EXHIBIT 99
Wells Fargo & Company's financial results for the quarter ended June 30, 2001
Wells Fargo & Company reported a net loss of $87 million for the second
quarter of 2001, compared with net income of $1,037 million for the second
quarter of 2000. Net income for the first six months of 2001 was $1,078
million, compared with $2,077 million in the same period a year ago. Diluted
earnings per common share were a loss of $.05 for the second quarter of 2001
compared with earnings of $.61 for the second quarter of 2000, and $.62 for
the first six months of 2001, compared with $1.21 for the same period of
2000. Diluted cash earnings per common share were $.05 for the second quarter
of 2001, compared with $.70 in the second quarter of 2000, and $.85 for the
first six months of 2001, compared with $1.39 for the same period of 2000.
Cash earnings are earnings before goodwill and nonqualifying core deposit
intangible amortization and the reduction of unamortized goodwill due to
sales of assets.
The Company announced on June 6, 2001 that it expected to recognize
non-cash and other special charges during the second quarter mainly related to
impairment of publicly traded and private equity securities, primarily in the
venture capital portfolio. Approximately $1.1 billion (after tax), or $.63 per
share, was recorded in the second quarter of 2001 to reflect the
other-than-temporary impairment in the valuation of securities, resulting from
sustained declines in market values of the securities, particularly in the
technology and telecommunication industries. The other special charges of
approximately $70 million (after tax), or $.04 per share, are related to auto
finance portfolios acquired as part of the acquisition of First Security
Corporation in October 2000, including adjustments to lease residual values in
response to the continued deterioration in the used car market. In conjunction
with this write-down, those remaining residuals were placed under a residual
loss insurance policy.
"Core revenue, which excludes revenue from acquisitions, non-cash
impairment and other special charges, and market-sensitive income, increased
13 percent for the quarter and the first six months of this year compared
with last year," said Chairman and CEO Dick Kovacevich. "Core revenue
increases were strong across the board with an 18 percent increase in core
noninterest income and a 9 percent increase in core net interest income.
Excluding the non-cash impairment ($.63) and other special charges ($.04) and
integration and conversion costs for First Security, National Bank of Alaska
and other acquisitions ($.05), diluted earnings per share would have been
$.67 and diluted cash earnings per share would have been $.77.
Market-sensitive income, which includes venture capital gains, was $.03 per
share, $.02 below normalized level of $.05 per share. Assuming a normalized
level of market-sensitive income, diluted earnings per share would have been
$.69 and diluted cash earnings per share would have been $.79."
Net interest income on a taxable-equivalent basis was $3,029 million in
the second quarter of 2001 and $5,863 million for the first six months of 2001,
compared with $2,681 million and $5,330 million in the same periods of 2000. The
net interest margin was 5.31% for the second quarter of 2001 and 5.26% for the
first six months of 2001, compared with 5.36% and 5.38% for the same periods of
2000.
-2-
Net interest income increased $188 million, or 6.7%, compared to the
first quarter of 2001. The growth in net interest income is primarily
attributable to a 4.4% increase in average earning assets and a 10 basis point
improvement in the margin to 5.31%.
Noninterest income was $545 million in the second quarter of 2001 and
$2,959 million for the first six months of 2001, compared with $2,135 million
and $4,177 million in the same periods of 2000. Core noninterest income, which
excludes revenue from acquisitions, non-cash impairment and other special
charges and market-sensitive income, for the first half of 2001 was up 18% over
the same period a year ago.
Noninterest expense was $3,255 million in the second quarter of 2001
and $6,251 million for the first six months of 2001, compared with $2,852
million and $5,588 million in the same periods a year ago. The increase in
noninterest income for the second quarter of 2001 was mostly due to an
increase in salaries, due to an increase in full-time equivalent staff, an
increase in incentive compensation, due to high mortgage origination volume,
and $130 million of integration and conversion costs for First Security,
National Bank of Alaska and other acquisitions.
The Company continued to experience pressure on asset quality in the
second quarter of 2001 and expects that this pressure will continue in the
foreseeable future. The provision for loan losses was $427 million for the
second quarter of 2001 compared with $275 million for the second quarter of
2000. Net charge-offs totaled $427 million, or 1.06% of average loans
(annualized), in the second quarter of 2001, compared with $262 million, or
.74%, for the second quarter of 2000. For the six months ended June 30,
2001, the loan loss provision was $788 million and net charge-offs totaled
$788 million, or .99% of total loans (annualized), compared with a loan loss
provision of $551 million and net charge-offs of $537 million, or .78%, for
the same period of 2000.
At June 30, 2001, the allowance for loan losses of $3,760 million was
2.28% of total loans, compared with 2.31% at December 31, 2000 and 2.37% at June
30, 2000. Total nonaccrual and restructured loans were $1,631 million at June
30, 2001, compared with $1,350 million at December 31, 2000 and $1,051 million
at June 30, 2000.
