WELLS FARGO & CO/MN - 10-Q Quarterly Report

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

FORM 10-Q

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

For the quarterly period ended June 30, 2002

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

Commission file number 001-2979

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

Delaware
(State or other jurisdiction of
incorporation or organization)

41-0449260
(I.R.S. Employer
Identification No.)

420 Montgomery Street, San Francisco, California 94163
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 1-800-411-4932

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 ý No o

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

		Shares Outstanding July 31, 2002
Common stock, $1-2/3 par value		1,698,750,534

FORM 10-Q
TABLE OF CONTENTS

		Page
PART I	Financial Information
Item 1.	Financial Statements
	Consolidated Statement of Income	2
	Consolidated Balance Sheet	3
	Consolidated Statement of Changes in Stockholders' Equity and Comprehensive Income	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 (MD&A)
	Summary Financial Data	22
	Overview	23
	Earnings Performance	25
	Net Interest Income	25
	Noninterest Income	29
	Noninterest Expense	31
	Operating Segment Results	32
	Balance Sheet Analysis	33
	Securities Available for Sale	33
	Loan Portfolio	35
	Nonaccrual Loans and Other Assets	35
	Loans 90 Days Past Due and Still Accruing	38
	Allowance for Loan Losses	39
	Interest Receivable and Other Assets	40
	Deposits	41
	Capital Adequacy/Ratios	41
	Off-Balance Sheet Transactions	42
	Asset/Liability and Market Risk Management	43
	Capital Management	47
	Factors that May Affect Future Results	47
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
PART II	Other Information
Item 2.	Changes in Securities and Use of Proceeds	54
Item 4.	Submission of Matters to a Vote of Security Holders	54
Item 5.	Other Events	55
Item 6.	Exhibits and Reports on Form 8-K	55
Signature		58

The information furnished in these interim statements reflects all adjustments that 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. The interim financial information should be read in conjunction with Wells Fargo & Company's 2001 Annual Report on Form 10-K.

PART I—FINANCIAL INFORMATION

WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME


		Quarter ended June 30,						Six months ended June 30,
(in millions, except per share amounts)		2002			2001			2002			2001

INTEREST INCOME
Securities available for sale		$	656		$	611		$	1,312		$	1,215
Mortgages held for sale			440			373			1,031			630
Loans held for sale			73			89			142			182
Loans			3,379			3,668			6,671			7,511
Other interest income			79			75			151			158

	Total interest income		4,627			4,816			9,307			9,696

INTEREST EXPENSE
Deposits			483			983			977			2,104
Short-term borrowings			131			328			305			722
Long-term debt			344			479			674			1,008
Guaranteed preferred beneficial interests in Company's subordinated debentures			30			18			58			35

	Total interest expense		988			1,808			2,014			3,869

NET INTEREST INCOME			3,639			3,008			7,293			5,827
Provision for loan losses			410			427			900			788

Net interest income after provision for loan losses			3,229			2,581			6,393			5,039

NONINTEREST INCOME
Service charges on deposit accounts			547			471			1,052			900
Trust and investment fees			451			417			890			832
Credit card fees			223			196			424			377
Other fees			326			311			637			618
Mortgage banking			412			517			772			908
Insurance			269			210			532			327
Net gains (losses) on debt securities available for sale			45			(19	)		81			69
Loss from equity investments			(58	)		(1,556	)		(78	)		(1,419	)
Other			163			(2	)		369			347

	Total noninterest income		2,378			545			4,679			2,959

NONINTEREST EXPENSE
Salaries			1,106			1,018			2,182			1,995
Incentive compensation			362			265			719			469
Employee benefits			364			236			693			514
Equipment			228			217			464			454
Net occupancy			274			239			543			476
Goodwill			—			152			—			296
Core deposit intangibles			39			41			79			84
Net losses (gains) on dispositions of premises and equipment			29			—			27			(19	)
Other			1,003			1,087			2,025			1,982

	Total noninterest expense		3,405			3,255			6,732			6,251

INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT) AND EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			2,202			(129	)		4,340			1,747
Income tax expense (benefit)			782			(42	)		1,541			669

NET INCOME (LOSS) BEFORE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			1,420			(87	)		2,799			1,078
Cumulative effect of change in accounting principle			—			—			(276	)		—

NET INCOME (LOSS)		$	1,420		$	(87	)	$	2,523		$	1,078

NET INCOME (LOSS) APPLICABLE TO COMMON STOCK		$	1,419		$	(91	)	$	2,521		$	1,069

EARNINGS (LOSS) PER COMMON SHARE BEFORE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
	Earnings (loss) per common share	$	.83		$	(.05	)	$	1.64		$	.62

	Diluted earnings (loss) per common share	$	.82		$	(.05	)	$	1.62		$	.62

EARNINGS (LOSS) PER COMMON SHARE
	Earnings (loss) per common share	$	.83		$	(.05	)	$	1.48		$	.62

	Diluted earnings (loss) per common share	$	.82		$	(.05	)	$	1.46		$	.62

DIVIDENDS DECLARED PER COMMON SHARE		$	.28		$	.24		$	.54		$	.48

Average common shares outstanding			1,710.4			1,714.9			1,706.7			1,715.4

Diluted average common shares outstanding			1,730.8			1,714.9			1,725.1			1,736.0

WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET


(in millions, except shares)		June 30, 2002			December 31, 2001			June 30, 2001

ASSETS
Cash and due from banks		$	14,701		$	16,968		$	15,966
Federal funds sold and securities purchased under resale agreements			3,741			2,530			3,013
Securities available for sale			37,132			40,308			41,290
Mortgages held for sale			24,685			30,405			22,446
Loans held for sale			5,165			4,745			4,615
Loans			185,001			172,499			164,754
Allowance for loan losses			3,883			3,761			3,760

	Net loans		181,118			168,738			160,994

Mortgage servicing rights			5,956			6,241			6,076
Premises and equipment, net			3,638			3,549			3,531
Core deposit intangibles			944			1,013			1,093
Goodwill			9,724			9,527			9,607
Interest receivable and other assets			27,998			23,545			21,127

	Total assets	$	314,802		$	307,569		$	289,758

LIABILITIES
Noninterest-bearing deposits		$	61,499		$	65,362		$	56,774
Interest-bearing deposits			131,712			121,904			121,484

	Total deposits		193,211			187,266			178,258
Short-term borrowings			30,107			37,782			31,678
Accrued expenses and other liabilities			17,159			16,777			16,487
Long-term debt			41,913			36,095			35,339
Guaranteed preferred beneficial interests in Company's subordinated debentures			2,885			2,435			935
STOCKHOLDERS' EQUITY
Preferred stock			341			218			485
Unearned ESOP shares			(287	)		(154	)		(226	)

	Total preferred stock		54			64			259
Common stock—$1-2/3 par value, authorized 6,000,000,000 shares; issued 1,736,381,025 shares			2,894			2,894			2,894
Additional paid-in capital			9,488			9,436			9,427
Retained earnings			17,530			16,005			14,616
Cumulative other comprehensive income			919			752			1,054
Treasury stock—26,756,638 shares, 40,886,028 shares and 22,993,569 shares			(1,358	)		(1,937	)		(1,189	)

	Total stockholders' equity		29,527			27,214			27,061

	Total liabilities and stockholders' equity	$	314,802		$	307,569		$	289,758

WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME


(in millions, except shares)			Number of shares	Preferred stock			Unearned ESOP shares			Common stock		Additional paid-in capital			Retained earnings			Treasury stock			Cumulative other comprehensive income			Total stockholders' equity

BALANCE DECEMBER 31, 2000				$	385		$	(118	)	$	2,894	$	9,337		$	14,541		$	(1,075	)	$	524		$	26,488

Comprehensive income:
	Net income															1,078									1,078
	Other comprehensive income, net of tax:
		Net unrealized gains on securities available for sale, net of reclassification of $519 million of net losses included in net income																				305			305
		Cumulative effect of the change in accounting principle for derivatives and hedging activities																				71			71
		Net unrealized gains on derivatives and hedging activities, net of reclassification of $7 million of net gains on cash flow hedges included in net income																				154			154

Total comprehensive income																									1,608
Common stock issued			11,404,130										77			(172	)		508						413
Common stock issued for acquisitions			427,123										1			2			20						23
Common stock repurchased			15,003,968																(720	)					(720	)
Preferred stock (192,000) issued to ESOP					192			(207	)				15												—
Preferred stock released to ESOP								99					(7	)											92
Preferred stock (92,094) converted to common shares			1,914,328		(92	)							4						88						—
Preferred stock dividends																(9	)								(9	)
Common stock dividends																(824	)								(824	)
Change in Rabbi trust assets (classified as treasury stock)																			(10	)					(10	)

Net change					100			(108	)		—		90			75			(114	)		530			573

BALANCE JUNE 30, 2001				$	485		$	(226	)	$	2,894	$	9,427		$	14,616		$	(1,189	)	$	1,054		$	27,061

BALANCE DECEMBER 31, 2001				$	218		$	(154	)	$	2,894	$	9,436		$	16,005		$	(1,937	)	$	752		$	27,214

Comprehensive income:
	Net income															2,523									2,523
	Other comprehensive income, net of tax:
		Translation adjustments																				4			4
		Net unrealized gains on securities available for sale and other retained interests, net of reclassification of $203 million of net losses included in net income																				265			265
		Net unrealized losses on derivatives and hedging activities, net of reclassification of $112 million of net losses on cash flow hedges included in net income																				(102	)		(102	)

Total comprehensive income																									2,690
Common stock issued			8,439,025										28			(73	)		366						321
Common stock issued for acquisitions			12,017,193										4						531						535
Common stock repurchased			8,649,792																(426	)					(426	)
Preferred stock (238,000) issued to ESOP					238			(255	)				17												—
Preferred stock released to ESOP								122					(8	)											114
Preferred stock (115,420) converted to common shares			2,322,964		(115	)							11						104						—
Preferred stock dividends																(2	)								(2	)
Common stock dividends																(923	)								(923	)
Change in Rabbi trust assets and similar arrangements (classified as treasury stock)																			4						4

Net change					123			(133	)		—		52			1,525			579			167			2,313

BALANCE JUNE 30, 2002				$	341		$	(287	)	$	2,894	$	9,488		$	17,530		$	(1,358	)	$	919		$	29,527

WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS


			Six months ended June 30,
(in millions)			2002			2001

Cash flows from operating activities:
	Net income		$	2,523		$	1,078
	Adjustments to reconcile net income to net cash provided by operating activities:
		Provision for loan losses		900			788
		Depreciation and amortization		1,078			1,281
		Net (gains) losses on securities available for sale		(113	)		837
		Net gains of mortgage loan originations / sales activities		(292	)		(198	)
		Net (gains) losses on sales of loans		(8	)		1
		Net losses (gains) on dispositions of premises and equipment		27			(19	)
		Net gains on dispositions of operations		(3	)		(104	)
		Release of preferred shares to ESOP		114			92
		Net increase in trading assets		(566	)		(116	)
		Net increase (decrease) in deferred income taxes		149			(546	)
		Net (increase) decrease in accrued interest receivable		(50	)		71
		Net increase (decrease) in accrued interest payable		41			(155	)
		Originations of mortgages held for sale		(111,945	)		(67,216	)
		Proceeds from sales of mortgages held for sale		118,836			56,839
		Principal collected on mortgages held for sale		553			552
		Net increase in loans held for sale		(420	)		(76	)
		Other assets, net		(1,405	)		(1,947	)
		Other accrued expenses and liabilities, net		446			3,387

Net cash provided (used) by operating activities				9,865			(5,451	)

Cash flows from investing activities:
	Securities available for sale:
		Proceeds from sales		10,485			12,013
		Proceeds from prepayments and maturities		4,200			2,958
		Purchases		(9,825	)		(18,438	)
	Net cash paid for acquisitions			(532	)		(261	)
	Net (increase) decrease in banking subsidiaries' loans resulting from originations and collections			(7,500	)		(4,949	)
	Proceeds from sales (including participations) of banking subsidiaries' loans			641			1,273
	Purchases (including participations) of banking subsidiaries' loans			(1,341	)		(285	)
	Principal collected on nonbank subsidiaries' loans			5,563			4,918
	Nonbank subsidiaries' loans originated			(6,885	)		(5,426	)
	Proceeds from dispositions of operations			34			1,188
	Proceeds from sales of foreclosed assets			269			140
	Net increase in federal funds sold and securities purchased under resale agreements			(1,045	)		(1,415	)
	Net increase in mortgage servicing rights			(1,236	)		(1,342	)
	Other, net			(2,545	)		605

Net cash used by investing activities				(9,717	)		(9,021	)

Cash flows from financing activities:
	Net increase in deposits			1,345			8,699
	Net (decrease) increase in short-term borrowings			(8,562	)		2,689
	Proceeds from issuance of long-term debt			11,164			8,524
	Repayment of long-term debt			(5,673	)		(5,334	)
	Proceeds from issuance of guaranteed preferred beneficial interests in Company's subordinated debentures			450			—
	Proceeds from issuance of common stock			269			332
	Repurchase of common stock			(426	)		(720	)
	Payment of cash dividends on preferred and common stock			(925	)		(833	)
	Other, net			(57	)		103

Net cash (used) provided by financing activities				(2,415	)		13,460

	Net change in cash and due from banks			(2,267	)		(1,012	)
Cash and due from banks at beginning of period				16,968			16,978

Cash and due from banks at end of period			$	14,701		$	15,966

Supplemental disclosures of cash flow information:
	Cash paid during the period for:
		Interest	$	2,055		$	3,714
		Income taxes		943			1,622
	Noncash investing and financing activities:
		Transfers from loans to foreclosed assets	$	291		$	123
		Net transfers from mortgages held for sale to loans		172			—

WELLS FARGO & COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Descriptions of the significant accounting policies of Wells Fargo & Company and Subsidiaries (the Company) are included in Note 1 (Summary of Significant Accounting Policies) to the audited consolidated financial statements included in the Company's 2001 Annual Report on Form 10-K. There have been no significant changes to these policies except for accounting policies related to goodwill discussed below.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations under the purchase method of accounting. On July 1, 2001, the Company adopted Financial Accounting Standards Board Statement No. 142 (FAS 142), Goodwill and Other Intangible Assets. FAS 142 eliminates amortization of goodwill associated with business combinations completed after June 30, 2001. During the transition period from July 1, 2001 through December 31, 2001, the Company's goodwill associated with business combinations completed prior to July 1, 2001 continued to be amortized over periods of up to 25 years. Effective January 1, 2002, all goodwill amortization was discontinued.

Effective January 1, 2002, goodwill will be assessed at least annually for impairment on a reporting unit level by applying a fair-value-based test using discounted estimated future net cash flows. In the first quarter of 2002, the Company completed its initial goodwill impairment assessment and recorded a transitional impairment charge as a cumulative effect of a change in accounting principle in the Consolidated Statement of Income. Impairment that may result from subsequent assessments will be recognized as a charge to noninterest expense unless related to discontinued operations.

Core deposit intangibles are amortized on an accelerated basis based on useful lives of up to 15 years. Certain identifiable intangible assets that are included in other assets are generally amortized using an accelerated method over useful lives of up to 15 years.

