Exhibit 99
Wells Fargo & Company's financial results for the quarter ended September 30,
1999
Wells Fargo & Company today reported net income of $962 million for the
third quarter of 1999, compared with $742 million for the third quarter of
1998, an increase of 30 percent. Net income for the first nine months of
1999 was $2,777 million, an increase of 30 percent over the same period a
year ago. Diluted earnings per common share were $.57 for the third quarter
of 1999 and $1.65 for the first nine months of 1999, compared with $.45 and
$1.29 for the same periods of 1998. Return on average assets was 1.88
percent for the third quarter of 1999 and 1.85 percent for the first nine
months of 1999, compared with 1.58 percent and 1.55 percent for the same
periods a year ago. Return on average common equity was 17.97 percent for
the third quarter of 1999 and 17.60 percent for the first nine months of
1999, compared with 14.72 percent and 14.55 percent for the same periods of
1998.
Diluted cash earnings were $.65 per share for the third quarter of 1999
and $1.89 per share for the first nine months of 1999, compared with $.53 per
share and $1.55 per share for the same periods of 1998. Cash return on
average assets was 2.24 percent for the third quarter of 1999 and 2.22
percent for the first nine months of 1999, compared with 1.97 percent and
1.95 percent for the same periods a year ago. Cash return on average
tangible common equity was 34.33 percent for the third quarter of 1999 and
34.04 percent for the first nine months of 1999, compared with 31.47 percent
and 32.02 percent for the same periods of 1998. Cash earnings are earnings
before the amortization of goodwill and nonqualifying core deposit intangible
(related primarily to the 1996 acquisition of First Interstate Bancorp).
"The successful merger of equals of Norwest and Wells Fargo and the
complementary strengths of both organizations now have produced impressive
earnings momentum across our new company for the third consecutive quarter,"
said Dick Kovacevich, president and chief executive officer. "We're
particularly pleased with the virtually flawless conversion to common systems
that our team members achieved recently for our 170,000 banking households in
New Mexico, the first of our 21 banking states to convert over the next year
and a half."
-1-
Net interest income on a taxable-equivalent basis was $2,399 million in
the third quarter of 1999, compared with $2,278 million for the same quarter
a year ago and $7,007 million for the first nine months of 1999, compared
with $6,734 million for the same period a year ago. The net interest margin
was 5.73 percent for the third quarter of 1999 and 5.67 percent for the first
nine months of 1999, compared with 5.88 percent and 5.86 percent in the same
periods of 1998. The decrease in the net interest margin for both the third
quarter and the first nine months was primarily due to higher balances of
lower yielding investment securities and lower yields on consumer loans and
commercial real estate mortgages partially offset by decreased rates on
consumer deposits.
Noninterest income in the third quarter of 1999 was $1,809 million,
compared with $1,621 million in the same quarter of 1998, an increase of 12
percent. For the first nine months of 1999, noninterest income was $5,350
million, compared with $4,870 million in the same period of 1998, an increase
of 10 percent. The increase for the third quarter of 1999 was mostly due to
higher net mortgage servicing fees and higher venture capital gains partially
offset by gains on sales of mortgages in the third quarter of 1998. The
increase for the first nine months of 1999 was primarily due to higher net
mortgage servicing fees, venture capital gains and trust and investment fees
and commissions.
Noninterest expense was $2,418 million in the third quarter of 1999,
compared with $2,347 million in the same quarter of 1998. In the first nine
months of 1999, noninterest expense was $7,124 million, compared with $7,097
million in the same period of 1998. The efficiency ratio improved to 57.7
percent for the third quarter of 1999 and 57.9 percent for the first nine
months of 1999, compared with 60.4 percent and 61.4 percent for the same
periods a year ago.
The provision for loan losses was $240 million for the third quarter of
1999, compared with $307 million for the same period in 1998. Net
charge-offs totaled $241 million, or .85 percent of average loans
(annualized), in the third quarter of 1999. Net charge-offs totaled $318
million, or 1.18 percent of average loans (annualized), for the third quarter
of 1998. For the nine months ended September 30, 1999 the loan loss
provision was $770 million and net charge-offs totaled $775 million, or .94
percent of average loans (annualized), compared with a loan loss provision of
$921 million and net charge-offs of $931 million, or 1.18 percent of average
loans (annualized) for the same period of 1998.
