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

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004

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

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

420 Montgomery Street, San Francisco, California 94104
(Address of principal executive offices) (Zip Code)

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.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

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



										% Change
	Quarter ended									Sept. 30, 2004 from						Nine months ended
	Sept. 30		,	June 30		,	Sept. 30		,	June 30		,	Sept. 30		,	Sept. 30		,	Sept. 30		,	%
(in millions, except per share amounts)	2004			2004			2003			2004			2003			2004			2003			Change

For the Period
Net income	$	1,748		$	1,714		$	1,561			2	%		12	%	$	5,229		$	4,578			14	%
Diluted earnings per common share		1.02			1.00			.92			2			11			3.05			2.70			13
Profitability ratios (annualized)
Net income to average total assets (ROA)		1.66	%		1.68	%		1.57	%		(1	)		6			1.72	%		1.63	%		6
Net income applicable to common stock to average common stockholders’ equity (ROE)		19.34			19.57			18.88			(1	)		2			19.74			19.42			2
Efficiency ratio (1)		57.7			58.6			62.4			(2	)		(8	)		57.6			60.6			(5	)
Total revenue	$	7,318		$	7,426		$	7,333			(1	)		—		$	21,891		$	20,946			5
Dividends declared per common share		.48			.45			.45			7			7			1.38			1.05			31
Average common shares outstanding		1,688.9			1,688.1			1,677.2			—			1			1,692.1			1,678.0			1
Diluted average common shares outstanding		1,708.7			1,708.3			1,693.9			—			1			1,712.7			1,692.6			1
Average loans	$	274,255		$	266,231		$	216,181			3			27		$	265,676		$	205,431			29
Average assets		419,636			410,544			394,995			2			6			405,649			375,209			8
Average core deposits (2)		225,027			224,920			215,685			—			4			221,046			206,041			7
Net interest margin		4.89	%		4.83	%		5.01	%		1			(2	)		4.89	%		5.12	%		(4	)
At Period End
Securities available for sale	$	35,121		$	36,771		$	30,260			(4	)		16		$	35,121		$	30,260			16
Loans		279,310			269,731			228,137			4			22			279,310			228,137			22
Allowance for loan losses		3,782			3,940			3,854			(4	)		(2	)		3,782			3,854			(2	)
Goodwill		10,431			10,430			9,849			—			6			10,431			9,849			6
Assets		421,549			420,305			390,750			—			8			421,549			390,750			8
Core deposits		224,946			222,166			209,422			1			7			224,946			209,422			7
Stockholders’ equity		36,680			35,478			32,333			3			13			36,680			32,333			13
Tier 1 capital (3)		28,257			27,130			24,530			4			15			28,257			24,530			15
Total capital (3)		40,854			39,049			35,012			5			17			40,854			35,012			17
Capital ratios
Stockholders’ equity to assets		8.70	%		8.44	%		8.27	%		3			5			8.70	%		8.27	%		5
Risk-based capital (3)
Tier 1 capital		8.40			8.24			8.14			2			3			8.40			8.14			3
Total capital		12.15			11.86			11.62			2			5			12.15			11.62			5
Tier 1 leverage (3)		6.97			6.84			6.43			2			8			6.97			6.43			8
Book value per common share	$	21.71		$	21.03		$	19.25			3			13		$	21.71		$	19.25			13
Team members (active, full-time equivalent)		143,700			142,600			139,200			1			3			143,700			139,200			3
Common Stock Price
High	$	59.86		$	59.72		$	53.71			—			11		$	59.86		$	53.71			11
Low		56.12			54.32			48.90			3			15			54.32			43.27			26
Period end		59.63			57.23			51.50			4			16			59.63			51.50			16

This Report on Form 10-Q for the quarter ended September 30, 2004, including the Financial Review and the Financial Statements and related Notes, has forward-looking statements, which include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not rely unduly on forward-looking statements. Actual results might differ significantly from our forecasts and expectations. Please refer to “Factors that May Affect Future Results” for a discussion of some factors that may cause results to differ.

Wells Fargo & Company is a $422 billion diversified financial services company providing banking, insurance, investments, mortgage banking and consumer finance through banking stores, the internet and other distribution channels to consumers, businesses and institutions in all 50 states of the U.S. and in other countries. We ranked fifth in assets and fourth in market value of our common stock among U.S. bank holding companies at September 30, 2004. When we refer to “the Company”, “we”, “our” and “us” in this report, we mean Wells Fargo & Company and Subsidiaries (consolidated). When we refer to the Parent, we mean Wells Fargo & Company.

We continued to have double-digit earnings per share growth, with third quarter 2004 diluted earnings per share of $1.02, up 11% from a year ago, and net income of $1.75 billion, up 12% from a year ago. While third quarter 2004 revenue of $7.32 billion was flat, compared with a year ago, revenue grew 11% in businesses other than Wells Fargo Home Mortgage (Home Mortgage). Growth in these businesses was broad based, led by strong growth in consumer lending and deposits, small business banking, credit cards, debit cards and consumer finance. The lower revenue in Home Mortgage was due to a decline in mortgage originations driven by the increase in long-term rates from last year’s record lows. We continued to take advantage of unusually volatile markets in third quarter 2004 with repositioning actions resulting in $10 million of bond gains and $35 million of losses on loans, connected with the sale of approximately $4 billion of securities and adjustable rate mortgages following the big drop in long-term interest rates and narrowing of credit spreads. In addition, given the decline in long-term rates during the quarter, mortgage banking fees were reduced by $130 million, due primarily to the $211 million impairment valuation allowance for mortgage servicing rights (MSRs), offset by $81 million in net derivative gains.

Our corporate vision is to satisfy all the financial needs of our customers, help them succeed financially, be recognized as the premier financial services company in our markets and be one of America’s great companies. Our primary strategy to achieve this vision is to increase the number of products we provide to our customers and to focus on providing each customer with all of the financial products that fulfill their needs. Our cross-sell strategy and diversified business model facilitates growth in strong and weak economic cycles, as we can grow by expanding the number of products our current customers have with us. We estimate that our average banking household now has 4.5 products with us, which we believe is among the highest, if not the highest, in our industry. Our goal is eight products per customer, which is currently half of our estimate of potential demand. Our core products grew this quarter compared with a year ago, with average loans up 27% and average core deposits up 10%, excluding mortgage escrow deposits.

We believe it is important to maintain a well-controlled environment as we continue to grow our businesses. We manage our credit risk by maintaining prudent credit policies and continuously

examining our credit process. Despite the substantial loan growth we experienced in the last three years, nonperforming assets continued to trend lower and credit losses remained flat. In third quarter 2004, nonperforming loans and net charge-offs as a percentage of loans outstanding declined from the prior year. Asset quality improved in third quarter 2004 compared with a year ago, with net charge-offs down 4% and nonperforming assets (including nonaccrual loans and foreclosed assets) down 9%. We manage the interest rate and market risks inherent in our asset and liability balances within prudent ranges, while ensuring adequate liquidity and funding. Wells Fargo Bank, N.A. is the only bank in the U.S. to be “Aaa” rated by Moody’s Investors Service, their highest rating. Our stockholder value has increased over time due to customer satisfaction, strong financial results and the prudent way we attempt to manage our business risks.

Net income for third quarter 2004 was $1.75 billion, up 12%, compared with $1.56 billion for third quarter 2003. Diluted earnings per share for third quarter 2004 were $1.02, up 11%, compared with $.92 for third quarter 2003. Return on average assets (ROA) increased to 1.66% for third quarter 2004 from 1.57% a year ago and return on average equity (ROE) increased to 19.34% from 18.88% a year ago.

Net income for the first nine months of 2004 was $5.23 billion, up 14%, compared with $4.58 billion for the first nine months of 2003. Diluted earnings per share for the first nine months of 2004 were $3.05, up 13%, compared with $2.70 for the first nine months of 2003. ROA was 1.72% in the first nine months of 2004, compared with 1.63% for the first nine months of 2003. ROE was 19.74% in the first nine months of 2004, compared with 19.42% for the first nine months of 2003.

Net interest income on a taxable-equivalent basis was $4.45 billion and $12.77 billion for the third quarter and first nine months of 2004, respectively, compared with $4.16 billion and $12.02 billion for the same periods of 2003. Net interest income for third quarter 2004 increased 7%, compared with the prior year. Despite the decline in mortgages held for sale from last year, earning assets were up 9%, due to the 27% growth in average commercial and commercial real estate and consumer loans. The net interest margin was 4.89% for both the third quarter and first nine months of 2004, compared with 5.01% and 5.12% for the same periods of 2003. The margin increased from 4.83% in second quarter 2004 to 4.89% in third quarter 2004, the first increase in the margin in 10 consecutive quarters, partly due to balance sheet repositioning activities taken in the last few quarters.

Noninterest income was $2.90 billion and $9.20 billion for the third quarter and first nine months of 2004, respectively, compared with $3.19 billion and $8.98 billion for the same periods of 2003. Excluding mortgage banking fee income, noninterest income increased 9% from third quarter 2003. The increase in fee income in our non-mortgage banking activities reflected improved business conditions and growth across the Company, with solid year-over-year growth in deposit, loan, credit card and debit card fees, and growth in the international, institutional investment, capital markets and Acordia insurance businesses. During third quarter 2004, $48 million of equity investment gains were realized compared with $58 million a year ago.

Revenue, the sum of net interest income and noninterest income, was $7.32 billion in third quarter 2004, essentially flat compared with $7.33 billion in third quarter 2003, reflecting the

impact of lower revenue from Home Mortgage. Revenue increased 5% to $21.89 billion in the first nine months of 2004 from $20.95 billion in the first nine months of 2003.

Noninterest expense was $4.22 billion and $12.60 billion for the third quarter and first nine months of 2004, respectively, compared with $4.58 billion and $12.69 billion for the same periods of 2003. Home Mortgage expense in third quarter 2004 declined approximately $370 million from third quarter 2003 reflecting lower production and staffing costs.

During third quarter 2004, net charge-offs were $407 million, or .59% of average total loans (annualized), compared with $424 million, or .78%, during third quarter 2003. The provision for credit losses, which relates to loans and unfunded credit commitments, was $408 million and $1,252 million in the third quarter and first nine months of 2004, respectively, compared with $426 million and $1,258 million in the same periods of 2003. Effective September 30, 2004, we reclassified the portion of the allowance for loan losses related to commercial lending commitments and letters of credit, or $163 million, to other liabilities. The resulting allowance for credit losses (including both the allowance for loan losses and the reserve for unfunded credit commitments) was $3.95 billion, or 1.41% of total loans, at September 30, 2004, compared with $3.89 billion, or 1.54%, at December 31, 2003 and $3.85 billion, or 1.69%, at September 30, 2003.

At September 30, 2004, total nonaccrual loans were $1.38 billion, or .49% of total loans, compared with $1.46 billion, or .58%, at December 31, 2003 and $1.52 billion, or .66%, at September 30, 2003. Foreclosed assets were $190 million at September 30, 2004, compared with $198 million at December 31, 2003 and $196 million at September 30, 2003.

The ratio of stockholders’ equity to total assets was 8.70% at September 30, 2004, compared with 8.89% at December 31, 2003 and 8.27% at September 30, 2003. Our total risk-based capital (RBC) ratio at September 30, 2004 was 12.15% and our Tier 1 RBC ratio was 8.40%, exceeding the minimum regulatory guidelines of 8% and 4%, respectively, for bank holding companies. Our RBC ratios at September 30, 2003 were 11.62% and 8.14%, respectively. Our Tier 1 leverage ratios were 6.97% and 6.43% at September 30, 2004 and September 30, 2003, respectively, exceeding the minimum regulatory guideline of 3% for bank holding companies.