The Company reviews other intangible assets for impairment annually (except mortgage servicing rights, which are reviewed monthly), or whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For those intangible assets subject to amortization, impairment is indicated if the sum of undiscounted estimated future net cash flows is less than the carrying value of the asset. Impairment is recognized by writing down the asset to the extent that the carrying value exceeds the estimated fair value.

2. Business Combinations

The Company regularly explores opportunities to acquire financial institutions and related financial services businesses. Generally, management of the Company does not make a public announcement about an acquisition opportunity until a definitive agreement has been signed.

Transactions completed in the six months ended June 30, 2002 include:


(in millions)	Date	Assets
Risk Management Services, Inc., Morristown, Tennessee	January 1	$	2
Alcalay, Cohen, Inc. d/b/a General Insurance Consultants, Tarzana, California	February 1		6
Texas Financial Bancorporation, Inc., Minneapolis, Minnesota	February 1		2,957
Five affiliated banks and related entities of Marquette Bancshares, Inc. located in Minnesota, Wisconsin, Illinois, Iowa and South Dakota	February 1		3,086
SIFE, Walnut Creek, California	February 22		25
Rediscount business of Washington Mutual Bank, FA, Philadelphia, Pennsylvania	March 28		281
Tejas Bancshares, Inc., Amarillo, Texas	April 26		374

		$	6,731

3. Preferred Stock

The Company is authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. All preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. No preference shares have been issued under this authorization.

The table below is a summary of the Company's preferred stock. A detailed description of the Company's preferred stock is provided in Note 11 to the audited consolidated financial statements included in the Company's 2001 Annual Report on Form 10-K.

		Shares issued and outstanding			Carrying amount (in millions)

		Shares issued and outstanding			Carrying amount (in millions)									Adjustable dividends rate
		June 30, 2002	Dec. 31, 2001	June 30, 2001	June 30, 2002			Dec. 31, 2001			June 30, 2001			Adjustable dividends rate
		June 30, 2002	Dec. 31, 2001	June 30, 2001	June 30, 2002			Dec. 31, 2001			June 30, 2001			Minimum		Maximum

Adjustable-Rate Cumulative, Series B (1)		1,460,000	1,460,000	1,468,400	$	73		$	73		$	73		5.50	%	10.50	%
6.59%/Adjustable-Rate Noncumulative Preferred Stock, Series H (1)(2)		—	—	4,000,000		—			—			200		7.00		13.00
2002 ESOP Cumulative Convertible (3)		128,804	—	—		129			—			—		10.50		11.50
2001 ESOP Cumulative Convertible (3)		57,826	61,800	112,031		58			62			112		10.50		11.50
2000 ESOP Cumulative Convertible (3)		39,242	39,962	44,163		39			40			44		11.50		12.50
1999 ESOP Cumulative Convertible (3)		15,222	15,552	17,832		15			15			18		10.30		11.30
1998 ESOP Cumulative Convertible (3)		5,945	6,145	7,471		6			6			8		10.75		11.75
1997 ESOP Cumulative Convertible (3)		7,376	7,576	9,362		7			8			9		9.50		10.50
1996 ESOP Cumulative Convertible (3)		7,407	7,707	10,041		8			8			10		8.50		9.50
1995 ESOP Cumulative Convertible (3)		5,243	5,543	8,190		5			5			8		10.00		10.00
ESOP Cumulative Convertible (3)		802	1,002	2,620		1			1			3		9.00		9.00
Unearned ESOP shares (4)		—	—	—		(287	)		(154	)		(226	)	—		—

	Total	1,727,867	1,605,287	5,680,110	$	54		$	64		$	259

(1): Liquidation preference $50.
(2): On October 1, 2001 all shares were redeemed at the stated liquidation price plus accrued dividends.
(3): Liquidation preference $1,000.
(4): In accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 93-6, Employers' Accounting for Employee Stock Ownership Plans, the Company recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released.

4. Earnings Per Common Share

The table below shows dual presentation of earnings (loss) per common share and diluted earnings (loss) per common share and a reconciliation of the numerator and denominator of both earnings (loss) per common share calculations.

		Quarter ended June 30,					Six months ended June 30,

(in millions, except per share amounts)		2002		2001			2002			2001

Net income (loss) before effect of change in accounting principle		$	1,420	$	(87	)	$	2,799		$	1,078
Less: Preferred stock dividends			1		4			2			9

Net income (loss) applicable to common stock before effect of change in accounting principle (numerator)			1,419		(91	)		2,797			1,069
Cumulative effect of change in accounting principle (numerator)			—		—			(276	)		—

Net income (loss) applicable to common stock (numerator)		$	1,419	$	(91	)	$	2,521		$	1,069

EARNINGS (LOSS) PER COMMON SHARE
Average common shares outstanding (denominator)			1,710.4		1,714.9			1,706.7			1,715.4

Per share before effect of change in accounting principle		$	..83	$	(.05	)	$	1.64		$	..62
Per share effect of change in accounting principle			—		—			.16			—

Per share		$	.83	$	(.05	)	$	1.48		$	.62

DILUTED EARNINGS (LOSS) PER COMMON SHARE
Average common shares outstanding			1,710.4		1,714.9			1,706.7			1,715.4
Add: Stock options			20.1		—			18.0			19.8
	Restricted share rights		.3		—			.4			.8

Diluted average common shares outstanding (denominator)			1,730.8		1,714.9			1,725.1			1,736.0

Per share before effect of change in accounting principle		$	..82	$	(.05	)	$	1.62		$	..62
Per share effect of change in accounting principle			—		—			.16			—

Per share		$	.82	$	(.05	)(1)	$	1.46		$	.62

(1): The incremental shares from the assumed conversion of common stock equivalents (stock options of 17.2 million and restricted share rights of .9 million) are not included in computing the diluted loss per share for the second quarter of 2001, because the effect of such equivalents would have been antidilutive for this period.

In accordance with FAS 123, Accounting for Stock-Based Compensation, the Company follows the provisions of Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees, in accounting for its stock option plans for directors and employees. Under APB 25, compensation expense for stock options is generally not recognized in net income; however, the effect of the shares that would be issued is reflected in diluted earnings per share as an increase to average common shares outstanding and results in a decrease to earnings per share. For further information see Note 12 (Common Stock and Stock Plans) to the audited consolidated financial statements included in the Company's 2001 Annual Report on Form 10-K.

5. "Adjusted" Earnings—FAS 142 Transitional Disclosure

Under FAS 142, effective January 1, 2002 amortization of goodwill was discontinued. For comparability, the table below reconciles the Company's reported earnings (loss) to "adjusted" earnings, which exclude goodwill amortization.

		June 30, 2001					September 30, 2001

(in millions, except per share amounts)		Quarter ended			Six months ended		Quarter ended		Nine months ended

NET INCOME
	Reported net (loss) income	$	(87	)	$	1,078	$	1,164	$	2,242
	Goodwill amortization, net of tax		143			278		146		424

	Adjusted net income	$	56		$	1,356	$	1,310	$	2,666

EARNINGS PER COMMON SHARE
	Reported earnings (loss) per common share	$	(.05	)	$	.62	$	.68	$	1.30
	Goodwill amortization, net of tax		.08			.17		.08		.25

	Adjusted earnings per common share	$	.03		$	.79	$	.76	$	1.55

DILUTED EARNINGS PER COMMON SHARE
	Reported diluted earnings (loss) per common share	$	(.05	)	$	.62	$	.67	$	1.29
	Goodwill amortization, net of tax		.08			.16		.08		.24

	Adjusted diluted earnings per common share	$	.03		$	.78	$	.75	$	1.53

		December 31,

		2001				2000		1999
(in millions, except per share amounts)		Quarter ended		Year ended		Year ended		Year ended

NET INCOME
	Reported net income	$	1,181	$	3,423	$	4,026	$	4,012
	Goodwill amortization, net of tax		147		571		496		431

	Adjusted net income	$	1,328	$	3,994	$	4,522	$	4,443

EARNINGS PER COMMON SHARE
	Reported earnings per common share	$	.70	$	1.99	$	2.36	$	2.32
	Goodwill amortization, net of tax		.08		.34		.29		.25

	Adjusted earnings per common share	$	.78	$	2.33	$	2.65	$	2.57

DILUTED EARNINGS PER COMMON SHARE
	Reported diluted earnings per common share	$	.69	$	1.97	$	2.33	$	2.29
	Goodwill amortization, net of tax		.08		.33		.29		.25

	Adjusted diluted earnings per common share	$	.77	$	2.30	$	2.62	$	2.54

6. Operating Segments

The Company has three lines of business for management reporting: Community Banking, Wholesale Banking and Wells Fargo Financial. The results for these lines of business are based on the Company's management accounting process, which assigns balance sheet and income statement items to each responsible operating segment. This process is dynamic and, unlike financial accounting, there is no comprehensive, authoritative guidance for management accounting equivalent to generally accepted accounting principles. The management accounting process measures the performance of the operating segments based on the Company's management structure and is not necessarily comparable with similar information for other financial services companies. The Company's operating segments are defined by product type and customer segments. 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 for comparability. Results for 2001 have been restated to eliminate goodwill amortization from the operating segments and to reflect changes in transfer pricing methodology applied in first quarter 2002.

The Community Banking Group offers a complete line of diversified financial products and services to individual consumers and small businesses with annual sales up to $10 million in which the owner is also the principal financial decision maker. Community Banking also offers investment management and other services to retail customers and high net worth individuals, as well as insurance and securities brokerage through affiliates. These products and services include Wells Fargo Funds®, a family of mutual funds, as well as personal trust, employee benefit trust and agency assets. Loan products include lines of credit, equity lines and loans, equipment and transportation (auto, recreational vehicle and marine) loans, origination and purchase of residential mortgage loans for sale to investors and servicing of mortgage loans. Other credit products and financial services available to small businesses and their owners include receivables and inventory financing, equipment leases, real estate financing, Small Business Administration financing, cash management, payroll services, retirement plans, medical savings accounts and credit and debit card processing. Consumer and business deposit products include checking accounts, savings deposits, market rate accounts, Individual Retirement Accounts (IRAs) and time deposits.

Community Banking provides access to customers through a wide range of channels, which encompass a network of traditional banking stores, banking centers, in-store banking centers, business centers and ATMs. Additionally, 24-hour telephone service is provided by PhoneBank^SMcenters and the National Business Banking Center. Online banking services include single sign-on to online banking, bill pay and brokerage, as well as online banking for small business.

The Wholesale Banking Group serves businesses across the United States with annual sales in excess of $10 million. Wholesale Banking provides a complete line of commercial, corporate and real estate banking products and services. These include traditional commercial loans and lines of credit, letters of credit, asset-based lending, equipment leasing, mezzanine financing, high yield debt, international trade facilities, foreign exchange services, treasury management, investment management, institutional fixed income and equity sales, electronic products,

insurance and insurance brokerage services, and investment banking services. Wholesale Banking includes the majority ownership interest in the Wells Fargo HSBC Trade Bank, which provides trade financing, letters of credit and collection services and is sometimes supported by the Export-Import Bank of the United States (a public agency of the United States offering export finance support for American-made products). Wholesale Banking also supports the commercial real estate market with products and services such as 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, permanent loans for securitization, commercial real estate loan servicing and real estate and mortgage brokerage services.

Wells Fargo Financial includes consumer finance and auto finance operations. Consumer finance operations make direct loans to consumers and purchase sales finance contracts from retail merchants from offices throughout the United States, Canada and in the Caribbean. Automobile finance operations specialize in purchasing sales finance contracts directly from automobile dealers and making loans secured by automobiles in the United States and Puerto Rico. Wells Fargo Financial also provides credit cards, and lease and other commercial financing.

The Reconciliation Column includes all amortization of goodwill for 2001, the net impact of transfer pricing loan and deposit balances, the cost of external debt, 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 at the consolidated level.

The following table provides the results for the Company's three major operating segments.

(income/expense in millions, average balances in billions)	Community Banking					Wholesale Banking						Wells Fargo Financial					Reconciliation column (4)						Consolidated Company

Quarter ended June 30,	2002		2001			2002			2001			2002			2001		2002			2001			2002			2001

Net interest income (1)	$	2,615	$	2,083		$	571		$	538		$	452		$	408	$	1		$	(21	)	$	3,639		$	3,008
Provision for loan losses		192		246			73			71			145			110		—			—			410			427
Noninterest income		1,591		(4	)		702			477			87			88		(2	)		(16	)		2,378			545
Noninterest expense		2,469		2,227			662			617			272			255		2			156			3,405			3,255

Income (loss) before income tax expense (benefit)		1,545		(394	)		538			327			122			131		(3	)		(193	)		2,202			(129	)
Income tax expense (benefit) (2)		544		(177	)		192			116			47			48		(1	)		(29	)		782			(42	)

Net income (loss)	$	1,001		(217	)	$	346			211		$	75			83	$	(2	)		(164	)	$	1,420			(87	)

Less: Impairment and other special charges (after tax) (3)				(1,089	)					(62	)					—					(6	)					(1,157	)

Net income (loss) excluding impairment and other special charges			$	872					$	273					$	83				$	(158	)				$	1,070

Average loans	$	115	$	98		$	49		$	50		$	15		$	13	$	—		$	—		$	179		$	161
Average assets		218		193			71			66			16			15		6			5			311			279
Average core deposits		161		152			18			16			—			—		—			—			179			168
Six months ended June 30,
Net interest income (1)	$	5,295	$	3,990		$	1,129		$	1,077		$	893		$	800	$	(24	)	$	(40	)	$	7,293		$	5,827
Provision for loan losses		468		462			158			110			274			216		—			—			900			788
Noninterest income		3,132		1,780			1,353			983			178			173		16			23			4,679			2,959
Noninterest expense		4,872		4,300			1,316			1,148			542			497		2			306			6,732			6,251

Income (loss) before income tax expense (benefit) and effect of change in accounting principle		3,087		1,008			1,008			802			255			260		(10	)		(323	)		4,340			1,747
Income tax expense (benefit) (2)		1,106		320			359			289			96			96		(20	)		(36	)		1,541			669

Net income (loss) before effect of change in accounting principle		1,981		688			649			513			159			164		10			(287	)		2,799			1,078
Cumulative effect of change in accounting principle		—		—			(98	)		—			(178	)		—		—			—			(276	)		—

Less: Impairment and other special charges (after tax) (3)				(1,089	)					(62	)					—					(6	)					(1,157	)

Net income (loss) excluding impairment and other special charges	$	1,981	$	1,777		$	551		$	575		$	(19	)	$	164	$	10		$	(281	)	$	2,523		$	2,235

Average loans	$	112	$	98		$	49		$	50		$	15		$	13	$	—		$	—		$	176		$	161
Average assets		220		189			70			65			17			15		6			5			313			274
Average core deposits		161		147			18			16			—			—		—			—			179			163

(1): Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes actual interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment. In general, Community Banking has excess liabilities and receives interest credits for the funding it provides the other segments.
(2): Taxes vary by geographic concentration of revenue generation. Taxes as presented may differ from the consolidated Company's effective tax rate as a result of taxable-equivalent adjustments that primarily relate to income on certain loans and securities that is exempt from federal and applicable state income taxes. The offsets for these adjustments are found in the reconciliation column.
(3): Impairment and other special charges in the second quarter of 2001, which are included in noninterest income, mainly related to impairment of publicly traded and private equity securities, primarily in the venture capital portfolio.
(4): The material items in the reconciliation column related to revenue (i.e., net interest income plus noninterest income) and net income consist of Treasury activities and unallocated items. Revenue includes Treasury activities of $(2) million and $3 million; and unallocated items of $1 million and $(40) million for the second quarter of 2002 and 2001, respectively. Revenue includes Treasury activities of $16 million and $44 million; and unallocated items of $(24) million and $(61) million for the first six months of 2002 and 2001, respectively. Net income includes Treasury activities of $(2) million and $1 million for the second quarter of 2002 and 2001, respectively; and unallocated items of $(165) million for the second quarter of 2001. Net income includes Treasury activities of $9 million and $26 million; and unallocated items of $1 million and $(313) million for the first six months of 2002 and 2001, respectively. The material item in the reconciliation column related to noninterest expense is amortization of goodwill of $152 million for the second quarter of 2001 and $296 million for the first six months of 2001. The material item in the reconciliation column related to average assets is unallocated goodwill of $6 billion and $5 billion for the second quarter of 2002 and 2001, respectively, and $6 billion and $5 billion for the first six months of 2002 and 2001, respectively. Results for 2001 have been restated to reclassify goodwill amortization from the three operating segments to the reconciliation column for comparability.

