest Income and Noninterest Expense | 23-24 | |||
Balance Sheet | ||||
Consolidated Balance Sheet | 25-26 | |||
Average Balances | 27 | |||
Loans | ||||
Securities Available for Sale | 28 | |||
Loans | 28 | |||
Nonaccrual Loans and Foreclosed Assets | 29 | |||
Loans 90 Days or More Past Due and Still Accruing | 30 | |||
Purchased Credit-Impaired Loans | 31-33 | |||
Pick-A-Pay Portfolio | 34 | |||
Non-Strategic and Liquidating Loan Portfolios | 35 | |||
Home Equity Portfolios | 35 | |||
Allowance for Credit Losses | 36-37 | |||
Equity | ||||
Condensed Consolidated Statement of Changes in Total Equity | 38 | |||
Tier 1 Common Equity | 39 | |||
Operating Segments | ||||
Operating Segment Results | 40-41 | |||
Other | ||||
Mortgage Servicing and other related data | 42-44 |
17
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
| ||||||||||||||||||||||||
Quarter ended Dec. 31, | % |
Year ended Dec. 31, | % | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
($ in millions, except per share amounts) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
| ||||||||||||||||||||||||
For the Period | ||||||||||||||||||||||||
Wells Fargo net income | $ | 4,107 | 3,414 | 20 | % | $ | 15,869 | 12,362 | 28 | % | ||||||||||||||
Wells Fargo net income applicable to common stock | 3,888 | 3,232 | 20 | 15,025 | 11,632 | 29 | ||||||||||||||||||
Diluted earnings per common share | 0.73 | 0.61 | 20 | 2.82 | 2.21 | 28 | ||||||||||||||||||
Profitability ratios (annualized): | ||||||||||||||||||||||||
Wells Fargo net income to average assets (ROA) | 1.25 | % | 1.09 | 15 | 1.25 | 1.01 | 24 | |||||||||||||||||
Wells Fargo net income applicable to common stock to average Wells Fargo common stockolders’ equity (ROE) | 11.97 | 10.95 | 9 | 11.93 | 10.33 | 15 | ||||||||||||||||||
Efficiency ratio (1) | 60.7 | 62.1 | (2) | 61.0 | 59.2 | 3 | ||||||||||||||||||
Total revenue | $ | 20,605 | 21,494 | (4) | $ | 80,948 | 85,210 | (5) | ||||||||||||||||
Pre-tax pre-provision profit (PTPP) (2) | 8,097 | 8,154 | (1) | 31,555 | 34,754 | (9) | ||||||||||||||||||
Dividends declared per common share | 0.12 | 0.05 | 140 | 0.48 | 0.20 | 140 | ||||||||||||||||||
Average common shares outstanding | 5,271.9 | 5,256.2 | - | 5,278.1 | 5,226.8 | 1 | ||||||||||||||||||
Diluted average common shares outstanding | 5,317.6 | 5,293.8 | - | 5,323.4 | 5,263.1 | 1 | ||||||||||||||||||
Average loans | $ | 768,563 | 753,675 | 2 | $ | 757,144 | 770,601 | (2) | ||||||||||||||||
Average assets | 1,306,728 | 1,237,037 | 6 | 1,270,265 | 1,226,938 | 4 | ||||||||||||||||||
Average core deposits (3) | 864,928 | 794,799 | 9 | 826,735 | 772,021 | 7 | ||||||||||||||||||
Average retail core deposits (4) | 606,810 | 573,843 | 6 | 595,851 | 572,881 | 4 | ||||||||||||||||||
Net interest margin | 3.89 | % | 4.16 | (6) | 3.94 | 4.26 | (8) | |||||||||||||||||
At Period End | ||||||||||||||||||||||||
Securities available for sale | $ | 222,613 | 172,654 | 29 | $ | 222,613 | 172,654 | 29 | ||||||||||||||||
Loans | 769,631 | 757,267 | 2 | 769,631 | 757,267 | 2 | ||||||||||||||||||
Allowance for loan losses | 19,372 | 23,022 | (16) | 19,372 | 23,022 | (16) | ||||||||||||||||||
Goodwill | 25,115 | 24,770 | 1 | 25,115 | 24,770 | 1 | ||||||||||||||||||
Assets | 1,313,867 | 1,258,128 | 4 | 1,313,867 | 1,258,128 | 4 | ||||||||||||||||||
Core deposits (3) | 872,629 | 798,192 | 9 | 872,629 | 798,192 | 9 | ||||||||||||||||||
Wells Fargo stockholders’ equity | 140,241 | 126,408 | 11 | 140,241 | 126,408 | 11 | ||||||||||||||||||
Total equity | 141,687 | 127,889 | 11 | 141,687 | 127,889 | 11 | ||||||||||||||||||
Capital ratios: | ||||||||||||||||||||||||
Total equity to assets | 10.78 | % | 10.16 | 6 | 10.78 | 10.16 | 6 | |||||||||||||||||
Risk-based capital (5): | ||||||||||||||||||||||||
Tier 1 capital | 11.33 | 11.16 | 2 | 11.33 | 11.16 | 2 | ||||||||||||||||||
Total capital | 14.77 | 15.01 | (2) | 14.77 | 15.01 | (2) | ||||||||||||||||||
Tier 1 leverage (5) | 9.03 | 9.19 | (2) | 9.03 | 9.19 | (2) | ||||||||||||||||||
Tier 1 common equity (6) | 9.46 | 8.30 | 14 | 9.46 | 8.30 | 14 | ||||||||||||||||||
Common shares outstanding | 5,262.6 | 5,262.3 | - | 5,262.6 | 5,262.3 | - | ||||||||||||||||||
Book value per common share | $ | 24.64 | 22.49 | 10 | $ | 24.64 | 22.49 | 10 | ||||||||||||||||
Common stock price: | ||||||||||||||||||||||||
High | 27.97 | 31.61 | (12) | 34.25 | 34.25 | - | ||||||||||||||||||
Low | 22.61 | 23.37 | (3) | 22.58 | 23.02 | (2) | ||||||||||||||||||
Period end | 27.56 | 30.99 | (11) | 27.56 | 30.99 | (11) | ||||||||||||||||||
Team members (active, full-time equivalent) | 264,200 | 272,200 | (3) | 264,200 | 272,200 | (3) | ||||||||||||||||||
|
(1) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). |
(2) | Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. |
(3) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain 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, 2011, ratios are preliminary. |
(6) | See the “Five Quarter Tier 1 Common Equity Under Basel I” table for additional information. |
18
Wells Fargo & Company and Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA
| ||||||||||||||||||||
Quarter ended | ||||||||||||||||||||
|
| |||||||||||||||||||
($ in millions, except per share amounts) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
For the Quarter | ||||||||||||||||||||
Wells Fargo net income | $ | 4,107 | 4,055 | 3,948 | 3,759 | 3,414 | ||||||||||||||
Wells Fargo net income applicable to common stock | 3,888 | 3,839 | 3,728 | 3,570 | 3,232 | |||||||||||||||
Diluted earnings per common share | 0.73 | 0.72 | 0.70 | 0.67 | 0.61 | |||||||||||||||
Profitability ratios (annualized): | ||||||||||||||||||||
Wells Fargo net income to average assets (ROA) | 1.25 | % | 1.26 | 1.27 | 1.23 | 1.09 | ||||||||||||||
Wells Fargo net income applicable to common stock to average | ||||||||||||||||||||
Wells Fargo common stockholders’ equity (ROE) | 11.97 | 11.86 | 11.92 | 11.98 | 10.95 | |||||||||||||||
Efficiency ratio (1) | 60.7 | 59.5 | 61.2 | 62.6 | 62.1 | |||||||||||||||
Total revenue | $ | 20,605 | 19,628 | 20,386 | 20,329 | 21,494 | ||||||||||||||
Pre-tax pre-provision profit (PTPP) (2) | 8,097 | 7,951 | 7,911 | 7,596 | 8,154 | |||||||||||||||
Dividends declared per common share | 0.12 | 0.12 | 0.12 | 0.12 | 0.05 | |||||||||||||||
Average common shares outstanding | 5,271.9 | 5,275.5 | 5,286.5 | 5,278.8 | 5,256.2 | |||||||||||||||
Diluted average common shares outstanding | 5,317.6 | 5,319.2 | 5,331.7 | 5,333.1 | 5,293.8 | |||||||||||||||
Average loans | $ | 768,563 | 754,544 | 751,253 | 754,077 | 753,675 | ||||||||||||||
Average assets | 1,306,728 | 1,281,369 | 1,250,945 | 1,241,176 | 1,237,037 | |||||||||||||||
Average core deposits (3) | 864,928 | 836,845 | 807,483 | 796,826 | 794,799 | |||||||||||||||
Average retail core deposits (4) | 606,810 | 599,227 | 592,974 | 584,100 | 573,843 | |||||||||||||||
Net interest margin | 3.89 | % | 3.84 | 4.01 | 4.05 | 4.16 | ||||||||||||||
At Quarter End | ||||||||||||||||||||
Securities available for sale | $ | 222,613 | 207,176 | 186,298 | 167,906 | 172,654 | ||||||||||||||
Loans | 769,631 | 760,106 | 751,921 | 751,155 | 757,267 | |||||||||||||||
Allowance for loan losses | 19,372 | 20,039 | 20,893 | 21,983 | 23,022 | |||||||||||||||
Goodwill | 25,115 | 25,038 | 24,776 | 24,777 | 24,770 | |||||||||||||||
Assets | 1,313,867 | 1,304,945 | 1,259,734 | 1,244,666 | 1,258,128 | |||||||||||||||
Core deposits (3) | 872,629 | 849,632 | 808,970 | 795,038 | 798,192 | |||||||||||||||
Wells Fargo stockholders’ equity | 140,241 | 137,768 | 136,401 | 133,471 | 126,408 | |||||||||||||||
Total equity | 141,687 | 139,244 | 137,916 | 134,943 | 127,889 | |||||||||||||||
Capital ratios: | ||||||||||||||||||||
Total equity to assets | 10.78 | % | 10.67 | 10.95 | 10.84 | 10.16 | ||||||||||||||
Risk-based capital (5): | ||||||||||||||||||||
Tier 1 capital | 11.33 | 11.26 | 11.69 | 11.50 | 11.16 | |||||||||||||||
Total capital | 14.77 | 14.86 | 15.41 | 15.30 | 15.01 | |||||||||||||||
Tier 1 leverage (5) | 9.03 | 8.97 | 9.43 | 9.27 | 9.19 | |||||||||||||||
Tier 1 common equity (6) | 9.46 | 9.34 | 9.15 | 8.93 | 8.30 | |||||||||||||||
Common shares outstanding | 5,262.6 | 5,272.2 | 5,278.2 | 5,300.9 | 5,262.3 | |||||||||||||||
Book value per common share | $ | 24.64 | 24.13 | 23.84 | 23.18 | 22.49 | ||||||||||||||
Common stock price: | ||||||||||||||||||||
High | 27.97 | 29.63 | 32.63 | 34.25 | 31.61 | |||||||||||||||
Low | 22.61 | 22.58 | 25.26 | 29.82 | 23.37 | |||||||||||||||
Period end | 27.56 | 24.12 | 28.06 | 31.71 | 30.99 | |||||||||||||||
Team members (active, full-time equivalent) | 264,200 | 263,800 | 266,600 | 270,200 | 272,200 | |||||||||||||||
|
(1) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). |
(2) | Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. |
(3) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain 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, 2011, ratios are preliminary. |
(6) | See the “Five Quarter Tier 1 Common Equity Under Basel I” table for additional information. |
19
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
| ||||||||||||||||||||||||
Quarter ended Dec. 31, | % | Year ended Dec. 31, | % | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
(in millions, except per share amounts) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
| ||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||
Trading assets | $ | 400 | 295 | 36 | % | $ | 1,440 | 1,098 | 31 | % | ||||||||||||||
Securities available for sale | 2,092 | 2,374 | (12) | 8,475 | 9,666 | (12) | ||||||||||||||||||
Mortgages held for sale | 456 | 495 | (8) | 1,644 | 1,736 | (5) | ||||||||||||||||||
Loans held for sale | 16 | 15 | 7 | 58 | 101 | (43) | ||||||||||||||||||
Loans | 9,275 | 9,666 | (4) | 37,247 | 39,760 | (6) | ||||||||||||||||||
Other interest income | 139 | 124 | 12 | 548 | 435 | 26 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total interest income | 12,378 | 12,969 | (5) | 49,412 | 52,796 | (6) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||
Deposits | 507 | 662 | (23) | 2,275 | 2,832 | (20) | ||||||||||||||||||
Short-term borrowings | 14 | 26 | (46) | 80 | 92 | (13) | ||||||||||||||||||
Long-term debt | 885 | 1,153 | (23) | 3,978 | 4,888 | (19) | ||||||||||||||||||
Other interest expense | 80 | 65 | 23 | 316 | 227 | 39 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total interest expense | 1,486 | 1,906 | (22) | 6,649 | 8,039 | (17) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Net interest income | 10,892 | 11,063 | (2) | 42,763 | 44,757 | (4) | ||||||||||||||||||
Provision for credit losses | 2,040 | 2,989 | (32) | 7,899 | 15,753 | (50) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Net interest income after provision for credit losses | 8,852 | 8,074 | 10 | 34,864 | 29,004 | 20 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Noninterest income | ||||||||||||||||||||||||
Service charges on deposit accounts | 1,091 | 1,035 | 5 | 4,280 | 4,916 | (13) | ||||||||||||||||||
Trust and investment fees | 2,658 | 2,958 | (10) | 11,304 | 10,934 | 3 | ||||||||||||||||||
Card fees | 680 | 941 | (28) | 3,653 | 3,652 | - | ||||||||||||||||||
Other fees | 1,096 | 1,063 | 3 | 4,193 | 3,990 | 5 | ||||||||||||||||||
Mortgage banking | 2,364 | 2,757 | (14) | 7,832 | 9,737 | (20) | ||||||||||||||||||
Insurance | 466 | 564 | (17) | 1,960 | 2,126 | (8) | ||||||||||||||||||
Net gains from trading activities | 430 | 532 | (19) | 1,014 | 1,648 | (38) | ||||||||||||||||||
Net gains (losses) on debt securities available for sale | 48 | (268) | NM | 54 | (324) | NM | ||||||||||||||||||
Net gains from equity investments | 61 | 317 | (81) | 1,482 | 779 | 90 | ||||||||||||||||||
Operating leases | 60 | 79 | (24) | 524 | 815 | (36) | ||||||||||||||||||
Other | 759 | 453 | 68 | 1,889 | 2,180 | (13) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total noninterest income | 9,713 | 10,431 | (7) | 38,185 | 40,453 | (6) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Noninterest expense | ||||||||||||||||||||||||
Salaries | 3,706 | 3,513 | 5 | 14,462 | 13,869 | 4 | ||||||||||||||||||
Commission and incentive compensation | 2,251 | 2,195 | 3 | 8,857 | 8,692 | 2 | ||||||||||||||||||
Employee benefits | 1,012 | 1,192 | (15) | 4,348 | 4,651 | (7) | ||||||||||||||||||
Equipment | 607 | 813 | (25) | 2,283 | 2,636 | (13) | ||||||||||||||||||
Net occupancy | 759 | 750 | 1 | 3,011 | 3,030 | (1) | ||||||||||||||||||
Core deposit and other intangibles | 467 | 549 | (15) | 1,880 | 2,199 | (15) | ||||||||||||||||||
FDIC and other deposit assessments | 314 | 301 | 4 | 1,266 | 1,197 | 6 | ||||||||||||||||||
Other | 3,392 | 4,027 | (16) | 13,286 | 14,182 | (6) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total noninterest expense | 12,508 | 13,340 | (6) | 49,393 | 50,456 | (2) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Income before income tax expense | 6,057 | 5,165 | 17 | 23,656 | 19,001 | 24 | ||||||||||||||||||
Income tax expense | 1,874 | 1,672 | 12 | 7,445 | 6,338 | 17 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Net income before noncontrolling interests | 4,183 | 3,493 | 20 | 16,211 | 12,663 | 28 | ||||||||||||||||||
Less: Net income from noncontrolling interests | 76 | 79 | (4) | 342 | 301 | 14 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Wells Fargo net income | $ | 4,107 | 3,414 | 20 | $ | 15,869 | 12,362 | 28 | ||||||||||||||||
|
|
| ||||||||||||||||||||||
Less: Preferred stock dividends and other | 219 | 182 | 20 | 844 | 730 | 16 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Wells Fargo net income applicable to common stock | $ | 3,888 | 3,232 | 20 | $ | 15,025 | 11,632 | 29 | ||||||||||||||||
|
|
| ||||||||||||||||||||||
Per share information | ||||||||||||||||||||||||
Earnings per common share | $ | 0.74 | 0.62 | 19 | $ | 2.85 | 2.23 | 28 | ||||||||||||||||
Diluted earnings per common share | 0.73 | 0.61 | 20 | 2.82 | 2.21 | 28 | ||||||||||||||||||
Dividends declared per common share | 0.12 | 0.05 | 140 | 0.48 | 0.20 | 140 | ||||||||||||||||||
Average common shares outstanding | 5,271.9 | 5,256.2 | - | 5,278.1 | 5,226.8 | 1 | ||||||||||||||||||
Diluted average common shares outstanding | 5,317.6 | 5,293.8 | - | 5,323.4 | 5,263.1 | 1 | ||||||||||||||||||
|
NM - Not meaningful
20
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) | 2011 | 2011 | 2011 | 2011 | 2010 | |||||||||||||||
| ||||||||||||||||||||
Interest income | ||||||||||||||||||||
Trading assets | $ | 400 | 343 | 347 | 350 | 295 | ||||||||||||||
