Wells Fargo & Company's financial results for the quarter ended June 30, 2000
Wells Fargo & Company reported net income of $1,039 million for the second
quarter of 2000, compared with $931 million in the second quarter of 1999.
Net income for the first six months of 2000 was $2,049 million, compared with
$1,815 million in the same period a year ago. Diluted earnings per common
share were $.63 for the second quarter of 2000, up 15 percent from the $.55
reported for the second quarter of 1999, and $1.25 for the first six months
of 2000, up 16 percent from $1.08 for the same period of 1999. Return on
average assets (ROA) was 1.89 percent for the second quarter of 2000 and 1.88
percent for the first six months of 2000, compared with 1.86 percent for the
second quarter of 1999 and 1.83 percent for the first six months of 1999.
Return on average common equity (ROE) was 19.04 percent for the second
quarter of 2000, and 18.63 percent for the first six months of 2000, compared
with 17.50 percent and 17.42 percent for the same periods a year ago.
Diluted cash earnings per share were $.73 for the second quarter of
2000 and $1.42 for the first half of 2000, compared with $.63 per share and
$1.24 per share for the same periods of 1999. Cash earnings are earnings before
the amortization of goodwill and nonqualifying core deposit intangible. Cash ROA
was 2.26 percent for the second quarter of 2000 and 2.25 percent for the first
half of 2000, compared with 2.23 percent and 2.20 percent for the same periods a
year ago. Cash ROE was 37.16 percent for the second quarter of 2000 and 35.62
percent for the first half of 2000, compared with 33.43 percent and 33.89
percent for the same periods of 1999.
NET INTEREST INCOME
Net interest income on a taxable-equivalent basis was $2,485 million in
the second quarter of 2000 and $4,941 million in the first half of 2000,
compared with $2,328 million and $4,608 million for the same periods a year ago.
The net interest margin was 5.55 percent for the second quarter of 2000 and 5.56
percent for the first six months of 2000, compared with 5.69 percent and 5.65
percent for the same periods of 1999.
NONINTEREST INCOME
Noninterest income in the second quarter of 2000 was $2,092 million and
$4,002 million for the first six months of 2000, compared with $1,814 million
and $3,541 million in the same periods of 1999. The increase in the second
quarter and first six months of 2000 was primarily due to increases in net
venture capital gains and trust and investment fee income, partially offset
by net losses on securities in the available for sale portfolio and a decrease
in mortgage banking income.
NONINTEREST EXPENSE
Noninterest expense was $2,626 million in the second quarter of 2000
and $5,103 million for the first six months of 2000, compared with $2,364
million and $4,706 million for the same periods a year ago. The efficiency ratio
was 57.6 percent for the second quarter of 2000, compared with 57.3 percent for
the same quarter of 1999. For the first six months of 2000, the efficiency ratio
was 57.3 percent, compared with 58.0 percent for the same period a year ago. On
a cash basis, this ratio was 53.9 percent for the second quarter of 2000
- 2 -
and 53.7 percent for the first half of 2000, compared with 53.7 percent and
54.3 percent for the same periods of 1999.
LOAN LOSSES
The provision for loan losses was $260 million for both the second
quarter of 2000 and the second quarter of 1999. Net charge-offs totaled $246
million, or .78 percent of average loans (annualized) in the second quarter of
2000, compared with $261 million, or .96 percent of average loans (annualized)
for the second quarter of 1999. For the six months ended June 30, 2000, the loan
loss provision was $515 million and net charge-offs totaled $500 million, or .81
percent of average loans (annualized), compared with a loan loss provision of
$530 million and net charge-offs of $534 million, or .99 percent of average
loans (annualized) for the same periods of 1999.
At June 30, 2000, the allowance for loan losses of $3,349 million was
2.48 percent of total loans, compared with 2.65 percent at December 31, 1999 and
2.83 percent at June 30, 1999. Total nonaccrual and restructured loans were $804
million at June 30, 2000, compared with $669 million at December 31, 1999 and
$688 million at June 30, 1999.
WELLS FARGO & COMPANY IS A DIVERSIFIED FINANCIAL SERVICES COMPANY
WITH $234 BILLION IN ASSETS, PROVIDING BANKING, INSURANCE, INVESTMENTS,
MORTGAGE AND CONSUMER FINANCE FROM ABOUT 5,300 STORES AND THE INTERNET
(WELLSFARGO.COM) ACROSS NORTH AMERICA AND ELSEWHERE INTERNATIONALLY.