WELLS FARGO & COMPANY IS A DIVERSIFIED FINANCIAL SERVICES COMPANY WITH $290
BILLION IN ASSETS, PROVIDING BANKING, INSURANCE, INVESTMENTS, MORTGAGE AND
CONSUMER FINANCE FROM MORE THAN 5,400 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:
The foregoing discussion contains forward-looking statements about
the Company including, generally o descriptions of plans or objectives for
future operations, products or services o forecasts of revenues, earnings or
other measures of economic performance o assumptions underlying or relating
to any of the foregoing o expectations for credit losses and nonperforming
assets o normalized level of market-sensitive income o core revenue trends.
Forward-looking statements discuss matters that are not facts and often
include the word: "believe," "expect," "anticipate," "intend," "plan,"
"estimate," "will," "can," "would," "should," "could" or "may." They
-3-
give the Company's expectations about the future and are not guarantees.
Forward-looking statements speak only as of the date they are made, and the
Company does not undertake any obligation to update them to reflect changes
that occur after that date.
There are several factors--many of which are beyond the Company's
control--that could cause results to differ significantly from the Company's
expectations. Some of these factors include o the future market values of the
Company's publicly traded and private equity securities portfolio (including
equity securities of companies in the technology and telecommunications
industries) and the factors that may impact those future values (including the
continued deterioration in capital spending on technology and telecommunications
equipment) o the future condition of the used car market as it impacts the
market value of the Company's auto finance portfolios o whether there are any
unexpected difficulties or unusual expenses in integrating the Company's
acquisitions.
The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 2001 and Annual Report on Form 10-K for the year ended December 31, 2000,
including information incorporated into the Form 10-K from the Company's 2000
Annual Report to Stockholders, filed as Exhibit 13 to the Form 10-K, describe
other factors such as credit, market, operational, liquidity, interest rate and
other risks. See, for example, "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Balance Sheet Analysis" in the
Form 10-Q and "Financial Review--Balance Sheet Analysis" incorporated into the
Form 10-K from the 2000 Annual Report to Stockholders.
Other factors described in the Forms 10-Q and 10-K include factors such
as o business and economic conditions including, as described below, the energy
crisis o fiscal and monetary policies o regulation o disintermediation o
competition generally and in light of the Gramm-Leach-Bliley Act o potential
dividend restrictions o market acceptance and regulatory approval of new
products and services o non-banking activities o integration of acquired
companies o attracting and retaining key personnel o stock price volatility. See
"Factors That May Affect Future Results" included in the Form 10-Q and
incorporated into the Form 10-K from the 2000 Annual Report to Stockholders and
"Regulation and Supervision" included in the Form 10-K.
In recent months, California and other western states have experienced
an energy crisis, including increased energy costs, repeated episodes of
diminished or interrupted electrical power supply and the filing by a California
utility for protection under bankruptcy laws. The Company cannot predict the
duration or severity of this situation. Continuation of the situation, however,
could disrupt the Company's business and the businesses of its customers who
have operations or facilities in those states. It could also trigger an economic
slowdown in those states, decreasing the demand for the Company's loans and
other products and services and/or increasing the number of customers who fail
to repay their loans. The energy crisis could impact other states in which the
Company operates, creating the same or similar concerns for the Company in those
states.
Any factor described in this document or in the Forms 10-Q or 10-K
or in information incorporated by reference into the Form 10-K could, by itself
or together with one or more other factors, adversely affect the Company's
business, earnings and/or financial condition.