On December 8, 2003, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act). The Act introduces a prescription drug benefit under Medicare as well as a federal subsidy to plan sponsors that provide a benefit that is at least equivalent to Medicare. Specific authoritative guidance on the accounting for the federal subsidy has been issued through the Financial Accounting Standards Board (FASB) Staff Position 106-2 (FSP 106-2), Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which was issued in May 2004. We adopted FSP 106-2 prospectively effective July 1, 2004 and the adoption did not have a material impact on either our accumulated postretirement benefit obligation or our net periodic postretirement benefit cost for third quarter 2004.

On December 12, 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 03-3 (SOP 03-3), Accounting for Certain Loans or Debt Securities Acquired in a Transfer, which addresses

the accounting for certain loans acquired in a transfer when it is probable, at acquisition, that the investor will be unable to collect all contractually required payments receivable. SOP 03-3 is to be applied prospectively, effective for loans acquired in years beginning after December 15, 2004. SOP 03-3 requires acquired loans with evidence of credit deterioration to be recorded at fair value and prohibits recording any valuation allowance related to such loans at the time of purchase. This SOP limits the yield that may be accreted on such loans to the excess of the investor’s estimated cash flows over its initial investment in the loan. The excess of contractual cash flows over cash flows expected to be collected is not to be recognized as an adjustment of yield. Subsequent increases in cash flows expected to be collected are recognized prospectively through adjustment of the loan’s yield over its remaining life. Decreases in cash flows expected to be collected are recognized as impairment. Loans carried at fair value, mortgage loans held for sale, and loans to borrowers in good standing under revolving credit agreements are excluded from the scope of SOP 03-3.

On July 16, 2004, the FASB ratified the decisions reached by the Emerging Issues Task Force (EITF) with respect to Issue 02-14 (EITF 02-14), Whether the Equity Method of Accounting Applies When an Investor Does Not Have an Investment in Voting Stock of an Investee but Exercises Significant Influence through Other Means. The EITF reached a consensus that an investor should apply the equity method of accounting when it has investments in either common stock or “in-substance common stock” of a corporation, provided that the investor has the ability to exercise significant influence over the operating and financial policies of the investee. In-substance common stock, as defined in the consensus, is an investment that has risk and reward characteristics, among other factors, that are substantially the same as common stock. We adopted the consensus reached in EITF 02-14 during third quarter 2004 and the adoption did not have a material effect on our financial statements.

On October 13, 2004, the FASB ratified the consensus reached by the EITF at its September 29-30 and June 30-July 1 meetings with respect to Issue No. 04-8 (EITF 04-8), The Effect of Contingently Convertible Instruments on Diluted Earnings Per Share. This consensus would require instruments with contingent conversion features that are based on the market price of an entity’s own stock, such as our Floating Rate Convertible Senior Debentures due 2033 (the debentures) in their current form, to be included in the computation of diluted earnings per share, even though the market price trigger has not been met. EITF 04-8 becomes effective for periods ending after December 15, 2004, and must be applied retroactively by restating any periods during which the instruments were outstanding. However, the determination of the dilutive effect upon adoption of EITF 04-8, if any, is based on the form of the instrument that exists at December 31, 2004.

According to the terms of the indenture related to the debentures, we have the right to elect to deliver, in lieu of common stock, cash or a combination of cash and common stock upon conversion of the debentures. However, the indenture currently prohibits us from paying cash upon a conversion of the debentures if an event of default, as defined in the indenture, has occurred and is continuing at that time. We are therefore seeking consents from holders of the debentures to amend the indenture to eliminate this prohibition. After effectiveness of the amendment, we will make an irrevocable election under the indenture before the end of 2004, that will obligate us to deliver, upon conversion of the debentures, (i) cash in an amount equal to the lesser of the conversion value of the debentures as determined under the indenture or the

accreted principal amount of the debentures, and (ii) cash or common stock or a combination of cash and common stock for any conversion value of the debentures in excess of the accreted principal amount. As a result of these actions, none of the shares of the common stock underlying the debentures currently would be considered outstanding for purposes of calculating diluted earnings per share under EITF 04-8.

Our significant accounting policies are fundamental to understanding our results of operations and financial condition, because some accounting policies require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. Three of these policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. These policies govern the allowance for loan losses, the valuation of mortgage servicing rights and pension accounting. Management has reviewed and approved these critical accounting policies and has discussed these policies with the Audit and Examination Committee. These policies are described in “Financial Review – Critical Accounting Policies” and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2003 (2003 Form 10-K).

Net interest income is the interest earned on debt securities, loans (including yield-related loan fees) and other interest-earning assets minus the interest paid for deposits and long-term and short-term debt. The net interest margin is the average yield on earning assets minus the average interest rate paid for deposits and our other sources of funding, such as debt. Net interest income and the net interest margin are presented on a taxable-equivalent basis to consistently reflect income from taxable and tax-exempt loans and securities based on a 35% marginal tax rate.

Net interest income on a taxable-equivalent basis increased 7% to $4.45 billion in third quarter 2004 from $4.16 billion in third quarter 2003, primarily due to strong consumer loan growth, particularly in mortgage products. The benefit of this growth was partially offset by higher market funding costs, due to higher interest rates, and lower loan yields as new loans were added with yields below the existing portfolio average.

The net interest margin decreased to 4.89% in third quarter 2004 from 5.01% in third quarter 2003. The decline was primarily due to lower investment portfolio yields following maturities and prepayments of higher yielding mortgage-backed securities, and the addition of new consumer and commercial loans with yields below the existing portfolio average. These factors were partially offset by balance sheet repositioning actions taken in 2004.

Individual components of net interest income and the net interest margin are presented in the rate/yield table on pages 8 and 9.



	Quarter ended September 30																,
	2004								2003
							Interest								Interest
	Average			Yields/			income/		Average			Yields/			income/
(in millions)	balance			rates			expense		balance			rates			expense

EARNING ASSETS
Federal funds sold and securities purchased under resale agreements	$	3,818			1.37	%	$	14	$	2,514			.88	%	$	6
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies		1,132			4.39			12		1,283			4.59			14
Securities of U.S. states and political subdivisions		3,586			7.85			67		2,442			8.92			51
Mortgage-backed securities:
Federal agencies		22,965			6.02			335		18,538			7.50			334
Private collateralized mortgage obligations		3,836			5.12			48		1,972			5.25			25

Total mortgage-backed securities		26,801			5.89			383		20,510			7.28			359
Other debt securities (4)		3,443			7.60			58		3,540			7.89			64

Total debt securities available for sale (4)		34,962			6.19			520		27,775			7.37			488
Mortgages held for sale (3)		34,844			5.61			490		69,786			5.18			906
Loans held for sale (3)		8,276			3.68			76		7,124			3.17			57
Loans:
Commercial and commercial real estate:
Commercial		49,517			5.61			698		46,947			6.04			714
Other real estate mortgage		29,025			5.37			391		25,635			5.33			343
Real estate construction		8,949			5.29			119		7,775			4.98			98
Lease financing		5,084			6.23			79		4,497			6.27			70

Total commercial and commercial real estate		92,575			5.53			1,287		84,854			5.74			1,225
Consumer:
Real estate 1-4 family first mortgage		88,689			5.54			1,231		57,817			5.31			770
Real estate 1-4 family junior lien mortgage		46,367			5.07			591		32,512			5.69			466
Credit card		8,948			12.00			269		7,683			12.11			233
Other revolving credit and installment		34,168			8.99			771		31,053			8.81			689

Total consumer		178,172			6.40			2,862		129,065			6.65			2,158
Foreign		3,508			14.24			124		2,262			18.01			102

Total loans (5)		274,255			6.21			4,273		216,181			6.41			3,485
Other		7,598			3.09			59		8,905			2.60			58

Total earning assets	$	363,753			5.97			5,432	$	332,285			6.02			5,000

FUNDING SOURCES
Deposits:
Interest-bearing checking	$	3,017			.47			4	$	2,592			.20			1
Market rate and other savings		124,090			.68			213		108,969			.61			166
Savings certificates		18,490			2.24			105		20,429			2.43			125
Other time deposits		36,089			1.47			133		27,633			1.11			78
Deposits in foreign offices		8,856			1.44			32		5,643			1.00			14

Total interest-bearing deposits		190,542			1.02			487		165,266			.92			384
Short-term borrowings		29,840			1.41			105		29,572			.96			72
Long-term debt		65,443			2.41			395		57,960			2.40			349
Guaranteed preferred beneficial interests in Company’s subordinated debentures		—			—			—		3,525			3.64			32

Total interest-bearing liabilities		285,825			1.38			987		256,323			1.30			837
Portion of noninterest-bearing funding sources		77,928			—			—		75,962			—			—

Total funding sources	$	363,753			1.08			987	$	332,285			1.01			837

Net interest margin and net interest income on a taxable-equivalent basis (6)					4.89	%	$	4,445					5.01	%	$	4,163

NONINTEREST-EARNING ASSETS
Cash and due from banks	$	12,704							$	13,642
Goodwill		10,431								9,817
Other		32,748								39,251

Total noninterest-earning assets	$	55,883							$	62,710

NONINTEREST-BEARING FUNDING SOURCES
Deposits	$	79,430							$	83,695
Other liabilities		18,435								22,139
Stockholders’ equity		35,946								32,838
Noninterest-bearing funding sources used to fund earning assets		(77,928	)							(75,962	)

Net noninterest-bearing funding sources	$	55,883							$	62,710

TOTAL ASSETS	$	419,636							$	394,995



	Nine months ended September 30																,
	2004								2003
							Interest								Interest
	Average			Yields/			income/		Average			Yields/			income/
	balance			rates			expense		balance			rates			expense

EARNING ASSETS
Federal funds sold and securities purchased under resale agreements	$	3,021			1.13	%	$	26	$	4,005			1.16	%	$	35
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies		1,182			4.16			36		1,288			4.85			45
Securities of U.S. states and political subdivisions		3,460			7.90			196		2,183			8.92			136
Mortgage-backed securities:
Federal agencies		21,232			6.02			927		17,317			7.84			957
Private collateralized mortgage obligations		3,543			5.10			131		1,997			6.48			93

Total mortgage-backed securities		24,775			5.88			1,058		19,314			7.70			1,050
Other debt securities (4)		3,444			7.66			177		3,243			7.77			179

Total debt securities available for sale (4)		32,861			6.21			1,467		26,028			7.67			1,410
Mortgages held for sale (3)		32,226			5.35			1,294		64,609			5.33			2,585
Loans held for sale (3)		8,088			3.39			205		7,064			3.62			191
Loans:
Commercial and commercial real estate:
Commercial		48,515			5.71			2,074		47,146			6.13			2,164
Other real estate mortgage		28,472			5.24			1,116		25,561			5.50			1,052
Real estate construction		8,548			5.12			328		7,888			5.16			305
Lease financing		5,055			6.37			241		4,435			6.26			208

Total commercial and commercial real estate		90,590			5.54			3,759		85,030			5.86			3,729
Consumer:
Real estate 1-4 family first mortgage		88,140			5.36			3,539		51,147			5.65			2,164
Real estate 1-4 family junior lien mortgage		42,235			5.03			1,591		30,497			6.00			1,368
Credit card		8,599			11.89			767		7,514			12.14			684
Other revolving credit and installment		33,211			9.02			2,243		29,117			9.17			1,997

Total consumer		172,185			6.31			8,140		118,275			7.02			6,213
Foreign		2,901			15.91			346		2,126			18.10			289

Total loans (5)		265,676			6.15			12,245		205,431			6.65			10,231
Other		8,075			2.83			171		7,918			2.87			170