Securities available for sale | 2,092 | 2,053 | 2,166 | 2,164 | 2,374 | |||||||||||||||
Mortgages held for sale | 456 | 389 | 362 | 437 | 495 | |||||||||||||||
Loans held for sale | 16 | 13 | 17 | 12 | 15 | |||||||||||||||
Loans | 9,275 | 9,224 | 9,361 | 9,387 | 9,666 | |||||||||||||||
Other interest income | 139 | 156 | 131 | 122 | 124 | |||||||||||||||
| ||||||||||||||||||||
Total interest income | 12,378 | 12,178 | 12,384 | 12,472 | 12,969 | |||||||||||||||
| ||||||||||||||||||||
Interest expense | ||||||||||||||||||||
Deposits | 507 | 559 | 594 | 615 | 662 | |||||||||||||||
Short-term borrowings | 14 | 20 | 20 | 26 | 26 | |||||||||||||||
Long-term debt | 885 | 980 | 1,009 | 1,104 | 1,153 | |||||||||||||||
Other interest expense | 80 | 77 | 83 | 76 | 65 | |||||||||||||||
| ||||||||||||||||||||
Total interest expense | 1,486 | 1,636 | 1,706 | 1,821 | 1,906 | |||||||||||||||
| ||||||||||||||||||||
Net interest income | 10,892 | 10,542 | 10,678 | 10,651 | 11,063 | |||||||||||||||
Provision for credit losses | 2,040 | 1,811 | 1,838 | 2,210 | 2,989 | |||||||||||||||
| ||||||||||||||||||||
Net interest income after provision for credit losses | 8,852 | 8,731 | 8,840 | 8,441 | 8,074 | |||||||||||||||
| ||||||||||||||||||||
Noninterest income | ||||||||||||||||||||
Service charges on deposit accounts | 1,091 | 1,103 | 1,074 | 1,012 | 1,035 | |||||||||||||||
Trust and investment fees | 2,658 | 2,786 | 2,944 | 2,916 | 2,958 | |||||||||||||||
Card fees | 680 | 1,013 | 1,003 | 957 | 941 | |||||||||||||||
Other fees | 1,096 | 1,085 | 1,023 | 989 | 1,063 | |||||||||||||||
Mortgage banking | 2,364 | 1,833 | 1,619 | 2,016 | 2,757 | |||||||||||||||
Insurance | 466 | 423 | 568 | 503 | 564 | |||||||||||||||
Net gains (losses) from trading activities | 430 | (442) | 414 | 612 | 532 | |||||||||||||||
Net gains (losses) on debt securities available for sale | 48 | 300 | (128) | (166) | (268) | |||||||||||||||
Net gains from equity investments | 61 | 344 | 724 | 353 | 317 | |||||||||||||||
Operating leases | 60 | 284 | 103 | 77 | 79 | |||||||||||||||
Other | 759 | 357 | 364 | 409 | 453 | |||||||||||||||
| ||||||||||||||||||||
Total noninterest income | 9,713 | 9,086 | 9,708 | 9,678 | 10,431 | |||||||||||||||
| ||||||||||||||||||||
Noninterest expense | ||||||||||||||||||||
Salaries | 3,706 | 3,718 | 3,584 | 3,454 | 3,513 | |||||||||||||||
Commission and incentive compensation | 2,251 | 2,088 | 2,171 | 2,347 | 2,195 | |||||||||||||||
Employee benefits | 1,012 | 780 | 1,164 | 1,392 | 1,192 | |||||||||||||||
Equipment | 607 | 516 | 528 | 632 | 813 | |||||||||||||||
Net occupancy | 759 | 751 | 749 | 752 | 750 | |||||||||||||||
Core deposit and other intangibles | 467 | 466 | 464 | 483 | 549 | |||||||||||||||
FDIC and other deposit assessments | 314 | 332 | 315 | 305 | 301 | |||||||||||||||
Other | 3,392 | 3,026 | 3,500 | 3,368 | 4,027 | |||||||||||||||
| ||||||||||||||||||||
Total noninterest expense | 12,508 | 11,677 | 12,475 | 12,733 | 13,340 | |||||||||||||||
| ||||||||||||||||||||
Income before income tax expense | 6,057 | 6,140 | 6,073 | 5,386 | 5,165 | |||||||||||||||
Income tax expense | 1,874 | 1,998 | 2,001 | 1,572 | 1,672 | |||||||||||||||
| ||||||||||||||||||||
Net income before noncontrolling interests | 4,183 | 4,142 | 4,072 | 3,814 | 3,493 | |||||||||||||||
Less: Net income from noncontrolling interests | 76 | 87 | 124 | 55 | 79 | |||||||||||||||
| ||||||||||||||||||||
Wells Fargo net income | $ | 4,107 | 4,055 | 3,948 | 3,759 | 3,414 | ||||||||||||||
| ||||||||||||||||||||
Less: Preferred stock dividends and other | 219 | 216 | 220 | 189 | 182 | |||||||||||||||
| ||||||||||||||||||||
Wells Fargo net income applicable to common stock | $ | 3,888 | 3,839 | 3,728 | 3,570 | 3,232 | ||||||||||||||
| ||||||||||||||||||||
Per share information | ||||||||||||||||||||
Earnings per common share | $ | 0.74 | 0.73 | 0.70 | 0.68 | 0.62 | ||||||||||||||
Diluted earnings per common share | 0.73 | 0.72 | 0.70 | 0.67 | 0.61 | |||||||||||||||
Dividends declared per common share | 0.12 | 0.12 | 0.12 | 0.12 | 0.05 | |||||||||||||||
Average common shares outstanding | 5,271.9 | 5,275.5 | 5,286.5 | 5,278.8 | 5,256.2 | |||||||||||||||
Diluted average common shares outstanding | 5,317.6 | 5,319.2 | 5,331.7 | 5,333.1 | 5,293.8 |
21
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended December 31, | ||||||||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||||||||
(in millions) | Average balance | Yields/ rates | Interest income/ expense | Average balance | Yields/ rates | Interest income/ expense | ||||||||||||||||||||||||
Earning assets | ||||||||||||||||||||||||||||||
Federal funds sold, securities purchased under resale agreements and other short-term investments | $ | 67,968 | 0.52 | % | $ | 89 | 72,029 | 0.40 | % | $ | 74 | |||||||||||||||||||
Trading assets | 45,521 | 3.57 | 407 | 33,871 | 3.56 | 302 | ||||||||||||||||||||||||
Securities available for sale (3): | ||||||||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | 8,708 | 0.99 | 22 | 1,597 | 2.80 | 12 | ||||||||||||||||||||||||
Securities of U.S. states and political subdivisions | 28,015 | 4.80 | 336 | 18,245 | 5.58 | 255 | ||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||
Federal agencies | 84,332 | 3.68 | 776 | 76,674 | 4.48 | 859 | ||||||||||||||||||||||||
Residential and commercial | 34,717 | 7.05 | 612 | 31,060 | 10.95 | 850 | ||||||||||||||||||||||||
Total mortgage-backed securities | 119,049 | 4.66 | 1,388 | 107,734 | 6.35 | 1,709 | ||||||||||||||||||||||||
Other debt and equity securities | 47,278 | 4.38 | 518 | 35,492 | 6.15 | 545 | ||||||||||||||||||||||||
Total securities available for sale | 203,050 | 4.46 | 2,264 | 163,068 | 6.18 | 2,521 | ||||||||||||||||||||||||
Mortgages held for sale (4) | 44,842 | 4.07 | 456 | 45,063 | 4.39 | 495 | ||||||||||||||||||||||||
Loans held for sale (4) | 1,118 | 5.84 | 16 | 1,140 | 5.15 | 15 | ||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||
Commercial and industrial | 166,920 | 4.08 | 1,713 | 147,866 | 4.71 | 1,755 | ||||||||||||||||||||||||
Real estate mortgage | 105,219 | 4.26 | 1,130 | 99,188 | 3.85 | 961 | ||||||||||||||||||||||||
Real estate construction | 19,624 | 4.61 | 228 | 26,882 | 3.68 | 250 | ||||||||||||||||||||||||
Lease financing | 12,893 | 7.41 | 239 | 13,033 | 9.00 | 293 | ||||||||||||||||||||||||
Foreign | 38,740 | 2.39 | 233 | 30,986 | 3.57 | 279 | ||||||||||||||||||||||||
Total commercial | 343,396 | 4.10 | 3,543 | 317,955 | 4.42 | 3,538 | ||||||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 229,746 | 4.74 | 2,727 | 228,802 | 5.06 | 2,901 | ||||||||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 87,212 | 4.34 | 953 | 97,673 | 4.37 | 1,075 | ||||||||||||||||||||||||
Credit card | 21,933 | 12.96 | 711 | 21,888 | 13.44 | 736 | ||||||||||||||||||||||||
Other revolving credit and installment | 86,276 | 6.23 | 1,356 | 87,357 | 6.48 | 1,427 | ||||||||||||||||||||||||
Total consumer | 425,167 | 5.39 | 5,747 | 435,720 | 5.61 | 6,139 | ||||||||||||||||||||||||
Total loans (4) | 768,563 | 4.81 | 9,290 | 753,675 | 5.11 | 9,677 | ||||||||||||||||||||||||
Other | 4,671 | 4.32 | 50 | 5,338 | 3.93 | 51 | ||||||||||||||||||||||||
Total earning assets | $ | 1,135,733 | 4.41 | % | $ | 12,572 | 1,074,184 | 4.87 | % | $ | 13,135 | |||||||||||||||||||
Funding sources | ||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||
Interest-bearing checking | $ | 35,285 | 0.06 | % | $ | 6 | 60,879 | 0.09 | % | $ | 15 | |||||||||||||||||||
Market rate and other savings | 485,127 | 0.14 | 175 | 431,171 | 0.25 | 266 | ||||||||||||||||||||||||
Savings certificates | 64,868 | 1.43 | 233 | 79,146 | 1.43 | 285 | ||||||||||||||||||||||||
Other time deposits | 12,868 | 1.85 | 60 | 13,438 | 2.00 | 67 | ||||||||||||||||||||||||
Deposits in foreign offices | 67,213 | 0.20 | 33 | 55,463 | 0.21 | 29 | ||||||||||||||||||||||||
Total interest-bearing deposits | 665,361 | 0.30 | 507 | 640,097 | 0.41 | 662 | ||||||||||||||||||||||||
Short-term borrowings | 48,742 | 0.14 | 17 | 50,609 | 0.24 | 31 | ||||||||||||||||||||||||
Long-term debt | 129,445 | 2.73 | 885 | 160,801 | 2.86 | 1,153 | ||||||||||||||||||||||||
Other liabilities | 12,166 | 2.60 | 80 | 8,258 | 3.13 | 65 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 855,714 | 0.69 | 1,489 | 859,765 | 0.89 | 1,911 | ||||||||||||||||||||||||
Portion of noninterest-bearing funding sources | 280,019 | - | - | 214,419 | - | - | ||||||||||||||||||||||||
Total funding sources | $ | 1,135,733 | 0.52 | 1,489 | 1,074,184 | 0.71 | 1,911 | |||||||||||||||||||||||
Net interest margin and net interest income | 3.89 | % | $ | 11,083 | 4.16 | % | $ | 11,224 | ||||||||||||||||||||||
Noninterest-earning assets | ||||||||||||||||||||||||||||||
Cash and due from banks | $ | 17,718 | 18,016 | |||||||||||||||||||||||||||
Goodwill | 25,057 | 24,832 | ||||||||||||||||||||||||||||
Other | 128,220 | 120,005 | ||||||||||||||||||||||||||||
Total noninterest-earning assets | $ | 170,995 | 162,853 | |||||||||||||||||||||||||||
Noninterest-bearing funding sources | ||||||||||||||||||||||||||||||
Deposits | $ | 246,692 | 197,943 | |||||||||||||||||||||||||||
Other liabilities | 63,556 | 52,930 | ||||||||||||||||||||||||||||
Total equity | 140,766 | 126,399 | ||||||||||||||||||||||||||||
Noninterest-bearing funding sources used to fund earning assets | (280,019 | ) | (214,419 | ) | ||||||||||||||||||||||||||
Net noninterest-bearing funding sources | $ | 170,995 | 162,853 | |||||||||||||||||||||||||||
Total assets | $ | 1,306,728 | 1,237,037 |
(1) | Our average prime rate was 3.25% for the quarters ended December 31, 2011 and 2010. The average three-month London Interbank Offered Rate (LIBOR) was 0.48% and 0.29% for the same quarters, respectively. |
(2) | Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. |
(3) | Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost and the previously reported amounts for all periods prior to 2011 have been changed to amortized cost, the basis used to determine yield for those periods. |
(4) | Nonaccrual loans and related income are included in their respective loan categories. |
(5) | Includes taxable-equivalent adjustments of $191 million and $161 million for December 31, 2011 and 2010, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 35% for the periods presented. |
22
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Year ended December 31, | ||||||||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||||||||
(in millions) | Average balance | Yields/ rates | Interest income/ expense | Average balance | Yields/ rates | Interest income/ expense | ||||||||||||||||||||||||
Earning assets | ||||||||||||||||||||||||||||||
Federal funds sold, securities purchased under resale agreements and other short-term investments | $ | 87,186 | 0.40 | % | $ | 345 | 62,961 | 0.36 | % | $ | 230 | |||||||||||||||||||
Trading assets | 39,737 | 3.68 | 1,463 | 29,920 | 3.75 | 1,121 | ||||||||||||||||||||||||
Securities available for sale (3): | ||||||||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | 5,503 | 1.25 | 69 | 1,870 | 3.24 | 61 | ||||||||||||||||||||||||
Securities of U.S. states and political subdivisions | 24,035 | 5.09 | 1,223 | 16,089 | 6.09 | 980 | ||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||
Federal agencies | 74,665 | 4.36 | 3,257 | 71,953 | 5.14 | 3,697 | ||||||||||||||||||||||||
Residential and commercial | 31,902 | 8.20 | 2,617 | 31,815 | 10.67 | 3,396 | ||||||||||||||||||||||||
Total mortgage-backed securities | 106,567 | 5.51 | 5,874 | 103,768 | 6.84 | 7,093 | ||||||||||||||||||||||||
Other debt and equity securities | 38,625 | 5.03 | 1,941 | 32,611 | 6.45 | 2,102 | ||||||||||||||||||||||||
Total securities available for sale | 174,730 | 5.21 | 9,107 | 154,338 | 6.63 | 10,236 | ||||||||||||||||||||||||
Mortgages held for sale (4) | 37,232 | 4.42 | 1,644 | 36,716 | 4.73 | 1,736 | ||||||||||||||||||||||||
Loans held for sale (4) | 1,104 | 5.25 | 58 | 3,773 | 2.67 | 101 | ||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||
Commercial and industrial | 157,608 | 4.37 | 6,894 | 149,576 | 4.80 | 7,186 | ||||||||||||||||||||||||
Real estate mortgage | 102,236 | 4.07 | 4,163 | 98,497 | 3.89 | 3,836 | ||||||||||||||||||||||||
Real estate construction | 21,592 | 4.88 | 1,055 | 31,286 | 3.36 | 1,051 | ||||||||||||||||||||||||
Lease financing | 12,944 | 7.54 | 976 | 13,451 | 9.21 | 1,239 | ||||||||||||||||||||||||
Foreign | 36,768 | 2.56 | 941 | 29,726 | 3.49 | 1,037 | ||||||||||||||||||||||||
Total commercial | 331,148 | 4.24 | 14,029 | 322,536 | 4.45 | 14,349 | ||||||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 226,980 | 4.89 | 11,090 | 235,568 | 5.18 | 12,206 | ||||||||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 90,705 | 4.33 | 3,926 | 101,537 | 4.45 | 4,519 | ||||||||||||||||||||||||
Credit card | 21,463 | 13.02 | 2,794 | 22,375 | 13.35 | 2,987 | ||||||||||||||||||||||||
Other revolving credit and installment | 86,848 | 6.29 | 5,463 | 88,585 | 6.49 | 5,747 | ||||||||||||||||||||||||
Total consumer | 425,996 | 5.46 | 23,273 | 448,065 | 5.68 | 25,459 | ||||||||||||||||||||||||
Total loans (4) | 757,144 | 4.93 | 37,302 | 770,601 | 5.17 | 39,808 | ||||||||||||||||||||||||
Other | 4,929 | 4.12 | 203 | 5,849 | 3.56 | 207 | ||||||||||||||||||||||||
Total earning assets | $ | 1,102,062 | 4.55 | % | $ | 50,122 | 1,064,158 | 5.02 | % | $ | 53,439 | |||||||||||||||||||
Funding sources | ||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||
Interest-bearing checking | $ | 47,705 | 0.08 | % | $ | 40 | 60,941 | 0.12 | % | $ | 72 | |||||||||||||||||||
Market rate and other savings | 464,450 | 0.18 | 836 | 416,877 | 0.26 | 1,088 | ||||||||||||||||||||||||
Savings certificates | 69,711 | 1.43 | 995 | 87,133 | 1.43 | 1,247 | ||||||||||||||||||||||||
Other time deposits | 13,126 | 2.04 | 268 | 14,654 | 2.07 | 302 | ||||||||||||||||||||||||
Deposits in foreign offices | 61,566 | 0.22 | 136 | 55,097 | 0.22 | 123 | ||||||||||||||||||||||||
Total interest-bearing deposits | 656,558 | 0.35 | 2,275 | 634,702 | 0.45 | 2,832 | ||||||||||||||||||||||||
Short-term borrowings | 51,781 | 0.18 | 94 | 46,824 | 0.22 | 106 | ||||||||||||||||||||||||
Long-term debt | 141,079 | 2.82 | 3,978 | 185,426 | 2.64 | 4,888 | ||||||||||||||||||||||||
Other liabilities | 10,955 | 2.88 | 316 | 6,863 | 3.31 | 227 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 860,373 | 0.77 | 6,663 | 873,815 | 0.92 | 8,053 | ||||||||||||||||||||||||