- ----------------
The following appears in accordance with the Private Securities Litigation
Reform Act of 1995:
This press release (including information incorporated by reference in this
press release) may contain forward-looking statements about the Company,
including descriptions of plans or objectives of its management for future
operations, products or services, and forecasts of its revenues, earnings or
other measures of economic performance. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical or current
facts. They often include the words "believe," "expect," "anticipate," "intend,"
"plan," "estimate" or words of similar meaning, or future or conditional verbs
such as "will," "would," "should," "could" or "may."
Forward-looking statements, by their nature, are subject to risks and
uncertainties. A number of factors--many of which are beyond the Company's
control--could cause actual conditions, events or results to differ
significantly from those described in the forward-looking statements. The
Company's most recent annual and quarterly reports filed with the Securities and
Exchange Commission, including the Company's Form 10-Q for the quarter ended
March 31, 2000 and Form 10-K for the year ended December 31, 1999, describe some
of these factors, including certain credit, market, operational, liquidity and
interest rate risks associated with the Company's business and operations. Other
factors described in these reports include changes in business and economic
conditions, competition, fiscal and monetary policies, disintermediation,
legislation including the Gramm-Leach-Bliley Act of 1999, the combination of the
former Norwest Corporation and the former Wells Fargo & Company, and other
mergers and acquisitions.
Forward-looking statements speak only as of the date they are made. The Company
does not undertake to update forward-looking statements to reflect circumstances
or events that occur after the date the forward-looking statements are made.
- 3 -
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, % ended June 30, %
------------------------------ ------------------------------
(in millions, except per share amounts) 2000 1999 Change 2000 1999 Change
- ---------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
Net income $ 1,039 $ 931 12% $ 2,049 $ 1,815 13%
Net income applicable to common stock 1,035 922 12 2,040 1,798 13
Earnings per common share $ .64 $ .56 14 $ 1.26 $ 1.09 16
Diluted earnings per common share .63 .55 15 1.25 1.08 16
Dividends declared per common share .22 .20 10 .44 .385 14
Average common shares outstanding 1,613.0 1,651.4 (2) 1,620.0 1,649.2 (2)
Diluted average common shares outstanding 1,631.8 1,672.3 (2) 1,635.6 1,668.2 (2)
Profitability ratios (annualized)
Net income to average total assets (ROA) 1.89% 1.86% 2 1.88% 1.83% 3
Net income applicable to common stock to
average common stockholders' equity (ROE) 19.04 17.50 9 18.63 17.42 7
Total revenue $ 4,562 $ 4,125 11 $ 8,912 $ 8,118 10
Efficiency ratio (1) 57.6% 57.3% 1 57.3% 58.0% (1)
Average loans $127,000 $108,996 17 $124,086 $108,418 14
Average assets 220,766 200,342 10 218,612 199,537 10
Average core deposits 131,122 127,563 3 129,265 127,847 1
Net interest margin 5.55% 5.69% (2) 5.56% 5.65% (2)
NET INCOME AND RATIOS EXCLUDING
GOODWILL AND NONQUALIFYING CORE DEPOSIT
INTANGIBLE AMORTIZATION AND BALANCES
("CASH") (2)
Net income applicable to common stock $ 1,185 $ 1,054 12 $ 2,330 $ 2,062 13
Earnings per common share .73 .64 14 1.44 1.25 15
Diluted earnings per common share .73 .63 16 1.42 1.24 15
ROA 2.26% 2.23% 1 2.25% 2.20% 2
ROE 37.16 33.43 11 35.62 33.89 5
Efficiency ratio 53.9 53.7 -- 53.7 54.3 (1)
AT PERIOD END
Securities available for sale $ 34,604 $ 35,710 (3) $ 34,604 $ 35,710 (3)
Loans 135,046 111,646 21 135,046 111,646 21
Allowance for loan losses 3,349 3,165 6 3,349 3,165 6
Goodwill 8,526 7,598 12 8,526 7,598 12
Assets 234,159 205,421 14 234,159 205,421 14
Core deposits 134,269 127,302 5 134,269 127,302 5
Common stockholders' equity 22,862 20,915 9 22,862 20,915 9
Stockholders' equity 23,127 21,375 8 23,127 21,375 8
Capital ratios
Common stockholders' equity to assets 9.76% 10.18% (4) 9.76% 10.18% (4)
Stockholders' equity to assets 9.88 10.41 (5) 9.88 10.41 (5)
Risk-based capital (3)
Tier 1 capital 7.05 8.45 (17) 7.05 8.45 (17)
Total capital 10.95 11.07 (1) 10.95 11.07 (1)
Leverage (3) 6.35 7.05 (10) 6.35 7.05 (10)
Book value per common share $ 14.12 $ 12.67 11 $ 14.12 $ 12.67 11
Staff (active, full-time equivalent) 94,388 90,410 4 94,388 90,410 4
COMMON STOCK PRICE
High $ 47.75 $ 44.88 6 $ 47.75 $ 44.88 6
Low 37.31 34.38 9 31.00 32.13 (4)
Period end 38.75 42.75 (9) 38.75 42.75 (9)
- ---------------------------------------------------------------------------------------------------------------------------
(1) The efficiency ratio is defined as noninterest expense divided by total
revenue (net interest income and noninterest income).
