UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000 Commission File Number 001-2979
WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)
Delaware No. 41-0449260
(State of incorporation) (I.R.S. Employer
Identification No.)
420 Montgomery Street, San Francisco, California 94163
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 1-800-411-4932
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
Common Stock, par value $1-2/3 New York Stock Exchange
Chicago Stock Exchange
Preferred Share Purchase Rights New York Stock Exchange
Chicago Stock Exchange
6 3/4% Convertible Subordinated Debentures Due 2003 New York Stock Exchange
Adjustable Rate Cumulative Preferred Stock, Series B New York Stock Exchange
No securities are registered pursuant to Section 12(g) of the Act.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
-- --
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of February 28, 2001, 1,715,970,357 shares of common stock were
outstanding having an aggregate market value, based on a closing price of
$49.64 per share, of $85,181 million. At that date, the aggregate market
value of common stock held by non-affiliates was approximately $83,297
million.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2000 Annual Report to Stockholders - Incorporated into Parts I,
II and IV. Portions of the Proxy Statement for the 2001 Annual Meeting of
Stockholders - Incorporated into Part III.
FORM 10-K CROSS-REFERENCE INDEX
PAGE(S)
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FORM Annual Proxy
10-K Report (1) Statement (2)
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PART I
Item 1. Business
Description of Business 2-9 33-98 -
Statistical Disclosure:
Distribution of Assets, Liabilities and
Stockholders' Equity; Interest Rates
and Interest Differential 10 40-43 -
Investment Portfolio -- 45, 56, 63 -
Loan Portfolio 11-12 45-47, 57, 64-66 -
Summary of Loan Loss Experience 13-15 47, 57, 65-66 -
Deposits - 48, 68 -
Return on Equity and Assets - 34-35 -
Short-Term Borrowings - 69 -
Derivative Financial Instruments - 49, 58-59, 91-93 -
Item 2. Properties 16 67 -
Item 3. Legal Proceedings - 90 -
Item 4. Submission of Matters to a Vote of
Security Holders (3) - - -
PART II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters - 51 -
Item 6. Selected Financial Data - 36 -
Item 7. Management's Discussion and Analysis of Finan-
cial Condition and Results of Operations - 34-51 -
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk - 48-49 -
Item 8. Financial Statements and Supplementary Data - 52-98 -
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure (3) - - -
PART III
Item 10. Directors and Executive Officers of the
Registrant 17-20 - 6-9, 34
Item 11. Executive Compensation - - 13-30, 34
Item 12. Security Ownership of Certain Beneficial
Owners and Management - - 4-5
Item 13. Certain Relationships and Related Transactions - - 31-33
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 21-27 52-98 -
SIGNATURES 28 - -
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(1) The 2000 Annual Report to Stockholders, portions of which are
incorporated by reference into this Form 10-K.
(2) The information required to be submitted in response to these items is
incorporated by reference to the Company's definitive Proxy Statement
for the 2001 Annual Meeting of Stockholders to be held on
April 24, 2001, to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A.
(3) Not applicable.
1
DESCRIPTION OF BUSINESS
GENERAL
Wells Fargo & Company (Parent) is a diversified financial services company
organized under the laws of Delaware and registered under the Bank Holding
Company Act (BHC Act) of 1956, as amended, and registered as a financial holding
company under the Gramm-Leach-Bliley Act. Based on assets as of December 31,
2000, it was the fourth largest bank holding company in the United States. As a
diversified financial services organization, Wells Fargo & Company owns
subsidiaries engaged in banking and a variety of related businesses.
Subsidiaries of the Parent provide retail, commercial and corporate banking
services through banks located in Alaska, Arizona, California, Colorado, Idaho,
Illinois, Indiana, Iowa, Michigan, Minnesota, Montana, Nebraska, Nevada, New
Mexico, North Dakota, Ohio, Oregon, South Dakota, Texas, Utah, Washington,
Wisconsin and Wyoming. Additional financial services are provided to customers
by subsidiaries engaged in various businesses, principally: wholesale banking,
mortgage banking, consumer finance, equipment leasing, agricultural finance,
commercial finance, securities brokerage and investment banking, insurance
agency services, computer and data processing services, trust services,
mortgage-backed securities servicing and venture capital investment. Wells Fargo
& Company together with its subsidiaries is referred to in this report as the
Company.
On October 25, 2000, the merger involving the Company and First Security
Corporation (the FSCO Merger) was completed, with First Security Corporation
(First Security or FSCO) surviving as a wholly-owned subsidiary of the Company.
On November 2, 1998, the merger involving Norwest Corporation and the former
Wells Fargo & Company (the WFC Merger) was completed. On completion of the WFC
Merger, Norwest Corporation changed its name to Wells Fargo & Company. The FSCO
Merger and the WFC Merger were accounted for under the pooling-of-interests
method of accounting and, accordingly, the information included in this report,
including the Financial Statements and Supplementary Data, and Management's
Discussion and Analysis of Financial Condition and Results of Operations,
presents the combined results as if both mergers had been in effect for all
periods presented.
The Company has four operating segments for the purpose of management reporting:
Community Banking, Wholesale Banking, Wells Fargo Home Mortgage (formerly
Norwest Mortgage) and Wells Fargo Financial (formerly Norwest Financial).
Financial information and narrative descriptions of these operating segments are
included in the 2000 Annual Report to Stockholders, incorporated by reference
herein.
HISTORY AND GROWTH
Norwest Corporation, prior to the WFC Merger, provided banking services to
customers in 16 states and additional financial services through subsidiaries
engaged in a variety of businesses including mortgage banking and consumer
finance.
2
The former Wells Fargo & Company's principal subsidiary, Wells Fargo Bank,
N.A., was the successor to the banking portion of the business founded by
Henry Wells and William G. Fargo in 1852. That business later operated the
westernmost leg of the Pony Express and ran stagecoach lines in the western
part of the United States. The California banking business was separated from
the express business in 1905, was merged in 1960 with American Trust Company,
another of the oldest banks in the Western United States, and became Wells
Fargo Bank, N.A., a national banking association, in 1968.
The former Wells Fargo & Company acquired First Interstate Bancorp in April
1996. First Interstate's assets had an approximate book value of $55 billion.
The transaction was valued at approximately $11.3 billion and was accounted for
as a purchase.
The Company expands its business, in part, by acquiring banking institutions and
other companies engaged in activities that are financial in nature. The Company
continues to explore opportunities to acquire banking institutions and other
companies. Discussions are continually being carried on related to such
acquisitions. It is not presently known whether, or on what terms, such
discussions will result in further acquisitions. Generally it is the policy of
the Company not to comment on such discussions or possible acquisitions until a
definitive acquisition agreement has been signed.
COMPETITION
The financial services industry is highly competitive. The Company's
subsidiaries compete with financial services providers, such as banks, savings
and loan associations, credit unions, finance companies, mortgage banking
companies, insurance companies, and money market and mutual fund companies. They
also face increased competition from non-banking institutions such as brokerage
houses and insurance companies, as well as from financial services subsidiaries
of commercial and manufacturing companies. Many of these competitors enjoy the
benefits of fewer regulatory constraints and lower cost structures.
Effective March 13, 2000, securities firms and insurance companies that elect to
become financial holding companies may acquire banks and other financial
institutions. This may significantly change the competitive environment in which
the Company conducts business. The financial services industry is also likely to
become more competitive as further technological advances enable more companies
to provide financial services. These technological advances may diminish the
importance of depository institutions and other financial intermediaries in the
transfer of funds between parties.
REGULATION AND SUPERVISION
The following discussion, together with Notes 3 and 22 to Financial Statements
included in the 2000 Annual Report to Stockholders, incorporated by reference
herein, sets forth the material elements of the regulatory framework applicable
to bank holding companies and their subsidiaries and provides certain specific
information relevant to the Company. This regulatory framework is to protect
depositors, federal deposit insurance funds and the banking
3
system as a whole, and not to protect security holders. To the extent that
the information describes statutory and regulatory provisions, it is
qualified in its entirety by reference to those provisions. Further, such
statutes, regulations and policies are continually under review by Congress
and state legislatures, and federal and state regulatory agencies. A change
in statutes, regulations or regulatory policies applicable to the Company,
including changes in interpretation or implementation thereof, could have a
material effect on the Company's business.