At September 30, 1999, the allowance for loan losses of $3,167 million
was 2.76 percent of total loans, compared with 2.90 percent at December 31,
1998 and 2.94 percent at September 30, 1998. Total nonaccrual and
restructured loans were $698 million at September 30, 1999, compared with
$710 million at December 31, 1998 and $722 million at September 30, 1998.
-2-
________________
The following appears in accordance with the Securities Litigation Reform Act:
This discussion of financial results may contain forward-looking statements
about the Company, including descriptions of plans or objectives of its
management for future operations, products or services, and forecasts of its
revenues, earnings or other measures of economic performance. Forward-looking
statements can be identified by the fact that they do not relate strictly to
historical or current facts. They often include the words "believe,"
"expect," "anticipate," "intend," "plan," "estimate" or words of similar
meaning, or future or conditional verbs such as "will," "would," "should,"
"could" or "may."
Forward-looking statements, by their nature, are subject to risks and
uncertainties. A number of factors--many of which are beyond the Company's
control--could cause actual conditions, events or results to differ
significantly from those described in the forward-looking statements. The
Company's reports filed with the Securities and Exchange Commission,
including the Company's Form 10-Q for the quarter ended June 30, 1999,
describe some of these factors, including certain credit, market,
operational, liquidity, interest rate, and Year 2000 risks associated with
the Company's business and operations. Other factors described in the
Company's June 30, 1999 Form 10-Q include changes in business and economic
conditions, competition, fiscal and monetary policies, disintermediation,
legislation, the combination of the former Norwest Corporation and the former
Wells Fargo & Company, and other mergers and acquisitions.
There are other factors besides these that could cause actual conditions,
events or results to differ significantly from those described in the
forward-looking statements or otherwise affect in the future the Company's
business, results of operations and financial condition.
-3-
-4-
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Nine months
ended Sept. 30, % ended Sept. 30, %
--------------------- ---------------------
(in millions, except per share amounts) 1999 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD
Net income $ 962 $ 742 30 % $ 2,777 $ 2,144 30 %
Net income applicable to common stock 953 733 30 2,751 2,118 30
Earnings per common share $ .58 $ .45 29 $ 1.67 $ 1.31 27
Diluted earnings per common share .57 .45 27 1.65 1.29 28
Dividends declared per common share .20 .185 8 .585 .515 14
Average common shares outstanding 1,648.6 1,617.3 2 1,649.0 1,614.4 2
Diluted average common shares outstanding 1,667.1 1,640.7 2 1,667.9 1,637.3 2
Profitability ratios (annualized)
Net income to average total assets (ROA) 1.88% 1.58% 19 1.85% 1.55% 19
Net income applicable to common stock to
average common stockholders' equity (ROE) 17.97 14.72 22 17.60 14.55 21
Total revenue $ 4,191 $ 3,884 8 $ 12,309 $ 11,559 6
Efficiency ratio (1) 57.7% 60.4% (4) 57.9% 61.4% (6)
Average loans $112,262 $106,553 5 $109,714 $105,830 4
Average assets 202,972 186,634 9 200,694 185,187 8
Average core deposits 126,759 123,720 2 127,481 122,449 4
Net interest margin 5.73% 5.88% (3) 5.67% 5.86% (3)
NET INCOME AND RATIOS EXCLUDING
GOODWILL AND NONQUALIFYING CORE DEPOSIT
INTANGIBLE AMORTIZATION AND BALANCES
("CASH" OR "TANGIBLE") (2)
Net income applicable to common stock $ 1,087 $ 872 25 $ 3,149 $ 2,534 24
Earnings per common share .66 .54 22 1.91 1.57 22
Diluted earnings per common share .65 .53 23 1.89 1.55 22
ROA 2.24% 1.97% 14 2.22% 1.95% 14
ROE 34.33 31.47 9 34.04 32.02 6
Efficiency ratio 54.1 56.3 (4) 54.2 57.2 (5)
AT PERIOD END
Securities available for sale $ 36,906 $ 32,210 15 $ 36,906 $ 32,210 15
Loans 114,709 107,692 7 114,709 107,692 7
Allowance for loan losses 3,167 3,170 -- 3,167 3,170 --
Goodwill 7,620 7,758 (2) 7,620 7,758 (2)
Assets 207,060 195,863 6 207,060 195,863 6
Core deposits 125,160 123,792 1 125,160 123,792 1
Common stockholders' equity 21,722 20,096 8 21,722 20,096 8
Stockholders' equity 22,182 20,558 8 22,182 20,558 8
Capital ratios
Common stockholders' equity to assets 10.49% 10.26% 2 10.49% 10.26% 2
Stockholders' equity to assets 10.71 10.50 2 10.71 10.50 2
Risk-based capital (3)
Tier 1 capital 8.65 8.20 5 8.65 8.20 5
Total capital 11.20 11.07 1 11.20 11.07 1
Leverage (3) 7.20 7.00 3 7.20 7.00 3
Book value per common share $ 13.17 $ 12.40 6 $ 13.17 $ 12.40 6
Staff (active, full-time equivalent) 89,528 89,719 -- 89,528 90,719 --
COMMON STOCK PRICE
High $ 45.31 $ 39.75 14 $ 45.31 $ 43.88 3
Low 36.44 27.50 33 32.13 27.50 17
Period end 39.63 36.00 10 39.63 36.00 10
- ---------------------------------------------------------------------------------------------------------------------------
(1) The efficiency ratio is defined as noninterest expense divided by total
revenue (net interest income and noninterest income).