-4-
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
===========================================================================================================================
Quarter Six months
ended June 30, ended June 30,
---------------------- % ---------------------- %
(in millions, except per share amounts) 2001 2000 Change 2001 2000 Change
- ---------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
Net income (loss) $ (87) $ 1,037 --% $ 1,078 $ 2,077 (48)%
Net income (loss) applicable to common stock (91) 1,033 -- 1,069 2,068 (48)
Earnings (loss) per common share $ (.05) $ .61 -- $ .62 $ 1.22 (49)
Diluted earnings (loss) per common share (.05) .61 -- .62 1.21 (49)
Dividends declared per common share .24 .22 9 .48 .44 9
Average common shares outstanding 1,714.9 1,682.8 2 1,715.4 1,689.7 2
Diluted common shares outstanding 1,717.9 1,702.6 1 1,736.0 1,706.6 2
Profitability ratios (annualized)
Net income to average total assets (ROA) --% 1.71% -- .79% 1.73% (54)
Net income applicable to common stock to
average common stockholders' equity (ROE) -- 17.62 -- 8.19 17.73 (54)
Total revenue $ 3,553 $ 4,799 (26) $ 8,786 $ 9,473 (7)
Efficiency ratio (1) 91.6% 59.4% 54 71.1% 59.0% 21
Average loans $161,269 $141,465 14 $160,583 $138,200 16
Average assets 279,325 244,307 14 273,960 241,885 13
Average core deposits 168,183 143,565 17 162,572 141,627 15
Net interest margin 5.31% 5.36% (1) 5.26% 5.38% (2)
CASH NET INCOME AND RATIOS (2)
Net income applicable to common stock $ 85 $ 1,196 (93) $ 1,468 $ 2,377 (38)
Earnings per common share .05 .71 (93) .86 1.41 (39)
Diluted earnings per common share .05 .70 (93) .85 1.39 (39)
ROA .13% 2.06% (94) 1.13% 2.07% (45)
ROE 2.09 33.90 (94) 18.23 32.88 (45)
Efficiency ratio 86.2 55.7 55 66.5 55.4 20
AT PERIOD END
Securities available for sale $ 41,290 $ 39,774 4 $ 41,290 $ 39,774 4
Loans 164,754 148,262 11 164,754 148,262 11
Allowance for loan losses 3,760 3,519 7 3,760 3,519 7
Goodwill 9,607 8,854 9 9,607 8,854 9
Assets 289,758 256,622 13 289,758 256,622 13
Core deposits 171,218 146,522 17 171,218 146,522 17
Common stockholders' equity 26,802 24,576 9 26,802 24,576 9
Stockholders' equity 27,061 24,841 9 27,061 24,841 9
Capital ratios
Common stockholders' equity to assets 9.25% 9.58% (3) 9.25% 9.58% (3)
Stockholders' equity to assets 9.34 9.68 (4) 9.34 9.68 (4)
Risk-based capital (3)
Tier 1 capital 6.95 7.19 (3) 6.95 7.19 (3)
Total capital 10.45 10.87 (4) 10.45 10.87 (4)
Leverage (3) 5.95 6.46 (8) 5.95 6.46 (8)
Book value per common share $ 15.64 $ 14.55 7 $ 15.64 $ 14.55 7
Staff (active, full-time equivalent) 116,278 102,551 13 116,278 102,551 13
COMMON STOCK PRICE
High $ 50.16 $ 47.75 5 $ 54.81 $ 47.75 15
Low 42.65 37.31 14 42.55 31.00 37
Period end 46.43 38.75 20 46.43 38.75 20
===========================================================================================================================
(1) The efficiency ratio is defined as noninterest expense divided by total
revenue (net interest income and noninterest income).
(2) Cash net income and ratios exclude goodwill amortization, the reduction of
unamortized goodwill due to sales of assets and nonqualifying core deposit
intangible (CDI) amortization. The ratios also exclude the balance of
goodwill and nonqualifying CDI. Nonqualifying core deposit intangible
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 $1,081
million and $1,102 million for the quarter and six months ended June 30,
2001, respectively. The after-tax amounts for the amortization and average
balance of nonqualifying CDI were $24 million and $670 million,
respectively, for the quarter ended June 30, 2001 and $49 million and $683
million for the six months ended June 30, 2001, respectively. Goodwill
amortization, the reduction of unamortized goodwill due to the sales of
assets and average balance (which are not tax effected) were $152 million,
nil and $9,518 million, respectively, for the quarter ended June 30, 2001
and $296 million, $54 million and $9,393 million for the six months ended
June 30, 2001, respectively.
(3) The June 30, 2001 ratios are preliminary.