(2) Nonqualifying core deposit intangible (CDI) amortization and average
balance excluded from these calculations are, with the exception of the
efficiency and ROA ratios, net of applicable taxes. The pretax amount for
the average balance of nonqualifying CDI was $1,176 million for the quarter
ended June 30, 2000 and $1,195 million for the six months ended June 30,
2000. The after-tax amounts for the amortization and average balance of
nonqualifying CDI were $26 million and $729 million, respectively, for the
quarter ended June 30, 2000 and $52 million and $741 million, respectively,
for the six months ended June 30, 2000. Goodwill amortization and average
balance (which are not tax effected) were $124 million and $8,314 million,
respectively, for the quarter ended June 30, 2000 and $237 million and
$8,123 million, respectively, for the six months ended June 30, 2000.
(3) The June 30, 2000 ratios are preliminary.
- 4 -
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, % ended June 30, %
------------------------------ ------------------------------
(in millions, except per share amounts) 2000 1999 Change 2000 1999 Change
- ---------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Securities available for sale $ 587 $ 517 14% $ 1,218 $ 1,027 19 %
Mortgages held for sale 172 215 (20) 342 473 (28)
Loans held for sale 120 101 19 227 200 14
Loans 3,148 2,609 21 6,131 5,188 18
Other interest income 80 54 48 153 96 59
-------- -------- -------- --------
Total interest income 4,107 3,496 17 8,071 6,984 16
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 874 679 29 1,632 1,396 17
Short-term borrowings 353 201 76 723 408 77
Long-term debt 395 290 36 776 573 35
Guaranteed preferred beneficial interests
in Company's subordinated debentures 15 15 -- 30 30 --
-------- -------- -------- --------
Total interest expense 1,637 1,185 38 3,161 2,407 31
-------- -------- -------- --------
NET INTEREST INCOME 2,470 2,311 7 4,910 4,577 7
Provision for loan losses 260 260 -- 515 530 (3)
-------- -------- -------- --------
Net interest income after
provision for loan losses 2,210 2,051 8 4,395 4,047 9
-------- -------- -------- --------
NONINTEREST INCOME
Service charges on deposit accounts 406 367 11 788 711 11
Trust and investment fees 360 315 14 720 615 17
Credit card fees 126 126 -- 249 258 (3)
Other fees 292 267 9 562 505 11
Mortgage banking 304 324 (6) 611 651 (6)
Insurance 114 119 (4) 206 204 1
Net venture capital gains 320 13 -- 1,205 126 856
Net (losses) gains on securities available for sale (39) 23 -- (641) 21 --
Other 209 260 (20) 302 450 (33)
-------- -------- -------- --------
Total noninterest income 2,092 1,814 15 4,002 3,541 13
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries 838 750 12 1,656 1,475 12
Incentive compensation 156 135 16 289 269 7
Employee benefits 225 217 4 457 416 10
Equipment 189 182 4 382 373 2
Net occupancy 219 185 18 444 371 20
Goodwill 124 104 19 237 208 14
Core deposit intangible 45 50 (10) 91 102 (11)
Net gains on dispositions of premises
and equipment (16) (13) 23 (49) (11) 345
Other 846 754 12 1,596 1,503 6
-------- -------- -------- --------
Total noninterest expense 2,626 2,364 11 5,103 4,706 8
-------- -------- -------- --------
INCOME BEFORE INCOME TAX EXPENSE 1,676 1,501 12 3,294 2,882 14
Income tax expense 637 570 12 1,245 1,067 17
-------- -------- -------- --------
NET INCOME $ 1,039 $ 931 12% $ 2,049 $ 1,815 13 %
======== ======== ======== ========
NET INCOME APPLICABLE TO
COMMON STOCK $ 1,035 $ 922 12% $ 2,040 $ 1,798 13 %
======== ======== ======== ========
EARNINGS PER COMMON SHARE $ .64 $ .56 14% $ 1.26 $ 1.09 16 %
======== ======== ======== ========
DILUTED EARNINGS PER COMMON SHARE $ .63 $ .55 15% $ 1.25 $ 1.08 16 %
======== ======== ======== ========
DIVIDENDS DECLARED PER COMMON SHARE $ .22 $ .20 10% $ .44 $ .385 14 %
======== ======== ======== ========
Average common shares outstanding 1,613.0 1,651.4 (2)% 1,620.0 1,649.2 (2)%
======== ======== ======== ========
Diluted average common shares outstanding 1,631.8 1,672.3 (2)% 1,635.6 1,668.2 (2)%
======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------
- 5 -
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------------------------
