UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1998 Commission file number 1-6214

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WELLS FARGO & COMPANY
(Exact name of Registrant as specified in its charter)

Delaware 13-2553920
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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

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 (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No
----- -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Shares Outstanding
April 30, 1998
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Common stock, $5 par value 85,351,707

FORM 10-Q
TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Page
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Consolidated Statement of Income. . . . . . . . . . . . . . . . 2
Consolidated Balance Sheet. . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Changes in Stockholders' Equity . . . 4
Consolidated Statement of Cash Flows. . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Summary Financial Data. . . . . . . . . . . . . . . . . . . . . 9
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Line of Business Results. . . . . . . . . . . . . . . . . . . . 11
Earnings Performance. . . . . . . . . . . . . . . . . . . . . . 17
Net Interest Income . . . . . . . . . . . . . . . . . . . . . 17
Noninterest Income. . . . . . . . . . . . . . . . . . . . . . 19
Noninterest Expense . . . . . . . . . . . . . . . . . . . . . 21
Earnings/Ratios Excluding Goodwill and Nonqualifying CDI . . 23
Balance Sheet Analysis. . . . . . . . . . . . . . . . . . . . . 24
Investment Securities . . . . . . . . . . . . . . . . . . . . 24
Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . . . 26
Commercial real estate . . . . . . . . . . . . . . . . . . . 26
Nonaccrual and Restructured Loans and Other Assets . . . . . . 27
Changes in total nonaccrual loans. . . . . . . . . . . . . . 27
Changes in foreclosed assets . . . . . . . . . . . . . . . . 30
Loans 90 days past due and still accruing. . . . . . . . . . 30
Allowance for Loan Losses. . . . . . . . . . . . . . . . . . . 31
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . 33
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Capital Adequacy/Ratios. . . . . . . . . . . . . . . . . . . . 34
Market Risks . . . . . . . . . . . . . . . . . . . . . . . . . 36
Derivative Financial Instruments . . . . . . . . . . . . . . . 37
Liquidity Management . . . . . . . . . . . . . . . . . . . . . 38

PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . 39
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 39

SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

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The information furnished in these interim statements reflects all adjustments
which are, in the opinion of management, necessary for a fair statement of the
results for such periods. Such adjustments are of a normal recurring nature,
unless otherwise disclosed in this Form 10-Q. The results of operations in the
interim statements are not necessarily indicative of the results that may be
expected for the full year. In addition, this Form 10-Q includes
forward-looking statements that involve inherent risks and uncertainties. Wells
Fargo & Company (the Company) cautions readers that a number of important
factors could cause actual results to differ materially from those in the
forward-looking statements. Those factors include fluctuations in interest
rates, inflation, government regulations, the completion of the First Interstate
Bancorp integration, customer disintermediation, technology changes and economic
conditions and competition in the geographic and business areas in which the
Company conducts its operations. The interim financial information should be
read in conjunction with the Company's 1997 Annual Report on Form 10-K.

PART I - FINANCIAL INFORMATION

WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME

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Quarter
ended March 31,
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(in millions) 1998 1997
- --------------------------------------------------------------------------------

INTEREST INCOME
Federal funds sold and securities
purchased under resale agreements $ 6 $ 5
Investment securities 145 208
Loans 1,512 1,549
Other 21 11
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Total interest income 1,684 1,773
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INTEREST EXPENSE
Deposits 410 422
Federal funds purchased and securities sold under
repurchase agreements 40 31
Commercial paper and other short-term borrowings 7 2
Senior and subordinated debt 75 81
Guaranteed preferred beneficial interests in
Company's subordinated debentures 25 25
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Total interest expense 557 561
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NET INTEREST INCOME 1,127 1,212
Provision for loan losses 180 105
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Net interest income after provision for loan losses 947 1,107
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NONINTEREST INCOME
Fees and commissions 255 214
Service charges on deposit accounts 208 221
Trust and investment services income 114 109
Investment securities gains 5 4
Other 144 92
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Total noninterest income 726 640
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NONINTEREST EXPENSE
Salaries 305 341
Incentive compensation 53 41
Employee benefits 91 95
Equipment 98 94
Net occupancy 101 102
Goodwill 81 83
Core deposit intangible 60 62
Operating losses 31 42
Other 272 257
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Total noninterest expense 1,092 1,117
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INCOME BEFORE INCOME TAX EXPENSE 581 630
Income tax expense 266 291
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NET INCOME $ 315 $ 339
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NET INCOME APPLICABLE TO COMMON STOCK $ 311 $ 329
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EARNINGS PER COMMON SHARE $ 3.62 $ 3.62
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DILUTED EARNINGS PER COMMON SHARE $ 3.58 $ 3.58
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DIVIDENDS DECLARED PER COMMON SHARE $ 1.30 $ 1.30
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Average common shares outstanding 85.8 90.8
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Diluted average common shares outstanding 86.6 91.9
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WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

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MARCH 31, December 31, March 31,
(in millions) 1998 1997 1997
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ASSETS
Cash and due from banks $ 8,303 $ 8,169 $ 8,530
Federal funds sold and securities
purchased under resale agreements 111 82 209
Investment securities at fair value 8,676 9,888 12,634

Loans 64,504 65,734 65,436
Allowance for loan losses 1,830 1,828 1,922
-------- -------- --------
Net loans 62,674 63,906 63,514
-------- -------- --------

Due from customers on acceptances 77 98 96
Accrued interest receivable 504 507 611
Premises and equipment, net 2,081 2,117 2,310
Core deposit intangible 1,649 1,709 1,901
Goodwill 6,943 7,031 7,312
Other assets 3,802 3,949 4,746
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Total assets $94,820 $97,456 $101,863
-------- -------- --------
-------- -------- --------
LIABILITIES
Noninterest-bearing deposits $24,421 $23,953 $ 25,337
Interest-bearing deposits 47,895 48,246 51,090
-------- -------- --------
Total deposits 72,316 72,199 76,427
Federal funds purchased and securities
sold under repurchase agreements 1,068 3,576 1,685
Commercial paper and other short-term borrowings 324 249 241
Acceptances outstanding 77 98 96
Accrued interest payable 235 175 242
Other liabilities 2,438 2,403 3,400
Senior debt 1,751 1,983 1,940
Subordinated debt 2,509 2,585 2,938
Guaranteed preferred beneficial interests in
Company's subordinated debentures 1,299 1,299 1,299

STOCKHOLDERS' EQUITY
Preferred stock 275 275 425
Common stock - $5 par value,
authorized 150,000,000 shares; issued and outstanding
85,284,480 shares, 86,152,779 shares and
89,977,610 shares 426 431 450
Additional paid-in capital 8,431 8,712 9,801
Retained earnings 3,615 3,416 2,959
Cumulative other comprehensive income (loss) 56 55 (40)
-------- -------- --------

Total stockholders' equity 12,803 12,889 13,595
-------- -------- --------

Total liabilities and stockholders' equity $94,820 $97,456 $101,863
-------- -------- --------
-------- -------- --------
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WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

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Quarter ended March 31,
----------------------------------------------------
1998 1997
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STOCK- COMPRE- Stock- Compre-
HOLDERS' HENSIVE holders' hensive
(in millions) EQUITY INCOME equity income
- ----------------------------------------------------------------------------------------------------------------------------

PREFERRED STOCK
Balance, beginning of quarter $ 275 $ 600
Preferred stock redeemed -- (175)
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Balance, end of quarter 275 425
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COMMON STOCK
Balance, beginning of quarter 431 457
Common stock issued under employee benefit and
dividend reinvestment plans 1 1
Common stock repurchased (6) (8)
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Balance, end of quarter 426 450
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ADDITIONAL PAID-IN CAPITAL
Balance, beginning of quarter 8,712 10,287
Common stock issued under employee benefit and
dividend reinvestment plans 25 23
Common stock repurchased (306) (509)
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Balance, end of quarter 8,431 9,801
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RETAINED EARNINGS
Balance, beginning of quarter 3,416 2,749
Net income 315 $315 339 $339
Preferred stock dividends (4) (10)
Common stock dividends (112) (119)
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Balance, end of quarter 3,615 2,959
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CUMULATIVE OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of quarter 55 19
Unrealized gains (losses) on investment securities arising during
the quarter, net of tax of $3 million and ($42) million 4 4 (61) (61)
Reclassification adjustment for investment securities gains included
in net income, net of tax of $2 million and $2 million (3) (3) (2) (2)
Foreign currency translation adjustments, net of tax of ($4) million -- -- 4 4
------- ---- ------- ----
Balance, end of quarter 56 (40)
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COMPREHENSIVE INCOME $316 $280
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---- ----
Total stockholders' equity $12,803 $13,595
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WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS

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Quarter ended March 31,
-----------------------
(in millions) 1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 315 $ 339
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 180 105
Depreciation and amortization 231 223
Net decrease in accrued interest receivable 3 54
Net increase in accrued interest payable 60 71
Net decrease (increase) in loans originated for sale 466 (143)
Other, net 161 525
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Net cash provided by operating activities 1,416 1,174
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CASH FLOWS FROM INVESTING ACTIVITIES:
Investment securities at fair value
Proceeds from sales 24 150
Proceeds from prepayments and maturities 1,356 1,100
Purchases (162) (478)
Net (increase) decrease in loans resulting from originations and collections (522) 1,833
Proceeds from sales (including participations) of loans 1,179 81
Purchases (including participations) of loans (53) (39)
Proceeds from sales of foreclosed assets 27 48
Net increase in federal funds sold and securities
purchased under resale agreements (29) (22)
Other, net 56 272
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Net cash provided by investing activities 1,876 2,945
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 117 (5,394)
Net decrease in short-term borrowings (2,433) (504)
Repayment of senior debt (228) (175)
Proceeds from issuance of subordinated debt 25 --
Repayment of subordinated debt (100) --
Proceeds from issuance of guaranteed preferred beneficial interests
in Company's subordinated debentures -- 149
Proceeds from issuance of common stock 26 24
Redemption of preferred stock -- (175)
Repurchase of common stock (312) (517)
Payment of cash dividends on preferred stock (4) (10)
Payment of cash dividends on common stock (112) (119)
Other, net (137) (604)
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Net cash used by financing activities (3,158) (7,325)
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NET CHANGE IN CASH AND CASH EQUIVALENTS (DUE FROM BANKS) 134 (3,206)
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Cash and cash equivalents at beginning of quarter 8,169 11,736
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CASH AND CASH EQUIVALENTS AT END OF QUARTER $ 8,303 $ 8,530
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Supplemental disclosures of cash flow information:
Cash paid during the quarter for:
Interest $ 497 $ 490
Income taxes $ 34 $ 73
Noncash investing activities:
Transfers from loans to foreclosed assets $ 20 $ 26

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WELLS FARGO & COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS

1. STATEMENT OF FINANCIAL ACCOUNTING STANDARD NO. 130

Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (FAS 130), Reporting of Comprehensive Income. This Statement
establishes standards for reporting and displaying comprehensive income and its
components in the financial statements. It requires that a company classify
items of other comprehensive income, as defined by accounting standards, by
their nature in the financial statements. Other comprehensive income, as
defined, is net of income taxes. Cumulative other comprehensive income is
displayed separately in the equity section of the balance sheet and the
consolidated statement of changes in stockholders' equity. Amounts in the
financial statements for earlier periods have been reclassified for comparative
purposes, as required by FAS 130.