-5-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
===========================================================================================================================
Quarter Six months
ended June 30, ended June 30,
---------------------- % ---------------------- %
(in millions, except per share amounts) 2001 2000 Change 2001 2000 Change
- ---------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Securities available for sale $ 611 $ 671 (9)% $ 1,215 $ 1,386 (12)%
Mortgages held for sale 373 189 97 630 373 69
Loans held for sale 89 122 (27) 182 230 (21)
Loans 3,668 3,477 5 7,511 6,767 11
Other interest income 75 84 (11) 158 165 (4)
-------- -------- -------- --------
Total interest income 4,816 4,543 6 9,696 8,921 9
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 983 993 (1) 2,104 1,863 13
Short-term borrowings 328 421 (22) 722 845 (15)
Long-term debt 479 446 7 1,008 880 15
Guaranteed preferred beneficial interests
in Company's subordinated debentures 18 19 (5) 35 37 (5)
-------- -------- -------- --------
Total interest expense 1,808 1,879 (4) 3,869 3,625 7
-------- -------- -------- --------
NET INTEREST INCOME 3,008 2,664 13 5,827 5,296 10
Provision for loan losses 427 275 55 788 551 43
-------- -------- -------- --------
Net interest income after
provision for loan losses 2,581 2,389 8 5,039 4,745 6
-------- -------- -------- --------
NONINTEREST INCOME
Service charges on deposit accounts 471 428 10 900 833 8
Trust and investment fees 417 394 6 832 791 5
Credit card fees 196 175 12 377 340 11
Other fees 311 266 17 618 518 19
Mortgage banking 517 336 54 908 669 36
Insurance 210 117 79 327 212 54
Net venture capital (losses) gains (1,487) 320 -- (1,470) 1,205 --
Net gains (losses) on securities available for sale 27 (39) -- 145 (641) --
Other (117) 138 -- 322 250 29
-------- -------- -------- --------
Total noninterest income 545 2,135 (74) 2,959 4,177 (29)
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries 1,018 906 12 1,995 1,787 12
Incentive compensation 265 185 43 469 353 33
Employee benefits 236 245 (4) 514 500 3
Equipment 217 208 4 454 429 6
Net occupancy 239 233 3 476 470 1
Goodwill 152 136 12 296 253 17
Core deposit intangible 41 47 (13) 84 95 (12)
Net gains on dispositions of premises
and equipment -- (17) (100) (19) (51) (63)
Other 1,087 909 20 1,982 1,752 13
-------- -------- -------- --------
Total noninterest expense 3,255 2,852 14 6,251 5,588 12
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAX
EXPENSE (BENEFIT) (129) 1,672 -- 1,747 3,334 (48)
Income tax expense (benefit) (42) 635 -- 669 1,257 (47)
-------- -------- -------- --------
NET INCOME (LOSS) $ (87) $ 1,037 --% $ 1,078 $ 2,077 (48)%
======== ======== ======== ========
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCK $ (91) $ 1,033 --% $ 1,069 $ 2,068 (48)%
======== ======== ======== ========
EARNINGS (LOSS) PER COMMON SHARE $ (.05) $ .61 --% $ .62 $ 1.22 (49)%
======== ======== ======== ========
DILUTED EARNINGS (LOSS) PER
COMMON SHARE $ (.05) $ .61 --% $ .62 $ 1.21 (49)%
======== ======== ======== ========
DIVIDENDS DECLARED PER
COMMON SHARE $ .24 $ .22 9% $ .48 $ .44 9%
======== ======== ======== ========
Average common shares outstanding 1,714.9 1,682.8 2% 1,715.4 1,689.7 2%
======== ======== ======== ========
Diluted average common shares outstanding 1,714.9 1,702.6 1% 1,736.0 1,706.6 2%
======== ======== ======== ========
===========================================================================================================================
-6-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
===========================================================================================================================
% Change
June 30, 2001 from
-------------------
JUNE 30, Dec. 31, June 30, Dec. 31, June 30,
(in millions, except shares) 2001 2000 2000 2000 2000
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 15,966 $ 16,978 $ 15,053 (6)% 6%
Federal funds sold and securities
purchased under resale agreements 3,013 1,598 3,710 89 (19)
Securities available for sale 41,290 38,655 39,774 7 4
Mortgages held for sale 22,446 11,812 9,368 90 140
Loans held for sale 4,615 4,539 4,111 2 12
Loans 164,754 161,124 148,262 2 11
Allowance for loan losses 3,760 3,719 3,519 1 7
-------- -------- --------
Net loans 160,994 157,405 144,743 2 11
-------- -------- --------
Mortgage servicing rights 6,076 5,609 5,030 8 21
Premises and equipment, net 3,531 3,415 3,328 3 6
Core deposit intangible 1,093 1,183 1,226 (8) (11)
Goodwill 9,607 9,303 8,854 3 9
Interest receivable and other assets 21,127 21,929 21,425 (4) (1)
-------- -------- --------
Total assets $289,758 $272,426 $256,622 6% 13%
======== ======== ======== === ====
LIABILITIES
Noninterest-bearing deposits $ 56,774 $ 55,096 $ 50,628 3% 12%
Interest-bearing deposits 121,484 114,463 109,057 6 11
-------- -------- --------
Total deposits 178,258 169,559 159,685 5 12
Short-term borrowings 31,678 28,989 30,007 9 6
Accrued expenses and other liabilities 16,487 14,409 11,559 14 43
Long-term debt 35,339 32,046 29,595 10 19
Guaranteed preferred beneficial interests
in Company's subordinated debentures 935 935 935 -- --
STOCKHOLDERS' EQUITY
Preferred stock 485 385 441 26 10
Unearned ESOP shares (226) (118) (176) 92 28
-------- -------- --------
Total preferred stock 259 267 265 (3) (2)