Portion of noninterest-bearing funding sources | 241,689 | - | - | 190,343 | - | - | ||||||||||||||||||||||||
Total funding sources | $ | 1,102,062 | 0.61 | 6,663 | 1,064,158 | 0.76 | 8,053 | |||||||||||||||||||||||
Net interest margin and net interest income | 3.94 | % | $ | 43,459 | 4.26 | % | $ | 45,386 | ||||||||||||||||||||||
Noninterest-earning assets | ||||||||||||||||||||||||||||||
Cash and due from banks | $ | 17,388 | 17,618 | |||||||||||||||||||||||||||
Goodwill | 24,904 | 24,824 | ||||||||||||||||||||||||||||
Other | 125,911 | 120,338 | ||||||||||||||||||||||||||||
Total noninterest-earning assets | $ | 168,203 | 162,780 | |||||||||||||||||||||||||||
Noninterest-bearing funding sources | ||||||||||||||||||||||||||||||
Deposits | $ | 215,242 | 183,008 | |||||||||||||||||||||||||||
Other liabilities | 57,399 | 47,877 | ||||||||||||||||||||||||||||
Total equity | 137,251 | 122,238 | ||||||||||||||||||||||||||||
Noninterest-bearing funding sources used to fund earning assets | (241,689 | ) | (190,343 | ) | ||||||||||||||||||||||||||
Net noninterest-bearing funding sources | $ | 168,203 | 162,780 | |||||||||||||||||||||||||||
Total assets | $ | 1,270,265 | 1,226,938 |
(1) | Our average prime rate was 3.25% for the years ended December 31, 2011 and 2010. The average three-month London Interbank Offered Rate (LIBOR) was 0.34% for the same periods. |
(2) | Yields/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. |
(3) | Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost and the previously reported amounts for all periods prior to 2011 have been changed to amortized cost, the basis used to determine yield for those periods. |
(4) | Nonaccrual loans and related income are included in their respective loan categories. |
(5) | Includes taxable-equivalent adjustments of $696 million and $629 million for December 31, 2011 and 2010, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented. |
23
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
| ||||||||||||||||||||||||
Quarter ended Dec. 31, | % | Year ended Dec. 31, | % | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
(in millions) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
| ||||||||||||||||||||||||
Service charges on deposit accounts | $ | 1,091 | 1,035 | 5 | % | $ | 4,280 | 4,916 | (13) | % | ||||||||||||||
Trust and investment fees: | ||||||||||||||||||||||||
Trust, investment and IRA fees | 1,000 | 1,030 | (3) | 4,099 | 4,038 | 2 | ||||||||||||||||||
Commissions and all other fees | 1,658 | 1,928 | (14) | 7,205 | 6,896 | 4 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total trust and investment fees | 2,658 | 2,958 | (10 | ) | 11,304 | 10,934 | 3 | |||||||||||||||||
|
|
| ||||||||||||||||||||||
Card fees | 680 | 941 | (28) | 3,653 | 3,652 | - | ||||||||||||||||||
Other fees: | ||||||||||||||||||||||||
Cash network fees | 109 | 74 | 47 | 389 | 260 | 50 | ||||||||||||||||||
Charges and fees on loans | 402 | 446 | (10) | 1,641 | 1,690 | (3) | ||||||||||||||||||
Processing and all other fees | 585 | 543 | 8 | 2,163 | 2,040 | 6 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total other fees | 1,096 | 1,063 | 3 | 4,193 | 3,990 | 5 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Mortgage banking: | ||||||||||||||||||||||||
Servicing income, net | 493 | 240 | 105 | 3,266 | 3,340 | (2) | ||||||||||||||||||
Net gains on mortgage loan origination/sales activities | 1,871 | 2,517 | (26) | 4,566 | 6,397 | (29) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total mortgage banking | 2,364 | 2,757 | (14) | 7,832 | 9,737 | (20) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Insurance | 466 | 564 | (17) | 1,960 | 2,126 | (8) | ||||||||||||||||||
Net gains (losses) from trading activities | 430 | 532 | (19) | 1,014 | 1,648 | (38) | ||||||||||||||||||
Net gains (losses) on debt securities available for sale | 48 | (268) | NM | 54 | (324) | NM | ||||||||||||||||||
Net gains from equity investments | 61 | 317 | (81) | 1,482 | 779 | 90 | ||||||||||||||||||
Operating leases | 60 | 79 | (24) | 524 | 815 | (36) | ||||||||||||||||||
All other | 759 | 453 | 68 | 1,889 | 2,180 | (13) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total | $ | 9,713 | 10,431 | (7) | $ | 38,185 | 40,453 | (6) | ||||||||||||||||
| ||||||||||||||||||||||||
NM - Not meaningful
NONINTEREST EXPENSE |
| |||||||||||||||||||||||
| ||||||||||||||||||||||||
Quarter ended Dec. 31, | % | Year ended Dec. 31, | % | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
(in millions) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
| ||||||||||||||||||||||||
Salaries | $ | 3,706 | 3,513 | 5 | % | $ | 14,462 | 13,869 | 4 | % | ||||||||||||||
Commission and incentive compensation | 2,251 | 2,195 | 3 | 8,857 | 8,692 | 2 | ||||||||||||||||||
Employee benefits | 1,012 | 1,192 | (15) | 4,348 | 4,651 | (7) | ||||||||||||||||||
Equipment | 607 | 813 | (25) | 2,283 | 2,636 | (13) | ||||||||||||||||||
Net occupancy | 759 | 750 | 1 | 3,011 | 3,030 | (1) | ||||||||||||||||||
Core deposit and other intangibles | 467 | 549 | (15) | 1,880 | 2,199 | (15) | ||||||||||||||||||
FDIC and other deposit assessments | 314 | 301 | 4 | 1,266 | 1,197 | 6 | ||||||||||||||||||
Outside professional services | 813 | 781 | 4 | 2,692 | 2,370 | 14 | ||||||||||||||||||
Contract services | 356 | 481 | (26) | 1,407 | 1,642 | (14) | ||||||||||||||||||
Foreclosed assets | 370 | 452 | (18) | 1,354 | 1,537 | (12) | ||||||||||||||||||
Operating losses | 163 | 193 | (16) | 1,261 | 1,258 | - | ||||||||||||||||||
Postage, stationery and supplies | 231 | 239 | (3) | 942 | 944 | - | ||||||||||||||||||
Outside data processing | 257 | 235 | 9 | 935 | 1,046 | (11) | ||||||||||||||||||
Travel and entertainment | 212 | 221 | (4) | 821 | 783 | 5 | ||||||||||||||||||
Advertising and promotion | 166 | 192 | (14) | 607 | 630 | (4) | ||||||||||||||||||
Telecommunications | 129 | 151 | (15) | 523 | 596 | (12) | ||||||||||||||||||
Insurance | 87 | 90 | (3) | 515 | 464 | 11 | ||||||||||||||||||
Operating leases | 28 | 24 | 17 | 112 | 109 | 3 | ||||||||||||||||||
All other | 580 | 968 | (40) | 2,117 | 2,803 | (24) | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total | $ | 12,508 | 13,340 | (6) | $ | 49,393 | 50,456 | (2) | ||||||||||||||||
|
24
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
| ||||||||||||||||||||
Quarter ended | ||||||||||||||||||||
|
| |||||||||||||||||||
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Service charges on deposit accounts | $ | 1,091 | 1,103 | 1,074 | 1,012 | 1,035 | ||||||||||||||
Trust and investment fees: | ||||||||||||||||||||
Trust, investment and IRA fees | 1,000 | 1,019 | 1,020 | 1,060 | 1,030 | |||||||||||||||
Commissions and all other fees | 1,658 | 1,767 | 1,924 | 1,856 | 1,928 | |||||||||||||||
| ||||||||||||||||||||
Total trust and investment fees | 2,658 | 2,786 | 2,944 | 2,916 | 2,958 | |||||||||||||||
| ||||||||||||||||||||
Card fees | 680 | 1,013 | 1,003 | 957 | 941 | |||||||||||||||
Other fees: | ||||||||||||||||||||
Cash network fees | 109 | 105 | 94 | 81 | 74 | |||||||||||||||
Charges and fees on loans | 402 | 438 | 404 | 397 | 446 | |||||||||||||||
Processing and all other fees | 585 | 542 | 525 | 511 | 543 | |||||||||||||||
| ||||||||||||||||||||
Total other fees | 1,096 | 1,085 | 1,023 | 989 | 1,063 | |||||||||||||||
| ||||||||||||||||||||
Mortgage banking: | ||||||||||||||||||||
Servicing income, net | 493 | 1,030 | 877 | 866 | 240 | |||||||||||||||
Net gains on mortgage loan origination/sales activities | 1,871 | 803 | 742 | 1,150 | 2,517 | |||||||||||||||
| ||||||||||||||||||||
Total mortgage banking | 2,364 | 1,833 | 1,619 | 2,016 | 2,757 | |||||||||||||||
| ||||||||||||||||||||
Insurance | 466 | 423 | 568 | 503 | 564 | |||||||||||||||
Net gains (losses) from trading activities | 430 | (442) | 414 | 612 | 532 | |||||||||||||||
Net gains (losses) on debt securities available for sale | 48 | 300 | (128) | (166) | (268) | |||||||||||||||
Net gains from equity investments | 61 | 344 | 724 | 353 | 317 | |||||||||||||||
Operating leases | 60 | 284 | 103 | 77 | 79 | |||||||||||||||
All other | 759 | 357 | 364 | 409 | 453 | |||||||||||||||
| ||||||||||||||||||||
Total | $ | 9,713 | 9,086 | 9,708 | 9,678 | 10,431 | ||||||||||||||
| ||||||||||||||||||||
FIVE QUARTER NONINTEREST EXPENSE | ||||||||||||||||||||
| ||||||||||||||||||||
Quarter ended | ||||||||||||||||||||
|
| |||||||||||||||||||
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Salaries | $ | 3,706 | 3,718 | 3,584 | 3,454 | 3,513 | ||||||||||||||
Commission and incentive compensation | 2,251 | 2,088 | 2,171 | 2,347 | 2,195 | |||||||||||||||
Employee benefits | 1,012 | 780 | 1,164 | 1,392 | 1,192 | |||||||||||||||
Equipment | 607 | 516 | 528 | 632 | 813 | |||||||||||||||
Net occupancy | 759 | 751 | 749 | 752 | 750 | |||||||||||||||
Core deposit and other intangibles | 467 | 466 | 464 | 483 | 549 | |||||||||||||||
FDIC and other deposit assessments | 314 | 332 | 315 | 305 | 301 | |||||||||||||||
Outside professional services | 813 | 640 | 659 | 580 | 781 | |||||||||||||||
Contract services | 356 | 341 | 341 | 369 | 481 | |||||||||||||||
Foreclosed assets | 370 | 271 | 305 | 408 | 452 | |||||||||||||||
Operating losses | 163 | 198 | 428 | 472 | 193 | |||||||||||||||
Postage, stationery and supplies | 231 | 240 | 236 | 235 | 239 | |||||||||||||||
Outside data processing | 257 | 226 | 232 | 220 | 235 | |||||||||||||||
Travel and entertainment | 212 | 198 | 205 | 206 | 221 | |||||||||||||||
Advertising and promotion | 166 | 159 | 166 | 116 | 192 | |||||||||||||||
Telecommunications | 129 | 128 | 132 | 134 | 151 | |||||||||||||||
Insurance | 87 | 94 | 201 | 133 | 90 | |||||||||||||||
Operating leases | 28 | 29 | 31 | 24 | 24 | |||||||||||||||
All other | 580 | 502 | 564 | 471 | 968 | |||||||||||||||
| ||||||||||||||||||||
Total | $ | 12,508 | 11,677 | 12,475 | 12,733 | 13,340 | ||||||||||||||
|
25
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
|
December 31, | % | |||||||||||
|
| |||||||||||
(in millions, except shares) | 2011 | 2010 | Change | |||||||||
| ||||||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 19,440 | 16,044 | 21 | % | |||||||
Federal funds sold, securities purchased under resale agreements and other short-term investments | 44,367 | 80,637 | (45) | |||||||||
Trading assets | 77,814 | 51,414 | 51 | |||||||||
Securities available for sale | 222,613 | 172,654 | 29 | |||||||||
Mortgages held for sale (includes $44,791 and $47,531 carried at fair value) | 48,357 | 51,763 | (7) | |||||||||
Loans held for sale (includes $1,176 and $873 carried at fair value) | 1,338 | 1,290 | 4 | |||||||||
Loans (includes $5,916 and $309 carried at fair value) | 769,631 | 757,267 | 2 | |||||||||
Allowance for loan losses | (19,372) | (23,022) | (16) | |||||||||
| ||||||||||||
Net loans | 750,259 | 734,245 | 2 | |||||||||
| ||||||||||||
Mortgage servicing rights: | ||||||||||||
Measured at fair value | 12,603 | 14,467 | (13) | |||||||||
Amortized | 1,408 | 1,419 | (1) | |||||||||
Premises and equipment, net | 9,531 | 9,644 | (1) | |||||||||
Goodwill | 25,115 | 24,770 | 1 | |||||||||
Other assets | 101,022 | 99,781 | 1 | |||||||||
| ||||||||||||
Total assets | $ | 1,313,867 | 1,258,128 | 4 | ||||||||
| ||||||||||||
Liabilities | ||||||||||||
Noninterest-bearing deposits | $ | 244,003 | 191,256 | 28 | ||||||||
Interest-bearing deposits | 676,067 | 656,686 | 3 | |||||||||
| ||||||||||||
Total deposits | 920,070 | 847,942 | 9 | |||||||||
Short-term borrowings | 49,091 | 55,401 | (11) | |||||||||
Accrued expenses and other liabilities | 77,665 | 69,913 | 11 | |||||||||
Long-term debt (includes $0 and $306 carried at fair value) | 125,354 | 156,983 | (20) | |||||||||
| ||||||||||||
Total liabilities | 1,172,180 | 1,130,239 | 4 | |||||||||
| ||||||||||||
Equity | ||||||||||||
Wells Fargo stockholders’ equity: | ||||||||||||
Preferred stock | 11,431 | 8,689 | 32 | |||||||||
Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; | 8,931 | 8,787 | 2 | |||||||||
Additional paid-in capital | 55,957 | 53,426 | 5 | |||||||||
Retained earnings | 64,385 | 51,918 | 24 | |||||||||
Cumulative other comprehensive income | 3,207 | 4,738 | (32) | |||||||||
Treasury stock – 95,910,425 shares and 10,131,394 shares | (2,744) | (487) | 463 | |||||||||
Unearned ESOP shares | (926) | (663) | 40 | |||||||||
| ||||||||||||
Total Wells Fargo stockholders’ equity | 140,241 | 126,408 | 11 | |||||||||
Noncontrolling interests | 1,446 | 1,481 | (2) | |||||||||
| ||||||||||||
Total equity | 141,687 | 127,889 | 11 | |||||||||
| ||||||||||||
Total liabilities and equity | $ | 1,313,867 | 1,258,128 | 4 | ||||||||
|
26
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
|
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 19,440 | 18,314 | 24,059 | 16,978 | 16,044 | ||||||||||||||
Federal funds sold, securities purchased under | 44,367 | 89,804 | 88,406 | 93,041 | 80,637 | |||||||||||||||
Trading assets | 77,814 | 57,786 | 54,770 | 57,890 | 51,414 | |||||||||||||||
Securities available for sale | 222,613 | 207,176 | 186,298 | 167,906 | 172,654 | |||||||||||||||
Mortgages held for sale | 48,357 | 42,704 | 31,254 | 33,121 | 51,763 | |||||||||||||||
Loans held for sale | 1,338 | 743 | 1,512 | 1,428 | 1,290 | |||||||||||||||
Loans | 769,631 | 760,106 | 751,921 | 751,155 | 757,267 | |||||||||||||||
Allowance for loan losses | (19,372) | (20,039) | (20,893) | (21,983) | (23,022) | |||||||||||||||
| ||||||||||||||||||||
Net loans | 750,259 | 740,067 | 731,028 | 729,172 | 734,245 | |||||||||||||||
| ||||||||||||||||||||
Mortgage servicing rights: | ||||||||||||||||||||
Measured at fair value | 12,603 | 12,372 | 14,778 | 15,648 | 14,467 | |||||||||||||||
Amortized | 1,408 | 1,397 | 1,422 | 1,423 | 1,419 | |||||||||||||||
Premises and equipment, net | 9,531 | 9,607 | 9,613 | 9,545 | 9,644 | |||||||||||||||
Goodwill | 25,115 | 25,038 | 24,776 | 24,777 | 24,770 | |||||||||||||||
Other assets | 101,022 | 99,937 | 91,818 | 93,737 | 99,781 | |||||||||||||||
| ||||||||||||||||||||
Total assets | $ | 1,313,867 | 1,304,945 | 1,259,734 | 1,244,666 | 1,258,128 | ||||||||||||||
| ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Noninterest-bearing deposits | $ | 244,003 | 229,863 | 202,143 | 190,959 | 191,256 | ||||||||||||||
Interest-bearing deposits | 676,067 | 665,565 | 651,492 | 646,703 | 656,686 | |||||||||||||||
| ||||||||||||||||||||
Total deposits | 920,070 | 895,428 | 853,635 | 837,662 | 847,942 | |||||||||||||||
Short-term borrowings | 49,091 | 50,775 | 53,881 | 54,737 | 55,401 | |||||||||||||||
