Published:
Wells Fargo Reports Record Q3 and Year-to-Date Net Income
SAN FRANCISCO - (BUSINESS WIRE) - Wells Fargo & Company (NYSE:WFC):
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3rd consecutive quarter of record earnings
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Record Wells Fargo net income of $3.2 billion, up 98 percent from
last year; $9.5 billion year to date, up 75 percent from last year
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Diluted earnings per common share of $0.56, up 14 percent from
last year; $1.69 per share year to date
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Results driven by record $10.8 billion pre-tax, pre-provision
profit (PTPP); PTPP has been more than two times quarterly net
charge-offs each quarter this year, despite cyclically elevated
net charge-offs. (See footnote 4 on page 20 for information on
PTPP)
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Continued strong revenue
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Revenue of $22.5 billion, flat with record revenue in second
quarter 2009
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$169 billion of credit extended to customers in the quarter
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Average checking and savings deposits up 11 percent (annualized)
from prior quarter
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Net interest margin of 4.36 percent, up 6 basis points from prior
quarter
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Cross-sell for legacy Wells Fargo a record 5.90 for retail bank
households
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Broad-based revenue contribution from diverse businesses,
including double-digit linked-quarter growth in asset management,
auto lending, consumer finance, debit cards, retirement services,
SBA lending and wealth management, along with continued strong
performance from regional banking and mortgage banking
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Significant increases in capital, reduction in risk
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Wells Fargo stockholders' equity increased to $122 billion (10
percent of total assets), up $23 billion from year end
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Generated $20 billion during the past six months toward the $13.7
billion Supervisory Capital Assessment Program (SCAP) buffer
requirement; PTPP tracking above Company's internal SCAP estimates
and 35 percent above supervisory adverse scenario estimate
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Credit reserves built by $1.0 billion ($3.0 billion year to date),
reaching $24.5 billion, or 3.07 percent of total loans and 118
percent of nonaccrual loans
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Substantial increases in capital ratios driven by record retained
earnings and other sources of internal capital generation
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Sept. 30,
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June 30,
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Dec. 31,
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(as a percent of total risk-weighted assets)
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2009 (1
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2009
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2008
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Tier 1 capital
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10.6
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%
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9.8
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7.8
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Tier 1 common equity (2)
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5.2
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4.5
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3.1
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Tier 1 leverage
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9.0
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8.3
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14.5
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(3
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Total capital
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14.7
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13.8
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11.8
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(1) September 30, 2009, ratios are preliminary.
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(2) See table on page 38 for more information on Tier 1 common
equity.
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(3) Based on average Q4 2008 Wells Fargo assets only, excludes
Wachovia.
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Reduced non-strategic/liquidating loans by $5.7 billion in the quarter
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FAS 166/167 expected to add approximately $28 billion to risk-weighted
assets upon adoption in 2010
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Current projections show credit losses peaking in 2010, with consumer
losses potentially peaking in first half of the year and gradually
declining, absent further economic deterioration
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Growth in nonperforming loans and net charge-offs slowing as of
third quarter, for consumer and commercial portfolios
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Credit performance of recent vintage legacy Wells Fargo consumer
portfolios improving, largely the result of proactive credit
management over past two years
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90 days past due and still accruing levels flat with second
quarter; consumer 90 days past due and still accruing declined
from prior quarter
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Significantly smaller credit card portfolio than large bank peers
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Pick-a-Pay portfolio currently estimated to have lower
life-of-loan losses than originally estimated, driven in part by
extensive and successful loan modification efforts
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Collateral values improving in auto market and housing prices
stabilizing in many regions
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Legacy Wells Fargo commercial and commercial real estate portfolio
well underwritten and diversified; Wachovia commercial and
commercial real estate portfolio marked down at merger close at
end of last year
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Legacy Wells Fargo loss rate of 3.37 percent, below large bank
peers; overall loss rate of 2.50 percent reflected benefit of
purchase accounting on Wachovia loan portfolio; combined losses
less than half of Company's quarterly PTPP
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Wachovia integration on track and on schedule
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Estimated cumulative merger expenses reduced to approximately $5.5
billion from $7.9 billion; on track to achieve $5.0 billion annual
run-rate cost savings by completion of integration in 2011
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Cross-sell revenues already being realized
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Credit overall performing in line with original expectations
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First state community bank conversion (Colorado) scheduled for
November; conversion of remaining overlapping markets expected in
2010
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Increased loan modifications
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Provided 62,989 trial and completed modifications through the Home
Affordable Modification Program (HAMP) and 292,005 through
Company's proprietary programs, bringing total this year through
September 30, 2009, to 354,994
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Refinanced 987,000 customers' mortgages using the Home
Affordable Refinance Program (HARP) and other standard
refinance programs
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Over 20 percent of PCI Pick-a-Pay portfolio modified through
September 30, 2009, with positive early performance
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Selected Financial Information
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Nine
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months
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Quarter ended
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ended
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Sept. 30,
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June 30,
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Sept. 30,
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2009
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2009
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2009
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Earnings
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Diluted earnings per share
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$
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0.56
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0.57
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1.69
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Wells Fargo net income (in billions)
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3.24
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3.17
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9.45
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Asset Quality
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Net charge-offs as % of avg. total loans
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2.50
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%
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2.11
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2.05
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Nonperforming loans as % of total loans
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2.61
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1.92
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2.61
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Allowance as a % of total loans
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3.07
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2.86
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3.07
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Other
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Revenue (in billions)
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$
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22.47
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22.51
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65.99
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Average loans (in billions)
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810.2
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833.9
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833.1
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Average core deposits (in billions)
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759.3
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765.7
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759.7
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Net interest margin
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4.36
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%
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4.30
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4.27
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Wells Fargo & Company (NYSE:WFC) reported diluted earnings per common
share of $0.56 for third quarter 2009 compared with $0.57 for second
quarter 2009 and $0.49 for third quarter 2008. (Results prior to January
1, 2009, do not include Wachovia.) Wells Fargo net income was a record
$3.24 billion for third quarter 2009, up 98 percent from last year, and
a record $9.45 billion for the first nine months of 2009, up 75 percent
from last year.
"Doing what's right for our customers again proved to be right for our
stockholders as our talented team members earned even more of our
customers' business, enabling us to achieve our third consecutive
quarter of record earnings," said President and CEO John Stumpf. "The
Wells Fargo-Wachovia merger, agreed to a year ago, is exceeding our
expectations and already adding value for many of our 70 million
customers across North America. Merger costs have been significantly
less than originally expected. With our 80-plus businesses pulling the
stagecoach, the diversity of our business model again showed significant
power to generate capital internally. We had solid performance across
our company - especially among counter-cyclical businesses such as
deposits, residential mortgages, debit card and asset-based lending.
We're also doing what's right for our mortgage customers having
difficulty making their payments on time. We've offered home payment
relief to 1.3 million customers so far this year, including 355,000 loan
modifications. We now have 13,000 team members working on helping
customers stay in their homes and our delinquency and foreclosure rates
continue to be well below the industry average. As we've already
announced, Dick Kovacevich will step down as chairman and a director at
the end of 2009 and retire from the Company in early 2010. I am grateful
to Dick and to Wells Fargo's leadership team and believe we have the
strongest, most experienced team of senior leaders in all of financial
services. They've led our businesses to a strong third quarter,
following two consecutive quarters of record earnings, despite the
economic recession. This is something that few, if any, financial
services companies have achieved - and during the most challenging
credit cycle in recent memory and while we continue to build reserves.
Wells Fargo has always been committed to providing clear, complete, and
transparent communication about the Company's results to all of its
stakeholders. As we enter the second year of the merger with Wachovia,
we will be expanding our quarterly communications to include a live
quarterly earnings conference call - starting in January for our fourth
quarter and full year 2009 results - and we will also host an investor
day in 2010."
Financial Performance
"Third quarter results again illustrated the Company's ability to
profitably grow, even through the downward cycle despite elevated credit
losses," said Chief Financial Officer Howard Atkins. "Since the merger
with Wachovia at year-end 2008, we've earned a record $9.45 billion,
even after building credit reserves by $3.0 billion and recording
$1.4 billion of other-than-temporary impairment (OTTI) charges. Pre-tax
pre-provision profit has grown every quarter this year, reaching a
record $10.8 billion in the third quarter, more than double quarterly
net charge-offs. While mortgage origination and hedging results
contributed to our performance, collectively all of our other businesses
have also grown PTPP each quarter this year reflecting the breadth of
our diversified business model, record levels of sales and cross-sell,
the realization of revenue synergies from the combination with Wachovia,
and further improvements in our net interest margin to 4.36 percent and
efficiency ratio to 52.0 percent. We continued to maintain what we
believe is one of the strongest balance sheets in banking, building
credit reserves by $1.0 billion in the quarter to $24.5 billion, or 3.07
percent of total loans, reducing previously identified non-strategic and
liquidating loan portfolios to $152.7 billion, down over $14 billion
from year end, and reducing the value of our debt and equity investment
portfolios through $396 million of OTTI. Also, in line with lower
mortgage rates, the ratio of mortgage servicing rights (MSRs) as a
percentage of loans serviced for others was 83 basis points, the third
lowest ratio in our Company's history and a level considerably lower
than our mortgage peers.
"We have significantly built capital, increasing common stockholders'
equity to $123 billion, up $23 billion so far in 2009 and increasing
Tier 1 common to 5.2 percent, nearly two times our capital position at
year-end 2008. Nonperforming loans and net charge-offs increased in the
quarter, but the rate of growth of nonperforming loans has declined each
quarter so far this year. While the level of nonperforming assets and
losses is expected to remain elevated for a period of time, we currently
expect total credit losses to peak in 2010, with consumer losses
potentially peaking in the first half of the year and gradually
declining as the year progresses, absent any further deterioration in
the U.S. economy. Our credit reserves as of September 30, 2009, reflect
an improvement in consumer loss emergence with almost all of the current
quarter reserve build covering higher commercial loss emergence.
"Operationally and financially, the Wachovia merger is exceeding our
expectations. Structurally, the merger leaves us with an even more
diversified business than legacy Wells Fargo alone - less geographic
concentration, an even wider array of products and services, better
balance between consumer and commercial businesses, and an equal split
between spread income and fee income. We are currently on track to
realize our objective of $5.0 billion in annual run-rate savings when we
complete the integration in 2011, with about 30-40 percent of those
savings now beginning to be realized in our expense run-rate. We now
expect to spend about $2.4 billion less in merger and integration costs
than previously expected to achieve the run-rate savings, largely
because proportionately more of the labor savings are being realized
through attrition instead of severance and because we're spending less
than planned on building disposition, as we fill unoccupied space with
third party tenants. We are ahead of plan in shedding asset risk from
businesses that do not meet our financial and strategic criteria and in
retaining deposits and customers. We're already realizing meaningful
revenue synergies, an important driver of our earnings this year.
