![]() 4Q11 Quarterly Supplement January 17, 2012 Exhibit 99.2 |
![]() Wells Fargo 4Q11 Supplement 1 Appendix Pages 22-44 - Recent loan portfolio acquisitions 23 - Non-strategic/liquidating loan portfolio risk reduction 24 - Purchased credit-impaired (PCI) portfolios 25 - PCI nonaccretable difference 26 - PCI accretable yield 27 - Commercial PCI accretable yield 28 - Pick-a-Pay PCI accretable yield 29 - 4Q11 Credit quality highlights 30 - Commercial nonaccrual loans 31 - Consumer real estate nonaccrual loans 32 - Commercial real estate (CRE) loan portfolio 33 - Pick-a-Pay mortgage portfolio 34 - Pick-a-Pay credit highlights 35 - Pick-a-Pay nonaccrual loan composition 36 - Real estate 1-4 family first mortgage portfolio 37 - Home equity portfolio 38-39 - Credit card portfolio 40 - Auto portfolio 41 Forward-looking statements and additional information 42 Tier 1 common equity under Basel I 43 Tier 1 common equity under Basel III (Estimated) 44 Table of contents 4Q11 Results - 4Q11 Results Page 2 - Continued strong diversification 3 - Balance Sheet overview 4 - Income Statement overview 5 - Loans 6 - Deposits 7 - Net interest income 8 - Noninterest income 9 - Noninterest expense 10 - Noninterest expense 11 - Noninterest expense target 12 - Community Banking 13 - Wholesale Banking 14 - Wealth, Brokerage and Retirement 15 - Credit quality 16-17 - Mortgage servicing 18-19 - Capital 20 - Summary 21 |
![]() Wells Fargo 4Q11 Supplement 2 Record earnings of $4.1 billion, up 1% linked quarter (LQ) and 20% year-over-year (YoY) $0.73 diluted earnings per share, up 1% LQ and 20% YoY Total revenue of $20.6 billion, up $977 million LQ on both higher net interest income and noninterest income Pre-tax pre-provision profit (1) of $8.1 billion, up $146 million LQ Strong credit quality ROA = 1.25%, up 16 bps YoY ROE = 11.97%, up 102 bps YoY Capital levels continued to grow - 9.46% Tier 1 common equity ratio under Basel I and estimated Tier 1 common equity ratio under Basel III of 7.49% (2) 4Q11 Results Wells Fargo Net Income ($ in millions) (1) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes 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. (2) Pro forma Basel III calculation based on Tier 1 common equity, as adjusted to reflect management’s interpretation of current Basel III capital proposals. This pro forma calculation is subject to change depending on final promulgation of Basel III capital rulemaking and interpretations by regulatory authorities. See pages 43-44 for additional information regarding Tier 1 common equity ratios. 3,414 3,759 3,948 4,055 4,107 4Q10 1Q11 2Q11 3Q11 4Q11 |
![]() Wells Fargo 4Q11 Supplement 3 47% 53% Balanced Spread and Fee Income Diversified Fee Generation 11% 11% 17% 7% 11% 5% 19% 5% 14% Service Charges 11% Card Fees 7% Other Banking Fees 11% Mortgage Servicing, net 5% Insurance 5% Other Noninterest Income (1) 14% Noninterest Income 47% Net Interest Income 53% Diversified Loan Portfolio Commercial Loans 40% Consumer Loans 55% Continued strong diversification 55% 40% 5% Foreign Loans 5% Mortgage Orig./Sales, net 19% Trust, Investment & IRA fees 11% Commissions & all other fees 17% All data is for 4Q11. (1) Other noninterest income includes net gains (losses) on debt securities available for sale, net gains from equity investments, net gains (losses) from trading activities, operating leases and all other noninterest income. |
![]() Wells Fargo 4Q11 Supplement 4 Balance Sheet overview Loans Total period-end loans up $9.5 billion; core loans grew $13.7 billion; the non-strategic/liquidating portfolio decreased $4.2 billion (1) Acquired $2.1 billion of commercial real estate loans and consolidated $5.6 billion of reverse mortgage loans (2) previously sold Organic loan growth of $6.0 billion Securities available for sale (AFS) Balances up $15.4 billion, as we continued to deploy cash, and investments were partially offset by runoff in 4Q11 Trading Assets Balances up $20.0 billion reflecting conforming agency mortgages pooled into securities and held on balance sheet through year-end VaR (3) relatively stable with an average daily VaR of $32 million in the quarter Deposits Balances up $24.6 billion on increased balances from existing customers and new account growth Long-term debt Balances down $7.9 billion on trust preferred securities (TRUPs) redemptions and continued maturities $9.0 billion of LTD maturities with $2.5 billion of issuances in 4Q11 Common stock repurchases Purchased 26.6 million common shares and entered into a 4Q11 forward repurchase transaction that will settle in 1Q12 for an additional estimated 5.6 million shares |
![]() Wells Fargo 4Q11 Supplement 5 Income Statement overview Net interest income Up $350 million as growth in loans, securities and the mortgage warehouse was partially offset by balance sheet repricing Net interest margin (NIM) up 5 bps to 3.89% Noninterest income Mortgage banking up $531 million on higher origination volumes Card fees down $333 million on lower debit card fees as a $365 million decline in debit interchange fees was partially offset by higher credit card fees Market sensitive revenues (1) up $337 million - Trading includes $275 million higher deferred compensation plan investments (offset in expense) Other income included $153 million gain on sale of H.D. Vest Noninterest expense Deferred compensation up $266 million (offset in trading) Mortgage and capital markets personnel expense up approximately $300 million on higher revenues Seasonally higher equipment and foreclosed asset expenses of approximately $200 million Approximately $100 million in higher costs related to the mortgage servicing regulatory consent orders All result comparisons are 4Q11 compared to 3Q11. (1) net gains (losses) from trading activities, net gains (losses) on debt securities available for sale and net gains from equity investments. |
![]() Wells Fargo 4Q11 Supplement 6 624.1 624.4 630.1 643.6 657.3 133.2 126.8 121.8 116.5 112.3 757.3 751.2 751.9 760.1 769.6 4Q10 1Q11 2Q11 3Q11 4Q11 Core loans Non-strategic/liquidating loans 5.11% 5.03% 5.00% 4.87% 4.81% Loans Growth despite continued reduction in non-strategic/liquidating portfolio Period-end loans up $9.5 billion from 3Q11 - Commercial loans up $5.6 billion, or 2%, on growth in C&I, CRE and foreign, driven by portfolio acquisitions, new loans and new customer activity • Included $2.1 billion of U.S.-based CRE loans purchased - Consumer loans up $3.9 billion on the consolidation of $5.6 billion of reverse mortgage loans (2) and growth in credit card and core auto more than offset non-strategic/liquidating consumer loan runoff of $3.6 billion Non-strategic/liquidating loans (1) down $4.2 billion from 3Q11 Core loans grew $13.7 billion, or 2%, from 3Q11 including organic loan growth of $6.0 billion Total average loan yield of 4.81% down 6 bps LQ and 30 bps YoY due to runoff of higher-yielding loans including the non-strategic/liquidating portfolio and addition of lower-yielding reverse mortgages - Weighted average yield of the non-strategic portfolio was 5.29% in 4Q11 Period-end balances. (1) See page 24 for additional information regarding the non-strategic/liquidating portfolio, which comprises the Pick-a-Pay, liquidating home equity, legacy WFF indirect auto, legacy WFF debt consolidation, Education Finance-government guaranteed and legacy Wachovia Commercial, Commercial Real Estate and other PCI loan portfolios. (2) Based on clarifying guidance from the SEC in 4Q11, sales of $5.6 billion of reverse mortgages to a GNMA securitization program were reversed. The economics of these assets remain with the third party investors in the securitizations and Wells Fargo earns a servicing fee. Period–end Loans Outstanding ($ in billions) (1) Total average loan yield |