Accrued expenses and other liabilities | 77,665 | 86,284 | 71,430 | 68,721 | 69,913 | |||||||||||||||
Long-term debt | 125,354 | 133,214 | 142,872 | 148,603 | 156,983 | |||||||||||||||
| ||||||||||||||||||||
Total liabilities | 1,172,180 | 1,165,701 | 1,121,818 | 1,109,723 | 1,130,239 | |||||||||||||||
| ||||||||||||||||||||
Equity | ||||||||||||||||||||
Wells Fargo stockholders’ equity: | ||||||||||||||||||||
Preferred stock | 11,431 | 11,566 | 11,730 | 11,897 | 8,689 | |||||||||||||||
Common stock | 8,931 | 8,902 | 8,876 | 8,854 | 8,787 | |||||||||||||||
Additional paid-in capital | 55,957 | 55,495 | 55,226 | 54,815 | 53,426 | |||||||||||||||
Retained earnings | 64,385 | 61,135 | 57,942 | 54,855 | 51,918 | |||||||||||||||
Cumulative other comprehensive income | 3,207 | 3,828 | 5,422 | 5,021 | 4,738 | |||||||||||||||
Treasury stock | (2,744) | (2,087) | (1,546) | (541) | (487) | |||||||||||||||
Unearned ESOP shares | (926) | (1,071) | (1,249) | (1,430) | (663) | |||||||||||||||
| ||||||||||||||||||||
Total Wells Fargo stockholders’ equity | 140,241 | 137,768 | 136,401 | 133,471 | 126,408 | |||||||||||||||
Noncontrolling interests | 1,446 | 1,476 | 1,515 | 1,472 | 1,481 | |||||||||||||||
| ||||||||||||||||||||
Total equity | 141,687 | 139,244 | 137,916 | 134,943 | 127,889 | |||||||||||||||
| ||||||||||||||||||||
Total liabilities and equity | $ | 1,313,867 | 1,304,945 | 1,259,734 | 1,244,666 | 1,258,128 | ||||||||||||||
|
27
Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
Quarter ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
($ in billions) | Average balance | Yields/ rates | Average balance | Yields/ rates | Average balance | Yields/ rates | Average balance | Yields/ rates | Average balance | Yields/ rates | ||||||||||||||||||||||||||||||||||||||||||||||||
Earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal funds sold, securities purchased | $ | 68.0 | 0.52 | % | $ | 98.9 | 0.42 | % | $ | 98.5 | 0.32 | % | $ | 83.4 | 0.35 | % | $ | 72.0 | 0.40 | % | ||||||||||||||||||||||||||||||||||||||
Trading assets | 45.5 | 3.57 | 37.9 | 3.67 | 38.0 | 3.71 | 37.4 | 3.81 | 33.9 | 3.56 | ||||||||||||||||||||||||||||||||||||||||||||||||
Securities available for sale (2): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | 8.7 | 0.99 | 9.6 | 1.02 | 2.0 | 2.33 | 1.6 | 2.87 | 1.6 | 2.80 | ||||||||||||||||||||||||||||||||||||||||||||||||
Securities of U.S. states and political subdivisions | 28.0 | 4.80 | 25.6 | 4.93 | 22.5 | 5.35 | 19.9 | 5.45 | 18.3 | 5.58 | ||||||||||||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal agencies | 84.3 | 3.68 | 72.8 | 4.41 | 70.9 | 4.76 | 70.4 | 4.72 | 76.7 | 4.48 | ||||||||||||||||||||||||||||||||||||||||||||||||
Residential and commercial | 34.7 | 7.05 | 32.6 | 7.46 | 30.0 | 8.86 | 30.2 | 9.68 | 31.0 | 10.95 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total mortgage-backed securities | 119.0 | 4.66 | 105.4 | 5.36 | 100.9 | 5.98 | 100.6 | 6.21 | 107.7 | 6.35 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other debt and equity securities | 47.3 | 4.38 | 38.9 | 4.69 | 34.5 | 5.81 | 33.6 | 5.55 | 35.5 | 6.15 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total securities available for sale | 203.0 | 4.46 | 179.5 | 4.92 | 159.9 | 5.81 | 155.7 | 5.94 | 163.1 | 6.18 | ||||||||||||||||||||||||||||||||||||||||||||||||
Mortgages held for sale | 44.8 | 4.07 | 34.6 | 4.49 | 30.7 | 4.73 | 38.7 | 4.51 | 45.1 | 4.39 | ||||||||||||||||||||||||||||||||||||||||||||||||
Loans held for sale | 1.1 | 5.84 | 1.0 | 5.21 | 1.4 | 5.05 | 1.0 | 4.88 | 1.1 | 5.15 | ||||||||||||||||||||||||||||||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | 166.9 | 4.08 | 159.6 | 4.22 | 153.6 | 4.60 | 150.0 | 4.65 | 147.9 | 4.71 | ||||||||||||||||||||||||||||||||||||||||||||||||
Real estate mortgage | 105.2 | 4.26 | 102.4 | 3.93 | 101.5 | 4.16 | 99.9 | 3.92 | 99.2 | 3.85 | ||||||||||||||||||||||||||||||||||||||||||||||||
Real estate construction | 19.6 | 4.61 | 20.5 | 6.12 | 22.0 | 4.64 | 24.3 | 4.26 | 26.9 | 3.68 | ||||||||||||||||||||||||||||||||||||||||||||||||
Lease financing | 12.9 | 7.41 | 13.0 | 7.21 | 12.9 | 7.72 | 13.0 | 7.83 | 13.0 | 9.00 | ||||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 38.8 | 2.39 | 38.2 | 2.42 | 36.4 | 2.65 | 33.6 | 2.83 | 31.0 | 3.57 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total commercial | 343.4 | 4.10 | 333.7 | 4.16 | 326.4 | 4.37 | 320.8 | 4.33 | 318.0 | 4.42 | ||||||||||||||||||||||||||||||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 229.8 | 4.74 | 223.8 | 4.83 | 224.9 | 4.97 | 229.6 | 5.01 | 228.8 | 5.06 | ||||||||||||||||||||||||||||||||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 87.2 | 4.34 | 89.1 | 4.37 | 91.9 | 4.25 | 94.7 | �� | 4.35 | 97.7 | 4.37 | |||||||||||||||||||||||||||||||||||||||||||||||
Credit card | 21.9 | 12.96 | 21.5 | 12.96 | 21.0 | 12.97 | 21.5 | 13.18 | 21.9 | 13.44 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other revolving credit and installment | 86.3 | 6.23 | 86.5 | 6.25 | 87.1 | 6.32 | 87.5 | 6.36 | 87.3 | 6.48 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total consumer | 425.2 | 5.39 | 420.9 | 5.44 | 424.9 | 5.48 | 433.3 | 5.54 | 435.7 | 5.61 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total loans | 768.6 | 4.81 | 754.6 | 4.87 | 751.3 | 5.00 | 754.1 | 5.03 | 753.7 | 5.11 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other | 4.7 | 4.32 | 4.9 | 4.18 | 5.0 | 4.10 | 5.2 | 3.90 | 5.3 | 3.93 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total earning assets | $ | 1,135.7 | 4.41 | % | $ | 1,111.4 | 4.43 | % | $ | 1,084.8 | 4.64 | % | $ | 1,075.5 | 4.73 | % | $ | 1,074.2 | 4.87 | % | ||||||||||||||||||||||||||||||||||||||
Funding sources | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing checking | $ | 35.3 | 0.06 | % | $ | 44.0 | 0.07 | % | $ | 53.3 | 0.09 | % | $ | 58.5 | 0.10 | % | $ | 60.9 | 0.09 | % | ||||||||||||||||||||||||||||||||||||||
Market rate and other savings | 485.1 | 0.14 | 473.4 | 0.17 | 455.1 | 0.20 | 443.6 | 0.22 | 431.2 | 0.25 | ||||||||||||||||||||||||||||||||||||||||||||||||
Savings certificates | 64.9 | 1.43 | 67.6 | 1.47 | 72.1 | 1.42 | 74.4 | 1.39 | 79.1 | 1.43 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other time deposits | 12.9 | 1.85 | 12.8 | 2.02 | 13.0 | 2.03 | 13.8 | 2.24 | 13.4 | 2.00 | ||||||||||||||||||||||||||||||||||||||||||||||||
Deposits in foreign offices | 67.2 | 0.20 | 63.5 | 0.23 | 57.9 | 0.23 | 57.5 | 0.23 | 55.5 | 0.21 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing deposits | 665.4 | 0.30 | 661.3 | 0.34 | 651.4 | 0.37 | 647.8 | 0.38 | 640.1 | 0.41 | ||||||||||||||||||||||||||||||||||||||||||||||||
Short-term borrowings | 48.7 | 0.14 | 50.4 | 0.18 | 53.3 | 0.18 | 54.8 | 0.22 | 50.6 | 0.24 | ||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | 129.4 | 2.73 | 139.5 | 2.81 | 145.5 | 2.78 | 150.1 | 2.95 | 160.8 | 2.86 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 12.2 | 2.60 | 11.2 | 2.75 | 11.0 | 3.03 | 9.5 | 3.24 | 8.3 | 3.13 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | 855.7 | 0.69 | 862.4 | 0.76 | 861.2 | 0.80 | 862.2 | 0.85 | 859.8 | 0.89 | ||||||||||||||||||||||||||||||||||||||||||||||||
Portion of noninterest-bearing funding sources | 280.0 | - | 249.0 | - | 223.6 | - | 213.3 | - | 214.4 | - | ||||||||||||||||||||||||||||||||||||||||||||||||
Total funding sources | $ | 1,135.7 | 0.52 | $ | 1,111.4 | 0.59 | $ | 1,084.8 | 0.63 | $ | 1,075.5 | 0.68 | $ | 1,074.2 | 0.71 | |||||||||||||||||||||||||||||||||||||||||||
Net interest margin on a | 3.89 | % | 3.84 | % | 4.01 | % | 4.05 | % | 4.16 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-earning assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and due from banks | $ | 17.7 | 17.1 | 17.4 | 17.4 | 18.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | 25.1 | 25.0 | 24.8 | 24.8 | 24.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 128.2 | 127.9 | 123.9 | 123.5 | 120.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest-earnings assets | $ | 171.0 | 170.0 | 166.1 | 165.7 | 162.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing funding sources | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits | $ | 246.7 | 221.2 | 199.3 | 193.1 | 197.9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other liabilities | 63.5 | 57.5 | 53.2 | 55.3 | 52.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Total equity | 140.8 | 140.3 | 137.2 | 130.6 | 126.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing funding sources used to fund earning assets | (280.0 | ) | (249.0 | ) | (223.6 | ) | (213.3 | ) | (214.4 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net noninterest-bearing funding sources | $ | 171.0 | 170.0 | 166.1 | 165.7 | 162.8 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 1,306.7 | 1,281.4 | 1,250.9 | 1,241.2 | 1,237.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Our average prime rate was 3.25% for quarters ended December 31, September 30, June 30 and March 31, 2011, and December 31 2010. The average three-month London Interbank Offered Rate (LIBOR) was 0.48%, 0.30%, 0.26%, 0.31% and 0.29% for the same quarters, respectively. |
(2) | Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost and the previously reported amounts for all periods prior to December 31, 2011, have been changed to amortized cost, the basis used to determine yield for those periods. |
28
Wells Fargo & Company and Subsidiaries
FIVE QUARTER SECURITIES AVAILABLE FOR SALE
| ||||||||||||||||||||
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | 6,968 | 13,813 | 10,523 | 1,507 | 1,604 | ||||||||||||||
Securities of U.S. states and political subdivisions | 32,593 | 26,970 | 24,412 | 21,159 | 18,654 | |||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||
Federal agencies | 96,754 | 84,716 | 78,338 | 75,552 | 82,037 | |||||||||||||||
Residential and commercial | 35,986 | 35,159 | 33,088 | 32,728 | 33,757 | |||||||||||||||
| ||||||||||||||||||||
Total mortgage-backed securities | 132,740 | 119,875 | 111,426 | 108,280 | 115,794 | |||||||||||||||
Other debt securities | 46,895 | 42,925 | 35,582 | 31,952 | 31,413 | |||||||||||||||
| ||||||||||||||||||||
Total debt securities available for sale | 219,196 | 203,583 | 181,943 | 162,898 | 167,465 | |||||||||||||||
Marketable equity securities | 3,417 | 3,593 | 4,355 | 5,008 | 5,189 | |||||||||||||||
| ||||||||||||||||||||
Total securities available for sale | $ | 222,613 | 207,176 | 186,298 | 167,906 | 172,654 | ||||||||||||||
|
FIVE QUARTER LOANS
| ||||||||||||||||||||
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 167,216 | 164,510 | 157,095 | 150,857 | 151,284�� | ||||||||||||||
Real estate mortgage | 105,975 | 104,363 | 101,458 | 101,084 | 99,435 | |||||||||||||||
Real estate construction | 19,382 | 19,719 | 21,374 | 22,868 | 25,333 | |||||||||||||||
Lease financing | 13,117 | 12,852 | 12,907 | 12,937 | 13,094 | |||||||||||||||
Foreign (1) | 39,760 | 38,390 | 37,855 | 35,476 | 32,912 | |||||||||||||||
| ||||||||||||||||||||
Total commercial | 345,450 | 339,834 | 330,689 | 323,222 | 322,058 | |||||||||||||||
| ||||||||||||||||||||
Consumer: | ||||||||||||||||||||
Real estate 1-4 family first mortgage | 228,894 | 223,758 | 222,874 | 226,509 | 230,235 | |||||||||||||||
Real estate 1-4 family junior lien mortgage | 85,991 | 88,264 | 89,947 | 93,041 | 96,149 | |||||||||||||||
Credit card | 22,836 | 21,650 | 21,191 | 20,996 | 22,260 | |||||||||||||||
Other revolving credit and installment | 86,460 | 86,600 | 87,220 | 87,387 | 86,565 | |||||||||||||||
| ||||||||||||||||||||
Total consumer | 424,181 | 420,272 | 421,232 | 427,933 | 435,209 | |||||||||||||||
| ||||||||||||||||||||
Total loans (net of unearned income) (2) | $ | 769,631 | 760,106 | 751,921 | 751,155 | 757,267 | ||||||||||||||
|
(1) | Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign if the borrower’s primary address is outside of the United States. |
(2) | Includes $36.7 billion, $37.2 billion, $38.7 billion, $40.0 billion and $41.4 billion of purchased credit-impaired (PCI) loans at December 31, September 30, June 30 and March 31, 2011, and December 31, 2010, respectively. See table on page 31 for detail of PCI loans. |
29
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONPERFORMING ASSETS (NONACCRUAL LOANS AND FORECLOSED ASSETS)
| ||||||||||||||||||||
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Nonaccrual loans: | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 2,142 | 2,128 | 2,393 | 2,653 | 3,213 | ||||||||||||||
Real estate mortgage | 4,085 | 4,429 | 4,691 | 5,239 | 5,227 | |||||||||||||||
Real estate construction | 1,890 | 1,915 | 2,043 | 2,239 | 2,676 | |||||||||||||||
Lease financing | 53 | 71 | 79 | 95 | 108 | |||||||||||||||
Foreign | 47 | 68 | 59 | 86 | 127 | |||||||||||||||
| ||||||||||||||||||||
Total commercial | 8,217 | 8,611 | 9,265 | 10,312 | 11,351 | |||||||||||||||
| ||||||||||||||||||||
Consumer: | ||||||||||||||||||||
Real estate 1-4 family first mortgage | 10,913 | 11,024 | 11,427 | 12,143 | 12,289 | |||||||||||||||
Real estate 1-4 family junior lien mortgage | 1,975 | 2,035 | 2,098 | 2,235 | 2,302 | |||||||||||||||
Other revolving credit and installment | 199 | 230 | 255 | 275 | 300 | |||||||||||||||
| ||||||||||||||||||||
Total consumer | 13,087 | 13,289 | 13,780 | 14,653 | 14,891 | |||||||||||||||
| ||||||||||||||||||||
Total nonaccrual loans (1)(2)(3) | 21,304 | 21,900 | 23,045 | 24,965 | 26,242 | |||||||||||||||
| ||||||||||||||||||||
As a percentage of total loans | 2.77 | % | 2.88 | 3.06 | 3.32 | 3.47 | ||||||||||||||
Foreclosed assets: | ||||||||||||||||||||
GNMA (4) | $ | 1,319 | 1,336 | 1,320 | 1,457 | 1,479 | ||||||||||||||
Non-GNMA | 3,342 | 3,608 | 3,541 | 4,055 | 4,530 | |||||||||||||||
| ||||||||||||||||||||
Total foreclosed assets | 4,661 | 4,944 | 4,861 | 5,512 | 6,009 | |||||||||||||||
| ||||||||||||||||||||
Total nonperforming assets | $ | 25,965 | 26,844 | 27,906 | 30,477 | 32,251 | ||||||||||||||
| ||||||||||||||||||||
As a percentage of total loans | 3.37 | % | 3.53 | 3.71 | 4.06 | 4.26 | ||||||||||||||
|
(1) | Also includes nonaccrual mortgages held for sale and loans held for sale in their respective loan categories. |
(2) | Excludes loans that are accounted for as PCI loans because they continue to earn interest income from accretable yield, independent of performance in accordance with their contractual terms. |