(2) Nonqualifying core deposit intangible (CDI) amortization and average
balance excluded from these calculations are, with the exception of the
efficiency and ROA ratios, net of applicable taxes. The pretax amount for
the average balance of nonqualifying CDI was $1,301 million for the quarter
ended September 30, 1999 and $1,345 million for the nine months ended
September 30, 1999. The after-tax amounts for the amortization and average
balance of nonqualifying CDI were $27 million and $807 million,
respectively, for the quarter ended September 30, 1999 and $84 million and
$834 million, respectively, for the nine months ended September 30, 1999.
Goodwill amortization and average balance (which are not tax effected) were
$106 million and $7,674 million, respectively, for the quarter ended
September 30, 1999 and $314 million and $7,688 million, respectively, for
the nine months ended September 30, 1999.
(3) The September 30, 1999 ratios are preliminary.
-5-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Nine months
ended Sept. 30, % ended Sept. 30, %
--------------------- ---------------------
(in millions, except per share amounts) 1999 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Securities available for sale $ 586 $ 424 38 % $ 1,612 $ 1,330 21 %
Mortgages held for sale 198 230 (14) 671 609 10
Loans held for sale 80 93 (14) 280 274 2
Loans 2,725 2,702 1 7,912 8,046 (2)
Other interest income 52 79 (34) 150 199 (25)
-------- -------- -------- --------
Total interest income 3,641 3,528 3 10,625 10,458 2
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 679 788 (14) 2,075 2,340 (11)
Short-term borrowings 226 195 16 635 558 14
Long-term debt 338 266 27 911 804 13
Guaranteed preferred beneficial interests
in Company's subordinated debentures 16 16 -- 45 67 (33)
-------- -------- -------- --------
Total interest expense 1,259 1,265 -- 3,666 3,769 (3)
-------- -------- -------- --------
NET INTEREST INCOME 2,382 2,263 5 6,959 6,689 4
Provision for loan losses 240 307 (22) 770 921 (16)
-------- -------- -------- --------
Net interest income after
provision for loan losses 2,142 1,956 10 6,189 5,768 7
-------- -------- -------- --------
NONINTEREST INCOME
Service charges on deposit accounts 385 356 8 1,096 993 10
Trust and investment fees and commissions 317 267 19 932 794 17
Credit card fee revenue 138 136 1 395 384 3
Other fees and commissions 258 241 7 763 695 10
Mortgage banking 318 275 16 969 854 13
Insurance 95 73 30 299 278 8
Net venture capital gains 162 4 -- 287 116 147
Net (losses) gains on securities available for sale (2) 76 -- 19 161 (88)
Other 138 193 (28) 590 595 (1)
-------- -------- -------- --------
Total noninterest income 1,809 1,621 12 5,350 4,870 10
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries 776 730 6 2,251 2,132 6
Incentive compensation 124 164 (24) 393 449 (12)
Employee benefits 208 167 25 624 543 15
Equipment 193 192 1 566 572 (1)
Net occupancy 205 188 9 576 564 2
Goodwill 106 108 (2) 314 317 (1)
Core deposit intangible 49 58 (16) 151 183 (17)
Net losses (gains) on dispositions of premises
and equipment 6 7 (14) (5) 55 --
Other 751 733 2 2,254 2,282 (1)
-------- -------- -------- --------
Total noninterest expense 2,418 2,347 3 7,124 7,097 --
-------- -------- -------- --------
INCOME BEFORE INCOME TAX EXPENSE 1,533 1,230 25 4,415 3,541 25
Income tax expense 571 488 17 1,638 1,397 17
-------- -------- -------- --------
NET INCOME $ 962 $ 742 30 % $ 2,777 $ 2,144 30 %
======== ======== ==== ======== ======== ===
NET INCOME APPLICABLE TO
COMMON STOCK $ 953 $ 733 30 % $ 2,751 $ 2,118 30 %
======== ======== ==== ======== ======== ===
EARNINGS PER COMMON SHARE $ .58 $ .45 29 % $ 1.67 $ 1.31 27 %
======== ======== ==== ======== ======== ===
DILUTED EARNINGS PER COMMON SHARE $ .57 $ .45 27 % $ 1.65 $ 1.29 28 %
======== ======== ==== ======== ======== ===
DIVIDENDS DECLARED PER COMMON SHARE $ .20 $ .185 8 % $ .585 $ .515 14 %
======== ======== ==== ======== ======== ===
Average common shares outstanding 1,648.6 1,617.3 2 % 1,649.0 1,614.4 2 %
======== ======== ==== ======== ======== ===