Because Wachovia's credit-impaired loan portfolios were written down at
the close of the merger at the end of last year, Wachovia is now
contributing to the Company's rapid internal capital growth."
Revenue
Revenue of $22.5 billion remained at near-record levels following strong
first and second quarters. Relative to the pre-Wachovia third quarter a
year ago, the Company's assets almost doubled, while total revenue has
substantially more than doubled, despite the weak economy and despite
the reduction in non-strategic/liquidating loan and asset portfolios.
The high levels of revenue generated in the third quarter related to
several factors:
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Continued strong core deposits reflecting 11 percent (annualized)
growth in checking and savings, 25 percent (annualized) growth in
wholesale banking core deposits and 10 percent (annualized) growth in
wealth management core deposits. Wachovia's deposit pricing has been
conformed to that of Wells Fargo, with continued better-than-planned
retention of Wachovia's maturing higher-rate CDs (57 percent retained
in third quarter). The average cost of all core deposits declined to
41 basis points in the quarter, the principal reason for the Company's
4.36 net interest margin, highest among large bank peers.
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The Company remained an industry leader in making credit available to
U.S. consumers and businesses. Total credit supplied in the quarter
through mortgage originations and new/increased credit facilities was
$169 billion, one of the main drivers of continued strong loan fees,
even though loan demand remained soft in the quarter.
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Record core product solutions (sales) and record cross-sell in
regional banking for legacy Wells Fargo
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Broad-based revenue growth across multiple businesses, including
double-digit (annualized) linked-quarter growth in asset management,
auto lending, consumer finance, debit card, retirement services, SBA
lending and wealth management. Linked-quarter growth in these
businesses was partially offset by more modest mortgage revenue, lower
investment banking revenue and seasonal decline in insurance revenue.
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While mortgage originations and servicing revenue remained high, total
mortgage banking noninterest income represented less than 15 percent
of consolidated company revenue, reflecting the breadth and depth of
the Company's business model.
Net Interest Income
Net interest income was $11.7 billion, compared with $11.8 billion in
second quarter 2009. While the net interest margin improved to 4.36
percent, average earning assets were down $23.7 billion linked quarter,
reflecting soft loan demand and reductions in non-strategic/liquidating
assets. While average investment securities were up $7.3 billion, this
largely reflected the averaging effect in the quarter of mortgage-backed
securities (MBS) purchased late in the second quarter at yields more
than 1 percent above current market. During the third quarter,
$23 billion of the lowest-yielding MBS were sold to reduce exposure to
higher long-term interest rates.
Loans
Average total loans were $810.2 billion compared with $833.9 billion in
second quarter 2009, as consumer and commercial demand for credit
remained moderate and the Company continued to reduce certain
higher-risk loan portfolios. The decline in average loans included a
reduction of $5.7 billion linked quarter in the non-strategic and
liquidating loan portfolios that the Company has been exiting, such as
indirect home equity and indirect auto from legacy Wells Fargo, and
Wachovia's Pick-a-Pay and commercial real estate portfolios.
Deposits
Average total core deposits were $759.3 billion compared with $765.7
billion in second quarter 2009. During the quarter, $38 billion of
Wachovia's higher-rate certificates of deposit matured, with $22 billion
of those balances retained. "We continued to gain new deposit customers
and deepen our relationship with existing customers," said Atkins.
Average checking and savings deposits increased 11 percent (annualized)
to $629.6 billion from $613.3 billion in second quarter 2009. Average
mortgage escrow deposits were $28.7 billion compared with $32.0 billion
in second quarter 2009. Average consumer checking accounts at legacy
Wells Fargo grew a net 6.4 percent from third quarter 2008 and, for
Wells Fargo and Wachovia combined, grew a net 5.2 percent in California
for the same period.
Noninterest Income
Noninterest income of $10.8 billion was flat compared with $10.7 billion
in second quarter 2009 and included:
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Mortgage banking income of $3.1 billion, including:
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$1.1 billion in revenue from mortgage loan originations/sales
activities on $96 billion of residential mortgage originations
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$1.5 billion combined market-related valuation changes to mortgage
servicing rights (MSRs) and economic hedges (consisting of a $2.1
billion decrease in the fair value of the MSRs more than offset by
a $3.6 billion economic hedge gain in the quarter), largely due to
hedge-carry income reflecting the current low short-term interest
rate environment, which is expected to continue into the fourth
quarter; MSRs as a percentage of loans serviced for others reduced
to 0.83 percent; average servicing portfolio note rate was only
5.72 percent.
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Trust and investment fees of $2.5 billion, up 15 percent (annualized)
linked quarter primarily reflecting an increase in client assets, bond
origination fees, and higher brokerage revenue as the Company further
builds its retail securities brokerage business
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Service charges on deposit accounts of $1.5 billion, up 8 percent
(annualized) linked quarter driven by continued strong checking
account growth
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Card fees of $946 million, up 10 percent (annualized) linked quarter
reflecting seasonally higher purchase volumes and higher customer
penetration rates
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Net losses on debt and equity securities totaling $11 million,
including $396 million of OTTI write-downs and $120 million of
realized gains on the sale of MBS in the third quarter. After having
purchased over $34 billion of agency MBS in the second quarter of 2009
at yields more than 1 percent above the current market, the Company
sold $23 billion of its lowest-yielding MBS after long-term interest
rates declined in the third quarter.
Due to the general decline in long-term yields and narrowing of credit
spreads in the quarter, the Company's net unrealized securities gains,
reflected in equity, increased to $6.6 billion at September 30, 2009,
from net losses of $400 million at June 30, 2009.
Noninterest Expense
Noninterest expense declined to $11.7 billion from $12.7 billion in the
second quarter, which included $565 million of FDIC deposit insurance
assessments. The balance of the decline in third quarter expense was due
to merger consolidation savings and ongoing expense management
initiatives. "We currently expect cumulative merger integration costs of
approximately $5.5 billion, down from our previous $7.9 billion
estimate," said Atkins. "The revised estimate reflects lower owned real
estate write-downs and lower estimated severance costs since a greater
proportion of labor savings is being realized through attrition. Of this
$5.5 billion, we've spent $1.0 billion merger to date, including $200
million in the third quarter. Of the amount spent thus far, $444 million
has been recorded through the income statement and $559 million has been
recorded through purchase accounting adjustments to goodwill. A portion
of the remaining integration costs will be charged to goodwill in the
fourth quarter under purchase accounting. The balance of the cumulative
estimated integration costs are expected to be expensed over the next
two years, and are likely to be offset by merger-related savings during
this period. We remain on track to achieve $5.0 billion in annual
run-rate savings upon completion of the integration in 2011. To date, we
have achieved approximately 30-40 percent of these savings." Noninterest
expense also included $100 million of additional insurance reserve at
the Company's captive mortgage reinsurance operation and $49 million of
non-Wachovia-related integration costs. "As we reduce expenses through
consolidation and other expense initiatives, we continue to reinvest in
our businesses for long-term revenue growth," said Atkins. "During 2009,
we've opened 41 banking stores and converted 1,274 ATMs to Envelope-FreeSM
webATM machines. We have also continued to increase the level and
productivity of our sales force in community banking, commercial banking
and wealth management. We continue to manage to a variable expense base
in the mortgage company. Part-time staff was reduced in third quarter as
application volume declined, and increased again in September and early
in the fourth quarter as applications increased." The Company's
efficiency ratio improved to 52.0 percent from 56.4 percent in second
quarter and 56.2 percent in first quarter.
Capital
"We have rebuilt capital significantly this year," said Atkins, "with
most of our capital ratios now higher - in some cases substantially so -
than they were just before the Wachovia merger a year ago."
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Sept. 30,
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Sept. 30,
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(as a percent of total risk-weighted assets)
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2009 (1
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2008 (2
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Tier 1 common equity
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5.2
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%
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6.4
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Tier 1 capital
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10.6
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8.6
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Tier 1 leverage
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9.0
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7.5
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Total capital
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14.7
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11.5
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(1) September 30, 2009, ratios are preliminary
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(2) Wells Fargo only, excludes Wachovia
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Stockholders' equity now stands at $122 billion, up $50 billion from a
year ago (excluding the U.S. Treasury's $25 billion Capital Purchase
Program investment), up $23 billion from post-merger closing year-end
equity and up $8 billion just in the third quarter of this year alone.
"In the past year, we have more than doubled stockholders' equity while
significantly reducing risk and increasing internal capital momentum,"
said Atkins. Tier 1 common equity grew from second quarter 2009 entirely
from internally generated sources - record retained earnings,
realization of deferred tax assets and stock issued to the Company's
benefit plans. Through September 30, 2009, the Company generated
$20 billion, including the $8.6 billion equity raise in the second
quarter, toward the $13.7 billion regulatory capital buffer under SCAP,
exceeding the requirement by $6 billion. "A major contributor to our
strong results compared with the regulatory SCAP requirement has been
our consistent outperformance on pre-tax pre-provision profit year to
date, which confirmed the confidence we've had from the beginning of
this process in the underlying revenue strength of our company and the
consistency of our revenue generation even in adverse scenarios," said
Atkins. See footnote (4) on page 20 and the table on page 38 for more
information.
In January, the Company will adopt FAS 166/167, which will result in the
consolidation of certain off-balance sheet assets not currently included
in its financial statements. The Company's current estimate is that FAS
166/167 is expected to add approximately $28 billion in risk-weighted
assets. This latest analysis is lower than originally projected
primarily due to a reduction in the amount of securitized residential
mortgages expected to be consolidated. In addition, the Company
continues to explore the sale of certain interests held in securitized
residential mortgage loans, which would be expected to reduce further
the amount of incremental GAAP assets and incremental risk-weighted
assets.
Credit Quality
"While the challenging credit cycle continues and losses remain
elevated, we have begun to see early indications of consumer credit
stability," said Chief Credit and Risk Officer Mike Loughlin. "In the
third quarter, this stabilization was evident in several consumer loan
portfolios, while the consumer real estate portfolio continued to vary
across geography. Some real estate markets, such as California, have had
increased home sales and home price stabilization and, as these
conditions improve in more markets, we expect to see improvement in
credit results. Third quarter commercial and commercial real estate
losses remained at manageable levels, reflecting the high-quality of
Wells Fargo's commercial loan portfolio and the fact that Wachovia's
commercial and commercial real estate loan portfolios were already
written down at the end of last year.