(3) | Real estate 1-4 family mortgage loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) and student loans predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program are not placed on nonaccrual status since they are insured or guaranteed. |
(4) | Consistent with regulatory reporting requirements, foreclosed real estate securing government insured/guaranteed loans is classified as nonperforming. Both principal and interest for government insured/guaranteed loans secured by the foreclosed real estate are collectible because the loans are insured by the FHA or guaranteed by the VA. |
30
Wells Fargo & Company and Subsidiaries
LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
| ||||||||||||||||||||
(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Total (excluding PCI)(1): | $ | 22,569 | 19,639 | 17,318 | 17,901 | 18,488 | ||||||||||||||
Less: FHA insured / VA guaranteed (2) | 19,240 | 16,498 | 14,474 | 14,353 | 14,733 | |||||||||||||||
Less: Student loans guaranteed under the FFELP (3) | 1,281 | 1,212 | 1,014 | 1,120 | 1,106 | |||||||||||||||
| ||||||||||||||||||||
Total, not government insured/guaranteed | $ | 2,048 | 1,929 | 1,830 | 2,428 | 2,649 | ||||||||||||||
| ||||||||||||||||||||
By segment and class, not government insured/guaranteed: | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 153 | 108 | 110 | 338 | 308 | ||||||||||||||
Real estate mortgage | 256 | 207 | 137 | 177 | 104 | |||||||||||||||
Real estate construction | 89 | 57 | 86 | 156 | 193 | |||||||||||||||
Foreign | 6 | 11 | 12 | 16 | 22 | |||||||||||||||
| ||||||||||||||||||||
Total commercial | 504 | 383 | 345 | 687 | 627 | |||||||||||||||
| ||||||||||||||||||||
Consumer: | ||||||||||||||||||||
Real estate 1-4 family first mortgage (4) | 781 | 819 | 728 | 858 | 941 | |||||||||||||||
Real estate 1-4 family junior lien mortgage (4) | 279 | 255 | 286 | 325 | 366 | |||||||||||||||
Credit card | 346 | 328 | 334 | 413 | 516 | |||||||||||||||
Other revolving credit and installment | 138 | 144 | 137 | 145 | 199 | |||||||||||||||
| ||||||||||||||||||||
Total consumer | 1,544 | 1,546 | 1,485 | 1,741 | 2,022 | |||||||||||||||
| ||||||||||||||||||||
Total, not government insured/guaranteed | $ | 2,048 | 1,929 | 1,830 | 2,428 | 2,649 | ||||||||||||||
|
(1) | The carrying value of purchased credit-impaired (PCI) loans contractually 90 days or more past due was $8.7 billion, $8.9 billion, $9.8 billion, $10.8 billion and $11.6 billion at December 31, September 30, June 30 and March 31, 2011, and December 31, 2010, respectively. These amounts are excluded from the above table as PCI loan accretable yield interest recognition is independent from the underlying contractual loan delinquency status. |
(2) | Represents loans whose repayments are insured by the FHA or guaranteed by the VA. |
(3) | Represents loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program (FFELP). |
(4) | Includes mortgages held for sale 90 days or more past due and still accruing. |
31
Wells Fargo & Company and Subsidiaries
PURCHASED CREDIT-IMPAIRED (PCI) LOANS
Loans purchased with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered to be credit impaired. PCI loans predominately represent loans acquired from Wachovia that were deemed to be credit impaired. Evidence of credit quality deterioration as of the purchase date may include statistics such as past due and nonaccrual status, recent borrower credit scores and recent LTV percentages. PCI loans are initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loan. Accordingly, the associated allowance for credit losses related to these loans is not carried over at the acquisition date.
Under the accounting guidance for PCI loans, the excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan, or pool of loans, in situations where there is a reasonable expectation about the timing and amount of cash flows expected to be collected. Accordingly, such loans are not classified as nonaccrual and they are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for PCI loans and not to contractual interest payments. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference.
Subsequent to acquisition, we regularly evaluate our estimates of cash flows expected to be collected. These evaluations, performed quarterly, require the continued usage of key assumptions and estimates, similar to the initial estimate of fair value. If we have probable decreases in the expected cash flows (other than due to a decrease in rate indices), we charge the provision for credit losses, resulting in an increase to the allowance for loan losses. If we have probable and significant increases in the expected cash flows subsequent to establishing an additional allowance, we first reverse any previously established allowance and then increase interest income over the remaining life of the loan, or pool of loans.
As a result of PCI loan accounting, certain credit-related ratios cannot be used to compare a portfolio that includes PCI loans against one that does not, or to compare ratios across quarters or years. The ratios particularly affected include the allowance for loan losses and allowance for credit losses as percentages of loans, of nonaccrual loans and of nonperforming assets; nonaccrual loans and nonperforming assets as a percentage of total loans; and net charge-offs as a percentage of loans.
| ||||||||||||||||
December 31, | ||||||||||||||||
|
| |||||||||||||||
(in millions) | 2011 | 2010 | 2009 | 2008 | ||||||||||||
| ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | $ | 399 | 718 | 1,911 | 4,580 | |||||||||||
Real estate mortgage | 3,270 | 2,855 | 4,137 | 5,803 | ||||||||||||
Real estate construction | 1,745 | 2,949 | 5,207 | 6,462 | ||||||||||||
Foreign | 1,353 | 1,413 | 1,733 | 1,859 | ||||||||||||
| ||||||||||||||||
Total commercial | 6,767 | 7,935 | 12,988 | 18,704 | ||||||||||||
| ||||||||||||||||
Consumer: | ||||||||||||||||
Real estate 1-4 family first mortgage | 29,746 | 33,245 | 38,386 | 39,214 | ||||||||||||
Real estate 1-4 family junior lien mortgage | 206 | 250 | 331 | 728 | ||||||||||||
Other revolving credit and installment | - | - | - | 151 | ||||||||||||
| ||||||||||||||||
Total consumer | 29,952 | 33,495 | 38,717 | 40,093 | ||||||||||||
| ||||||||||||||||
Total PCI loans (carrying value) | $ | 36,719 | 41,430 | 51,705 | 58,797 | |||||||||||
|
32
Wells Fargo & Company and Subsidiaries
CHANGES IN NONACCRETABLE DIFFERENCE FOR PCI LOANS
The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference. A nonaccretable difference is established in purchase accounting for PCI loans to absorb losses expected at that time on those loans. Amounts absorbed by the nonaccretable difference do not affect the income statement or the allowance for credit losses. Substantially all our commercial and industrial, CRE and foreign PCI loans are accounted for as individual loans. Conversely, Pick-a-Pay and other consumer PCI loans have been aggregated into several pools based on common risk characteristics. Each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Resolutions of loans may include sales to third parties, receipt of payments in settlement with the borrower, or foreclosure of the collateral. Our policy is to remove an individual loan from a pool based on comparing the amount received from its resolution with its contractual amount. Any difference between these amounts is absorbed by the nonaccretable difference. This removal method assumes that the amount received from resolution approximates pool performance expectations. The accretable yield percentage is unaffected by the resolution and any changes in the effective yield for the remaining loans in the pool are addressed by our quarterly cash flow evaluation process for each pool. For loans that are resolved by payment in full, there is no release of the nonaccretable difference for the pool because there is no difference between the amount received at resolution and the contractual amount of the loan. Modified PCI loans are not removed from a pool even if those loans would otherwise be deemed troubled debt restructurings (TDRs). Modified PCI loans that are accounted for individually are considered TDRs, and removed from PCI accounting, if there has been a concession granted in excess of the original nonaccretable difference. The following table provides an analysis of changes in the nonaccretable difference.
| ||||||||||||||||
(in millions) | Commercial | Pick-a-Pay | Other consumer | Total | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2008 | $ | 10,410 | 26,485 | 4,069 | 40,964 | |||||||||||
Release of nonaccretable difference due to: | ||||||||||||||||
Loans resolved by settlement with borrower (1) | (330) | - | - | (330) | ||||||||||||
Loans resolved by sales to third parties (2) | (86) | - | (85) | (171) | ||||||||||||
Reclassification to accretable yield for loans | (138) | (27) | (276) | (441) | ||||||||||||
Use of nonaccretable difference due to: | ||||||||||||||||
Losses from loan resolutions and write-downs (4) | (4,853) | (10,218) | (2,086) | (17,157) | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2009 | 5,003 | 16,240 | 1,622 | 22,865 | ||||||||||||
Release of nonaccretable difference due to: | ||||||||||||||||
Loans resolved by settlement with borrower (1) | (817) | - | - | (817) | ||||||||||||
Loans resolved by sales to third parties (2) | (172) | - | - | (172) | ||||||||||||
Reclassification to accretable yield for loans | (726) | (2,356) | (317) | (3,399) | ||||||||||||
Use of nonaccretable difference due to: | ||||||||||||||||
Losses from loan resolutions and write-downs (4) | (1,698) | (2,959) | (391) | (5,048) | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2010 | 1,590 | 10,925 | 914 | 13,429 | ||||||||||||
Addition of nonaccretable difference due to acquisitions | 188 | - | - | 188 | ||||||||||||
Release of nonaccretable difference due to: | ||||||||||||||||
Loans resolved by settlement with borrower (1) | (198) | - | - | (198) | ||||||||||||
Loans resolved by sales to third parties (2) | (41) | - | - | (41) | ||||||||||||
Reclassification to accretable yield for loans | (352) | - | (21) | (373) | ||||||||||||
Use of nonaccretable difference due to: | ||||||||||||||||
Losses from loan resolutions and write-downs (4) | (258) | (1,799) | (241) | (2,298) | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2011 | $ | 929 | 9,126 | 652 | 10,707 | |||||||||||
| ||||||||||||||||
| ||||||||||||||||
Balance, September 30, 2011 | $ | 958 | 9,643 | 686 | 11,287 | |||||||||||
Addition of nonaccretable difference due to acquisitions | 171 | - | - | 171 | ||||||||||||
Release of nonaccretable difference due to: | ||||||||||||||||
Loans resolved by settlement with borrower (1) | (44) | - | - | (44) | ||||||||||||
Loans resolved by sales to third parties (2) | (11) | - | - | (11) | ||||||||||||
Reclassification to accretable yield for loans | (55) | - | - | (55) | ||||||||||||
Use of nonaccretable difference due to: | ||||||||||||||||
Losses from loan resolutions and write-downs (4) | (90) | (517) | (34) | (641) | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2011 | $ | 929 | 9,126 | 652 | 10,707 | |||||||||||
|
(1) | Release of the nonaccretable difference for settlement with borrower, on individually accounted PCI loans, increases interest income in the period of settlement. Pick-a-Pay and Other consumer PCI loans do not reflect nonaccretable difference releases due to pool accounting for those loans, which assumes that the amount received approximates the pool performance expectations. |
(2) | Release of the nonaccretable difference as a result of sales to third parties increases noninterest income in the period of the sale. |
(3) | Reclassification of nonaccretable difference to accretable yield for loans with increased cash flow estimates will result in increased interest income as a prospective yield adjustment over the remaining life of the loan or pool of loans. |
(4) | Write-downs to net realizable value of PCI loans are absorbed by the nonaccretable difference when severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan. |
33
Wells Fargo & Company and Subsidiaries
CHANGES IN ACCRETABLE YIELD RELATED TO PCI LOANS
The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the loan, or pool of loans. The accretable yield is affected by:
• | Changes in interest rate indices for variable rate PCI loans – Expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected; |
• | Changes in prepayment assumptions – Prepayments affect the estimated life of PCI loans which may change the amount of interest income, and possibly principal, expected to be collected; and |
• | Changes in the expected principal and interest payments over the estimated life – Updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected. |
The change in the accretable yield related to PCI loans is presented in the following table.
| ||||||||||||||||||
Quarter ended Dec. 31, | Year ended Dec. 31, | |||||||||||||||||
|
|
|
| |||||||||||||||
(in millions) | 2011 | 2011 | 2010 | 2009 | ||||||||||||||
| ||||||||||||||||||
Total, beginning of period | $ | 16,896 | 16,714 | 14,559 | 10,447 | |||||||||||||
Addition of accretable yield due to acquisitions | 124 | 128 | - | - | ||||||||||||||
Accretion into interest income (1) | (551) | (2,206) | (2,392) | (2,601) | ||||||||||||||
Accretion into noninterest income due to sales (2) | (1) | (189) | (43) | (5) | ||||||||||||||
Reclassification from nonaccretable difference for loans | 55 | 373 | 3,399 | 441 | ||||||||||||||
Changes in expected cash flows that do not affect nonaccretable difference (3) | (562) | 1,141 | 1,191 | 6,277 | ||||||||||||||
| ||||||||||||||||||
Total, end of period | $ | 15,961 | 15,961 | 16,714 | 14,559 | |||||||||||||
|
(1) | Includes accretable yield released as a result of settlements with borrowers, which is included in interest income. |
(2) | Includes accretable yield released as a result of sales to third parties, which is included in noninterest income |
(3) | Represents changes in cash flows expected to be collected due to changes in interest rates on variable rate PCI loans, changes in prepayment assumptions and the impact of modifications. |
CHANGES IN ALLOWANCE FOR PCI LOAN LOSSES
When it is estimated that the cash flows expected to be collected have decreased subsequent to acquisition for a PCI loan or pool of loans, an allowance is established and a provision for additional loss is recorded as a charge to income. The following table summarizes the changes in allowance for PCI loan losses.