The following table presents net income for the operating segments restated to reclassify goodwill amortization from the three operating segments to the reconciliation column.

(in millions)		Community Banking			Wholesale Banking		Wells Fargo Financial		Reconciliation column			Consolidated Company


Quarter ended
	June 30, 2001	$	(217	)	$	211	$	83	$	(164	)	$	(87	)
	September 30, 2001		930			298		85		(149	)		1,164
	December 31, 2001		983			282		85		(169	)		1,181
Six months ended
	June 30, 2001		688			513		164		(287	)		1,078
Nine months ended
	September 30, 2001		1,618			811		249		(436	)		2,242
Year ended December 31,
	2001		2,600			1,093		334		(604	)		3,423
	2000		3,234			1,024		286		(518	)		4,026
	1999		3,312			850		274		(424	)		4,012

7. Mortgage Banking Activities

Mortgage banking activities, included in the Community Banking and Wholesale Banking operating segments, comprise residential and commercial mortgage originations and servicing.

The components of mortgage banking noninterest income are presented below:

		Quarter ended June 30,						Six months ended June 30,

(in millions)		2002			2001			2002			2001

Origination and other closing fees		$	204		$	190		$	424		$	311
Servicing fees, net of amortization and impairment			(48	)		88			(122	)		106
Net gains (losses) on securities available for sale			—			(4	)		—			132
Net gains on mortgage loan originations/sales activities			172			158			292			198
All other			84			85			178			161

	Total mortgage banking	$	412		$	517		$	772		$	908

The managed servicing portfolio totaled $561 billion at June 30, 2002, $514 billion at December 31, 2001 and $482 billion at June 30, 2001, which included loans subserviced for others of $51 billion, $63 billion and $75 billion, respectively.

The following table summarizes the changes in capitalized mortgage loan servicing rights:

		Quarter ended June 30,						Six months ended June 30,

(in millions)		2002			2001			2002			2001

Balance, beginning of period		$	8,604		$	5,509		$	7,365		$	5,609
	Originations (1)		461			505			1,122			829
	Purchases (1)		314			252			716			412
	Amortization		(366	)		(206	)		(736	)		(372	)
	Other (includes changes in mortgage servicing rights due to hedging)		(1,148	)		291			(602	)		(127	)

Balance before valuation allowance			7,865			6,351			7,865			6,351
	Less: Valuation allowance		1,909			275			1,909			275

Balance, end of period		$	5,956		$	6,076		$	5,956		$	6,076

(1): Based on June 30, 2002 assumptions, the weighted-average amortization period for mortgage servicing rights added during the second quarter of 2002 and the first six months of 2002 was 5.3 years and 5.5 years, respectively.

The following table summarizes the changes in the valuation allowance for capitalized mortgage servicing rights:

		Quarter ended June 30,				Six months ended June 30,

(in millions)		2002		2001		2002		2001

Balance, beginning of period		$	1,466	$	169	$	1,124	$	—
	Provision for capitalized mortgage servicing rights in excess of fair value		443		106		785		275

Balance, end of period		$	1,909	$	275	$	1,909	$	275

8. Intangible Assets

The gross carrying amount of intangible assets and the associated accumulated amortization at June 30, 2002 is presented in the following table.

		June 30, 2002

(in millions)		Gross carrying amount		Accumulated amortization

Amortized intangible assets:
	Mortgage servicing rights, before valuation allowance	$	11,497	$	3,632
	Core deposit intangibles		2,415		1,471
	Other		363		240

	Total	$	14,275	$	5,343

Unamortized intangible asset (trademark)		$	14

The projections of amortization expense shown below for mortgage servicing rights are based on asset balances and the interest rate environment as of June 30, 2002. Future amortization expense may be significantly different depending upon changes in the mortgage servicing portfolio, mortgage interest rates and market conditions.

The following table shows the current period and estimated future amortization expense for amortized intangible assets:

(in millions)	Mortgage servicing rights		Core deposit intangibles		Other		Total


Six months ended June 30, 2002 (actual)	$	736	$	79	$	18	$	833

Six months ended December 31, 2002 (estimate)		746		76		12		834

Estimate for year ended December 31,
2003		1,360		142		21		1,523
2004		1,158		131		19		1,308
2005		929		120		14		1,063
2006		742		108		11		861
2007		592		99		9		700

9. Goodwill

The following table summarizes the changes in the first six months of 2002 in the carrying amount of goodwill as allocated to the Company's operating segments for the purpose of goodwill impairment analysis.

(in millions)		Community Banking			Wholesale Banking			Wells Fargo Financial			Consolidated Company


Balance December 31, 2001		$	6,265		$	2,655		$	607		$	9,527

	Goodwill from business combinations		600			21			8			629
	Transitional goodwill impairment charge		—			(133	)		(271	)		(404	)
	Goodwill written off related to divestitures of businesses		(28	)		—			—			(28	)

Balance June 30, 2002		$	6,837		$	2,543		$	344		$	9,724

During the first quarter of 2002, the Company completed its initial goodwill impairment testing. All reporting units were evaluated using discounted estimated future net cash flows. The process resulted in a $276 million (after tax), $404 million (before tax), transitional impairment charge reported as a cumulative effect of a change in accounting principle. The transitional impairment resulted from a change in the method of testing for goodwill impairment under FAS 142, as well as a change in business strategies, reflecting the current economic outlook, for certain reporting units in Wholesale Banking and Wells Fargo Financial, primarily Island Finance, a Puerto Rico based consumer finance company acquired in 1995.

Goodwill amounts allocated to the operating segments for goodwill impairment analysis differ from amounts allocated to the Company's operating segments for management reporting discussed in Note 6 (Operating Segments) to Financial Statements. At June 30, 2002, for management reporting, the balance of goodwill for Community Banking, Wholesale Banking and Wells Fargo Financial was $2.86 billion, $593 million and $344 million, respectively, with $5.93 billion recorded at the enterprise level.

10. Derivative Instruments and Hedging Activities

Fair Value Hedges

The Company enters into interest rate swaps to convert certain of its fixed-rate long-term debt to floating-rate debt. The ineffective portion of these fair value hedges was negligible for the second quarter of 2002 and a net gain of $1 million for first six months of 2002, compared with a net gain of $2 million and $8 million for the second quarter and first six months of 2001, respectively, recorded as an offset to interest expense. For long-term debt, all components of each derivative instrument's gain or loss are included in the assessment of hedge effectiveness.

The Company also enters into derivative contracts to hedge a portion of its mortgage servicing rights and other retained interests. The ineffective portion of these fair value hedges amounted to a net gain of $299 million and $596 million in the second quarter and first six months of 2002, respectively, compared with a net gain of $8 million and a net loss of $9 million in the second quarter and first six months of 2001, respectively. The gain in 2002 primarily resulted from increased interest rate volatility. Also, in the second quarter and first six months of 2002, a net gain of $203 million and $478 million, respectively, related to the spread between spot and forward rates on these derivative contracts was excluded from the assessment of hedge ineffectiveness. These gains were more than offset by higher mortgage servicing rights and other retained interests impairment charges and amortization expense amounting to $1,009 million and $2,116 million in the second quarter and first six months of 2002, respectively. These gains, impairment charges and amortization expense are included in "Servicing fees, net of impairment and amortization" in Note 7 (Mortgage Banking Activities) to Financial Statements. As of June 30, 2002, designated hedges continued to qualify as fair value hedges.

Cash Flow Hedges

The Company recognized a net loss of $62 million and $170 million in the second quarter and first six months of 2002, respectively, which represents the total ineffectiveness of cash flow hedges, compared with a net gain of $24 million and $10 million in the second quarter and first six months of 2001, respectively. The change was due to growth in mortgages held for sale and increased interest rate volatility. Gains and losses on derivative contracts that are reclassified from cumulative other comprehensive income to current period earnings are included in the line item in which the hedged item's effect in earnings is recorded. All components of each derivative instrument's gain or loss are included in the assessment of hedge effectiveness, except for derivative instruments hedging commercial loans indexed to LIBOR, where only the benchmark interest rate is included in the assessment of hedge effectiveness. As of June 30, 2002, designated hedges continued to qualify as cash flow hedges.

At June 30, 2002, $63 million of deferred net gains on derivative instruments included in other comprehensive income are expected to be reclassified as earnings during the next twelve months, compared with $108 million at June 30, 2001. The maximum term the Company is hedging its exposure to the variability of future cash flows for all forecasted transactions is three years for hedges converting floating-rate loans to fixed and one year for hedges of forecasted sales of mortgage loans.

Derivative Financial Instruments—Summary Information

The following table summarizes the credit risk amount and estimated net fair value for the Company's derivative financial instruments at June 30, 2002 and December 31, 2001.

	June 30, 2002					December 31, 2001

(in millions)	Credit risk amount (2)		Estimated net fair value			Credit risk amount (2)		Estimated net fair value

ASSET/LIABILITY MANAGEMENT HEDGES (1)
Interest rate contracts	$	3,230	$	2,717		$	2,197	$	1,507

CUSTOMER ACCOMMODATIONS AND TRADING (1)
Interest rate contracts		1,898		(50	)		2,363		232
Commodity contracts		19		(2	)		18		1
Equity contracts		25		(18	)		33		5
Credit contracts		54		(12	)		13		(2	)
Foreign exchange contracts		336		54			245		66

(1): The Company anticipates performance by substantially all of the counterparties for these contracts 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.

11. Guaranteed Preferred Beneficial Interest in Company's Subordinated Debentures

In March 2002, Wells Fargo Capital VI (the Trust), a business trust established by the Company, issued $450 million in trust preferred securities in the form of 6.95% Capital Securities to the public and issued $14 million of trust common securities to the Company. The Trust used the proceeds to purchase $464 million of the Company's 6.95% junior subordinated debentures (the Debentures). The Debentures are the sole assets of the Trust and are subordinate to all of the Company's existing and future obligations for borrowed or purchased money, obligations under letters of credit and certain derivative contracts, and any guarantees of any of such obligations. The Company also issued a guarantee related to the trust securities for the benefit of the holders.

The Company treats the trust preferred securities as Tier 1 capital. The Debentures, the common securities issued by the Trust, and the related income effects are eliminated within the Company's consolidated financial statements. The Company's obligations under the Debentures, the related indenture, the trust agreement relating to the trust securities, and the guarantee constitute a full and unconditional guarantee by the Company of the obligations of the Trust under the trust preferred securities.

The stated maturity date of the Debentures is April 15, 2032, which may be accelerated under limited circumstances or extended to no later than April 15, 2052. Also, the Company may redeem the Debentures, with regulatory approval, in whole or in part on or after April 15, 2007. The Company can also redeem the Debentures in whole, but not in part, within 90 days after the occurrence of certain events that either would have a negative tax effect on the Trust or the Company, would cause the trust preferred securities to no longer qualify as Tier 1 capital, or would result in the Trust being treated as an investment company. When the Debentures are repaid or redeemed, the Trust will use the proceeds to redeem an equivalent amount of outstanding trust preferred securities and trust common securities.

FINANCIAL REVIEW

SUMMARY FINANCIAL DATA

			Quarter ended									% Change June 30, 2002 from				Six months ended

(in millions, except per share amounts)			June 30, 2002			Mar. 31, 2002			June 30, 2001			Mar. 31, 2002		June 30, 2001		June 30, 2002			June 30, 2001			% Change

For the Period

Before effect of change in accounting principle (1) and excluding goodwill amortization
Net income			$	1,420		$	1,379		$	56		3	%	—	%	$	2,799		$	1,356		106	%
Diluted earnings per common share				.82			.80			.03		2		—			1.62			.78		108

Profitability ratios (annualized)
	Net income to average total assets (ROA)			1.83	%		1.78	%		.08	%	3		—			1.81	%		1.00	%	81
	Net income applicable to common stock to average common stockholders' equity (ROE)			19.72			20.01			.77		(1	)	—			19.86			10.32		92

		Efficiency ratio (2)		56.6			55.9			87.3		1		(35	)		56.2			67.8		(17	)

After effect of change in accounting principle
Net income (loss)			$	1,420		$	1,103		$	(87	)	29		—		$	2,523		$	1,078		134
Diluted earnings (loss) per common share				.82			.64			(.05	)	28		—			1.46			.62		135

Profitability ratios (annualized)
	ROA			1.83	%		1.42	%		—	%	29		—			1.63	%		.79	%	106
	ROE			19.72			16.00			—		23		—			17.90			8.19		119

		Efficiency ratio (2)		56.6			55.9			91.6		1		(38	)		56.2			71.1		(21	)

Dividends declared per common share			$	.28		$	.26		$	.24		8		17		$	.54		$	.48		13

Average common shares outstanding				1,710.4			1,703.0			1,714.9		—		—			1,706.7			1,715.4		(1	)
Diluted average common shares outstanding				1,730.8			1,718.9			1,714.9		1		1			1,725.1			1,736.0		(1	)

Total revenue			$	6,017		$	5,956		$	3,553		1		69		$	11,972		$	8,786		36

Average loans			$	179,232		$	172,128		$	161,269		4		11		$	175,700		$	160,583		9
Average assets				311,075			314,336			279,325		(1	)	11			312,697			273,960		14
Average core deposits				179,394			177,646			168,183		1		7			178,526			162,572		10

Net interest margin				5.66	%		5.67	%		5.31	%	—		7			5.67	%		5.26	%	8

At Period End
Securities available for sale			$	37,132		$	40,085		$	41,290		(7	)	(10	)	$	37,132		$	41,290		(10	)
Loans				185,001			178,447			164,754		4		12			185,001			164,754		12
Allowance for loan losses				3,883			3,842			3,760		1		3			3,883			3,760		3
Goodwill				9,724			9,733			9,607		—		1			9,724			9,607		1
Assets				314,802			311,509			289,758		1		9			314,802			289,758		9
Core deposits				181,807			181,659			171,218		—		6			181,807			171,218		6
Common stockholders' equity				29,473			28,276			26,802		4		10			29,473			26,802		10
Stockholders' equity				29,527			28,327			27,061		4		9			29,527			27,061		9
Tier 1 capital (3)				20,564			19,652			16,002		5		29			20,564			16,002		29
Total capital (3)				29,270			28,489			24,129		3		21			29,270			24,129		21

Capital ratios
	Common stockholders' equity to assets			9.36	%		9.08	%		9.25	%	3		1			9.36	%		9.25	%	1
	Stockholders' equity to assets			9.38			9.09			9.34		3		—			9.38			9.34		—
	Risk-based capital (3)
		Tier 1 capital		7.95			7.68			6.95		4		14			7.95			6.95		14
		Total capital		11.32			11.13			10.48		2		8			11.32			10.48		8
	Leverage (3)			6.89			6.50			5.97		6		15			6.89			5.97		15

Book value per common share			$	17.24		$	16.55		$	15.64		4		10		$	17.24		$	15.64		10

Staff (active, full-time equivalent)				123,500			123,200			116,300		—		6			123,500			116,300		6

Common Stock Price
High			$	53.44		$	50.75		$	50.16		5		7		$	53.44		$	54.81		(2	)
Low				48.12			42.90			42.65		12		13			42.90			42.55		1
Period end				50.06			49.40			46.43		1		8			50.06			46.43		8

(1): Change in accounting principle relates to transitional goodwill impairment charge recorded in first quarter 2002 related to the adoption of FAS 142.
(2): The efficiency ratio is defined as noninterest expense divided by the total revenue (net interest income and noninterest income).
(3): See the Capital Adequacy/Ratios section for additional information.