Common stock - $1-2/3 par value,
authorized 6,000,000,000 shares;
issued 1,736,381,025 shares, 1,736,381,025 shares
and 1,736,681,690 shares 2,894 2,894 2,895 -- --
Additional paid-in capital 9,427 9,337 9,302 1 1
Retained earnings 14,616 14,541 13,645 1 7
Cumulative other comprehensive income 1,054 524 811 101 30
Note receivable from ESOP -- -- (1) -- (100)
Treasury stock - 22,993,569 shares,
21,735,182 shares and 47,562,074 shares (1,189) (1,075) (2,076) 11 (43)
-------- -------- --------
Total stockholders' equity 27,061 26,488 24,841 2 9
-------- -------- --------
Total liabilities and stockholders' equity $289,758 $272,426 $256,622 6% 13%
======== ======== ======== === ====
=========================================================================================================================
-7-
Wells Fargo & Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
===================================================================================================================
Six months ended June 30,
---------------------------
(in millions) 2001 2000
- -------------------------------------------------------------------------------------------------------------------
BALANCE, BEGINNING OF PERIOD $26,488 $23,871
Net income 1,078 2,077
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments -- (1)
Change in valuation allowance related to:
Derivative instruments and hedging activities 154 --
Investment securities 305 52
Cumulative effect of change in accounting principle related to
derivative instruments and hedging activities 71 --
Common stock issued 413 261
Common stock issued for acquisitions 23 1,682
Common stock repurchased (720) (2,400)
Preferred stock released to ESOP 92 73
Preferred stock dividends (9) (9)
Common stock dividends (824) (766)
Change in Rabbi trust assets (classified as treasury stock) (10) 1
------- -------
BALANCE, END OF PERIOD $27,061 $24,841
======= =======
===================================================================================================================
LOANS
===================================================================================================================
JUN. 30, Dec. 31, Jun. 30,
(in millions) 2001 2000 2000
- -------------------------------------------------------------------------------------------------------------------
Commercial $ 49,957 $ 50,518 $ 46,513
Real estate 1-4 family first mortgage 20,366 18,464 18,727
Other real estate mortgage 24,140 23,972 22,248
Real estate construction 8,271 7,715 6,969
Consumer:
Real estate 1-4 family junior lien mortgage 20,683 18,218 15,139
Credit card 6,174 6,616 6,049
Other revolving credit and monthly payment 23,632 23,974 21,395
-------- -------- --------
Total consumer 50,489 48,808 42,583
Lease financing 9,887 10,023 9,580
Foreign 1,644 1,624 1,642
-------- -------- --------
Total loans (net of unearned discount) $164,754 $161,124 $148,262
======== ======== ========
===================================================================================================================
-8-
Wells Fargo & Company and Subsidiaries
CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
===========================================================================================================================
Quarter ended Six months ended
---------------------------------- --------------------
JUNE 30, March 31, June 30, JUNE 30, June 30,
(in millions) 2001 2001 2000 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, BEGINNING OF PERIOD $3,759 $3,719 $3,406 $3,719 $3,344
Allowance related to business combinations 1 40 100 41 161
Provision for loan losses 427 361 275 788 551
Loan charge-offs:
Commercial (173) (109) (92) (282) (197)
Real estate 1-4 family first mortgage (3) (3) (1) (6) (8)
Other real estate mortgage (6) (3) (13) (9) (16)
Real estate construction (3) (1) (3) (4) (4)
Consumer:
Real estate 1-4 family junior lien mortgage (11) (11) (6) (22) (17)
Credit card (117) (101) (88) (218) (174)
Other revolving credit and monthly payment (182) (187) (136) (369) (288)
------ ------ ------ ------ ------
Total consumer (310) (299) (230) (609) (479)
Lease financing (20) (24) (9) (44) (22)
Foreign (17) (18) (21) (35) (45)
------ ------ ------ ------ ------
Total loan charge-offs (532) (457) (369) (989) (771)
------ ------ ------ ------ ------
Loan recoveries:
Commercial 21 16 20 37 53
Real estate 1-4 family first mortgage 1 1 1 2 2
Other real estate mortgage 6 2 4 8 7
Real estate construction 1 1 1 2 2
Consumer:
Real estate 1-4 family junior lien mortgage 4 3 4 7 8
Credit card 10 12 10 22 20
Other revolving credit and monthly payment 50 49 60 99 116
------ ------ ------ ------ ------
Total consumer 64 64 74 128 144
Lease financing 7 7 3 14 6
Foreign 5 5 4 10 20
------ ------ ------ ------ ------
Total loan recoveries 105 96 107 201 234
------ ------ ------ ------ ------
Total net loan charge-offs (427) (361) (262) (788) (537)
------ ------ ------ ------ ------
BALANCE, END OF PERIOD $3,760 $3,759 $3,519 $3,760 $3,519
====== ====== ====== ====== ======
Total net loan charge-offs as a percentage
of average total loans (annualized) 1.06% .92% .74% .99% .78%
====== ====== ====== ====== ======
Allowance as a percentage of total loans 2.28% 2.32% 2.37% 2.28% 2.37%
====== ====== ====== ====== ======