| ||||||||||||||||
(in millions) | Commercial | Pick-a-Pay | Other consumer | Total | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2008 | $ | - | - | - | - | |||||||||||
Provision for losses due to credit deterioration | 850 | - | 3 | 853 | ||||||||||||
Charge-offs | (520) | - | - | (520) | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2009 | 330 | - | 3 | 333 | ||||||||||||
Provision for losses due to credit deterioration | 712 | - | 59 | 771 | ||||||||||||
Charge-offs | (776) | - | (30) | (806) | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2010 | 266 | - | 32 | 298 | ||||||||||||
Provision for losses due to credit deterioration | 106 | - | 54 | 160 | ||||||||||||
Charge-offs | (207) | - | (20) | (227) | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2011 | $ | 165 | - | 66 | 231 | |||||||||||
| ||||||||||||||||
| ||||||||||||||||
Balance, September 30, 2011 | $ | 242 | - | 60 | 302 | |||||||||||
Provision for losses due to credit deterioration | (26) | - | 10 | (16) | ||||||||||||
Charge-offs | (51) | - | (4) | (55) | ||||||||||||
| ||||||||||||||||
Balance, December 31, 2011 | $ | 165 | - | 66 | 231 | |||||||||||
|
34
Wells Fargo & Company and Subsidiaries
PICK-A-PAY PORTFOLIO (1)
| ||||||||||||||||||||||||
December 31, 2011 | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||
PCI loans | All other loans | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
(in millions) | Adjusted unpaid principal balance (2) | Current LTV ratio (3) | Carrying value (4) |
Ratio of | Carrying value (4) | Ratio of carrying value to current value (5) | ||||||||||||||||||
| ||||||||||||||||||||||||
California | $ | 25,036 | 121 | % | $ | 19,269 | 93 | % | $ | 17,870 | 86 | % | ||||||||||||
Florida | 3,325 | 122 | 2,562 | 89 | 3,760 | 100 | ||||||||||||||||||
New Jersey | 1,336 | 92 | 1,224 | 84 | 2,321 | 79 | ||||||||||||||||||
New York | 757 | 95 | 685 | 84 | 1,013 | 82 | ||||||||||||||||||
Texas | 340 | 78 | 312 | 72 | 1,487 | 64 | ||||||||||||||||||
Other states | 6,111 | 110 | 5,004 | 89 | 10,145 | 87 | ||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||
Total Pick-a-Pay loans | $ | 36,905 | $ | 29,056 | $ | 36,596 | ||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||
|
(1) | The individual states shown in this table represent the top five states based on the total net carrying value of the Pick-a-Pay loans at the beginning of 2011. |
(2) | Adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan. |
(3) | The current LTV ratio is calculated as the adjusted unpaid principal balance divided by the collateral value. Collateral values are generally determined using automated valuation models (AVM) and are updated quarterly. AVMs are computer-based tools used to estimate market values of homes based on processing large volumes of market data including market comparables and price trends for local market areas. |
(4) | Carrying value, which does not reflect the allowance for loan losses, includes remaining purchase accounting adjustments, which, for PCI loans may include the nonaccretable difference and the accretable yield and, for all other loans, an adjustment to mark the loans to a market yield at date of merger less any subsequent charge-offs. |
(5) | The ratio of carrying value to current value is calculated as the carrying value divided by the collateral value. |
35
Wells Fargo & Company and Subsidiaries
NON-STRATEGIC AND LIQUIDATING LOAN PORTFOLIOS
| ||||||||||||||||||||
(in millions) | Dec.31, 2011 | Sept.30, 2011 | June 30, 2011 | Mar.31, 2011 | Dec.31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Legacy Wachovia commercial and industrial, commercial real estate and foreign PCI loans (1) | $ | 5,695 | 6,321 | 7,016 | 7,507 | 7,935 | ||||||||||||||
| ||||||||||||||||||||
Total commercial | 5,695 | 6,321 | 7,016 | 7,507 | 7,935 | |||||||||||||||
| ||||||||||||||||||||
Consumer: | ||||||||||||||||||||
Pick-a-Pay mortgage (1) | 65,652 | 67,361 | 69,587 | 71,506 | 74,815 | |||||||||||||||
Liquidating home equity | 5,710 | 5,982 | 6,266 | 6,568 | 6,904 | |||||||||||||||
Legacy Wells Fargo Financial indirect auto | 2,455 | 3,101 | 3,881 | 4,941 | 6,002 | |||||||||||||||
Legacy Wells Fargo Financial debt consolidation | 16,542 | 17,186 | 17,730 | 18,344 | 19,020 | |||||||||||||||
Education Finance - government guaranteed (2) | 15,376 | 15,611 | 16,295 | 16,907 | 17,510 | |||||||||||||||
Legacy Wachovia other PCI loans (1) | 896 | 947 | 978 | 1,048 | 1,118 | |||||||||||||||
| ||||||||||||||||||||
Total consumer | 106,631 | 110,188 | 114,737 | 119,314 | 125,369 | |||||||||||||||
| ||||||||||||||||||||
Total non-strategic and liquidating loan portfolios | $ | 112,326 | 116,509 | 121,753 | 126,821 | 133,304 | ||||||||||||||
|
(1) | Net of purchase accounting adjustments related to PCI loans. |
(2) | Effective first quarter 2011, we included our education finance government guaranteed loan portfolio as there is no longer a U.S. Government guaranteed student loan program available to private financial institutions, pursuant to legislation in 2010. Prior periods have been adjusted to reflect this change. |
HOME EQUITY PORTFOLIOS (1)
| ||||||||||||||||||||||||||
Outstanding balance | % of loans two payments or more past due | Loss rate (annualized) Quarter ended | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||
| ||||||||||||||||||||||||||
Core portfolio (2) | ||||||||||||||||||||||||||
California | $ | 25,555 | 27,850 | 3.03 | % | 3.30 | 3.42 | 3.95 | ||||||||||||||||||
Florida | 10,870 | 12,036 | 4.99 | 5.46 | 4.30 | 5.84 | ||||||||||||||||||||
New Jersey | 7,973 | 8,629 | 3.73 | 3.44 | 2.22 | 1.83 | ||||||||||||||||||||
Virginia | 5,248 | 5,667 | 2.15 | 2.33 | 1.31 | 1.70 | ||||||||||||||||||||
Pennsylvania | 5,071 | 5,432 | 2.82 | 2.48 | 1.41 | 1.11 | ||||||||||||||||||||
Other | 46,165 | 50,976 | 2.79 | 2.83 | 2.50 | 2.86 | ||||||||||||||||||||
| ||||||||||||||||||||||||||
Total | 100,882 | 110,590 | 3.13 | 3.24 | 2.79 | 3.24 | ||||||||||||||||||||
| ||||||||||||||||||||||||||
Liquidating portfolio | ||||||||||||||||||||||||||
California | 2,024 | 2,555 | 5.50 | 6.66 | 11.93 | 13.48 | ||||||||||||||||||||
Florida | 265 | 330 | 7.02 | 8.85 | 9.71 | 10.59 | ||||||||||||||||||||
Arizona | 116 | 149 | 6.64 | 6.91 | 17.54 | 18.45 | ||||||||||||||||||||
Texas | 97 | 125 | 0.93 | 2.02 | 1.57 | 2.95 | ||||||||||||||||||||
Minnesota | 75 | 91 | 2.83 | 5.39 | 8.13 | 8.73 | ||||||||||||||||||||
Other | 3,133 | 3,654 | 4.13 | 4.53 | 7.12 | 6.46 | ||||||||||||||||||||
| ||||||||||||||||||||||||||
Total | 5,710 | 6,904 | 4.73 | 5.54 | 9.09 | 9.49 | ||||||||||||||||||||
| ||||||||||||||||||||||||||
Total core and liquidating portfolios | $ | 106,592 | 117,494 | 3.22 | 3.37 | 3.13 | 3.61 | |||||||||||||||||||
| ||||||||||||||||||||||||||
|
(1) | Consists predominantly of real estate 1-4 family junior lien mortgages and first and junior lines of credit secured by real estate, excluding PCI loans. |
(2) | Includes $1.5 billion at December 31, 2011, and $1.7 billion at December 31, 2010, associated with the Pick-a-Pay portfolio. |
36
Wells Fargo & Company and Subsidiaries
CHANGES IN ALLOWANCE FOR CREDIT LOSSES
| ||||||||||||||||
Quarter ended Dec. 31, |
Year ended Dec. 31, | |||||||||||||||
|
|
|
| |||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
| ||||||||||||||||
Balance, beginning of period | $ | 20,372 | 24,372 | 23,463 | 25,031 | |||||||||||
Provision for credit losses | 2,040 | 2,989 | 7,899 | 15,753 | ||||||||||||
Interest income on certain impaired loans (1) | (86) | (63) | (332) | (266) | ||||||||||||
Loan charge-offs: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | (416) | (610) | (1,598) | (2,775) | ||||||||||||
Real estate mortgage | (153) | (270) | (636) | (1,151) | ||||||||||||
Real estate construction | (35) | (199) | (351) | (1,189) | ||||||||||||
Lease financing | (8) | (26) | (38) | (120) | ||||||||||||
Foreign | (52) | (50) | (173) | (198) | ||||||||||||
| ||||||||||||||||
Total commercial | (664) | (1,155) | (2,796) | (5,433) | ||||||||||||
| ||||||||||||||||
Consumer: | ||||||||||||||||
Real estate 1-4 family first mortgage | (904) | (1,199) | (3,883) | (4,900) | ||||||||||||
Real estate 1-4 family junior lien mortgage | (856) | (1,059) | (3,763) | (4,934) | ||||||||||||
Credit card | (303) | (505) | (1,449) | (2,396) | ||||||||||||
Other revolving credit and installment | (412) | (573) | (1,724) | (2,437) | ||||||||||||
| ||||||||||||||||
Total consumer | (2,475) | (3,336) | (10,819) | (14,667) | ||||||||||||
| ||||||||||||||||
Total loan charge-offs | (3,139) | (4,491) | (13,615) | (20,100) | ||||||||||||
| ||||||||||||||||
Loan recoveries: | ||||||||||||||||
Commercial: | ||||||||||||||||
Commercial and industrial | 106 | 110 | 419 | 427 | ||||||||||||
Real estate mortgage | 36 | 36 | 143 | 68 | ||||||||||||
Real estate construction | 40 | 28 | 146 | 110 | ||||||||||||
Lease financing | 4 | 5 | 24 | 20 | ||||||||||||
Foreign | 7 | 22 | 45 | 53 | ||||||||||||
| ||||||||||||||||
Total commercial | 193 | 201 | 777 | 678 | ||||||||||||
| ||||||||||||||||
Consumer: | ||||||||||||||||
Real estate 1-4 family first mortgage | 60 | 175 | 405 | 522 | ||||||||||||
Real estate 1-4 family junior lien mortgage | 56 | 54 | 218 | 211 | ||||||||||||
Credit card | 47 | 53 | 251 | 218 | ||||||||||||
Other revolving credit and installment | 143 | 169 | 665 | 718 | ||||||||||||
| ||||||||||||||||
Total consumer | 306 | 451 | 1,539 | 1,669 | ||||||||||||
| ||||||||||||||||
Total loan recoveries | 499 | 652 | 2,316 | 2,347 | ||||||||||||
| ||||||||||||||||
Net loan charge-offs (2) | (2,640) | (3,839) | (11,299) | (17,753) | ||||||||||||
| ||||||||||||||||
Allowances related to business combinations/other (3) | (18) | 4 | (63) | 698 | ||||||||||||
| ||||||||||||||||
Balance, end of period | $ | 19,668 | 23,463 | 19,668 | 23,463 | |||||||||||
| ||||||||||||||||
Components: | ||||||||||||||||
Allowance for loan losses | $ | 19,372 | 23,022 | 19,372 | 23,022 | |||||||||||
Allowance for unfunded credit commitments | 296 | 441 | 296 | 441 | ||||||||||||
| ||||||||||||||||
Allowance for credit losses (4) | $ | 19,668 | 23,463 | 19,668 | 23,463 | |||||||||||
| ||||||||||||||||
Net loan charge-offs (annualized) as a percentage of average total loans (2) | 1.36 | % | 2.02 | 1.49 | 2.30 | |||||||||||
Allowance for loan losses as a percentage of total loans (4) | 2.52 | 3.04 | 2.52 | 3.04 | ||||||||||||
Allowance for credit losses as a percentage of total loans (4) | 2.56 | 3.10 | 2.56 | 3.10 | ||||||||||||
|
(1) | Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize reductions in allowance as interest income. |
(2) | For PCI loans, charge-offs are only recorded to the extent that losses exceed the purchase accounting estimates. |
(3) | Includes $693 million for the year ended December 31, 2010, related to the adoption of consolidation accounting guidance on January 1, 2010. |
(4) | The allowance for credit losses includes $231 million and $298 million at December 31, 2011 and 2010, respectively, related to PCI loans acquired from Wachovia. Loans acquired from Wachovia are included in total loans net of related purchase accounting net write-downs. |
37
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES
| ||||||||||||||||||||
Quarter ended | ||||||||||||||||||||
|
| |||||||||||||||||||
(in millions) | Dec.31, 2011 | Sept.30, 2011 | June30, 2011 | Mar.31, 2011 | Dec.31, 2010 | |||||||||||||||
| ||||||||||||||||||||
Balance, beginning of quarter | $ | 20,372 | 21,262 | 22,383 | 23,463 | 24,372 | ||||||||||||||
Provision for credit losses | 2,040 | 1,811 | 1,838 | 2,210 | 2,989 | |||||||||||||||
Interest income on certain impaired loans (1) | (86) | (84) | (79) | (83) | (63) | |||||||||||||||
Loan charge-offs: | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | (416) | (349) | (365) | (468) | (610) | |||||||||||||||
Real estate mortgage | (153) | (119) | (185) | (179) | (270) | |||||||||||||||
Real estate construction | (35) | (98) | (99) | (119) | (199) | |||||||||||||||
Lease financing | (8) | (10) | (7) | (13) | (26) | |||||||||||||||
Foreign | (52) | (25) | (57) | (39) | (50) | |||||||||||||||
| ||||||||||||||||||||
Total commercial | (664) | (601) | (713) | (818) | (1,155) | |||||||||||||||
| ||||||||||||||||||||
Consumer: | ||||||||||||||||||||
Real estate 1-4 family first mortgage | (904) | (900) | (1,064) | (1,015) | (1,199) | |||||||||||||||
Real estate 1-4 family junior lien mortgage | (856) | (893) | (968) | (1,046) | (1,059) | |||||||||||||||
Credit card | (303) | (320) | (378) | (448) | (505) | |||||||||||||||
Other revolving credit and installment | (412) | (421) | (391) | (500) | (573) | |||||||||||||||
| ||||||||||||||||||||
Total consumer | (2,475) | (2,534) | (2,801) | (3,009) | (3,336) | |||||||||||||||
| ||||||||||||||||||||
Total loan charge-offs | (3,139) | (3,135) | (3,514) | (3,827) | (4,491) | |||||||||||||||
| ||||||||||||||||||||
Loan recoveries: | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | 106 | 88 | 111 | 114 | 110 | |||||||||||||||
Real estate mortgage | 36 | 23 | 57 | 27 | 36 | |||||||||||||||
Real estate construction | 40 | 43 | 27 | 36 | 28 | |||||||||||||||
Lease financing | 4 | 7 | 6 | 7 | 5 | |||||||||||||||
Foreign | 7 | 17 | 10 | 11 | 22 | |||||||||||||||
| ||||||||||||||||||||
Total commercial | 193 | 178 | 211 | 195 | 201 | |||||||||||||||
| ||||||||||||||||||||
Consumer: | ||||||||||||||||||||
Real estate 1-4 family first mortgage | 60 | 79 | 155 | 111 | 175 | |||||||||||||||
Real estate 1-4 family junior lien mortgage | 56 | 51 | 59 | 52 | 54 | |||||||||||||||
Credit card | 47 | 54 | 84 | 66 | 53 | |||||||||||||||
Other revolving credit and installment | 143 | 162 | 167 | 193 | 169 | |||||||||||||||
| ||||||||||||||||||||
Total consumer | 306 | 346 | 465 | 422 | 451 | |||||||||||||||
| ||||||||||||||||||||
Total loan recoveries | 499 | 524 | 676 | 617 | 652 | |||||||||||||||
| ||||||||||||||||||||
Net loan charge-offs | (2,640) | (2,611) | (2,838) | (3,210) | (3,839) | |||||||||||||||
| ||||||||||||||||||||
Allowances related to business combinations/other | (18) | (6) | (42) | 3 | 4 | |||||||||||||||
| ||||||||||||||||||||
Balance, end of quarter | $ | 19,668 | 20,372 | 21,262 | 22,383 | 23,463 | ||||||||||||||
| ||||||||||||||||||||
Components: | ||||||||||||||||||||
Allowance for loan losses | $ | 19,372 | 20,039 | 20,893 | 21,983 | 23,022 | ||||||||||||||
Allowance for unfunded credit commitments | 296 | 333 | 369 | 400 | 441 | |||||||||||||||
| ||||||||||||||||||||
Allowance for credit losses | $ | 19,668 | 20,372 | 21,262 | 22,383 | 23,463 | ||||||||||||||
| ||||||||||||||||||||
Net loan charge-offs (annualized) as a percentage of average total loans | 1.36 | % | 1.37 | 1.52 | 1.73 | 2.02 | ||||||||||||||
Allowance for loan losses as a percentage of: | ||||||||||||||||||||
Total loans | 2.52 | 2.64 | 2.78 | 2.93 | 3.04 | |||||||||||||||
Nonaccrual loans | 91 | 92 | 91 | 88 | 88 | |||||||||||||||
Nonaccrual loans and other nonperforming assets | 75 | 75 | 75 | 72 | 71 | |||||||||||||||
Allowance for credit losses as a percentage of: | ||||||||||||||||||||