Diluted average common shares outstanding 1,667.1 1,640.7 2 % 1,667.9 1,637.3 2 %
======== ======== ==== ======== ======== ===
- ---------------------------------------------------------------------------------------------------------------------------
-6-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------------------------
% Change
Sept. 30, 1999 from
--------------------
SEPT. 30, Dec. 31, Sept. 30, Dec. 31, Sept. 30,
(in millions, except shares) 1999 1998 1998 1998 1998
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 12,011 $ 12,731 $ 10,985 (6)% 9 %
Federal funds sold and securities
purchased under resale agreements 1,556 1,517 1,950 3 (20)
Securities available for sale 36,906 31,997 32,210 15 15
Mortgages held for sale 9,850 19,770 15,469 (50) (36)
Loans held for sale 4,661 5,322 5,058 (12) (8)
Loans 114,709 107,994 107,692 6 7
Allowance for loan losses 3,167 3,134 3,170 1 --
-------- -------- --------
Net loans 111,542 104,860 104,522 6 7
-------- -------- --------
Mortgage servicing rights 4,341 3,080 2,725 41 59
Premises and equipment, net 3,124 3,130 3,279 -- (5)
Core deposit intangible 1,334 1,510 1,555 (12) (14)
Goodwill 7,620 7,664 7,758 (1) (2)
Interest receivable and other assets 14,115 10,894 10,352 30 36
-------- -------- --------
Total assets $207,060 $202,475 $195,863 2 % 6 %
======== ======== ======== === ===
LIABILITIES
Noninterest-bearing deposits $ 41,872 $ 46,732 $ 40,951 (10)% 2 %
Interest-bearing deposits 89,685 90,056 89,000 -- 1
-------- -------- --------
Total deposits 131,557 136,788 129,951 (4) 1
Short-term borrowings 19,248 15,897 17,570 21 10
Accrued expenses and other liabilities 8,377 8,537 8,616 (2) (3)
Long-term debt 24,911 19,709 18,486 26 35
Guaranteed preferred beneficial interests
in Company's subordinated debentures 785 785 682 -- 15
STOCKHOLDERS' EQUITY
Preferred stock 560 547 552 2 1
Unearned ESOP shares (100) (84) (90) 19 11
-------- -------- --------
Total preferred stock 460 463 462 (1) --
Common stock - $1-2/3 par value,
authorized 4,000,000,000 shares;
issued 1,666,095,265 shares, 1,661,392,590 shares
and 1,635,821,810 shares 2,777 2,769 2,726 -- 2
Additional paid-in capital 8,769 8,673 7,921 1 11
Retained earnings 10,625 9,045 9,552 17 11
Cumulative other comprehensive income 242 463 462 (48) (48)
Note receivable from ESOP (1) (3) (4) (67) (75)
Treasury stock - 16,331,628 shares,
17,334,787 shares and 15,309,106 shares (690) (651) (561) 6 23
-------- -------- --------
Total stockholders' equity 22,182 20,759 20,558 7 8
-------- -------- --------
Total liabilities and stockholders' equity $207,060 $202,475 $195,863 2 % 6 %
======== ======== ======== === ===
- ---------------------------------------------------------------------------------------------------------------------------
-7-
Wells Fargo & Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------------
Nine months ended Sept. 30,
--------------------------
(in millions) 1999 1998
- -------------------------------------------------------------------------------------------------------------------
BALANCE, BEGINNING OF PERIOD $20,759 $19,778
Net income 2,777 2,144
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments 3 (2)
Change in investment securities valuation allowance (224) --
Common stock issued 522 63
Common stock issued for acquisitions 67 300
Common stock repurchased (777) (944)
Preferred stock released to ESOP 60 26
Preferred stock dividends (27) (26)
Common stock dividends (964) (725)
Cash payments received on notes receivable from ESOP 2 8
Increase in Rabbi trust assets (classified as treasury stock) (16) (64)
------- -------
BALANCE, END OF PERIOD $22,182 $20,558
======= =======
- -------------------------------------------------------------------------------------------------------------------
LOANS
- -------------------------------------------------------------------------------------------------------------------
SEPT. 30, Dec. 31, Sept. 30,
(in millions) 1999 1998 1998
- -------------------------------------------------------------------------------------------------------------------
Commercial $ 37,222 $ 35,450 $ 35,012