This report, including the Notes to Financial Statements and the information in response to Items 2 and 3 of Form 10-Q, contains forward-looking statements about the Company. Broadly speaking, forward-looking statements include forecasts of future financial results and condition, expectations for future operations and business, and any assumptions underlying those forecasts and expectations. Actual outcomes and results may differ significantly from forecasts and expectations. Please refer to "Factors that May Affect Future Results" for a list of some of the forward-looking statements in this report and a discussion of some of the factors that may cause results to differ.

OVERVIEW

Wells Fargo & Company is a $315 billion diversified financial services company providing banking, insurance, investments, mortgage banking and consumer finance through banking branches, the internet and other distribution channels to consumers, commercial businesses and financial institutions in all 50 states of the U.S. and in other countries. It ranked fifth in assets and third in market capitalization among U.S. bank holding companies at June 30, 2002. In this quarterly report on Form 10-Q, Wells Fargo & Company and Subsidiaries (consolidated) is referred to as the Company and Wells Fargo & Company alone is referred to as the Parent.

Certain amounts in the financial review for prior quarters have been reclassified to conform with the current financial statement presentation.

Net income for the second quarter of 2002 was $1.42 billion, compared with a net loss of $87 million for the second quarter of 2001. Excluding goodwill amortization, net income for the second quarter of 2001 would have been $56 million. Diluted earnings per common share for the second quarter of 2002 were $.82, compared with $(.05) and $.03 (excluding goodwill amortization) for the second quarter of 2001. Return on average assets (ROA) was 1.83% and return of average common equity (ROE) was 19.72% for the second quarter of 2002, compared with .08% and .77% (excluding goodwill amortization), respectively, for the same period of 2001.

The loss in the second quarter of 2001 was due to impairment and other special charges of $1.16 billion (after tax), or $.67 per share, predominantly related to other-than-temporary impairment of publicly traded and private equity securities, primarily in the venture capital portfolio.

Net income for the first six months of 2002, before the effect of a first quarter accounting change related to FAS 142, Goodwill and Other Intangible Assets, was $2.80 billion, or $1.62 per share, compared with $1.08 billion, or $.62 per share and $1.36 billion, or $.78 per share (excluding goodwill amortization), for the first six months of 2001. On the same basis, ROA was 1.81% in the first half of 2002, compared with .79% and 1.00%, respectively, for the first half of 2001. ROE was 19.86% in the first half of 2002, compared with 8.19% and 10.32% (excluding goodwill amortization) for the first half of 2001.

Net interest income on a taxable-equivalent basis was $3.67 billion for the second quarter of 2002 and $7.35 billion for the first half of 2002 compared with $3.03 billion and $5.86 billion for

the same periods of 2001. The Company's net interest margin was 5.66% and 5.67% for the second quarter and first half of 2002, respectively, compared with 5.31% and 5.26% for the same periods of 2001.

Noninterest income was $2.38 billion and $4.68 billion for the second quarter and first half of 2002, respectively, compared with $.55 billion and $2.96 billion for the same periods of 2001. Excluding the impairment and other special charges recorded in second quarter 2001, noninterest income would have been $2.40 billion and $4.81 billion for second quarter and first half of 2001, respectively.

Noninterest expense totaled $3.41 billion and $6.73 billion for the second quarter and first half of 2002, respectively, compared with $3.26 billion and $6.25 billion for the same periods of 2001.

The provision for loan losses was $410 million and $900 million in the second quarter and first half of 2002, respectively, compared with $427 million and $788 million in the same periods of 2001. During the second quarter of 2002, net charge-offs were $387 million, or .87% of average total loans (annualized), compared with $427 million, or 1.06%, in the second quarter of 2001. The provision for loan losses in the second quarter was $23 million in excess of net charge-offs largely because the Company has adopted a loss recognition policy in certain consumer finance businesses under which loss recognition is based primarily on contractual delinquency rather than a combination of recency and contractual delinquency. The Company expects these losses will be recognized as charge-offs by the end of the year. The allowance for loan losses was $3.88 billion, or 2.10% of total loans, at June 30, 2002, compared with $3.76 billion, or 2.18%, at December 31, 2001 and $3.76 billion, or 2.28%, at June 30, 2001.

At June 30, 2002, total nonaccrual loans were $1.67 billion, or .9% of total loans, compared with $1.64 billion, or 1.0%, at December 31, 2001 and $1.50 billion, or .9%, at June 30, 2001. Foreclosed assets amounted to $192 million at June 30, 2002, $171 million at December 31, 2001 and $134 million at June 30, 2001.

At June 30, 2002, the ratio of common stockholders' equity to total assets was 9.36%, compared with 9.25% at June 30, 2001. The Company's total risk-based capital (RBC) ratio at June 30, 2002 was 11.32% and its Tier 1 RBC ratio was 7.95%, exceeding the minimum regulatory guidelines of 8% and 4%, respectively, for bank holding companies. The Company's ratios at June 30, 2001 were 10.48% and 6.95%, respectively. The Company's leverage ratio was 6.89% at June 30, 2002 and 5.97% at June 30, 2001, exceeding the minimum regulatory guideline of 3% for bank holding companies.

Recent Accounting Standards

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 141 (FAS 141), Business Combinations, and Statement No. 142 (FAS 142), Goodwill and Other Intangible Assets. The significant changes to the Company's accounting policies related to these Statements are presented in Note 1 (Summary of Significant Accounting Policies) to Financial Statements in this report.

The Company completed its initial goodwill impairment assessment and recorded a transitional impairment charge of $276 million (after tax) in first quarter 2002. At December 31, 2001, the Company had $9.53 billion of goodwill, $5.50 billion of which related to the 1996 purchase of First Interstate Bancorp. The Company has determined that recognition of impairment of the remaining First Interstate goodwill is not permitted under FAS 142 since the former First Interstate operations must be combined with other similar banking operations for impairment testing.

In June 2001, the FASB issued Statement No. 143 (FAS 143), Accounting for Asset Retirement Obligations, which addresses the recognition and measurement of obligations associated with the retirement of tangible long-lived assets. FAS 143 is effective January 1, 2003, with early adoption permitted. The Company plans to adopt FAS 143 effective January 1, 2003 and does not expect the adoption of the statement to have a material effect on the financial statements.

In June 2002, the FASB issued Statement No. 146 (FAS 146), Accounting for Costs Associated with Exit or Disposal Activities, which addresses financial accounting and reporting for costs associated with exit or disposal activities. Under FAS 146, such costs will be recognized when the liability is incurred, rather than at the date of commitment to an exit plan. FAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002, with early application permitted. The Company does not expect the adoption of FAS 146 to have a material effect on the financial statements.

EARNINGS PERFORMANCE

NET INTEREST INCOME

Net interest income on a taxable equivalent basis was $3.67 billion in second quarter 2002, up 21 percent from second quarter of last year, largely due to growth in loans and increases in net interest margin from 5.31 percent a year ago to 5.66 percent in second quarter 2002.

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

Earning assets increased $31.1 billion in the second quarter from the same period last year due to increases in average loans, mortgages held for sale and debt securities available for sale. Loans averaged $179.2 billion in the second quarter of 2002 compared with $161.3 billion in the second quarter of 2001. The increase was largely due to increased originations of home equity and home mortgage products. Average mortgages held for sale increased to $26.6 billion in second quarter 2002 from $21.5 billion in the second quarter of 2001 and increased to $31.8 billion in the first six months of 2002 from $17.8 billion in the first six months of 2001. The increase for both periods was due to increased originations including refinancing activity. These increases were partially offset by a slowdown in commercial loan demand consistent with conditions in the current U.S. economy. Debt securities averaged $39.4 billion in the second quarter of 2002 compared with $34.6 billion in the second quarter of 2001.

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1) (2)

	Quarter ended June 30,

	2002							2001
(in millions)	Average balance			Yields/ rates		Interest income/ expense		Average balance			Yields/ rates		Interest income/ expense

EARNING ASSETS
Federal funds sold and securities purchased under resale agreements	$	2,810		1.59	%	$	11	$	2,963		3.82	%	$	28
Debt securities available for sale(3):
Securities of U.S. Treasury and federal agencies		1,798		5.65			25		2,057		6.83			34
Securities of U.S. states and political subdivisions		2,148		8.27			43		2,034		8.12			40
Mortgage-backed securities:
Federal agencies		29,865		7.00			510		25,798		7.19			454
Private collateralized mortgage obligations		2,562		7.29			46		1,570		9.56			37

Total mortgage-backed securities		32,427		7.03			556		27,368		7.32			491
Other debt securities(4)		2,982		7.63			56		3,097		7.75			64

Total debt securities available for sale(4)		39,355		7.08			680		34,556		7.38			629
Mortgages held for sale(3)		26,561		6.60			440		21,480		6.92			373
Loans held for sale(3)		5,321		5.50			73		4,818		7.42			89
Loans:
Commercial		46,628		6.94			807		49,771		8.30			1,030
Real estate 1-4 family first mortgage		28,373		6.25			443		18,048		7.42			335
Other real estate mortgage		25,711		6.26			401		24,070		8.26			496
Real estate construction		7,935		5.80			115		8,208		8.41			172
Consumer:
Real estate 1-4 family junior lien mortgage		29,504		7.52			553		19,849		9.64			478
Credit card		6,616		12.33			204		6,148		13.35			205
Other revolving credit and monthly payment		23,646		10.37			612		23,442		11.54			676

Total consumer		59,766		9.18			1,369		49,439		11.00			1,359
Lease financing		9,071		7.19			163		10,150		7.71			196
Foreign		1,748		19.11			84		1,583		20.97			83

Total loans(5)		179,232		7.56			3,382		161,269		9.12			3,671
Other		6,660		4.04			67		3,756		4.98			47

Total earning assets	$	259,939		7.19			4,653	$	228,842		8.48			4,837

FUNDING SOURCES
Deposits:
Interest-bearing checking	$	2,694		.92			6	$	2,301		2.79			16
Market rate and other savings		92,725		.95			221		79,815		2.37			473
Savings certificates		24,862		3.30			205		31,185		5.39			419
Other time deposits		6,213		1.98			30		1,093		5.22			14
Deposits in foreign offices		4,982		1.67			21		5,751		4.27			61

Total interest-bearing deposits		131,476		1.47			483		120,145		3.28			983
Short-term borrowings		31,921		1.65			131		29,970		4.39			328
Long-term debt		41,234		3.34			344		35,066		5.47			479
Guaranteed preferred beneficial interests in Company's subordinated debentures		2,885		4.20			30		935		7.59			18

Total interest-bearing liabilities		207,516		1.91			988		186,116		3.89			1,808
Portion of noninterest-bearing funding sources		52,423		—			—		42,726		—			—

Total funding sources	$	259,939		1.53			988	$	228,842		3.17			1,808

Net interest margin and net interest income on a taxable-equivalent basis(6)				5.66	%	$	3,665				5.31	%	$	3,029

NONINTEREST-EARNING ASSETS
Cash and due from banks	$	13,417						$	14,474
Goodwill		9,718							9,518
Other		28,001							26,491

Total noninterest-earning assets	$	51,136						$	50,483

NONINTEREST-BEARING FUNDING SOURCES
Deposits	$	59,113						$	54,882
Other liabilities		15,536							11,670
Preferred stockholders' equity		50							256
Common stockholders' equity		28,860							26,401
Noninterest-bearing funding sources used to fund earning assets		(52,423	)						(42,726	)

Net noninterest-bearing funding sources	$	51,136						$	50,483

TOTAL ASSETS	$	311,075						$	279,325

(1): The average prime rate of the Company was 4.75% and 7.34% for the quarters ended June 30, 2002 and 2001, respectively, and 4.75% and 7.98% for the six months ended June 30, 2002 and 2001, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 1.92% and 4.19% for the quarters ended June 30, 2002 and 2001, respectively, and 1.91% and 4.76% for the six months ended June 30, 2002 and 2001, respectively.
(2): Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(3): Yields are based on amortized cost balances computed on a settlement date basis.
(4): Includes certain preferred securities.
(5): Nonaccrual loans and related income are included in their respective loan categories.
(6): Includes taxable-equivalent adjustments that primarily relate to income on certain loans and securities that is exempt from federal and applicable state income taxes. The federal statutory tax rate was 35% for all periods presented.