![]() Wells Fargo 4Q11 Supplement 7 640.1 661.4 665.4 197.9 221.2 246.7 838.0 882.6 912.1 4Q10 3Q11 4Q11 Interest-bearing deposits Noninterest-bearing deposits 0.31% 0.25% 0.22% Deposits Strong growth and reduced average cost Average deposits up $29.5 billion LQ to $912.1 billion Average core deposits of $864.9 billion up $28.1 billion from 3Q11 and up $70.1 billion, or 9%, YoY - 113% of average loans - Average retail core deposits up 5% annualized LQ Average core checking and savings up $30.9 billion, or 4% from 3Q11, and up $84.4 billion, or 12%, YoY - 93% of average core deposits Consumer checking accounts up a net 3.2% YoY Average deposit cost of 22 bps down 3 bps from 3Q11 and 9 bps YoY Average Deposits and Rates ($ in billions) Average deposit cost Average Core Checking and Savings ($ in billions) 715.7 769.2 800.1 4Q10 3Q11 4Q11 |
![]() Wells Fargo 4Q11 Supplement 8 Net interest income Net Interest Income (TE) (1) ($ in millions) Tax-equivalent net interest income (1) increased $369 million from 3Q11; NIM up 5 bps Average earning assets up $24.3 billion, driven by: - $14.0 billion increase in loans - $23.5 billion increase in AFS securities - $16.7 billion supported increased mortgage refinance activity ($10.2 billion in mortgages held for sale and $6.5 billion in trading) - Growth in assets partially funded by draw down of fed funds and short-term investments of $30.9 billion Increased balance sheet efficiency and pricing discipline offset the impact of balance sheet repricing and resulted in a margin increase of 5 bps - Interest bearing deposit costs down 4 bps in the quarter - Noninterest bearing deposits grew $25.5 billion - Long-term debt expense declined on the maturity of debt and the redemption of $5.8 billion of TRUPs - Income from variable sources, including loan prepayments and resolutions, up modestly from 3Q11 11,224 10,812 10,851 10,714 11,083 4Q10 1Q11 2Q11 3Q11 4Q11 4.16% 4.05% 4.01% 3.84% 3.89% Net Interest Margin (NIM) (1) Tax equivalent net interest income is based on the federal statutory rate of 35% for the periods presented. Net interest income was $11,063 million, $10,651 million, $10,678 million, $10,542 million and $10,892 million for 4Q10, 1Q11, 2Q11, 3Q11 and 4Q11, respectively. |
![]() Wells Fargo 4Q11 Supplement 9 Noninterest income Service charges on deposit account fees down 1% LQ Trust and investment fees down 5% LQ as lower retail brokerage asset-based fees and transaction activity offset stronger investment banking originations Card fees down $333 million LQ as lower debit card interchange income was partially offset by growth in credit card fees Mortgage banking up $531 million, or 29%, LQ on a 35% increase in originations Insurance up 10% LQ on seasonally higher underwriting gains Trading gains up $872 million from a 3Q11 that included the loss on resolving one legacy Wachovia position, and included $275 million higher deferred compensation plan investment results (P&L neutral), and stronger core customer accommodation trading Equity gains down $283 million LQ and included $85 million higher other-than-temporary impairment Operating lease income down $224 million LQ on lower lease settlement income Other income up $402 million LQ on a $153 million gain on the sale of H.D. Vest and a $102 million LQ increase in reinsurance income (revenue neutral - offset in trading) 10,431 9,678 9,708 9,086 9,713 4Q10 1Q11 2Q11 3Q11 4Q11 vs vs ($ in millions) 4Q11 3Q11 4Q10 Noninterest income Service charges on deposit accounts $ 1,091 (1) % 5 Trust and investment fees 2,658 (5) (10) Card fees 680 (33) (28) Other fees 1,096 1 3 Mortgage banking 2,364 29 (14) Insurance 466 10 (17) Net gains (losses) from trading activities 430 nm (19) 48 (84) nm Net gains from equity investments 61 (82) (81) Operating leases 60 (79) (24) Other 759 nm 68 Total nonterest income $ 9,713 7 % (7) Net gains (losses) on debt securities available for sale |
![]() Wells Fargo 4Q11 Supplement 10 Noninterest expense Noninterest expense up $831 million from 3Q11 driven by higher employee benefits expense, incentive compensation, and seasonally higher costs; down $832 million from 4Q10 - Commission and incentive compensation increased $163 million, or 8%, on higher revenue-based compensation in mortgage and capital markets - Employee benefits expense up $232 million reflecting the $266 million increase in deferred compensation expense - Equipment expense up $91 million on seasonally higher software and system maintenance - Other expenses up $366 million and included: • $173 million increase in outside professional services including ~$100 million in costs related to the mortgage servicing regulatory consent orders • $99 million increase in foreclosed assets expense driven by seasonality Additional 4Q11 expenses - Salaries expense included $133 million in expense initiative severance expense vs. $111 million in 3Q11 - $374 million of Wachovia integration costs in 4Q11 vs. $376 million in 3Q11 • 63% of merger integration costs in the quarter were from outside professional services, contract services and advertising 13,340 12,733 12,475 11,677 12,508 4Q10 1Q11 2Q11 3Q11 4Q11 vs vs ($ in millions) 4Q11 3Q11 4Q10 Noninterest expense Salaries $ 3,706 - % 5 Commission and incentive compensation 2,251 8 3 Employee benefits 1,012 30 (15) Equipment 607 18 (25) Net occupancy 759 1 1 Core deposit and other intangibles 467 - (15) FDIC and other deposit assessments 314 (5) 4 Other 3,392 12 (16) Total noninterest expense 12,508 7 (6) |
![]() Wells Fargo 4Q11 Supplement 11 $11,677 $12,508 $266 $300 $200 $100 Deferred Compensation Mortgage servicing regulatory consent orders expense Seasonally higher equipment and foreclosed asset expense Mortgage and capital markets personnel costs, largely incentive compensation 3Q11 Noninterest Expense 4Q11 Noninterest Expense Noninterest expense 4Q11 Increases from 3Q11 ~ ~ ~ ($ in millions) |