% Change
June 30, 2000 from
-------------------
JUNE 30, Dec. 31, June 30, Dec. 31, June 30,
(in millions, except shares) 2000 1999 1999 1999 1999
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 14,168 $ 13,250 $ 12,633 7 % 12 %
Federal funds sold and securities
purchased under resale agreements 3,409 1,554 1,692 119 101
Securities available for sale 34,604 38,518 35,710 (10) (3)
Mortgages held for sale 8,500 11,707 11,781 (27) (28)
Loans held for sale 4,049 4,975 4,192 (19) (3)
Loans 135,046 119,464 111,646 13 21
Allowance for loan losses 3,349 3,170 3,165 6 6
-------- -------- --------
Net loans 131,697 116,294 108,481 13 21
-------- -------- --------
Mortgage servicing rights 4,848 4,483 4,080 8 19
Premises and equipment, net 2,959 2,985 3,141 (1) (6)
Core deposit intangible 1,214 1,286 1,381 (6) (12)
Goodwill 8,526 7,702 7,598 11 12
Interest receivable and other assets 20,185 15,348 14,732 32 37
-------- -------- --------
Total assets $234,159 $218,102 $205,421 7 % 14 %
======== ======== ======== === ===
LIABILITIES
Noninterest-bearing deposits $ 47,979 $ 42,916 $ 43,708 12 % 10 %
Interest-bearing deposits 98,469 89,792 88,834 10 11
-------- -------- --------
Total deposits 146,448 132,708 132,542 10 10
Short-term borrowings 26,304 27,995 20,155 (6) 31
Accrued expenses and other liabilities 10,856 11,108 9,296 (2) 17
Long-term debt 26,639 23,375 21,268 14 25
Guaranteed preferred beneficial interests
in Company's subordinated debentures 785 785 785 -- --
STOCKHOLDERS' EQUITY
Preferred stock 441 344 590 28 (25)
Unearned ESOP shares (176) (73) (130) 141 35
-------- -------- --------
Total preferred stock 265 271 460 (2) (42)
Common stock - $1-2/3 par value,
authorized 4,000,000,000 shares;
issued 1,666,095,265 shares 2,777 2,777 2,777 -- --
Additional paid-in capital 8,863 8,786 8,764 1 1
Retained earnings 12,297 11,196 10,028 10 23
Cumulative other comprehensive income 961 892 (10) 8 --
Note receivable from ESOP (1) (1) (1) -- --
Treasury stock - 46,953,959 shares,
39,245,724 shares and 15,465,932 shares (2,035) (1,790) (643) 14 216
-------- -------- --------
Total stockholders' equity 23,127 22,131 21,375 5 8
-------- -------- --------
Total liabilities and stockholders' equity $234,159 $218,102 $205,421 7 % 14 %
======== ======== ======== === ===
- ---------------------------------------------------------------------------------------------------------------------------
- 6 -
Wells Fargo & Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
Six months ended June 30,
-------------------------
(in millions) 2000 1999
- -------------------------------------------------------------------------------------------------------------------
BALANCE, BEGINNING OF PERIOD $22,131 $20,759
Net income 2,049 1,815
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments (1) 3
Change in investment securities valuation allowance 69 (476)
Common stock issued 253 372
Common stock issued for acquisitions 1,671 67
Common stock repurchased (2,399) (547)
Preferred stock released to ESOP 73 32
Preferred stock dividends (9) (17)
Common stock dividends (711) (635)
Cash payments received on notes receivable from ESOP -- 2
Increase in Rabbi trust assets (classified as treasury stock) 1 --
------- --------
BALANCE, END OF PERIOD $23,127 $21,375
======= ========
- -------------------------------------------------------------------------------------------------------------------
LOANS
- -------------------------------------------------------------------------------------------------------------------
JUNE 30, Dec. 31, June 30,
(in millions) 2000 1999 1999
- -------------------------------------------------------------------------------------------------------------------
Commercial $ 43,381 $ 38,688 $ 36,633
Real estate 1-4 family first mortgage 17,233 12,398 11,941
Other real estate mortgage 20,524 19,178 17,157
Real estate construction 5,417 4,711 4,103
Consumer:
Real estate 1-4 family junior lien mortgage 15,127 12,938 11,494
Credit card 5,733 5,472 5,294
Other revolving credit and monthly payment 18,617 16,656 16,652
-------- -------- ---------
Total consumer 39,477 35,066 33,440
Lease financing 7,391 7,850 6,875
Foreign 1,623 1,573 1,497