Six months ended June 30,

2002							2001
Average balance			Yields/ rates		Interest income/ expense		Average balance			Yields/ rates		Interest income/ expense

$	2,601		1.72	%	$	22	$	2,666		4.49	%	$	59

	1,920		5.76			53		2,232		6.95			75
	2,114		8.29			84		2,015		7.89			77

	29,508		7.05			1,014		25,477		7.18			893
	2,627		7.09			92		1,560		9.20			71

	32,135		7.05			1,106		27,037		7.29			964
	3,089		7.66			114		3,180		7.76			129

	39,258		7.10			1,357		34,464		7.35			1,245
	31,826		6.45			1,031		17,834		7.04			630
	5,203		5.50			142		4,818		7.60			182

	46,648		6.99			1,617		49,434		8.68			2,128
	26,474		6.41			849		18,181		7.50			681
	25,500		6.33			801		23,987		8.53			1,015
	7,983		5.77			228		8,063		8.99			360

	28,022		7.61			1,058		19,192		9.91			948
	6,594		12.29			406		6,240		13.76			431
	23,597		10.43			1,223		23,691		11.74			1,387

	58,213		9.28			2,687		49,123		11.28			2,766
	9,216		7.23			332		10,211		7.84			400
	1,666		19.42			162		1,584		21.07			167

	175,700		7.64			6,676		160,583		9.40			7,517
	6,384		4.10			131		3,647		5.46			99

$	260,972		7.23			9,359	$	224,012		8.74			9,732



$	2,548		1.00			13	$	2,385		3.24			38
	91,415		.95			430		75,013		2.60			966
	25,279		3.44			431		32,002		5.60			888
	5,456		2.00			55		1,655		5.43			45
	5,842		1.66			48		6,724		4.99			167

	130,540		1.51			977		117,779		3.60			2,104
	36,748		1.67			305		29,082		5.00			722
	39,457		3.43			674		34,323		5.88			1,008

	2,673		4.35			58		934		7.69			35

	209,418		1.94			2,014		182,118		4.28			3,869
	51,554		—			—		41,894		—			—

$	260,972		1.56			2,014	$	224,012		3.48			3,869

			5.67	%	$	7,345				5.26	%	$	5,863


$	13,985						$	14,642
	9,725							9,393
	28,015							25,913

$	51,725						$	49,948


$	59,284						$	53,172
	15,542							12,094
	56							261
	28,397							26,315

	(51,554	)						(41,894	)

$	51,725						$	49,948

$	312,697						$	273,960

The net interest margin increased to 5.66% in second quarter 2002 from 5.31% in second quarter 2001, principally due to loan mix and a faster decline in deposit and borrowing costs than loan yields.

An important contributor to the growth in net interest income and net interest margin from second quarter 2001 was a 7% increase in core deposits, the Company's lowest cost source of funding. Average core deposits were $179.4 billion and $168.2 billion and funded 58% and 60% of the Company's average total assets in the second quarter of 2002 and 2001, respectively. Total average interest-bearing deposits increased to $131.5 billion in second quarter 2002 from $120.1 billion a year ago. For the same period, total average noninterest-bearing deposits increased to $59.1 billion from $54.9 billion. While savings certificates of deposits declined on average from $31.2 billion to $24.9 billion, noninterest-bearing checking accounts and other core deposit categories increased on average from $137.0 billion to $154.5 billion in second quarter 2002 reflecting the Company's success in growing customer accounts and balances reflecting growth in mortgage escrow deposits associated with the increase in mortgage volume in 2002.

NONINTEREST INCOME

			Quarter ended June 30,								Six months ended June 30,

			Quarter ended June 30,						% Change		Six months ended June 30,						% Change
(in millions)			2002			2001			% Change		2002			2001			% Change

Service charges on deposit accounts			$	547		$	471		16	%	$	1,052		$	900		17	%
Trust and investment fees:
	Asset management and custody fees			185			181		2			364			369		(1	)
	Mutual fund and annuity sales fees			196			201		(2	)		396			415		(5	)
	All other			70			35		100			130			48		171

		Total trust and investment fees		451			417		8			890			832		7
Credit card fees				223			196		14			424			377		12
Other fees:
	Cash network fees			45			53		(15	)		92			99		(7	)
	Charges and fees on loans			138			120		15			271			213		27
	All other			143			138		4			274			306		(10	)

		Total other fees		326			311		5			637			618		3
Mortgage banking:
	Origination and other closing fees			204			190		7			424			311		36
	Servicing fees, net of amortization and impairment			(48	)		88		—			(122	)		106		—
	Net gains (losses) on securities available for sale			—			(4	)	(100	)		—			132		(100	)
	Net gains on mortgage loan originations/sales activities			172			158		9			292			198		47
	All other			84			85		(1	)		178			161		11

		Total mortgage banking		412			517		(20	)		772			908		(15	)
Insurance				269			210		28			532			327		63
Net gains (losses) on debt securities available for sale				45			(19	)	—			81			69		17
Loss from equity investments				(58	)		(1,556	)	(96	)		(78	)		(1,419	)	(95	)
Net gains (losses) on sales of loans				2			(14	)	—			8			(1	)	—
Net gains on dispositions of operations				—			3		(100	)		3			104		(97	)
All other				161			9		—			358			244		47

		Total	$	2,378		$	545		336	%	$	4,679		$	2,959		58	%

Deposit service fees increased 16% due to growth in primary accounts and increased activity.

The increase in trust and investment fees for the second quarter and first six months of 2002 was due to an increase in "all other" fees primarily due to the acquisition of H.D. Vest, partly offset by a change in the mutual fund mix from equity funds to money market funds. The Company managed mutual funds with $77 billion of assets at June 30, 2002, compared with $69 billion at June 30, 2001. The Company also managed or maintained personal trust, employee benefit trust and agency assets of approximately $520 billion and $500 billion at June 30, 2002 and 2001, respectively.

Credit card fees increased 14% and 12% for the second quarter and first half of 2002, respectively, primarily due to an increase in merchant fees on debit and credit cards.

The decrease in mortgage banking fee income for both periods was predominantly due to increased amortization and impairment of mortgage servicing rights and other retained interests. Both were driven by the decline in mortgage interest rates from 2001 to 2002. Impairment of mortgage servicing rights and other retained interests was $443 million and $129 million, respectively, in the second quarter of 2002 and $785 million and $437 million, respectively, for

the first six months of 2002. The increase in amortization and impairment was largely offset by gains representing the ineffective and the excluded portion of fair value hedges of mortgage servicing rights and an increase in mortgage servicing fees resulting from growth of the servicing portfolio. The increase in origination and other closing fees and net gains on mortgage originations/sales activities was due to higher mortgage origination volumes.

Insurance income increased in the second quarter and first six months of 2002 due to Acordia, an insurance brokerage company acquired in second quarter 2001.

In the second quarter of 2001, loss from equity investments included approximately $1,500 million of impairment write-downs reflecting other-than-temporary impairment in the valuation of publicly traded and private equity securities.

The Company routinely reviews its venture capital portfolios for impairment. During second quarter 2001, based on general economic and market conditions, including those events occurring in the technology and telecommunications industries, adverse changes occurred that impacted venture capital financing. While the determination of impairment is based on all of the information available at the time of the assessment, new information or economic developments in the future could lead to additional impairment.

Net gains on disposition of operations were negligible in the first six months of 2002. The first six months of last year included a $96 million gain from the divestiture of 39 stores in Idaho, New Mexico, Nevada and Utah as a condition to completing the First Security Corporation merger.

The increase in "all other" noninterest income was predominantly due to a net loss of $115 million in cost method equity investments in the second quarter of 2001 related to impairment write-downs.

Based on insurance claims experience and conservative projections for used car prices, the Company recorded a second quarter 2002 charge of $53 million, included in "all other" noninterest income, for estimated auto residual losses that are not expected to be covered under loss contingency provisions in its various residual insurance policies. These estimated losses are primarily concentrated in one older, liquidating portfolio.

NONINTEREST EXPENSE

		Quarter ended June 30,						Six months ended June 30,

		Quarter ended June 30,				% Change		Six months ended June 30,					% Change
(in millions)		2002		2001		% Change		2002		2001			% Change

Salaries		$	1,106	$	1,018	9	%	$	2,182	$	1,995		9	%
Incentive compensation			362		265	37			719		469		53
Employee benefits			364		236	54			693		514		35
Equipment			228		217	5			464		454		2
Net occupancy			274		239	15			543		476		14
Goodwill			—		152	(100	)		—		296		(100	)
Core deposit intangibles			39		41	(5	)		79		84		(6	)
Net losses (gains) on dispositions of premises and equipment			29		—	—			27		(19	)	—
Outside professional services			118		129	(9	)		246		230		7
Contract services			87		143	(39	)		169		258		(34	)
Telecommunications			78		90	(13	)		170		169		1
Outside data processing			87		77	13			171		154		11
Travel and entertainment			83		69	20			158		142		11
Advertising and promotion			79		66	20			144		124		16
Postage			59		54	9			124		124		—
Stationery and supplies			55		63	(13	)		113		122		(7	)
Operating losses			30		43	(30	)		76		99		(23	)
Insurance			61		68	(10	)		112		115		(3	)
Security			40		49	(18	)		79		76		4
All other			226		236	(4	)		463		369		25

	Total	$	3,405	$	3,255	5	%	$	6,732	$	6,251		8	%

The increase in salaries in the second quarter and first six months of 2002 resulted from additional active, full-time equivalent staff, a major portion of which was due to acquisitions. The increase in employee benefits for the first six months of 2002 includes net pension cost of approximately $77 million in 2002, due to the impact of a weaker stock market and plan asset returns, compared with net pension income of approximately $18 million in 2001. Incentive compensation increased predominantly due to mortgage commission expense resulting from higher origination volume.

Under FAS 142, effective January 1, 2002, all goodwill amortization was discontinued.

Net losses on dispositions of premises and equipment in 2002 were mostly due to premises write-downs and sublease losses.

Contract services decreased partly due to the reduction in technology projects.

Operating losses decreased as a result of the Company's ongoing customer service quality initiatives.

The "all other" category increased in the first six months of 2002 partly due to temporary personnel required to meet the demands of higher mortgage origination volumes.

OPERATING SEGMENT RESULTS

Community Banking's net income increased 15% to $1,001 million in the second quarter of 2002 from $872 million, excluding impairment and other special charges of $1,089 million (after tax), in the second quarter of 2001. Net income increased 11% to $1,981 million for the first six months of 2002 from $1,777 million, excluding impairment and other special charges, from the first six months of 2001. Net interest income increased to $2,615 million in the second quarter of 2002 from $2,083 million in the second quarter of 2001. Average loans in Community Banking grew 17% and average core deposits grew 6% from second quarter 2001. The provision for loan losses decreased by $54 million for the second quarter of 2002 due to the improved credit environment. Noninterest income for the second quarter of 2002 decreased by $147 million over the same period in 2001, excluding 2001 impairment and other special charges of $1,742 million (before tax), due to a $337 million increase in mortgage servicing rights impairment provision. Noninterest expense increased by $242 million in the second quarter of 2002 over the same period in 2001 due primarily to increased expense associated with strong mortgage origination growth.

Wholesale Banking's net income increased 27% to $346 million in the second quarter of 2002, compared with $273 million, excluding impairment and other special charges of $62 million (after tax), in the second quarter of 2001. Net income, before the effect of change in accounting principle, was $649 million for the first six months of 2002, compared with $575 million, excluding impairment and other special charges, in the first six months of 2001, an increase of 13%. Net interest income increased 6% to $571 million for the second quarter of 2002 from $538 million in the second quarter of 2001. The provision for loan losses increased by $2 million to $73 million in the second quarter of 2002 and by $48 million to $158 million for the first six months of 2002. Noninterest income increased 47% to $702 million in the second quarter of 2002 from $477 million, excluding 2001 impairment and other special charges of $99 million (before tax), in the same periods of 2001, primarily due to higher insurance revenue, including the acquisition of Acordia in second quarter 2001, and treasury management services. Noninterest expense increased 7% to $662 million in the second quarter of 2002 from $617 million for the same period in the prior year, due primarily to the Acordia acquisition along with increased personnel expenses related to increased sales and service staff.

In first quarter 2002, under FAS 142, a transitional goodwill impairment charge of $98 million (after tax) was recognized in certain reporting units.

Wells Fargo Financial's net income was $75 million in the second quarter of 2002 and $83 million for the same period in 2001. Net income before effect of change in accounting principle was $159 million for the first six months of 2002 and $164 million for the same period in 2001. Net interest income increased 11% in the second quarter and 12% in the first six months of 2002, compared with the same periods in 2001. The provision for loan losses increased by $35 million and $58 million in the second quarter and first six months of 2002, respectively. The increase in the provision in second quarter 2002 was primarily due to the adoption of a new loss recognition policy at U.S. branches based on a contractual delinquency method rather than a combination of recency and contractual delinquency.

In first quarter 2002, under FAS 142, a transitional goodwill impairment charge of $178 million (after tax) was recognized in certain international reporting units, substantially related to Island Finance, a Puerto Rico based consumer finance company acquired in 1995.

BALANCE SHEET ANALYSIS

SECURITIES AVAILABLE FOR SALE

The following table provides the cost and fair value for the major components of securities available for sale carried at fair value. There were no securities classified as held to maturity at the end of the periods presented.

				June 30, 2002				December 31, 2001				June 30, 2001

(in millions)				Cost		Estimated fair value		Cost		Estimated fair value		Cost		Estimated fair value

Securities of U.S. Treasury and federal agencies				$	1,719	$	1,776	$	1,983	$	2,047	$	2,033	$	2,098
Securities of U.S. states and political subdivisions					2,353		2,464		2,146		2,223		2,224		2,307
Mortgage-backed securities:
	Federal agencies				26,456		27,521		29,280		29,721		30,137		30,725
	Private collateralized mortgage obligations (1)				2,130		2,195		2,628		2,658		1,807		1,841

		Total mortgage-backed securities			28,586		29,716		31,908		32,379		31,944		32,566
Other					2,555		2,587		2,625		2,668		2,805		2,854

	Total debt securities				35,213		36,543		38,662		39,317		39,006		39,825
Marketable equity securities					634		589		815		991		982		1,465

			Total	$	35,847	$	37,132	$	39,477	$	40,308	$	39,988	$	41,290

(1): Substantially all private collateralized mortgage obligations are AAA-rated bonds collateralized by 1-4 family residential first mortgages.

The following table provides the components of the estimated unrealized net gain on securities available for sale. The estimated unrealized net gain or loss on securities available for sale is reported on an after-tax basis as a component of cumulative other comprehensive income.

(in millions)	June 30, 2002			Dec. 31, 2001			June 30, 2001


Estimated unrealized gross gains	$	1,585		$	1,004		$	1,490
Estimated unrealized gross losses		(300	)		(173	)		(188	)

Estimated unrealized net gain	$	1,285		$	831		$	1,302

The following table provides the components of the total realized net gains (losses) on the sales of securities from the securities available for sale portfolio, composed of debt securities, including those related to mortgage banking, and marketable equity securities.

	Quarter ended June 30,						Six months ended June 30,

(in millions)	2002			2001			2002			2001

Realized gross gains	$	105		$	152		$	282		$	523
Realized gross losses		(75	)		(1,291	)		(169	)		(1,360	)

Realized net gains (losses)	$	30		$	(1,139	)	$	113		$	(837	)

The weighted average expected remaining maturity of the debt securities portion of the securities available for sale portfolio was 4 years and 11 months at June 30, 2002. Expected remaining maturities will differ from contractual maturities because obligations may be prepaid.

The effect of a 200 basis point increase and a 200 basis point decrease on the fair value and the expected remaining maturity of the mortgage-backed securities available for sale portfolio is indicated below.

(in billions)		Fair value		Net unrealized gain (loss)			Remaining maturity


At June 30, 2002		$	29.7	$	1.1		4 yrs., 8 mos.
At June 30, 2002, assuming a 200 basis point:
	Increase in interest rates		27.4		(1.2	)	7 yrs., 8 mos.
	Decrease in interest rates		31.0		2.4		1 yrs., 9 mos.