Applicable laws and regulations could restrict the Company's ability to
diversify into other areas of financial services, acquire depository
institutions, and pay dividends on the Company's capital stock. They could also
require the Company to provide financial support to one or more of its
subsidiary banks, maintain capital balances in excess of those desired by
management, and pay higher deposit insurance premiums as a result of the
deterioration in the financial condition of depository institutions in general.
GENERAL
PARENT BANK HOLDING COMPANY. As a bank holding company, the Company is subject
to regulation under the BHC Act and to inspection, examination and supervision
by the Board of Governors of the Federal Reserve System (Federal Reserve Board
or FRB).
SUBSIDIARY BANKS. The Company's national subsidiary banks are subject to
regulation and examination primarily by the Office of the Comptroller of the
Currency (OCC) and secondarily by the Federal Deposit Insurance Corporation
(FDIC) and the FRB. The Company's state-chartered banks are subject to primary
federal regulation and examination by the FDIC or the FRB and, in addition, are
regulated and examined by their respective state banking departments.
NONBANK SUBSIDIARIES. Many of the Company's nonbank subsidiaries are also
subject to regulation by the FRB and other applicable federal and state
agencies. The Company's brokerage subsidiaries are regulated by the SEC, the
National Association of Securities Dealers, Inc. and state securities
regulators. The Company's insurance subsidiaries are subject to regulation by
applicable state insurance regulatory agencies. Other nonbank subsidiaries of
the Company are subject to the laws and regulations of both the federal
government and the various states in which they conduct business.
PARENT BANK HOLDING COMPANY ACTIVITIES
"FINANCIAL IN NATURE" REQUIREMENT. As a bank holding company that has elected to
become a financial holding company pursuant to the BHC Act, the Company may
affiliate with securities firms and insurance companies and engage in other
activities that are financial in nature or incidental or complementary to
activities that are financial in nature. "Financial in nature" activities
include securities underwriting, dealing and market making, sponsoring mutual
funds and investment companies, insurance underwriting and agency, merchant
banking, and activities that the FRB, in consultation with the Secretary of the
Treasury, determines from
4
time to time to be financial in nature or incidental to such financial
activity or is complementary to a financial activity and does not pose a
safety and soundness risk. A bank holding company that is not also a
financial holding company is limited to engaging in banking and such other
activities as determined by the FRB to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto.
No Federal Reserve Board approval is required for the Company to acquire a
company (other than a bank holding company, bank or savings association) engaged
in activities that are financial in nature or incidental to activities that are
financial in nature, as determined by the FRB. Prior FRB approval is required
before the Company may acquire the beneficial ownership or control of more than
5% of the voting shares or substantially all of the assets of a bank holding
company, bank or savings association.
If any subsidiary bank of the Company ceases to be "well capitalized" or "well
managed" under applicable regulatory standards, the FRB may, among other
actions, order the Company to divest the subsidiary bank. Alternatively, the
Company may elect to conform its activities to those permissible for a bank
holding company that is not also a financial holding company.
If any subsidiary bank of the Company receives a rating under the Community
Reinvestment Act of 1977 of less than satisfactory, the Company will be
prohibited, until the rating is raised to satisfactory or better, from engaging
in new activities or acquiring companies other than bank holding companies,
banks or savings associations.
The Company became a financial holding company effective March 13, 2000. It
continues to maintain its status as a bank holding company for purposes of other
FRB regulations.
INTERSTATE BANKING. Under the Riegle-Neal Interstate Banking and Branching Act
(Riegle-Neal Act), a bank holding company may acquire banks in states other than
its home state, subject to any state requirement that the bank has been
organized and operating for a minimum period of time, not to exceed five years,
and the requirement that the bank holding company not control, prior to or
following the proposed acquisition, more than 10% of the total amount of
deposits of insured depository institutions nationwide or, unless the
acquisition is the bank holding company's initial entry into the state, more
than 30% of such deposits in the state (or such lesser or greater amount set by
the state).
The Riegle-Neal Act also authorizes banks to merge across state lines, thereby
creating interstate branches. States were permitted for a period of time to opt
out of the interstate merger authority provided by the Riegle-Neal Act and, by
doing so, prohibit interstate mergers in the state. The Company will be unable
to consolidate its banking operations in one state with those of another state
if either state in question has opted out of the Riegle-Neal Act. The state of
Montana has opted out until September 2001. Banks are also permitted to acquire
and to establish DE NOVO branches in other states where authorized under the
laws of those states.
REGULATORY APPROVAL. In determining whether to approve a proposed bank
acquisition, federal bank regulators will consider, among other factors, the
effect of the acquisition on competition,
5
the public benefits expected to be received from the acquisition, the
projected capital ratios and levels on a post-acquisition basis, and the
acquiring institution's record of addressing the credit needs of the
communities it serves, including the needs of low and moderate income
neighborhoods, consistent with the safe and sound operation of the bank,
under the Community Reinvestment Act of 1977, as amended.
DIVIDEND RESTRICTIONS
Wells Fargo & Company is a legal entity separate and distinct from its
subsidiary banks and other subsidiaries. Its principal source of funds to pay
dividends on its common and preferred stock and principal and interest on its
debt is dividends from its subsidiaries. Various federal and state statutory
provisions and regulations limit the amount of dividends the Company's
subsidiary banks and certain other subsidiaries of the Company may pay without
regulatory approval. For information about the restrictions applicable to the
Company's subsidiary banks, see Note 3 to Financial Statements, incorporated by
reference herein.
Federal bank regulatory agencies have the authority to prohibit the Company's
subsidiary banks from engaging in unsafe or unsound practices in conducting
their businesses. The payment of dividends, depending on the financial condition
of the bank in question, could be deemed an unsafe or unsound practice. The
ability of the Company's subsidiary banks to pay dividends in the future is
currently, and could be further, influenced by bank regulatory policies and
capital guidelines.
HOLDING COMPANY STRUCTURE
TRANSFER OF FUNDS FROM SUBSIDIARY BANKS. The Company's subsidiary banks are
subject to restrictions under federal law that limit the transfer of funds or
other items of value from such subsidiaries to the Parent and its nonbank
subsidiaries (including affiliates) in so-called "covered transactions." In
general, covered transactions include loans and other extensions of credit,
investments and asset purchases, as well as other transactions involving the
transfer of value from a subsidiary bank to an affiliate or for the benefit of
an affiliate. Unless an exemption applies, covered transactions by a subsidiary
bank with a single affiliate are limited to 10% of the subsidiary bank's capital
and surplus and, with respect to all covered transactions with affiliates in the
aggregate, to 20% of the subsidiary bank's capital and surplus. Also, loans and
extensions of credit to affiliates generally are required to be secured in
specified amounts. A bank's transactions with its nonbank affiliates are also
generally required to be on arm's length terms.
SOURCE OF STRENGTH. The FRB has a policy that a bank holding company is expected
to act as a source of financial and managerial strength to each of its
subsidiary banks and, under appropriate circumstances, to commit resources to
support each such subsidiary bank. This support may be required at times when
the bank holding company may not have the resources to provide the support.
6
The OCC may order the assessment of the Company if the capital of one of its
national bank subsidiaries were to become impaired. If the Company failed to pay
the assessment within three months, the OCC could order the sale of the
Company's stock in the national bank to cover the deficiency.
Capital loans by the Company to any of its subsidiary banks are subordinate
in right of payment to deposits and certain other indebtedness of the
subsidiary bank. In addition, in the event of the Company's bankruptcy, any
commitment by the Company to a federal bank regulatory agency to maintain the
capital of a subsidiary bank will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
DEPOSITOR PREFERENCE. The Federal Deposit Insurance Act (FDI Act) provides that,
in the event of the "liquidation or other resolution" of an insured depository
institution, the claims of depositors of the institution (including the claims
of the FDIC as subrogee of insured depositors) and certain claims for
administrative expenses of the FDIC as a receiver will have priority over other
general unsecured claims against the institution. If an insured depository
institution fails, insured and uninsured depositors, along with the FDIC, will
have priority in payment ahead of unsecured, nondeposit creditors, including the
Company, with respect to any extensions of credit they have made to such insured
depository institution.
LIABILITY OF COMMONLY CONTROLLED INSTITUTIONS. All of the Company's banks are
insured by the FDIC. FDIC-insured depository institutions can be held liable for
any loss incurred, or reasonably expected to be incurred, by the FDIC due to the
default of an FDIC-insured depository institution controlled by the same bank
holding company, and for any assistance provided by the FDIC to an FDIC-insured
depository institution that is in danger of default and that is controlled by
the same bank holding company. "Default" means generally the appointment of a
conservator or receiver. "In danger of default" means generally the existence of
certain conditions indicating that a default is likely to occur in the absence
of regulatory assistance.