-------- -------- ---------
Total loans (net of unearned discount) $135,046 $119,464 $111,646
======== ======== =========
- -------------------------------------------------------------------------------------------------------------------
- 7 -
Wells Fargo & Company and Subsidiaries
CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
- ---------------------------------------------------------------------------------------------------------------------------
Quarter ended Six months ended
---------------------------------- ---------------------
JUNE 30, Mar. 31, June 30, JUNE 30, June 30,
(in millions) 2000 2000 1999 2000 1999
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, BEGINNING OF PERIOD $3,237 $3,170 $3,161 $3,170 $3,134
Allowance related to business combinations, net 98 66 5 164 35
Provision for loan losses 260 255 260 515 530
Loan charge-offs:
Commercial (89) (101) (111) (190) (192)
Real estate 1-4 family first mortgage -- (6) (6) (6) (7)
Other real estate mortgage (13) (3) (4) (16) (12)
Real estate construction (3) (1) (1) (4) (1)
Consumer:
Real estate 1-4 family junior lien mortgage (6) (11) (6) (17) (15)
Credit card (84) (82) (96) (166) (206)
Other revolving credit and monthly payment (120) (131) (109) (251) (236)
------- ------ ------ ------ ------
Total consumer (210) (224) (211) (434) (457)
Lease financing (9) (13) (10) (22) (21)
Foreign (21) (24) (36) (45) (51)
------- ------ ------ ------ ------
Total loan charge-offs (345) (372) (379) (717) (741)
------- ------ ------ ------ ------
Loan recoveries:
Commercial 19 32 23 51 36
Real estate 1-4 family first mortgage 1 1 2 2 3
Other real estate mortgage 4 3 12 7 29
Real estate construction 1 1 4 2 4
Consumer:
Real estate 1-4 family junior lien mortgage 4 4 4 8 7
Credit card 9 9 13 18 26
Other revolving credit and monthly payment 54 49 53 103 89
------- ------ ------ ------ ------
Total consumer 67 62 70 129 122
Lease financing 3 3 3 6 6
Foreign 4 16 4 20 7
------- ------ ------ ------ ------
Total loan recoveries 99 118 118 217 207
------- ------ ------ ------ ------
Total net loan charge-offs (246) (254) (261) (500) (534)
------- ------ ------ ------ ------
BALANCE, END OF PERIOD $3,349 $3,237 $3,165 $3,349 $3,165
======= ====== ====== ====== ======
Total net loan charge-offs as a percentage
of average total loans (annualized) .78% .84% .96% .81% .99%
======= ====== ====== ====== ======
Allowance as a percentage of total loans 2.48% 2.59% 2.83% 2.48% 2.83%
======= ====== ====== ====== ======
- ---------------------------------------------------------------------------------------------------------------------------
- 8 -
Wells Fargo & Company and Subsidiaries
NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
- -------------------------------------------------------------------------------------------------------------------
JUN. 30, Dec. 31, Jun. 30,
(in millions) 2000 1999 1999
- -------------------------------------------------------------------------------------------------------------------
Nonaccrual loans:
Commercial $ 462 $ 344 $ 338
Real estate 1-4 family first mortgage 107 127 147
Other real estate mortgage 125 112 124
Real estate construction 17 7 11
Consumer:
Real estate 1-4 family junior lien mortgage 11 17 17
Other revolving credit and monthly payment 22 27 23
----- ------ ------
Total consumer 33 44 40
Lease financing 46 22 21
Foreign 11 9 6
----- ------ ------
Total nonaccrual loans 801 665 687
Restructured loans 3 4 1
----- ------ ------
Nonaccrual and restructured loans 804 669 688
As a percentage of total loans .6% .6% .6%
Foreclosed assets 135 153 171
Real estate investments (1) 32 33 --
----- ------ ------
Total nonaccrual and restructured loans
and other assets $ 971 $ 855 $ 859
===== ====== ======
- -------------------------------------------------------------------------------------------------------------------
(1) Represents the amount of real estate investments (contingent interest loans
accounted for as investments) that would be classified as nonaccrual if
such assets were recorded as loans. Real estate investments totaled $79
million, $89 million and $133 million at June 30, 2000, December 31, 1999
and June 30, 1999, respectively.