LOAN PORTFOLIO

									% Change June 30, 2002 from

(in millions)			June 30, 2002		Dec. 31, 2001		June 30, 2001		Dec. 31, 2001		June 30, 2001

Commercial (1)			$	47,413	$	47,547	$	49,957	—	%	(5	)%
Real estate 1-4 family first mortgage				30,790		25,588		20,366	20		51
Other real estate mortgage (2)				25,665		24,808		24,140	3		6
Real estate construction				7,853		7,806		8,271	1		(5	)
Consumer:
	Real estate 1-4 family junior lien mortgage			31,312		25,530		20,683	23		51
	Credit card			6,781		6,700		6,174	1		10
	Other revolving credit and monthly payment			24,504		23,502		23,632	4		4

		Total consumer		62,597		55,732		50,489	12		24
Lease financing				8,832		9,420		9,887	(6	)	(11	)
Foreign				1,851		1,598		1,644	16		13

		Total loans (net of unearned income, including net deferred loan fees, of $4,174, $4,143 and $4,223)	$	185,001	$	172,499	$	164,754	7	%	12	%

(1): Includes agricultural loans (loans to finance agricultural production and other loans to farmers) of $3,952 million, $4,345 million and $4,024 million at June 30, 2002, December 31, 2001 and June 30, 2001, respectively.
(2): Includes agricultural loans that are secured by real estate of $1,185 million, $1,254 million and $1,271 million at June 30, 2002, December 31, 2001 and June 30, 2001, respectively.

NONACCRUAL LOANS AND OTHER ASSETS

The table on the next page presents comparative data for nonaccrual loans and other assets. Management's classification of a loan as nonaccrual does not necessarily indicate that the principal of the loan is uncollectible in whole or in part. The table on the next page excludes loans that are 90 days or more past due and still accruing, which are presented in the table on page 38. However, real estate 1-4 family loans (first and junior liens) are placed on nonaccrual within 120 days of becoming past due and are shown in the table on the next page. The Company anticipates changes in the amount of nonaccrual loans that result from increases in lending activity or from resolutions of loans in the nonaccrual portfolio. The performance of any individual loan can be affected 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 and acquires loans from business combinations that may be classified as nonaccrual based on the Company's policies.

NONACCRUAL LOANS AND OTHER ASSETS (1)

(in millions)				June 30, 2002			Dec. 31, 2001			June 30, 2001


Nonaccrual loans:
	Commercial (2)			$	934		$	827		$	823
	Real estate 1-4 family first mortgage				211			203			198
	Other real estate mortgage (3)				200			210			193
	Real estate construction				147			145			80
	Consumer:
		Real estate 1-4 family junior lien mortgage			38			24			15
		Other revolving credit and monthly payment			48			59			37

			Total consumer		86			83			52
	Lease financing				85			163			140
	Foreign				6			9			9

			Total nonaccrual loans (4)		1,669			1,640			1,495
As a percentage of total loans					.9	%		1.0	%		.9	%
Foreclosed assets					192			171			134
Real estate investments (5)					2			2			2

Total nonaccrual loans and other assets				$	1,863		$	1,813		$	1,631

(1): Excludes loans that are 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 commercial agricultural loans of $50 million, $68 million and $65 million at June 30, 2002, December 31, 2001 and June 30, 2001, respectively.
(3): Includes agricultural loans secured by real estate of $18 million, $43 million and $48 million at June 30, 2002, December 31, 2001 and June 30, 2001, respectively.
(4): Includes impaired loans of $1,093 million, $995 million and $912 million at June 30, 2002, December 31, 2001 and June 30, 2001, respectively.
(5): Represents the amount of real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if such assets were recorded as loans. Real estate investments totaled $13 million, $24 million and $28 million at June 30, 2002, December 31, 2001 and June 30, 2001, respectively.

The Company generally identifies loans to be evaluated for impairment under FASB Statement No. 114, Accounting by Creditors for Impairment of a Loan, when such loans are on nonaccrual. 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 (first and junior liens) are placed on nonaccrual status within 120 days of becoming past due as to interest or principal, regardless of security. In contrast, 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 loans covered under FAS 114, the Company makes an assessment for impairment when such loans are on nonaccrual. When a loan with unique risk characteristics is identified as impaired, the Company estimates the amount of impairment using discounted cash flows, except when 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, is used in place of discounted cash flows. Additionally, impaired loans with commitments of less than $1 million are aggregated to estimate impairment using historical loss factors, which approximates the discounted cash flow method.

If the measurement of the impaired loan results in a value that 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 through 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 table below shows the recorded investment in impaired loans and the related methodology used to measure impairment for the periods presented:

(in millions)			June 30, 2002		Dec. 31, 2001		June 30, 2001


Impairment measurement based on:
	Collateral value method		$	364	$	485	$	368
	Discounted cash flow method			416		338		310
	Historical loss factors			313		172		234

		Total (1)	$	1,093	$	995	$	912

(1): Includes $672 million, $529 million and $423 million of impaired loans with a related FAS 114 allowance of $94 million, $91 million and $91 million at June 30, 2002, December 31, 2001 and June 30, 2001, respectively.

The average recorded investment in impaired loans was $1,017 million and $934 million during the second quarter of 2002 and 2001, respectively, and $1,021 million and $860 million during the first six months of 2002 and 2001, respectively. Total interest income recognized on impaired loans was $6 million and $5 million during the second quarter of 2002 and 2001, respectively, and $10 million and $9 million during the first six months of 2002 and 2001, respectively, which was predominantly recorded using the cost recovery method. 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 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 nonaccrual loans. 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. However, real estate 1-4 family loans (first and junior liens) are placed on nonaccrual within 120 days of becoming past due and are excluded from the following table.

(in millions)			June 30, 2002		Dec. 31, 2001			June 30, 2001


Commercial			$	70	$	60		$	88
Real estate 1-4 family first mortgage				109		107	(1)		79	(1)
Other real estate mortgage				12		22			29
Real estate construction				34		47			23
Consumer:
	Real estate 1-4 family junior lien mortgage			67		56			56
	Credit card			109		117			114
	Other revolving credit and monthly payment			288		289			291

		Total consumer		464		462			461

	Total		$	689	$	698		$	680

(1): Prior periods have been restated to exclude certain government guaranteed loans.

ALLOWANCE FOR LOAN LOSSES

					Quarter ended June 30,						Six months ended June 30,

(in millions)					2002			2001			2002			2001

Balance, beginning of period					$	3,842		$	3,759		$	3,761		$	3,719
Allowances related to business combinations/other						18			1			95			41
Provision for loan losses						410			427			900			788
Loan charge-offs:
	Commercial					(183	)		(173	)		(375	)		(282	)
	Real estate 1-4 family first mortgage					(9	)		(3	)		(16	)		(6	)
	Other real estate mortgage					(2	)		(6	)		(12	)		(9	)
	Real estate construction					(3	)		(3	)		(23	)		(4	)
	Consumer:
		Real estate 1-4 family junior lien mortgage				(18	)		(11	)		(30	)		(22	)
		Credit card				(105	)		(117	)		(208	)		(218	)
		Other revolving credit and monthly payment				(170	)		(182	)		(383	)		(369	)

			Total consumer			(293	)		(310	)		(621	)		(609	)
	Lease financing					(20	)		(20	)		(46	)		(44	)
	Foreign					(23	)		(17	)		(44	)		(35	)

				Total loan charge-offs		(533	)		(532	)		(1,137	)		(989	)

Loan recoveries:
	Commercial					53			21			84			37
	Real estate 1-4 family first mortgage					2			1			3			2
	Other real estate mortgage					5			6			9			8
	Real estate construction					7			1			8			2
	Consumer:
		Real estate 1-4 family junior lien mortgage				4			4			8			7
		Credit card				12			10			24			22
		Other revolving credit and monthly payment				54			50			109			99

			Total consumer			70			64			141			128
	Lease financing					5			7			12			14
	Foreign					4			5			7			10

			Total loan recoveries			146			105			264			201

				Total net loan charge-offs		(387	)		(427	)		(873	)		(788	)

Balance, end of period					$	3,883		$	3,760		$	3,883		$	3,760

Total net loan charge-offs as a percentage of average total loans (annualized)						.87	%		1.06	%		1.00	%		.99	%

Allowance as a percentage of total loans						2.10	%		2.28	%		2.10	%		2.28	%

The Company considers the allowance for loan losses of $3.88 billion adequate to cover losses inherent in loans, loan commitments and standby and other letters of credit at June 30, 2002. The Company's determination of the level of the allowance for loan losses rests upon various judgements and assumptions, including general economic conditions, loan portfolio composition,

prior loan loss experience, evaluation of credit risk related to certain individual borrowers and the Company's ongoing examination process and that of its regulators.

INTEREST RECEIVABLE AND OTHER ASSETS

(in millions)			June 30, 2002		December 31, 2001		June 30, 2001


Trading assets			$	6,874	$	4,996	$	3,893
Nonmarketable equity investments:
	Private equity investments			1,642		1,696		1,783
	Federal Reserve Bank stock			1,419		1,295		1,259
	All other			1,293		1,071		730

		Total nonmarketable equity investments		4,354		4,062		3,772
Government National Mortgage Association (GNMA) pool buy-outs				2,435		2,815		2,532
Interest receivable				1,334		1,284		1,445
Interest-earning deposits				2,107		206		156
Foreclosed assets				192		171		134
Certain identifiable intangible assets				118		119		203
Due from customers on acceptances				83		104		101
Other				10,501		9,788		8,891

		Total interest receivable and other assets	$	27,998	$	23,545	$	21,127

Trading assets consist largely of securities, including corporate debt, U.S. government agency obligations, and the fair value of derivative instruments held for customer accommodation purposes. Interest income from trading assets was $48 million and $28 million in the second quarter of 2002 and 2001, respectively, and $92 million and $60 million in the first half of 2002 and 2001, respectively. Noninterest income from trading assets was $108 million and $91 million in the second quarter of 2002 and 2001, respectively, and $202 million and $204 million in the first half of 2002 and 2001, respectively.

GNMA pool buy-outs are advances made to GNMA mortgage pools that are guaranteed by the Federal Housing Administration or by the Department of Veterans Affairs (collectively, "the guarantors"). These advances are made to buy out government agency-guaranteed delinquent loans, pursuant to the Company's servicing agreements. The Company undertakes the collection and foreclosure process on behalf of the guarantors. After the foreclosure process is complete, the Company is reimbursed by the guarantors for substantially all costs incurred, including the advances.

DEPOSITS

The following table shows comparative detail of deposits.

(in millions)			June 30, 2002		December 31, 2001		June 30, 2001


Noninterest-bearing			$	61,499	$	65,362	$	56,774
Interest-bearing checking				2,428		2,228		1,950
Market rate and other savings				93,687		89,251		82,705
Savings certificates				24,193		25,454		29,789

	Core deposits			181,807		182,295		171,218
Other time deposits				5,552		839		1,168
Deposits in foreign offices				5,852		4,132		5,872

		Total deposits	$	193,211	$	187,266	$	178,258

CAPITAL ADEQUACY/RATIOS

The Company and each of the subsidiary banks are subject to various regulatory capital adequacy requirements administered by the Federal Reserve Board and the Office of the Comptroller of the Currency. Risk-based capital (RBC) guidelines establish a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet exposures.

			Actual				For capital adequacy purposes						To be well capitalized under the FDICIA prompt corrective action provisions

(in billions)			Amount		Ratio		Amount			Ratio			Amount			Ratio

As of June 30, 2002:
	Total capital (to risk-weighted assets)
		Wells Fargo & Company	$	29.3	11.32	%	³	$	20.7	³	8.00	%
		Wells Fargo Bank, N.A.		16.2	12.27		³		10.6	³	8.00		³	$	13.2	³	10.00	%
		Wells Fargo Bank Minnesota, N.A.		3.5	12.22		³		2.3	³	8.00		³		2.8	³	10.00
Tier 1 capital (to risk-weighted assets)
		Wells Fargo & Company	$	20.6	7.95	%	³	$	10.3	³	4.00	%
		Wells Fargo Bank, N.A.		10.0	7.60		³		5.3	³	4.00		³	$	7.9	³	6.00	%
		Wells Fargo Bank Minnesota, N.A.		3.2	11.31		³		1.1	³	4.00		³		1.7	³	6.00
Tier 1 capital (to average assets)
	(Leverage ratio)
		Wells Fargo & Company	$	20.6	6.89	%	³	$	11.9	³	4.00	%(1)
		Wells Fargo Bank, N.A.		10.0	7.37		³		5.4	³	4.00	(1)	³	$	6.8	³	5.00	%
		Wells Fargo Bank Minnesota, N.A.		3.2	5.88		³		2.2	³	4.00	(1)	³		2.7	³	5.00

(1): The leverage ratio consists of Tier 1 capital divided by quarterly average total assets, excluding goodwill and certain other items. The minimum leverage ratio guideline is 3% for banking organizations that do not anticipate significant growth and that have well-diversified risk, excellent asset quality, high liquidity, good earnings, effective management and monitoring of market risk and, in general, are considered top-rated, strong banking organizations.

To remain a seller/servicer in good standing, the Company's mortgage banking affiliate must maintain specified levels of shareholders' equity as required by the United States Department of Housing and Urban Development, Government National Mortgage Association, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. The equity requirements are generally based on the size of the loan portfolio being serviced for each investor. At June 30, 2002, the equity requirements for these agencies ranged from $1 million to $184 million. The mortgage banking affiliate had agency capital levels ranging from $955 million to $1 billion.

OFF-BALANCE SHEET TRANSACTIONS

OFF-BALANCE SHEET ARRANGEMENTS

The Company consolidates majority-owned subsidiaries that it controls. Other affiliates, including certain joint ventures, in which there is generally 20% ownership are accounted for by the equity method of accounting and not consolidated; those in which there is less than 20% ownership are generally carried at cost.

The Company routinely originates, securitizes and sells into the secondary market mortgage loans, and from time to time, other financial assets, including student loans, commercial mortgages and auto receivables. The Company also structures investment vehicles, typically in the form of collateralized debt obligations, to provide customers and investors with specialized investments to meet their specific needs. These securitizations are structured without recourse to the Company and without restrictions on the retained interest. In general, because the Company no longer maintains legal ownership of, nor controls the loans transferred, the transfers are accounted for as sales with related gain or loss recognized in income. In most securitizations, the Company retains the servicing rights related to the transferred loans so that customers that borrow from the Company benefit from continuity of service, and the Company may retain other beneficial interests from these sales. The Company does not dispose of troubled loans or problem assets by means of unconsolidated special purpose entities.

For more information, see "Off-Balance Sheet Transactions—Off-Balance Sheet Arrangements" in the Company's 2001 Annual Report on Form 10-K.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

Through the normal course of operations, the Company has entered into certain contractual obligations and other commitments. Such obligations generally relate to funding of operations through debt issuances as well as leases for premises and equipment. As a financial services provider, the Company routinely enters into commitments to extend credit, including loan commitments, standby letters of credit and financial guarantees. While contractual obligations represent future cash requirements of the Company, a significant portion of commitments to extend credit are likely to expire without being drawn upon. Such commitments are subject to the same credit policies and approval processes accorded to loans made by the Company. In the merchant banking business, the Company makes commitments to fund equity investments directly to investment funds and to specific private companies. The timing of future cash

requirements to fund such commitments is generally dependent upon the venture capital investment cycle. This cycle, the period over which privately-held companies are funded by venture capitalists and ultimately taken public through an initial offering, can vary based on overall market conditions as well as the nature and type of industry in which the companies operate. It is anticipated that many private equity investments would become liquid or would become public before the balance of unfunded equity commitments is utilized. Other commitments include investments in low-income housing and other community development activities undertaken by the Company. For more information, see "Off-Balance Sheet Transactions—Contractual Obligations and Other Commitments" in the Company's 2001 Annual Report on Form 10-K.