Real estate 1-4 family first mortgage 12,375 11,496 12,333
Other real estate mortgage 17,653 16,668 16,240
Real estate construction 4,381 3,790 3,748
Consumer:
Real estate 1-4 family junior lien mortgage 12,171 11,128 11,057
Credit card 5,347 5,795 5,686
Other revolving credit and monthly payment 16,709 15,809 16,215
-------- -------- --------
Total consumer 34,227 32,732 32,958
Lease financing 7,292 6,380 5,994
Foreign 1,559 1,478 1,407
-------- -------- --------
Total loans (net of unearned discount) $114,709 $107,994 $107,692
======== ======== ========
- -------------------------------------------------------------------------------------------------------------------
-8-
Wells Fargo & Company and Subsidiaries
CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
- ---------------------------------------------------------------------------------------------------------------------------
Quarter ended Nine months ended
---------------------------------- ---------------------
SEPT. 30, June 30, Sept. 30, SEPT. 30, Sept. 30,
(in millions) 1999 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
BALANCE, BEGINNING OF PERIOD $3,165 $3,161 $3,098 $ 3,134 $ 3,062
Allowance related to business combinations, net 3 5 83 38 118
Provision for loan losses 240 260 307 770 921
Loan charge-offs:
Commercial (116) (111) (67) (308) (189)
Real estate 1-4 family first mortgage (3) (18) (6) (22) (18)
Other real estate mortgage (8) (4) (23) (20) (42)
Real estate construction -- (1) -- (1) (2)
Consumer:
Real estate 1-4 family junior lien mortgage (7) (6) (5) (22) (18)
Credit card (93) (96) (127) (299) (409)
Other revolving credit and monthly payment (122) (109) (158) (358) (493)
------ ------ ------ ------ ------
Total consumer (222) (211) (290) (679) (920)
Lease financing (9) (10) (11) (30) (35)
Foreign (18) (24) (25) (57) (47)
------ ------ ------ ------ ------
Total loan charge-offs (376) (379) (422) (1,117) (1,253)
------ ------ ------ ------ ------
Loan recoveries:
Commercial 48 23 18 84 60
Real estate 1-4 family first mortgage 3 2 4 6 9
Other real estate mortgage 4 12 27 33 68
Real estate construction -- 4 1 4 3
Consumer:
Real estate 1-4 family junior lien mortgage 3 4 1 10 5
Credit card 10 13 14 36 44
Other revolving credit and monthly payment 60 53 31 149 112
------ ------ ------ ------ ------
Total consumer 73 70 46 195 161
Lease financing 3 3 4 9 10
Foreign 4 4 4 11 11
------ ------ ------ ------ ------
Total loan recoveries 135 118 104 342 322
------ ------ ------ ------ ------
Total net loan charge-offs (241) (261) (318) (775) (931)
------ ------ ------ ------ ------
BALANCE, END OF PERIOD $3,167 $3,165 $3,170 $3,167 $3,170
====== ====== ====== ====== ======
Total net loan charge-offs as a percentage
of average loans (annualized) .85% .96% 1.18% .94% 1.18%
====== ====== ====== ====== ======
Allowance as a percentage of total loans 2.76% 2.83% 2.94% 2.76% 2.94%
====== ====== ====== ====== ======
- ---------------------------------------------------------------------------------------------------------------------------
-9-
Wells Fargo & Company and Subsidiaries
NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
- -------------------------------------------------------------------------------------------------------------------
SEPT. 30, Dec. 31, Sept. 30,
(in millions) 1999 1998 1998
- -------------------------------------------------------------------------------------------------------------------
Nonaccrual loans $697 $709 $721
Restructured loans 1 1 1
---- ---- ----
Nonaccrual and restructured loans 698 710 722
As a percentage of total loans .6% .7% .7%
Foreclosed assets 213 167 176
Real estate investments (1) 34 1 2
---- ---- ----
Total nonaccrual and restructured loans
and other assets $945 $878 $900
==== ==== ====
- -------------------------------------------------------------------------------------------------------------------
(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 loans. Real estate investments totaled $108 million, $128
million and $134 million at September 30, 1999, December 31, 1998 and
September 30, 1998, respectively.