Total loans | 2.56 | 2.68 | 2.83 | 2.98 | 3.10 | |||||||||||||||
Nonaccrual loans | 92 | 93 | 92 | 90 | 89 | |||||||||||||||
Nonaccrual loans and other nonperforming assets | 76 | 76 | 76 | 73 | 72 | |||||||||||||||
|
(1) | Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan’s effective interest rate over the remaining life of the loan recognize reductions in allowance as interest income. |
38
Wells Fargo & Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
| ||||||||
Year ended December 31, | ||||||||
|
| |||||||
(in millions) | 2011 | 2010 | ||||||
| ||||||||
Balance, beginning of period | $ 127,889 | 114,359 | ||||||
Cumulative effect from change in accounting for VIEs (1) | - | 183 | ||||||
Cumulative effect from change in accounting for embedded credit derivatives (2) | - | (28) | ||||||
Wells Fargo net income | 15,869 | 12,362 | ||||||
Wells Fargo other comprehensive income (loss), net of tax, related to: | ||||||||
Translation adjustments | (22) | 45 | ||||||
Investment securities | (653) | 1,525 | ||||||
Derivative instruments and hedging activities | (249) | 89 | ||||||
Defined benefit pension plans | (607) | 70 | ||||||
Common stock issued | 1,296 | 1,375 | ||||||
Common stock repurchased (3) | (2,416) | (91) | ||||||
Preferred stock released by ESOP | 959 | 796 | ||||||
Preferred stock issued | 2,501 | - | ||||||
Common stock warrants repurchased | (2) | (545) | ||||||
Common stock dividends | (2,537) | (1,045) | ||||||
Preferred stock dividends and other | (844) | (730) | ||||||
Noncontrolling interests and other, net | 503 | (476) | ||||||
| ||||||||
Balance, end of period | $ 141,687 | 127,889 | ||||||
|
(1) | Effective January 1, 2010, we adopted changes in consolidation accounting pursuant to amendments by ASU 2009-17 to ASC 810 (FAS 167) and, accordingly, consolidated certain VIEs that were not included in our consolidated financial statements at December 31, 2009. We recorded a $183 million increase to beginning retained earnings as a cumulative effect adjustment. |
(2) | Effective July 1, 2010, we adopted changes in accounting for embedded credit derivatives pursuant to ASU 2010-11, which provides guidance clarifying the accounting for embedded credit derivative features in certain financial instruments. We recorded a $28 million decrease to beginning retained earnings as a cumulative effect adjustment. |
(3) | For the year ended December 31, 2011, includes $150 million related to a private forward repurchase transaction entered into in fourth quarter 2011 that will settle in first quarter 2012 for an estimated 6 million shares of common stock. |
39
Wells Fargo & Company and Subsidiaries
FIVE QUARTER TIER 1 COMMON EQUITY UNDER BASEL I(1)
| ||||||||||||||||||||||
(in billions) |
Dec. 31, | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||||
| ||||||||||||||||||||||
Total equity | $ | 141.7 | 139.2 | 137.9 | 134.9 | 127.9 | ||||||||||||||||
Noncontrolling interests | (1.5) | (1.5) | (1.5) | (1.5) | (1.5) | |||||||||||||||||
| ||||||||||||||||||||||
Total Wells Fargo stockholders’ equity | 140.2 | 137.7 | 136.4 | 133.4 | 126.4 | |||||||||||||||||
| ||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||
Preferred equity | (10.6) | (10.6) | (10.6) | (10.6) | (8.1) | |||||||||||||||||
Goodwill and intangible assets (other than MSRs) | (34.0) | (34.4) | (34.6) | (35.1) | (35.5) | |||||||||||||||||
Applicable deferred taxes | 3.8 | 4.0 | 4.1 | 4.2 | 4.3 | |||||||||||||||||
MSRs over specified limitations | (0.8) | (0.7) | (0.9) | (0.9) | (0.9) | |||||||||||||||||
Cumulative other comprehensive income | (3.1) | (3.7) | (5.3) | (4.9) | (4.6) | |||||||||||||||||
Other | (0.4) | (0.4) | (0.3) | (0.1) | (0.3) | |||||||||||||||||
| ||||||||||||||||||||||
Tier 1 common equity | (A) | $ | 95.1 | 91.9 | 88.8 | 86.0 | 81.3 | |||||||||||||||
| ||||||||||||||||||||||
Total risk-weighted assets (2) | (B) | $ | 1,005.3 | 983.2 | 970.2 | 962.9 | 980.0 | |||||||||||||||
| ||||||||||||||||||||||
Tier 1 common equity to total risk-weighted assets | (A)/(B) | 9.46 | % | 9.34 | 9.15 | 8.93 | 8.30 | |||||||||||||||
|
(1) | Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. |
(2) | Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. The Company’s December 31, 2011, preliminary risk-weighted assets reflect estimated on-balance sheet risk-weighted assets of $838.7 billion and derivative and off-balance sheet risk-weighted assets of $166.6 billion. |
Wells Fargo & Company and Subsidiaries
TIER 1 COMMON EQUITY UNDER BASEL III (ESTIMATED) (1)
| ||||||||||||
(in billions) |
Dec. 31, | |||||||||||
| ||||||||||||
Tier 1 common equity under Basel I | $ | 95.1 | ||||||||||
| ||||||||||||
Adjustments from Basel I to Basel III: | ||||||||||||
Cumulative other comprehensive income (2) | 3.1 | |||||||||||
Other | 0.3 | |||||||||||
| ||||||||||||
Tier 1 common equity anticipated under Basel III | (C) | 98.5 | ||||||||||
| ||||||||||||
Total risk-weighted assets anticipated under Basel III (3) | (D) | $ | 1,314.6 | |||||||||
| ||||||||||||
Tier 1 common equity to total risk-weighted assets anticipated under Basel III | (C)/(D) | 7.49 | % | |||||||||
|
(1) | Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. |
(2) | Volatility in interest rates can have a significant impact on the valuation of cumulative other comprehensive income and MSRs and therefore, impact adjustments under Basel III in future reporting periods. |
(3) | Under current Basel proposals, risk-weighted assets incorporate different classifications of assets, with certain risk weights based on a borrower’s credit rating or Wells Fargo’s own risk models, along with adjustments to address a combination of credit/counterparty, operational and market risks, and other Basel III elements. The amount of risk-weighted assets anticipated under Basel III is preliminary and subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory authorities. |
40
Wells Fargo & Company and Subsidiaries
OPERATING SEGMENT RESULTS (1)
| ||||||||||||||||||||||||||||||||||||||||
Community | Wholesale | Wealth, Brokerage |
Consolidated | |||||||||||||||||||||||||||||||||||||
Banking | Banking | and Retirement | Other (2) | Company | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
(income/expense in millions, average balances in billions) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Quarter ended Dec. 31, | ||||||||||||||||||||||||||||||||||||||||
Net interest income (3) | $ | 7,414 | 7,751 | 3,081 | 2,965 | 754 | 676 | (357) | (329) | 10,892 | 11,063 | |||||||||||||||||||||||||||||
Provision for credit losses | 2,031 | 2,785 | 32 | 195 | 20 | 113 | (43) | (104) | 2,040 | 2,989 | ||||||||||||||||||||||||||||||
Noninterest income | 5,590 | 5,721 | 2,344 | 2,875 | 2,311 | 2,365 | (532) | (530) | 9,713 | 10,431 | ||||||||||||||||||||||||||||||
Noninterest expense | 7,310 | 7,855 | 2,939 | 2,992 | 2,521 | 2,608 | (262) | (115) | 12,508 | 13,340 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Income (loss) before income tax expense (benefit) | 3,663 | 2,832 | 2,454 | 2,653 | 524 | 320 | (584) | (640) | 6,057 | 5,165 | ||||||||||||||||||||||||||||||
Income tax expense (benefit) | 1,082 | 836 | 815 | 958 | 199 | 121 | (222) | (243) | 1,874 | 1,672 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Net income (loss) before noncontrolling interests | 2,581 | 1,996 | 1,639 | 1,695 | 325 | 199 | (362) | (397) | 4,183 | 3,493 | ||||||||||||||||||||||||||||||
Less: Net income (loss) from noncontrolling interests | 78 | 72 | (2) | 5 | - | 2 | - | - | 76 | 79 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Net income (loss) (4) | $ | 2,503 | 1,924 | 1,641 | 1,690 | 325 | 197 | (362) | (397) | 4,107 | 3,414 | |||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Average loans | $ | 493.9 | 514.1 | 264.8 | 229.6 | 42.7 | 43.0 | (32.8) | (33.0) | 768.6 | 753.7 | |||||||||||||||||||||||||||||
Average assets | 756.0 | 771.6 | 458.3 | 384.4 | 159.3 | 140.2 | (66.9) | (59.2) | 1,306.7 | 1,237.0 | ||||||||||||||||||||||||||||||
Average core deposits | 568.3 | 544.4 | 223.2 | 185.1 | 136.6 | 121.5 | (63.2) | (56.2) | 864.9 | 794.8 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Year ended Dec. 31, | ||||||||||||||||||||||||||||||||||||||||
Net interest income (3) | $ | 29,580 | 31,885 | 11,714 | 11,474 | 2,855 | 2,707 | (1,386) | (1,309) | 42,763 | 44,757 | |||||||||||||||||||||||||||||
Provision (reversal of provision) for credit losses | 8,001 | 13,807 | (109) | 1,920 | 170 | 334 | (163) | (308) | 7,899 | 15,753 | ||||||||||||||||||||||||||||||
Noninterest income | 21,124 | 22,604 | 9,952 | 10,951 | 9,333 | 9,023 | (2,224) | (2,125) | 38,185 | 40,453 | ||||||||||||||||||||||||||||||
Noninterest expense | 29,234 | 30,071 | 11,194 | 11,269 | 9,935 | 9,768 | (970) | (652) | 49,393 | 50,456 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Income (loss) before income tax expense (benefit) | 13,469 | 10,611 | 10,581 | 9,236 | 2,083 | 1,628 | (2,477) | (2,474) | 23,656 | 19,001 | ||||||||||||||||||||||||||||||
Income tax expense (benefit) | 4,072 | 3,347 | 3,525 | 3,315 | 789 | 616 | (941) | (940) | 7,445 | 6,338 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Net income (loss) before noncontrolling interests | 9,397 | 7,264 | 7,056 | 5,921 | 1,294 | 1,012 | (1,536) | (1,534) | 16,211 | 12,663 | ||||||||||||||||||||||||||||||
Less: Net income from noncontrolling interests | 317 | 274 | 19 | 20 | 6 | 7 | - | - | 342 | 301 | ||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Net income (loss) (4) | $ | 9,080 | 6,990 | 7,037 | 5,901 | 1,288 | 1,005 | (1,536) | (1,534) | 15,869 | 12,362 | |||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||
Average loans | $ | 498.1 | 530.1 | 249.1 | 230.5 | 43.0 | 43.0 | (33.1) | (33.0) | 757.1 | 770.6 | |||||||||||||||||||||||||||||
Average assets | 755.7 | 772.4 | 428.1 | 373.8 | 152.2 | 139.3 | (65.7) | (58.6) | 1,270.3 | 1,226.9 | ||||||||||||||||||||||||||||||
Average core deposits | 556.2 | 536.4 | 202.1 | 170.0 | 130.4 | 121.2 | (62.0) | (55.6) | 826.7 | 772.0 | ||||||||||||||||||||||||||||||
|
(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. In first quarter 2010, we conformed certain funding and allocation methodologies of legacy Wachovia to those of Wells Fargo; in addition, amounts remaining in “Other” related to integration expense were revised to reflect only integration expense related to the Wachovia merger. In fourth quarter 2010, we realigned certain lending businesses into Wholesale Banking from Community Banking to reflect our previously announced restructuring of Wells Fargo Financial. In first quarter 2011, we realigned a private equity business into Wholesale Banking from Community Banking. Prior periods have been revised to reflect these changes. |
(2) | Includes Wachovia integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing wealth management customers serviced and products sold in the stores. |
(3) | Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment. |
(4) | Represents segment net income (loss) for Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement segments and Wells Fargo net income for the consolidated company. |
41
Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
| ||||||||||||||||||||
Quarter ended | ||||||||||||||||||||
|
| |||||||||||||||||||
(income/expense in millions, average balances in billions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
| ||||||||||||||||||||
COMMUNITY BANKING | ||||||||||||||||||||
Net interest income (2) | $ | 7,414 | 7,264 | 7,359 | 7,543 | 7,751 | ||||||||||||||
Provision for credit losses | 2,031 | 1,978 | 1,927 | 2,065 | 2,785 | |||||||||||||||
Noninterest income | 5,590 | 5,232 | 5,208 | 5,094 | 5,721 | |||||||||||||||
Noninterest expense | 7,310 | 6,901 | 7,418 | 7,605 | 7,855 | |||||||||||||||
| ||||||||||||||||||||
Income before income tax expense | 3,663 | 3,617 | 3,222 | 2,967 | 2,832 | |||||||||||||||
Income tax expense | 1,082 | 1,217 | 1,031 | 742 | 836 | |||||||||||||||
| ||||||||||||||||||||
Net income before noncontrolling interests | 2,581 | 2,400 | 2,191 | 2,225 | 1,996 | |||||||||||||||
Less: Net income from noncontrolling interests | 78 | 85 | 104 | 50 | 72 | |||||||||||||||
| ||||||||||||||||||||
Segment net income | $ | 2,503 | 2,315 | 2,087 | 2,175 | 1,924 | ||||||||||||||
| ||||||||||||||||||||
Average loans | $ | 493.9 | 491.0 | 498.2 | 509.8 | 514.1 | ||||||||||||||
Average assets | 756.0 | 754.4 | 752.5 | 759.9 | 771.6 | |||||||||||||||
Average core deposits | 568.3 | 556.3 | 552.0 | 548.1 | 544.4 | |||||||||||||||
| ||||||||||||||||||||
WHOLESALE BANKING | ||||||||||||||||||||
Net interest income (2) | $ | 3,081 | 2,910 | 2,968 | 2,755 | 2,965 | ||||||||||||||
Provision (reversal of provision) for credit losses | 32 | (178) | (97) | 134 | 195 | |||||||||||||||
Noninterest income | 2,344 | 2,240 | 2,663 | 2,705 | 2,875 | |||||||||||||||
Noninterest expense | 2,939 | 2,689 | 2,766 | 2,800 | 2,992 | |||||||||||||||
| ||||||||||||||||||||
Income before income tax expense | 2,454 | 2,639 | 2,962 | 2,526 | 2,653 | |||||||||||||||
Income tax expense | 815 | 826 | 1,012 | 872 | 958 | |||||||||||||||
| ||||||||||||||||||||
Net income before noncontrolling interests | 1,639 | 1,813 | 1,950 | 1,654 | 1,695 | |||||||||||||||
Less: Net income (loss) from noncontrolling interests | (2) | - | 19 | 2 | 5 | |||||||||||||||
| ||||||||||||||||||||
Segment net income | $ | 1,641 | 1,813 | 1,931 | 1,652 | 1,690 | ||||||||||||||
| ||||||||||||||||||||
Average loans | $ | 264.8 | 253.4 | 243.1 | 234.7 | 229.6 | ||||||||||||||
Average assets | 458.3 | 438.0 | 415.7 | 399.6 | 384.4 | |||||||||||||||
Average core deposits | 223.2 | 209.3 | 190.6 | 184.8 | 185.1 | |||||||||||||||
| ||||||||||||||||||||
WEALTH, BROKERAGE AND RETIREMENT | ||||||||||||||||||||
Net interest income (2) | $ | 754 | 714 | 691 | 696 | 676 | ||||||||||||||
Provision for credit losses | 20 | 48 | 61 | 41 | 113 | |||||||||||||||
Noninterest income | 2,311 | 2,173 | 2,395 | 2,454 | 2,365 | |||||||||||||||
Noninterest expense | 2,521 | 2,368 | 2,487 | 2,559 | 2,608 | |||||||||||||||
| ||||||||||||||||||||
Income before income tax expense | 524 | 471 | 538 | 550 | 320 | |||||||||||||||
Income tax expense | 199 | 178 | 204 | 208 | 121 | |||||||||||||||
| ||||||||||||||||||||
Net income before noncontrolling interests | 325 | 293 | 334 | 342 | 199 | |||||||||||||||
Less: Net income from noncontrolling interests | - | 2 | 1 | 3 | 2 | |||||||||||||||
| ||||||||||||||||||||
Segment net income | $ | 325 | 291 | 333 | 339 | 197 | ||||||||||||||
| ||||||||||||||||||||
Average loans | $ | 42.7 | 43.1 | 43.5 | 42.7 | 43.0 | ||||||||||||||
Average assets | 159.3 | 155.1 | 147.7 | 146.5 | 140.2 | |||||||||||||||
Average core deposits | 136.6 | 133.4 | 126.0 | 125.4 | 121.5 | |||||||||||||||
| ||||||||||||||||||||
OTHER (3) | ||||||||||||||||||||
Net interest income (2) | $ | (357) | (346) | (340) | (343) | (329) | ||||||||||||||
Provision for credit losses | (43) | (37) | (53) | (30) | (104) | |||||||||||||||