ASSET/LIABILITY AND MARKET RISK MANAGEMENT

Asset/liability management comprises the evaluation, monitoring, and management of the Company's interest rate risk, market risk and liquidity and funding. The Corporate Asset/Liability Management Committee (Corporate ALCO) maintains oversight of these risks. The Committee is comprised of senior financial and senior business executives. Each of the Company's principal business groups—Community Banking, Mortgage Banking and Wholesale Banking—have individual asset/liability management committees and processes that are linked to the Corporate ALCO process.

INTEREST RATE RISK

Interest rate risk, one of the more prominent risks in terms of potential earnings impact, is an inevitable part of being a financial intermediary. For more information, see "Asset/Liability and Market Risk Management—Interest Rate Risk" in the Company's 2001 Annual Report on Form 10-K. The principal tool used to evaluate Company interest rate risk is a simulation of net income under multiple economic and interest rate scenarios.

The Company simulates its future net income under multiple interest rate paths that differ in terms of the direction of interest rate changes, the degree of change over time, the speed of change, and the projected shape of the yield curve. As of June 30, 2002, the simulation analysis indicated that the Company's earnings would tend to decrease from most likely expectations under scenarios of much higher short term rates accompanied by higher but less pronounced increases in long term rates. As an example, a 2.50% increase in the federal funds rate accompanied by a 1.00% increase in the 10 year constant maturity treasury rate from levels prevailing at June 30, 2002 would reduce estimated net income by 5.1% relative to the Company's most likely earnings plan over a twelve month horizon. The principal source of net income risk in that particular scenario is a modeled slowdown in mortgage origination activity and narrower new business spreads associated with a flatter yield curve. Simulation estimates are highly dependent on and will change with the size and mix of the actual and projected balance sheet at the time each simulation is done.

The Company uses exchange-traded and over-the-counter interest rate derivatives to hedge its interest rate exposures. The credit risk amount and estimated net fair values of these derivatives as of June 30, 2002 and December 31, 2001 are indicated in Note 10 (Derivative Instruments and Hedging Activities) to Financial Statements. Derivatives are used for asset/liability management in three ways: (a) most of the Company's long-term fixed-rate debt is converted to floating-rate payments by entering into received-fixed swaps at issuance, (b) the cash flows from selected asset and/or liability instruments/portfolios are converted from fixed to floating payments or vice versa, and (c) the Mortgage Company actively uses swaptions, futures, forwards and rate options to hedge the Company's mortgage pipeline, funded mortgage loans, and mortgage servicing rights asset.

MORTGAGE BANKING INTEREST RATE RISK

The origination, funding and servicing of home mortgages is subject to complex risks. For more information, see "Asset/Liability and Market Risk Management—Mortgage Banking Interest Rate Risk" in the Company's 2001 Annual Report on Form 10-K. Because Mortgage Banking sells or securitizes most of the mortgage loans it originates, credit and liquidity risk is contained. Changes in interest rates, however, may have a potentially large impact on Mortgage Banking earnings in any calendar quarter and over time. Wells Fargo dynamically manages both the risk to net income over time from all sources as well as the risk to an immediate reduction in the fair value of its mortgage servicing rights. Both mortgage loans held on the Company's balance sheet and off-balance sheet derivative instruments are used to maintain these risks within parameters established by Corporate ALCO.

Under generally accepted accounting principles (GAAP), the capitalized mortgage servicing rights asset of $5.96 billion would be written down through the income statement as long term interest rates decline, which would impact prepayment speed assumptions. The Company mitigates this risk in two ways. First, a substantial portion of the mortgage servicing rights asset is hedged with derivative contracts. The principal source of risk in this hedging process is the risk that changes in the value of the hedging contracts may not match changes in the value of the hedged portion of the mortgage servicing rights for any given change in long term interest rates. Second, a portion of the potential reduction in the value of the mortgage servicing rights asset for a given decline in interest rates is offset by estimated increases in origination and servicing fees over a twelve month period from new mortgage activity or refinancing associated with that decline in interest rates. In a scenario of much lower long-term interest rates, the decline in the value of the mortgage servicing rights and its impact on net income would be immediate whereas the additional fee income accrues over time. Net of impairment reserves, the capitalized mortgage servicing rights asset is valued at 1.23% of the total servicing portfolio at June 30, 2002, down from 1.58% of the servicing portfolio at June 30, 2001.

MARKET RISK—TRADING ACTIVITIES

The Company incurs interest rate risk, foreign exchange risk and commodity price risk in several trading businesses managed under limits set by Corporate ALCO. The purpose of these businesses is to accommodate customers in the management of their market price risks. All securities, loans, foreign exchange transactions, commodity transactions and derivatives

transacted with customers or used to hedge capital market transactions done with customers are carried at fair value. Counterparty risk limits are established and monitored by the Institutional Risk Committee. Open "at risk" positions for all trading business are monitored by Corporate ALCO.

MARKET RISK—EQUITY MARKETS

Equity markets impact the Company in both direct and indirect ways. For more information, see "Asset/Liability and Market Risk Management—Market Risk—Equity Markets" in the Company's 2001 Annual Report on Form 10-K. The Company makes and manages direct equity investments in start up businesses, emerging growth companies, management buy-outs, acquisitions and corporate recapitalizations. The Company also invests in non-affiliated funds that make similar private equity investments. These private equity investments are made within capital allocations approved by the Company's management and its Board of Directors. Management reviews these investments at least quarterly and assesses for possible other-than-temporary impairment. For nonmarketable investments, the analysis is based on facts and circumstances of each individual investment and the expectations for that investment's cash flows and capital needs, the viability of its business model and the Company's exit strategy. The balance of private equity investments was $1,642 million at June 30, 2002 and $1,696 million at December 31, 2001.

The Company has marketable equity securities in its securities available for sale investment portfolio, including shares distributed from the Company's venture capital activities. These securities are managed within capital risk limits approved by management and the Board of Directors and monitored by Corporate ALCO. Gains and losses on these securities are recognized in net income when realized and, in addition, these securities are assessed for other-than-temporary impairment periodically. At June 30, 2002, the cost of marketable equity securities was $634 million and fair market value was $589 million.

The Company regularly assesses the private equity investments and marketable equity securities portfolios for impairment, however there can be no assurance that there will not be additional losses in the future.

LIQUIDITY AND FUNDING

The objective of effective liquidity management is to ensure that the Company can meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments efficiently under both normal operating conditions as well as under unforeseen and unpredictable circumstances of industry or market stress. To achieve this objective, Corporate ALCO establishes and monitors liquidity guidelines requiring sufficient asset based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. The Company sets liquidity management guidelines for both the consolidated balance sheet as well as for the Parent specifically to ensure that the Parent is a source of strength for its regulated, deposit taking banking subsidiaries.

In addition to the immediately liquid resources of cash and due from banks and federal funds sold and securities purchased under resale agreements, asset liquidity is provided by the debt securities in the securities available for sale portfolio. Asset liquidity is further enhanced by the Company's ability to sell or securitize loans in secondary markets through whole-loan sales and securitizations.

Core customer deposits have historically provided the Company with a sizeable source of relatively stable and low-cost funds.

The remaining funding of assets is mostly provided by long-term debt, deposits in foreign offices, short-term borrowings (federal funds purchased and securities sold under repurchase agreements, commercial paper and other short-term borrowings) and trust preferred securities. Liquidity for the Company is also available through the Company's ability to raise funds in a variety of domestic and international money and capital markets.

At March 31, 2002, the Parent had authority to issue a total of $4.55 billion in senior and subordinated notes under an Securities and Exchange Commission (SEC) registration statement filed in 2000. Under this registration statement, the Parent issued $1 billion in senior notes in the second quarter of 2002, leaving at June 30, 2002 a total of $3.55 billion available for issuance. In February 2002, the Parent registered for issuance an additional $10 billion in debt and equity securities, and certain other securities, including preferred and common securities to be issued by one or more trusts that are directly or indirectly owned by the Company and consolidated in the financial statements, and securities obligating the holders to purchase or sell securities issued by third parties, currencies, or commodities. At March 31, 2002, the Parent had authority to issue $9.55 billion under this registration. The Parent did not issue any securities in the second quarter of 2002. The Company used the proceeds from securities issued in 2002 for general corporate purposes and expects that it will use the proceeds from the issuance of any securities in the future for general corporate purposes as well. The Parent issues commercial paper and has two back-up credit facilities amounting to $2 billion.

At March 31, 2002, Wells Fargo Financial, Inc. (WFFI) had authority to issue a total of $3.3 billion of senior debt and subordinated notes under two previously filed SEC registration statements. During the second quarter of 2002, WFFI issued a total of $1.1 billion in senior notes, leaving at June 30, 2002 a total of $2.2 billion available for issuance by WFFI. In July 2002, WFFI issued $500 million in senior notes. In addition, at March 31, 2002, a subsidiary of WFFI had authority to issue a total of $1.3 billion (Canadian) of debt securities under a registration statement previously filed with the Canadian provincial securities authorities. During the second quarter of 2002, the subsidiary issued $150 million (Canadian) senior notes, leaving at June 30, 2002 a total of $1.15 billion (Canadian) available for issuance by the WFFI subsidiary.

In February 2001, Wells Fargo Bank, N.A. established a $20 billion bank note program under which it may issue up to $10 billion in short-term senior notes outstanding at any time and up to an aggregate of $10 billion in long-term senior and subordinated notes. Securities are issued under this program as private placements in accordance with OCC regulations. Wells Fargo Bank, N.A. did not issue any long-term notes during the second quarter of 2002. As of June 30, 2002, the remaining issuance authority under the long-term portion was $5.4 billion.

CAPITAL MANAGEMENT

The Company has an active program for managing stockholder capital. The objective of effective capital management is to produce above market long-term returns by opportunistically utilizing capital when returns are perceived to be high and issuing/accumulating capital when the costs of doing so is perceived to be low.

Uses of capital include investments for organic growth, acquisitions of banks and other financial services companies, dividends and share repurchases. During the first six months of 2002, the Company's consolidated assets increased $7.23 billion, or 2%. During 2001, the Board of Directors authorized the repurchase of up to 85 million additional shares of the Company's outstanding common stock. During the first six months of 2002, the Company repurchased 8.6 million shares of common stock for an aggregate of $426 million. At June 30, 2002, the total remaining common stock repurchase authority was approximately 42 million shares. In April 2002, the Board of Directors approved an increase in the Company's quarterly common stock dividend to 28 cents from 26 cents, representing an 8% increase in the quarterly dividend rate.

Sources of capital include retained earnings, common and preferred stock issuance and issuance of subordinated debt and the placement of trust preferred securities. In the first six months of 2002, total net income was $2.52 billion and the change in retained earnings was $1.53 billion after payment of $923 million in common stock dividends. In the first six months of 2002, the Company issued a total of $321 million in common stock for various employee stock plans.

FACTORS THAT MAY AFFECT FUTURE RESULTS

We make forward-looking statements in this report and from time to time in other reports and proxy statements we file with the SEC. Also, our senior management might make forward-looking statements orally to analysts, investors, the media and others. Broadly speaking, forward-looking statements include:

•: projections of our revenues, income, earnings per share, capital expenditures, dividends, capital structure or other financial items;
•: descriptions of plans or objectives of our management for future operations, products or services, including pending acquisitions;
•: forecasts of our future economic performance; and
•: descriptions of assumptions underlying or relating to any of the foregoing.

In this report, for example, we make forward-looking statements about:

•: future credit losses and non-performing assets;
•: future cash requirements relating to commitments to extend credit and to fund equity investments;
•: future amortization expense;
•: the impact of new accounting standards; and
•: the impact of interest rate changes on our net income and our securities available for sale portfolio.

Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements often include words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "can," "could," "may," "should," "will," "would" or similar expressions. Do not unduly rely on forward-looking statements. They give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we might not update them to reflect changes that occur after the date they are made.

There are several factors—many beyond our control—that could cause results to differ significantly from our expectations. Some of these factors are described below. Other factors, such as credit, market, operational, liquidity, interest rate and other risks, are described elsewhere in this report (see, for example, "Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Analysis" and "—Asset/Liability and Market Risk Management"). Factors relating to the regulation and supervision of the Company are described in our Annual Report on Form 10-K for the year ended December 31, 2001. When we refer to our Form 10-K, we mean not only to the information included directly in that report but also to information incorporated by reference into that report from other documents including our 2001 Annual Report to Stockholders. Information incorporated into the Form 10-K from our 2001 Annual Report to Stockholders is filed as Exhibit 13 to the Form 10-K.

Any factor described in this report or in our 2001 Form 10-K could by itself, or together with one or more other factors, adversely affect our business, results of operations and/or financial condition. There are factors not described in this report or in our Form 10-K that could cause results to differ from our expectations.

Industry Factors

As a financial services company, our earnings are significantly affected by business and economic conditions.

Our earnings are impacted by business and economic conditions in the United States and abroad. These conditions include short-term and long-term interest rates, inflation, monetary supply, fluctuations in both debt and equity capital markets, and the strength of the U.S. economy and the local economies in which we operate. Business and economic conditions that negatively impact household or corporate incomes could decrease the demand for the Company's products and increase the number of customers who fail to pay their loans.

Political conditions can also impact our earnings. Acts or threats of terrorism, and/or actions taken by the U.S. or other governments in response to acts or threats of terrorism, could impact business and economic conditions in the U.S. and abroad. Last year's terrorist attacks, for example, caused an immediate decrease in demand for air travel, which adversely affected not only the airline industry but also other travel-related and leisure industries, such as lodging, gaming and tourism.

We discuss other business and economic conditions in more detail elsewhere in this report.

Our earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies.

The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the United States. Its policies determine in large part our cost of funds for lending and investing and the return we earn on those loans and investments, both of which impact our net interest margin, and can materially affect the value of financial instruments we hold, such as debt securities and mortgage servicing rights. Its policies also can affect our borrowers, potentially increasing the risk that they may fail to repay their loans. Changes in Federal Reserve Board policies are beyond our control and hard to predict or anticipate.

The financial services industry is highly competitive.

We operate in a highly competitive industry which could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can now merge by creating a new type of financial services company called a "financial holding company," which can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Recently, a number of foreign banks have acquired financial services companies in the United States, further increasing competition in the U.S. market. Also, technology has lowered barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and some have lower cost structures.

We are heavily regulated by federal and state agencies.