"Nonperforming assets and credit losses increased during the quarter,
and once again we increased reserve levels to provide for the additional
risk. We expect credit losses and nonperforming assets to continue to
increase in the near term, but at a slower rate as we have seen the pace
of deterioration slow. Based on our current economic outlook, we expect
losses to peak in 2010, with consumer losses expected to peak in the
first half of 2010 and commercial and commercial real estate losses
expected to peak in the second half of 2010. The recovery may take some
time to gain momentum and changes in the economic outlook could affect
this time horizon."
Credit Losses
Third quarter net charge-offs were $5.1 billion, or 2.50 percent of
average loans, compared with second quarter net charge-offs of $4.4
billion, or 2.11 percent of average loans. While losses were up in the
quarter, the increase in terms of both dollars and percentages moderated
from prior quarter growth. The overall quarterly loss rate in the third
quarter, 2.50 percent, is substantially lower than reported large peer
loss rates partly because Wells Fargo had already written down
Wachovia's higher-risk loan portfolios at year end. Reflecting, in part,
stabilizing credit performance, legacy Wells Fargo net charge-offs were
$3.4 billion, or 3.37 percent of average loans. Wachovia's net
charge-offs increased to $1.7 billion, or 1.66 percent of average loans,
compared with $984 million in second quarter 2009, due to some
deterioration in its portfolios and the lagging effect of purchase
accounting.
Total credit losses of $5.1 billion included $1.5 billion of commercial
and commercial real estate loans (1.78 percent of average loans) and
$3.6 billion in consumer loans (3.13 percent of average loans), as shown
in the following table.
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Net Loan Charge-Offs (1)
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Quarter ended
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September 30, 2009
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June 30, 2009
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March 31, 2009
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|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
|
Net loan
|
|
average
|
|
|
|
Net loan
|
|
average
|
|
|
|
Net loan
|
|
average
|
|
|
|
|
|
|
|
|
charge-
|
|
loans
|
|
|
|
charge-
|
|
loans
|
|
|
|
charge-
|
|
loans
|
|
|
|
($ in millions)
|
|
offs
|
|
(annualized)
|
|
|
|
offs
|
|
(annualized)
|
|
|
|
offs
|
|
(annualized)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Wells Fargo
|
|
$
|
862
|
|
1.96
|
|
%
|
|
$
|
897
|
|
2.01
|
|
%
|
|
$
|
667
|
|
1.48
|
|
%
|
|
|
Wachovia
|
|
|
602
|
|
1.57
|
|
|
|
|
246
|
|
0.61
|
|
|
|
|
30
|
|
0.07
|
|
|
|
Total commercial and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
commercial real estate
|
|
|
1,464
|
|
1.78
|
|
|
|
|
1,143
|
|
1.35
|
|
|
|
|
697
|
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Wells Fargo
|
|
|
2,480
|
|
4.50
|
|
|
|
|
2,462
|
|
4.44
|
|
|
|
|
2,175
|
|
3.90
|
|
|
|
|
Wachovia
|
|
|
1,107
|
|
1.87
|
|
|
|
|
735
|
|
1.22
|
|
|
|
|
341
|
|
0.56
|
|
|
|
Total consumer
|
|
|
3,587
|
|
3.13
|
|
|
|
|
3,197
|
|
2.77
|
|
|
|
|
2,516
|
|
2.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Wells Fargo
|
|
|
43
|
|
3.00
|
|
|
|
|
43
|
|
3.05
|
|
|
|
|
45
|
|
3.13
|
|
|
|
|
Wachovia
|
|
|
17
|
|
0.28
|
|
|
|
|
3
|
|
0.05
|
|
|
|
|
-
|
|
-
|
|
|
|
Total foreign
|
|
|
60
|
|
0.79
|
|
|
|
|
46
|
|
0.61
|
|
|
|
|
45
|
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Legacy Wells Fargo
|
|
|
3,385
|
|
3.37
|
|
|
|
|
3,402
|
|
3.35
|
|
|
|
|
2,887
|
|
2.82
|
|
|
|
Total Wachovia
|
|
|
1,726
|
|
1.66
|
|
|
|
|
984
|
|
0.92
|
|
|
|
|
371
|
|
0.34
|
|
|
|
|
Total
|
|
$
|
5,111
|
|
2.50
|
|
%
|
|
$
|
4,386
|
|
2.11
|
|
%
|
|
$
|
3,258
|
|
1.54
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)See explanation on page 40 of the accounting for purchased
credit-impaired (PCI) loans from Wachovia and the impact on selected
financial ratios.
|
"Commercial and commercial real estate charge-offs remained manageable
in the third quarter," said Loughlin. "In fact, legacy Wells Fargo's
commercial and commercial real estate losses declined $35 million, or 4
percent, in the quarter. The increase in commercial and commercial real
estate losses was entirely in the Wachovia non-impaired portfolio, in
part reflecting the fact that charge-offs are just now coming through
Wachovia's portfolio after having eliminated nonaccruals through
purchase accounting at the end of last year. The overall loss rate in
third quarter for Wachovia's commercial and commercial real estate
portfolio was roughly comparable to Wells Fargo's higher-quality
commercial portfolio. While the industry is likely to experience
elevated commercial and commercial real estate losses, we continue to
believe we have one of the best commercial and commercial real estate
loan portfolios among large bank peers given our long-standing
underwriting discipline and because we wrote down Wachovia's commercial
and commercial real estate portfolio when we closed the acquisition at
year end."
Consumer losses were up 12 percent in the third quarter, with virtually
all of the increase in Wachovia's consumer portfolios. Over 40 percent
of the increase in Wachovia consumer loan losses came from the
non-impaired Pick-a-Pay portfolio, in large part reflecting the lagging
effect of purchase accounting. "We are currently expecting lower
life-of-loan losses on the non-impaired Pick-a-Pay portfolio than
originally assumed at the time of the merger," said Loughlin. Overall
losses on legacy Wells Fargo's consumer portfolio were essentially flat
linked quarter. "Given the actions we've previously taken to reduce
higher-risk portfolios, given the life-of-loan loss write-downs we have
taken through purchase accounting and given the substantially smaller
exposure to credit cards and sub-prime loans, we are expecting consumer
losses to potentially peak in the first half of 2010 and gradually
decline as the year progresses.
"We remain comfortable with our original loss estimates for the impaired
portfolio from Wachovia, and currently expect life-of-loan losses on the
purchased credit-impaired (PCI) Pick-a-Pay portfolio to be lower than
original estimates. Also, while increasing this year, losses in the
non-impaired Pick-a-Pay portion of the Wachovia portfolio are tracking
below our original estimates at the time we acquired Wachovia. We
continue to expect the non-impaired portfolios to perform significantly
better than the impaired portfolios that have already been written down
through purchase accounting, and the Pick-a-Pay portfolio to perform
better than other companies' option adjustable-rate mortgage portfolios."
Nonperforming assets
Total nonperforming assets (NPAs) were $23.5 billion (2.93 percent of
total loans) at September 30, 2009, and included $20.9 billion of
nonaccrual loans and $2.5 billion of foreclosed assets (repossessed real
estate and vehicles).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual Loans and Other
Nonperforming Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2009
|
|
|
|
June 30, 2009
|
|
|
|
March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
As a
|
|
|
|
|
|
As a
|
|
|
|
|
|
As a
|
|
|
|
|
|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
% of
|
|
|
|
|
|
|
|
|
|
|
total
|
|
|
|
|
|
total
|
|
|
|
|
|
total
|
|
|
|
($ in millions)
|
Balances
|
|
loans
|
|
|
|
Balances
|
|
loans
|
|
|
|
Balances
|
|
loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Wells Fargo
|
$
|
6,037
|
|
3.53
|
|
%
|
|
$
|
5,260
|
|
3.02
|
|
%
|
|
$
|
3,860
|
|
2.13
|
|
%
|
|
|
Wachovia
|
|
4,227
|
|
2.86
|
|
|
|
|
2,333
|
|
1.46
|
|
|
|
|
645
|
|
0.39
|
|
|
|
Total commercial and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
commercial real estate
|
|
10,264
|
|
3.22
|
|
|
|
|
7,593
|
|
2.28
|
|
|
|
|
4,505
|
|
1.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Wells Fargo
|
|
6,293
|
|
2.90
|
|
|
|
|
5,687
|
|
2.59
|
|
|
|
|
4,970
|
|
2.22
|
|
|
|
|
Wachovia
|
|
4,168
|
|
1.78
|
|
|
|
|
2,292
|
|
0.96
|
|
|
|
|
966
|
|
0.40
|
|
|
|
Total consumer
|
|
10,461
|
|
2.32
|
|
|
|
|
7,979
|
|
1.74
|
|
|
|
|
5,936
|
|
1.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
|
|
|
|
144
|
|
0.48
|
|
|
|
|
226
|
|
0.75
|
|
|
|
|
75
|
|
0.24
|
|
|
|
|
|
Total nonaccrual loans
|
|
20,869
|
|
2.61
|
|
|
|
|
15,798
|
|
1.92
|
|
|
|
|
10,516
|
|
1.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreclosed assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Wells Fargo
|
|
1,756
|
|
|
|
|
|
|
1,741
|
|
|
|
|
|
|
1,421
|
|
|
|
|
|
|
Wachovia
|
|
771
|
|
|
|
|
|
|
783
|
|
|
|
|
|
|
641
|
|
|
|
|
|
Total foreclosed assets
|
|
2,527
|
|
|
|
|
|
|
2,524
|
|
|
|
|
|
|
2,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate and other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
nonaccrual investments
|
|
55
|
|
|
|
|
|
|
20
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
Total nonaccrual loans and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
other nonperforming assets
|
$
|
23,451
|
|
2.93
|
|
%
|
|
$
|
18,342
|
|
2.23
|
|
%
|
|
$
|
12,612
|
|
1.50
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change from prior quarter
|
$
|
5,109
|
|
|
|
|
|
$
|
5,730
|
|
|
|
|
|
$
|
3,603
|
|
|
|
|
While commercial and commercial real estate nonaccrual loans were up in
the quarter, the dollar amount of the increase declined in the quarter
and the rate of growth slowed considerably. Legacy Wells Fargo's
commercial and commercial real estate nonaccrual loans increased $777
million. The rate of growth in Wachovia's commercial and commercial real
estate nonaccrual loans reflected some deterioration but was in line
with management's expectations. Similarly, the growth rate in consumer
nonaccrual loans also slowed in the quarter. Legacy Wells Fargo's
consumer nonaccrual loans increased $606 million, about 11 percent,
reflecting the more moderate deterioration the Company has experienced
in consumer loans. Wachovia's Pick-a-Pay portfolio represents the
largest portion of consumer nonaccrual loans. While up $1.2 billion in
the third quarter, the increase in nonaccrual loans in the non-impaired
Pick-a-Pay portfolio reflected the inflows to nonaccruals expected in
the first few quarters after purchase accounting write-downs. The
Company continued to actively modify non-PCI Pick-a-Pay loans through
the use of troubled debt restructurings (TDRs), which temporarily keeps
NPA levels elevated until the modified loans can demonstrate
performance. To the extent these nonperforming loans return to accrual
status, NPA growth should moderate.