Noninterest income | (532) | (559) | (558) | (575) | (530) | |||||||||||||||
Noninterest expense | (262) | (281) | (196) | (231) | (115) | |||||||||||||||
| ||||||||||||||||||||
Loss before income tax benefit | (584) | (587) | (649) | (657) | (640) | |||||||||||||||
Income tax benefit | (222) | (223) | (246) | (250) | (243) | |||||||||||||||
| ||||||||||||||||||||
Net loss before noncontrolling interests | (362) | (364) | (403) | (407) | (397) | |||||||||||||||
Less: Net income from noncontrolling interests | - | - | - | - | - | |||||||||||||||
| ||||||||||||||||||||
Other net loss | $ | (362) | (364) | (403) | (407) | (397) | ||||||||||||||
| ||||||||||||||||||||
Average loans | $ | (32.8) | (33.0) | (33.5) | (33.1) | (33.0) | ||||||||||||||
Average assets | (66.9) | (66.1) | (65.0) | (64.8) | (59.2) | |||||||||||||||
Average core deposits | (63.2) | (62.2) | (61.1) | (61.5) | (56.2) | |||||||||||||||
| ||||||||||||||||||||
CONSOLIDATED COMPANY | ||||||||||||||||||||
Net interest income (2) | $ | 10,892 | 10,542 | 10,678 | 10,651 | 11,063 | ||||||||||||||
Provision for credit losses | 2,040 | 1,811 | 1,838 | 2,210 | 2,989 | |||||||||||||||
Noninterest income | 9,713 | 9,086 | 9,708 | 9,678 | 10,431 | |||||||||||||||
Noninterest expense | 12,508 | 11,677 | 12,475 | 12,733 | 13,340 | |||||||||||||||
| ||||||||||||||||||||
Income before income tax expense | 6,057 | 6,140 | 6,073 | 5,386 | 5,165 | |||||||||||||||
Income tax expense | 1,874 | 1,998 | �� | 2,001 | 1,572 | 1,672 | ||||||||||||||
| ||||||||||||||||||||
Net income before noncontrolling interests | 4,183 | 4,142 | 4,072 | 3,814 | 3,493 | |||||||||||||||
Less: Net income from noncontrolling interests | 76 | 87 | 124 | 55 | 79 | |||||||||||||||
| ||||||||||||||||||||
Wells Fargo net income | $ | 4,107 | 4,055 | 3,948 | 3,759 | 3,414 | ||||||||||||||
| ||||||||||||||||||||
Average loans | $ | 768.6 | 754.5 | 751.3 | 754.1 | 753.7 | ||||||||||||||
Average assets | 1,306.7 | 1,281.4 | 1,250.9 | 1,241.2 | 1,237.0 | |||||||||||||||
Average core deposits | 864.9 | 836.8 | 807.5 | 796.8 | 794.8 | |||||||||||||||
|
(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. In fourth quarter 2010, we realigned certain lending businesses into Wholesale Banking from Community Banking to reflect our previously announced restructuring of Wells Fargo Financial. In first quarter 2011, we realigned a private equity business into Wholesale Banking from Community Banking. Prior periods have been revised to reflect these changes. |
(2) | Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment. |
(3) | Includes Wachovia integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing wealth management customers serviced and products sold in the stores. |
42
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING
| ||||||||||||||||||||
Quarter ended | ||||||||||||||||||||
|
| |||||||||||||||||||
Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||||||||
(in millions) | 2011 | 2011 | 2011 | 2011 | 2010 | |||||||||||||||
| ||||||||||||||||||||
MSRs measured using the fair value method: | ||||||||||||||||||||
Fair value, beginning of quarter | $ | 12,372 | 14,778 | 15,648 | 14,467 | 12,486 | ||||||||||||||
Servicing from securitizations or asset transfers | 1,211 | 744 | 740 | 1,262 | 1,052 | |||||||||||||||
Changes in fair value: | ||||||||||||||||||||
Due to changes in valuation model inputs or assumptions (1) | (464) | (2,640) | (1,075) | 499 | 1,613 | |||||||||||||||
Other changes in fair value (2) | (516) | (510) | (535) | (580) | (684) | |||||||||||||||
| ||||||||||||||||||||
Total changes in fair value | (980) | (3,150) | (1,610) | (81) | 929 | |||||||||||||||
| ||||||||||||||||||||
Fair value, end of quarter | $ | 12,603 | 12,372 | 14,778 | 15,648 | 14,467 | ||||||||||||||
|
(1) | Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates and costs to service, including delinquency and foreclosure costs. |
(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) | 2011 | 2011 | 2011 | 2011 | 2010 | |||||||||||||||
| ||||||||||||||||||||
Amortized MSRs: | ||||||||||||||||||||
Balance, beginning of quarter | $ | 1,437 | 1,432 | 1,432 | 1,422 | 1,013 | ||||||||||||||
Purchases | 53 | 21 | 36 | 45 | 36 | |||||||||||||||
Servicing from securitizations or asset transfers | 26 | 50 | 27 | 29 | 432 | |||||||||||||||
Amortization | (71) | (66) | (63) | (64) | (59) | |||||||||||||||
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Balance, end of quarter | 1,445 | 1,437 | 1,432 | 1,432 | 1,422 | |||||||||||||||
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Valuation Allowance: | ||||||||||||||||||||
Balance, beginning of quarter | (40) | (10) | (9) | (3) | - | |||||||||||||||
Reversal of provision (provision) for MSRs in excess of fair value | 3 | (30) | (1) | (6) | (3) | |||||||||||||||
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Balance, end of quarter | (37) | (40) | (10) | (9) | (3) | |||||||||||||||
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Amortized MSRs, net | $ | 1,408 | 1,397 | 1,422 | 1,423 | 1,419 | ||||||||||||||
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Fair value of amortized MSRs: | ||||||||||||||||||||
Beginning of quarter | $ | 1,759 | 1,805 | 1,898 | 1,812 | 1,349 | ||||||||||||||
End of quarter | 1,756 | 1,759 | 1,805 | 1,898 | 1,812 | |||||||||||||||
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43
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
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Quarter ended | ||||||||||||||||||||
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(in millions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
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Servicing income, net: | ||||||||||||||||||||
Servicing fees (1) | $ | 876 | 1,029 | 1,102 | 1,137 | 1,129 | ||||||||||||||
Changes in fair value of MSRs carried at fair value: | ||||||||||||||||||||
Due to changes in valuation model inputs or assumptions (2) | (464 | ) | (2,640 | ) | (1,075 | ) | 499 | 1,613 | ||||||||||||
Other changes in fair value (3) | (516 | ) | (510 | ) | (535 | ) | (580 | ) | (684 | ) | ||||||||||
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Total changes in fair value of MSRs carried at fair value | (980 | ) | (3,150 | ) | (1,610 | ) | (81 | ) | 929 | |||||||||||
Amortization | (71 | ) | (66 | ) | (63 | ) | (64 | ) | (59 | ) | ||||||||||
Reversal of provision (provision) for MSRs in excess of fair value | 3 | (30 | ) | (1 | ) | (6 | ) | (3 | ) | |||||||||||
Net derivative gains (losses) from economic hedges (4) | 665 | 3,247 | 1,449 | (120 | ) | (1,756 | ) | |||||||||||||
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Total servicing income, net | $ | 493 | 1,030 | 877 | 866 | 240 | ||||||||||||||
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Market-related valuation changes to MSRs, net of hedge results (2)+(4) | $ | 201 | 607 | 374 | 379 | (143 | ) | |||||||||||||
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(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 and costs to service, including delinquency and foreclosure costs. (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.
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(in billions) |
Dec. 31, | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
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Managed servicing portfolio (1): | ||||||||||||||||||||
Residential mortgage servicing: | ||||||||||||||||||||
Serviced for others | $ | 1,456 | 1,457 | 1,464 | 1,453 | 1,429 | ||||||||||||||
Owned loans serviced | 358 | 349 | 338 | 346 | 371 | |||||||||||||||
Subservicing | 8 | 8 | 8 | 9 | 9 | |||||||||||||||
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Total residential servicing | 1,822 | 1,814 | 1,810 | 1,808 | 1,809 | |||||||||||||||
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Commercial mortgage servicing: | ||||||||||||||||||||
Serviced for others | 398 | 401 | 402 | 406 | 408 | |||||||||||||||
Owned loans serviced | 106 | 104 | 101 | 101 | 99 | |||||||||||||||
Subservicing | 14 | 14 | 14 | 14 | 13 | |||||||||||||||
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Total commercial servicing | 518 | 519 | 517 | 521 | 520 | |||||||||||||||
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Total managed servicing portfolio | $ | 2,340 | 2,333 | 2,327 | 2,329 | 2,329 | ||||||||||||||
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Total serviced for others | $ | 1,854 | 1,858 | 1,866 | 1,859 | 1,837 | ||||||||||||||
Ratio of MSRs to related loans serviced for others | 0.76 | % | 0.74 | 0.87 | 0.92 | 0.86 | ||||||||||||||
Weighted-average note rate (mortgage loans serviced for others) | 5.14 | 5.21 | 5.26 | 5.31 | 5.39 | |||||||||||||||
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(1) The components of our managed servicing portfolio are presented at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced. |
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SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA |
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Quarter ended | ||||||||||||||||||||
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(in billions) | Dec. 31, 2011 | Sept. 30, 2011 | June 30, 2011 | Mar. 31, 2011 | Dec. 31, 2010 | |||||||||||||||
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Application data: | ||||||||||||||||||||
Wells Fargo first mortgage quarterly applications | $ | 157 | 169 | 109 | 102 | 158 | ||||||||||||||
Refinances as a percentage of applications | 78 | % | 74 | 55 | 61 | 73 | ||||||||||||||
Wells Fargo first mortgage unclosed pipeline, at quarter end | $ | 72 | 84 | 51 | 45 | 73 | ||||||||||||||
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Residential Real Estate Originations: | ||||||||||||||||||||
Wells Fargo first mortgage loans: | ||||||||||||||||||||
Retail | $ | 58 | 43 | 34 | 49 | 70 | ||||||||||||||
Correspondent/Wholesale | 61 | 45 | 29 | 34 | 57 | |||||||||||||||
Other (1) | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
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Total quarter-to-date | $ | 120 | 89 | 64 | 84 | 128 | ||||||||||||||
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Total year-to-date | $ | 357 | 237 | 148 | 84 | 386 | ||||||||||||||
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(1) | Consists of home equity loans and lines and legacy Wells Fargo Financial. |
44
Wells Fargo & Company and Subsidiaries
CHANGES IN LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSES
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Quarter ended | Year ended | |||||||||||||||||||
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(in millions) |
Dec.31, | Sept.30, 2011 | Dec.31, 2010 | Dec.31, 2011 | Dec.31, 2010 | |||||||||||||||
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Balance, beginning of period | $ | 1,194 | 1,188 | 1,331 | 1,289 | 1,033 | ||||||||||||||
Provision for repurchase losses: | ||||||||||||||||||||
Loan sales | 27 | 19 | 35 | 101 | 144 | |||||||||||||||
Change in estimate – primarily due to credit deterioration | 377 | 371 | 429 | 1,184 | 1,474 | |||||||||||||||
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Total additions | 404 | 390 | 464 | 1,285 | 1,618 | |||||||||||||||
Losses | (272) | (384) | (506) | (1,248) | (1,362) | |||||||||||||||
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Balance, end of period | $ | 1,326 | 1,194 | 1,289 | 1,326 | 1,289 | ||||||||||||||
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UNRESOLVED REPURCHASE DEMANDS AND MORTGAGE INSURANCE RESCISSIONS |
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($ in millions) |
Government | Private | Mortgage insurance rescissions (2) | Total | ||||||||||||||||
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December 31, 2011 | ||||||||||||||||||||
Number of loans | 7,066 | 470 | 1,178 | 8,714 | ||||||||||||||||
Original loan balance (3) | $ | 1,575 | 167 | 268 | 2,010 | |||||||||||||||
September 30, 2011 | ||||||||||||||||||||
Number of loans | 6,577 | 582 | 1,508 | 8,667 | ||||||||||||||||
Original loan balance (3) | $ | 1,500 | 208 | 314 | 2,022 | |||||||||||||||
June 30, 2011 | ||||||||||||||||||||
Number of loans | 6,876 | 695 | 2,019 | 9,590 | ||||||||||||||||
Original loan balance (3) | $ | 1,565 | 230 | 444 | 2,239 | |||||||||||||||
March 31, 2011 | ||||||||||||||||||||
Number of loans | 6,210 | 1,973 | 2,885 | 11,068 | ||||||||||||||||
Original loan balance (3) | $ | 1,395 | 424 | 674 | 2,493 | |||||||||||||||
December 31, 2010 | ||||||||||||||||||||
Number of loans | 6,501 | 2,899 | 3,248 | 12,648 | ||||||||||||||||
Original loan balance (3) | $ | 1,467 | 680 | 801 | 2,948 | |||||||||||||||
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(1) | Includes repurchase demands of 861 and $161 million, 878 and $173 million, 892 and $179 million, 685 and $132 million, and 1,495 and $291 million, for December 31, September 30, June 30 and March 31, 2011, and December 31, 2010, respectively, received from investors on mortgage servicing rights acquired from other originators. We generally have the right of recourse against the seller and may be able to recover losses related to such repurchase demands subject to counterparty risk associated with the seller. |
(2) | As part of our representations and warranties in our loan sales contracts, we typically represent to GSEs and private investors that certain loans have mortgage insurance to the extent there are loans that have loan to value ratios in excess of 80% that require mortgage insurance. To the extent the mortgage insurance is rescinded by the mortgage insurer due to a claim of breach of a contractual representation or warranty, the lack of insurance may result in a repurchase demand from an investor. Similar to repurchase demands, we evaluate mortgage insurance rescission notices for validity and appeal for reinstatement if the rescission was not based on a contractual breach. When investor demands are received due to lack of mortgage insurance, they are reported as unresolved repurchase demands based on the applicable investor category for the loan (GSE or private). Over the last year, approximately 20% of our repurchase demands from GSEs had mortgage insurance rescission as one of the reasons for the repurchase demand. Of all the mortgage insurance rescissions notices received in 2010, approximately 70% have resulted in repurchase demands through December 2011. Not all mortgage insurance rescissions received in 2010 have been completed through the appeals process with the mortgage insurer and upon successful appeal, we work with the investor to rescind the repurchase demand. |
(3) | While original loan balance related to these demands is presented above, the establishment of the repurchase liability is based on a combination of factors, such as our appeals success rates, reimbursement by correspondent and other third party originators, and projected loss severity, which is driven by the difference between the current loan balance and the estimated collateral value less costs to sell the property. |