CAPITAL REQUIREMENTS
The Company is subject to risk-based capital requirements and guidelines imposed
by the FRB, which are substantially similar to the capital requirements and
guidelines imposed by the FRB, the OCC and the FDIC on depository institutions
under their jurisdictions. For information about these capital requirements and
guidelines, see Note 22 to Financial Statements, incorporated by reference
herein.
The FRB may set higher capital requirements for holding companies whose
circumstances warrant it. For example, holding companies experiencing internal
growth or making acquisitions are expected to maintain strong capital positions
substantially above the minimum supervisory levels, without significant reliance
on intangible assets. Also, the FRB considers a "tangible Tier 1 leverage ratio"
(deducting all intangibles) and other indications of capital strength in
evaluating proposals for expansion or new activities.
7
FRB, FDIC and OCC rules require the Company to incorporate market and interest
rate risk components into their risk-based capital standards. Under the market
risk requirements, capital is allocated to support the amount of market risk
related to a financial institution's ongoing trading activities.
As an additional means to identify problems in the financial management of
depository institutions, the FDI Act requires federal bank regulatory
agencies to establish certain non-capital safety and soundness standards for
institutions for which they are the primary federal regulator. The standards
relate generally to operations and management, asset quality, interest rate
exposure and executive compensation. The agencies are authorized to take
action against institutions that fail to meet such standards.
The FDI Act requires federal bank regulatory agencies to take "prompt corrective
action" with respect to FDIC-insured depository institutions that do not meet
minimum capital requirements. A depository institution's treatment for purposes
of the prompt corrective action provisions will depend upon how its capital
levels compare to various capital measures and certain other factors, as
established by regulation.
DEPOSIT INSURANCE ASSESSMENTS
Through the Bank Insurance Fund (BIF), the FDIC insures the deposits of the
Company's depository institution subsidiaries up to prescribed limits for each
depositor. The amount of FDIC assessments paid by each BIF member institution is
based on its relative risk of default as measured by regulatory capital ratios
and other factors. Specifically, the assessment rate is based on the
institution's capitalization risk category and supervisory subgroup category. An
institution's capitalization risk category is based on the FDIC's determination
of whether the institution is well capitalized, adequately capitalized or less
than adequately capitalized. An institution's supervisory subgroup category is
based on the FDIC's assessment of the financial condition of the institution and
the probability that FDIC intervention or other corrective action will be
required.
The BIF assessment rate currently ranges from zero to 27 cents per $100 of
domestic deposits. The BIF assessment rate for the Company's depository
institutions currently is zero. The FDIC may increase or decrease the assessment
rate schedule on a semiannual basis. An increase in the BIF assessment rate
could have a material adverse effect on the Company's earnings, depending on the
amount of the increase. The FDIC is authorized to terminate a depository
institution's deposit insurance upon a finding by the FDIC that the
institution's financial condition is unsafe or unsound or that the institution
has engaged in unsafe or unsound practices or has violated any applicable rule,
regulation, order or condition enacted or imposed by the institution's
regulatory agency. The termination of deposit insurance for one or more of the
Company's subsidiary depository institutions could have a material adverse
effect on the Company's earnings, depending on the collective size of the
particular institutions involved.
All FDIC-insured depository institutions must pay an annual assessment to
provide funds for the payment of interest on bonds issued by the Financing
Corporation, a federal corporation
8
chartered under the authority of the Federal Housing Finance Board. The bonds
(commonly referred to as FICO bonds) were issued to capitalize the Federal
Savings and Loan Insurance Corporation. FDIC-insured depository institutions
paid approximately 2.1 cents per $100 of BIF-assessable deposits in 2000. The
FDIC established the FICO assessment rate effective for the first quarter of
2001 at approximately 2.0 cents annually per $100 of BIF-assessable deposits.
FISCAL AND MONETARY POLICIES
The Company's business and earnings are affected significantly by the fiscal and
monetary policies of the federal government and its agencies. The Company is
particularly affected by the policies of the FRB, which regulates the supply of
money and credit in the United States. Among the instruments of monetary policy
available to the FRB are (a) conducting open market operations in United States
government securities, (b) changing the discount rates of borrowings of
depository institutions, (c) imposing or changing reserve requirements against
depository institutions' deposits, and (d) imposing or changing reserve
requirements against certain borrowings by banks and their affiliates. These
methods are used in varying degrees and combinations to directly affect the
availability of bank loans and deposits, as well as the interest rates charged
on loans and paid on deposits. The policies of the FRB may have a material
effect on the Company's business, results of operations and financial condition.
PRIVACY PROVISIONS OF THE GRAMM-LEACH-BLILEY ACT
Federal banking regulators, as required under the Gramm-Leach-Bliley Act (the
GLB Act), have adopted rules limiting the ability of banks and other financial
institutions to disclose nonpublic information about consumers to nonaffiliated
third parties. The rules became effective November 13, 2000, but compliance
before July 1, 2001 is optional. The rules require disclosure of privacy
policies to consumers and, in some circumstances, allow consumers to prevent
disclosure of certain personal information to nonaffiliated third parties. The
privacy provisions of the GLB Act will affect how consumer information is
transmitted through diversified financial services companies and conveyed to
outside vendors. It is not possible at this time to assess fully the impact of
the privacy provisions on the Company's business, results of operations or
financial condition.
FUTURE LEGISLATION
Various legislation, including proposals to change substantially the financial
institution regulatory system, is from time to time introduced in Congress. This
legislation may change banking statutes and the operating environment of the
Company in substantial and unpredictable ways. If enacted, this legislation
could increase or decrease the cost of doing business, limit or expand
permissible activities or affect the competitive balance among banks, savings
associations, credit unions, and other financial institutions. The Company
cannot predict whether any of this potential legislation will be enacted and, if
enacted, the effect that it, or any implementing regulations, would have on the
Company's business, results of operations or financial condition.
9
ANALYSIS OF CHANGES IN NET INTEREST INCOME
The following table allocates the changes in net interest income on a
taxable-equivalent basis to changes in either average balances or average
rates for both interest-earning assets and interest-bearing liabilities.
Because of the numerous simultaneous volume and rate changes during any
period, it is not possible to precisely allocate such changes between volume
and rate. For this table, changes that are not solely due to either volume or
rate are allocated to these categories in proportion to the percentage
changes in average volume and average rate.
- -------------------------------------------------------------------------------------------------------------------------
Year ended December 31,
-----------------------------------------------------------
2000 OVER 1999 1999 over 1998
--------------------------- ---------------------------
(in millions) VOLUME RATE TOTAL Volume Rate Total
- -------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in interest income:
Federal funds sold and securities
purchased under resale agreements $ 40 $ 17 $ 57 $ (5) $ (8) $ (13)
Debt securities available for sale:
Securities of U.S. Treasury and federal agencies (173) 35 (138) 16 (21) (5)
Securities of U.S. states and political subdivisions (2) (4) (6) 24 (4) 20
Mortgage-backed securities:
Federal agencies 187 117 304 263 (40) 223
Private collateralized mortgage obligations (114) 31 (83) 63 2 65
Other securities 46 6 52 113 (9) 104
Mortgages held for sale (213) 111 (102) (74) 17 (57)
Loans held for sale (18) 59 41 21 (20) 1
Loans:
Commercial 588 305 893 271 (70) 201
Real estate 1-4 family first mortgage 241 23 264 (43) (19) (62)
Other real estate mortgage 330 48 378 117 (120) (3)
Real estate construction 167 25 192 94 (6) 88
Consumer:
Real estate 1-4 family junior lien mortgage 377 57 434 96 (52) 44
Credit card 26 47 73 (91) (74) (165)
Other revolving credit and monthly payment 271 36 307 (51) (53) (104)
Lease financing 74 (13) 61 142 (23) 119
Foreign 14 8 22 42 -- 42
Other (2) 39 37 9 (28) (19)
------ ----- ------ ------ ----- -----
Total increase (decrease) in interest income 1,839 947 2,786 1,007 (528) 479
------ ----- ------ ------ ----- -----
Increase (decrease) in interest expense:
Deposits:
Interest-bearing checking 3 30 33 1 (11) (10)
Market rate and other savings 64 323 387 104 (197) (93)
Savings certificates 1 153 154 (92) (132) (224)
Other time deposits 25 32 57 (31) (23) (54)
Deposits in foreign offices 260 31 291 34 (1) 33
Short-term borrowings 319 312 631 233 (69) 164
Long-term debt 276 210 486 318 (79) 239
Guaranteed preferred beneficial interests
in Company's subordinated debentures -- 2 2 (18) (4) (22)
------ ----- ------ ------ ----- -----
Total increase (decrease) in interest expense 948 1,093 2,041 549 (516) 33
------ ----- ------ ------ ----- -----
Increase (decrease) in net interest income
on a taxable-equivalent basis $ 891 $ (146) $ 745 $ 458 $ (12) $ 446
====== ====== ====== ====== ===== =====
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10
LOAN PORTFOLIO
The following table presents the remaining contractual principal maturities of
selected loan categories at December 31, 2000 and a summary of the major
categories of loans outstanding at the end of the last five years. At December
31, 2000, the Company did not have loan concentrations that exceeded 10% of
total loans, except as shown below.