2. MERGER WITH FIRST INTERSTATE BANCORP (MERGER)

On April 1, 1996, the Company completed its acquisition of First Interstate
Bancorp (First Interstate). The Merger was accounted for as a purchase
transaction.

The major components of management's plan for the combined company include the
realignment of First Interstate's businesses to reflect Wells Fargo's structure,
consolidation of retail branches and administrative facilities and reduction in
staffing levels. As a result of this plan, the adjustments to goodwill since
April 1, 1996 included accruals totaling approximately $324 million
($191 million after tax) related to the disposition of premises, including an
accrual of $127 million ($75 million after tax) associated with the dispositions
of traditional former First Interstate branches in California and out of state.
At March 31, 1998, the remaining accrual associated with the disposition of
traditional former First Interstate branches was $5 million. The California
dispositions included 175 branch closures during 1996, 47 branch closures during
1997 and one branch closure in the first quarter of 1998. The Company also sold
17 former First Interstate branches located in California, including deposits,
in 1997. The out-of-state dispositions included 88 branch closures that were
completed in 1997, 30 branch closures in the first quarter of 1998 and 38 branch
closures scheduled to be completed by June 30, 1998. The Company also sold 87
former First Interstate out-of-state branches, including deposits, in 1997. (See
Noninterest Income section for information on other branch dispositions.)
Additionally, the adjustments to goodwill included accruals of approximately
$481 million ($284 million after tax) related to severance of former First
Interstate employees throughout the Company who have been or, in the case of
scheduled branch closures, will be displaced by June 30, 1998. Severance
payments totaling $400 million were paid since the second quarter of 1996,
including $28 million in the first quarter of 1998.

During 1997, the Bank signed a definitive agreement to sell its Institutional
Custody businesses to The Bank of New York and its affiliate, BNY Western Trust
Company. Transfer of the accounts is occurring in several stages, the first of
which was during the third quarter of 1997. Substantially all of the businesses
were acquired as part of the acquisition of First Interstate;

therefore, the excess of the related proceeds over the attributable costs of the
net assets sold on that portion of the sale is being deducted from goodwill.
Net proceeds of approximately $2 million attributable to business originated by
the Company were recorded as a gain in the first quarter of 1998. Substantially
all of the remaining gain of about $7 million will be recorded in the second
quarter of 1998.

The $7,223 million excess purchase price over fair value of First Interstate's
net assets acquired (goodwill) is amortized using the straight-line method over
25 years.

[This page intentionally left blank.]

FINANCIAL REVIEW

SUMMARY FINANCIAL DATA

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% Change
Quarter Ended Mar. 31, 1998 from
-------------------------------------- -----------------------
MAR. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
(in millions) 1998 1997 1997 1997 1997
- ------------------------------------------------------------------------------------------------------------------------------

FOR THE QUARTER
Net income $ 315 $ 298 $ 339 6% (7)%
Net income applicable to common stock 311 294 329 6 (5)
Earnings per common share $ 3.62 $ 3.40 $ 3.62 6 --
Diluted earnings per common share 3.58 3.36 3.58 7 --

Dividends declared per common share 1.30 1.30 1.30 -- --

Average common shares outstanding 85.8 86.5 90.8 (1) (6)
Diluted average common shares outstanding 86.6 87.3 91.9 (1) (6)

Profitability ratios (annualized)
Net income to average total assets (ROA) 1.34% 1.23% 1.31% 9 2
Net income applicable to common stock to
average common stockholders' equity (ROE) 10.07 9.29 10.02 8 --

Efficiency ratio (1) 58.9% 59.9% 60.3% (2) (2)

Average loans $65,067 $64,545 $ 65,493 1 (1)
Average assets 95,258 96,170 105,430 (1) (10)
Average core deposits 69,858 70,198 77,622 -- (10)

Net interest margin 6.01% 5.94% 6.14% 1 (2)

NET INCOME AND RATIOS EXCLUDING
GOODWILL AND NONQUALIFYING CORE DEPOSIT
INTANGIBLE AMORTIZATION AND BALANCES
("CASH" OR "TANGIBLE") (2)
Net income applicable to common stock $ 423 $ 407 $ 443 4 (5)
Earnings per common share 4.92 4.71 4.88 4 1
Diluted earnings per common share 4.88 4.66 4.83 5 1
ROA 1.98% 1.85% 1.90% 7 4
ROE 37.46 36.15 36.67 4 2
Efficiency ratio 51.7 52.5 52.9 (2) (2)

AT QUARTER END
Investment securities $ 8,676 $ 9,888 $ 12,634 (12) (31)
Loans 64,504 65,734 65,436 (2) (1)
Allowance for loan losses 1,830 1,828 1,922 -- (5)
Goodwill 6,943 7,031 7,312 (1) (5)
Assets 94,820 97,456 101,863 (3) (7)
Core deposits 72,041 71,397 76,156 1 (5)
Common stockholders' equity 12,528 12,614 13,170 (1) (5)
Stockholders' equity 12,803 12,889 13,595 (1) (6)
Tier 1 capital (3) 6,141 6,119 6,407 -- (4)
Total capital (Tiers 1 and 2) (3) 9,161 9,242 9,891 (1) (7)

Capital ratios
Common stockholders' equity to assets 13.21% 12.94% 12.93% 2 2
Stockholders' equity to assets 13.50 13.22 13.35 2 1
Risk-based capital (3)
Tier 1 capital 7.76 7.61 7.80 2 (1)
Total capital 11.58 11.49 12.05 1 (4)
Leverage (3) 7.04 6.95 6.61 1 7

Book value per common share $146.90 $146.41 $ 146.37 -- --

Staff (active, full-time equivalent) 32,414 33,100 34,486 (2) (6)

COMMON STOCK PRICE
High $337.88 $339.44 $ 319.25 -- 6
Low 295.00 275.75 271.00 7 9
Quarter End 331.25 339.44 284.13 (2) 17

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(1) The efficiency ratio is defined as noninterest expense divided by the total
of 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 ratio, net of applicable taxes. The after-tax amounts for the
amortization and average balance of nonqualifying CDI were $31 million and
$944 million, respectively, for the quarter ended March 31, 1998. Goodwill
amortization and average balance (which are not tax effected) were
$81 million and $6,990 million, respectively, for the quarter ended
March 31, 1998.
(3) See the Capital Adequacy/Ratios section for additional information.

OVERVIEW

Wells Fargo & Company (Parent) is a bank holding company whose principal
subsidiary is Wells Fargo Bank, N.A. (Bank). In this Form 10-Q, Wells Fargo &
Company and its subsidiaries are referred to as the Company.

Net income for the first quarter of 1998 was $315 million, compared with
$298 million for the fourth quarter of 1997 and $339 million for the first
quarter of 1997. Earnings per share for the first quarter of 1998 were $3.62,
compared with $3.40 for the fourth quarter of 1997 and $3.62 for the first
quarter of 1997.

Return on average assets (ROA) was 1.34% and return on average common equity
(ROE) was 10.07% for the first quarter of 1998, compared with 1.23% and 9.29%,
respectively, for the fourth quarter of 1997 and 1.31% and 10.02%, respectively,
for the first quarter of 1997.

Earnings before the amortization of goodwill and nonqualifying CDI ("cash" or
"tangible" earnings) for the first quarter of 1998 were $4.92 per share,
compared with $4.71 for the fourth quarter of 1997 and $4.88 per share for the
first quarter of 1997. On the same basis, ROA was 1.98% and ROE was 37.46% in
the first quarter of 1998, compared with 1.85% and 36.15%, respectively, for the
fourth quarter of 1997 and 1.90% and 36.67%, respectively, for the first quarter
of 1997.

Net interest income on a taxable-equivalent basis was $1,130 million in the
first quarter of 1998, compared with $1,130 million in the fourth quarter of
1997 and $1,216 million in the first quarter of 1997. The decrease in net
interest income in the first quarter of 1998 compared with the same period of
1997 was primarily due to a decline in earning assets. The Company's net
interest margin was 6.01% for the first quarter of 1998, compared with 5.94% in
the fourth quarter of 1997 and 6.14% in the first quarter of 1997.

Noninterest income was $726 million in the first quarter of 1998, compared with
$708 million in the fourth quarter of 1997 and $640 million in the first quarter
of 1997. The increase from a year ago was primarily due to gains on sales of
loans, higher credit card fees and lower losses on dispositions of premises and
equipment.

Noninterest expense in the first quarter of 1998 was $1,092 million, compared
with $1,098 million in the fourth quarter of 1997 and $1,117 million in the
first quarter of 1997.

The provision for loan losses in the first quarter of 1998 was $180 million,
compared with $195 million for the fourth quarter of 1997 and $105 million for
the first quarter of 1997. During the first quarter of 1998, net charge-offs
totaled $178 million, or 1.11% of average loans (annualized). This compared
with $190 million, or 1.17%, during the fourth quarter of 1997 and $201 million,
or 1.23%, during the first quarter of 1997. The allowance for loan losses of
$1,830 million was 2.84% of total loans at March 31, 1998, compared with 2.78%
at December 31, 1997 and 2.94% at March 31, 1997.

Total nonaccrual and restructured loans were $512 million, or .8% of total
loans, at March 31, 1998, compared with $537 million, or .8%, at December 31,
1997 and $655 million, or 1.0%, at March 31, 1997. Foreclosed assets amounted
to $155 million at March 31, 1998, compared with $158 million at December 31,
1997 and $207 million at March 31, 1997.

Common stockholders' equity to total assets was 13.21% at March 31, 1998,
compared with 12.94% and 12.93% at December 31, 1997 and March 31, 1997,
respectively. The Company's total risk-based capital (RBC) ratio at
March 31, 1998 was 11.58% and its Tier 1 RBC ratio was 7.76%, exceeding minimum
guidelines of 8% and 4%, respectively, for bank holding companies and the "well
capitalized" guidelines for banks of 10% and 6%, respectively. At December 31,
1997, the Company's ratios were 11.49% and 7.61%, respectively; at March 31,
1997, these ratios were 12.05% and 7.80%, respectively. The Company's leverage
ratios were 7.04%, 6.95% and 6.61% at March 31, 1998, December 31, 1997 and
March 31, 1997, respectively, exceeding the minimum regulatory guideline of 3%
for bank holding companies and the "well capitalized" guideline for banks of 5%.

The Company has bought in the past, and will continue to buy, shares to offset
common stock issued or expected to be issued under the Company's employee
benefit and dividend reinvestment plans. In addition to these shares, the Board
of Directors authorized in April 1996 the repurchase of up to 9.6 million shares
of the Company's outstanding common stock under a repurchase program begun in
1994. In October 1997, the Board of Directors authorized the repurchase from
time to time of up to an additional 8.6 million shares of the Company's
outstanding stock under the same program. Under these programs, the Company has
repurchased 7.7 million shares (net of shares issued) in 1996, 5.3 million
shares (net of shares issued) in 1997 and .9 million shares (net of shares
issued) in the first quarter of 1998. The Company currently expects to continue
repurchasing shares from time to time in 1998 using cash earnings not
required to support balance sheet growth.

LINE OF BUSINESS RESULTS

The line of business results show the financial performance of the Company's
major business units. The table on pages 12 and 13 presents the line of business
results for the quarters ended March 31, 1998 and 1997.

Changes in management structure and/or the allocation process may result in
changes in allocations, transfers and assignments. In that case, results for
prior periods would be (and have been) restated to allow comparability from one
period to the next.