Total earning assets	$	349,947			5.90			15,408	$	315,055			6.23			14,622

FUNDING SOURCES
Deposits:
Interest-bearing checking	$	2,997			.35			8	$	2,512			.29			5
Market rate and other savings		121,048			.64			576		104,826			.68			533
Savings certificates		18,902			2.24			317		21,257			2.60			413
Other time deposits		29,510			1.25			275		25,052			1.24			233
Deposits in foreign offices		8,446			1.19			75		6,083			1.15			52

Total interest-bearing deposits		180,903			.92			1,251		159,730			1.03			1,236
Short-term borrowings		26,067			1.16			227		30,414			1.12			254
Long-term debt		66,976			2.31			1,160		52,141			2.61			1,020
Guaranteed preferred beneficial interests in Company’s subordinated debentures		—			—			—		3,210			3.69			88

Total interest-bearing liabilities		273,946			1.29			2,638		245,495			1.41			2,598
Portion of noninterest-bearing funding sources		76,001			—			—		69,560			—			—

Total funding sources	$	349,947			1.01			2,638	$	315,055			1.11			2,598

Net interest margin and net interest income on a taxable-equivalent basis (6)					4.89	%	$	12,770					5.12	%	$	12,024

NONINTEREST-EARNING ASSETS
Cash and due from banks	$	12,950							$	13,551
Goodwill		10,412								9,803
Other		32,340								36,800

Total noninterest-earning assets	$	55,702							$	60,154

NONINTEREST-BEARING FUNDING SOURCES
Deposits	$	78,099							$	77,446
Other liabilities		18,237								20,714
Stockholders’ equity		35,367								31,554
Noninterest-bearing funding sources used to fund earning assets		(76,001	)							(69,560	)

Net noninterest-bearing funding sources	$	55,702							$	60,154

TOTAL ASSETS	$	405,649							$	375,209

Average earning assets increased $31.5 billion to $363.8 billion in third quarter 2004 from $332.3 billion in third quarter 2003, due to an increase in average loans and debt securities available for sale, primarily offset by a decline in average mortgages held for sale. Loans averaged $274.3 billion in third quarter 2004, compared with $216.2 billion in third quarter 2003. Average mortgages held for sale decreased to $34.8 billion in third quarter 2004 from $69.8 billion in third quarter 2003, due to lower origination volume. Debt securities available for sale averaged $35.0 billion in third quarter 2004 and $27.8 billion in third quarter 2003.

Average core deposits are an important contributor to growth in net interest income and the net interest margin. This low-cost source of funding rose 4% from a year ago. Average core deposits were $225.0 billion and $215.7 billion and funded 53.6% and 54.6% of our average total assets in third quarter 2004 and 2003, respectively. Average mortgage escrow deposits were $13.8 billion for third quarter 2004, down $10.4 billion from a year ago. Excluding mortgage escrow deposits, total average core deposits for third quarter 2004 grew $19.8 billion, or 10%, from a year ago. While average savings certificates of deposit declined to $18.5 billion in third quarter 2004 from $20.4 billion in third quarter 2003, average noninterest-bearing checking accounts and other core deposit categories increased from $195.3 billion in third quarter 2003 to $206.5 billion in third quarter 2004. Total average interest-bearing deposits increased to $190.5 billion in third quarter 2004 from $165.3 billion in third quarter 2003.



	Quarter									Nine months
	ended Sept. 30					,	%			ended Sept. 30					,	%
(in millions)	2004			2003			Change			2004			2003			Change

Service charges on deposit accounts	$	644		$	607			6	%	$	1,896		$	1,747			9	%
Trust and investment fees:
Trust, investment and IRA fees		366			348			5			1,124			995			13
Commissions and all other fees		142			156			(9	)		449			438			3

Total trust and investment fees		508			504			1			1,573			1,433			10
Credit card fees		290			251			16			827			752			10
Other fees:
Cash network fees		47			48			(2	)		136			136			—
Charges and fees on loans		236			199			19			671			565			19
All other		173			175			(1	)		503			460			9

Total other fees		456			422			8			1,310			1,161			13
Mortgage banking:
Servicing fees, net of amortization and provision for impairment		(24	)		(82	)		(71	)		603			(1,266	)		—
Net gains on mortgage loan origination/sales activities		212			712			(70	)		258			2,790			(91	)
All other		74			143			(48	)		209			353			(41	)

Total mortgage banking		262			773			(66	)		1,070			1,877			(43	)
Operating leases		207			229			(10	)		625			726			(14	)
Insurance		264			252			5			928			807			15
Net gains (losses) on debt securities available for sale		10			(23	)		—			(18	)		16			—
Net gains (losses) from equity investments		48			58			(17	)		224			(87	)		—
Net gains on sales of loans		3			19			(84	)		7			23			(70	)
Net gains on dispositions of operations		—			—			—			2			27			(93	)
All other		208			99			110			753			499			51

Total	$	2,900		$	3,191			(9	)%	$	9,197		$	8,981			2	%

Service charges on deposit accounts increased 6% and 9% for the third quarter and first nine months of 2004, respectively, from the same periods of 2003, due to growth in core deposit accounts and increased activity.

We earn trust, investment and IRA fees from managing and administering assets, which include mutual funds, corporate trust, personal trust, employee benefit trust and agency assets. At September 30, 2004, these assets totaled approximately $627 billion, up 15% from $544 billion at September 30, 2003. Generally, these fees are based on the market value of the assets that are managed, administered, or both. The increase in trust, investment and IRA fees of 5% and 13% for the third quarter and first nine months of 2004, respectively, from the same periods of 2003, was primarily due to growth in assets, successful efforts to grow business, and modest fill-in acquisitions.

We expect to complete the pending acquisition of the mutual fund assets and institutional investment accounts from Strong Financial Corporation (Strong) at the end of this year or early next year. Based on values at September 30, 2004, we expect to acquire approximately $24 billion in mutual fund assets and approximately $6 billion in institutional investment accounts.

Additionally, we receive commissions and other fees for providing services to retail and discount brokerage customers. At September 30, 2004 and 2003, brokerage balances were approximately $79 billion and $75 billion, respectively. Generally, these fees are based on the number of transactions executed at the customer’s direction.

Credit card fees increased 16% and 10% for the third quarter and first nine months of 2004, respectively, from the same periods of 2003, predominantly due to an increase in credit card accounts and credit and debit card transaction volume.

Mortgage banking noninterest income was $262 million and $1,070 million in the third quarter and first nine months of 2004, compared with $773 million and $1,877 million in the same periods of 2003.

Net servicing fees reflected a net loss of $24 million and net gain of $603 million in the third quarter and first nine months of 2004, respectively, compared with net losses of $82 million and $1,266 million in the same periods of 2003. Servicing fees are presented net of amortization and impairment of mortgage servicing rights (MSRs) and gains and losses from hedging activities, which are all influenced by both the level and direction of mortgage interest rates. The increase in net servicing fees in 2004 from the prior year reflected lower MSRs impairment and amortization, due to higher mortgage rates and a lower weighted-average note rate in the servicing portfolio. Amortization of MSRs was $411 million and $1,353 million in the third quarter and first nine months of 2004, respectively, compared with $572 million and $2,301 million in the same periods of 2003.

In third quarter 2004, the provision for MSRs impairment was $211 million, resulting from a declining rate environment during the quarter, compared with a reversal of provision of $238 million in third quarter 2003. The provision recorded in third quarter 2004 was offset by net derivative gains of $81 million, and the reversal of provision in third quarter 2003 was offset by net derivative losses of $206 million. For the first nine months of 2004, the provision for

MSRs impairment was $26 million compared with a provision of $974 million in 2003, offset by net derivative gains of $415 million and $752 million for the same periods. (For further discussion of hedge accounting for MSRs see Note 18 (Derivatives – Fair Value Hedges) to Financial Statements.)

Net gains on mortgage loan origination/sales activities were $212 million in third quarter 2004 and $258 million for the first nine months of 2004, compared with $712 million and $2,790 million, respectively, for the same periods of 2003. The lower level of net gains in 2004 compared with 2003 reflected a decline in mortgage origination volume and a decrease in margins, primarily due to an increase in mortgage rates and lower customer demand. Originations during third quarter 2004 declined to $68 billion from $161 billion in third quarter 2003. For the first nine months of 2004, originations declined to $229 billion from $399 billion in 2003.

See “Financial Review – Critical Accounting Policies – Mortgage Servicing Rights Valuation” in our 2003 Form 10-K for the method used to evaluate MSRs for impairment and to determine if such impairment is other-than-temporary.

Insurance revenue, approximately half of which was from the Acordia insurance business, was $264 million and $928 million in the third quarter and first nine months of 2004, respectively, compared with $252 million and $807 million in the same periods of 2003. The increase in insurance revenue for both periods, compared with the prior year, was due to increased demand for crop and commercial insurance products, as well as continued cross-selling of all insurance products.

Net gains (losses) on debt securities available for sale were a net gain of $10 million and a net loss of $18 million in the third quarter and first nine months of 2004, respectively, compared with a net loss of $23 million and a net gain of $16 million in the same periods of 2003. Net gains from equity investments were $48 million and $224 million in the third quarter and first nine months of 2004, respectively, compared with a net gain of $58 million and a net loss of $87 million in the same periods of 2003.

We routinely review our investment portfolios and recognize impairment write-downs based primarily on issuer-specific factors and results, and our intent to hold such securities. We also consider general economic and market conditions, including industries in which venture capital investments are made, and adverse changes affecting the availability of venture capital. We determine impairment based on all of the information available at the time of the assessment, but new information or economic developments in the future could result in recognition of additional impairment.

“All other” noninterest income for third quarter 2003 was offset by a $125 million loss on the early retirement of $1.8 billion of term debt that was previously issued at higher costs.



	Quarter								Nine months
	ended Sept. 30				,	%			ended Sept. 30				,	%
(in millions)	2004		2003			Change			2004		2003			Change

Salaries	$	1,383	$	1,185			17	%	$	3,955	$	3,481			14	%
Incentive compensation		449		621			(28	)		1,281		1,571			(18	)
Employee benefits		390		374			4			1,273		1,143			11
Equipment		254		298			(15	)		826		871			(5	)
Net occupancy		309		283			9			907		867			5
Operating leases		158		175			(10	)		469		541			(13	)
Contract services		154		270			(43	)		454		675			(33	)
Outside professional services		165		122			35			440		345			28
Outside data processing		109		105			4			314		306			3
Advertising and promotion		113		98			15			315		274			15
Travel and entertainment		110		98			12			312		275			13
Telecommunications		73		92			(21	)		216		256			(16	)
Postage		63		94			(33	)		201		265			(24	)
Stationery and supplies		57		62			(8	)		177		173			2
Charitable donations		7		197			(96	)		24		216			(89	)
Insurance		47		48			(2	)		214		166			29
Operating losses		45		29			55			144		149			(3	)
Security		40		41			(2	)		120		125			(4	)
Loss from debt extinguishment		—		—			—			176		—			—
Core deposit intangibles		33		35			(6	)		101		107			(6	)
All other		261		348			(25	)		683		884			(23	)

Total	$	4,220	$	4,575			(8	)%	$	12,602	$	12,690			(1	)%

Noninterest expense was $4.2 billion in third quarter 2004, down $355 million, or 8%, from $4.6 billion in third quarter 2003, mostly due to a reduction in Home Mortgage expense and the charitable donation made to the Wells Fargo Foundation in third quarter 2003, offset by higher salaries. Home Mortgage expense, predominantly incentive compensation and contract services, declined approximately $370 million from third quarter 2003 reflecting reduced production costs from lower volume.

We expect to incur approximately $65 million of integration expenses related to the Strong acquisition, with approximately $20 million (or approximately $.01 per share) in the fourth quarter of 2004. In 2005, we expect to incur total integration expenses of approximately $.02 per share, including the balance of the expenses related to the Strong acquisition and approximately $10 million related to the pending acquisition of First Community Capital Corporation.