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DECEMBER 31, 2000
- ------------------------------------------------------------------------------------------
OVER ONE YEAR
THROUGH FIVE YEARS OVER FIVE YEARS
------------------ ---------------
FLOATING FLOATING
OR OR December 31,
ONE YEAR FIXED ADJUSTABLE FIXED ADJUSTABLE --------------------------------------
(in millions) OR LESS RATE RATE RATE RATE TOTAL 1999 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Selected loan maturities:
Commercial $24,515 $ 4,198 $18,602 $ 1,217 $ 1,986 $ 50,518 $ 41,671 $ 38,218 $ 34,368 $ 33,047
Real estate 1-4 family
first mortgage 7,458 1,171 110 6,696 3,029 18,464 13,506 12,613 15,220 17,186
Other real estate mortgage 4,377 9,099 935 4,780 4,781 23,972 20,899 18,033 17,587 17,552
Real estate construction 4,062 594 2,536 190 333 7,715 6,067 4,529 3,941 3,807
Foreign 1,234 12 312 2 64 1,624 1,600 1,528 1,155 1,154
------- ------- ------- ------- ------- -------- ------- ------- ------- --------
Total selected loan
maturities $41,646 $15,074 $22,495 $12,885 $10,193 102,293 83,743 74,921 72,271 72,746
======= ======= ======= ======= ======= -------- ------- ------- ------- --------
Other loan categories:
Consumer:
Real estate 1-4 family
junior lien mortgage 18,218 12,949 11,135 10,622 10,854
Credit card 6,616 5,805 6,119 6,989 7,341
Other revolving credit and
monthly payment 23,974 20,617 19,441 20,255 19,615
-------- ------- ------- ------- --------
Total consumer 48,808 39,371 36,695 37,866 37,810
Lease financing 10,023 9,890 8,046 6,298 4,563
-------- ------- ------- ------- --------
Total loans $161,124 $133,004 $119,662 $116,435 $115,119
======== ======== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
The table at the top of the following page summarizes other real estate
mortgage loans by state and property type. The table at the bottom of the
following page summarizes real estate construction loans by state and project
type.
11
REAL ESTATE MORTGAGE LOANS BY STATE AND PROPERTY TYPE
(excluding 1-4 family first mortgages)
- --------------------------------------------------------------------------------------------------------------------------------
December 31, 2000
-----------------------------------------------------------------------------------------------------------
Other Non-
California Texas Minnesota Colorado States (2) All States accruals
-------------- ------------- ------------ -------------- -------------- -------------- as a %
Total Non- Total Non- Total Non- Total Non- Total Non- Total Non- of total
(in millions) loans accrual loans accrual loans accrual loans accrual loans accrual loans accrual by type
- --------------------------------------------------------------------------------------------------------------------------------
Office buildings $2,649 $ 1 $ 490 $ 1 $ 106 $-- $194 $-- $ 2,175 $ 6 $ 5,614 $ 8 --%
Retail buildings 1,530 18 363 5 276 3 238 1 1,900 4 4,307 31 1
Industrial 2,005 11 305 7 299 2 197 -- 1,222 5 4,028 25 1
Hotels/motels 352 -- 320 2 58 3 63 -- 1,438 1 2,231 6 --
Apartments 694 1 210 -- 102 -- 83 -- 835 15 1,924 16 1
Institutional 215 2 23 -- -- -- 12 -- 185 -- 435 2 --
Agricultural 344 2 72 1 110 5 25 -- 621 4 1,172 12 1
Land 338 -- 163 1 46 -- 47 1 396 -- 990 2 --
1-4 family
structures (1) 2 -- 7 -- 3 -- 8 -- 102 -- 122 -- --
Other 1,268 2 216 2 146 1 117 1 1,402 5 3,149 11 --
------ ---- ------ ----- ------ --- ----- --- ------- --- ------- ---
Total by state $9,397 $ 37 $2,169 $ 19 $1,146 $14 $984 $ 3 $10,276 $40 $23,972 $113 --%
====== ==== ====== ===== ====== === ==== === ======= === ======= ==== ===
% of total loans 39% 9% 5% 4% 43% 100%
====== ====== ====== ==== ======= =======
Nonaccruals as a %
of total by state --% 1% 1% --% --%
==== ===== === === ===
- --------------------------------------------------------------------------------------------------------------------------------
(1) Represents loans to real estate developers secured by 1-4 family
residential developments.
(2) Consists of 46 states; no state had loans in excess of $976 million at
December 31, 2000.
REAL ESTATE CONSTRUCTION LOANS BY STATE AND PROPERTY TYPE
- ------------------------------------------------------------------------------------------------------------------------------
December 31, 2000
---------------------------------------------------------------------------------------------------------
Other Non-
California Nevada Texas Colorado States (2) All States accruals
-------------- ------------- ------------- -------------- -------------- ------------ as a %
Total Non- Total Non- Total Non- Total Non- Total Non- Total Non- of total
(in millions) loans accrual loans accrual loans accrual loans accrual loans accrual loans accrual by type
- ------------------------------------------------------------------------------------------------------------------------------
Retail buildings $ 199 $-- $ 48 $-- $ 32 $-- $ 30 $-- $ 453 $-- $ 762 $-- --%
1-4 family:
Land 104 -- 14 -- 15 -- 19 -- 84 -- 236 -- --
Structures 356 -- 148 2 171 -- 197 -- 985 19 1,857 21 1
Land (excluding
1-4 family) 332 -- 106 -- 58 1 71 -- 462 -- 1,029 1 --
Apartments 124 -- 108 25 20 -- 32 -- 210 -- 494 25 5
Office buildings 424 -- 19 -- 63 -- 121 -- 490 2 1,117 2 --
Industrial 266 -- 22 -- 57 -- 54 1 224 -- 623 1 --
Hotels/motels 57 -- 39 -- 8 -- 1 -- 112 -- 217 -- --
Institutional 35 -- -- -- 8 -- -- -- 38 -- 81 -- --
Agricultural 13 -- -- -- -- -- -- -- 11 -- 24 -- --
Other 257 -- 228 2 297 2 45 -- 448 3 1,275 7 1
------ --- ---- --- ---- --- ---- --- ------ --- ------ ---
Total by state $2,167 $-- $732 $29 $729 $ 3 $570 $ 1 $3,517 $24 $7,715 $57 1%
====== === ==== === ==== === ==== === ====== === ====== === ==
% of total loans 28% 10% 9% 7% 46% 100%
====== ==== ==== ==== ====== ======
Nonaccruals as a %
of total by state --% 4% --% --% 1%
=== === == === ===
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Consists of 41 states; no state had loans in excess of $517 million at
December 31, 2000.