-10-
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Nine months
ended Sept. 30, % ended Sept. 30, %
------------------- --------------------
(in millions) 1999 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
Service charges on deposit accounts $ 385 $ 356 8 % $1,096 $ 993 10 %
Trust and investment fees and commissions:
Asset management and custody fees 195 167 17 569 495 15
Mutual fund and annuity sales fees 99 76 30 288 227 27
All other 23 24 (4) 75 72 4
------ ------ ------ ------
Total trust and investment fees
and commissions 317 267 19 932 794 17
Credit card fee revenue 138 136 1 395 384 3
Other fees and commissions:
Cash network fees 73 60 22 201 167 20
Charges and fees on loans 78 73 7 241 215 12
All other 107 108 (1) 321 313 3
------ ------ ------ ------
Total other fees and commissions 258 241 7 763 695 10
Mortgage banking:
Origination and other closing fees 101 128 (21) 330 366 (10)
Servicing fees, net of amortization 176 (47) -- 231 (6) --
Net gains on sales of mortgage servicing rights -- -- -- -- 16 (100)
Net (losses) gains on sales of mortgages (16) 142 -- 228 306 (25)
All other 57 52 10 180 172 5
------ ------ ------ ------
Total mortgage banking 318 275 16 969 854 13
Insurance 95 73 30 299 278 8
Net venture capital gains 162 4 -- 287 116 147
Net (losses) gains on securities available for sale (2) 76 -- 19 161 (88)
Income from equity investments accounted
for by the:
Cost method 35 32 9 99 116 (15)
Equity method 18 12 50 59 43 37
Net gains on sales of loans 6 25 (76) 32 48 (33)
Net gains on dispositions of operations -- 18 (100) 102 89 15
All other 79 106 (25) 298 299 --
------ ------ ------ ------
Total $1,809 $1,621 12 % $5,350 $4,870 10 %
====== ====== ==== ====== ====== ====
- ---------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Nine months
ended Sept. 30, % ended Sept. 30, %
------------------- --------------------
(in millions) 1999 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
Salaries $ 776 $ 730 6 % $2,251 $2,132 6 %
Incentive compensation 124 164 (24) 393 449 (12)
Employee benefits 208 167 25 624 543 15
Equipment 193 192 1 566 572 (1)
Net occupancy 205 188 9 576 564 2
Goodwill 106 108 (2) 314 317 (1)
Core deposit intangible:
Nonqualifying (1) 44 52 (15) 135 162 (17)
Qualifying 5 6 (17) 16 21 (24)
Net losses (gains) on dispositions of premises
and equipment 6 7 (14) (5) 55 --
Operating losses 25 35 (29) 91 106 (14)
Outside professional services 83 74 12 243 213 14
Contract services 119 89 34 320 243 32
Telecommunications 66 66 -- 191 187 2
Outside data processing 69 66 5 207 174 19
Advertising and promotion 54 62 (13) 160 181 (12)
Postage 54 56 (4) 169 168 1
Travel and entertainment 58 53 9 173 153 13
Stationery and supplies 44 41 7 122 123 (1)
Insurance 41 29 41 127 111 14
Security 22 22 -- 64 63 2
All other 116 140 (17) 387 560 (31)
------ ------ ------ ------
Total $2,418 $2,347 3 % $7,124 $7,097 -- %
====== ====== === ====== ====== ===
- ---------------------------------------------------------------------------------------------------------------------------
(1) 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 September 30,
------------------------------------------------------------------
1999 1998
----------------------------- ------------------------------
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 $ 1,327 5.13% $ 17 $ 2,120 5.86% $ 31
Securities available for sale (3):
Securities of U.S. Treasury and federal agencies 5,915 5.47 85 4,494 6.03 68
Securities of U.S. states and political subdivisions 1,848 8.31 38 1,547 8.57 31
Mortgage-backed securities:
Federal agencies 20,840 7.11 374 15,286 7.09 265
Private collateralized mortgage obligations 3,003 6.89 53 3,078 6.70 51
-------- ------ -------- ------
Total mortgage-backed securities 23,843 7.08 427 18,364 7.03 316
Other securities 3,612 6.93 50 1,533 6.29 21
-------- ------ -------- ------
Total securities available for sale 35,218 6.85 600 25,938 6.90 436
Loans held for sale (3) 4,381 7.24 80 4,757 7.84 93
Mortgages held for sale (3) 10,711 7.33 198 13,142 7.01 230
Loans:
Commercial 36,011 8.88 806 33,762 8.92 758
Real estate 1-4 family first mortgage 12,236 8.58 263 12,558 8.47 266
Other real estate mortgage 17,243 8.73 379 16,230 9.53 390
Real estate construction 4,189 9.38 99 3,764 9.43 90
Consumer:
Real estate 1-4 family junior lien mortgage 11,817 9.01 267 10,837 9.58 261
Credit card 5,323 13.95 187 5,877 15.07 221
Other revolving credit and monthly payment 16,848 12.06 509 16,345 12.87 527
-------- ------ -------- ------
Total consumer 33,988 11.29 963 33,059 12.18 1,009
Lease financing 7,070 7.76 137 5,766 8.20 118
Foreign 1,525 20.88 80 1,414 21.03 74
-------- ------ -------- ------
Total loans (4) 112,262 9.67 2,727 106,553 10.11 2,705
Other 3,067 4.68 36 2,794 6.71 48
-------- ------ -------- ------
Total earning assets $166,966 8.73 3,658 $155,304 9.13 3,543
======== ------ ======== ------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 2,723 .92 6 $ 2,774 1.03 7
Market rate and other savings 56,339 2.23 317 52,331 2.68 354
Savings certificates 25,262 4.66 297 27,750 5.21 364
Other time deposits 3,276 4.86 40 3,955 5.50 55
Deposits in foreign offices 1,552 4.86 19 663 4.77 8
-------- ------ -------- ------
Total interest-bearing deposits 89,152 3.02 679 87,473 3.58 788
Short-term borrowings 17,649 5.09 226 13,819 5.59 195
Long-term debt 23,112 5.85 339 16,713 6.37 266
Guaranteed preferred beneficial interests in Company's
subordinated debentures 785 7.56 15 744 8.59 16
-------- ------ -------- ------
Total interest-bearing liabilities 130,698 3.83 1,259 118,749 4.23 1,265
Portion of noninterest-bearing funding sources 36,268 -- -- 36,555 -- --
-------- ------ -------- ------
Total funding sources $166,966 3.00 1,259 $155,304 3.25 1,265
======== ------ ======== ------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (5) 5.73% $2,399 5.88% $2,278
==== ====== ==== ======
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 11,196 $ 10,381
Goodwill 7,674 7,811
Other 17,136 13,138
-------- --------
Total noninterest-earning assets $ 36,006 $ 31,330
======== ========
NONINTEREST-BEARING FUNDING SOURCES
Deposits $ 42,435 $ 40,865
Other liabilities 8,337 6,803
Preferred stockholders' equity 460 462
Common stockholders' equity 21,042 19,755
Noninterest-bearing funding sources used to
fund earning assets (36,268) (36,555)
-------- --------
Net noninterest-bearing funding sources $ 36,006 $ 31,330
======== ========
TOTAL ASSETS $202,972 $186,634
======== ========
- ------------------------------------------------------------------------------------------------------
(1) The average prime rate of the Company was 8.10% and 8.50% for the quarters
ended September 30, 1999 and 1998, respectively. The average three-month
London Interbank Offered Rate (LIBOR) was 5.44% and 5.62% for the same
quarters, respectively.
(2) Interest rates and amounts include the effects of hedge and risk management
activities associated with the respective asset and liability categories.
(3) Yields are based on amortized cost balances.
(4) Nonaccrual loans and related income are included in their respective loan
categories.