The loss exposure expected in the nonperforming assets is significantly
mitigated by three factors. First, 96 percent of our nonperforming loans
(NPLs) are secured. Second, losses have already been recognized on 36
percent of the total. Residential real estate NPLs greater than 180 days
old, or 41 percent of the total NPLs balance, have been written down to
net realizable value. Third, there is a segment of NPLs for which there
are specific reserves in the allowance, while other NPLs are covered by
general reserves. "We believe that the allowance as of September 30,
2009, fully covers loss content embedded in the September 30, 2009
nonaccrual balances," said Loughlin.
|
|
|
|
|
|
|
|
Loans 90 Days or More Past Due
and Still Accruing (1)
|
|
|
|
|
|
(Excluding Insured/Guaranteed GNMA and Similar Loans)
|
|
|
|
|
|
Includes Wells Fargo and Wachovia
|
|
|
|
|
|
|
|
|
Sept. 30,
|
|
June 30,
|
|
(in millions)
|
|
2009
|
|
2009
|
|
|
|
|
|
|
|
|
Commercial and commercial real estate:
|
|
|
|
|
|
Commercial
|
|
$
|
458
|
|
415
|
|
Real estate mortgage
|
|
|
693
|
|
702
|
|
Real estate construction
|
|
|
930
|
|
860
|
|
Total commercial and commercial real estate
|
|
|
2,081
|
|
1,977
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
Real estate 1-4 family first mortgage
|
|
|
1,552
|
|
1,497
|
|
Real estate 1-4 family junior lien mortgage
|
|
|
484
|
|
660
|
|
Credit card
|
|
|
683
|
|
680
|
|
Other revolving credit and installment
|
|
|
1,138
|
|
1,160
|
|
Total consumer
|
|
|
3,857
|
|
3,997
|
|
Foreign
|
|
|
|
76
|
|
32
|
|
Total loans
|
|
$
|
6,014
|
|
6,006
|
|
(1) The table above does not include PCI loans that were
contractually 90 days past due and still accruing. These loans
have a related nonaccretable difference that will absorb future
losses; therefore charge-offs on these loans are not expected to
reduce income in future periods to the extent that actual future
loan performance is consistent with original estimates.
|
Loans 90 days or more past due and still accruing totaled $18.9 billion
at September 30, 2009, and $16.7 billion at June 30, 2009. For the same
periods, the totals included $12.9 billion and $10.7 billion,
respectively, in advances pursuant to the Company's servicing agreement
to Government National Mortgage Association (GNMA) mortgage pools and
similar loans whose repayments are insured by the Federal Housing
Administration or guaranteed by the Department of Veterans Affairs.
Allowance for Credit Losses
(Includes Wells Fargo and, beginning December 31, 2008, Wachovia)
The allowance for credit losses, including the reserve for unfunded
commitments, totaled $24.5 billion at September 30, 2009, compared with
$23.5 billion at June 30, 2009. The credit reserve is driven by
management's estimate of inherent losses in the loan portfolio at
September 30, 2009. Of the $1.0 billion reserve increase in the third
quarter, approximately $900 million reflected continued deterioration in
the commercial portfolios. "We continued to see a decline in the quality
of our performing commercial and commercial real estate portfolio as
well as an increase in the amount of life-of-loan reserves taken on
large commercial loans where we believe it is probable that we will not
collect all amounts due," said Loughlin.
The remaining $100 million increase in the reserve relates mostly to the
consumer loan portfolio and is principally due to the increasing level
of residential real estate loan modifications classified as TDRs. The
increased modifications this quarter resulted in an increase in the
allowance of approximately $400 million compared with approximately $265
million last quarter. This increase was offset by approximately
$345 million release in reserves related to performing consumer loans.
"Based on our expectation that consumer related losses will peak in the
first half of 2010 and then begin to gradually decline, the allowance
required for performing consumer loans has decreased when compared to
the allowance at the end of the second quarter 2009," said Loughlin.
The allowance coverage to total loans increased to 3.07 percent compared
with 2.86 percent at June 30, 2009. The allowance coverage to NPLs was
118 percent as of September 30, 2009. "We believe the allowance was
adequate for losses inherent in the loan portfolio at September 30,
2009, including both performing and nonperforming loans," said Loughlin.
Credit Summary
"We are two years into the most difficult credit cycle in recent
memory," said Loughlin. "Economic challenges continue and we expect that
credit costs will remain elevated in the fourth quarter. However, based
on portfolio trends and our current economic outlook, and assuming no
unexpected further deterioration in the economy, we believe consumer
loan losses will peak in the first half of 2010 then gradually decline,
while commercial and commercial real estate loan losses will peak in the
second half of 2010 and then gradually decline. We expect nonperforming
assets to continue to increase in the near term, but at a slower pace as
credit deterioration slows. NPAs are expected to remain elevated through
2010. We are working closely with customers who are having difficulties
to understand their challenges, identify possible solutions and minimize
loss. We believe our experienced and stable management team is well
equipped to navigate through the end of this cycle."
For additional detail on credit quality and trends, please refer to the
quarterly supplement.
Business Segment Performance
Wells Fargo defines its operating segments by product type and customer
segment. Segment net income for each of the three business segments was:
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
|
|
|
Sept. 30,
|
|
June 30,
|
|
(in millions)
|
|
|
2009
|
|
2009
|
|
Community Banking
|
|
$
|
2,667
|
|
2,008
|
|
Wholesale Banking
|
|
|
598
|
|
1,067
|
|
Wealth, Brokerage and Retirement
|
|
|
244
|
|
363
|
More financial information about the business segments is on pages 39
and 40.
Community Banking offers
a complete line of diversified financial products and services for
consumers and small businesses including investment, insurance and trust
services in 39 states and D.C., and mortgage and home equity loans in
all 50 states and D.C.
|
Selected Financial Information
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
|
|
|
Sept. 30,
|
|
June 30,
|
|
(in millions)
|
|
|
2009
|
|
2009
|
|
Total revenue
|
|
$
|
15,143
|
|
14,807
|
|
Provision for credit losses
|
|
|
4,572
|
|
4,264
|
|
Noninterest expense
|
|
|
6,802
|
|
7,665
|
|
Segment net income
|
|
|
2,667
|
|
2,008
|
|
|
|
|
|
|
|
|
|
|
|
(in billions)
|
|
|
|
|
|
Average loans
|
|
|
534.7
|
|
540.7
|
|
Average assets
|
|
|
785.2
|
|
799.2
|
|
Average core deposits
|
|
|
530.3
|
|
543.9
|
Community Banking reported net income of $2.7 billion, up $659 million,
or 131 percent (annualized), from second quarter. Revenue increased $336
million, or 9 percent (annualized), driven by strong regional banking
and mortgage fee income partially offset by a decrease in net interest
margin. Noninterest income increased $420 million, or 28 percent
(annualized), from prior quarter driven by continued strength in
mortgage banking and strong growth in deposit service charges and card
fees. Noninterest expense decreased $863 million, or 45 percent
(annualized), driven by higher second quarter FDIC deposit insurance
assessments as well as expense reductions due to Wachovia merger-related
cost saves. The provision for credit losses increased $308 million, and
included a $236 million credit reserve build compared with a $479
million credit reserve build in the prior quarter.
Regional Banking Highlights for Legacy Wells Fargo
-
Record core product solutions (sales) of 6.84 million, up 10 percent
from prior year on a comparable basis
-
Core sales per platform banker FTE (active, full-time equivalent) of
5.88 per day, up from 5.65 in prior year on a comparable basis
-
Record retail bank household cross-sell of Wells Fargo products of
5.90 products per household; 25 percent of retail bank households had
8 or more products, the Company's long-term goal
-
Sales of Wells Fargo Packages (a checking account
and at least three other products) up 14 percent from prior year,
purchased by 78 percent of new checking account customers
-
Customer loyalty scores up 3 percent, and welcoming and wait time
scores improved 7 percent from prior year (based on customers
conducting transactions with tellers)
-
Business Banking
-
Store-based business solutions up 11 percent from prior year
-
Business Banking household cross-sell of 3.72 products per
household
-
Sales of Wells Fargo Business Services Packages (business
checking account and at least three other business products) up 18
percent from prior year, purchased by 55 percent of new business
checking account customers
Regional Banking Highlights for Wachovia
-
Retail bank household cross-sell of Wachovia products of 4.65 products
per household
-
Wachovia maintained its very high customer experience levels; scores
continued to surpass prior year
Combined Regional Banking
-
Consumer checking accounts up a net 5.2 percent from prior year
-
Business checking accounts up a net 4.1 percent from prior year
-
Opened 15 banking stores for retail network total of 6,653 stores
-
12,352 ATMs across our network, including 3,260 Envelope-FreeSM
webATM machines
-
America's #1 small business lender for 7th consecutive year
(in loans under $100,000), according to 2008 Community Reinvestment
Act (CRA) data
Online Banking
-
16.2 million combined active online customers
-
3.9 million combined active Bill Pay customers
-
Global Finance Magazine ranked Wells Fargo the Best Consumer
Internet Bank in the U.S. (July 2009)
-
Wells Fargo launched customer-to-customer mobile banking money
transfers, a simple and secure way to send funds to family and friends
Wells Fargo Home Mortgage (Home Mortgage)
-
Home Mortgage applications of $123 billion, compared with $194 billion
in prior quarter
-
Home Mortgage application pipeline of $62 billion at quarter end,
compared with $90 billion at June 30, 2009
-
Home Mortgage originations of $96 billion, down from $129 billion in
prior quarter
-
Owned residential mortgage servicing portfolio of $1.7 trillion
Wholesale Banking
provides financial solutions to businesses across the United States with
annual sales generally in excess of $10 million and financial
institutions globally. Products include middle market banking, corporate
banking, commercial real estate, treasury management, asset-based
lending, insurance brokerage, foreign exchange, correspondent banking,
trade services, specialized lending, equipment finance, corporate trust,
investment banking, capital markets and asset management.
|
Selected Financial Information
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
|
|
|
Sept. 30,
|
|
June 30,
|
|
(in millions)
|
|
|
2009
|
|
2009
|
|
Total revenue
|
|
$
|
4,916
|
|
5,238
|
|
Provision for credit losses
|
|
|
1,361
|
|
738
|
|
Noninterest expense
|
|
|
2,630
|
|
2,807
|
|
Segment net income
|
|
|
598
|
|
1,067
|
|
|
|
|
|
|
|
|
|
|
|
(in billions)
|
|
|
|
|
|
Average loans
|
|
|
247.0
|
|
263.5
|
|
Average assets
|
|
|
369.3
|
|
381.7
|
|
Average core deposits
|
|
|
146.9
|
|
138.1
|
Wholesale Banking reported net income of $598 million compared with
$1.07 billion in second quarter 2009. Revenue decreased $322 million,
primarily due to strength in investment banking and capital markets
revenue in the prior quarter, as well as insurance revenue seasonality.