12
CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
- -------------------------------------------------------------------------------------------------------------------
(in millions) 2000 1999 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------------
BALANCE, BEGINNING OF YEAR $ 3,344 $ 3,307 $ 3,220 $ 3,202 $ 2,846
Allowances related to business combinations, net 265 48 148 172 874
Provision for loan losses 1,329 1,104 1,617 1,203 541
Loan charge-offs:
Commercial (429) (395) (271) (369) (206)
Real estate 1-4 family first mortgage (16) (14) (29) (28) (25)
Other real estate mortgage (32) (28) (54) (27) (51)
Real estate construction (8) (2) (3) (5) (14)
Consumer:
Real estate 1-4 family junior lien mortgage (34) (33) (31) (37) (38)
Credit card (367) (403) (549) (593) (500)
Other revolving credit and monthly payment (623) (585) (1,069) (672) (530)
------- ------- ------- ------- -------
Total consumer (1,024) (1,021) (1,649) (1,302) (1,068)
Lease financing (52) (38) (49) (49) (36)
Foreign (86) (90) (84) (37) (35)
------- ------- ------- ------- -------
Total loan charge-offs (1,647) (1,588) (2,139) (1,817) (1,435)
------- ------- ------- ------- -------
Loan recoveries:
Commercial 98 90 87 110 96
Real estate 1-4 family first mortgage 4 6 12 10 13
Other real estate mortgage 13 38 79 63 57
Real estate construction 4 5 4 12 13
Consumer:
Real estate 1-4 family junior lien mortgage 14 15 7 10 10
Credit card 39 49 59 64 52
Other revolving credit and monthly payment 213 243 187 166 117
------- ------- ------- ------- -------
Total consumer 266 307 253 240 179
Lease financing 13 12 12 15 9
Foreign 30 15 14 10 9
------- ------- ------- ------- -------
Total loan recoveries 428 473 461 460 376
------- ------- ------- ------- -------
Total net loan charge-offs (1,219) (1,115) (1,678) (1,357) (1,059)
------- ------- ------- ------- -------
BALANCE, END OF YEAR $ 3,719 $ 3,344 $ 3,307 $ 3,220 $ 3,202
======= ======= ======= ======= =======
Total net loan charge-offs as a percentage of
average total loans .84% .90% 1.44% 1.19% .99%
======= ======= ======= ======= =======
Allowance as a percentage of total loans 2.31% 2.51% 2.76% 2.77% 2.78%
======= ======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------------
13
The SEC requires the Company to present the ratio of the allowance for loan
losses to total nonaccrual loans. This ratio was 311% and 462% at December 31,
2000 and 1999, respectively. This ratio may fluctuate significantly from period
to period due to such factors as the mix of loan types in the portfolio, the
prospects of borrowers and the value and marketability of collateral as well as,
for the nonaccrual portfolio taken as a whole, wide variances from period to
period in terms of delinquency and relationship of book to contractual principal
balance. Classification of a loan as nonaccrual does not necessarily indicate
that the principal of a loan is uncollectible in whole or in part. Consequently,
the ratio of the allowance for loan losses to nonaccrual loans, taken alone and
without taking into account numerous additional factors, is not a reliable
indicator of the adequacy of the allowance for loan losses. Indicators of the
credit quality of the Company's loan portfolio and the method of determining the
allowance for loan losses are discussed below and in greater detail in the 2000
Annual Report to Stockholders, incorporated by reference herein.
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The table below provides a breakdown of the allowance for loan losses by loan
category.
- ---------------------------------------------------------------------------------------------------------------------------------
December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
(in millions) 2000 1999 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
Commercial $ 798 $ 655 $ 664 $ 603 $ 519
Real estate 1-4 family first mortgage 55 64 58 71 59
Other real estate mortgage 220 220 238 284 347
Real estate construction 69 58 62 51 63
Consumer:
Credit card 394 349 356 483 452
Other consumer 556 428 588 575 485
------ ------ ------ ------ -----
Total consumer 950 777 944 1,058 937
Lease financing 67 71 66 67 55
Foreign 95 62 79 43 34
------ ------ ------ ------ -----
Total allocated 2,254 1,907 2,111 2,177 2,014
Unallocated component of
the allowance (1) 1,465 1,437 1,196 1,043 1,188
------ ------ ------ ------ -----
Total $3,719 $3,344 $3,307 $3,220 $3,202
====== ====== ====== ====== ======
December 31,
--------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------- ----------------- ----------------- ----------------- ----------------
ALLOC. LOAN Alloc. Loan Alloc. Loan Alloc. Loan Alloc. Loan
ALLOW. CATGRY allow. catgry allow. catgry allow. catgry allow. catgry
AS % AS % as % as % as % as % as % as % as % as %
OF LOAN OF TOTAL of loan of total of loan of total of loan of total of loan of total
CATGRY LOANS catry loans catgry loans catgry loans catgry loans
------ -------- ------- -------- ------- -------- ------- -------- ------- --------
Commercial 1.58% 31% 1.57% 31% 1.74% 32% 1.75% 30% 1.57% 29%
Real estate 1-4 family first mortgage .30 12 .47 10 .46 11 .47 13 .34 15
Other real estate mortgage .92 15 1.05 16 1.32 15 1.61 15 1.98 15
Real estate construction .90 5 .96 5 1.37 4 1.29 3 1.66 3
Consumer:
Credit card 5.96 4 6.01 4 5.82 5 6.91 6 6.15 6
Other consumer 1.32 26 1.28 26 1.92 25 1.86 27 1.59 27
--- --- --- --- ---
Total consumer 1.95 30 1.97 30 2.57 30 2.79 33 2.48 33
Lease financing .67 6 .72 7 .82 7 1.06 5 1.21 4
Foreign 5.89 1 3.88 1 5.17 1 3.72 1 2.95 1
--- --- --- --- ---
Total allocated 1.40 100% 1.43 100% 1.76 100% 1.87 100% 1.75 100%
=== === === === ===
Unallocated component of
the allowance (1) .91 1.08 1.00 .90 1.03
---- ---- ---- ---- ----
Total 2.31% 2.51% 2.76% 2.77% 2.78%
==== ==== ==== ==== ====
- -----------------------------------------------------------------------------------------------------------------------------------
(1) This amount and any unabsorbed portion of the allocated allowance are also
available for any of the above listed loan categories.
14
See Note 5 to Financial Statements in the 2000 Annual Report, incorporated by
reference herein, for the description of the process used by the Company to
determine the adequacy and the components (allocated and unallocated) of the
allowance for loan losses.
At December 31, 2000, the allowance for loan losses was $3,719 million, or 2.31%
of total loans, compared with $3,344 million, or 2.51%, at December 31, 1999.
During 2000, net provision for loan losses exceeded the charge-offs by $110
million. The addition of $265 million of allowances related to business
combinations in 2000 accounted for the majority of the increase of $375 million
in the reserve, year over year. The components of the allowance, allocated and
unallocated, are shown in the table on the previous page. The allocated
component increased to $2,254 million from $1,907 million, while the unallocated
component grew to $1,465 million from $1,437 million, as of December 31, 2000
and 1999, respectively. At December 31, 2000, the unallocated portion of the
allowance amounted to 39% of the total allowance, compared with 43% at December
31, 1999.
The $347 million increase in the allocated component of the allowance was
entirely due to growth in the loan portfolio. Analyzing the movements in the
allocated reserve strictly from a loan volume perspective indicates that, had
the ratio of allocated reserves to loans outstanding remained flat with the 1999
ratio of 1.43%, allocated reserves would have increased by approximately $395
million, as loans outstanding grew by $28 billion during the year. However, due
to a shift in portfolio composition, the higher volume increased the allocated
reserve by only $366 million, as relatively higher-risk foreign loans grew at a
slower pace than other, lower-risk portfolio segments.
Lower allocated allowance to loans outstanding ratios in the residential
mortgage and other real estate mortgage portfolios were substantially offset by
higher allocated allowance to loans outstanding ratios in the other consumer and
foreign loan portfolios. On a net basis, marginally lower allocated reserve
ratios resulted in a reduction of roughly $19 million in allocated reserves,
primarily a reflection of modestly lower projected loss rates in the loan
portfolio.
There were no material changes in estimation methods and assumptions for the
allowance that took place during 2000.
The Company considers the allowance for loan losses of $3,719 million adequate
to cover losses inherent in loans, loan commitments, and standby and other
letters of credit at December 31, 2000.
The foregoing discussion contains forward-looking statements about the adequacy
of the Company's reserves for loan losses. These forward-looking statements are
inherently subject to risks and uncertainties. A number of factors--many of
which are beyond the Company's control--could cause actual losses to be more
than estimated losses. For a discussion of some of the other factors that could
cause actual losses to be more than estimated losses, see "Factors That May
Affect Future Results" in the "Financial Review" section of the 2000 Annual
Report to Stockholders, incorporated by reference herein.