The holding company, its subsidiary banks and many of its non-bank subsidiaries are heavily regulated at the federal and state levels. This regulation is to protect depositors, federal deposit insurance funds and the banking system as a whole, not security holders. Congress and state legislatures and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect us in substantial and unpredictable ways including limiting the types of financial services and products we may offer and increasing the ability of non-banks to offer competing financial services and products. Also, our failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies and damage to our reputation. For more information, refer to the "Regulation and Supervision" section of our Annual Report on Form 10-K for the year ended December 31, 2001 and to Notes 3 (Cash, Loan and Dividend Restrictions) and 22 (Risk-Based Capital) to Financial Statements included in the 2001 Annual Report to Stockholders and incorporated by reference into the Form 10-K.

Future legislation could change our competitive position.

Various legislation, including proposals to substantially change the financial institution regulatory system and to expand or contract the powers of banking institutions and bank holding companies, is from time to time introduced in the Congress. This legislation may change banking statutes and the operating environment of the Company and its subsidiaries in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. We cannot predict whether any of this potential legislation will be enacted, and if enacted, the effect that it, or any implementing regulations, would have on the financial condition or results of operations of the Company or any of its subsidiaries.

We depend on the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit, we may assume that a customer's audited financial statements conform with GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. We also may rely on the audit report covering those financial statements. Our financial condition and results of operations could be negatively impacted to the extent we rely on financial statements that do not comply with GAAP or that are materially misleading.

Consumers may decide not to use banks to complete their financial transactions.

Technology and other changes are allowing parties to complete financial transactions that historically have involved banks. For example, consumers can now pay bills and transfer funds directly without banks. The process of eliminating banks as intermediaries, known as "disintermediation," could result in the loss of fee income, as well as the loss of customer deposits and income generated from those deposits.

Company Factors

Maintaining or increasing our market share depends on market acceptance and regulatory approval of new products and services.

Our success depends, in part, on our ability to adapt our products and services to evolving industry standards. There is increasing pressure on financial services companies to provide products and services at lower prices. This can reduce our net interest margin and revenues from our fee-based products and services. Also, the widespread adoption of new technologies, including internet-based services, could require us to make substantial expenditures to modify or adapt our existing products and services. We might not successfully introduce new products and

services, achieve market acceptance of our products and services, and/or develop and maintain loyal customers.

The holding company relies on dividends from its subsidiaries for most of its revenue.

The holding company is a separate and distinct legal entity from its subsidiaries. It receives substantially all of its revenue from dividends from its subsidiaries. These dividends are the principal source of funds to pay dividends on the holding company's common and preferred stock and interest and principal on its debt. Various federal and/or state laws and regulations limit the amount of dividends that our bank and certain of our non-bank subsidiaries may pay to the holding company. Also, the holding company's right to participate in a distribution of assets upon a subsidiary's liquidation or reorganization is subject to the prior claims of the subsidiary's creditors. For more information, refer to "Regulation and Supervision—Dividend Restrictions" and "—Holding Company Structure" in our Annual Report on Form 10-K for the year ended December 31, 2001.

We have businesses other than banking.

We are a diversified financial services company. In addition to banking, we provide insurance, investments, mortgages and consumer finance. Although we believe our diversity helps mitigate the impact to the Company when downturns affect any one segment of our industry, it also means that our earnings could be subject to different risks and uncertainties. We discuss some examples below.

Merchant Banking. Our merchant banking activities including venture capital investments have a much greater risk of capital losses than our traditional banking activities. Also, it is difficult to predict the timing of any gains from these activities. Realization of gains from our venture capital investments depends on a number of factors—many beyond our control—including general economic conditions, the prospects of the companies in which we invest, when these companies go public, the size of our position relative to the public float, and whether we are subject to any resale restrictions. Factors such as a slowdown in consumer demand or a deterioration in capital spending on technology and telecommunications equipment, could result in declines in the values of our publicly traded and private equity securities. If we determine that the declines are other-than-temporary, additional impairment charges would be recognized. Also, we will realize losses to the extent we sell securities at less than book value. For more information, see in this report "Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Analysis—Securities Available for Sale."

Mortgage Banking. The impact of interest rates on our mortgage banking business can be large and complex. Changes in interest rates can impact loan origination fees and loan servicing fees, which account for a significant portion of mortgage-related revenues. A decline in mortgage rates might be expected to increase the demand for mortgage loans as borrowers refinance, but could also lead to accelerated payoffs in our mortgage servicing portfolio. Conversely, in a constant or increasing rate environment, we would expect fewer loans to be refinanced and a decline in payoffs in our servicing portfolio. While the Company uses dynamic and sophisticated models to assess the impact of interest rates on mortgage fees, amortization of mortgage

servicing rights, and the value of mortgage servicing assets, the estimates of net income and fair value produced by these models are dependent on estimates and assumptions of future loan demand, prepayment speeds and other factors which may overstate or understate actual subsequent experience. For more information, see in this report "Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations—Asset/Liability and Market Risk Management."

We rely on other companies to provide key components of our business infrastructure.

Third parties provide key components of our business infrastructure such as internet connections and network access. Any disruption in internet, network access or other voice or data communication services provided by these third parties or any failure of these third parties to handle current or higher volumes of use could adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business. Technological or financial difficulties of a third party service provider could adversely affect our business to the extent those difficulties result in the interruption or discontinuation of services provided by that party.

We have an active acquisition program.

We regularly explore opportunities to acquire financial institutions and other financial services providers. We cannot predict the number, size or timing of future acquisitions. As a matter of policy, we do not comment publicly on a possible acquisition or business combination until we have signed a definitive agreement for the transaction.

Our ability to successfully complete an acquisition generally is subject to regulatory approval, and we cannot be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted. We might be required to divest banks or branches as a condition to receiving regulatory approval.

Difficulty in integrating an acquired company may cause us not to realize expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from the acquisition. Specifically, the integration process could result in higher than expected deposit attrition (run-off), loss of key employees, the disruption of our business or the business of the acquired company, or otherwise adversely affect our ability to maintain relationships with customers and employees or achieve the anticipated benefits of the acquisition. Also, the negative impact of any divestitures required by regulatory authorities in connection with acquisitions or business combinations may be greater than expected.

Legislative Risk

Our business model is dependent on sharing information between the family of companies owned by Wells Fargo to better satisfy our customers' needs. Laws that restrict the ability of our companies to share information about customers could negatively impact our revenue and profit.

Our stock price can be volatile.

Our stock price can fluctuate widely in response to a variety of factors including:

•: actual or anticipated variations in our quarterly operating results;
•: recommendations by securities analysts;
•: new technology used, or services offered, by our competitors;
•: significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors;
•: failure to integrate our acquisitions or realize anticipated benefits from our acquisitions;
•: operating and stock price performance of other companies that investors deem comparable to us;
•: news reports relating to trends, concerns and other issues in the financial services industry; and
•: changes in government regulations.

General market fluctuations, industry factors and general economic and political conditions and events, such as future terrorist attacks and activities, economic slowdowns or recessions, interest rate changes, credit loss trends or currency fluctuations, also could cause our stock price to decrease regardless of our operating results.

PART II—OTHER INFORMATION

Item 2. Changes in Securities and Use of Proceeds.

The preferred share purchase rights issued under the Company's rights plan and included with the Company's common stock will expire as of the close of business on August 12, 2002. See Part II, Item 5 of this report for more information.

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

The Company held its Annual Meeting of Stockholders on April 23, 2002. There were 1,706,480,505 shares of common stock outstanding and entitled to vote at the meeting. A total of 1,432,458,328 shares of common stock were represented at the meeting in person or by proxy, representing 83.94% of the shares outstanding and entitled to vote at the meeting.

At the meeting stockholders (1) elected each person named in the Proxy Statement as a nominee for director, (2) approved the proposal to increase by 50,000,000 the number of shares of common stock available for awards under the Long-Term Incentive Compensation Plan, (3) ratified the appointment by the Board of Directors of KPMG LLP to audit the financial statements of the Company and its subsidiaries for the year ending December 31, 2002, and (4) approved the stockholder proposal requesting that the Board of Directors eliminate the Company's rights plan. Following are the voting results for each matter:

(1) Election of Directors

	For	Withheld


Leslie S. Biller	1,420,015,371	12,442,957
J.A. Blanchard III	1,411,571,845	20,886,483
Michael R. Bowlin	1,420,119,246	12,339,082
David A. Christensen	1,409,664,414	22,793,914
Spencer F. Eccles	1,418,431,142	14,027,186
Susan E. Engel	1,413,915,688	18,542,640
Robert L. Joss	1,413,664,073	18,794,255
Reatha Clark King	1,411,692,745	20,765,583
Richard M. Kovacevich	1,420,518,131	11,940,197
Richard D. McCormick	1,420,352,124	12,106,204
Cynthia H. Milligan	1,411,307,890	21,150,438
Benjamin F. Montoya	1,411,051,362	21,406,966
Philip J. Quigley	1,411,521,249	20,937,079
Donald B. Rice	1,410,203,288	22,255,040
Judith M. Runstad	1,411,564,972	20,893,356
Susan G. Swenson	1,411,388,150	21,070,178
Michael W. Wright	1,404,187,017	28,271,311

(2) Proposal to Increase Shares Available for Awards Under the Long-Term Incentive Compensation Plan

For	Against	Abstentions


1,050,426,772	371,249,913	10,781,643

(3) Proposal to Ratify Appointment of KPMG LLP

For	Against	Abstentions


1,384,053,561	39,844,019	8,560,748

(4) Stockholder Proposal Regarding Rights Plan

For	Against	Abstentions	Non-Votes


684,408,144	508,877,512	22,819,211	216,353,461

Item 5. Other Events.

The Company and Mellon Investor Services LLC (formerly known as ChaseMellon Shareholder Services, L.L.C.), as rights agent, following authorization by the Company's board of directors to terminate the Company's rights plan, entered into an Amendment to Rights Agreement, dated as of August 12, 2002, amending the Rights Agreement, dated as of October 21, 1998, between the Company and the rights agent to cause the preferred share purchase rights issued pursuant to the Rights Agreement to expire as of the close of business on August 12, 2002. The foregoing description of the Amendment to Rights Agreement is qualified in its entirety by reference to the full text of the Amendment to Rights Agreement, attached hereto as Exhibit 4(c), and to the Rights Agreement, attached hereto as Exhibit 4(b).

Item 6. Exhibits and Reports on Form 8-K

(a): Exhibits

3	(a)	Restated Certificate of Incorporation, incorporated by reference to Exhibit 3(b) to the Company's Current Report on Form 8-K dated June 28, 1993. Certificates of Amendment of Certificate of Incorporation, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated July 3, 1995 (authorizing preference stock), Exhibits 3(b) and 3(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (changing the Company's name and increasing authorized common and preferred stock, respectively) and Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 (increasing authorized common stock)
	(b)	Certificate of Change of Location of Registered Office and Change of Registered Agent, incorporated by reference to Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999
	(c)	Certificate of Designations for the Company's ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994

3	(d)	Certificate of Designations for the Company's 1995 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995
	(e)	Certificate Eliminating the Certificate of Designations for the Company's Cumulative Convertible Preferred Stock, Series B, incorporated by reference to Exhibit 3(a) to the Company's Current Report on Form 8-K dated November 1, 1995
	(f)	Certificate Eliminating the Certificate of Designations for the Company's 10.24% Cumulative Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated February 20, 1996
	(g)	Certificate of Designations for the Company's 1996 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated February 26, 1996
	(h)	Certificate of Designations for the Company's 1997 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated April 14, 1997
	(i)	Certificate of Designations for the Company's 1998 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated April 20, 1998
	(j)	Certificate of Designations for the Company's Adjustable Cumulative Preferred Stock, Series B, incorporated by reference to Exhibit 3(j) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998
	(k)	Certificate of Designations for the Company's Series C Junior Participating Preferred Stock, incorporated by reference to Exhibit 3(l) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998
	(l)	Certificate Eliminating the Certificate of Designations for the Company's Series A Junior Participating Preferred Stock, incorporated by reference to Exhibit 3(a) to the Company's Current Report on Form 8-K dated April 21, 1999
	(m)	Certificate of Designations for the Company's 1999 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3(b) to the Company's Current Report on Form 8-K dated April 21, 1999
	(n)	Certificate of Designations for the Company's 2000 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3(o) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000

3	(o)	Certificate of Designations for the Company's 2001 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated April 17, 2001
	(p)	Certificate of Designations for the Company's 2002 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated April 16, 2002
	(q)	By-Laws, incorporated by reference to Exhibit 3(m) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998
4	(a)	See Exhibits 3(a) through 3(q)
	(b)	Rights Agreement, dated as of October 21, 1998, between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form 8-A dated October 21, 1998
	(c)	Amendment to Rights Agreement, dated as of August 12, 2002, between the Company and Mellon Investor Services LLC (formerly known as ChaseMellon Shareholder Services, L.L.C.), as Rights Agent, filed herewith
	(d)	The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company.
10	(a)	Long-Term Incentive Compensation Plan, as amended through April 23, 2002, filed herewith
	(b)	Agreement, effective April 15, 2002, between Robert L. Joss and Wells Fargo Bank, N.A., filed herewith
	(c)	Agreement, dated May 29, 2002, between the Company and Leslie S. Biller, filed herewith
	(d)	Amendment, dated May 22, 2002, to Agreement between the Company and an executive officer, filed herewith
99	(a)	Computation of Ratios of Earnings to Fixed Charges—the ratios of earnings to fixed charges, including interest on deposits, were 3.13 and .93 for the quarters ended June 30, 2002 and 2001, respectively, and 3.06 and 1.44 for the six months ended June 30, 2002 and 2001, respectively. The ratios of earnings to fixed charges, excluding interest on deposits, were 5.00 and .85 for the quarters ended June 30, 2002 and 2001, respectively, and 4.85 and 1.95 for the six months ended June 30, 2002 and 2001, respectively.

99	(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 3.12 and .93 for the quarters ended June 30, 2002 and 2001, respectively, and 3.06 and 1.44 for the six months ended June 30, 2002 and 2001, respectively. The ratios of earnings to fixed charges and preferred dividends, excluding interest on deposits, were 4.98 and .84 for the quarters ended June 30, 2002 and 2001, respectively, and 4.84 and 1.93 for the six months ended June 30, 2002 and 2001, respectively.
99	(c)	Certification of Periodic Financial Reports by Chief Executive Officer Pursuant to 18 U.S.C. §1350
99	(d)	Certification of Periodic Financial Reports by Chief Financial Officer Pursuant to 18 U.S.C. §1350

(b)

The Company filed the following reports on Form 8-K during the second quarter of 2002:

(1): April 15, 2002, under Item 7, filing as exhibits documents relating to the issuance by Wells Fargo Capital VI of its 6.95% Capital Securities and the issuance by the Company of its 6.95% Junior Subordinated Debentures
(2): April 16, 2002, under Item 5, containing the Company's financial results for the quarter ended March 31, 2002

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.

Dated: August 12, 2002		WELLS FARGO & COMPANY
		By:		/s/ LES L. QUOCK Les L. Quock Senior Vice President and Controller (Principal Accounting Officer)

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FORM 10-Q TABLE OF CONTENTS
PART I—FINANCIAL INFORMATION
WELLS FARGO & COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME
WELLS FARGO & COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
WELLS FARGO & COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
WELLS FARGO & COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
WELLS FARGO & COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS
FINANCIAL REVIEW
PART II—OTHER INFORMATION
SIGNATURE