Average core deposits were $147 billion up 25 percent (annualized) from
the prior quarter. Noninterest expense decreased $177 million, primarily
due to lower FDIC deposit insurance assessments. The provision for
credit losses was $1.36 billion, an increase of $623 million from the
prior quarter, and included $627 million of additional provision
recorded to build reserves for the wholesale portfolio, compared with a
credit reserve build of $162 million in the prior quarter.
-
Government and Institutional Banking core deposits up 3 percent and
noninterest income up 9 percent, driven by creation of integrated
national platform of Wachovia and Wells Fargo capabilities, continued
support of client credit needs and expansion in Public Finance
-
Total core deposits up 13 percent and noninterest income up 2 percent
in Global Financial Institutions and Trade Services, as international
bank liquidity continued to improve and trade and payment volumes
increased
-
For 7th time in 8 years, Wells Fargo Shareowner ServicesSM
received the TALON award as transfer agent ranked highest in Overall
Satisfaction
-
Treasury Management introduced enhanced version of CEO Workstation,
an easy-to-use online cash management tool
-
Merger of Wachovia wholesale businesses on track to meet or exceed
expected cost saves and is producing significant new growth
opportunities from acquired businesses such as Government and
Institutional Banking, Global Finance and Institutional Trade, and
Investment Banking and Capital Markets
Wealth, Brokerage and Retirement provides
a full range of financial advisory services to clients using a
comprehensive planning approach to meet each client's needs. Wealth
Management provides affluent and high net worth clients with a complete
range of wealth management solutions including financial planning,
private banking, credit, investment management and trust. Family Wealth
meets the unique needs of the ultra high net worth customers. Retail
Brokerage's financial advisors serve customers' advisory, brokerage and
financial needs as part of one of the largest full-service brokerage
firms in the U.S. Retirement provides retirement services for individual
investors and is a national leader in 401(k) and pension record keeping.
|
Selected Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
|
|
|
Sept. 30,
|
|
June 30,
|
|
(in millions)
|
|
|
2009
|
|
2009
|
|
Total revenue
|
|
$
|
2,966
|
|
2,986
|
|
Provision for credit losses
|
|
|
234
|
|
115
|
|
Noninterest expense
|
|
|
2,314
|
|
2,289
|
|
Segment net income
|
|
|
244
|
|
363
|
|
|
|
|
|
|
|
|
|
|
|
(in billions)
|
|
|
|
|
|
Average loans
|
|
|
45.4
|
|
45.9
|
|
Average assets
|
|
|
108.6
|
|
110.2
|
|
Average core deposits
|
|
|
116.4
|
|
113.5
|
Wealth, Brokerage and Retirement reported net income of $244 million,
compared with $363 million in the prior quarter. Revenue was $3.0
billion consistent with the prior quarter's levels as the strong equity
market recovery led to increases in client assets across the brokerage,
wealth and retirement businesses, driving solid revenue growth,
partially offset by lower realized gains on sales of securities
available for sale in the brokerage business. Total provision for credit
losses increased $119 million from the prior quarter, largely reflecting
a credit reserve build of $137 million in third quarter due to higher
loss rates. Average core deposits increased $2.9 billion, or 10 percent
(annualized), from second quarter, reflecting continued success in
attracting client assets, including deposits.
Retail Brokerage
-
Client assets increased 8 percent to $1.1 trillion from prior quarter
-
Managed account assets increased $23 billion, or 14 percent, from
prior quarter, including net inflows of $8 billion
-
Brokerage transactional revenue increased 2 percent from prior quarter
Wealth Management
-
Continued strong deposit growth, with average balances up 8 percent
from prior quarter
-
Trust assets of $119 billion, up 7 percent from prior quarter
Retirement
-
Retirement plan assets of $271 billion increased $22 billion, or 9
percent, from prior quarter
-
IRA assets of $231 billion increased $20 billion, or 9 percent, from
prior quarter
-
Integrated sales approach, firm stability and scale in the business,
drove key new business wins in institutional retirement
Recorded Message
A recorded message reviewing Wells Fargo's results is available at 5:30
a.m. Pacific Time through October 24, 2009. Dial 866-416-0522 (domestic)
or 706-902-3479 (international). No password is required. The call is
also available online at wellsfargo.com/invest_relations/earnings.
Cautionary Statement About Forward-Looking Information
In accordance with the Private Securities Litigation Reform Act of 1995,
we caution you that this news release contains forward-looking
statements about our future financial performance and business. We make
forward-looking statements when we use words such as "believe,"
"expect," "anticipate," "estimate," "should," "may," "can," "will,"
"outlook," "project" or similar expressions. Forward-looking statements
in this news release include, among others, statements about: (i) future
credit quality, the adequacy of the allowance for loan losses, the level
of nonperforming assets and nonaccrual loans, expected or estimated
future losses in our loan portfolios and life-of-loan loss estimates,
including that we currently expect that credit losses will peak in 2010,
absent further deterioration in the economy, with consumer loan losses
expected to peak in the first half of 2010 and commercial and commercial
real estate loan losses expected to peak later in 2010, and that the
pick-a-pay portfolios, both purchased credit-impaired and non-impaired,
will perform better than management's expectations at the time of the
Wachovia merger; (ii) reduction or mitigation of risk in our loan
portfolios and the effects of loan modification programs; (iii) the
amount and timing of expected integration activities, expenses and cost
savings relating to the Wachovia merger, as well as the expected
synergies and benefits of the merger, including that we currently
estimate merger expenses of approximately $5.5 billion and that we
currently are on track to achieve $5.0 billion annual run rate cost
savings by the expected completion of the integration in 2011; (iv) the
status of our capital requirements under the Supervisory Capital
Assessment Program; and (v) our preliminary estimates to add assets to
our consolidated financial statements upon the implementation of FAS 166
and FAS 167.
Do not unduly rely on forward-looking statements as actual results could
differ materially from expectations. Forward-looking statements speak
only as of the date made, and we do not undertake to update them to
reflect changes or events that occur after that date. Several factors
could cause actual results to differ materially from expectations
including: current and future economic and market conditions, including
the effects of further declines in housing prices and high unemployment
rates; our capital requirements and our ability to generate capital
internally or raise capital on favorable terms; the terms of capital
investments or other financial assistance provided by the U.S.
government; legislative proposals to allow mortgage cram-downs in
bankruptcy or force other loan modifications; the extent of success in
our loan modification efforts; our ability to successfully and timely
integrate the Wachovia merger and realize the expected cost savings and
other benefits, including delays or disruptions in system conversions
and higher severance costs; our ability to realize efficiency
initiatives to lower expenses when and in the amount expected;
recognition of other-than-temporary impairment on securities held in our
available-for-sale portfolio; the effect of changes in interest rates on
our net interest margin and our mortgage originations, mortgage
servicing rights and mortgages held for sale; hedging gains or losses;
disruptions in the capital markets and reduced investor demand for
mortgage loans; our ability to sell more products to our customers; the
effect of the economic recession on the demand for our products and
services; the effect of fluctuations in stock market prices on fee
income from our brokerage, asset and wealth management businesses; our
election to provide support to our mutual funds for structured credit
products they may hold; changes in the value of our venture capital
investments; changes in our accounting policies or in accounting
standards or in how accounting standards are to be applied, including
the implementation of FAS 166 and FAS 167 and its effects on the
consolidation of additional assets on our balance sheet; mergers and
acquisitions; federal and state regulations; reputational damage from
negative publicity, fines, penalties and other negative consequences
from regulatory violations, the loss of checking and saving account
deposits to other investments such as the stock market, and fiscal and
monetary policies of the Federal Reserve Board. There is no assurance
that our allowance for credit losses will be adequate to cover future
credit losses, especially if credit markets, housing prices, and
unemployment do not stabilize or improve. Increases in loan charge-offs
or in the allowance for credit losses and related provision expense
could materially adversely affect our financial results and condition.
There is no assurance that we will meet the SCAP capital requirement on
the November 9, 2009, deadline established by the Federal Reserve Board.
Although we exceeded the requirement at September 30, 2009, our common
equity capital could fall between now and the deadline, causing us not
to meet the requirement. Failure to meet the requirement could result in
the issuance of equity securities or the conversion of preferred
securities into common stock, resulting in substantial dilution to
existing stockholders. There is no assurance as to when or how we will
repay the government's investment or that we will be able to repay the
investment in a manner that does not require the issuance of equity
securities resulting in substantial dilution to existing stockholders.
For more information about factors that could cause actual results to
differ materially from our expectations, refer to our reports filed with
the Securities and Exchange Commission, including our Quarterly Reports
on Form 10-Q for the periods ended March 31, 2009, and June 30, 2009,
and our Annual Report on Form 10-K for the year ended December 31, 2008,
including the discussions under "Risk Factors" in each of those reports,
as filed with the SEC and available on the SEC's website at www.sec.gov.
Any factor described above or in our SEC reports could, by itself or
together with one or more other factors, adversely affect our financial
results and condition.