The following table provides the line of business results (estimated) for the
Company's six major business units.

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(income/expense in millions, Retail Business
average balances in billions) Distribution Banking Investment
Group Group Group
---------------------------------------------------------------------------------
QUARTER ENDED MARCH 31, 1998 1997 1998 1997 1998 1997

Net interest income (1) $ 230 $ 252 $ 194 $ 186 $ 183 $ 199
Provision for loan losses (2) -- -- 38 30 1 1
Noninterest income (3) 267 288 72 67 140 134
Noninterest expense (3) 453 476 99 103 168 163
----- ----- ----- ----- ----- -----
Income before income
tax expense (benefit) 44 64 129 120 154 169
Income tax expense (benefit) (4) 18 26 53 49 62 69
----- ----- ----- ----- ----- -----
Net income $ 26 $ 38 $ 76 $ 71 $ 92 $ 100
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----

Average loans $ -- $ -- $ 6.1 $ 5.2 $ 2.1 $ 1.9
Average assets 2.6 3.3 7.8 7.4 2.7 3.0
Average core deposits 18.1 19.5 11.1 12.2 32.4 35.3
Return on equity (5) 10% 15% 40% 40% 53% 58%
Risk-adjusted efficiency ratio (6) 101% 97% 60% 64% 63% 59%

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(1) Net interest income is the difference between actual interest earned on
assets (and interest paid on liabilities) owned by a group and a funding
charge (and credit) based on the Company's cost of funds. Groups are
charged a cost to fund any assets (e.g., loans) and are paid a funding
credit for any funds provided (e.g., deposits). The interest spread is the
difference between the interest rate earned on an asset or paid on a
liability and the Company's cost of funds rate.
(2) The provision allocated to the line groups in 1998 and 1997 is based on
management's current assessment of the normalized net charge-off ratio for
each line of business. In any particular year, the actual net charge-offs
can be higher or lower than the normalized provision allocated to the lines
of business. The difference between the normalized provision and the
Company provision is included in Other.
(3) The Retail Distribution Group's charges to the product groups are shown as
noninterest income to the retail distribution channels and noninterest
expense to the product groups. They amounted to $83 million and
$89 million for the quarters ended March 31, 1998 and 1997, respectively.
These charges are eliminated in the Other category in arriving at the
Consolidated Company totals for noninterest income and expense.

The following describes the major business units.

The Retail Distribution Group sells and services a complete line of retail
financial products for consumers and small businesses. In addition to the
24-hour Telephone Banking Centers and Wells Fargo's Online Financial Services
(the Company's personal computer banking services), the Group encompasses
Physical Distribution's network of traditional branches, in-store branches,
banking centers, business centers and ATMs. Retail Distribution also includes
the consumer checking business, which primarily uses the network as a source of
new customers.

As of March 31, 1998, the Company had 920 traditional branches, 546 in-store
branches, 376 banking centers and 33 business centers. Motor banking facilities
("motorbanks") were available at 45 of the traditional branches. There were
4,627 ATMs as of March 31, 1998.

Retail Distribution Group's net income for the first quarter 1998 decreased $12
million, or 32%, from first quarter 1997. Net interest income for the first
quarter 1998 declined largely due to lower core deposit balances related to
branch dispositions and lower spreads on core deposits, partially offset by
lower nonearning asset (cash) balances. The decline in noninterest income
reflected higher losses on the disposition of premises due to branch closures,
lower sales and service charges to the product groups and lower service charges
on deposit accounts. Noninterest expense improved due to branch closures and
merger-related cost savings.

- -----------------------------------------------------------------------------------------------------------------------------------
(income/expense in millions, Wholesale
average balances in billions) Real Estate Products Consumer Consolidated
Group Group Lending Other Company
---------------------------------------------------------------------------------------------
QUARTER ENDED MARCH 31, 1998 1997 1998 1997 1998 1997 1998 1997 1998 1997

Net interest income (1) $ 97 $ 112 $ 168 $ 200 $ 272 $ 274 $ (17) $ (11) $1,127 $1,212
Provision for loan losses (2) 12 10 19 19 106 114 4 (69) 180 105
Noninterest income (3) 70 18 93 84 124 98 (40) (49) 726 640
Noninterest expense (3) 31 19 121 111 117 120 103 125 1,092 1,117
----- ----- ----- ----- ----- ----- ----- ----- ------ ------
Income before income
tax expense (benefit) 124 101 121 154 173 138 (164) (116) 581 630
Income tax expense (benefit) (4) 50 41 49 63 70 57 (36) (14) 266 291
----- ----- ----- ----- ----- ----- ----- ----- ------ ------
Net income $ 74 $ 60 $ 72 $ 91 $ 103 $ 81 $(128) $(102) $ 315 $ 339
----- ----- ----- ----- ----- ----- ----- ----- ------ ------
----- ----- ----- ----- ----- ----- ----- ----- ------ ------

Average loans $10.7 $ 9.4 $17.2 $17.0 $22.8 $24.3 $ 6.2 $ 7.7 $ 65.1 $ 65.5
Average assets 12.0 10.1 20.8 22.2 23.8 25.6 25.6 33.8 95.3 105.4
Average core deposits .4 .4 7.3 9.3 .6 .4 -- .5 69.9 77.6
Return on equity (5) 25% 26 % 17% 20% 29% 21% --% --% 10% 10%
Risk-adjusted efficiency ratio (6) 56% 54 % 83% 75% 63% 75% --% --% --% --%

- ---------------------------------------------------------------------------------------------------------------------------------

(4) Businesses are taxed at the Company's marginal (statutory) tax rate,
adjusted for any nondeductible expenses. Any differences between the
marginal and effective tax rates are in Other.

(5) Equity is allocated to the lines of business based on an assessment of the
inherent risk associated with each business so that the returns on
allocated equity are on a risk-adjusted basis and comparable across
business lines.
(6) The risk-adjusted efficiency ratio is defined as noninterest expense plus
the cost of capital divided by revenues (net interest income and
noninterest income) less normalized loan losses.

The Business Banking Group provides a full range of credit products and
financial services to small businesses and their owners. These include lines of
credit, receivables and inventory financing, equipment loans and leases, real
estate financing, SBA financing, cash management, deposit and investment
accounts, payroll services, medical savings accounts and credit and debit card
processing. Business Banking customers are small businesses with annual sales
up to $10 million in which the owner of the business is also the principal
financial decision maker.

Business Banking's net income for the first quarter of 1998 increased $5
million, or 7%. The increase in net interest income was due to higher volume and
spreads on commercial loans and higher spreads on core deposits. This was
partially offset by lower core deposit balances. The provision was higher due to
the volume of loans acquired through direct market mailings. Noninterest income
increased due to higher fees on loans. Noninterest expense improved due to
lower costs in the direct market lending area.

The Investment Group is responsible for the sales and management of savings and
investment products, investment management and fiduciary and brokerage services
to institutions, retail customers and high net worth individuals. This includes
the Stagecoach family of mutual funds as well as personal trust, employee
benefit trust and agency assets. It also includes product management for market
rate accounts, savings deposits, Individual Retirement Accounts (IRAs) and time
deposits. Within this Group, Private Client Services operates as a fully
integrated financial services organization focusing on banking/credit, trust
services, investment management and full-service and discount brokerage.

The Group also includes Wells Capital Management, a registered investment
adviser and wholly owned subsidiary of the Bank. Wells Capital Management
provides investment management services to institutional clients as well as the
Bank's proprietary trust funds.

In 1997, the Bank signed a definitive agreement to sell its Institutional
Custody businesses to The Bank of New York and its affiliate, BNY Western Trust
Company. Transfer of accounts is occurring in several stages, the first of
which was in the third quarter of 1997, with substantial completion expected by
the end of the second quarter of 1998.

Also in 1997, the Bank announced an alliance with Morgan Stanley Dean Witter &
Co., whereby Dean Witter would provide technology, investment products, services
and sales and marketing support to Wells Fargo Securities and its full-service
brokerage clients. Substantially all of these services are now available to
Wells Fargo customers under private label.

In addition, the Bank entered into an alliance in December 1997 with BHC
Securities as its clearing broker which will allow Wells Fargo Securities'
on-line brokerage (Wells Trade) to offer a broad range of investment products to
customers through the Internet and telephone channels.

Assets under management at March 31, 1998 were $67.9 billion, compared with
$57.4 billion at March 31, 1997.

Investment Group's net income for the first quarter of 1998 declined by $8
million, or 8%. Net interest income decreased due to lower core deposit balances
and spreads, which were partially offset by interest recoveries on loans
previously charged off. The increase in noninterest income was largely due to
higher fee income in the mutual funds, trust and brokerage areas and gains on
the sale of the Institutional Custody businesses. This was primarily offset by
the loss of ongoing fee income related to the businesses sold during 1997. The
increase in noninterest expense reflects higher sales force growth and sales in
the brokerage business which was partially offset by cost savings realized after
the sale of the Corporate Trust and Institutional Custody businesses.

The Real Estate Group provides a complete line of services supporting the
commercial real estate market. Products and services include construction loans
for commercial and residential development, land acquisition and development
loans, secured and unsecured lines of credit, interim financing arrangements for
completed structures, rehabilitation loans, affordable housing loans and letters
of credit. Secondary market services are provided through the Real Estate
Capital Markets Group. Its business includes senior loan financing, mezzanine
financing, financing for leveraged transactions, purchasing distressed real
estate loans and high yield debt, origination of permanent loans for
securitization, loan syndications and commercial real estate loan servicing.

The Real Estate Group's net income for the first quarter of 1998 increased $14
million, or 23%. Net interest income for the quarter decreased primarily due to
lower interest recoveries on loans where interest had previously been applied to
principal and narrower spreads on

loans. This was partially offset by higher average loan and investment security
balances. Noninterest income was higher primarily due to gains from the
securitization of loans as well as higher Acquisition, Development or
Construction (ADC) investment income, gains from investment securities and
income from equity investments. Noninterest expense for the first quarter
increased due to lower foreclosed asset gains in 1998 and higher incentive
compensation expense.

The Wholesale Products Group serves businesses with annual sales in excess of
$5 million and maintains relationships with major corporations throughout the
United States. The Group is responsible for soliciting and maintaining credit
and noncredit relationships with businesses by offering a variety of products
and services, including traditional commercial loans and lines, letters of
credit, international trade facilities, foreign exchange services, cash
management and electronic products. The Group includes the majority ownership
interest in the Wells Fargo HSBC Trade Bank, which provides trade and Eximbank
(a public corporation offering export finance support programs for American-made
products) financing, letters of credit and collection services.

Wholesale Products Group's net income in the first quarter of 1998 decreased $19
million, or 21%. Net interest income declined due to lower core deposit
balances and lower recoveries on loans where interest had previously been
applied to principal. A significant portion of the increase in noninterest
income was due to income from foreign exchange and trust and investment
services. Noninterest expense increased primarily due to expense recoveries
in 1997.

Consumer Lending offers a full array of consumer loan products, including credit
cards, transportation (auto, recreational vehicle, marine) financing, home
equity lines and loans, lines of credit and installment loans. The loan
portfolio for the first quarter averaged $22.8 billion, consisting of $4.8
billion in credit cards, $10.9 billion in equity/unsecured loans and $7.1
billion in transportation financing. This compares with $5.3 billion in credit
cards, $11.9 billion in equity/unsecured loans and $7.1 billion in
transportation financing in first quarter 1997.