(5) Includes taxable-equivalent adjustments that primarily relate to income on
certain loans and securities that is exempt from federal and applicable
state income taxes. The federal statutory tax rate was 35% for all periods
presented
-12-
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
Nine months ended September 30,
------------------------------------------------------------------
1999 1998
----------------------------- ------------------------------
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 $ 1,311 4.95% $ 49 $ 1,531 5.73% $ 66
Securities available for sale (3):
Securities of U.S. Treasury and federal agencies 5,608 5.43 233 5,254 5.97 233
Securities of U.S. states and political subdivisions 1,797 8.36 108 1,524 8.53 93
Mortgage-backed securities:
Federal agencies 19,923 6.81 1,014 16,153 7.14 846
Private collateralized mortgage obligations 3,156 6.82 162 2,641 6.78 134
-------- ------- -------- -------
Total mortgage-backed securities 23,079 6.81 1,176 18,794 7.09 980
Other securities 3,202 6.81 136 1,460 4.55 60
-------- ------- -------- -------
Total securities available for sale 33,686 6.65 1,653 27,032 6.84 1,366
Loans held for sale (3) 5,182 7.23 280 4,705 7.75 273
Mortgages held for sale (3) 12,774 6.97 671 11,624 6.98 609
Loans:
Commercial 35,512 8.66 2,302 32,813 9.04 2,219
Real estate 1-4 family first mortgage 12,134 8.44 767 13,227 8.29 823
Other real estate mortgage 16,985 8.82 1,121 16,241 9.53 1,158
Real estate construction 4,044 9.34 283 3,542 9.48 251
Consumer:
Real estate 1-4 family junior lien mortgage 11,336 9.07 770 10,600 9.86 782
Credit card 5,402 13.77 558 6,136 15.05 693
Other revolving credit and monthly payment 15,983 12.38 1,482 16,569 12.81 1,591
-------- ------- -------- -------
Total consumer 32,721 11.46 2,810 33,305 12.29 3,066
Lease financing 6,813 7.81 399 5,417 8.30 337
Foreign 1,505 20.99 237 1,285 20.88 201
-------- ------- -------- -------
Total loans (4) 109,714 9.64 7,919 105,830 10.16 8,055
Other 2,636 5.17 101 3,021 5.97 134
-------- ------- -------- -------
Total earning assets $165,303 8.65 10,673 $153,743 9.14 10,503
======== ------- ======== -------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 2,764 .89 18 $ 2,713 1.40 28
Market rate and other savings 55,996 2.28 956 51,842 2.65 1,026
Savings certificates 26,077 4.76 929 27,774 5.25 1,091
Other time deposits 3,528 4.97 131 4,085 5.52 170
Deposits in foreign offices 1,212 4.51 41 690 4.89 25
-------- ------- -------- -------
Total interest-bearing deposits 89,577 3.10 2,075 87,104 3.59 2,340
Short-term borrowings 17,567 4.83 635 13,570 5.49 557
Long-term debt 20,903 5.81 912 16,828 6.38 805
Guaranteed preferred beneficial interests in Company's
subordinated debentures 785 7.54 44 1,089 8.15 67
-------- ------- -------- -------
Total interest-bearing liabilities 128,832 3.80 3,666 118,591 4.25 3,769
Portion of noninterest-bearing funding sources 36,471 -- -- 35,152 -- --
-------- ------- -------- -------
Total funding sources $165,303 2.97 3,666 $153,743 3.28 3,769
======== ------- ======== -------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (5) 5.67% $ 7,007 5.86% $ 6,734
==== ======= ==== =======
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 11,184 $ 10,529
Goodwill 7,688 7,918
Other 16,519 12,997
-------- --------
Total noninterest-earning assets $ 35,391 $ 31,444
======== ========
NONINTEREST-BEARING FUNDING SOURCES
Deposits $ 42,644 $ 40,120
Other liabilities 7,866 6,552
Preferred stockholders' equity 460 461
Common stockholders' equity 20,892 19,463
Noninterest-bearing funding sources used to
fund earning assets (36,471) (35,152)
-------- --------
Net noninterest-bearing funding sources $ 35,391 $ 31,444
======== ========
TOTAL ASSETS $200,694 $185,187
======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of the Company was 7.87% and 8.50% for the nine
months ended September 30, 1999 and 1998, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 5.17% and 5.65%
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.
(4) Nonaccrual loans and related income are included in their respective loan
categories.
(5) Includes taxable-equivalent adjustments that primarily relate to income on
certain loans and securities that is exempt from federal and applicable
state income taxes. The federal statutory tax rate was 35% for all periods
presented.