The effective tax rate for third quarter 2004 was 34.9%, compared with 33.1% for third quarter 2003, bringing the 2004 year-to-date effective tax rate up to 34.9% from 34.6% for the same period of 2003. The lower rate in third quarter 2003 was primarily due to the tax benefit derived from the Company’s third quarter 2003 donations of appreciated public equity securities to the Wells Fargo Foundation.

Our lines of business for management reporting consist of Community Banking, Wholesale Banking and Wells Fargo Financial.

Community Banking’s net income increased 17% to $1,246 million in third quarter 2004 from third quarter 2003 and increased 17% to $3,729 million for the first nine months of 2004 from the first nine months of 2003. Net interest income increased 6% to $3,173 million in third quarter 2004 from third quarter 2003, mostly due to growth in consumer loans, real estate 1-4 family loans and deposits, partially offset by lower mortgages held for sale. Average loans in Community Banking grew 30% and average core deposits grew 4% from third quarter 2003, or 11% excluding mortgage escrow deposits. The provision for credit losses decreased 7% to $199 million in third quarter 2004 from third quarter 2003, due to improved credit quality. Noninterest income for third quarter 2004 decreased 13% to $2,079 million from third quarter 2003, primarily due to lower mortgage revenue, partially offset by increases in fee income, including consumer loan fees, deposit service charges, insurance revenue, trust and investment fees and credit card fees. Noninterest expense decreased 13% to $3,143 million in third quarter 2004 from third quarter 2003, primarily due to lower mortgage production costs.

Wholesale Banking’s net income was $363 million in third quarter 2004, compared with $372 million in third quarter 2003. The decline reflected a lower net interest margin and an increase in noninterest expense. Net income increased 13% to $1,196 million for the first nine months of 2004 from the first nine months of 2003. The 2004 year-to-date results benefited from continued strength in asset-based lending and improved credit quality. The provision for credit losses decreased from $54 million in third quarter 2003 to $10 million in third quarter 2004, due to lower net charge-offs and a reduction in nonperforming assets. Noninterest expense increased 8% to $678 million in third quarter 2004 from third quarter 2003, partly due to higher salaries and benefit costs.

Wells Fargo Financial’s net income increased 13% to $137 million in third quarter 2004 from $121 million in third quarter 2003. Net income increased 14% to $378 million for the first nine months of 2004 from $332 million for the same period in 2003. Net interest income increased 19% to $715 million for third quarter 2004 and 22% to $2,039 million for the first nine months of 2004. For both periods, the increase was due to growth in average loans. The provision for credit losses increased by $40 million and $127 million in the third quarter and first nine months of 2004, respectively, compared with the same periods of 2003. The provision for credit losses of $50 million above net charge-offs for the first nine months of 2004 reflected the sustained growth of Wells Fargo Financial’s consumer portfolio. Noninterest expense increased 16% to $398 million in third quarter 2004 from third quarter 2003, primarily due to higher salaries and benefit costs, consistent with the 16% increase in team members.

For a more complete description of our operating segments, including additional financial information and the underlying management accounting process, see Note 12 (Operating Segments) to Financial Statements.

A comparison between third quarter 2004 and year-end 2003 balance sheets is presented below.

Our securities available for sale portfolio includes both debt and marketable equity securities. We hold debt securities available for sale primarily for liquidity, interest rate risk management and yield enhancement purposes. Accordingly, this portfolio primarily includes very liquid, high quality federal agency debt securities. At September 30, 2004, we held $34.5 billion of debt securities available for sale, compared with $32.4 billion at December 31, 2003. We had a net unrealized gain on debt securities available for sale of $1.3 billion at September 30, 2004 and December 31, 2003. In addition, we held $574 million of marketable equity securities available for sale at September 30, 2004, and $582 million at December 31, 2003, with a net unrealized gain of $92 million and $188 million for the same periods.

The weighted-average expected maturity of debt securities available for sale was 5.1 years at September 30, 2004. Since 77% of this portfolio is mortgage-backed securities, the expected remaining maturity may differ from contractual maturity because borrowers may have the right to prepay obligations before the underlying mortgages mature.

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

See Note 3 (Securities Available for Sale) to Financial Statements for securities available for sale by security type.

A comparative schedule of average loan balances is included in the table on pages 8 and 9; quarter-end balances are in Note 4 (Loans and Allowance for Credit Losses) to Financial Statements.

Loans averaged $274.3 billion in third quarter 2004, compared with $216.2 billion in third quarter 2003, an increase of 27%. Total loans at September 30, 2004 were $279.3 billion, compared with $253.1 billion at December 31, 2003, an increase of 10%. Average 1-4 family first mortgages and junior liens increased $30.9 billion and $13.9 billion, respectively, in third quarter 2004 compared with a year ago. Average commercial and commercial real estate loans

increased $7.7 billion in third quarter 2004 compared with a year ago. Average mortgages held for sale decreased to $34.8 billion in third quarter 2004 from $69.8 billion a year ago, due to lower origination volume.

Average deposits increased $21.0 billion to $270.0 billion in third quarter 2004 from $249.0 billion in third quarter 2003, primarily due to growth in market rate and other savings deposits.

In the ordinary course of business, we engage in financial transactions that are not recorded on the balance sheet, or may be recorded on the balance sheet in amounts that are different than the full contract or notional amount of the transaction. We also enter into certain contractual obligations. For additional information on off-balance sheet arrangements and other contractual obligations see “Financial Review – Off-Balance Sheet Arrangements and Aggregate Contractual Obligations” in our 2003 Form 10-K and Note 16 (Guarantees) to Financial Statements.

Our credit risk management process provides for decentralized management and accountability by our lines of business. Our overall credit process includes comprehensive credit policies, frequent and detailed risk measurement and modeling, and a continual loan audit review process. In addition, regulatory examiners review and perform detailed tests of our credit underwriting, loan administration and allowance processes.

The following table shows the comparative data for nonaccrual loans and other assets. We generally place loans on nonaccrual status (1) when they are 90 days (120 days with respect to real estate 1-4 family first and junior lien mortgages) past due for interest or principal (unless both well-secured and in the process of collection), (2) when the full and timely collection of interest or principal becomes uncertain or (3) when part of the principal balance has been charged off. Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2003 Form 10-K describes our accounting policy for nonaccrual loans.



	Sept. 30		,	Dec. 31		,	Sept. 30		,
(in millions)	2004			2003			2003

Nonaccrual loans:
Commercial and commercial real estate:
Commercial	$	382		$	592		$	713
Other real estate mortgage		258			285			267
Real estate construction		59			56			48
Lease financing		54			73			71

Total commercial and commercial real estate		753			1,006			1,099
Consumer:
Real estate 1-4 family first mortgage		360			274			258
Real estate 1-4 family junior lien mortgage		93			87			79
Other revolving credit and installment		155			88			78

Total consumer		608			449			415
Foreign		16			3			3

Total nonaccrual loans (1)		1,377			1,458			1,517
As a percentage of total loans		.49	%		.58	%		.66	%
Foreclosed assets		190			198			196
Real estate investments (2)		2			6			6

Total nonaccrual loans and other assets	$	1,569		$	1,662		$	1,719

We expect that the amount of nonaccrual loans will change due to portfolio growth, routine problem loan recognition and resolution through collections, sales or charge-offs. The performance of any loan can be affected by external factors, such as economic conditions, or factors particular to a borrower, such as actions of a borrower’s management.

Loans included in this category are 90 days or more past due as to interest or principal and still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1-4 family first mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual.

The total of loans 90 days past due and still accruing was $2,564 million, $2,337 million and $690 million at September 30, 2004, December 31, 2003 and September 30, 2003, respectively. At September 30, 2004 and December 31, 2003, the total included $1,817 million and $1,641 million, respectively, in advances pursuant to our servicing agreements to Government

National Mortgage Association (GNMA) mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Prior to clarifying guidance issued in 2003 as to classification as loans, GNMA advances were included in other assets.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
(EXCLUDING INSURED/GUARANTEED GNMA ADVANCES)

The allowance for credit losses, which comprises the allowance for loan losses and the reserve for unfunded credit commitments, is management’s estimate of credit losses inherent in the loan portfolio, including unfunded commitments, at the balance sheet date. We assume that our allowance as a percentage of charge-offs and nonperforming loans will change at different points in time based on credit performance, loan mix and collateral values. The analysis of the changes in the allowance for credit losses, including charge-offs and recoveries by loan category, is presented in Note 4 (Loans and Allowance for Credit Losses) to Financial Statements.

We consider the allowance for credit losses of $3.95 billion adequate to cover credit losses inherent in the loan portfolio, including unfunded commitments, at September 30, 2004. The process for determining the adequacy of the allowance for credit losses is critical to our financial results. It requires management to make difficult, subjective and complex judgments, as a result of the need to make estimates about the effect of matters that are uncertain. See “Financial Review – Critical Accounting Policies – Allowance for Loan Losses” in our 2003 Form 10-K. Therefore, we cannot provide assurance that, in any particular period, we will not have sizeable credit losses in relation to the amount reserved. We may need to significantly adjust the allowance for credit losses, considering current factors at the time, including economic conditions and ongoing internal and external examination processes. Our process for determining the adequacy of the allowance for credit losses is discussed in Note 5 (Loans and Allowance for Loan Losses) to Financial Statements in our 2003 Form 10-K.

Asset/liability management involves the evaluation, monitoring and management of interest rate risk, market risk, liquidity and funding. The Corporate Asset/Liability Management Committee (Corporate ALCO) – which oversees these risks and reports periodically to the Finance Committee of the Board of Directors – consists of senior financial and business executives. Each of our principal business groups – Community Banking (including Mortgage Banking), Wholesale Banking and Wells Fargo Financial – have individual asset/liability management committees and processes linked to the Corporate ALCO process.

Interest rate risk, which potentially can have a significant earnings impact, is an integral part of being a financial intermediary. We are subject to interest rate risk because:

	•		assets and liabilities may mature or re-price at different times (for example, if assets re-price faster than liabilities and interest rates are generally falling, earnings will initially decline);
	•		assets and liabilities may re-price at the same time but by different amounts (for example, when the general level of interest rates is falling, we may reduce rates paid on checking and savings deposit accounts by an amount that is less than the general decline in market interest rates);
	•		short-term and long-term market interest rates may change by different amounts (i.e., the shape of the yield curve may affect new loan yields and funding costs differently); or
	•		the remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change (for example, if long-term mortgage interest rates decline sharply, mortgage-backed securities held in the securities available for sale portfolio may prepay significantly earlier than anticipated – which could reduce portfolio income). In addition, interest rates may have an indirect impact on loan demand, credit losses, mortgage origination volume, the value of mortgage servicing rights, the value of the pension liability and other sources of earnings.

We assess interest rate risk by comparing our most likely earnings plan with various earnings models using many interest rate scenarios that differ in the direction of interest rate changes, the degree of change over time, the speed of change and the projected shape of the yield curve. For example, if we assume an increase of 375 basis points in the federal funds rate from its level at September 30, 2004 through the end of 2005 and an increase of 275 basis points in the 10 year Constant Maturity Treasury bond yield during the same period, estimated earnings at risk would be approximately 3% of our most likely 2005 earnings plan. The potential variances in any individual quarter can vary by more than that amount, depending on the actual path of interest rates. Simulation estimates depend on, and will change with, the size and mix of our actual and projected balance sheet at the time of each simulation.

We use exchange-traded and over-the-counter interest rate derivatives to hedge our interest rate exposures. The credit risk amount and estimated net fair values of these derivatives as of September 30, 2004 and December 31, 2003 are presented in Note 18 (Derivatives) to Financial Statements. We use derivatives for asset/liability management in three ways:

•

to convert most of the long-term fixed-rate debt to floating-rate payments by entering into receive-fixed swaps at issuance,

	•		to convert the cash flows from selected asset and/or liability instruments/portfolios from fixed to floating payments or vice versa, and
	•		to hedge the mortgage origination pipeline, funded mortgage loans and mortgage servicing rights using swaptions, futures, forwards and options.