In April 1998, Wells Fargo entered into a letter of intent to sell its
mortgage servicing business to GMAC Mortgage Corporation. (See page 33 for
additional information.)

Consumer Lending's net income for the first quarter of 1998 increased $22
million, or 27%. Net interest income decreased due to lower credit card and
equity/unsecured loan balances and higher interest losses related to an increase
in loans charged off in the consumer portfolio which were partially offset by
higher spreads on credit cards and higher auto lease volume. The increase in
noninterest income was due largely to higher fee income on credit cards.

The Other category includes the Company's 1-4 family first mortgage portfolio,
the investment securities portfolio, goodwill and the nonqualifying core deposit
intangible, the difference between the normalized provision for the line groups
and the Company provision for loan losses, the net impact of transfer pricing
loan and deposit balances, the cost of external debt, the elimination of
intergroup noninterest income and expense, and any residual effects of
unallocated systems and other support groups. It also includes the impact of
asset/liability strategies the Company has put in place to manage interest rate
sensitivity.

The net loss for the Other category for the quarter ended March 31, 1998
increased by $26 million from 1997. Net interest income in the first quarter of
1998 reflects the impact of lower investment securities and lower first mortgage
balances, which was partially offset by lower funding costs. Noninterest
expense improved due to merger-related cost savings in the systems and other
support groups.

In 1997, the Financial Accounting Standards Board (FASB) issued FAS 131,
Disclosures about Segments of an Enterprise and Related Information. The
Statement requires that a public business enterprise report financial and
descriptive information about its reportable operating segments on the basis
that is used internally for evaluating segment performance and deciding how to
allocate resources to segments. While that is the basis of the above line of
business presentation, this Statement requires it to be part of the annual
audited financial statements effective year-end 1998.

EARNINGS PERFORMANCE

NET INTEREST INCOME

Net interest income on a taxable-equivalent basis was $1,130 million in the
first quarter of 1998, compared with $1,216 million in the first quarter of
1997. The Company's net interest margin was 6.01% in the first quarter of 1998,
compared with 6.14% in the first quarter of 1997. The Company expects the net
interest margin to remain in the area of 6.0% for the remainder of 1998.

Interest income included hedging income of $18 million in the first quarter of
1998, compared with $25 million in the first quarter of 1997. Interest expense
included hedging expense of $3 million in the first quarter of 1998, compared
with $1 million in the same quarter of 1997.

Individual components of net interest income and the net interest margin are
presented in the rate/yield table on page 18.

Loans averaged $65.1 billion in the first quarter of 1998, compared with
$65.5 billion in the first quarter of 1997. The Company anticipates overall
loan growth for the remainder of 1998, particularly in the commercial portfolio.
This growth is expected to be partially offset by declines due to decreased
credit card marketing efforts and continuing run-off in the residential mortgage
and direct auto loan portfolios, where the Company has withdrawn from the
business of being an active originator.

Investment securities averaged $9.1 billion during the first quarter of 1998, a
31% decrease from $13.1 billion in the first quarter of 1997. The decrease was
predominantly due to maturities.

Average core deposits were $69.9 billion and $77.6 billion and funded 73% and
74% of the Company's average total assets in the first quarter of 1998 and 1997,
respectively. The decrease in average core deposits from the first quarter of
1997 was largely due to net run-off. In addition, a significant portion of the
decrease was due to sales of branches in 1997, including $1.6 billion of core
deposits.

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1) (2)
- -----------------------------------------------------------------------------------------------------------------------------
Quarter ended March 31,
----------------------------------------------------------------------
1998 1997
-------------------------------- ---------------------------------
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 $ 428 5.69% $ 6 $ 374 5.43% $ 5
Investment securities at fair value (3):
U.S. Treasury securities 2,466 6.08 37 2,916 6.04 43
Securities of U.S. government agencies
and corporations 3,991 6.61 65 6,703 6.41 107
Private collateralized mortgage obligations 2,180 6.71 37 3,134 6.57 52
Other securities 487 7.36 8 368 6.35 6
-------- ------ -------- ------
Total investment securities at fair value 9,124 6.53 147 13,121 6.36 208
Loans:
Commercial 20,019 9.13 451 18,406 8.98 409
Real estate 1-4 family first mortgage 8,668 7.50 162 10,236 7.41 189
Other real estate mortgage 12,138 9.19 275 11,550 10.89 310
Real estate construction 2,339 9.66 56 2,299 9.75 55
Consumer:
Real estate 1-4 family junior lien mortgage 5,720 9.53 135 6,170 9.30 142
Credit card 4,835 14.98 181 5,330 14.07 188
Other revolving credit and monthly payment 7,078 9.15 160 8,271 9.27 189
-------- ------ -------- ------
Total consumer 17,633 10.87 476 19,771 10.57 519
Lease financing 4,165 8.73 91 3,079 8.84 68
Foreign 105 8.33 2 152 7.34 3
-------- ------ -------- ------
Total loans 65,067 9.39 1,513 65,493 9.57 1,553
Other 1,148 7.46 21 706 6.25 11
-------- ------ -------- ------
Total earning assets $75,767 8.99 1,687 $79,694 8.99 1,777
-------- ------ -------- ------
-------- --------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 1,725 1.47 6 $ 1,913 1.14 5
Market rate and other savings 30,476 2.68 202 34,103 2.55 214
Savings certificates 15,182 5.16 193 15,518 5.05 193
Other time deposits 281 4.90 3 180 3.94 2
Deposits in foreign offices 379 5.22 5 559 5.13 7
-------- ------ -------- ------
Total interest-bearing deposits 48,043 3.46 409 52,273 3.27 421
Federal funds purchased and securities sold
under repurchase agreements 2,984 5.45 40 2,425 5.18 31
Commercial paper and other short-term borrowings 460 5.97 7 230 5.07 2
Senior debt 1,912 6.31 30 2,001 6.19 31
Subordinated debt 2,578 7.10 46 2,939 6.92 51
Guaranteed preferred beneficial interests in
Company's subordinated debentures 1,299 7.80 25 1,251 7.85 25
-------- ------ -------- ------
Total interest-bearing liabilities 57,276 3.94 557 61,119 3.72 561
Portion of noninterest-bearing funding sources 18,491 -- -- 18,575 -- --
-------- ------ -------- ------
Total funding sources $75,767 2.98 557 $ 79,694 2.85 561
-------- ------ -------- ------
-------- ------ -------- ------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (4) 6.01% $1,130 6.14% $1,216
---- ------ ---- ------
---- ------ ---- ------
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 6,808 $ 9,956
Goodwill 6,990 7,306
Other 5,693 8,474
-------- --------
Total noninterest-earning assets $19,491 $ 25,736
-------- --------
-------- --------

NONINTEREST-BEARING FUNDING SOURCES

Deposits $22,475 $ 26,088
Other liabilities 2,724 4,370
Preferred stockholders' equity 275 548
Common stockholders' equity 12,508 13,305
Noninterest-bearing funding sources used to
fund earning assets (18,491) (18,575)
-------- --------
Net noninterest-bearing funding sources $19,491 $ 25,736
-------- --------
-------- --------

TOTAL ASSETS $95,258 $105,430
-------- --------
-------- --------
- ------------------------------------------------------------------------------------------------------------------------------

(1) The average prime rate of Wells Fargo Bank was 8.50%, and 8.27% for the
quarters ended March 31, 1998 and 1997, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 5.66%, and 5.57%
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. The average amortized cost
balances for investment securities at fair value totaled $9,022 million
and $13,116 million for the quarters ended March 31, 1998 and 1997,
respectively.
(4) 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 both quarters presented.

NONINTEREST INCOME

- ----------------------------------------------------------------------------------------------------
Quarter
ended March 31,
-------------------- %
(in millions) 1998 1997 Change
- ----------------------------------------------------------------------------------------------------

Fees and commissions:
Credit card membership and other credit card fees $ 66 $ 45 47 %
ATM network fees 44 39 13
Charges and fees on loans 41 31 32
Debit and credit card merchant fees 21 22 (5)
Mutual fund and annuity sales fees 21 16 31
All other (1) 62 61 2
---- ----
Total fees and commissions 255 214 19
Service charges on deposit accounts 208 221 (6)
Trust and investment services income:
Asset management and custody fees 63 61 3
Mutual fund management fees 45 40 13
All other 6 8 (25)
---- ----
Total trust and investment services income 114 109 5
Investment securities gains 5 4 25
Income from equity investments accounted for by the:
Cost method 50 51 (2)
Equity method 15 16 (6)
Check printing charges 18 17 6
Gains on sales of loans 36 6 500
Gains (losses) from dispositions of operations (3) 7 --
Losses on dispositions of premises and equipment (9) (30) (70)
All other 37 25 48
---- ----

Total $726 $640 13 %
---- ---- ---
---- ---- ---
- ----------------------------------------------------------------------------------------------------

(1) Includes mortgage loan servicing fees totaling $24 million for purchased
mortgage servicing rights and the related amortization expense of $18
million for both quarters presented. (See page 33 for additional
information.)

Credit card membership and other credit card fees increased $21 million, or 47%,
from the first quarter of 1997 reflecting an industry trend of increased fees.

The increase in trust and investment services income for the first quarter
ended March 31, 1998 reflected the growth in assets under management from
$57.4 billion at March 31, 1997 to $67.9 billion at March 31, 1998. The
majority of this increase was offset by a reduction in income due to the sale
of the Corporate Trust business and the Institutional Custody businesses to
The Bank of New York and its affiliate, BNY Western Trust Company. Trust and
investment services income for the first quarter of 1998 generated by the
Corporate Trust and Institutional Custody businesses was approximately $.5
million, compared with $11.1 million for the first quarter of 1997. In the
fourth quarter of 1997, the Overland Express Funds totaling $5.6 billion were
merged into the Stagecoach family of mutual funds. The assets and fees
generated are not expected to change significantly as a result of the merging
of the two families of funds. The Company managed 37 mutual funds consisting
of $24.5 billion of assets at March 31, 1998, compared with 42 mutual funds
consisting of $19.6 billion of assets (including 14 Overland Express Funds
consisting of $5.2 billion of assets) at March 31, 1997. In addition to
managing Stagecoach Funds, the Company also managed or maintained personal
trust, employee benefit trust and agency assets of approximately $127 billion
and $191 billion at March 31, 1998 and 1997, respectively. The

decrease in assets managed and maintained was due to the sale of the
Institutional Custody businesses which was substantially completed in the last
half of 1997.

The increase in gains on sales of loans is primarily due to gains from the
securitization of commercial mortgage loans. The Company expects to complete at
least two such securitizations of loans during the remainder of 1998.

At December 31, 1997, the Company had a liability of $48 million related to the
disposition of premises and, to a lesser extent, severance and miscellaneous
expenses associated with branches not acquired as a result of the acquisition of
First Interstate Bancorp (First Interstate) or with First Interstate branches
that were identified in the fourth quarter of 1997 for closure in 1998. Of this
amount, $21 million represented the balance of the fourth-quarter 1996 accrual
related to 32 traditional branches in California and $27 million represented the
fourth-quarter 1997 accrual for the disposition of 33 traditional branches
located mostly outside of California. Of the total 65 branches, three branches
were closed in the first quarter of 1998. The remaining balance of $46 million
at March 31, 1998 is for the expected closure of 62 branches by year-end 1998.
(See Note 2 to Financial Statements for other, former First Interstate branch
dispositions.)