![]() ![]() Wells Fargo 4Q11 Supplement 12 Noninterest expense target (1) Reflects management’s current targeted noninterest expense in 4Q12, which is subject to change and may be affected by a variety of factors, including business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our business and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters. Currently expect 1Q12 expenses to remain elevated driven by seasonally higher personnel expenses and final quarter of integration expenses partially offset by continued gains from efficiency and cost save initiatives Noninterest expense targeted to decline to $11 billion in 4Q12 - 2Q12 expense currently expected to decline by $500-700 million from reductions in 1Q12 personnel and merger costs - Full year 2012 expenses to benefit from ongoing expense efficiency and cost save initiatives - Savings drivers expected to include: • Consolidation of consumer lending businesses • Streamlined staff functions and combined technology efforts • Moderation in cyclically-high mortgage costs, including loss remediation • Streamlined customer experiences in key businesses Quarterly expense trends may vary ($ in millions) Actual 4Q11 Merger integration expense $ 374 - Staff/technology functions 2,343 2,050-2,150 Loss mitigation and foreclosed asset expense 718 600-650 Business optimization 8,910 8,100-8,450 Operating losses 163 not targeted Total NIE $ 12,508 10,750-11,250 Targeted 4Q12 (1) |
![]() Wells Fargo 4Q11 Supplement 13 Community Banking Higher segment earnings reflects stronger mortgage banking revenues Average loans increased 1% reflecting the move of reserve mortgage loans on to the balance sheet as well as growth in core auto, credit card and SBA lending Regional Banking Solid combined net checking gains - Consumer checking up a net 3.2% from 4Q10 - Business checking up a net 3.7% from 4Q10 Combined retail bank cross-sell of 5.92 products per household up from 5.70 in 4Q10 - West cross-sell = 6.29 - East cross-sell = 5.43 Wells Fargo Home Mortgage Mortgage originations up $31 billion from 3Q11 while application volumes were down 7% Managed residential mortgage servicing of $1.8 trillion up 1% YoY (1) Checking account growth is period-ending, 12-month rolling. vs vs ($ in millions) 4Q11 3Q11 4Q10 Net interest income $ 7,414 2 % (4) Noninterest income 5,590 7 (2) Provision for credit losses 2,031 3 (27) Noninterest expense 7,310 6 (7) Income tax expense 1,082 (11) 29 Segment earnings $ 2,503 8 % 30 ($ in billions) Avg loans, net 493.9 1 (4) Avg core deposits $ 568.3 2 4 4Q11 3Q11 4Q10 Regional Banking Consumer checking account growth (1) 3.2 % 5.6 7.5 Business checking account growth (1) 3.7 3.8 4.8 Retail Bank cross-sell 5.92 5.91 5.70 vs vs ($ in billions) 4Q11 3Q11 4Q10 Wells Fargo Home Mortgage Applications $ 157 (7) % (1) Application pipeline 72 (14) (1) Originations 120 35 (6) Managed residential mortgage servicing ($ in trillions) $ 1.8 - 1 |
![]() Wells Fargo 4Q11 Supplement 14 Wholesale Banking Net interest income up 6% LQ on strong earning assets and deposit growth - Average loans up $11.4 billion, or 4%, driven by new loans from existing customers, new customer growth and portfolio acquisitions Noninterest income up 5% LQ primarily from capital markets and investment banking results Provision expense up $210 million LQ on $200 million lower reserve release Expenses up 9% LQ driven by higher revenue- based incentive compensation, as well as higher operating losses, professional services, foreclosed asset and travel expenses Treasury Management Commercial card spend volume of $3.44 billion up 4% LQ and 25% YoY Investment Banking 2011 U.S. investment banking market share (2) of 5.1% up from 4.2% in 2010 Asset Management Total AUM down 7% and mutual funds AUM down 9% YoY (1) Approved and initiated. (2) Source: Dealogic U.S. investment banking fee market share. vs vs ($ in millions) 4Q11 3Q11 4Q10 Net interest income $ 3,081 6 % 4 Noninterest income 2,344 5 (18) Provision for credit losses 32 nm (84) Noninterest expense 2,939 9 (2) Income tax expense 815 (1) (15) Segment earnings $ 1,641 (9) % (3) ($ in billions) Avg loans, net $ 264.8 4 15 Avg core deposits 223.2 7 21 vs vs ($ in billions) 4Q11 3Q11 4Q10 Key Metrics: Commercial card spend volume $ 3.44 4 % 25 CEO Mobile Wire volume (1) 2.2 (11) nm 2011 U.S. investment banking market share % (2) 5.1 Total AUM $ 453 1 (7) Advantage Funds AUM 214 1 (9) |
![]() Wells Fargo 4Q11 Supplement 15 Wealth, Brokerage and Retirement Net interest income up 6% LQ - Average loans relatively stable LQ and YoY - Average core deposits up 2% LQ and up 12% YoY Noninterest income up 6% LQ on gains on deferred compensation plan investments and the sale of H.D. Vest Total revenue increased 6%; excluding the $153 million H.D. Vest gain and $59 million of deferred compensation plan investment gains vs. $128 million in losses in 3Q11, revenue was down 5% on lower asset-based fees, retail brokerage transaction revenue and securities gains - Brokerage managed account asset fees priced at beginning of quarter, reflecting 9/30/2011 market valuations Expenses up 6% LQ primarily due to higher deferred compensation expense; excluding $52 million deferred compensation expense vs. $125 million in 3Q11, expenses declined 1% on lower revenue-based compensation expense Retail Brokerage Managed account assets up 7% LQ and 8% YoY driven by strong net flows Wealth Management Wealth Management client assets down 2% YoY Retirement IRA assets down 4% YoY Institutional Retirement plan assets up 2% YoY (1) Includes deposits. (2) Data as of November 2011. vs vs ($ in millions) 4Q11 3Q11 4Q10 Net interest income $ 754 6 % 12 Noninterest income 2,311 6 (2) Provision for credit losses 20 (58) (82) Noninterest expense 2,521 6 (3) Income tax expense 199 12 64 Segment earnings $ 325 12 % 65 ($ in billions) Avg loans, net 42.7 (1) (1) Avg core deposits $ 136.6 2 12 vs vs ($ in billions, except where noted) 4Q11 3Q11 4Q10 Key Metrics: WBR Clients Assets (1) ($ in trillions)$ 1.3 3 % (3) Cross-sell (2) 10.05 1 bps 25 Retail Brokerage Financial Advisors 15,263 - % - Managed account assets $ 254 7 8 Client assets (1) ($ in trillions) 1.1 3 (3) Wealth Management Client assets (1) 198 4 (2) Retirement IRA Assets 268 3 (4) Institutional Retirement Plan Assets 236 3 2 |
![]() Wells Fargo 4Q11 Supplement 16 Credit quality Strong performance with stable net charge-offs $2.6 billion net charge-offs, up $29 million LQ though down 51% from 4Q09 peak Provision expense of $2.0 billion, up $229 million from 3Q11, includes a $600 million reserve release (1) in 4Q11 vs. $800 million in 3Q11 Allowance for credit losses = $19.7 billion Remaining PCI nonaccretable = 27.5% of remaining UPB (2) Credit metrics showed continued improvement - $879 million LQ decline in NPAs reflects $596 million decline in nonaccrual loans driven by lower commercial real estate nonaccruals and a $283 million decrease in foreclosed assets - Retail 30+ delinquency balances stable while rates up modestly on lower loan balances 5.41 5.33 4.49 4.10 3.84 3.21 2.84 2.61 2.64 0.50 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Net Charge-offs Credit Reserve Build (0.50) (0.65) (0.85) Reserve Release 3.99 3.45 2.99 5.33 5.91 (1) Reserve release represents the amount by which net charge-offs exceed the provision for credit losses. (2) Unpaid principal balance for PCI loans that have not had a UPB charge-off. Provision Expense ($ in billions) 2.21 (1.0) 1.84 (1.0) 1.81 (0.8) 2.04 (0.6) |