===========================================================================================================================
-9-
Wells Fargo & Company and Subsidiaries
NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
===================================================================================================================
JUN. 30, Dec. 31, Jun. 30,
(in millions) 2001 2000 2000
- -------------------------------------------------------------------------------------------------------------------
Nonaccrual loans:
Commercial $ 823 $ 739 $ 495
Real estate 1-4 family first mortgage 198 127 129
Other real estate mortgage 193 113 129
Real estate construction 80 57 23
Consumer:
Real estate 1-4 family junior lien mortgage 15 23 11
Other revolving credit and monthly payment 37 36 22
------ ------ ------
Total consumer 52 59 33
Lease financing 140 92 51
Foreign 9 7 11
------ ------ ------
Total nonaccrual loans 1,495 1,194 871
Restructured loans -- 1 3
------ ------ ------
Nonaccrual and restructured loans 1,495 1,195 874
As a percentage of total loans .9% .7% .6%
Foreclosed assets 134 128 145
Real estate investments (1) 2 27 32
------ ------ ------
Total nonaccrual and restructured loans
and other assets $1,631 $1,350 $1,051
====== ====== ======
===================================================================================================================
(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 $28
million, $56 million and $79 million at June 30, 2001, December 31, 2000
and June 30, 2000, respectively.
-10-
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
===========================================================================================================================
Quarter ended June 30, % Six months ended June 30, %
--------------------- ------------------------
(in millions) 2001 2000 Change 2001 2000 Change
- ---------------------------------------------------------------------------------------------------------------------------
Service charges on deposit accounts $ 471 $ 428 10% $ 900 $ 833 8%
Trust and investment fees:
Asset management and custody fees 181 177 2 369 353 5
Mutual fund and annuity sales fees 201 185 9 415 369 12
All other 35 32 9 48 69 (30)
------ ------ ------ ------
Total trust and investment fees 417 394 6 832 791 5
Credit card fees 196 175 12 377 340 11
Other fees:
Cash network fees 53 50 6 99 91 9
Charges and fees on loans 120 80 50 213 160 33
All other 138 136 1 306 267 15
------ ------ ------ ------
Total other fees 311 266 17 618 518 19
Mortgage banking:
Origination and other closing fees 190 93 104 311 158 97
Servicing fees, net of amortization and impairment 105 172 (39) 115 324 (65)
Net (losses) gains on securities available for sale (4) -- -- 132 -- --
Net gains on sale of mortgage servicing rights -- 33 (100) -- 59 (100)
Net gains (losses) on sales of mortgages 149 (36) -- 206 6 --
All other 77 74 4 144 122 18
------ ------ ------ ------
Total mortgage banking 517 336 54 908 669 36
Insurance 210 117 79 327 212 54
Net venture capital (losses) gains (1,487) 320 -- (1,470) 1,205 --
Net gains (losses) on securities available for sale 27 (39) -- 145 (641) --
Net (loss) income from equity investments
accounted for by the:
Cost method (115) 13 -- (25) 127 --
Equity method (86) 39 -- (85) 75 --
Net losses on sales of loans (14) (72) (81) (1) (71) (99)
Net gains on dispositions of operations 3 4 (25) 104 6 --
All other 95 154 (38) 329 113 191
------ ------ ------ ------
Total $ 545 $2,135 (74)% $2,959 $4,177 (29)%
====== ====== ==== ====== ====== ====
===========================================================================================================================
NONINTEREST EXPENSE
===========================================================================================================================
Quarter ended June 30, % Six months ended June 30, %
--------------------- ------------------------
(in millions) 2001 2000 Change 2001 2000 Change
- ---------------------------------------------------------------------------------------------------------------------------
Salaries $1,018 $ 906 12% $1,995 $1,787 12%
Incentive compensation 265 185 43 469 353 33
Employee benefits 236 245 (4) 514 500 3
Equipment 217 208 4 454 429 6
Net occupancy 239 233 3 476 470 1
Goodwill 152 136 12 296 253 17
Core deposit intangible:
Nonqualifying (1) 39 44 (11) 79 88 (10)
Qualifying 2 3 (33) 5 7 (29)
Net gains on dispositions of premises
and equipment -- (17) (100) (19) (51) (63)
Contract services 143 121 18 258 230 12
Outside professional services 129 89 45 230 179 28
Outside data processing 77 80 (4) 154 159 (3)
Advertising and promotion 66 78 (15) 124 138 (10)
Telecommunications 90 78 15 169 146 16
Travel and entertainment 69 71 (3) 142 128 11
Postage 54 64 (16) 124 123 1
Stationery and supplies 63 56 13 122 105 16
Insurance 68 55 24 115 97 19
Operating losses 43 31 39 99 69 43
Security 49 25 96 76 48 58
All other 236 161 47 369 330 12
------ ------ ------ ------
Total $3,255 $2,852 14% $6,251 $5,588 12%
====== ====== ==== ====== ====== ====
===========================================================================================================================
(1) Represents amortization of core deposit intangible acquired after February
1992 that is subtracted from stockholders' equity in computing regulatory
capital for bank holding companies.