At March 31, 1998, the Company had 920 traditional branches, 546 in-store
branches, 376 banking centers and 33 business centers. Motor banking facilities
("motorbanks") were available at 45 of the traditional branches.

NONINTEREST EXPENSE

- --------------------------------------------------------------------------------
Quarter
ended March 31,
------------------- %
(in millions) 1998 1997 Change
- --------------------------------------------------------------------------------

Salaries $ 305 $ 341 (11)%
Incentive compensation 53 41 29
Employee benefits 91 95 (4)
Equipment 98 94 4
Net occupancy 101 102 (1)
Goodwill 81 83 (2)
Core deposit intangible:
Nonqualifying (1) 52 54 (4)
Qualifying 8 8 --
Operating losses 31 42 (26)
Contract services 65 56 16
Telecommunications 31 38 (18)
Security 22 22 --
Postage 19 23 (17)
Outside professional services 20 15 33
Advertising and promotion 21 13 62
Stationery and supplies 14 21 (33)
Travel and entertainment 16 14 14
Check printing 12 15 (20)
Outside data processing 13 13 --
Foreclosed assets 5 (9) --
All other 34 36 (6)
------ ------

Total $1,092 $1,117 (2)%
------ ------ ---
------ ------ ---
- --------------------------------------------------------------------------------

(1) Amortization of core deposit intangible acquired after February 1992
that is subtracted from stockholders' equity in computing regulatory
capital for bank holding companies.

Salaries expense decreased $36 million in the first quarter of 1998 due to
reduced staff levels. The Company's active full-time equivalent (FTE) staff,
including hourly employees, was 32,414 at March 31, 1998, compared with 34,486
at March 31, 1997.

Goodwill and CDI amortization resulting from the acquisition of First Interstate
on April 1, 1996 were $72 million and $52 million, respectively, for the quarter
ended March 31, 1998, compared with $74 million and $54 million, respectively,
for the quarter ended March 31, 1997. The core deposit intangible is amortized
on an accelerated basis based on an estimated useful life of 15 years. The
impact on noninterest expense from the amortization of the nonqualifying core
deposit intangible in 1998, 1999 and 2000 is expected to be $199 million,
$178 million and $162 million, respectively. The related impact on income tax
expense is expected to be a benefit of $81 million, $72 million and $66 million
in 1998, 1999 and 2000, respectively.

The Company has determined that a significant number of its computer software
applications will need to be reprogrammed or, to a far lesser extent, replaced
in order to maintain their functionality as the year 2000 approaches. A
comprehensive plan has been developed, with system conversions and testing to be
substantially completed by December 31, 1998. Additionally, the Company
continues to communicate with significant customers and vendors

to determine the extent of risk created by those third parties' failure to
remediate their own Year 2000 issue. However, it is not possible, at present,
to determine the financial effect if significant customer and vendor remediation
efforts are not resolved in a timely manner.

Cumulative charges to noninterest expense for incremental costs associated with
the Year 2000 issue were approximately $30 million, including approximately $20
million in the first quarter of 1998. The Company currently estimates that it
will incur (and expense) additional incremental, out-of-pocket costs in the area
of $90 million. Other costs associated with the redeployment of internal systems
technology resources to the Year 2000 issue are expected to be significantly
less than the incremental costs.

In February 1998, the FASB issued FAS 132, Employers' Disclosures about Pensions
and Other Postretirement Benefits, which will be effective for the year-end 1998
financial statements. FAS 132 only addresses disclosure issues; it does not
address measurement and recognition of pensions and other postretirement
benefits. FAS 132 requires the reconciliation of changes in benefit obligation
and plan assets for both pensions and other postretirement benefits, showing the
effects of the major components separately for each reconciliation. FAS 132
will be adopted at year-end 1998 and is not expected to materially change the
Company's current pension and other postretirement disclosures.

EARNINGS/RATIOS EXCLUDING GOODWILL AND NONQUALIFYING CDI

The following table reconciles reported earnings to net income excluding
goodwill and nonqualifying core deposit intangible ("cash" or "tangible") for
the quarter ended March 31, 1998:

- ----------------------------------------------------------------------------------------------------
Quarter ended
(in millions) March 31, 1998
- ----------------------------------------------------------------------------------------------------
Amortization
-----------------------
Nonqualifying
Reported core deposit "Cash"
earnings Goodwill intangible earnings
- ----------------------------------------------------------------------------------------------------

Income before income tax expense $ 581 $ 81 $ 52 $ 714
Income tax expense 266 -- 21 287
----- ---- ---- -----
Net income 315 81 31 427
Preferred stock dividends 4 -- -- 4
----- ---- ---- -----
Net income applicable to common stock $ 311 $ 81 $ 31 $ 423
----- ---- ---- -----
----- ---- ---- -----
Earnings per common share $3.62 $.94 $.36 $4.92
----- ---- ---- -----
----- ---- ---- -----
Diluted earnings per common share $3.58 $.94 $.36 $4.88
----- ---- ---- -----
----- ---- ---- -----
- ----------------------------------------------------------------------------------------------------

The ROA, ROE and efficiency ratios excluding goodwill and nonqualifying core
deposit intangible amortization and balances for the quarter ended March 31,
1998 were calculated as follows:

- ----------------------------------------------------------------------------------------------------------
Quarter ended
(in millions) March 31, 1998
- ----------------------------------------------------------------------------------------------------------

ROA: A*/ (C-E) = 1.98%
ROE: B*/ (D-E) = 37.46%
Efficiency: (F-G) / H = 51.72%

Net income $ 427 (A)
Net income applicable to common stock 423 (B)
Average total assets 95,258 (C)
Average common stockholders' equity 12,508 (D)
Average goodwill ($6,990) and after-tax nonqualifying core deposit intangible ($944) 7,934 (E)
Noninterest expense 1,092 (F)
Amortization expense for goodwill and nonqualifying core deposit intangible 133 (G)
Net interest income plus noninterest income 1,853 (H)
- ----------------------------------------------------------------------------------------------------------

* Annualized

These calculations were specifically formulated by the Company and may not be
comparable to similarly titled measures reported by other companies. Also,
"cash" or "tangible" earnings are not entirely available for use by management.
See the Consolidated Statement of Cash Flows on page 5 for other information
regarding funds available for use by management.

BALANCE SHEET ANALYSIS

INVESTMENT SECURITIES

The following table provides the cost and fair value for the major components of
available-for-sale securities carried at fair value:

- --------------------------------------------------------------------------------------------------------------
MARCH 31, December 31, March 31,
1998 1997 1997
------------------ ------------------ -------------------
ESTIMATED Estimated Estimated
FAIR fair fair
(in millions) COST VALUE Cost value Cost value
- --------------------------------------------------------------------------------------------------------------

U.S. Treasury securities $2,243 $2,258 $2,535 $2,549 $ 2,847 $ 2,830
Securities of U.S. government
agencies and corporations (1) 3,731 3,766 4,390 4,425 6,423 6,388
Private collateralized mortgage
obligations (2) 2,166 2,175 2,390 2,396 3,102 3,065
Other 399 407 441 453 310 309
------- ------ ------- ------- ------- -------
Total debt securities 8,539 8,606 9,756 9,823 12,682 12,592
Marketable equity securities 43 70 40 65 18 42
------- ------ ------- ------- ------- -------

Total $8,582 $8,676 $9,796 $9,888 $12,700 $12,634
------- ------ ------- ------- ------- -------
------- ------ ------- ------- ------- -------
- --------------------------------------------------------------------------------------------------------------

(1) All securities of U.S. government agencies and corporations are
mortgage-backed securities.
(2) Substantially all private collateralized mortgage obligations (CMOs) are
AAA rated bonds collateralized by 1-4 family residential first mortgages.

The available-for-sale portfolio includes both debt and marketable equity
securities. At March 31, 1998, the available-for-sale securities portfolio had
an unrealized net gain of $94 million, or less than 2% of the cost of the
portfolio, comprised of unrealized gross gains of $107 million and unrealized
gross losses of $13 million. At December 31, 1997, the available-for-sale
securities portfolio had an unrealized net gain of $92 million, comprised of
unrealized gross gains of $112 million and unrealized gross losses of
$20 million. At March 31, 1997, the available-for-sale securities portfolio had
an unrealized net loss of $66 million, comprised of unrealized gross losses of
$120 million and unrealized gross gains of $54 million. The unrealized net gain
or loss on available-for-sale securities is included as a separate component of
cumulative other comprehensive income in stockholders' equity. At March 31,
1998, the amount included in cumulative other comprehensive income on a net of
tax basis was an unrealized net gain of $56 million, compared with an unrealized
net gain of $55 million at December 31, 1997 and an unrealized net loss of $40
million at March 31, 1997.

The major portion of the unrealized net gain in the available-for-sale portfolio
at March 31, 1998 was due to investments in mortgage-backed securities. This
unrealized net gain reflected current interest rates that were lower than those
at the time the investments were purchased. The Company may decide to sell
certain of the available-for-sale securities to manage the level of earning
assets (for example, to offset loan growth that may exceed expected maturities
and prepayments of securities).

Realized gross gains resulting from the sale of available-for-sale securities
were $5 million and $4 million in the first three months of 1998 and 1997,
respectively. Realized gross losses in both periods were zero.

The following table provides the expected remaining maturities and yields
(taxable-equivalent basis) of debt securities within the investment portfolio.

- ------------------------------------------------------------------------------------------------------
March 31, 1998
----------------------------------------------------------------------
Expected remaining principal maturity
----------------------------------------------------------------------
Weighted
average
expected After one year
Weighted remaining Within one year through five years
Total average maturity --------------- ------------------
(in millions) amount yield (in yrs.-mos.) Amount Yield Amount Yield
- --------------------------------------------------------------------------------------------------------

U.S. Treasury securities $2,243 6.07% 1-2 $1,063 5.80% $1,179 6.32%
Securities of U.S. government
agencies and corporations 3,731 6.69 2-3 1,631 6.93 1,703 6.50
Private collateralized mortgage
obligations 2,166 6.70 1-6 1,063 6.90 1,036 6.34
Other 399 8.01 4-2 52 7.04 212 7.61
------ ------ ------

TOTAL COST OF DEBT SECURITIES(1) $8,539 6.59% 1-10 $3,809 6.61% $4,130 6.47%
------ ---- ---- ------ ---- ------ ----
------ ---- ---- ------ ---- ------ ----
ESTIMATED FAIR VALUE $8,606 $3,826 $4,169
------ ------ ------
------ ------ ------
- ------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------
March 31, 1998
--------------------------------------
Expected remaining principal maturity
--------------------------------------

After five years
through ten years After ten years
----------------- ---------------
(in millions) Amount Yield Amount Yield
- ----------------------------------------------------------------------

U.S. Treasury securities $ 1 6.70% $-- --%
Securities of U.S. government
agencies and corporations 330 6.81 67 5.24
Private collateralized mortgage
obligations 64 8.14 3 29.96
Other 117 8.91 18 9.67
---- ---

TOTAL COST OF DEBT SECURITIES(1) $512 7.46% $88 6.99%
---- ---- --- ----
---- ---- --- ----
ESTIMATED FAIR VALUE $519 $92
---- ---
---- ---
- ----------------------------------------------------------------------

(1) The weighted average yield is computed using the amortized cost of
available-for-sale securities carried at fair value.