We originate, fund and service mortgage loans, which subjects us to a number of risks, including credit, liquidity and interest rate risks. We manage credit and liquidity risk by selling or securitizing most of the mortgage loans we originate. Changes in interest rates, however, may have a significant effect on mortgage banking income in any quarter and over time. Interest rates impact both the value of the mortgage servicing rights (MSRs), which is adjusted to the lower of cost or fair value, and the future earnings of the mortgage business, which are driven by origination volume and the duration of our servicing. We manage both risks by hedging the impact of interest rates on the value of the MSRs using derivatives, combined with the “natural hedge” provided by the origination and servicing components of the mortgage business; however, we do not hedge 100% of these two risks.

We hedge a significant portion of the value of our MSRs against a change in interest rates with derivatives. 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 our MSRs for any given change in long-term interest rates.

The value of our MSRs is influenced primarily by prepayment speed assumptions affecting the duration of the mortgage loans to which our MSRs relate. Changes in long-term interest rates affect these prepayment speed assumptions. For example, a decrease in long-term rates would accelerate prepayment speed assumptions as borrowers refinance their existing mortgage loans and decrease the value of the MSRs. In contrast, prepayment speed assumptions would tend to slow in a rising interest rate environment and increase the value of the MSRs.

For a given decline in interest rates, a portion of the potential reduction in the value of our MSRs is offset by estimated increases in origination and servicing fees over time from new mortgage activity or refinancing associated with that decline in interest rates. With much lower long-term interest rates, the decline in the value of our MSRs and the effect on net income would be immediate whereas the additional origination and servicing fee income accrues over time. Under generally accepted accounting principles (GAAP), impairment of our MSRs, due to a decrease in long-term rates or other reasons, is charged to earnings through an increase to the valuation allowance.

In scenarios of sustained increases in long-term interest rates, origination fees may decline as refinancing activity slows. In such higher interest rate scenarios, the duration of the servicing portfolio may lengthen. In such circumstances, we may reduce periodic amortization of MSRs, and may recover some or all of the previously established valuation allowance.

Our MSRs totaled $7.8 billion, net of a valuation allowance of $1.8 billion, at September 30, 2004, and $6.9 billion, net of a valuation allowance of $1.9 billion, at December 31, 2003. The increase in MSRs was primarily due to the growth in the servicing

portfolio resulting from originations and purchases. Our MSRs were 1.18% of mortgage loans serviced for others at September 30, 2004 and 1.15% at December 31, 2003.

From a market risk perspective, our net income is exposed to changes in interest rates, credit spreads, foreign exchange rates, equity and commodity prices and their implied volatilities. The primary purpose of our trading businesses is to accommodate customers in the management of their market price risks. Also, we take positions based on market expectations or to benefit from price differences between financial instruments and markets, subject to risk limits established and monitored by Corporate ALCO. All securities, loans, foreign exchange transactions, commodity transactions and derivatives – transacted with customers or used to hedge capital market transactions with customers – are carried at fair value. The Institutional Risk Committee establishes and monitors counterparty risk limits. The notional or contractual amount, credit risk amount and estimated net fair value of all customer accommodation derivatives at September 30, 2004 and December 31, 2003 are included in Note 18 (Derivatives) to Financial Statements. Open, “at risk” positions for all trading business are monitored by Corporate ALCO.

The standardized approach for monitoring and reporting market risk for the trading activities is the value-at-risk (VAR) metrics complemented with factor analysis and stress testing. Value-at-risk measures the worst expected loss over a given time interval and within a given confidence interval. We measure and report daily VAR at 99% confidence interval based on actual changes in rates and prices over the past 250 days. The analysis captures all financial instruments that are considered trading positions. The average one day VAR throughout third quarter 2004 was $15 million, with a lower bound of $14 million and an upper bound of $17 million.

We are directly and indirectly affected by changes in the equity markets. We make and manage direct equity investments in start-up businesses, emerging growth companies, management buy-outs, acquisitions and corporate recapitalizations. We also invest in non-affiliated funds that make similar private equity investments. These private equity investments are made within capital allocations approved by management and the Board of Directors. The Board reviews business developments, key risks and historical returns for the private equity investments at least annually. Management reviews these investments at least quarterly and assesses them 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 our exit strategy. Private equity investments totaled $1,548 million at September 30, 2004 and $1,714 million at December 31, 2003.

We also have marketable equity securities in the available for sale investment portfolio, including securities relating to our venture capital activities. We manage these investments within capital risk limits approved by management and the Board and monitored by Corporate ALCO. Gains and losses on these securities are recognized in net income when realized and, in addition, other-than-temporary impairment may be periodically recorded. The initial indicator of impairment for marketable equity securities is a sustained decline in market price below the amount recorded for that investment. We consider a variety of factors, such as the length of time

and the extent to which the market value has been less than cost; the issuer’s financial condition, capital strength, and near-term prospects; any recent events specific to that issuer and economic conditions of its industry; and, to a lesser degree, our investment horizon in relationship to an anticipated near-term recovery in the stock price, if any. At September 30, 2004, the fair value of marketable equity securities was $574 million and cost was $482 million, compared with $582 million and $394 million, respectively, at December 31, 2003.

Changes in equity market prices may also indirectly affect our net income (1) by affecting the value of third party assets under management and, hence, fee income, (2) by affecting particular borrowers, whose ability to repay principal and/or interest may be affected by the stock market, or (3) by affecting brokerage activity, related commission income and other business activities. Each business line monitors and manages these indirect risks.

The objective of effective liquidity management is to ensure that we can meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments efficiently under both normal operating conditions and under unpredictable circumstances of industry or market stress. To achieve this objective, Corporate ALCO establishes and monitors liquidity guidelines that require sufficient asset-based liquidity to cover potential funding requirements and to avoid over-dependence on volatile, less reliable funding markets. We set 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. Debt securities in the securities available for sale portfolio provide asset liquidity, 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 further enhanced by our ability to sell or securitize loans in secondary markets through whole-loan sales and securitizations.

Core customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. The remaining assets were funded 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 is also available through our ability to raise funds in a variety of domestic and international money and capital markets. We access capital markets for long-term funding by issuing registered debt, private placements and asset-based secured funding. In September 2003, Moody’s Investors Service raised Wells Fargo Bank, N.A.’s rating to “Aaa,” its highest investment grade, from “Aa1” and raised the Company’s senior debt rating to “Aa1” from “Aa2.” In October 2003, Standard & Poor’s Ratings Service raised the counterparty ratings on the Company to “AA-minus/A-1-plus” from “A-plus/A-1” and the revised outlook for the Company to stable from positive. Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix and level and quality of earnings.

Parent. In March 2003, the Parent registered with the Securities and Exchange Commission (SEC) for issuance of $15.3 billion in senior and subordinated notes and preferred and common securities. In April 2004, the Parent filed a registration statement with the SEC for issuance of an additional $20 billion in senior and subordinated notes, preferred stock and other securities.

During the third quarter and first nine months of 2004, the Parent issued a total of $6.9 billion and $14.1 billion, respectively, of senior and subordinated notes. Third quarter 2004 activity included issuance of $6 billion in senior debentures and $850 million in subordinated debt. At September 30, 2004, the Parent’s remaining issuance capacity under effective registration statements was $15.0 billion. We used the proceeds from securities issued in the first nine months of 2004 for general corporate purposes and expect that the proceeds in the future will also be used for general corporate purposes. In October 2004, the Parent issued $500 million in senior notes. The Parent also issues commercial paper and has a $1 billion back-up credit facility.

Bank Note Program. In March 2003, Wells Fargo Bank, N.A. established a $50 billion bank note program under which it may issue up to $20 billion in short-term senior notes outstanding at any time and up to a total of $30 billion in long-term senior and subordinated notes. Securities are issued under this program as private placements in accordance with Office of the Comptroller of the Currency (OCC) regulations. During the third quarter and first nine months of 2004, Wells Fargo Bank, N.A. issued $500 million and $5.5 billion, respectively, in senior long-term notes. At September 30, 2004, the remaining issuance authority under the long-term portion was $9.4 billion.

Wells Fargo Financial. In November 2003, Wells Fargo Financial Canada Corporation (WFFCC), a wholly-owned Canadian subsidiary of Wells Fargo Financial, Inc. (WFFI), qualified for distribution with the provincial securities exchanges in Canada $1.5 billion (Canadian) in senior debt. During third quarter 2004, WFFCC issued $400 million (Canadian) in senior debt, leaving, at September 30, 2004, a total of $900 million (Canadian) available for issuance. Wells Fargo Financial issued $400 million (Canadian) in private placements in September 2004.

We have an active program for managing stockholder capital. Our objective is to produce above market long-term returns by opportunistically using capital when returns are perceived to be high and issuing/accumulating capital when such costs are perceived to be low.

We use capital to fund organic growth, acquire banks and other financial services companies, pay dividends and repurchase our shares. During the first nine months of 2004, consolidated assets increased by $34 billion, or 9%.

From time to time our Board of Directors authorizes the Company to repurchase shares of its common stock. Although we announce when our Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for acquisitions and employee benefit plans, market conditions (including the trading price of our stock), and legal considerations. These factors can change at any time, and there can be no assurance as to the number of shares we will repurchase or when we will repurchase them.

Historically, our policy has been to repurchase shares under the “safe harbor” conditions of Rule 10b-18 of the Exchange Act including a limitation on the daily volume of repurchases. In November 2003, the SEC amended Rule 10b-18 to impose an additional daily volume limitation

on share repurchases during a pending merger or acquisition in which shares of our stock will constitute some or all of the consideration. Our management may determine that during a pending stock merger or acquisition when the safe harbor would otherwise be available, it is in the Company’s best interest to repurchase shares in excess of this additional daily volume limitation. In such cases, we intend to repurchase shares in compliance with the other conditions of the safe harbor, including the standing daily volume limitation that applies whether or not there is a pending stock merger or acquisition.

During 2002, the Board of Directors authorized the repurchase of up to 50 million additional shares of our outstanding common stock. In April 2004, the Board authorized the repurchase of up to 25 million additional shares of common stock. During the first nine months of 2004, we repurchased approximately 34 million shares of our common stock. At September 30, 2004, the total remaining common stock repurchase authority under outstanding authorizations was approximately 18 million shares. (For additional information regarding share repurchases and repurchase authorizations, see Part II Item 2 of this report.) Total common stock dividend payments in the first nine months of 2004 were $2.3 billion. In July 2004, the Board of Directors authorized a quarterly common stock dividend of 48 cents per share, an increase of 3 cents per share, or 7%, from the prior quarter.

Our potential sources of capital include retained earnings, and issuances of common and preferred stock and subordinated debt. In the first nine months of 2004, retained earnings increased $2.7 billion, predominantly as a result of net income of $5.2 billion less dividends of $2.3 billion. In the first nine months of 2004, we issued $1.3 billion of common stock under various employee benefit and director plans and under our dividend reinvestment program.

We make forward-looking statements in this report and in other reports and proxy statements we file with the SEC. In addition, our senior management might make forward-looking statements orally to analysts, investors, the media and others.

	•		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 discussing our expectations about:

	•		the expected integration costs relating to the Strong Financial Corporation asset and First Community Capital Corporation stock acquisitions and the expected time frame for incurring those costs;
	•		the expected completion date of the Strong Financial Corporation asset acquisition;
	•		future credit losses and nonperforming assets;
	•		the future value of mortgage servicing rights;

	•		the future value of equity securities, including those in our venture capital portfolios;
	•		the impact of new accounting standards;
	•		future gains from equity investments;
	•		future short-term and long-term interest rate levels and their impact on our net interest margin, net income, liquidity and capital; and
	•		future amortization expense for intangible assets.