15
PROPERTIES
The Company owns its headquarters building in San Francisco as well as Wells
Fargo Centers in Phoenix, Arizona and Portland, Oregon. In addition, the Company
leases office space for data processing support and various administrative
departments in major locations in Alaska, Arizona, California, Colorado,
Minnesota, Oregon, Texas, and Utah.
As of December 31, 2000, the Company provides banking, mortgage and consumer
finance through about 5,400 stores under various types of ownership and
leasehold agreements. Wells Fargo Home Mortgage (WFHM) owns its headquarters in
Des Moines, Iowa and servicing centers located in Minneapolis, Minnesota;
Springfield, Ohio; and Riverside, California. In addition, WFHM leases servicing
centers in Minneapolis, Minnesota; Phoenix, Arizona; Charlotte, North Carolina;
and Springfield, Illinois, operations centers in Frederick, Maryland and St.
Louis, Missouri and all mortgage production offices nationwide. Wells Fargo
Financial owns its headquarters in Des Moines, Iowa, and leases all branch
locations.
The Company is also a joint venture partner in two office buildings in downtown
Los Angeles, California.
For further information with respect to premises and equipment and commitments
under noncancelable leases for premises and equipment, refer to Note 6 to
Financial Statements, incorporated by reference herein.
16
EXECUTIVE OFFICERS OF THE REGISTRANT
YEARS WITH
NAME AND COMPANY OR
COMPANY POSITION POSITIONS HELD DURING THE PAST FIVE YEARS AGE PREDECESSORS
- ----------------- ----------------------------------------- --- ------------
John A. Berg Group Executive Vice President (North Central Banking Group) 55 25
Group Executive (November 2000 to Present); Group Executive Vice President (Central
Vice President (North Banking) (November 1998 to November 2000); Senior Vice President and
Central Banking Group) Regional Group Head of former Norwest (March 1998 to November 1998);
Regional President (Greater Minnesota/La Crosse Region) (January 1990
to March 1998)
Leslie S. Biller Vice Chairman and Chief Operating Officer (November 1998 to Present); 53 13
Vice Chairman and Chief President and Chief Operating Officer of former Norwest (February
Operating Officer 1997 to November 1998); Executive Vice President (South Central
Community Banking) (July 1990 to February 1997)
Patricia R. Callahan Executive Vice President (Human Resources) (November 1998 to 47 23
Executive Vice President Present); Executive Vice President of former Wells Fargo (Personnel)
(Human Resources) (September 1998 to November 1998); Executive Vice President
(Wholesale Banking) (July 1997 to September 1998); Executive Vice
President (Personnel) (March 1993 to July 1997)
James R. Campbell Group Executive Vice President (Minnesota Banking and Investments 58 36
Group Executive Group) (November 2000 to Present); Group Executive Vice President
Vice President (Minnesota (Minnesota Banking) (November 1998 to November 2000); Executive Vice
Banking and Investments President (North Central Banking) of former Norwest (August 1997 to
Group) November 1998); Executive Vice President (Commercial Banking
Services, Specialized Lending and Nebraska) (January 1996 to August
1997)
Teresa A. Dial Group Executive Vice President (January 2001 to Present); Group 51 28
Group Executive Executive Vice President (California, Business Banking, Telephone
Vice President Banking, Distribution Strategies, Insurance, Diversified Products
Group, Education Finance) (November 1998 to January
2001); Vice Chair (Consumer and Business Banking)
of former Wells Fargo (March 1996 to November
1998); Group Executive Vice President (Business
Banking) (September 1991 to March 1996)
17
YEARS WITH
NAME AND COMPANY OR
COMPANY POSITION POSITIONS HELD DURING THE PAST FIVE YEARS AGE PREDECESSORS
- ----------------- ----------------------------------------- --- ------------
C. Webb Edwards Executive Vice President (Technology and Operations Group) (November 53 16
Executive Vice President 1998 to Present); Executive Vice President of the former Norwest
(Technology and Operations (April 1995 to November 1998); and President and Chief Executive
Group) Officer of Wells Fargo Services Company (formerly known as Norwest
Services, Inc. and Norwest Technical Services, Inc.) (May 1995 to
Present)
David A. Hoyt Group Executive Vice President (Wholesale Banking Group) (November 45 19
Group Executive 1998 to Present); Vice Chair (Real Estate, Capital Markets,
Vice President (Wholesale International) of former Wells Fargo (May 1997 to November 1998);
Banking Group) Executive Vice President (Capital Markets, Special Loans) (September
1994 to May 1997)
Michael R. James Group Executive Vice President (Business Banking and Consumer Lending 49 27
Group Executive Vice Group) (July 2000 to Present); Executive Vice President of Wells
President (Business Banking Fargo Bank, N.A. (Business Banking Group Head) (July 1997 to July
and Consumer Lending Group) 2000); Executive Vice President (Business Banking Group Division
Manager) (June 1992 to July 1997)
Ross J. Kari Executive Vice President and Chief Financial Officer (January 2000 to 42 18
Executive Vice President Present); Executive Vice President and Deputy Chief Financial Officer
and Chief Financial Officer (November 1998 to January 2000); Chief Financial Officer of former
Wells Fargo (May 1998 to November 1998); Executive Vice President
(Group Head of Finance) (March 1997 to May 1998); Executive Vice
President and General Auditor (September 1995 to March 1997)
Richard M. Kovacevich President and Chief Executive Officer (November 1998 to Present); 57 15
President and Chief Chairman and Chief Executive Officer of former Norwest (February 1997
Executive Officer to November 1998); Chairman, President and Chief Executive Officer
(May 1995 to January 1997)
Ely L. Licht Executive Vice President and Chief Credit Officer (November 1998 to 53 17
Executive Vice President Present); Executive Vice President (Credit Administration) of former
(Chief Credit Officer) Wells Fargo (February 1990 to November 1998)
18
YEARS WITH
NAME AND COMPANY OR
COMPANY POSITION POSITIONS HELD DURING THE PAST FIVE YEARS AGE PREDECESSORS
- ----------------- ----------------------------------------- --- ------------
Dennis J. Mooradian Group Executive Vice President (Private Client Services) (July 1999 53 4
Group Executive Vice to Present); Executive Vice President of Wells Fargo Bank, N.A. (May
President (Private Client 1996 to July 1999); Lehman Brothers' Global Private Client Services
Services) Division's Chief Operating Officer (April 1995 to May 1996)
Mark C. Oman Group Executive Vice President (Mortgage and Home Equity Group) 46 21
Group Executive (November 1998 to Present); Executive Vice President (Mortgage
Vice President (Mortgage Services and Iowa Community Banking) of former Norwest (February 1997
and Home Equity Group) to November 1998); and Chairman of Wells Fargo Home Mortgage, Inc.
(formerly known as Norwest Mortgage, Inc.) (February 1997 to Present);
Chief Executive Officer (August 1989 to January 2001); President
(August 1989 to February 1997)
Clyde W. Ostler Group Executive Vice President (Internet Services Group) (October 54 30
Group Executive 1999 to Present); Group Executive Vice President (Investments)
Vice President (Internet (November 1998 to October 1999); Vice Chair (Trust and Investment
Services Group) Services) of former Wells Fargo (May 1993 to November 1998)
Daniel W. Porter Group Executive Vice President (Wells Fargo Financial) and Chairman 45 1
Group Executive Vice and Chief Executive Officer of Wells Fargo Financial, Inc.
President (Wells Fargo (December 1999 to Present); various positions with GE Capital since
Financial) 1986 including Managing Director of GE Capital Europe in London
(European Transportation Group) (March 1998 to
December 1999); President of Global Consumer
Development (September 1997 to March 1998); and
President and Chief Executive Officer of Retailer
Financial Services (April 1994 to September 1997)
Les L. Quock, CPA Senior Vice President and Controller (November 1998 to Present); 47 21
Senior Vice President and Senior Vice President (Payment Systems Services Group) of former
Controller (Principal Wells Fargo (February 1997 to November 1998); Senior Vice President
Accounting Officer) (Business Banking Group Systems) (October 1996 to February 1997);
Senior Vice President (Business Loan Finance and Administration)
(November 1995 to October 1996)
19
YEARS WITH
NAME AND COMPANY OR
COMPANY POSITION POSITIONS HELD DURING THE PAST FIVE YEARS AGE PREDECESSORS
- ----------------- ----------------------------------------- --- ------------
Stanley S. Stroup Executive Vice President and General Counsel (November 1998 to 57 17
Executive Vice President Present); Executive Vice President and General Counsel of former
and General Counsel Norwest (February 1993 to November 1998)
John G. Stumpf Group Executive Vice President (Western Banking Group) (May 2000 to 47 19
Group Executive Present); Group Executive Vice President (Southwestern Banking)
Vice President (Western (November 1998 to May 2000); Regional President (Texas) of former
Banking Group) Norwest (July 1994 to November 1998)
Carrie L. Tolstedt Group Executive Vice President (California Banking) (January 2001 to 41 11
Group Executive Vice Present); Regional President of Wells Fargo Bank, N.A. (Central
President (California California Banking) (December 1998 to January 2001); Regional Manager
Banking) of Norwest Bank Minnesota, N.A. (Greater Minnesota Community Banking)
(May 1998 to December 1998); Executive Vice
President of FirstMerit Corporation and President
and Chief Executive Officer of Citizens National
Bank and Peoples National Bank (August 1996 to May
1998); Senior Vice President (Corporate Retail) of
FirstMerit Corporation (May 1995 to August 1996)
There is no family relationship among the above officers. All executive officers
serve at the pleasure of the Board of Directors.