The weighted average expected remaining maturity of the debt securities
portfolio was 1 year and 10 months at March 31, 1998, compared with 1 year and
11 months at December 31, 1997 and 2 years and 3 months at March 31, 1997. The
short-term debt securities portfolio serves to maintain asset liquidity and to
fund loan growth.

At March 31, 1998, mortgage-backed securities included in securities of U.S.
government agencies and corporations primarily consisted of pass-through
securities and collateralized mortgage obligations (CMOs) and substantially all
were issued or backed by federal agencies. These securities, along with the
private CMOs, represented $5,941 million, or 68%, of the Company's investment
securities portfolio at March 31, 1998. The CMO securities held by the Company
(including the private issues) are primarily shorter-maturity class bonds that
were structured to have more predictable cash flows by being less sensitive to
prepayments during periods of changing interest rates. As an indication of
interest rate risk, the Company has estimated the impact of a 200 basis point
increase in interest rates on the value of the mortgage-backed securities and
the corresponding expected remaining maturities. Based on this rate scenario,
mortgage-backed securities would decrease in fair value from $5,941 million to
$5,751 million and the expected remaining maturity of these securities would
increase from 1 year and 11 months to 2 years and 4 months.

LOAN PORTFOLIO

- ------------------------------------------------------------------------------------------------------------
% Change
Mar. 31, 1998 from
--------------------
MAR. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
(in millions) 1998 1997 1997 1997 1997
- ------------------------------------------------------------------------------------------------------------

Commercial (1)(2) $20,424 $20,144 $19,025 1% 7%
Real estate 1-4 family first mortgage 8,349 8,869 10,032 (6) (17)
Other real estate mortgage (3) 11,722 12,186 11,497 (4) 2
Real estate construction 2,383 2,320 2,243 3 6
Consumer:
Real estate 1-4 family junior lien mortgage 5,588 5,865 6,112 (5) (9)
Credit card 4,675 5,039 5,232 (7) (11)
Other revolving credit and monthly payment 6,982 7,185 7,984 (3) (13)
------- ------- -------
Total consumer 17,245 18,089 19,328 (5) (11)
Lease financing 4,274 4,047 3,152 6 36
Foreign 107 79 159 35 (33)
------- ------- -------
Total loans (net of unearned income,
including net deferred loan fees,
of $833, $832 and $598) $64,504 $65,734 $65,436 (2)% (1)%
------- ------- ------- --- --
------- ------- ------- --- --
- ------------------------------------------------------------------------------------------------------------

(1) Includes loans (primarily unsecured) to real estate developers and real
estate investment trusts (REITs) of $1,805 million, $1,772 million and
$968 million at March 31, 1998, December 31, 1997 and March 31, 1997,
respectively.
(2) Includes agricultural loans (loans to finance agricultural production and
other loans to farmers) of $1,432 million, $1,599 million and
$1,282 million at March 31, 1998, December 31, 1997 and March 31, 1997,
respectively.
(3) Includes agricultural loans that are secured by real estate of
$338 million, $343 million and $332 million at March 31, 1998,
December 31, 1997 and March 31, 1997, respectively.

The table below presents comparative period-end commercial real estate loans.

Commercial loans to real
estate developers and REITs (1) $ 1,805 $ 1,772 $ 968 2% 86%
Other real estate mortgage 11,722 12,186 11,497 (4) 2
Real estate construction 2,383 2,320 2,243 3 6
------- ------- -------
Total $15,910 $16,278 $14,708 (2)% 8%
------- ------- ------- -- ---
------- ------- ------- -- ---

Nonaccrual loans $ 236 $ 252 $ 330 (6)% (28)%
------- ------- ------- -- ---
------- ------- ------- -- ---

Nonaccrual loans as a % of total 1.5% 1.5% 2.2%
------- ------- -------
------- ------- -------
- ------------------------------------------------------------------------------------------------------------

(1) Included in commercial loans.

NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS (1)

- ------------------------------------------------------------------------------------
MAR. 31, Dec. 31, Mar. 31,
(in millions) 1998 1997 1997
- ------------------------------------------------------------------------------------

Nonaccrual loans:
Commercial (2)(3) $163 $155 $199
Real estate 1-4 family first mortgage 89 104 97
Other real estate mortgage (4) 208 228 306
Real estate construction 28 23 24
Consumer:
Real estate 1-4 family junior lien mortgage 12 17 16
Other revolving credit and monthly payment 3 1 1
Lease financing -- -- 2
---- ---- ----
Total nonaccrual loans (5) 503 528 645
Restructured loans (6) 9 9 10
---- ---- ----
Nonaccrual and restructured loans 512 537 655
As a percentage of total loans .8% .8% 1.0%

Foreclosed assets 155 158 207
Real estate investments (7) 4 4 5
---- ---- ----
Total nonaccrual and restructured loans
and other assets $671 $699 $867
---- ---- ----
---- ---- ----
- ------------------------------------------------------------------------------------

(1) Excludes loans that are contractually past due 90 days or more as to
interest or principal, but are both well-secured and in the process of
collection or are real estate 1-4 family first mortgage loans or consumer
loans that are exempt under regulatory rules from being classified as
nonaccrual.
(2) Includes loans (primarily unsecured) to real estate developers and REITs of
none, $1 million and none at March 31, 1998, December 31, 1997 and March
31, 1997, respectively.
(3) Includes agricultural loans of $12 million, $13 million and $18
million at March 31, 1998, December 31, 1997 and March 31, 1997,
respectively.
(4) Includes agricultural loans secured by real estate of $13 million,
$13 million and $10 million at March 31, 1998, December 31, 1997 and
March 31, 1997, respectively.
(5) Of the total nonaccrual loans, $313 million, $321 million and $419
million at March 31, 1998, December 31, 1997 and March 31, 1997,
respectively, were considered impaired under FAS 114 (Accounting by
Creditors for Impairment of a Loan).
(6) In addition to originated loans that were subsequently restructured,
there were loans of $23 million, $23 million and $50 million at March
31, 1998, December 31, 1997 and March 31, 1997 that were purchased at
a steep discount whose contractual terms were modified after
acquisition. The modified terms did not affect the book balance nor
the yields expected at the date of purchase. Of the total
restructured loans and loans purchased at a steep discount, $23
million, $23 million and $50 million were considered impaired under
FAS 114 at March 31, 1998, December 31, 1997 and March 31, 1997.
(7) 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
$162 million, $172 million and $158 million at March 31, 1998,
December 31, 1997 and March 31, 1997, respectively.

The table below summarizes the changes in total nonaccrual loans.

- ------------------------------------------------------------------------
MARCH 31, March 31,
(in millions) 1998 1997
- ------------------------------------------------------------------------

BALANCE, BEGINNING OF QUARTER $528 $714
New loans placed on nonaccrual 66 107
Charge-offs (2) (52)
Payments (83) (120)
Transfers to foreclosed assets (3) (1)
Loans returned to accrual (3) (3)
---- ----

BALANCE, END OF QUARTER $503 $645
---- ----
---- ----
- ------------------------------------------------------------------------

The Company generally identifies loans to be evaluated for impairment under FAS
114 (Accounting by Creditors for Impairment of a Loan) when such loans are on
nonaccrual or have been restructured. However, not all nonaccrual loans are
impaired. Generally, a loan is placed on nonaccrual status upon becoming 90 days
past due as to interest or principal (unless both well-secured and in the
process of collection), when the full timely collection of interest or principal
becomes uncertain or when a portion of the principal balance has been charged
off. Real estate 1-4 family loans (both first liens and junior liens) are
placed on nonaccrual status within 150 days of becoming past due as to interest
or principal, regardless of security. In contrast, under FAS 114, loans are
considered impaired when it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the loan
agreement, including scheduled interest payments. For a loan that has been
restructured, the contractual terms of the loan agreement refer to the
contractual terms specified by the original loan agreement, not the contractual
terms specified by the restructuring agreement. Not all impaired loans are
necessarily placed on nonaccrual status. That is, restructured loans performing
under restructured terms beyond a specified performance period are classified as
accruing but may still be deemed impaired under FAS 114.

For loans covered under FAS 114, the Company makes an assessment for impairment
when and while such loans are on nonaccrual, or the loan has been restructured.
When a loan with unique risk characteristics has been identified as being
impaired, the amount of impairment will be measured by the Company using
discounted cash flows, except when it is determined that the sole (remaining)
source of repayment for the loan is the operation or liquidation of the
underlying collateral. In such cases, the current fair value of the collateral,
reduced by costs to sell, will be used in place of discounted cash flows.
Additionally, some impaired loans with commitments of less than $1 million are
aggregated for the purpose of measuring impairment using historical loss factors
as a means of measurement.

If the measurement of the impaired loan is less than the recorded investment in
the loan (including accrued interest, net deferred loan fees or costs and
unamortized premium or discount), an impairment is recognized by creating or
adjusting an existing allocation of the allowance for loan losses. FAS 114 does
not change the timing of charge-offs of loans to reflect the amount ultimately
expected to be collected.

The average recorded investment in impaired loans was $333 million during the
first quarter of 1998 and $480 million during the first quarter of 1997. Total
interest income recognized on impaired loans was $3 million during the first
quarter of 1998 and $5 million during the first quarter of 1997. The interest
income for all periods was recorded using the cash method.

The table below shows the recorded investment in impaired loans by loan category
at March 31, 1998, December 31, 1997 and March 31, 1997:

Commercial $108 $103 $122
Real estate 1-4 family first mortgage 2 2 2
Other real estate mortgage (1) 196 216 320
Real estate construction 27 22 23
Other 3 1 2
---- ---- ----

Total (2) $336 $344 $469
---- ---- ----
---- ---- ----

Impairment measurement based on:
Collateral value method $250 $256 $362
Discounted cash flow method 62 61 79
Historical loss factors 24 27 28
---- ---- ----
$336 $344 $469
---- ---- ----
---- ---- ----
- ------------------------------------------------------------------------------------

(1) Includes accruing loans of $23 million, $23 million and $50 million
purchased at a steep discount at March 31, 1998, December 31, 1997 and
March 31, 1997 whose contractual terms were modified after acquisition. The
modified terms did not affect the book balance nor the yields expected at
the date of purchase.
(2) Includes $24 million, $27 million and $28 million of impaired loans (with a
related FAS 114 allowance of $2 million) at March 31, 1998, December 31,
1997 and March 31, 1997, respectively.

The Company uses either the cash or cost recovery method to record cash receipts
on impaired loans that are on nonaccrual. Under the cash method, contractual
interest is credited to interest income when received. This method is used when
the ultimate collectibility of the total principal is not in doubt. Under the
cost recovery method, all payments received are applied to principal. This
method is used when the ultimate collectibility of the total principal is in
doubt. Loans on the cost recovery method may be changed to the cash method when
the application of the cash payments has reduced the principal balance to a
level where collection of the remaining recorded investment is no longer in
doubt.

The Company anticipates normal influxes of nonaccrual loans as it further
increases its lending activity as well as resolutions of loans in the nonaccrual
portfolio. The performance of any individual loan can be impacted by external
factors, such as the interest rate environment or factors particular to a
borrower such as actions taken by a borrower's management. In addition, from
time to time, the Company purchases loans from other financial institutions that
may be classified as nonaccrual based on its policies.

The table below summarizes the changes in foreclosed assets.