-11-
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
=============================================================================================================================
Quarter ended June 30,
--------------------------------------------------------------------
2001 2000
------------------------------- ------------------------------
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 $ 2,963 3.82% $ 28 $ 2,355 6.44% $ 38
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies 2,057 6.83 34 2,783 6.13 43
Securities of U.S. states and political subdivisions 2,034 8.12 40 2,152 7.76 42
Mortgage-backed securities:
Federal agencies 25,798 7.19 454 26,797 7.09 485
Private collateralized mortgage obligations 1,570 9.56 37 2,713 7.46 53
-------- ------ -------- ------
Total mortgage-backed securities 27,368 7.32 491 29,510 7.12 538
Other debt securities (4) 3,097 7.75 64 4,678 7.38 62
-------- ------ -------- ------
Total debt securities available for sale (4) 34,556 7.38 629 39,123 7.11 685
Mortgages held for sale (3) 21,480 6.92 373 9,195 8.15 189
Loans held for sale (3) 4,818 7.42 89 5,706 8.58 122
Loans:
Commercial 49,771 8.30 1,030 44,502 9.41 1,042
Real estate 1-4 family first mortgage 18,048 7.42 335 15,388 7.84 301
Other real estate mortgage 24,070 8.26 496 22,164 8.87 489
Real estate construction 8,208 8.41 172 6,634 10.06 166
Consumer:
Real estate 1-4 family junior lien mortgage 19,849 9.64 478 14,530 10.37 376
Credit card 6,148 13.35 205 5,531 14.60 201
Other revolving credit and monthly payment 23,442 11.54 676 21,439 11.90 637
-------- ------ -------- ------
Total consumer 49,439 11.00 1,359 41,500 11.73 1,214
Lease financing 10,150 7.71 196 9,634 7.53 181
Foreign 1,583 20.97 83 1,643 21.04 86
-------- ------ -------- ------
Total loans (5) 161,269 9.12 3,671 141,465 9.87 3,479
Other 3,756 4.98 47 3,113 6.12 47
-------- ------ -------- ------
Total earning assets $228,842 8.48 4,837 $200,957 9.13 4,560
======== ------ ======== ------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 2,301 2.79 16 $ 3,445 1.74 15
Market rate and other savings 79,815 2.37 473 62,997 2.72 427
Savings certificates 31,185 5.39 419 29,453 5.25 384
Other time deposits 1,093 5.22 14 4,335 5.58 60
Deposits in foreign offices 5,751 4.27 61 6,990 6.16 107
-------- ------ -------- ------
Total interest-bearing deposits 120,145 3.28 983 107,220 3.72 993
Short-term borrowings 29,970 4.39 328 27,695 6.12 421
Long-term debt 35,066 5.47 479 27,203 6.56 446
Guaranteed preferred beneficial interests in Company's
subordinated debentures 935 7.59 18 935 7.89 19
-------- ------ -------- ------
Total interest-bearing liabilities 186,116 3.89 1,808 163,053 4.63 1,879
Portion of noninterest-bearing funding sources 42,726 -- -- 37,904 -- --
-------- ------ -------- ------
Total funding sources $228,842 3.17 1,808 $200,957 3.77 1,879
======== ------ ======== ------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (6) 5.31% $3,029 5.36% $2,681
==== ====== ==== ======
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 14,474 $ 12,572
Goodwill 9,518 8,652
Other 26,491 22,126
-------- --------
Total noninterest-earning assets $ 50,483 $ 43,350
======== ========
NONINTEREST-BEARING FUNDING SOURCES
Deposits $ 54,882 $ 47,670
Other liabilities 11,670 9,745
Preferred stockholders' equity 256 263
Common stockholders' equity 26,401 23,576
Noninterest-bearing funding sources used to
fund earning assets (42,726) (37,904)
-------- --------
Net noninterest-bearing funding sources $ 50,483 $ 43,350
======== ========
TOTAL ASSETS $279,325 $244,307
======== ========
=============================================================================================================================
(1) The average prime rate of the Company was 7.34% and 9.25% for the quarters
ended June 30, 2001 and 2000, respectively. The average three-month London
Interbank Offered Rate (LIBOR) was 4.19% and 6.65% for the same quarters,
respectively.