20
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements, Schedules and Exhibits:
(1) The consolidated financial statements and related notes, the
independent auditors' report thereon and supplementary data that
appear on pages 52 through 98 of the 2000 Annual Report to
Stockholders are incorporated herein by reference.
(2) Financial Statement Schedules:
All schedules are omitted, because they are either not applicable
or the required information is shown in the consolidated financial
statements or the notes thereto.
(3) Exhibits:
The Company's SEC file number is 001-2979. On and before November
2, 1998, the Company filed documents with the SEC under the name
Norwest Corporation. The former Wells Fargo & Company filed
documents under SEC file number 001-6214. First Security
Corporation filed documents under SEC file number 001-6906.
Exhibit
number Description
------ -----------
3(a) Restated Certificate of Incorporation, incorporated by
reference to Exhibit 3(b) to the Company's Current
Report on Form 8-K dated June 28, 1993. Certificates of
Amendment of Certificate of Incorporation, incorporated
by reference to Exhibit 3 to the Company's Current
Report on Form 8-K dated July 3, 1995 (authorizing
preference stock), and Exhibits 3(b) and 3(c) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 (changing the Company's name
and increasing authorized common and preferred stock,
respectively)
(b) Certificate of Change of Location of Registered Office
and Change of Registered Agent, incorporated by
reference to Exhibit 3(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999
(c) Certificate of Designations for the Company's ESOP
Cumulative Convertible Preferred Stock, incorporated by
reference to Exhibit 4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1994
(d) Certificate of Designations for the Company's 1995 ESOP
Cumulative Convertible Preferred Stock, incorporated by
reference to Exhibit 4 to the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995
21
3(e) Certificate Eliminating the Certificate of Designations
for the Company's Cumulative Convertible Preferred
Stock, Series B, incorporated by reference to Exhibit
3(a) to the Company's Current Report on Form 8-K dated
November 1, 1995
(f) Certificate Eliminating the Certificate of Designations
for the Company's 10.24% Cumulative Preferred Stock,
incorporated by reference to Exhibit 3 to the Company's
Current Report on Form 8-K dated February 20, 1996
(g) Certificate of Designations for the Company's 1996 ESOP
Cumulative Convertible Preferred Stock, incorporated by
reference to Exhibit 3 to the Company's Current Report
on Form 8-K dated February 26, 1996
(h) Certificate of Designations for the Company's 1997 ESOP
Cumulative Convertible Preferred Stock, incorporated by
reference to Exhibit 3 to the Company's Current Report
on Form 8-K dated April 14, 1997
(i) Certificate of Designations for the Company's 1998 ESOP
Cumulative Convertible Preferred Stock, incorporated by
reference to Exhibit 3 to the Company's Current Report
on Form 8-K dated April 20, 1998
(j) Certificate of Designations for the Company's Adjustable
Cumulative Preferred Stock, Series B, incorporated by
reference to Exhibit 3(j) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1998
(k) Certificate of Designations for the Company's
Fixed/Adjustable Rate Noncumulative Preferred Stock,
Series H, incorporated by reference to Exhibit 3(k) to
the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998
(l) Certificate of Designations for the Company's Series C
Junior Participating Preferred Stock, incorporated by
reference to Exhibit 3(l) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1998
(m) Certificate Eliminating the Certificate of Designations
for the Company's Series A Junior Participating
Preferred Stock, incorporated by reference to Exhibit
3(a) to the Company's Current Report on Form 8-K dated
April 21, 1999
(n) Certificate of Designations for the Company's 1999 ESOP
Cumulative Convertible Preferred Stock, incorporated by
reference to Exhibit 3(b) to the Company's Current
Report on Form 8-K dated April 21, 1999
(o) Certificate of Designations for the Company's 2000 ESOP
Cumulative Convertible Preferred Stock, incorporated by
reference to Exhibit 3(o) to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000
22
3(p) By-Laws, incorporated by reference to Exhibit 3(m) to
the Company's Annual Report on Form 10-K for the year
ended December 31, 1998
4(a) See Exhibits 3(a) through 3(p)
(b) Rights Agreement, dated as of October 21, 1998, between
the Company and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on
Form 8-A dated October 21, 1998
(c) The Company agrees to furnish upon request to the
Commission a copy of each instrument defining the rights
of holders of senior and subordinated debt of the
Company.
10*(a) Long-Term Incentive Compensation Plan, as amended
effective November 23, 1999 (including Forms of Award
Term Sheet for grants of restricted share rights),
incorporated by reference to Exhibit 10(a) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1999. Amendment to Long-Term Incentive
Compensation Plan, effective November 1, 2000, filed as
paragraph (1) of Exhibit 10(ff) hereto. Forms of
Non-Qualified Stock Option and Restricted Stock
Agreements for grants subsequent to November 2, 1998,
incorporated by reference to Exhibit 10(a) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998. Forms of Non-Qualified Stock Option
and Restricted Stock Agreements for grants prior to
November 2, 1998, incorporated by reference to Exhibit
10(a) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997
*(b) Long-Term Incentive Plan, incorporated by reference to
Exhibit A to the former Wells Fargo's Proxy Statement
filed March 14, 1994
*(c) Wells Fargo Bonus Plan
*(d) Performance-Based Compensation Policy, incorporated by
reference to Exhibit 10(d) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1999
*(e) 1990 Equity Incentive Plan, incorporated by reference to
Exhibit 10(f) to the former Wells Fargo's Annual Report
on Form 10-K for the year ended December 31, 1995
*(f) 1982 Equity Incentive Plan, incorporated by reference to
Exhibit 10(g) to the former Wells Fargo's Annual Report
on Form 10-K for the year ended December 31, 1993
*(g) Employees' Stock Deferral Plan, incorporated by
reference to Exhibit 10(c) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1998. Amendment to Employees' Stock Deferral Plan,
effective November 1, 2000, filed as paragraph (2) of
Exhibit 10(ff) hereto
23
10*(h) Deferred Compensation Plan, as amended and restated
effective January 1, 2000, incorporated by reference to
Exhibit 10(h) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.
Amendments to Deferred Compensation Plan, effective
July 1, 2000 and November 1, 2000
*(i) 1999 Directors Stock Option Plan, incorporated by
reference to Exhibit 10(n) to the Company's Annual
Report on Form 10-K for the year ended December 31,
1998. Amendment to 1999 Directors Stock Option Plan,
effective November 1, 2000, filed as paragraph (3) of
Exhibit 10(ff) hereto
*(j) 1990 Director Option Plan for directors of the former
Wells Fargo, incorporated by reference to Exhibit 10(c)
to the former Wells Fargo's Annual Report on Form 10-K
for the year ended December 31, 1997
*(k) 1987 Director Option Plan for directors of the former
Wells Fargo, incorporated by reference to Exhibit A to
the former Wells Fargo's Proxy Statement filed March 10,
1995, and as further amended by the amendment adopted
September 16, 1997, incorporated by reference to Exhibit
10 to the former Wells Fargo's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997
*(l) First Security Corporation Comprehensive Management
Incentive Plan, incorporated by reference to Exhibit
10.1 to First Security Corporation's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999
*(m) Deferred Compensation Plan for Non-Employee Directors of
the former Norwest, incorporated by reference to Exhibit
10(c) to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999. Amendment to
Deferred Compensation Plan for Non-Employee Directors,
effective November 1, 2000, filed as paragraph (4) of
Exhibit 10(ff) hereto
*(n) Directors' Stock Deferral Plan for directors of the
former Norwest, incorporated by reference to Exhibit
10(d) to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999. Amendment to
Directors' Stock Deferral Plan, effective November 1,
2000, filed as paragraph (5) of Exhibit 10(ff) hereto
*(o) Directors' Formula Stock Award Plan for directors of the
former Norwest, incorporated by reference to Exhibit
10(e) to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999. Amendment to
Directors' Formula Stock Award Plan, effective November
1, 2000, filed as paragraph (6) of Exhibit 10(ff) hereto
*(p) Deferral Plan for Directors of the former Wells Fargo,
incorporated by reference to Exhibit 10(b) to the former
Wells Fargo's Annual Report on Form 10-K for the year
ended December 31, 1997
24
10*(q) 1999 Deferral Plan for Directors, incorporated by
reference to Exhibit 10(q) of the Company's Annual
Report on Form 10-K for the year ended December 31,
1999. Amendment to 1999 Deferral Plan for Directors,
effective November 1, 2000, filed as paragraph (7) of
Exhibit 10(ff) hereto
*(r) 1999 Directors Formula Stock Award Plan, incorporated by
reference to Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999.