![]() Wells Fargo 4Q11 Supplement 17 2.0 1.7 1.5 1.5 1.5 0.6 0.7 0.3 0.4 0.5 2.6 2.4 1.8 1.9 2.0 4Q10 1Q11 2Q11 3Q11 4Q11 Consumer Commercial Credit quality Nonperforming Assets ($ in billions) $10 $15 $20 $25 4Q10 1Q11 2Q11 3Q11 4Q11 Loans 30+ DPD - Retail Businesses (1) (Balances and rates) Nonaccrual Loan Flows Loans 90+ DPD and Still Accruing (1) (2) ($ in billions) 6.85% 5.94% 5.77% 5.74% 5.81% ($ in billions) 4Q10 1Q11 2Q11 3Q11 4Q11 Commercial Inflows 2.3 1.9 1.6 1.2 1.3 Outflows (3.6) (2.9) (2.7) (1.8) (1.7) Ending balance 11.3 10.3 9.2 8.6 8.2 Consumer Inflows 4.3 4.0 3.4 3.5 3.5 Outflows (5.1) (4.2) (4.3) (4.0) (3.7) Ending balance 14.9 14.7 13.8 13.3 13.1 Total $ 26.2 25.0 23.0 21.9 21.3 26.2 25.0 23.0 21.9 21.3 6.1 5.5 4.9 4.9 4.7 32.3 30.5 27.9 26.8 26.0 4Q10 1Q11 2Q11 3Q11 4Q11 Nonaccrual loans Foreclosed assets (1) Excludes mortgage loans insured/guaranteed by the FHA or VA and student loans whose repayments are predominantly guaranteed by guarantee agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program. Also excludes the carrying value of PCI loans contractually delinquent. PCI loans 90 days or more past due were $8.7 billion in 4Q11, $8.9 billion in 3Q11, $9.8 billion in 2Q11, $10.8 billion in 1Q11 and $11.6 billion in 4Q10. (2) Consumer includes mortgage loans held for sale 90 days or more past due and still accruing. |
![]() Wells Fargo 4Q11 Supplement 18 69% 20% 5% 6% Mortgage servicing Wells Fargo has a high quality servicing portfolio Residential Mortgage Servicing Portfolio $1.8 Trillion (as of December 31, 2011) Agency Retained and acquired portfolio Non-agency securitizations of WFC originated loans Non-agency acquired servicing and private whole loan sales 69% of the portfolio is with the Agencies (FNMA, FHLMC and GNMA) 20% are loans that we retained or acquired - Loss exposure handled through loan loss reserves and PCI nonaccretable 5% are private securitizations where Wells Fargo originated the loan and therefore has some repurchase risk - 79% prime at origination - 58% from pre-2006 vintages - Insignificant amount of home equity and no option ARMs - ~50% do not have traditional reps and warranties 6% are non-agency acquired servicing and private whole loan sales - 4% is acquired servicing where Wells Fargo did not underwrite and securitize and has repurchase recourse with the originator - 2% are private whole loan sales • Less than 2% subprime at origination • Loans sold to others and subsequently securitized are included in private securitizations above |
![]() Wells Fargo 4Q11 Supplement 19 5.36% 5.85% 6.45% 9.53% 7.03% 7.61% 2.27% 2.52% 5.08% 4.01% 3.66% 4.14% 0% 2% 4% 6% 8% 10% 12% 14% 16% Wells Fargo Citi JPM Chase Bank of America Industry Industry ex WFC Foreclosure Rate Delinquency Rate 7.63% 8.37% 11.52% 13.54% 10.70% 11.75% Mortgage servicing Delinquency ratios lower than peers and total repurchase demands stable As of 3Q11, the delinquency and foreclosure ratio of Wells Fargo’s servicing portfolio continued to be lower than peers, per industry data Wells Fargo’s total delinquency and foreclosure ratio for 4Q11 was 7.96%, down from a peak of 8.96% in 4Q09 Total repurchase demands stable compared to prior quarter and down approximately 31% from a year ago Agency - Agency repurchase demands outstanding up modestly from 3Q11 • Agency new demands for 2006-2008 vintages are basically unchanged due to continued elevated demands from FNMA; these elevated demand levels are the primary driver of the 4Q reserve build • FHLMC demands as well as newer vintage demands continue to emerge consistent with our estimates - Demands and losses continued to be concentrated in the 2006 - early 2008 vintages Non-Agency - Non-agency repurchase demands outstanding, which includes non-agency securities, whole loans sold and acquired servicing, down for the fifth consecutive quarter (1) Inside Mortgage Finance, data as of September 30, 2011. Industry excluding WFC performance calculated based on IMF data. (2) Industry is all large servicers ($7.0 trillion) including WFC, C, JPM and BAC. (3) Includes mortgage insurance rescissions. (2) Total Outstanding Repurchase Demands (3) and Agency New Demands for 2006-2008 Vintages 3Q11 Servicing Portfolio Delinquency Performance (1) |
![]() Wells Fargo 4Q11 Supplement 20 Capital Capital remained strong and continued to grow internally 8.30% 8.93% 9.15% 9.34% 9.46% 4Q10 1Q11 2Q11 3Q11 4Q11 Tier 1 common equity ratio increased 12 bps in 4Q11 Tier 1 common equity ratio under Basel III is estimated to be 7.49% at 12/31/11 (1) $5.8 billion of high-cost trust preferred securities redeemed in 4Q11 - Weighted average coupon of 8.42% Purchased 26.6 million common shares and entered into a 4Q11 forward repurchase transaction that will settle in 1Q12 for an additional estimated 5.6 million shares See Appendix page 43 for additional information on Tier 1 common equity. 4Q11 capital ratios are preliminary estimates. (1) Pro forma Basel III calculation based on Tier 1 common equity, as adjusted to reflect management’s interpretation of current Basel III capital proposals. This pro forma calculation is subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory authorities. See page 44 for additional information. Tier 1 Common Equity Ratio |
![]() Wells Fargo 4Q11 Supplement 21 Summary Record earnings of $4.1 billion Strong revenue growth Robust earning asset growth on core loan growth and investment securities purchases Expenses expected to remain elevated in 1Q12, continue to target 4Q12 expenses of $11 billion Higher pre-tax pre-provision profit (1) of $8.1 billion Strong credit quality Solid returns - ROA = 1.25% - ROE = 11.97% Capital levels continued to grow (1) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. |
![]() Wells Fargo 4Q11 Supplement 22 Appendix *************************************************** *************************************************** *************************************************** *************************************************** *************************************************** *************************************************** *************************************************** *************************************************** *************************************************** *************************************************** |
![]() ![]() Wells Fargo 4Q11 Supplement 23 Recent loan portfolio acquisitions ($ in billions) Acquired from 2Q 3Q 4Q Completed Allied Irish/Bank of Ireland/Irish Bank Resolution Corp. June - Dec 0.4 1.5 3.6 Pending Burdale Financial Holdings Limited Est. 1Q12 2011 Period-end balance Date of acquisition |