- 9 -
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
- ---------------------------------------------------------------------------------------------------------------------------
Quarter ended June 30, % Six months ended June 30, %
--------------------- ------------------------
(in millions) 2000 1999 Change 2000 1999 Change
- ---------------------------------------------------------------------------------------------------------------------------
Service charges on deposit accounts $ 406 $ 367 11% $ 788 $ 711 11%
Trust and investment fees:
Asset management and custody fees 168 154 9 336 305 10
Mutual fund and annuity sales fees 166 134 24 328 258 27
All other 26 27 (4) 56 52 8
------ ------ ------ ------
Total trust and investment fees 360 315 14 720 615 17
Credit card fees 126 126 -- 249 258 (3)
Other fees:
Cash network fees 78 70 11 148 128 16
Charges and fees on loans 80 87 (8) 160 163 (2)
All other 134 110 22 254 214 19
------ ------ ------ ------
Total other fees 292 267 9 562 505 11
Mortgage banking:
Origination and other closing fees 88 115 (23) 149 228 (35)
Servicing fees, net of amortization 170 99 72 321 54 494
Net (losses) gains on sales of mortgages (16) 44 -- 40 244 (84)
All other 62 66 (6) 101 125 (19)
------ ------ ------ ------
Total mortgage banking 304 324 (6) 611 651 (6)
Insurance 114 119 (4) 206 204 1
Net venture capital gains 320 13 -- 1,205 126 856
Net (losses) gains on securities available for sale (39) 23 -- (641) 21 --
Income from equity investments accounted for by the:
Cost method 13 30 (57) 127 64 98
Equity method 40 20 100 78 41 90
Net gains on sales of loans 2 12 (83) 5 25 (80)
Net gains on dispositions of operations 4 103 (96) 6 102 (94)
All other 150 95 58 86 218 (61)
------ ------ ------ ------
Total $2,092 $1,814 15% $4,002 $3,541 13%
====== ====== === ====== ====== ===
- ---------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
- ---------------------------------------------------------------------------------------------------------------------------
Quarter ended June 30, % Six months ended June 30, %
--------------------- ------------------------
(in millions) 2000 1999 Change 2000 1999 Change
- ---------------------------------------------------------------------------------------------------------------------------
Salaries $ 838 $ 750 12% $1,656 $1,475 12%
Incentive compensation 156 135 16 289 269 7
Employee benefits 225 217 4 457 416 10
Equipment 189 182 4 382 373 2
Net occupancy 219 185 18 444 371 20
Goodwill 124 104 19 237 208 14
Core deposit intangible:
Nonqualifying (1) 42 45 (7) 84 92 (9)
Qualifying 3 5 (40) 7 10 (30)
Net gains on dispositions of premises
and equipment (16) (13) 23 (49) (11) 345
Contract services 120 110 9 228 200 14
Outside professional services 87 88 (1) 174 160 9
Outside data processing 71 62 15 142 138 3
Telecommunications 73 64 14 135 125 8
Travel and entertainment 68 60 13 122 115 6
Advertising and promotion 71 56 27 129 106 22
Postage 61 58 5 117 115 2
Stationery and supplies 53 39 36 99 77 29
Insurance 55 50 10 97 86 13
Operating losses 29 37 (22) 65 66 (2)
Security 23 21 10 44 43 2
All other 135 109 24 244 272 (10)
------ ------ ------ ------
Total $2,626 $2,364 11% $5,103 $4,706 8%
====== ====== === ====== ====== ===
- ---------------------------------------------------------------------------------------------------------------------------
(1) Amortization of core deposit intangible acquired after February 1992 that
is subtracted from stockholders' equity in computing regulatory capital for
bank holding companies.