- ------------------------------------------------------------------------
MARCH 31, March 31,
(in millions) 1998 1997
- ------------------------------------------------------------------------

BALANCE, BEGINNING OF QUARTER $158 $219
Additions 20 25
Sales (23) (34)
Charge-offs (2) (3)
Write-downs (2) (1)
Other 4 1
---- ----

BALANCE, END OF QUARTER $155 $207
---- ----
---- ----
- ------------------------------------------------------------------------

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING

The following table shows loans contractually past due 90 days or more as to
interest or principal, but not included in the nonaccrual or restructured
categories. All loans in this category are both well-secured and in the process
of collection or are real estate 1-4 family first mortgage loans or consumer
loans that are exempt under regulatory rules from being classified as nonaccrual
because they are automatically charged off after being past due for a prescribed
period (generally, 180 days). Notwithstanding, real estate 1-4 family loans
(first liens and junior liens) are placed on nonaccrual within 150 days of
becoming past due and such nonaccrual loans are excluded from the following
table.

Commercial $ 13 $ 8 $ 29
Real estate 1-4 family first mortgage 38 35 45
Other real estate mortgage 7 5 28
Real estate construction -- 1 3
Consumer:
Real estate 1-4 family junior lien mortgage 40 42 32
Credit card 135 133 139
Other revolving credit and monthly payment 13 19 20
---- ---- ----
Total consumer 188 194 191
---- ---- ----
Total $246 $243 $296
---- ---- ----
---- ---- ----
- ------------------------------------------------------------------------------------

ALLOWANCE FOR LOAN LOSSES

- ------------------------------------------------------------------------
Quarter ended March 31,
-----------------------
(in millions) 1998 1997
- ------------------------------------------------------------------------

BALANCE, BEGINNING OF QUARTER $1,828 $2,018

Provision for loan losses 180 105

Loan charge-offs:
Commercial (1) (49) (69)
Real estate 1-4 family first mortgage (4) (5)
Other real estate mortgage -- (8)
Real estate construction (1) (1)
Consumer:
Real estate 1-4 family junior lien mortgage (3) (6)
Credit card (118) (115)
Other revolving credit and monthly payment (55) (56)
------ ------
Total consumer (176) (177)
Lease financing (11) (10)
------ ------
Total loan charge-offs (241) (270)
------ ------

Loan recoveries:
Commercial (2) 19 13
Real estate 1-4 family first mortgage 3 1
Other real estate mortgage 9 22
Real estate construction -- 1
Consumer:
Real estate 1-4 family junior lien mortgage 2 2
Credit card 11 11
Other revolving credit and monthly payment 16 16
------ ------
Total consumer 29 29
Lease financing 3 3
------ ------
Total loan recoveries 63 69
------ ------
Total net loan charge-offs (178) (201)
------ ------

BALANCE, END OF QUARTER $1,830 $1,922
------ ------
------ ------
Total net loan charge-offs as a percentage
of average loans (annualized) 1.11% 1.23%
------ ------
------ ------

Allowance as a percentage of total loans 2.84% 2.94%
------ ------
------ ------
- ------------------------------------------------------------------------

(1) There were no charge-offs of loans (primarily unsecured) to real estate
developers and REITs for either quarter presented.
(2) Includes recoveries from loans (primarily unsecured) to real estate
developers and REITs of none and $1 million in the quarters ended March 31,
1998 and 1997, respectively.

The table below presents net charge-offs by loan category.

- ------------------------------------------------------------------------------------------------
Quarter ended March 31,
------------------------------------------
1998 1997
-------------------- -------------------
% OF % of
AVERAGE average
(in millions) AMOUNT LOANS(1) Amount loans(1)
- ------------------------------------------------------------------------------------------------

Commercial $ 30 .61% $ 56 1.17%
Real estate 1-4 family first mortgage 1 .08 4 .16
Other real estate mortgage (9) (.28) (14) (.47)
Real estate construction 1 .07 -- --
Consumer:
Real estate 1-4 family junior lien mortgage 1 .11 4 .26
Credit card 107 8.95 104 7.92
Other revolving credit and monthly payment 39 2.16 40 1.94
---- ----
Total consumer 147 3.36 148 3.05
Lease financing 8 .83 7 .86
---- ----

Total net loan charge-offs $178 1.11% $201 1.23%
---- ---- ---- ----
---- ---- ---- ----
- -------------------------------------------------------------------------------------------------

(1) Calculated on an annualized basis.

The commercial loan category includes net charge-offs for the commercial loan
component of small business loans of $33 million (or 3.31% of average small
business loans in this category), compared with $34 million (or 3.43%) in the
fourth quarter of 1997 and $19 million (or 2.18%) in the first quarter of 1997.
During the last half of 1997, the period of charging off past due loans for the
Business Direct product within this portfolio was changed from 180 to 120 days.
The target market for small business loans is expected to experience higher loss
rates on a recurring basis than is the case with loans to middle market and
corporate borrowers, and such loans are priced at appropriately higher spreads.

The largest category of net charge-offs in the first quarter of 1998 and 1997
was credit card loans, comprising 60% and 52%, respectively, of total net
charge-offs. During the first quarter of 1998, credit card gross charge-offs
due to bankruptcies were $46 million, or 39%, of total credit card gross
charge-offs, compared with $46 million, or 40%, in the fourth quarter of 1997
and $45 million, or 39%, in the first quarter of 1997. In addition, credit card
loans 30 to 89 days past due and still accruing totaled $154 million at March
31, 1998, compared with $173 million at December 31, 1997 and $189 million at
March 31, 1997. The total amount of credit card charge-offs is expected to
decline modestly over the remainder of 1998 compared to prior year levels.
However, due to run-off in portfolio outstandings, the percentage of net
charge-offs to average credit card loans is expected to continue for the
remainder of 1998 at a level consistent with or slightly higher than prior year
levels.

The Company considers the allowance for loan losses of $1,830 million adequate
to cover losses inherent in loans, commitments to extend credit and standby
letters of credit at March 31, 1998. The Company's determination of the level
of the allowance and, correspondingly, the provision for loan losses rests upon
various judgments and assumptions, including general (particularly California)
economic conditions, loan portfolio composition, prior loan loss experience and
the Company's ongoing examination process and that of its regulators. The
Company made a $180 million provision in the first quarter of 1998. To maintain
the allowance

at its approximate current level, the Company anticipates that it will continue
to make a provision for loan losses of about $180 million for each quarter of
1998, which is expected to approximate net charge-offs.

OTHER ASSETS

- ---------------------------------------------------------------------------------------
MARCH 31, December 31, March 31,
(in millions) 1998 1997 1997
- ---------------------------------------------------------------------------------------

Nonmarketable equity investments $1,125 $1,113 $1,090
Trading assets 791 815 230
Net deferred tax asset 175 209 540
Certain identifiable intangible assets 482 479 493
Foreclosed assets 155 158 207
Other 1,074 1,175 2,186
------ ------ ------

Total other assets $3,802 $3,949 $4,746
------ ------ ------
------ ------ ------
- ---------------------------------------------------------------------------------------

Income from nonmarketable equity investments accounted for using the cost method
was $50 million and $51 million in the first quarter of 1998 and 1997,
respectively.

Trading assets consist predominantly of securities, including corporate debt and
U.S. government agency obligations. Gains from trading assets were $20 million
and $16 million in the first quarter of 1998 and 1997, respectively.

The Company estimates that approximately $170 million of the $175 million net
deferred tax asset at March 31, 1998 could be realized by the recovery of
previously paid federal taxes; however, the Company expects to actually realize
the federal net deferred tax asset by claiming deductions against future taxable
income. The balance of approximately $5 million primarily relates to net
deductions that are expected to reduce future state taxable income. The Company
believes that it is more likely than not that it will have sufficient future
state taxable income to fully utilize these deductions. The amount of the total
deferred tax asset considered realizable, however, could be reduced in the near
term if estimates of future taxable income during the carry forward periods are
reduced.

Included in certain identifiable intangible assets were purchased mortgage
servicing rights of $303 million, $292 million and $287 million at March 31,
1998, December 31, 1997 and March 31, 1997, respectively. In April 1998,
Wells Fargo entered into a letter of intent to sell its mortgage servicing
business to GMAC Mortgage Corporation. The transaction is anticipated to
close in the second quarter, although there is no assurance that the
transaction will be completed.

The other identifiable intangible assets included in other assets are generally
amortized using an accelerated method, which is based on estimated useful lives
ranging from 5 to 15 years. Amortization expense was $6 million and $7 million
for the quarters ended March 31, 1998 and 1997, respectively.

DEPOSITS

Noninterest-bearing $24,421 $23,953 $25,337
Interest-bearing checking 2,412 2,155 2,350
Market rate and other savings 30,121 29,940 33,055
Savings certificates 15,087 15,349 15,414
------- ------- -------
Core deposits 72,041 71,397 76,156
Other time deposits 223 205 173
Deposits in foreign offices 52 597 98
------- ------- -------

Total deposits $72,316 $72,199 $76,427
------- ------- -------
------- ------- -------
- ---------------------------------------------------------------------------------------

CAPITAL ADEQUACY/RATIOS

Risk-based capital (RBC) guidelines issued by the Federal Reserve Board (FRB)
establish a risk-adjusted ratio relating capital to different categories of
assets and off-balance sheet exposures. The Company's Tier 1 and Tier 2 capital
components are presented on the following page. The guidelines require a
minimum total RBC ratio of 8%, with at least half of the total capital in the
form of Tier 1 capital. To supplement the RBC guidelines, the FRB established a
minimum leverage ratio guideline of 3% of Tier 1 capital to average total
assets.

The decrease in the Company's total RBC ratio at March 31, 1998 compared with
March 31, 1997 was primarily due to a decrease in subordinated debt. The
increase in the Company's leverage ratio at March 31, 1998 compared with
March 31, 1997 was predominantly due to a decrease in quarterly average total
assets.

The table below presents the Company's risk-based capital and leverage ratios.

- ------------------------------------------------------------------------------------------
MAR. 31, Dec. 31, Mar. 31,
(in billions) 1998 1997 1997
- ------------------------------------------------------------------------------------------

Tier 1:
Common stockholders' equity $12.5 $12.6 $13.2
Preferred stock .3 .3 .4
Guaranteed preferred beneficial interests in
Company's subordinated debentures 1.3 1.3 1.2
Goodwill and other deductions (1) (8.0) (8.1) (8.4)
----- ----- -----
Total Tier 1 capital 6.1 6.1 6.4
----- ----- -----
Tier 2:
Preferred securities in excess of Tier 1 limitation -- -- .1
Mandatory convertible debt .1 .1 .2
Subordinated debt and unsecured senior debt 1.9 2.0 2.2
Allowance for loan losses allowable in Tier 2 1.0 1.0 1.0
----- ----- -----
Total Tier 2 capital 3.0 3.1 3.5
----- ----- -----

Total risk-based capital $ 9.1 $ 9.2 $ 9.9
----- ----- -----
----- ----- -----

Risk-weighted balance sheet assets $75.9 $77.6 $79.0
Risk-weighted off-balance sheet items:
Commitments to make or purchase loans 9.4 9.4 10.1
Standby letters of credit 1.5 1.6 1.7
Other 1.1 .7 .6
----- ----- -----
Total risk-weighted off-balance sheet items 12.0 11.7 12.4
----- ----- -----
Goodwill and other deductions (1) (8.0) (8.1) (8.4)
Allowance for loan losses not included in Tier 2 (.8) (.8) (.9)
----- ----- -----

Total risk-weighted assets $79.1 $80.4 $82.1
----- ----- -----
----- ----- -----

Risk-based capital ratios:
Tier 1 capital (4% minimum requirement) 7.76% 7.61% 7.80%
Total capital (8% minimum requirement) 11.58 11.49 12.05

Leverage ratio (3% minimum requirement) (2) 7.04% 6.95% 6.61%

- ------------------------------------------------------------------------------------------

(1) Other deductions include CDI acquired after February 1992 (nonqualifying
CDI) and the unrealized net gain (loss) on available-for-sale investment
securities carried at fair value.
(2) Tier 1 capital divided by quarterly average total assets (excluding
goodwill, nonqualifying CDI and other items which were deducted to arrive
at Tier 1 capital).

Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a "well
capitalized" bank must have a Tier 1 RBC ratio of at least 6%, a combined Tier 1
and Tier 2 ratio of at least 10% and a leverage ratio of at least 5%. At March
31, 1998, the Bank had a Tier 1 RBC ratio of 8.23%, a combined Tier 1 and Tier 2
ratio of 11.27% and a leverage ratio of 7.06%.

MARKET RISKS

Market risk is the exposure to loss resulting from changes in interest rates,
foreign currency exchange rates, commodity prices and equity prices. The
primary market risk to which the Company is exposed is interest rate risk.
Interest rate risk occurs when assets and liabilities reprice at different times
as interest rates change. For example, if fixed-rate assets are funded with
floating-rate debt, the spread between asset and liability rates will decline or
turn negative if rates increase. The Company refers to this type of risk as
"term structure risk." There is, however, another source of interest rate risk
which results from changing spreads between asset and liability rates. The
Company calls this type of risk "basis risk;" it is the Company's main source of
interest rate risk and is significantly more difficult to quantify and manage
than term structure risk.

The Company employs a sensitivity analysis in the form of a net interest income
simulation to help characterize the market risk arising from changes in interest
rates in the other-than-trading portfolio. The Company's net interest income
simulation includes all other-than-trading financial assets, financial
liabilities, derivative financial instruments and leases where the Company is
the lessor. It captures the dynamic nature of the balance sheet by anticipating
probable balance sheet and off-balance sheet strategies and volumes under
different interest rate scenarios over the course of a one-year period. This
simulation measures both the term structure risk and the basis risk in the
Company's positions. The simulation also captures the option characteristics of
products, such as caps and floors on floating rate loans, the right to prepay
mortgage loans without penalty and the ability of customers to withdraw deposits
on demand. These options are modeled directly in the simulation either through
the use of option pricing models, in the case of caps and floors on loans, or
through statistical analysis of historical customer behavior, in the case of
mortgage loan prepayments or non-maturity deposits.

The Company uses four standard scenarios - rates unchanged, expected rates, high
rates and low rates - in analyzing interest rate sensitivity. The expected
scenario is based on the Company's projected future interest rates, while the
high-rate and low-rate scenarios cover 90% probable upward and downward rate
movements based on the Company's own interest rate models.

The current interest rate risk limit using the net interest income simulation
allows up to 30 basis points (.30%) of sensitivity in the expected average net
interest margin over the next 12 months. As of March 31, 1998, the simulation
showed a decline in the net interest margin of 6 basis points (.06%, or $46
million decline in net interest income over the next 12 months) for the low-rate
scenario case relative to the expected case.

The Company uses interest rate derivative financial instruments as an
asset/liability management tool to hedge mismatches in interest rate exposures
indicated by the net interest income simulation described above. They are used
to reduce the Company's exposure to interest rate fluctuations and provide more
stable spreads between loan yields and the rates on their funding sources.

DERIVATIVE FINANCIAL INSTRUMENTS

The following table summarizes the aggregate notional or contractual amounts,
credit risk amount and net fair value of the Company's derivative financial
instruments at March 31, 1998 and December 31, 1997.

- ----------------------------------------------------------------------------------------------------------------------------------
MARCH 31, 1998 December 31, 1997
----------------------------------------- -----------------------------------------
NOTIONAL OR CREDIT ESTIMATED Notional or Credit Estimated
CONTRACTUAL RISK FAIR contractual risk fair
(in millions) AMOUNT AMOUNT (2) VALUE amount amount (2) value
- ----------------------------------------------------------------------------------------------------------------------------------

ASSET/LIABILITY MANAGEMENT HEDGES
Interest rate contracts:
Swaps (1) $20,242 $232 $161 $16,301 $233 $174
Futures 5,765 -- -- 6,259 -- --
Floors purchased (1) 21,785 67 67 20,727 63 63
Caps purchased (1) 226 1 1 240 1 1
Options purchased 49 -- -- 42 -- --

Foreign exchange contracts:
Forwards (1) 113 1 1 57 1 1

CUSTOMER ACCOMMODATIONS
Interest rate contracts:
Swaps (1) 3,628 17 4 3,158 13 4
Futures 3,655 -- -- 2,387 -- --
Floors purchased (1) 1,083 16 16 1,141 13 13
Caps purchased (1) 2,732 4 4 2,836 8 8
Floors written 1,066 -- (16) 1,122 -- (13)
Caps written 2,715 -- (5) 2,871 -- (8)
Options purchased(1) -- -- -- 37 -- --
Options written(1) -- -- -- 27 -- --
Forwards (1) 63 1 1 59 2 2

Foreign exchange contracts:
Forwards and spots (1) 2,641 29 3 1,853 29 3
Options purchased (1) 93 2 2 110 -- --
Options written 78 -- (2) 110 -- --

- ----------------------------------------------------------------------------------------------------------------------------------

(1) The Company anticipates performance by substantially all of the
counterparties for these or the underlying financial instruments.
(2) Credit risk amounts reflect the replacement cost for those contracts in a
gain position in the event of nonperformance by counterparties.

The Company enters into a variety of financial contracts, which include
interest rate futures and forward contracts, interest rate floors and caps
and interest rate swap agreements. The contractual or notional amounts of
derivatives do not represent amounts exchanged by the parties and therefore
are not a measure of exposure through the use of derivatives. The amounts
exchanged are determined by reference to the notional amounts and the other
terms of the derivatives. The contractual or notional amounts do not
represent exposure to liquidity risk. The Company is not a dealer but an
end-user of these instruments and does not use them speculatively. The
Company also offers contracts to its customers, but offsets such contracts
by purchasing other financial contracts or uses the contracts for
asset/liability management.

The Company also enters into foreign exchange derivative financial instruments
(forward and spot contracts and options) primarily as an accommodation to
customers and offsets the related foreign exchange risk with other foreign
exchange derivative financial instruments.

The Company is exposed to credit risk in the event of nonperformance by
counterparties to financial instruments. The Company controls the credit risk
of its financial contracts (except futures contracts and floor, cap and option
contracts written for which credit risk is DE MINIMUS) through credit approvals,
limits and monitoring procedures. Credit risk related to derivative financial
instruments is considered and, if material, provided for separately from the
allowance for loan losses. As the Company generally enters into transactions
only with high quality counterparties, losses associated with counterparty
nonperformance on derivative financial instruments have been immaterial.

LIQUIDITY MANAGEMENT

Liquidity for the Parent Company and its subsidiaries is generated through its
ability to raise funds in a variety of domestic and international money and
capital markets, and through dividends from subsidiaries and lines of credit. In
1996, the Company filed a shelf registration with the Securities and Exchange
Commission (SEC) that allows for the issuance of $3.5 billion of senior or
subordinated debt or preferred stock. The proceeds from the sale of any
securities will be used for general corporate purposes. As of March 31,
1998, the Company had issued $.2 billion of preferred stock and $.7 billion of
medium-term notes under this shelf registration, with $2.6 billion of securities
remaining unissued.

In 1996, the Company also filed a universal shelf registration statement with
the SEC that allowed for the issuance of $750 million of senior and subordinated
debt, preferred stock and common stock of the Company and preferred securities
of special purpose subsidiary trusts. The registration allows each special
purpose subsidiary to issue trust preferred securities which qualify as Tier 1
capital of the Company for regulatory purposes. As of March 31, 1998, the
Company had issued $550 million of trust preferred securities and $200 million
remained unissued under this shelf registration. In April 1998, the Company
issued $200 million of subordinated debt under this shelf registration.

PART II - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

(a) The Annual Meeting of Shareholders was held on April 21, 1998.

(b) Each of the persons named in the Proxy Statement as a
nominee for director was elected; and the selection of KPMG
Peat Marwick LLP as the Company's independent auditors for
1998 was ratified. The following are the voting results on
each of the matters:

Against
For or Withheld Abstentions
---------- ----------- -----------

(1) Election of Directors
H. Jesse Arnelle 73,362,414 451,992 --
Michael R. Bowlin 69,896,713 3,917,693 --
Edward M. Carson 73,398,818 415,588 --
William S. Davila 73,369,374 445,032 --
Rayburn S. Dezember 73,402,576 411,830 --
Paul Hazen 73,371,578 442,828 --
Robert K. Jaedicke 73,378,075 436,331 --
Thomas L. Lee 73,411,091 403,315 --
Philip J. Quigley 69,925,293 3,889,113 --
Donald B. Rice 69,935,962 3,878,444 --
Susan G. Swenson 69,901,427 3,912,979 --
Daniel M. Tellep 69,905,662 3,908,744 --
Chang-Lin Tien 73,384,846 429,560 --
John A. Young 69,921,081 3,893,325 --

(2) Ratification of KPMG
Peat Marwick LLP as
independent auditors
for 1998. 73,473,967 232,104 108,335

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

3(ii) By-Laws

4 The Company hereby agrees to furnish upon
request to the Commission a copy of each
instrument defining the rights of holders of
securities of the Company.

11 Computation of Earnings Per Common Share

27 Financial Data Schedule

99(a) Computation of Ratios of Earnings to Fixed
Charges -- the ratios of earnings to fixed
charges, including interest on deposits, were
1.98 and 2.06 for the quarters ended March 31,
1998 and 1997, respectively. The ratios of
earnings to fixed charges, excluding interest
on deposits, were 4.21 and 4.66 for the
quarters ended March 31, 1998 and 1997,
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
1.96 and 2.00 for the quarters ended March 31,
1998 and 1997, respectively. The ratios of
earnings to fixed charges and preferred
dividends, excluding interest on deposits, were
4.05 and 4.20 for the quarters ended March 31,
1998 and 1997, respectively.

(b) The Company filed the following reports on Form 8-K
during the first quarter of 1998 and through the date
hereof:

(1) January 20, 1998 under Item 5, containing the
Press Release that announced the Company's
financial results for the quarter and year ended
December 31, 1997

(2) March 20, 1998 under Item 5, providing information
about the beneficial ownership by Oppenheimer
Capital of the Common Stock of the Company

(3) April 3, 1998 under Item 5, announcing that on
April 2, 1998 Wells Fargo Bank, N.A. and GMAC
Mortgage Corporation entered into a letter of
intent with respect to the acquisition by GMAC
Mortgage of Wells Fargo's mortgage servicing
business

(4) April 21, 1998 under Item 5, containing the Press
Release that announced the Company's financial
results for the quarter ended March 31, 1998

SIGNATURE

Pursuant to the requirements 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 May 14, 1998.

WELLS FARGO & COMPANY

By: FRANK A. MOESLEIN
-----------------------------------------
Frank A. Moeslein
Executive Vice President and Controller
(Principal Accounting Officer)