![]() Wells Fargo 4Q11 Supplement 24 (1) Net of purchase accounting adjustments. -$27.6 -$8.2 -$8.2 Non-strategic/liquidating loan portfolio risk reduction -$7.1 -$6.5 -$6.4 -$5.0 -$78.5 -$5.3 ($ in billions) 4Q11 3Q11 2Q11 1Q11 4Q10 3Q10 2Q10 4Q08 Pick-a-Pay mortgage (1) $ 65.7 67.4 69.6 71.5 74.8 77.3 80.2 82.9 85.2 95.3 Liquidating home equity 5.7 6.0 6.3 6.6 6.9 7.3 7.6 8.0 8.4 10.3 Legacy WFF indirect auto 2.5 3.1 3.9 4.9 6.0 7.1 8.3 9.7 11.3 18.2 Legacy WFF debt consolidation 16.5 17.2 17.7 18.4 19.0 19.7 20.4 21.4 22.4 25.3 Education Finance - gov't guaranteed 15.4 15.6 16.3 16.9 17.5 18.0 18.7 19.7 21.2 20.5 Legacy WB C&I, CRE and foreign PCI loans (1) 5.7 6.3 7.0 7.5 7.9 9.2 10.3 11.8 13.0 18.7 Legacy WB other PCI loans (1) 0.8 0.9 1.0 1.0 1.1 1.1 1.3 1.5 1.7 2.5 Total $ 112.3 116.5 121.8 126.8 133.2 139.7 146.8 155.0 163.2 190.8 4Q09 1Q10 -$4.2 |
![]() Wells Fargo 4Q11 Supplement 25 Purchased credit-impaired (PCI) portfolios Legacy Wachovia continued to perform better than originally expected (1) 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. (2) Reflects releases of $1.7 billion for loan resolutions and $4.2 billion from the reclassification of nonaccretable difference to the accretable yield, which will result in increasing income over the remaining life of the loan or pool of loans. ($ in billions) Adjusted unpaid principal balance (1) December 31, 2008 $ 29.2 62.5 6.5 98.2 September 30, 2011 8.3 38.1 1.9 48.3 December 31, 2011 8.5 36.9 1.8 47.2 Nonaccretable difference rollforward 12/31/08 Nonaccretable difference $ 10.4 26.5 4.0 40.9 Addition of nonaccretable difference due to acquisitions 0.2 - - 0.2 Losses from loan resolutions and write-downs (6.8) (15.0) (2.7) (24.5) Release of nonaccretable difference since merger (2.9) (2.4) (0.6) (5.9) (2) 12/31/11 Remaining nonaccretable difference 0.9 9.1 0.7 10.7 Life-to-date net performance Additional provision since 2008 merger $ (1.7) - (0.1) (1.8) Release of nonaccretable difference since 2008 merger 2.9 2.4 0.6 5.9 (2) Net performance 1.2 2.4 0.5 4.1 Commercial Pick-a-Pay Other consumer Total |
![]() Wells Fargo 4Q11 Supplement 26 (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. (5) Unpaid principal balance of loans without write-downs. $55 million nonaccretable difference released in 4Q11 into income due to loan resolutions - $44 million in net interest income; $11 million in noninterest income $55 million reclassified to accretable yield in 4Q11 $10.7 billion in nonaccretable difference remains to absorb losses on PCI loans - Remaining nonaccretable = 27.5% of unpaid principal balance (UPB) (5) • Remaining Pick-a-Pay nonaccretable = 28.9% of Pick-a-Pay UPB (5) Nonaccretable difference established in purchase accounting for PCI loans absorbs losses otherwise recorded as charge-offs PCI nonaccretable difference Analysis of nonaccretable difference for PCI loans ($ in millions) Pick-a-Pay Total Balance at September 30, 2011 $ 958 9,643 Addition of nonaccretable difference due to acquisitions 171 - - Release of nonaccretable difference due to: Loans resolved by settlement with borrower (1) (44) - - Loans resolved by sales to third parties (2) (11) - - Reclassification to accretable yield for loans with improving credit-related cash flows (3) (55) - Use of nonaccretable difference due to: Losses from loan resolutions and write-downs (4) (90) (517) Balance at December 31, 2011 $ 929 9,126 171 - (34) (44) (11) (55) (641) Commercial 686 11,287 Other consumer 652 10,707 |
![]() Wells Fargo 4Q11 Supplement 27 PCI accretable yield 4Q11 results included accretion of $552 million, in line with 3Q11 Balance of $16.0 billion expected to accrete to income over the remaining life of the underlying loans Expected cash flows on all PCI portfolios are recalculated quarterly including the adequacy of life-of-loan loss marks (nonaccretable difference) - 4Q11 decrease in expected cash flows of $562 million primarily due to the Pick-a-Pay portfolio • Lifetime expected cash flows are updated quarterly and will fluctuate based on estimates and assumptions • Cash flow estimates are affected by changes in interest rates, liquidation timing, the pace of the economic and housing recovery and projected lifetime performance of loan modification activity • The PCI cash flows remained significantly better than estimated at acquisition (1) Includes accretable yield released as a result of settlements with borrowers, which is included in interest income. (2) Includes accretable yield released as a result of sales to third parties, which is included in noninterest income. (3) Represents changes in cash flows expected to be collected due to changes in interest rates on variable rate PCI loans, changes in prepayment assumptions and the impact of modifications. Cumulative Accretable yield rollforward since ($ in millions) 4Q11 3Q11 merger Total, beginning of period $ 16,896 14,871 10,447 Addition of accretable yield due to acquisitions 124 4 128 Accretion into interest income (1) (551) (553) (7,199) Accretion into noninterest income due to sales (2) (1) (3) (237) Reclassification from nonaccretable difference for loans with improving cash flows 55 108 4,213 Changes in expected cash flows that do not affect nonaccretable difference (3) (562) 2,469 8,609 Total, end of period $ 15,961 16,896 15,961 |
![]() Wells Fargo 4Q11 Supplement 28 $1.4 billion remains to be accreted into income over the remaining life of the portfolio Most of portfolio tied to LIBOR Weighted average life of the portfolio of 3.2 years has extended over the past couple of quarters as shorter duration portfolios have rolled off and period of future cash flow assumptions have been extended Commercial PCI accretable yield Includes both legacy Wachovia PCI loans as well as recently purchased PCI loans. (1) Increase in accretion and accretable yield percentage is primarily due to improvements in the expected cash flows. ($ in millions) 4Q11 3Q11 2Q11 PCI interest income Accretion (1) $ 198 220 186 Resolution income 44 65 36 Average carrying value 6,812 6,672 7,171 Accretable yield percentage Accretion (1) 11.62 % 13.20 10.36 Accretable yield balance $ 1,363 1,303 1,357 Weighted average life (years) 3.2 2.7 2.4 |
![]() Wells Fargo 4Q11 Supplement 29 $14.0 billion remains to be accreted into income over the remaining life of the portfolio - Based on updated cash flow valuations, there was no reclassification of nonaccretable to accretable in 4Q11 - Lifetime expected cash flows are updated quarterly and will fluctuate based on estimates and assumptions • Cash flow estimates are affected by changes in interest rates, liquidation timing, the pace of the economic and housing recovery and projected lifetime performance of loan modification activity Pick-a-Pay PCI accretable yield ($ in millions) 4Q11 3Q11 2Q11 PCI interest income Accretion $ 326 310 352 Average carrying value 29,331 30,168 31,008 Accretable yield percentage 4.45 % 4.11 4.54 Accretable yield balance $ 14,018 14,989 12,884 Weighted average life (years) 11.0 11.0 10.0 |