- 10 -
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
- -------------------------------------------------------------------------------------------------------------------------------
Quarter ended June 30,
-------------------------------------------------------------------
2000 1999
------------------------------ -------------------------------
INTEREST Interest
AVERAGE YIELDS/ INCOME/ Average Yields/ income/
(in millions) BALANCE RATES EXPENSE balance rates expense
- -------------------------------------------------------------------------------------------------------------------------------
EARNING ASSETS
Federal funds sold and securities purchased
under resale agreements $ 2,239 6.40% $ 36 $ 1,446 4.74% $ 17
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies 2,304 6.13 35 6,180 5.25 82
Securities of U.S. states and political subdivisions 1,860 7.88 37 1,855 8.36 37
Mortgage-backed securities:
Federal agencies 23,652 7.18 433 19,261 6.59 315
Private collateralized mortgage obligations 1,914 7.88 39 3,160 6.81 54
-------- ------ -------- ------
Total mortgage-backed securities 25,566 7.24 472 22,421 6.62 369
Other debt securities (6) 4,469 7.22 56 2,850 7.52 43
-------- ------ -------- ------
Total debt securities available for sale 34,199 7.20 600 33,306 6.51 531
Loans held for sale (3) 5,633 8.60 121 5,618 7.22 101
Mortgages held for sale (3) 8,317 8.18 172 12,254 6.96 215
Loans:
Commercial 41,547 9.44 975 35,638 8.57 762
Real estate 1-4 family first mortgage 14,125 7.67 270 12,075 7.65 231
Other real estate mortgage 20,460 8.88 452 16,977 8.71 368
Real estate construction 5,084 9.66 122 4,039 9.30 94
Consumer:
Real estate 1-4 family junior lien mortgage 14,519 10.37 375 11,210 9.90 277
Credit card 5,218 14.54 190 5,337 13.61 182
Other revolving credit and monthly payment 16,953 12.62 534 15,416 12.59 485
-------- ------ -------- ------
Total consumer 36,690 12.00 1,099 31,963 11.82 944
Lease financing 7,472 7.81 146 6,789 7.79 132
Foreign 1,622 21.22 86 1,515 21.05 80
-------- ------ -------- ------
Total loans (4) 127,000 9.96 3,150 108,996 9.60 2,611
Other 2,946 6.09 43 2,867 5.33 38
-------- ------ -------- ------
Total earning assets $180,334 9.21 4,122 $164,487 8.59 3,513
======== ------ ======== ------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 3,144 1.76 14 $ 2,844 .79 6
Market rate and other savings 58,159 2.69 389 56,064 2.24 314
Savings certificates 24,842 5.17 319 25,926 4.72 305
Other time deposits 3,807 5.62 53 3,600 4.92 43
Deposits in foreign offices 6,436 6.16 99 1,032 4.28 11
-------- ------ -------- ------
Total interest-bearing deposits 96,388 3.65 874 89,466 3.05 679
Short-term borrowings 23,375 6.08 353 17,496 4.61 201
Long-term debt 23,979 6.59 395 20,663 5.61 290
Guaranteed preferred beneficial interests in Company's
subordinated debentures 785 7.77 15 785 7.52 15
-------- ------ -------- ------
Total interest-bearing liabilities 144,527 4.55 1,637 128,410 3.70 1,185
Portion of noninterest-bearing funding sources 35,807 -- -- 36,077 -- --
-------- ------ -------- ------
Total funding sources $180,334 3.66 1,637 $164,487 2.90 1,185
========= ------ ========= ------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (5) 5.55% $2,485 5.69% $2,328
==== ====== ===== ======
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 11,640 $ 11,116
Goodwill 8,314 7,657
Other 20,478 17,082
-------- --------
Total noninterest-earning assets $ 40,432 $ 35,855
======== ========
NONINTEREST-BEARING FUNDING SOURCES
Deposits $44,977 $ 42,729
Other liabilities 9,134 7,603
Preferred stockholders' equity 263 459
Common stockholders' equity 21,865 21,141
Noninterest-bearing funding sources used to
fund earning assets (35,807) (36,077)
-------- --------
Net noninterest-bearing funding sources $ 40,432 $ 35,855
======== ========
TOTAL ASSETS $220,766 $200,342
======== ========
- -------------------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of the Company was 9.25% and 7.75% for the quarters
ended June 30, 2000 and 1999, respectively. The average three-month London
Interbank Offered Rate (LIBOR) was 6.65% and 5.07% for the same quarters,
respectively.
(2) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(3) Yields are based on amortized cost balances.
(4) Nonaccrual loans and related income are included in their respective loan
categories.
(5) Includes taxable-equivalent adjustments that primarily relate to income on
certain loans and securities that is exempt from federal and applicable
state income taxes. The federal statutory tax rate was 35% for all periods
presented.
(6) Includes certain preferred securities.