About Wells Fargo
Wells Fargo & Company is a diversified financial services company with
$1.2 trillion in assets, providing banking, insurance, investments,
mortgage and consumer finance through more than 10,000 stores, over
12,000 ATMs and the internet (wellsfargo.com) across North America and
internationally.
|
Wells Fargo & Company and Subsidiaries
|
|
SUMMARY FINANCIAL DATA (1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended Sept. 30,
|
|
Nine months ended Sept. 30,
|
|
($ in millions, except per share amounts)
|
|
|
2009
|
|
|
2008
|
|
2009
|
|
2008
|
|
For the Period
|
|
|
|
|
|
|
|
|
|
|
Wells Fargo net income
|
|
$
|
3,235
|
|
|
1,637
|
|
9,452
|
|
5,389
|
|
Wells Fargo net income applicable to common stock
|
|
|
2,637
|
|
|
1,637
|
|
7,596
|
|
5,389
|
|
Diluted earnings per common share
|
|
|
0.56
|
|
|
0.49
|
|
1.69
|
|
1.62
|
|
Profitability ratios (annualized):
|
|
|
|
|
|
|
|
|
|
|
|
Wells Fargo net income to average assets (ROA)
|
|
|
1.03
|
%
|
|
1.06
|
|
1.00
|
|
1.21
|
|
|
Net income to average assets
|
|
|
1.06
|
|
|
1.07
|
|
1.02
|
|
1.22
|
|
|
Wells Fargo net income applicable to common stock to average Wells
Fargo common stockholders' equity (ROE)
|
|
|
12.04
|
|
|
13.63
|
|
13.29
|
|
15.02
|
|
|
Net income to average total equity
|
|
|
10.57
|
|
|
13.66
|
|
11.32
|
|
15.06
|
|
Efficiency ratio (3)
|
|
|
52.0
|
|
|
53.0
|
|
54.9
|
|
51.8
|
|
Total revenue
|
|
$
|
22,466
|
|
|
10,377
|
|
65,990
|
|
32,400
|
|
Pre-tax pre-provision profit (PTPP) (4)
|
|
|
10,782
|
|
|
4,876
|
|
29,791
|
|
15,612
|
|
Dividends declared per common share
|
|
|
0.05
|
|
|
0.34
|
|
0.44
|
|
0.96
|
|
Average common shares outstanding
|
|
|
4,678.3
|
|
|
3,316.4
|
|
4,471.2
|
|
3,309.6
|
|
Diluted average common shares outstanding
|
|
|
4,706.4
|
|
|
3,331.0
|
|
4,485.3
|
|
3,323.4
|
|
Average loans
|
|
$
|
810,191
|
|
|
404,203
|
|
833,076
|
|
393,262
|
|
Average assets
|
|
|
1,246,051
|
|
|
614,194
|
|
1,270,071
|
|
594,717
|
|
Average core deposits (5)
|
|
|
759,319
|
|
|
320,074
|
|
759,668
|
|
318,582
|
|
Average retail core deposits (6)
|
|
|
584,414
|
|
|
234,140
|
|
590,499
|
|
230,935
|
|
Net interest margin
|
|
|
4.36
|
%
|
|
4.79
|
|
4.27
|
|
4.80
|
|
At Period End
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale
|
|
$
|
183,814
|
|
|
86,882
|
|
183,814
|
|
86,882
|
|
Loans
|
|
|
799,952
|
|
|
411,049
|
|
799,952
|
|
411,049
|
|
Allowance for loan losses
|
|
|
24,028
|
|
|
7,865
|
|
24,028
|
|
7,865
|
|
Goodwill
|
|
|
24,052
|
|
|
13,520
|
|
24,052
|
|
13,520
|
|
Assets
|
|
|
1,228,625
|
|
|
622,361
|
|
1,228,625
|
|
622,361
|
|
Core deposits (5)
|
|
|
747,913
|
|
|
334,076
|
|
747,913
|
|
334,076
|
|
Wells Fargo stockholders' equity
|
|
|
122,150
|
|
|
46,957
|
|
122,150
|
|
46,957
|
|
Total equity
|
|
|
128,924
|
|
|
47,259
|
|
128,924
|
|
47,259
|
|
Capital ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Wells Fargo common stockholders' equity to assets
|
|
|
7.41
|
%
|
|
7.54
|
|
7.41
|
|
7.54
|
|
|
Total equity to assets
|
|
|
10.49
|
|
|
7.59
|
|
10.49
|
|
7.59
|
|
|
Average Wells Fargo common stockholders' equity to average assets
|
|
|
6.98
|
|
|
7.78
|
|
6.02
|
|
8.06
|
|
|
Average total equity to average assets
|
|
|
9.99
|
|
|
7.83
|
|
8.98
|
|
8.11
|
|
|
Risk-based capital (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital
|
|
|
10.63
|
|
|
8.59
|
|
10.63
|
|
8.59
|
|
|
|
Total capital
|
|
|
14.66
|
|
|
11.51
|
|
14.66
|
|
11.51
|
|
|
Tier 1 leverage (7)
|
|
|
9.03
|
|
|
7.54
|
|
9.03
|
|
7.54
|
|
Book value per common share
|
|
$
|
19.46
|
|
|
14.14
|
|
19.46
|
|
14.14
|
|
Team members (active, full-time equivalent)
|
|
|
265,100
|
|
|
159,000
|
|
265,100
|
|
159,000
|
|
Common stock price:
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
29.56
|
|
|
44.68
|
|
30.47
|
|
44.68
|
|
|
Low
|
|
|
22.08
|
|
|
20.46
|
|
7.80
|
|
20.46
|
|
|
Period end
|
|
|
28.18
|
|
|
37.53
|
|
28.18
|
|
37.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Wells Fargo & Company (Wells Fargo) acquired Wachovia Corporation
(Wachovia) on December 31, 2008. Because the acquisition was
completed on December 31, 2008, Wachovia's results are included in
the income statement, average balances and related metrics beginning
in 2009. Wachovia's assets and liabilities are included in the
consolidated balance sheet beginning on December 31, 2008.
|
|
(2)
|
On January 1, 2009, we adopted new accounting guidance on
noncontrolling interests contained in FASB ASC 810-10, Consolidation
(Statement of Financial Accounting Standards (FAS) No. 160, Noncontrolling
Interests in Consolidated Financial Statements - an amendment of ARB
No. 51), on a retrospective basis for disclosure and,
accordingly, prior period information reflects the adoption. The
guidance requires that noncontrolling interests be reported as a
component of total equity.
|
|
(3)
|
The efficiency ratio is noninterest expense divided by total revenue
(net interest income and noninterest income).
|
|
(4)
|
Pre-tax pre-provision profit (PTPP) is total revenue less
noninterest expense. Management believes that PTPP is a useful
financial measure because it enables investors and others to assess
the Company's ability to generate capital to cover credit losses
through a credit cycle.
|
|
(5)
|
Core deposits are noninterest-bearing deposits, interest-bearing
checking, savings certificates, market rate and other savings, and
certain foreign deposits (Eurodollar sweep balances).
|
|
(6)
|
Retail core deposits are total core deposits excluding Wholesale
Banking core deposits and retail mortgage escrow deposits.
|
|
(7)
|
The September 30, 2009, ratios are preliminary.
|
|
Wells Fargo & Company and Subsidiaries
|
|
FIVE QUARTER SUMMARY FINANCIAL DATA (1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
|
Sept. 30,
|
|
June 30,
|
|
Mar. 31,
|
|
Dec. 31,
|
|
Sept. 30,
|
|
($ in millions, except per share amounts)
|
|
|
2009
|
|
2009
|
|
2009
|
|
2008
|
|
|
2008
|
|
For the Quarter
|
|
|
|
|
|
|
|
|
|
|
|
Wells Fargo net income (loss)
|
|
$
|
3,235
|
|
3,172
|
|
3,045
|
|
(2,734
|
)
|
|
1,637
|
|
Wells Fargo net income (loss) applicable to common stock
|
|
|
2,637
|
|
2,575
|
|
2,384
|
|
(3,020
|
)
|
|
1,637
|
|
Diluted earnings (loss) per common share
|
|
|
0.56
|
|
0.57
|
|
0.56
|
|
(0.84
|
)
|
|
0.49
|
|
Profitability ratios (annualized):
|
|
|
|
|
|
|
|
|
|
|
|
|
Wells Fargo net income (loss) to average assets (ROA)
|
|
|
1.03
|
%
|
1.00
|
|
0.96
|
|
(1.72
|
)
|
|
1.06
|
|
|
Net income (loss) to average assets
|
|
|
1.06
|
|
1.02
|
|
0.97
|
|
(1.72
|
)
|
|
1.07
|
|
|
Wells Fargo net income (loss) applicable to common stock to
average Wells Fargo common stockholders' equity (ROE)
|
|
|
12.04
|
|
13.70
|
|
14.49
|
|
(22.32
|
)
|
|
13.63
|
|
|
Net income (loss) to average total equity
|
|
|
10.57
|
|
11.56
|
|
11.97
|
|
(15.53
|
)
|
|
13.66
|
|
Efficiency ratio (3)
|
|
|
52.0
|
|
56.4
|
|
56.2
|
|
61.3
|
|
|
53.0
|
|
Total revenue
|
|
$
|
22,466
|
|
22,507
|
|
21,017
|
|
9,477
|
|
|
10,377
|
|
Pre-tax pre-provision profit (PTPP) (4)
|
|
|
10,782
|
|
9,810
|
|
9,199
|
|
3,667
|
|
|
4,876
|
|
Dividends declared per common share
|
|
|
0.05
|
|
0.05
|
|
0.34
|
|
0.34
|
|
|
0.34
|
|
Average common shares outstanding
|
|
|
4,678.3
|
|
4,483.1
|
|
4,247.4
|
|
3,582.4
|
|
|
3,316.4
|
|
Diluted average common shares outstanding
|
|
|
4,706.4
|
|
4,501.6
|
|
4,249.3
|
|
3,593.6
|
|
|
3,331.0
|
|
Average loans
|
|
$
|
810,191
|
|
833,945
|
|
855,591
|
|
413,940
|
|
|
404,203
|
|
Average assets
|
|
|
1,246,051
|
|
1,274,926
|
|
1,289,716
|
|
633,223
|
|
|
614,194
|
|
Average core deposits (5)
|
|
|
759,319
|
|
765,697
|
|
753,928
|
|
344,957
|
|
|
320,074
|
|
Average retail core deposits (6)
|
|
|
584,414
|
|
596,648
|
|
590,502
|
|
243,464
|
|
|
234,140
|
|
Net interest margin
|
|
|
4.36
|
%
|
4.30
|
|
4.16
|
|
4.90
|
|
|
4.79
|
|
At Quarter End
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale
|
|
$
|
183,814
|
|
206,795
|
|
178,468
|
|
151,569
|
|
|
86,882
|
|
Loans
|
|
|
799,952
|
|
821,614
|
|
843,579
|
|
864,830
|
|
|
411,049
|
|
Allowance for loan losses
|
|
|
24,028
|
|
23,035
|
|
22,281
|
|
21,013
|
|
|
7,865
|
|
Goodwill
|
|
|
24,052
|
|
24,619
|
|
23,825
|
|
22,627
|
|
|
13,520
|
|
Assets
|
|
|
1,228,625
|
|
1,284,176
|
|
1,285,891
|
|
1,309,639
|
|
|
622,361
|
|
Core deposits (5)
|
|
|
747,913
|
|
761,122
|
|
756,183
|
|
745,432
|
|
|
334,076
|
|
Wells Fargo stockholders' equity
|
|
|
122,150
|
|
114,623
|
|
100,295
|
|
99,084
|
|
|
46,957
|
|
Total equity
|
|
|
128,924
|
|
121,382
|
|
107,057
|
|
102,316
|
|
|
47,259
|
|
Capital ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
Wells Fargo common stockholders' equity to assets
|
|
|
7.41
|
%
|
6.51
|
|
5.40
|
|
5.21
|
|
|
7.54
|
|
|
Total equity to assets
|
|
|
10.49
|
|
9.45
|
|
8.33
|
|
7.81
|
|
|
7.59
|
|
|
Average Wells Fargo common stockholders' equity to average assets
|
|
|
6.98
|
|
5.92
|
|
5.17
|
|
8.50
|
|
|
7.78
|
|
|
Average total equity to average assets
|
|
|
9.99
|
|
8.85
|
|
8.11
|
|
11.09
|
|
|
7.83
|
|
|
Risk-based capital (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital
|
|
|
10.63
|
|
9.80
|
|
8.30
|
|
7.84
|
|
|
8.59
|
|
|
|
Total capital
|
|
|
14.66
|
|
13.84
|
|
12.30
|
|
11.83
|
|
|
11.51
|
|
|
Tier 1 leverage (7)
|
|
|
9.03
|
|
8.32
|
|
7.09
|
|
14.52
|
|
|
7.54
|
|
Book value per common share
|
|
$
|
19.46
|
|
17.91
|
|
16.28
|
|
16.15
|
|
|
14.14
|
|
Team members (active, full-time equivalent)
|
|
|
265,100
|
|
269,900
|
|
272,800
|
|
270,800
|
|
|
159,000
|
|
Common stock price:
|
|
|
|
|
|
|
|
|
|
|
|
|
High
|
|
$
|
29.56
|
|
28.45
|
|
30.47
|
|
38.95
|
|
|
44.68
|
|
|
Low
|
|
|
22.08
|
|
13.65
|
|
7.80
|
|
19.89
|
|
|
20.46
|
|
|
Period end
|
|
|
28.18
|
|
24.26
|
|
14.24
|
|
29.48
|
|
|
37.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Wells Fargo & Company (Wells Fargo) acquired Wachovia Corporation
(Wachovia) on December 31, 2008. Because the acquisition was
completed on December 31, 2008, Wachovia's results are included in
the income statement, average balances and related metrics beginning
in 2009. Wachovia's assets and liabilities are included in the
consolidated balance sheet beginning on December 31, 2008.