![]() Wells Fargo 4Q11 Supplement 30 4Q11 Credit quality highlights Net charge-offs of $2.6 billion up $29 million LQ - Commercial losses up $48 million as higher C&I and foreign losses offset lower commercial real estate - Consumer losses down $19 million as lower consumer real estate 1-4 family junior lien and credit card losses more than offset higher consumer real estate 1-4 family first mortgage and other revolving credit and installment Total NPAs of $26.0 billion down $879 million - Nonaccrual loans down $596 million - Foreclosed assets down $283 million • 56% of the balance are government guaranteed loans and loans written down through purchase accounting $1.3 billion, or 28%, are government guaranteed $1.3 billion, or 28%, reflects shift from PCI loans to REO ($465 million consumer and $840 million C&I and CRE) Currently expect future reserve releases absent significant deterioration in the economy Total ($ in millions) Wells Fargo Commercial loans 6,767 338,683 345,450 Consumer loans 29,952 394,229 424,181 Total period-end loans 36,719 732,912 769,631 Total nonaccrual loans $ 21,304 Total foreclosed assets 4,661 Total NPAs $ 25,965 as % of loans 3.37 % Provision for credit losses $ 2,040 Net charge-offs 2,640 as % of avg loans 1.36 % Commercial 0.54 Consumer 2.02 % Allowance for credit losses 19,335 $ 19,668 as % of loans 2.64 2.56 % as % of nonaccrual loans 92 % 4Q11 PCI loans Non PCI loans |
![]() Wells Fargo 4Q11 Supplement 31 Commercial nonaccrual loans 4Q11 Total Commercial nonaccrual loans = $8,217 million ($ change in millions) $1,890 $4,085 $47 $2,195 Commercial and Industrial & Lease Financing: CRE Construction: CRE Mortgage: Foreign Inflows increased $0.2B Outflows decreased<$0.1B 88% secured 40% guaranteed 78% current on interest 26% have already been written down Inflows increased<$0.1B Outflows decreased <$0.1B 54% guaranteed 40% current on interest 37% of NPLs have been written down Inflows decreased <$0.1B; fifth consecutive quarterly decline Outflows remained relatively flat 65% guaranteed 56% current on interest 35% of NPLs have been written down All comparisons are to 3Q11. - 1,000 2,000 3,000 4,000 4Q10 1Q11 2Q11 3Q11 4Q11 Commercial Loans & Leases Total Inflow Total Outflow NPL Balances - 1,000 2,000 3,000 4,000 4Q10 1Q11 2Q11 3Q11 4Q11 CRE Construction Total Inflow Total Outflow NPL Balances - 1,000 2,000 3,000 4,000 5,000 6,000 4Q10 1Q11 2Q11 3Q11 4Q11 CRE Mortgage Total Inflow Total Outflow NPL Balances |
![]() Wells Fargo 4Q11 Supplement 32 3,000 3,250 3,500 3,750 4,000 1,000 1,500 2,000 2,500 3,000 4Q10 1Q11 2Q11 3Q11 4Q11 Home Equity Total Inflow (Left) Total Outflow (Left) RE NPL Balances (Right) $3,015 $2,476 $3,909 $3,488 Consumer real estate nonaccrual loans Nonaccrual balances decreased $41mm Inflows decreased <$0.1B Outflows decreased <$0.2B 50% are 1-4 family first mortgage 78% is legacy WFF debt consolidation - Inflows were flat - Outflows increased 12% - 41% written down; losses taken stable from prior quarter 13% is WBR Nonaccrual balances decreased slightly 41% written down; losses taken stable from prior quarter 56% are > 180 DPD Inflows increased <$0.1B Outflows decreased <$0.2B 85% of NPLs held at current estimated recoverable value 23% are TDRs for which impairment has been recognized See page 36 for additional information 4Q11 Total residential real estate nonaccrual loans = $12,888 million Inflows stabilized while outflows slowed reflecting environment and seasonality All comparisons are to 3Q11. (1) Includes National Home Equity first and junior lines and loans. (2) Total inflows and outflows tracked on left scale and RE NPL balances tracked on right scale. National Home Equity (1) : Home Mortgage: Pick-a-Pay: Other Businesses: ($ change in millions) (2) - 1,000 2,000 3,000 4,000 5,000 - 1,000 2,000 3,000 4,000 4Q10 1Q11 2Q11 3Q11 4Q11 Home Mortgage Total Inflow (Left) Total Outflow (Left) RE NPL Balances (Right) 2,000 3,000 4,000 5,000 500 1,000 1,500 2,000 2,500 4Q10 1Q11 2Q11 3Q11 4Q11 Pick-a-Pay Total Inflow (Left) Total Outflow (Left) RE NPL Balances (Right) |
![]() Wells Fargo 4Q11 Supplement 33 Commercial real estate (CRE) loan portfolio Growth in outstandings includes the $2.1 billion period-end balance of loans purchased in 4Q11 partially offset by paydowns Nonaccruals down $369 million, or 34 bps Net charge-offs down $39 million, or 13 bps, as lower construction losses more than offset the $21 million increase in mortgage losses 29% of the portfolio is owner-occupied ($ in millions) 4Q11 3Q11 CRE outstandings Real estate mortgage $ 105,975 104,363 Real estate construction 19,382 19,719 Total CRE outstandings 125,357 124,082 Nonaccrual loans Real estate mortgage 4,085 4,429 Real estate construction 1,890 1,915 Total nonaccrual loans 5,975 6,344 as % of loans 4.77 % 5.11 Net charge-offs (recoveries) Real estate mortgage $ 117 96 Real estate construction (5) 55 Total net charge-offs 112 151 as % of avg loans 0.36 % 0.49 |
![]() Wells Fargo 4Q11 Supplement 34 Pick-a-Pay mortgage portfolio Carrying value of $65.7 billion in first lien loans outstanding, down $1.7 billion from 3Q11 and down $29.7 billion from 4Q08 on paid-in-full loans and loss mitigation efforts - Adjusted unpaid principal balance of $73.4 billion, down $2.2 billion from 3Q11 and down $42.3 billion from 4Q08 - $4.0 billion in modification principal forgiveness since acquisition reflects over 99,000 completed full-term modifications; additional $516 million of conditional forgiveness that can be earned by borrowers through performance over the next 3 years - Modification redefault rate has been consistently better than the industry average (as measured by 60+ DPD after six months) as we have strived to give customers an affordable, sustainable payment - Pick-a-Pay loans with negative amortization potential decreased $2.2 billion from 3Q11 to 53% of loans Total portfolio deferred interest of $2.0 billion down $127 million from 3Q11 and down $2.3 billion from 4Q08; down for eleventh consecutive quarter ($ in millions) Product type Adjusted unpaid principal % of total Adjusted unpaid principal % of total Adjusted unpaid principal % of total Option payment loans (1) $ 39,164 53 % $ 49,958 59 % $ 99,937 86 % Non-option payment adjustable-rate and fixed-rate loans (1) 9,986 14 11,070 13 15,763 14 Full-term loan modifications (1) 24,207 33 23,132 28 - - Total adjusted unpaid principal balance (1) $ 73,357 100 % $ 84,160 100 % $ 115,700 100 % Total carrying value 65,652 74,815 95,315 At 12/31/2011 At 12/31/2010 At 12/31/2008 (1) Adjusted unpaid principal 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. |