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 that date.

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, “Balance Sheet Analysis” and “Asset/Liability and Market Risk Management”). Factors relating to regulation and supervision are described in our 2003 Form 10-K. Any factor described in this report or in our 2003 Form 10-K could by itself, or together with one or more other factors, adversely affect our business, results of operations or financial condition. There are also other factors that we have not described in this report or in our 2003 Form 10-K that could cause results to differ from our expectations.

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

General business and economic conditions in the United States and abroad affect our business and earnings. 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. For example, an economic downturn, increase in unemployment, increase in interest rates or other event that decreases household or corporate incomes or increases household or corporate expenses could decrease the demand for loan and non-loan products and services and increase the number of customers who fail to pay interest or principal on their loans.

Geopolitical conditions can also affect our earnings. Acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts, could affect business and economic conditions in the U.S. and abroad. The terrorist attacks in 2001, for example, caused an immediate decrease in air travel, which affected the airline industry, lodging, gaming and tourism.

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

The fiscal and monetary policies of the federal government and its agencies significantly affect our earnings.

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 affect our net interest margin. They also can materially affect the value of financial instruments we hold, such as debt securities. Its policies also can affect our borrowers, increasing their borrowing costs and potentially increasing the risk that they may fail to repay their loans. Changes in Federal Reserve Board policies are beyond our control and can be hard to predict.

We operate in a highly competitive industry that 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 combine to 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 nonbanks 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.

The holding company, its subsidiary banks and many of its nonbank 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 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/or increasing the ability of nonbanks to offer competing financial services and products. Also, if we do not comply with laws, regulations or policies, we could receive regulatory sanctions and incur damage to our reputation. For more information, refer to the “Regulation and Supervision” and to Notes 3 (Cash, Loan and Dividend Restrictions) and 26 (Regulatory and Agency Capital Requirements) to Financial Statements in our 2003 Form 10-K.

Legislation is from time to time introduced in the Congress, including proposals to substantially change the financial institution regulatory system and to expand or contract the powers of banking institutions and bank holding companies. This legislation may change banking statutes and our operating environment 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 regulations, would have on our financial condition or results of operations.

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 the customers and counterparties, including financial statements and other financial information. We also may rely on representations of the 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 affected by relying 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 now allow parties to complete financial transactions without banks. For example, consumers can 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.

Maintaining or increasing our market share depends on market acceptance 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 to provide products and services at lower prices. This can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet services, could require us to make substantial expenditures to modify or adapt our existing products and services. We might not be successful in introducing new products and services, achieving market acceptance of our products and services, or developing and maintaining loyal customers.

Negative public opinion could damage our reputation and adversely impact our earnings.

Reputation risk, or the risk to our earnings and capital from negative public opinion, is inherent in our business. Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, and from actions taken by government regulators and community organizations in response to those activities. Negative public opinion can adversely affect our ability to keep and attract customers and can expose us to litigation and regulatory action. Because virtually all our businesses operate under the “Wells Fargo” brand, actual or alleged conduct by one business can result in negative public opinion about other Wells Fargo businesses. Although we take steps to minimize reputation risk in dealing with our customers and communities, as a large diversified financial services company with a relatively high industry profile, the risk will always be present in our organization.

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 nonbank 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 2003 Form 10-K.

Our accounting policies and methods are key to how we report our financial condition and results of operations. They may require management to make estimates about matters that are uncertain.

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Our management must exercise judgment in selecting and applying many of these accounting policies and methods so they comply with generally accepted accounting principles and reflect management’s judgment of the most appropriate manner to report our financial condition and results. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which might be reasonable under the circumstances yet might result in our reporting materially different amounts than would have been reported under a different alternative. Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2003 Form 10-K describes our significant accounting policies.

Three accounting policies are critical to presenting our financial condition and results. They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions. These critical accounting policies relate to: (1) the allowance for loan losses, (2) the valuation of mortgage servicing rights, and (3) pension accounting. Because of the uncertainty of estimates about these matters, we cannot provide any assurance that we will not:

•		significantly increase our allowance for loan losses and/or sustain credit losses that are significantly higher than the reserve provided;
•		recognize significant provision for impairment of our mortgage servicing rights; or
•		significantly increase our pension liability.

For more information, see “Critical Accounting Policies” in our 2003 Form 10-K and refer in this report to “Balance Sheet Analysis” and “Asset/Liability and Market Risk Management.”

Changes in accounting standards could materially impact our financial statements.

From time to time the Financial Accounting Standards Board (FASB) changes the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements.

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 lessen the impact on the Company when downturns affect any one segment of our industry, it also means our earnings could be subject to different risks and uncertainties. We discuss some examples below.

Merchant Banking. Our merchant banking business, which includes venture capital investments, has a much greater risk of capital losses than our traditional banking business. Also, it is difficult to predict the timing of any gains from this business. 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 decline in capital spending, 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, we will recognize impairment charges. Also, we will realize losses to the extent we sell securities at less than book value. For more information, see in this report “Balance Sheet Analysis—Securities Available for Sale.”

Mortgage Banking. The effect of interest rates on our mortgage business can be large and complex. Changes in interest rates can affect loan origination fees and loan servicing fees, which account for a significant portion of mortgage-related revenues. A decline in mortgage rates generally increases the demand for mortgage loans as borrowers refinance, but also generally leads 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. We use dynamic, sophisticated models to assess the effect of interest rates on mortgage fees, amortization of mortgage servicing rights, and the value of mortgage servicing rights. The estimates of net income and fair value produced by these models, however, depend on assumptions of future loan demand, prepayment speeds and other factors that may overstate or understate actual experience. We use derivatives to hedge the value of our servicing portfolio but they do not cover the full value of the portfolio. We cannot assure that the hedges will offset significant decreases in the value of the portfolio. For more information, see in our 2003 Form 10-K “Critical Accounting Policies—Valuation of Mortgage Servicing Rights” and in this report “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 regularly explore opportunities to acquire financial institutions and other financial services providers. We cannot predict the number, size or timing of acquisitions. We typically do not comment publicly on a possible acquisition or business combination until we have signed a definitive agreement.

Our ability to complete an acquisition generally is subject to regulatory approval. 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 sell 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. The integration could result in higher than expected deposit attrition (run-off), loss of key employees, 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 effect of any divestitures required by regulatory authorities in acquisitions or business combinations may be greater than expected.

Our business model depends on sharing information among 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 affect our revenue and profit.

Our success depends, in large part, on our ability to attract and retain key people. Competition for the best people in most activities we engage in can be intense. We may not be able to hire the best people or to keep them.

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;
	•		changes in government regulations; and
	•		geopolitical conditions such as acts or threats of terrorism or military conflicts.

General market fluctuations, industry factors and general economic and political conditions and events, such as terrorist attacks, 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.

As required by SEC rules, the Company’s management evaluated the effectiveness, as of September 30, 2004, of the Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2004.

No change occurred during third quarter 2004 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.



	Quarter ended Sept. 30				,	Nine months ended Sept. 30					,
(in millions, except per share amounts)	2004		2003			2004			2003

INTEREST INCOME
Securities available for sale	$	496	$	470		$	1,398		$	1,358
Mortgages held for sale		490		906			1,294			2,585
Loans held for sale		76		57			205			191
Loans		4,271		3,482			12,239			10,224
Other interest income		72		64			196			205

Total interest income		5,405		4,979			15,332			14,563

INTEREST EXPENSE
Deposits		487		384			1,251			1,236
Short-term borrowings		105		72			227			254
Long-term debt		395		349			1,160			1,020
Guaranteed preferred beneficial interests in Company’s subordinated debentures		—		32			—			88

Total interest expense		987		837			2,638			2,598

NET INTEREST INCOME		4,418		4,142			12,694			11,965
Provision for credit losses		408		426			1,252			1,258

Net interest income after provision for credit losses		4,010		3,716			11,442			10,707

NONINTEREST INCOME
Service charges on deposit accounts		644		607			1,896			1,747
Trust and investment fees		508		504			1,573			1,433
Credit card fees		290		251			827			752
Other fees		456		422			1,310			1,161
Mortgage banking		262		773			1,070			1,877
Operating leases		207		229			625			726
Insurance		264		252			928			807
Net gains (losses) on debt securities available for sale		10		(23	)		(18	)		16
Net gains (losses) from equity investments		48		58			224			(87	)
Other		211		118			762			549

Total noninterest income		2,900		3,191			9,197			8,981

NONINTEREST EXPENSE
Salaries		1,383		1,185			3,955			3,481
Incentive compensation		449		621			1,281			1,571
Employee benefits		390		374			1,273			1,143
Equipment		254		298			826			871
Net occupancy		309		283			907			867
Operating leases		158		175			469			541
Other		1,277		1,639			3,891			4,216

Total noninterest expense		4,220		4,575			12,602			12,690

INCOME BEFORE INCOME TAX EXPENSE		2,690		2,332			8,037			6,998
Income tax expense		942		771			2,808			2,420

NET INCOME	$	1,748	$	1,561		$	5,229		$	4,578

NET INCOME APPLICABLE TO COMMON STOCK	$	1,748	$	1,560		$	5,229		$	4,575

EARNINGS PER COMMON SHARE	$	1.03	$	.93		$	3.09		$	2.73

DILUTED EARNINGS PER COMMON SHARE	$	1.02	$	.92		$	3.05		$	2.70

DIVIDENDS DECLARED PER COMMON SHARE	$	.48	$	.45		$	1.38		$	1.05

Average common shares outstanding		1,688.9		1,677.2			1,692.1			1,678.0

Diluted average common shares outstanding		1,708.7		1,693.9			1,712.7			1,692.6



	September 30		,	December 31		,	September 30		,
(in millions, except shares)	2004			2003			2003

ASSETS
Cash and due from banks	$	13,249		$	15,547		$	15,423
Federal funds sold and securities purchased under resale agreements		3,869			2,745			2,692
Securities available for sale		35,121			32,953			30,260
Mortgages held for sale		30,783			29,027			55,328
Loans held for sale		8,434			7,497			7,310
Loans		279,310			253,073			228,137
Allowance for loan losses		(3,782	)		(3,891	)		(3,854	)

Net loans		275,528			249,182			224,283

Mortgage servicing rights, net		7,768			6,906			5,765
Premises and equipment, net		3,722			3,534			3,517
Goodwill		10,431			10,371			9,849
Other assets		32,644			30,036			36,323

Total assets	$	421,549		$	387,798		$	390,750

LIABILITIES
Noninterest-bearing deposits	$	79,090		$	74,387		$	77,175
Interest-bearing deposits		189,697			173,140			174,261

Total deposits		268,787			247,527			251,436
Short-term borrowings		24,278			24,659			25,589
Accrued expenses and other liabilities		20,484			17,501			18,815
Long-term debt		71,320			63,642			58,992
Guaranteed preferred beneficial interests in Company’s subordinated debentures		—			—			3,585

Total liabilities		384,869			353,329			358,417

STOCKHOLDERS’ EQUITY
Preferred stock		325			214			319
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		9,767			9,643			9,532
Retained earnings		25,564			22,842			22,064
Cumulative other comprehensive income		914			938			572
Treasury stock – 46,042,180 shares, 38,271,651 shares and 59,314,051 shares		(2,436	)		(1,833	)		(2,785	)
Unearned ESOP shares		(348	)		(229	)		(263	)