- 11 -
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
- --------------------------------------------------------------------------------------------------------------------------------
Six months ended June 30,
-------------------------------------------------------------------
2000 1999
------------------------------ -------------------------------
INTEREST Interest
AVERAGE YIELDS/ INCOME/ Average Yields/ income/
(in millions) BALANCE RATES EXPENSE balance rates expense
- --------------------------------------------------------------------------------------------------------------------------------
EARNING ASSETS
Federal funds sold and securities purchased
under resale agreements $ 2,095 5.98% $ 62 $ 1,304 4.86% $ 31
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies 3,299 5.87 101 5,452 5.41 148
Securities of U.S. states and political subdivisions 1,843 8.00 75 1,771 8.38 70
Mortgage-backed securities:
Federal agencies 23,730 7.24 876 19,457 6.65 640
Private collateralized mortgage obligations 2,041 7.52 79 3,234 6.78 110
-------- ----- -------- ------
Total mortgage-backed securities 25,771 7.27 955 22,691 6.67 750
Other debt securities (6) 4,957 7.53 113 2,708 7.59 85
-------- ----- -------- ------
Total debt securities available for sale 35,870 7.19 1,244 32,622 6.61 1,053
Loans held for sale (3) 5,468 8.35 227 5,590 7.23 200
Mortgages held for sale (3) 8,602 7.86 342 13,822 6.82 473
Loans:
Commercial 40,384 9.30 1,868 35,258 8.55 1,496
Real estate 1-4 family first mortgage 13,410 7.75 519 12,082 7.64 462
Other real estate mortgage 20,042 9.07 905 16,855 8.87 743
Real estate construction 4,964 9.52 235 3,971 9.33 184
Consumer:
Real estate 1-4 family junior lien mortgage 13,917 10.28 714 11,092 9.89 545
Credit card 5,255 14.12 370 5,442 13.62 371
Other revolving credit and monthly payment 16,861 12.55 1,056 15,542 12.55 973
-------- ----- -------- ------
Total consumer 36,033 11.90 2,140 32,076 11.81 1,889
Lease financing 7,648 7.75 296 6,682 7.84 261
Foreign 1,605 21.47 172 1,494 21.05 157
-------- ----- -------- ------
Total loans (4) 124,086 9.92 6,135 108,418 9.62 5,192
Other 3,142 5.84 92 2,417 5.43 66
-------- ----- -------- ------
Total earning assets $179,263 9.12 8,102 $164,173 8.61 7,015
======== ----- ======== ------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 3,098 1.58 25 $ 2,784 .88 12
Market rate and other savings 57,527 2.61 746 55,822 2.31 639
Savings certificates 24,769 5.03 619 26,491 4.81 632
Other time deposits 3,506 5.45 95 3,657 5.02 91
Deposits in foreign offices 4,941 5.94 146 1,039 4.24 22
-------- ------ -------- ------
Total interest-bearing deposits 93,841 3.50 1,631 89,793 3.14 1,396
Short-term borrowings 24,441 5.95 723 17,526 4.70 408
Long-term debt 23,905 6.49 777 19,780 5.80 573
Guaranteed preferred beneficial interests in Company's
subordinated debentures 785 7.75 30 785 7.52 30
-------- ------ -------- ------
Total interest-bearing liabilities 142,972 4.44 3,161 127,884 3.79 2,407
Portion of noninterest-bearing funding sources 36,291 -- -- 36,289 -- --
-------- ------ -------- ------
Total funding sources $179,263 3.56 3,161 $164,173 2.96 2,407
======== ------ ======== ------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (5) 5.56% $4,941 5.65% $4,608
==== ====== ===== ======
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 11,769 $ 11,177
Goodwill 8,123 7,695
Other 19,457 16,492
------- -------
Total noninterest-earning assets $ 39,349 $ 35,364
======= =======
NONINTEREST-BEARING FUNDING SOURCES
Deposits $ 43,871 $ 42,750
Other liabilities 9,483 7,627
Preferred stockholders' equity 267 461
Common stockholders' equity 22,019 20,815
Noninterest-bearing funding sources used to
fund earning assets (36,291) (36,289)
-------- -------
Net noninterest-bearing funding sources $ 39,349 $ 35,364
======== =======
TOTAL ASSETS $218,612 $199,537
======== ========
- --------------------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of the Company was 8.97% and 7.75% for the six
months ended June 30, 2000 and 1999, respectively. The average three-month
London Interbank Offered Rate (LIBOR) was 6.38% and 5.03% for the six
months ended June 30, 2000 and 1999, respectively.
(2) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(3) Yields are based on amortized cost balances.
(4) Nonaccrual loans and related income are included in their respective loan
categories.
(5) Includes taxable-equivalent adjustments that primarily relate to income on
certain loans and securities that is exempt from federal and applicable
state income taxes. The federal statutory tax rate was 35% for all periods
presented.
(6) Includes certain preferred securities.