|
|
(2)
|
On January 1, 2009, we adopted new accounting guidance on
noncontrolling interests contained in FASB ASC 810-10, Consolidation
(Statement of Financial Accounting Standards (FAS) No. 160, Noncontrolling
Interests in Consolidated Financial Statements - an amendment of ARB
No. 51), on a retrospective basis for disclosure and,
accordingly, prior period information reflects the adoption. The
guidance requires that noncontrolling interests be reported as a
component of total equity.
|
|
(3)
|
The efficiency ratio is noninterest expense divided by total revenue
(net interest income and noninterest income).
|
|
(4)
|
Pre-tax pre-provision profit (PTPP) is total revenue less
noninterest expense. Management believes that PTPP is a useful
financial measure because it enables investors and others to assess
the Company's ability to generate capital to cover credit losses
through a credit cycle.
|
|
(5)
|
Core deposits are noninterest-bearing deposits, interest-bearing
checking, savings certificates, market rate and other savings, and
certain foreign deposits (Eurodollar sweep balances).
|
|
(6)
|
Retail core deposits are total core deposits excluding Wholesale
Banking core deposits and retail mortgage escrow deposits.
|
|
(7)
|
The September 30, 2009, ratios are preliminary. Because the Wachovia
acquisition was completed on December 31, 2008, the Tier 1 leverage
ratio at December 31, 2008, which considers period-end Tier 1
capital and quarterly average assets in the computation of the
ratio, does not reflect average assets of Wachovia for 2008.
|
|
Wells Fargo & Company and Subsidiaries
|
|
CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended Sept. 30,
|
|
Nine months ended Sept. 30,
|
|
(in millions, except per share amounts)
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
Trading assets
|
|
$
|
216
|
|
|
41
|
|
|
688
|
|
|
126
|
|
|
Securities available for sale
|
|
|
2,947
|
|
|
1,397
|
|
|
8,543
|
|
|
3,753
|
|
|
Mortgages held for sale
|
|
|
524
|
|
|
394
|
|
|
1,484
|
|
|
1,211
|
|
|
Loans held for sale
|
|
|
34
|
|
|
12
|
|
|
151
|
|
|
34
|
|
|
Loans
|
|
|
10,170
|
|
|
6,888
|
|
|
31,467
|
|
|
20,906
|
|
|
Other interest income
|
|
|
77
|
|
|
42
|
|
|
249
|
|
|
140
|
|
|
|
Total interest income
|
|
|
13,968
|
|
|
8,774
|
|
|
42,582
|
|
|
26,170
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
905
|
|
|
1,019
|
|
|
2,861
|
|
|
3,676
|
|
|
Short-term borrowings
|
|
|
32
|
|
|
492
|
|
|
210
|
|
|
1,274
|
|
|
Long-term debt
|
|
|
1,301
|
|
|
882
|
|
|
4,565
|
|
|
2,801
|
|
|
Other interest expense
|
|
|
46
|
|
|
-
|
|
|
122
|
|
|
-
|
|
|
|
Total interest expense
|
|
|
2,284
|
|
|
2,393
|
|
|
7,758
|
|
|
7,751
|
|
|
Net interest income
|
|
|
11,684
|
|
|
6,381
|
|
|
34,824
|
|
|
18,419
|
|
|
Provision for credit losses
|
|
|
6,111
|
|
|
2,495
|
|
|
15,755
|
|
|
7,535
|
|
|
Net interest income after provision for credit losses
|
|
|
5,573
|
|
|
3,886
|
|
|
19,069
|
|
|
10,884
|
|
|
Noninterest income
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
1,478
|
|
|
839
|
|
|
4,320
|
|
|
2,387
|
|
|
Trust and investment fees
|
|
|
2,502
|
|
|
738
|
|
|
7,130
|
|
|
2,263
|
|
|
Card fees
|
|
|
946
|
|
|
601
|
|
|
2,722
|
|
|
1,747
|
|
|
Other fees
|
|
|
950
|
|
|
552
|
|
|
2,814
|
|
|
1,562
|
|
|
Mortgage banking
|
|
|
3,067
|
|
|
892
|
|
|
8,617
|
|
|
2,720
|
|
|
Insurance
|
|
|
468
|
|
|
439
|
|
|
1,644
|
|
|
1,493
|
|
|
Net gains (losses) on debt securities available for sale (includes
impairment losses of $273 and $850, consisting of $314 and $1,889
of total other-than-temporary impairment losses, net of $41 and
$1,039 recognized in other comprehensive income, for the quarter
and nine months ended September 30, 2009, respectively)
|
|
|
(40
|
)
|
|
84
|
|
|
(237
|
)
|
|
316
|
|
|
Net gains (losses) from equity investments
|
|
|
29
|
|
|
(509
|
)
|
|
(88
|
)
|
|
(149
|
)
|
|
Other
|
|
|
1,382
|
|
|
360
|
|
|
4,244
|
|
|
1,642
|
|
|
|
Total noninterest income
|
|
|
10,782
|
|
|
3,996
|
|
|
31,166
|
|
|
13,981
|
|
|
Noninterest expense
|
|
|
|
|
|
|
|
|
|
Salaries
|
|
|
3,428
|
|
|
2,078
|
|
|
10,252
|
|
|
6,092
|
|
|
Commission and incentive compensation
|
|
|
2,051
|
|
|
555
|
|
|
5,935
|
|
|
2,005
|
|
|
Employee benefits
|
|
|
1,034
|
|
|
486
|
|
|
3,545
|
|
|
1,666
|
|
|
Equipment
|
|
|
563
|
|
|
302
|
|
|
1,825
|
|
|
955
|
|
|
Net occupancy
|
|
|
778
|
|
|
402
|
|
|
2,357
|
|
|
1,201
|
|
|
Core deposit and other intangibles
|
|
|
642
|
|
|
47
|
|
|
1,935
|
|
|
139
|
|
|
FDIC and other deposit assessments
|
|
|
228
|
|
|
37
|
|
|
1,547
|
|
|
63
|
|
|
Other
|
|
|
2,960
|
|
|
1,594
|
|
|
8,803
|
|
|
4,667
|
|
|
|
Total noninterest expense
|
|
|
11,684
|
|
|
5,501
|
|
|
36,199
|
|
|
16,788
|
|
|
Income before income tax expense
|
|
|
4,671
|
|
|
2,381
|
|
|
14,036
|
|
|
8,077
|
|
|
Income tax expense
|
|
|
1,355
|
|
|
730
|
|
|
4,382
|
|
|
2,638
|
|
|
Net income before noncontrolling interests
|
|
|
3,316
|
|
|
1,651
|
|
|
9,654
|
|
|
5,439
|
|
|
Less: Net income from noncontrolling interests
|
|
|
81
|
|
|
14
|
|
|
202
|
|
|
50
|
|
|
Wells Fargo net income
|
|
$
|
3,235
|
|
|
1,637
|
|
|
9,452
|
|
|
5,389
|
|
|
Wells Fargo net income applicable to common stock
|
|
$
|
2,637
|
|
|
1,637
|
|
|
7,596
|
|
|
5,389
|
|
|
Per share information
|
|
|
|
|
|
|
|
|
|
Earnings per common share
|
|
$
|
0.56
|
|
|
0.49
|
|
|
1.70
|
|
|
1.63
|
|
|
Diluted earnings per common share
|
|
|
0.56
|
|
|
0.49
|
|
|
1.69
|
|
|
1.62
|
|
|
Dividends declared per common share
|
|
|
0.05
|
|
|
0.34
|
|
|
0.44
|
|
|
0.96
|
|
|
Average common shares outstanding
|
|
|
4,678.3
|
|
|
3,316.4
|
|
|
4,471.2
|
|
|
3,309.6
|
|
|
Diluted average common shares outstanding
|
|
|
4,706.4
|
|
|
3,331.0
|
|
|
4,485.3
|
|
|
3,323.4
|
|
|
Wells Fargo & Company and Subsidiaries
|
|
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended
|
|
|
|
|
|
Sept. 30,
|
|
June 30,
|
|
Mar. 31,
|
|
Dec. 31,
|
|
Sept. 30,
|
|
(in millions, except per share amounts)
|
|
2009
|
|
2009
|
|
2009
|
|
2008
|
|
2008
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
Trading assets
|
|
$
|
216
|
|
|
206
|
|
|
266
|
|
|
51
|
|
|
41
|
|
|
Securities available for sale
|
|
|
2,947
|
|
|
2,887
|
|
|
2,709
|
|
|
1,534
|
|
|
1,397
|
|
|
Mortgages held for sale
|
|
|
524
|
|
|
545
|
|
|
415
|
|
|
362
|
|
|
394
|
|
|
Loans held for sale
|
|
|
34
|
|
|
50
|
|
|
67
|
|
|
14
|
|
|
12
|
|
|
Loans
|
|
|
10,170
|
|
|
10,532
|
|
|
10,765
|
|
|
6,726
|
|
|
6,888
|
|
|
Other interest income
|
|
|
77
|
|
|
81
|
|
|
91
|
|
|
41
|
|
|
42
|
|
|
|
Total interest income
|
|
|
13,968
|
|
|
14,301
|
|
|
14,313
|