Amendment to 1999 Directors Formula Stock Award Plan,
effective November 1, 2000, filed as paragraph (8) of
Exhibit 10(ff) hereto
*(s) Supplemental 401(k) Plan, incorporated by reference to
Exhibit 10(a) to the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1999. Amendment
to Supplemental 401(k) Plan, effective November 1, 2000,
filed as paragraph (9) of Exhibit 10(ff) hereto
*(t) Supplemental Cash Balance Plan, incorporated by
reference to Exhibit 10(b) to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30,
1999
*(u) Supplemental Long Term Disability Plan, incorporated by
reference to Exhibit 10(f) to the Company's Annual
Report on Form 10-K for the year ended December 31,
1990. Amendment to Supplemental Long Term Disability
Plan, incorporated by reference to Exhibit 10(g) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1992
*(v) Agreement between the Company and Richard M. Kovacevich
dated March 18, 1991, incorporated by reference to
Exhibit 19(e) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1991. Amendment
effective January 1, 1995, to the March 18, 1991
agreement between the Company and Richard M. Kovacevich,
incorporated by reference to Exhibit 10(c) to the
Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995
*(w) Employment Agreement, dated as of June 7, 1998, between
the Company and Paul Hazen, incorporated by reference to
Exhibit 10.01 to the Company's Registration Statement
No. 333-63247 on Form S-4 filed September 11, 1998.
Forms of Stock Option and Restricted Stock Agreements
pursuant to Employment Agreement, incorporated by
reference to Exhibit 10(cc) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998
*(x) Amended and Restated Employment Agreement, dated as of
October 18, 2000, between the Company and Spencer F.
Eccles
*(y) Agreements between the Company and three executive
officers dated October 7, 1998, May 7, 1999 and October
25, 1999, respectively, incorporated by reference to
Exhibit 10(y) to the Company's Annual Report on Form
10-K for the year ended December 31, 1999
25
10*(z) Form of severance agreement between the Company and
seven executive officers, including two directors, and
agreement between the Company and Terri A. Dial,
incorporated by reference to Exhibit 10(ee) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998. Amendment effective January 1, 1995,
to the March 11, 1991 agreement between the Company and
Richard M. Kovacevich, incorporated by reference to
Exhibit 10(b) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1995
*(aa) Description of Supplemental Pension Arrangement for
C. Webb Edwards
*(bb) Consulting Agreement dated January 25, 1999, between the
Company and Chang-Lin Tien, incorporated by reference to
Exhibit 10(ff) to the Company's Annual Report on Form
10-K for the year ended December 31, 1998
*(cc) Description of Relocation Program for Designated
High-Cost Areas, incorporated by reference to Exhibit
10(dd) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1999
*(dd) Description of Executive Financial Planning Program,
incorporated by reference to Exhibit 10(ee) to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1999
*(ee) Executive Loan Plan, incorporated by reference to
Exhibit 10(i) to the former Wells Fargo's Annual Report
on Form 10-K for the year ended December 31, 1994
*(ff) Amendments to Long-Term Incentive Compensation Plan,
Employees' Stock Deferral Plan, 1999 Directors Stock
Option Plan, Deferred Compensation Plan for Non-Employee
Directors, Directors' Stock Deferral Plan, Directors'
Formula Stock Award Plan, 1999 Deferral Plan for
Directors, 1999 Directors Formula Stock Award Plan, and
Supplemental 401(k) Plan
- ------------------------
* Management contract or compensatory plan or arrangement
Stockholders may obtain a copy of any of the foregoing exhibits, upon payment of
a reasonable fee, by writing Wells Fargo & Company, Office of the Secretary,
Wells Fargo Center, N9305-173, Sixth and Marquette, Minneapolis, Minnesota
55479.
26
12(a) Computation of Ratios of Earnings to Fixed Charges --
the ratios of earnings to fixed charges, including
interest on deposits, were 1.82, 2.07, 1.62, 1.79 and
1.76 for the years ended December 31, 2000, 1999, 1998,
1997 and 1996, respectively. The ratios of earnings to
fixed charges, excluding interest on deposits, were
2.67, 3.29, 2.51, 3.02 and 2.97 for the years ended
December 31, 2000, 1999, 1998, 1997 and 1996,
respectively.
(b) Computation of Ratios of Earnings to Fixed Charges and
Preferred Dividends -- the ratios of earnings to fixed
charges and preferred dividends, including interest on
deposits, were 1.81, 2.05, 1.60, 1.77 and 1.72 for the
years ended December 31, 2000, 1999, 1998, 1997 and
1996, respectively. The ratios of earnings to fixed
charges and preferred dividends, excluding interest on
deposits, were 2.65, 3.22, 2.45, 2.93 and 2.77 for the
years ended December 31, 2000, 1999, 1998, 1997 and
1996, respectively.
13 2000 Annual Report to Stockholders, pages 33 through 98
21 Subsidiaries of the Company
23 Consent of Independent Accountants
24 Powers of Attorney
(b) The Company filed the following reports on Form 8-K during the fourth
quarter of 2000:
(1) October 13, 2000, under Item 7, filing as an exhibit the First
Supplemental Indenture, dated October 12, 2000, between the Company and
Citibank, N.A.
(2) October 17, 2000, under Item 5, containing the Company's financial
results for the quarter ended September 30, 2000
(3) November 30, 2000, under Item 5, filing as exhibits the Company's
Supplemental Annual Report for 1999 and Supplemental Quarterly Report
for the period ended September 30, 2000, which give retroactive effect
to the FSCO Merger
STATUS OF PRIOR DOCUMENTS
The Wells Fargo & Company Annual Report on Form 10-K for the year ended December
31, 2000, at the time of filing with the Securities and Exchange Commission,
shall modify and supersede all documents filed prior to January 1, 2001 pursuant
to Sections 13, 14 and 15(d) of the Securities Exchange Act of 1934 (other than
the Current Report on Form 8-K filed October 14, 1997, containing a description
of the Company's common stock) for purposes of any offers or sales of any
securities after the date of such filing pursuant to any Registration Statement
or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference such Annual Report on Form 10-K.
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on March 16, 2001.
WELLS FARGO & COMPANY
BY: /s/ RICHARD M. KOVACEVICH
-------------------------------------
Richard M. Kovacevich
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated.
By: /s/ ROSS J. KARI
-------------------------------------
Ross J. Kari
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
By: /s/ LES L. QUOCK
-------------------------------------
Les L. Quock
Senior Vice President and Controller
(Principal Accounting Officer)
The Directors of Wells Fargo & Company listed below have duly executed powers of
attorney empowering Philip J. Quigley to sign this document on their behalf.
Leslie S. Biller Richard M. Kovacevich
Michael R. Bowlin Richard D. McCormick
David A. Christensen Cynthia H. Milligan
Spencer F. Eccles Benjamin F. Montoya
Susan E. Engel Donald B. Rice
Paul Hazen Judith M. Runstad
Robert L. Joss Susan G. Swenson
Reatha Clark King Michael W. Wright
By: /s/ PHILIP J. QUIGLEY
-------------------------------------
Philip J. Quigley
Director and Attorney-in-fact
March 16, 2001
28