![]() Wells Fargo 4Q11 Supplement 35 Pick-a-Pay credit highlights Non-PCI portfolio Loans down 3% driven by loans paid-in-full 84% of portfolio current Nonaccrual loans relatively stable - 85% of loans written down to current net recoverable value (See page 36) - New inflows of $0.7 billion, flat from 3Q11 - $211 million of nonaccrual TDRs reclassified to accruing TDR status based on borrower payment performance $3.9 billion in nonaccruals includes $886 million of nonaccruing TDRs Net charge-offs of $196 million in 4Q11, consistent with expectations and an annualized loss rate of 2.11% 41% of portfolio with LTV (2) 80% PCI portfolio Carrying value down 2% 67% of portfolio current, consistent with 3Q11 Life-of-loan losses continued to be lower than originally projected at time of merger (1) The carrying value, which does not reflect the allowance for loan losses, includes purchase accounting adjustments, which, for PCI loans, are the nonaccretable difference and the accretable yield, and for all other loans, an adjustment to mark the loans to a market yield at date of merger less any subsequent charge-offs. (2) The current loan-to-value (LTV) ratio is calculated as the net carrying value (defined in (1) above) divided by the collateral value. (3) The adjusted unpaid principal balance includes write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan. ($ in millions) 4Q11 3Q11 Non-PCI loans Carrying value (1) $ 36,596 37,646 Nonaccrual loans 3,909 3,900 as a % of loans 10.68 % 10.36 Net charge-offs $ 196 220 as % of avg loans 2.11 % 2.30 90+ days past due as % of loans 10.07 9.53 Current average LTV (2) 86 % 85 Current average FICO 681 682 Contractual average loan size $ 210,000 211,000 Contractual average age of loans 7.79 years 7.54 % of loans in California 49 % 49 ($ in millions) 3Q11 PCI loans Adjusted unpaid principal balance (3) $ 36,905 38,060 Carrying value (1) 29,056 29,715 Current average LTV (2) 91 % 89 Current average FICO 610 608 Contractual average loan size $ 311,000 311,000 Contractual average age of loans 5.75 years 5.50 % of loans in California 68 % 67 |
![]() Wells Fargo 4Q11 Supplement 36 Pick-a-Pay nonaccrual loan composition 85% of Pick-a-Pay nonaccruals held at estimated recoverable value vs. 84% at 3Q11, reflecting write-downs and/or LTV 100% Allowance available for the remaining 15% that have not yet been written down 5% of the nonaccruals are performing modifications - Performing modifications move to accruing status after six consecutive payments are made 12/31/11 Total $3,909 million 20% 15% 23% 42% Charge-offs to date of $681 million (29% of original balance) 65% of loans have LTV<80% 34% of loans have LTV 80% but <100% 1% of loans have LTV 100% (1) Initial charge-offs usually not taken until 180 DPD ($44 million taken to date) Expected losses included in allowance Charge-offs/principal forgiveness to date of $226 million (20% of original balance) Additionally, we hold expected life- of-loan loss reserves in allowance LTV is considered to be over 100% if the loan balance exceeds current estimated appraised value based on automated valuation methodology or updated appraisal where available. Calculation excludes unpaid principal balance of related equity lines of credit that share common collateral. Does not include PCI Pick-a-Pay since they are considered to be accruing under PCI loan accounting for accretable yield and accrual status is not based on contractual interest payments. (1) Loans with LTV>100% are currently in modification trial periods. 180 DPD written down to estimated recoverable value 0-179 DPD Loan modifications (TDRs) 180 DPD updated LTV 100% |
![]() Wells Fargo 4Q11 Supplement 37 Real estate 1-4 family first mortgage portfolio First lien mortgage loans up $7.5 billion on the consolidation of $5.6 billion of reverse mortgages; runoff portfolios declined $2.4 billion - Pick-a-Pay non-PCI portfolio down 3% - PCI portfolio down 2% - Debt consolidation down 4% - Core first lien up 5% Debt consolidation charge-offs increased $53 million Core first lien mortgage nonaccruals down $90 million, or 24 bps Core net charge-offs down $6 million (1) Ratios on WFF debt consolidation loan portfolio only. (2) Ratios on non runoff first lien mortgage loan portfolio only. ($ in millions) 4Q11 3Q11 Total real estate 1-4 family first mortgage $ 228,894 223,758 Less consumer non-strategic/liquidating portfolios: Pick-a-Pay non-PCI first lien mortgage 36,596 37,646 PCI first lien mortgage 29,746 30,446 WFF debt consolidation portfolio 16,542 17,186 Core first lien mortgage 146,010 138,480 Nonaccrual loans $ 2,304 2,334 as % of loans 13.93 % 13.58 Net charge-offs $ 244 191 as % of average loans 5.78 % 4.37 Nonaccrual loans $ 4,700 4,790 as % of loans 3.22 % 3.46 Net charge-offs $ 404 410 as % of loans 1.10 % 1.17 WFF debt consolidation mortgage loan performance (1) Core first lien mortgage loan performance (2) |
![]() Wells Fargo 4Q11 Supplement 38 Home equity portfolio Core Portfolio (1) Outstandings down 2% - High quality new originations with weighted average CLTV of 61%, 778 FICO, and 32% total debt service ratio 4Q11 losses down $35 million, or 9 bps 2+ delinquencies decreased $7 million Delinquency rate for loans with a CLTV >100% relatively stable Unsecured balances (3) stable at 17% Liquidating Portfolio Outstandings down 5% 4Q11 losses down $5 million 2+ delinquencies declined $11 million Continued decline in delinquency rate for loans with a CLTV >100%, 4 bps improvement Excludes purchased credit-impaired loans. (1) Includes equity lines of credit and closed-end junior liens associated with the Pick-a-Pay portfolio totaling $1.5 billion at December 31, 2011, and $1.5 billion at September 30, 2011. (2) CLTV is calculated based on outstanding balance plus unused lines of credit divided by estimated home value. Estimated home values are determined predominantly based on automated valuation models updated through December 2011. (3) Unsecured balances, representing the percentage of outstanding balances above the most recent home value. ($ in millions) 4Q11 3Q11 Core Portfolio (1) Outstandings 100,882 103,100 Net charge-offs 718 753 as % of avg loans 2.79 % 2.88 2+ payments past due 3,146 3,153 as % loans 3.13 % 3.07 % CLTV > 100% (2) 36 35 2+ payments past due 4.42 % 4.40 % Unsecured balances (3) 17 17 % 1st lien position 20 20 Liquidating Portfolio Outstandings 5,710 5,982 Net charge-offs 134 139 as % of avg loans 9.09 % 8.97 2+ payments past due 270 281 as % loans 4.73 % 4.69 % CLTV > 100% (2) 74 73 2+ payments past due 5.02 % 5.06 % 1st lien position 4 4 |
![]() Wells Fargo 4Q11 Supplement 39 $106.6 billion home equity portfolio - 20% in 1 st lien position - 40% in junior lien position behind WFC owned or serviced 1 st lien - 40% in junior lien position behind third party 1 lien Excludes purchased credit-impaired loans. (1) Delinquency represents two or more payments past due as of November 2011. Home equity portfolio Delinquency Status (1) of Junior Liens Behind a Wells Fargo 1 st Lien Delinquency Status Current 1 st lien, Current junior lien 95.6 % Current 1 st lien, Delinquent junior lien 1.1 Delinquent 1 st lien, Current junior lien 1.5 Delinquent 1 st lien, Delinquent junior lien 1.8 Outstanding Balance % st |