|
|
8,728
|
|
|
8,774
|
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
905
|
|
|
957
|
|
|
999
|
|
|
845
|
|
|
1,019
|
|
|
Short-term borrowings
|
|
|
32
|
|
|
55
|
|
|
123
|
|
|
204
|
|
|
492
|
|
|
Long-term debt
|
|
|
1,301
|
|
|
1,485
|
|
|
1,779
|
|
|
955
|
|
|
882
|
|
|
Other interest expense
|
|
|
46
|
|
|
40
|
|
|
36
|
|
|
-
|
|
|
-
|
|
|
|
Total interest expense
|
|
|
2,284
|
|
|
2,537
|
|
|
2,937
|
|
|
2,004
|
|
|
2,393
|
|
|
Net interest income
|
|
|
11,684
|
|
|
11,764
|
|
|
11,376
|
|
|
6,724
|
|
|
6,381
|
|
|
Provision for credit losses
|
|
|
6,111
|
|
|
5,086
|
|
|
4,558
|
|
|
8,444
|
|
|
2,495
|
|
|
Net interest income after provision for credit losses
|
|
|
5,573
|
|
|
6,678
|
|
|
6,818
|
|
|
(1,720
|
)
|
|
3,886
|
|
|
Noninterest income
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
1,478
|
|
|
1,448
|
|
|
1,394
|
|
|
803
|
|
|
839
|
|
|
Trust and investment fees
|
|
|
2,502
|
|
|
2,413
|
|
|
2,215
|
|
|
661
|
|
|
738
|
|
|
Card fees
|
|
|
946
|
|
|
923
|
|
|
853
|
|
|
589
|
|
|
601
|
|
|
Other fees
|
|
|
950
|
|
|
963
|
|
|
901
|
|
|
535
|
|
|
552
|
|
|
Mortgage banking
|
|
|
3,067
|
|
|
3,046
|
|
|
2,504
|
|
|
(195
|
)
|
|
892
|
|
|
Insurance
|
|
|
468
|
|
|
595
|
|
|
581
|
|
|
337
|
|
|
439
|
|
|
Net gains (losses) on debt securities available for sale
|
|
|
(40
|
)
|
|
(78
|
)
|
|
(119
|
)
|
|
721
|
|
|
84
|
|
|
Net gains (losses) from equity investments
|
|
|
29
|
|
|
40
|
|
|
(157
|
)
|
|
(608
|
)
|
|
(509
|
)
|
|
Other
|
|
|
1,382
|
|
|
1,393
|
|
|
1,469
|
|
|
(90
|
)
|
|
360
|
|
|
|
Total noninterest income
|
|
|
10,782
|
|
|
10,743
|
|
|
9,641
|
|
|
2,753
|
|
|
3,996
|
|
|
Noninterest expense
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
|
|
|
3,428
|
|
|
3,438
|
|
|
3,386
|
|
|
2,168
|
|
|
2,078
|
|
|
Commission and incentive compensation
|
|
|
2,051
|
|
|
2,060
|
|
|
1,824
|
|
|
671
|
|
|
555
|
|
|
Employee benefits
|
|
|
1,034
|
|
|
1,227
|
|
|
1,284
|
|
|
338
|
|
|
486
|
|
|
Equipment
|
|
|
563
|
|
|
575
|
|
|
687
|
|
|
402
|
|
|
302
|
|
|
Net occupancy
|
|
|
778
|
|
|
783
|
|
|
796
|
|
|
418
|
|
|
402
|
|
|
Core deposit and other intangibles
|
|
|
642
|
|
|
646
|
|
|
647
|
|
|
47
|
|
|
47
|
|
|
FDIC and other deposit assessments
|
|
|
228
|
|
|
981
|
|
|
338
|
|
|
57
|
|
|
37
|
|
|
Other
|
|
|
2,960
|
|
|
2,987
|
|
|
2,856
|
|
|
1,709
|
|
|
1,594
|
|
|
|
Total noninterest expense
|
|
|
11,684
|
|
|
12,697
|
|
|
11,818
|
|
|
5,810
|
|
|
5,501
|
|
|
Income (loss) before income tax expense (benefit)
|
|
|
4,671
|
|
|
4,724
|
|
|
4,641
|
|
|
(4,777
|
)
|
|
2,381
|
|
|
Income tax expense (benefit)
|
|
|
1,355
|
|
|
1,475
|
|
|
1,552
|
|
|
(2,036
|
)
|
|
730
|
|
|
Net income (loss) before noncontrolling interests
|
|
|
3,316
|
|
|
3,249
|
|
|
3,089
|
|
|
(2,741
|
)
|
|
1,651
|
|
|
Less: Net income (loss) from noncontrolling interests
|
|
|
81
|
|
|
77
|
|
|
44
|
|
|
(7
|
)
|
|
14
|
|
|
Wells Fargo net income (loss)
|
|
$
|
3,235
|
|
|
3,172
|
|
|
3,045
|
|
|
(2,734
|
)
|
|
1,637
|
|
|
Wells Fargo net income (loss) applicable to common stock
|
|
$
|
2,637
|
|
|
2,575
|
|
|
2,384
|
|
|
(3,020
|
)
|
|
1,637
|
|
|
Per share information
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share
|
|
$
|
0.56
|
|
|
0.58
|
|
|
0.56
|
|
|
(0.84
|
)
|
|
0.49
|
|
|
Diluted earnings (loss) per common share
|
|
|
0.56
|
|
|
0.57
|
|
|
0.56
|
|
|
(0.84
|
)
|
|
0.49
|
|
|
Dividends declared per common share
|
|
|
0.05
|
|
|
0.05
|
|
|
0.34
|
|
|
0.34
|
|
|
0.34
|
|
|
Average common shares outstanding
|
|
|
4,678.3
|
|
|
4,483.1
|
|
|
4,247.4
|
|
|
3,582.4
|
|
|
3,316.4
|
|
|
Diluted average common shares outstanding
|
|
|
4,706.4
|
|
|
4,501.6
|
|
|
4,249.3
|
|
|
3,593.6
|
|
|
3,331.0
|
|
|
Wells Fargo & Company and Subsidiaries
|
|
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT
BASIS) (1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended September 30,
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
|
|
|
|
Interest
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
Yields/
|
|
|
income/
|
|
Average
|
|
Yields/
|
|
|
income/
|
|
(in millions)
|
|
balance
|
|
rates
|
|
|
expense
|
|
balance
|
|
rates
|
|
|
expense
|
|
Earning assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold, securities purchased under resale agreements
and other short-term investments
|
|
$
|
16,356
|
|
|
0.66
|
%
|
|
$
|
27
|
|
3,463
|
|
|
2.09
|
%
|
|
$
|
18
|
|
Trading assets
|
|
|
|
20,518
|
|
|
4.29
|
|
|
|
221
|
|
4,838
|
|
|
3.72
|
|
|
|
46
|
|
Debt securities available for sale (3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities of U.S. Treasury and federal agencies
|
|
|
2,545
|
|
|
3.79
|
|
|
|
24
|
|
1,141
|
|
|
3.99
|
|
|
|
11
|
|
|
Securities of U.S. states and political subdivisions
|
|
|
12,818
|
|
|
6.28
|
|
|
|
204
|
|
7,211
|
|
|
6.65
|
|
|
|
124
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal agencies
|
|
|
94,457
|
|
|
5.34
|
|
|
|
1,221
|
|
50,528
|
|
|
5.83
|
|
|
|
731
|
|
|
|
Residential and commercial
|
|
|
43,214
|
|
|
9.56
|
|
|
|
1,089
|
|
21,358
|
|
|
5.82
|
|
|
|
346
|
|
|
|
|
Total mortgage-backed securities
|
|
|
137,671
|
|
|
6.75
|
|
|
|
2,310
|
|
71,886
|
|
|
5.83
|
|
|
|
1,077
|
|
|
Other debt securities (4)
|
|
|
33,294
|
|
|
7.00
|
|
|
|
568
|
|
12,622
|
|
|
7.17
|
|
|
|
248
|
|
|
|
|
|
Total debt securities available for sale (4)
|
|
|
186,328
|
|
|
6.72
|
|
|
|
3,106
|
|
92,860
|
|
|
6.06
|
|
|
|
1,460
|
|
Mortgages held for sale (5)
|
|
|
40,604
|
|
|
5.16
|
|
|
|
524
|
|
24,990
|
|
|
6.31
|
|
|
|
394
|
|
Loans held for sale (5)
|
|
|
4,975
|
|
|
2.67
|
|
|
|
34
|
|
677
|
|
|
6.95
|
|
|
|
12
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and commercial real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
175,642
|
|
|
4.34
|
|
|
|
1,919
|
|
100,688
|
|
|
5.92
|
|
|
|
1,496
|
|
|
|
Real estate mortgage
|
|
|
103,450
|
|
|
3.39
|
|
|
|
883
|
|
43,616
|
|
|
5.60
|
|
|
|
615
|
|
|
|
Real estate construction
|
|
|
32,649
|
|
|
3.02
|
|
|
|
249
|
|
19,715
|
|
|
4.82
|
|
|
|
238
|
|
|
|
Lease financing
|
|
|
14,360
|
|
|
9.14
|
|
|
|
328
|
|
7,250
|
|
|
5.48
|
|
|
|
100
|
|
|
|
|
Total commercial and commercial real estate
|
|
|
326,101
|
|
|
4.12
|
|
|
|
3,379
|
|
171,269
|
|
|
5.69
|
|
|
|
2,449
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate 1-4 family first mortgage
|
|
|
235,051
|
|
|
5.35
|
|
|
|
3,154
|
|
76,197
|
|
|
6.64
|
|
|
|
1,265
|
|
|
|
Real estate 1-4 family junior lien mortgage
|
|
|
105,779
|
|
|
4.62
|
|
|
|
1,229
|
|
75,379
|
|
|
6.36
|
|
|
|
1,206
|
|
|
|
Credit card
|
|
|
|
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