Total stockholders’ equity		36,680			34,469			32,333

Total liabilities and stockholders’ equity	$	421,549		$	387,798		$	390,750



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

BALANCE DECEMBER 31, 2002		1,685,906,507		$	251		$	2,894	$	9,498		$	19,355		$	976		$	(2,465	)	$	(190	)	$	30,319

Comprehensive income:
Net income													4,578												4,578
Other comprehensive income, net of tax:
Translation adjustments																20									20
Net unrealized losses on securities available for sale and other retained interests, net of reclassification of $22 million of net gains included in net income																(77	)								(77	)
Net unrealized losses on derivatives and hedging activities, net of reclassification of $51 million of net losses on cash flow hedges included in net income																(347	)								(347	)

Total comprehensive income																									4,174
Common stock issued		14,383,099								22			(102	)					667						587
Common stock issued for acquisitions		129,475																	6						6
Common stock repurchased		(27,327,815	)																(1,289	)					(1,289	)
Preferred stock (260,200) issued to ESOP					260					19												(279	)		—
Preferred stock released to ESOP										(14	)											206			192
Preferred stock (191,774) converted to common shares		3,975,708			(192	)				7									185						—
Preferred stock dividends													(3	)											(3	)
Common stock dividends													(1,764	)											(1,764	)
Change in Rabbi trust assets and similar arrangements (classified as treasury stock)																			111						111

Net change		(8,839,533	)		68			—		34			2,709			(404	)		(320	)		(73	)		2,014

BALANCE SEPTEMBER 30, 2003		1,677,066,974		$	319		$	2,894	$	9,532		$	22,064		$	572		$	(2,785	)	$	(263	)	$	32,333

BALANCE DECEMBER 31, 2003		1,698,109,374		$	214		$	2,894	$	9,643		$	22,842		$	938		$	(1,833	)	$	(229	)	$	34,469

Comprehensive income:
Net income													5,229												5,229
Other comprehensive income, net of tax:
Translation adjustments																4									4
Net unrealized losses on securities available for sale and other retained interests, net of reclassification of $31 million of net gains included in net income																(16	)								(16	)
Net unrealized losses on derivatives and hedging activities, net of reclassification of $131 million of net losses on cash flow hedges included in net income																(12	)								(12	)

Total comprehensive income																									5,205
Common stock issued		22,079,043								93			(152	)					1,104						1,045
Common stock issued for acquisitions		153,482								1									8						9
Common stock repurchased		(33,642,988	)																(1,909	)					(1,909	)
Preferred stock (321,000) issued to ESOP					321					23												(344	)		—
Preferred stock released to ESOP										(15	)											225			210
Preferred stock (210,025) converted to common shares		3,639,934			(210	)				22									188						—
Common stock dividends													(2,337	)											(2,337	)
Change in Rabbi trust assets and similar arrangements (classified as treasury stock)																			6						6
Other, net													(18	)											(18	)

Net change		(7,770,529	)		111			—		124			2,722			(24	)		(603	)		(119	)		2,211

BALANCE SEPTEMBER 30, 2004		1,690,338,845		$	325		$	2,894	$	9,767		$	25,564		$	914		$	(2,436	)	$	(348	)	$	36,680



	Nine months ended September 30					,
(in millions)	2004			2003

Cash flows from operating activities:
Net income	$	5,229		$	4,578
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		1,252			1,258
Provision for mortgage servicing rights in excess of fair value, net		26			974
Depreciation and amortization		2,519			3,515
Net gains on securities available for sale		(57	)		(36	)
Net gains on mortgage loan origination/sales activities		(258	)		(2,790	)
Net gains on sales of loans		(7	)		(23	)
Net losses on dispositions of premises and equipment		24			10
Net gains on dispositions of operations		(2	)		(27	)
Release of preferred shares to ESOP		210			192
Net decrease (increase) in trading assets		812			(112	)
Net increase in deferred income taxes		491			718
Net increase in accrued interest receivable		(129	)		(70	)
Net increase (decrease) in accrued interest payable		64			(12	)
Originations of mortgages held for sale		(169,112	)		(334,504	)
Proceeds from sales of mortgages held for sale		175,199			329,484
Principal collected on mortgages held for sale		1,295			2,632
Net increase in loans held for sale		(1,025	)		(645	)
Other assets, net		(404	)		(3,522	)
Other accrued expenses and liabilities, net		2,755			295

Net cash provided by operating activities		18,882			1,915

Cash flows from investing activities:
Securities available for sale:
Proceeds from sales		5,312			6,057
Proceeds from prepayments and maturities		7,108			10,225
Purchases		(15,080	)		(19,117	)
Net cash paid for acquisitions		(45	)		(816	)
Increase in banking subsidiaries’ loan originations, net of collections		(26,990	)		(18,421	)
Proceeds from sales (including participations) of loans by banking subsidiaries		972			1,259
Purchases (including participations) of loans by banking subsidiaries		(4,583	)		(13,468	)
Principal collected on nonbank entities’ loans		12,774			13,754
Loans originated by nonbank entities		(20,298	)		(15,410	)
Purchases of loans by nonbank entities		—			(3,682	)
Proceeds from dispositions of operations		1			30
Proceeds from sales of foreclosed assets		228			206
Net decrease (increase) in federal funds sold and securities purchased under resale agreements		(1,124	)		482
Net increase in mortgage servicing rights		(1,239	)		(2,263	)
Other, net		(3,295	)		374

Net cash used by investing activities		(46,259	)		(40,790	)

Cash flows from financing activities:
Net increase in deposits		21,256			34,520
Net decrease in short-term borrowings		(381	)		(7,857	)
Proceeds from issuance of long-term debt		24,936			25,677
Repayment of long-term debt		(17,531	)		(14,688	)
Proceeds from issuance of guaranteed preferred beneficial interests in Company’s subordinated debentures		—			700
Proceeds from issuance of common stock		917			544
Repurchase of common stock		(1,909	)		(1,289	)
Payment of cash dividends on preferred and common stock		(2,337	)		(1,767	)
Other, net		128			638

Net cash provided by financing activities		25,079			36,478

Net change in cash and due from banks		(2,298	)		(2,397	)
Cash and due from banks at beginning of period		15,547			17,820

Cash and due from banks at end of period	$	13,249		$	15,423

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	2,702		$	2,586
Income taxes		1,506			2,429
Noncash investing and financing activities:
Transfers from loans to foreclosed assets	$	350		$	375
Net transfers between mortgages held for sale and loans		9,936			282

Wells Fargo & Company is a diversified financial services company. We provide banking, insurance, investments, mortgage banking and consumer finance through stores, the internet and other distribution channels to consumers, businesses and institutions in all 50 states of the U.S. and in other countries. When we refer to “the Company,” “we,” “our” and “us” in this Form 10-Q, we mean Wells Fargo & Company and Subsidiaries (consolidated). Wells Fargo & Company (the Parent) is a financial holding company and a bank holding company.

Our accounting and reporting policies conform with generally accepted accounting principles (GAAP) and practices in the financial services industry. To prepare the financial statements in conformity with GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and income and expenses during the reporting period.

The information furnished in these unaudited interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q. The results of operations in the interim statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 (2003 Form 10-K).

Descriptions of our significant accounting policies are included in Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2003 Form 10-K. There have been no significant changes to these policies.

We have several stock-based employee compensation plans, which are described more fully in Note 14 (Common Stock and Stock Plans) to Financial Statements in our 2003 Form 10-K. As permitted by Statement of Financial Accounting Standards No. 123 (FAS 123), Accounting for Stock-Based Compensation, we have elected to continue applying the intrinsic value method of Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees, in accounting for stock-based employee compensation plans. Pro forma net income and earnings per common share information is provided in the following table, as if we accounted for employee stock option plans under the fair value method of FAS 123.

Total stock-based employee compensation was higher under the fair value method in the first nine months of 2004 compared with the first nine months of 2003. Stock options granted in our February 2004 grant, under our Long-Term Incentive Compensation Plan (the Plan), fully vested upon grant, resulting in full recognition of stock-based compensation expense for the 2004 annual grant under the fair value method in the table above. Stock options granted in our 2003, 2002 and 2001 annual grants under the Plan vest over a three-year period, and expense reflected in the table for these grants is recognized over the vesting period.

We regularly explore opportunities to acquire financial services companies and businesses. Generally, we do not make a public announcement about an acquisition opportunity until a definitive agreement has been signed.

In the nine months ended September 30, 2004, we completed acquisitions of eight insurance brokerage businesses and one payroll services business with a total of approximately $67 million in assets.

At September 30, 2004, we had three pending business combinations, including the acquisition of mutual fund assets and institutional investment accounts from Strong Financial Corporation (Strong) and the acquisition of First Community Capital Corporation, a $550 million bank holding company located in Houston, Texas. Based on values at September 30, 2004, we expect to acquire approximately $24 billion in mutual fund assets and approximately $6 billion in institutional investment accounts from Strong.

Pending certain shareholder and regulatory approval, we expect to complete these transactions by early 2005.

The following table provides the cost and fair value for the major categories of securities available for sale carried at fair value. There were no securities classified as held to maturity at September 30, 2004 or 2003.



	Sept. 30, 2004				Dec. 31, 2003				Sept. 30, 2003
			Estimated				Estimated				Estimated
			fair				fair				fair
(in millions)	Cost		value		Cost		value		Cost		value

Securities of U.S. Treasury and federal agencies	$	1,076	$	1,097	$	1,252	$	1,286	$	1,190	$	1,244
Securities of U.S. states and political subdivisions		3,448		3,651		3,175		3,346		2,601		2,757
Mortgage-backed securities:
Federal agencies		22,214		23,032		20,353		21,130		20,006		20,892
Private collateralized mortgage obligations (1)		3,588		3,723		3,056		3,154		1,827		1,908

Total mortgage-backed securities		25,802		26,755		23,409		24,284		21,833		22,800
Other		2,903		3,044		3,285		3,455		2,837		3,004

Total debt securities		33,229		34,547		31,121		32,371		28,461		29,805
Marketable equity securities		482		574		394		582		333		455

Total	$	33,711	$	35,121	$	31,515	$	32,953	$	28,794	$	30,260

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

The following table shows the realized net gains on the sales of securities from the securities available for sale portfolio, including marketable equity securities.

A summary of the major categories of loans outstanding is shown in the table below. Outstanding loan balances are net of unearned income, including net deferred loan fees, of $3,690 million, $3,430 million and $3,596 million, at September 30, 2004, December 31, 2003 and September 30, 2003, respectively.

The recorded investment in impaired loans and the methodology used to measure impairment was:

The average recorded investment in impaired loans during third quarter 2004 and 2003 was $478 million and $696 million, respectively, and $521 million and $676 million in the first nine months of 2004 and 2003, respectively.