![]() Wells Fargo 4Q11 Supplement 40 Credit card portfolio $22.8 billion credit card outstandings up 5% from 3Q11 on new customer growth and higher consumer spending from existing customers - New accounts increased 6% in the quarter with household penetration increasing to 27.0% (1) • East penetration of 16.6% (1) - Purchase dollar volumes increased 6% and transactions grew 7% from 3Q11 - Purchase dollar volume increased 13% and transactions grew 16% from 4Q10 Net charge-offs down $10 million LQ, or 27 bps, reflecting continued steady improvement (1) Household penetration as of November, 2011 and defined as the percentage of retail banking deposit households that have a credit card with Wells Fargo. ($ in millions) 4Q11 3Q11 Credit card outstandings $ 22,836 21,650 Net charge-offs 256 266 as % of avg loans 4.63 % 4.90 |
![]() Wells Fargo 4Q11 Supplement 41 Auto portfolio Core Portfolio Total outstandings up 1% LQ and up 8% YoY - Originations were down 6% LQ reflecting increased competition in the marketplace; 2011 originations increased 11% from 2010 Net charge-offs relatively stable on strong used car values - December Manheim index of 125.1, up 2% LQ and up 1% from December 2010 30+ days past due increased $59 million LQ, or 11 bps, reflecting expected seasonality and portfolio growth Liquidating Portfolio (1) Legacy Wells Fargo Financial indirect auto outstandings down 21% LQ driven by paydowns (1) Legacy Wells Fargo Indirect portfolio. ($ in millions) 4Q11 3Q11 Core Portfolios Direct Auto outstandings $ 2,529 2,636 Nonaccrual loans 67 75 as % of loans 2.66 % 2.84 Net charge-offs $ 16 11 as % of avg loans 2.43 % 1.57 30+ days past due $ 75 66 as % of loans 2.98 % 2.49 Indirect Auto outstandings $ 39,647 39,139 Nonaccrual loans 9 12 as % of loans 0.02 % 0.03 Net charge-offs $ 68 69 as % of avg loans 0.69 % 0.71 30+ days past due $ 571 521 as % of loans 1.44 % 1.33 Auto outstandings $ 2,455 3,101 Nonaccrual loans 83 97 as % of loans 3.39 % 3.14 Net charge-offs $ 31 25 as % of avg loans 4.47 % 2.85 30+ days past due $ 230 208 as % of loans 9.35 % 6.72 Liquidating portfolio (1) |
![]() Wells Fargo 4Q11 Supplement 42 Forward-looking statements and additional information Forward-looking statements: This Quarterly Supplement and management’s related presentation contain forward-looking statements about our future financial performance. These forward-looking statements include statements using words such as “believe,” “expect,” “anticipate,” “estimate,” “target”, “should,” “may,” “can,” “will,” “outlook,” “appears” or similar expressions. These forward-looking statements may include, among others, statements about: expected or estimated future losses in our loan portfolios, including our belief that the allowance for loan losses is expected to decline; expected or estimated loan loss reserve releases; mortgage repurchase exposure; exposure related to mortgage practices, including foreclosures and servicing; our noninterest expense, including our targeted noninterest expense for first quarter 2012 and fourth quarter 2012 as part of our expense management initiatives; the future economic environment; loan growth; reduction or mitigation of risk in our loan portfolios; future effects of loan modification programs; life-of- loan loss estimates; the estimated impact of regulatory reform on our financial results and business and expectations regarding our efforts to mitigate such impact; and our estimated Tier 1 common equity ratio as of December 31, 2011, under proposed Basel capital rules. Investors are urged to not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. For more information about factors that could cause actual results to differ materially from expectations, refer to page 14 of Wells Fargo’s press release announcing our fourth quarter 2011 results, as well as Wells Fargo’s reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Quarterly Reports on Form 10-Q for the periods ended June 30, 2011 and September 30, 2011. Purchased credit-impaired loan portfolio: Loans that were acquired from Wachovia that were considered credit impaired were written down at acquisition date in purchase accounting to an amount estimated to be collectible and the related allowance for loan losses was not carried over to Wells Fargo’s allowance. In addition, such purchased credit-impaired loans are not classified as nonaccrual or nonperforming, and are not included in loans that were contractually 90+ days past due and still accruing. Any losses on such loans are charged against the nonaccretable difference established in purchase accounting and are not reported as charge-offs (until such difference is fully utilized). As a result of accounting for purchased loans with evidence of credit deterioration, certain ratios of the combined company are not comparable to a portfolio that does not include purchased credit-impaired loans. In certain cases, the purchased credit-impaired loans may affect portfolio credit ratios and trends. Management believes that the presentation of information adjusted to exclude the purchased credit-impaired loans provides useful disclosure regarding the credit quality of the non-impaired loan portfolio. Accordingly, certain of the loan balances and credit ratios in this Quarterly Supplement have been adjusted to exclude the purchased credit-impaired loans. References in this Quarterly Supplement to impaired loans mean the purchased credit-impaired loans. Please see pages 31-33 of the press release for additional information regarding the purchased credit-impaired loans. |
![]() Wells Fargo 4Q11 Supplement 43 Tier 1 common equity under Basel I (1) Quarter ended Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2011 2011 2011 2011 2010 $ 141.7 139.2 137.9 134.9 127.9 (1.5) (1.5) (1.5) (1.5) (1.5) 140.2 137.7 136.4 133.4 126.4 (10.6) (10.6) (10.6) (10.6) (8.1) (34.0) (34.4) (34.6) (35.1) (35.5) 3.8 4.0 4.1 4.2 4.3 (0.8) (0.7) (0.9) (0.9) (0.9) (3.1) (3.7) (5.3) (4.9) (4.6) (0.4) (0.4) (0.3) (0.1) (0.3) (A) $ 95.1 91.9 88.8 86.0 81.3 (B) $ 1,005.3 983.2 970.2 962.9 980.0 (A)/(B) 9.46 % 9.34 9.15 8.93 8.30 (1) (2) Total risk-weighted assets (2) Tier 1 common equity to total risk-weighted assets Cumulative other comprehensive income 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 $166.6 billion. Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. Other Tier 1 common equity MSRs over specified limitations Wells Fargo & Company and Subsidiaries ($ in billions) Total equity Noncontrolling interests Total Wells Fargo stockholders' equity Adjustments: FIVE QUARTER TIER 1 COMMON EQUITY UNDER BASEL I (1) Preferred equity Goodwill and intangible assets (other than MSRs) Applicable deferred taxes |
![]() Wells Fargo 4Q11 Supplement 44 Tier 1 common equity under Basel III (Estimated) (1) Quarter ended Dec. 31, 2011 $ 95.1 3.1 Other 0.3 (C) 98.5 (D) $ 1,314.6 (C)/(D) 7.49 % (1) (2) 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. Wells Fargo & Company and Subsidiaries TIER 1 COMMON EQUITY UNDER BASEL III (ESTIMATED) (1) ($ in billions) Tier 1 common equity under Basel I Adjustments from Basel I to Basel III: Cumulative other comprehensive income (2) Tier 1 common equity anticipated under Basel III Total risk-weighted assets anticipated under Basel III (3) Tier 1 common equity to total risk-weighted assets anticipated under Basel III 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. |