(2) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(3) Yields are based on amortized cost balances computed on a settlement date
basis.
(4) Includes certain preferred securities.
(5) Nonaccrual loans and related income are included in their respective loan
categories.
(6) Includes taxable-equivalent adjustments 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.
-12-
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
==============================================================================================================================
Six months ended June 30,
--------------------------------------------------------------------
2001 2000
------------------------------- ------------------------------
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 $ 2,666 4.49% $ 59 $ 2,295 6.06% $ 69
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies 2,232 6.95 75 3,767 5.90 116
Securities of U.S. states and political subdivisions 2,015 7.89 77 2,140 7.84 85
Mortgage-backed securities:
Federal agencies 25,477 7.18 893 26,924 7.13 982
Private collateralized mortgage obligations 1,560 9.20 71 2,854 7.19 107
-------- ------ -------- ------
Total mortgage-backed securities 27,037 7.29 964 29,778 7.14 1,089
Other debt securities (4) 3,180 7.76 129 5,180 7.70 125
-------- ------ -------- ------
Total debt securities available for sale (4) 34,464 7.35 1,245 40,865 7.10 1,415
Mortgages held for sale (3) 17,834 7.04 630 9,427 7.83 373
Loans held for sale (3) 4,818 7.60 182 5,544 8.33 230
Loans:
Commercial 49,434 8.68 2,128 43,350 9.26 1,995
Real estate 1-4 family first mortgage 18,181 7.50 681 14,600 7.92 578
Other real estate mortgage 23,987 8.53 1,015 21,747 9.05 979
Real estate construction 8,063 8.99 360 6,445 9.90 317
Consumer:
Real estate 1-4 family junior lien mortgage 19,192 9.91 948 13,928 10.29 714
Credit card 6,240 13.76 431 5,573 14.19 395
Other revolving credit and monthly payment 23,691 11.74 1,387 21,170 11.84 1,251
-------- ------ -------- ------
Total consumer 49,123 11.28 2,766 40,671 11.63 2,360
Lease financing 10,211 7.84 400 9,759 7.59 370
Foreign 1,584 21.07 167 1,628 21.26 173
-------- ------ -------- ------
Total loans (5) 160,583 9.40 7,517 138,200 9.83 6,772
Other 3,647 5.46 99 3,302 5.88 96
-------- ------ -------- ------
Total earning assets $224,012 8.74 9,732 $199,633 9.04 8,955
======== ------ ======== ------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 2,385 3.24 38 $ 3,391 1.57 27
Market rate and other savings 75,013 2.60 966 62,339 2.64 818
Savings certificates 32,002 5.60 888 29,389 5.12 748
Other time deposits 1,655 5.43 45 4,039 5.41 109
Deposits in foreign offices 6,724 4.99 167 5,451 5.94 161
-------- ------ -------- ------
Total interest-bearing deposits 117,779 3.60 2,104 104,609 3.58 1,863
Short-term borrowings 29,082 5.00 722 28,512 5.96 845
Long-term debt 34,323 5.88 1,008 27,249 6.47 880
Guaranteed preferred beneficial interests in Company's
subordinated debentures 934 7.69 35 935 7.88 37
-------- ------ -------- ------
Total interest-bearing liabilities 182,118 4.28 3,869 161,305 4.51 3,625
Portion of noninterest-bearing funding sources 41,894 -- -- 38,328 -- --
-------- ------ -------- ------
Total funding sources $224,012 3.48 3,869 $199,633 3.66 3,625
======== ------ ======== ------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (6) 5.26% $5,863 5.38% $5,330
==== ====== ==== ======
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 14,642 $ 12,687
Goodwill 9,393 8,463
Other 25,913 21,102
-------- --------
Total noninterest-earning assets $ 49,948 $ 42,252
======== ========
NONINTEREST-BEARING FUNDING SOURCES
Deposits $ 53,172 $ 46,508
Other liabilities 12,094 10,077
Preferred stockholders' equity 261 268
Common stockholders' equity 26,315 23,727
Noninterest-bearing funding sources used to
fund earning assets (41,894) (38,328)
-------- --------
Net noninterest-bearing funding sources $ 49,948 $ 42,252
======== ========
TOTAL ASSETS $273,960 $241,885
======== ========
==============================================================================================================================
(1) The average prime rate of the Company was 7.98% and 8.97% for the six
months ended June 30, 2001 and 2000, respectively. The average three-month
London Interbank Offered Rate (LIBOR) was 4.76% and 6.38% for the same
periods, respectively.
(2) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(3) Yields are based on amortized cost balances computed on a settlement date
basis.
(4) Includes certain preferred securities.
(5) Nonaccrual loans and related income are included in their respective loan
categories.
(6) Includes taxable-equivalent adjustments 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.