The allowance for credit losses comprises the allowance for loan losses and the reserve for unfunded commitments. Changes in the allowance for credit losses were:



	Quarter						Nine months
	ended Sept. 30					,	ended Sept. 30					,
(in millions)	2004			2003			2004			2003

Balance, beginning of period	$	3,940		$	3,853		$	3,891		$	3,819
Allowances related to business combinations/other		4			(1	)		3			31
Provision for credit losses		408			426			1,252			1,258
Loan charge-offs:
Commercial and commercial real estate:
Commercial		(98	)		(136	)		(321	)		(437	)
Other real estate mortgage		(4	)		(12	)		(18	)		(23	)
Real estate construction		(1	)		(2	)		(4	)		(8	)
Lease financing		(24	)		(12	)		(48	)		(33	)

Total commercial and commercial real estate		(127	)		(162	)		(391	)		(501	)
Consumer:
Real estate 1-4 family first mortgage		(14	)		(11	)		(38	)		(31	)
Real estate 1-4 family junior lien mortgage		(20	)		(16	)		(76	)		(54	)
Credit card		(109	)		(109	)		(337	)		(337	)
Other revolving credit and installment		(233	)		(206	)		(669	)		(602	)

Total consumer		(376	)		(342	)		(1,120	)		(1,024	)
Foreign		(37	)		(29	)		(95	)		(74	)

Total loan charge-offs		(540	)		(533	)		(1,606	)		(1,599	)

Loan recoveries:
Commercial and commercial real estate:
Commercial		31			31			117			106
Other real estate mortgage		8			2			14			7
Real estate construction		3			2			5			11
Lease financing		7			2			19			5

Total commercial and commercial real estate		49			37			155			129
Consumer:
Real estate 1-4 family first mortgage		1			3			4			8
Real estate 1-4 family junior lien mortgage		6			5			17			12
Credit card		15			13			45			38
Other revolving credit and installment		56			46			167			145

Total consumer		78			67			233			203
Foreign		6			5			17			13

Total loan recoveries		133			109			405			345

Net loan charge-offs		(407	)		(424	)		(1,201	)		(1,254	)

Balance, end of period	$	3,945		$	3,854		$	3,945		$	3,854

Components:
Allowance for loan losses	$	3,782		$	3,854		$	3,782		$	3,854
Reserve for unfunded credit commitments (1)		163			—			163			—

Allowance for credit losses	$	3,945		$	3,854		$	3,945		$	3,854

Net loan charge-offs (annualized) as a percentage of average total loans		.59	%		.78	%		.60	%		.82	%
Allowance for loan losses as a percentage of total loans		1.35			1.69			1.35			1.69
Allowance for credit losses as a percentage of total loans		1.41			1.69			1.41			1.69

Trading assets are predominantly securities, including corporate debt, U.S. government agency obligations and the fair value of derivatives held for customer accommodation purposes.

The gross carrying amount of intangible assets and accumulated amortization was:

As of September 30, 2004, the current year and estimated future amortization expense for amortized intangible assets was:

We based the projections of amortization expense for mortgage servicing rights shown above on existing asset balances and the existing interest rate environment as of September 30, 2004. Future amortization expense may be significantly different depending upon changes in the mortgage servicing portfolio, mortgage interest rates and market conditions. We based the projections of amortization expense for core deposit intangibles shown above on existing asset balances at September 30, 2004. Future amortization expense may vary based on additional core deposit intangibles acquired through business combinations.

The following table summarizes the changes in the carrying amount of goodwill as allocated to our operating segments for goodwill impairment analysis.

For our goodwill impairment analysis, we allocate all of the goodwill to the individual operating segments. For management reporting we do not allocate all of the goodwill to the individual operating segments: some is allocated at the enterprise level. See Note 12 for further information on management reporting. The balances of goodwill for management reporting are:

8. GUARANTEED PREFERRED BENEFICIAL INTERESTS IN COMPANY’S SUBORDINATED DEBENTURES

We have wholly-owned trusts (the Trusts) that were formed to issue trust preferred securities and related common securities of the Trusts. At December 31, 2003, as a result of the adoption of Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, we deconsolidated the Trusts. The $3.8 billion of junior subordinated debentures issued by the Company to the Trusts were reflected as long-term debt in the consolidated balance sheet at December 31, 2003. The common stock issued by the Trusts was recorded in other assets in the consolidated balance sheet at December 31, 2003. Because the Trusts are (1) wholly-owned finance subsidiary issuers of securities, have no operating histories or independent operations and are not engaged in and do not propose to engage in any activity other than holding as trust assets the corresponding junior subordinated debentures of Wells Fargo and issuing the trust securities, and (2) the securities were fully and unconditionally guaranteed by the parent company, the Trusts will not file periodic reports with the Securities and Exchange Commission under the Securities Exchange Act of 1934. Payments on the junior subordinated debentures are generally made from cash provided by operating activities, which includes dividends received from subsidiaries. See Note 3 (Cash, Loan and Dividend Restrictions) to Financial Statements in our 2003 Form 10-K for a discussion of certain federal and state regulatory limitations on dividends.

Prior to December 31, 2003, the Trusts were consolidated subsidiaries and were included in liabilities in the consolidated balance sheet, as “Guaranteed preferred beneficial interests in Company’s subordinated debentures.” The common securities and subordinated debentures, along with the related income effects were eliminated in the consolidated financial statements.

The subordinated debentures issued to the Trusts, less the common securities of the Trusts, equals the amount of trust preferred securities outstanding, and continued to qualify as Tier 1 capital under guidance issued by the Federal Reserve Board. Information with respect to the Trusts is as follows:

We are authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. We have not issued any preference shares under this authorization.



	Shares issued and outstanding									Carrying amount (in millions)									Adjustable
	Sept. 30		,	Dec. 31		,	Sept. 30		,	Sept. 30		,	Dec. 31		,	Sept. 30		,	dividends rate
	2004			2003			2003			2004			2003			2003			Minimum			Maximum
Adjustable-Rate Cumulative, Series B (1)		—			—			1,460,000		$	—		$	—		$	73			5.50	%		10.50	%
ESOP Cumulative Convertible (2)
2004		125,629			—			—			126			—			—			8.50			9.50
2003		64,713			68,238			85,324			65			68			85			8.50			9.50
2002		50,294			53,641			56,741			50			54			57			10.50			11.50
2001		37,379			40,206			42,606			37			40			43			10.50			11.50
2000		26,962			29,492			32,092			27			30			32			11.50			12.50
1999		9,922			11,032			12,532			10			11			13			10.30			11.30
1998		3,485			4,075			4,875			3			4			5			10.75			11.75
1997		3,706			4,081			5,481			4			4			5			9.50			10.50
1996		2,682			2,927			4,327			3			3			4			8.50			9.50
1995		303			408			2,008			—			—			2			10.00			10.00

Total preferred stock		325,075			214,100			1,705,986		$	325		$	214		$	319

Unearned ESOP shares (3)										$	(348	)	$	(229	)	$	(263	)

We sponsor noncontributory qualified defined benefit retirement plans including the Cash Balance Plan. The Cash Balance Plan is an active plan, which covers eligible employees (except employees of certain subsidiaries).

In the fourth quarter of 2004, the Company anticipates contributing approximately $535 million to the Cash Balance Plan. As of September 30, 2004, the Company contributed $11 million to another of its qualified defined benefit retirement plans.



	Pension benefits									Pension benefits
				Non-			Other						Non-		Other
(in millions)	Qualified			qualified			benefits			Qualified			qualified		benefits
Quarter ended September 30,	2004									2003

Service cost	$	42		$	5		$	3		$	41		$	5	$	3
Interest cost		54			4			11			52			4		11
Expected return on plan assets		(81	)		—			(6	)		(68	)		—		(4	)
Recognized net actuarial loss (gain)(1)		13			1			1			21			2		(1	)
Amortization of prior service cost		(3	)		(1	)		—			4			—		—
Settlement		(1	)		1			—			—			—		—

Net periodic benefit cost	$	24		$	10		$	9		$	50		$	11	$	9

Nine months ended September 30,
Service cost	$	127		$	17		$	11		$	123		$	16	$	11
Interest cost		161			10			33			156			11		32
Expected return on plan assets		(244	)		—			(17	)		(206	)		—		(13	)
Recognized net actuarial loss (gain)(1)		38			1			3			64			5		(2	)
Amortization of prior service cost		(3	)		(1	)		(1	)		12			—		(1	)
Amortization of unrecognized transition asset		—			—			1			—			—		—
Settlement		—			2			—			—			—		—

Net periodic benefit cost	$	79		$	29		$	30		$	149		$	32	$	27

The table below shows earnings per common share and diluted earnings per common share and reconciles the numerator and denominator of both earnings per common share calculations.



	Quarter					Nine months
	ended Sept. 30				,	ended Sept. 30				,
(in millions, except per share amounts)	2004		2003			2004		2003

Net income	$	1,748	$	1,561		$	5,229	$	4,578
Less: Preferred stock dividends		—		1			—		3

Net income applicable to common stock (numerator)	$	1,748	$	1,560		$	5,229	$	4,575

EARNINGS PER COMMON SHARE
Average common shares outstanding (denominator)		1,688.9		1,677.2			1,692.1		1,678.0

Per share	$	1.03	$	.93		$	3.09	$	2.73

DILUTED EARNINGS PER COMMON SHARE
Average common shares outstanding		1,688.9		1,677.2			1,692.1		1,678.0
Add: Stock options		19.4		16.3			20.2		14.2
Restricted share rights		.4		.4			.4		.4

Diluted average common shares outstanding (denominator)		1,708.7		1,693.9			1,712.7		1,692.6

Per share	$	1.02	$	.92		$	3.05	$	2.70

At September 30, 2004 and 2003, options to purchase 3.4 million and 34.7 million shares, respectively, were outstanding but not included in the calculation of earnings per share because the exercise price was higher than the market price, and therefore they were antidilutive.

We have 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 our 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 our management structure and is not necessarily comparable with similar information for other financial services companies. We define our operating segments by product type and customer segments. If the management structure and/or the allocation process changes, allocations, transfers and assignments may change. In that case, results for prior periods would be restated for comparability.

The Community Banking Group offers a complete line of diversified financial products and services to consumers and small businesses with annual sales generally up to $10 million in which the owner generally is the financial decision maker. Community Banking also offers investment management and other services to retail customers and high net worth individuals, insurance, securities brokerage through affiliates and venture capital financing. 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, education loans, origination and purchase of residential mortgage loans and servicing of mortgage loans and credit cards. 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, venture capital 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), time deposits and debit cards.

Community Banking serves customers through a wide range of channels, which include traditional banking stores, in-store banking centers, business centers and ATMs. Also, PhoneBank^sm centers and the National Business Banking Center provide 24-hour telephone service. 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 generally 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, online/electronic products, 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 consumer and real estate loans to individuals and purchase sales finance contracts from retail merchants from offices throughout the United States, Canada, Mexico 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, Canada and Puerto Rico. Wells Fargo Financial also provides credit cards and lease and other commercial financing.

The Other Column consists of Corporate level investment activities and balances and unallocated goodwill held at the enterprise level. This column also includes separately identified transactions recorded at the enterprise level for management reporting.



(income/expense in millions,	Community				Wholesale				Wells Fargo										Consolidated
average balances in billions)	Banking				Banking				Financial				Other (2					)	Company
Quarter ended September 30,	2004		2003		2004		2003		2004		2003		2004			2003			2004		2003
Net interest income (1)	$	3,173	$	2,990	$	531	$	556	$	715	$	599	$	(1	)	$	(3	)	$	4,418	$	4,142
Provision for credit losses		199		213		10		54		199		159		—			—			408		426
Noninterest income		2,079		2,379		723		707		93		97		5			8			2,900		3,191
Noninterest expense		3,143		3,603		678		629		398		343		1			—			4,220		4,575

Income before income tax expense		1,910		1,553		566		580		211		194		3			5			2,690		2,332
Income tax expense		664		488		203		208		74		73		1			2			942		771

Net income	$	1,246	$	1,065	$	363	$	372	$	137	$	121	$	2		$	3		$	1,748	$	1,561

Average loans	$	189.9	$	146.0	$	53.7	$	49.0	$	30.7	$	21.2	$	—		$	—		$	274.3	$	216.2
Average assets		303.7		290.2		77.4		75.7		32.5		22.9		6.0			6.2			419.6		395.0
Average core deposits		199.6		191.8		25.3		23.8		.1		.1		—			—			225.0		215.7
Nine months ended September 30,
Net interest income (1)	$	9,008	$	8,633	$	1,652	$	1,667	$	2,039	$	1,672	$	(5	)	$	(7	)	$	12,694	$	11,965
Provision for credit losses		626		656		51		154		575		448		—			—			1,252		1,258
Noninterest income		6,578		6,674		2,271		2,015		279		283		69			9			9,197		8,981
Noninterest expense		9,263		9,830		2,010		1,885		1,151		973		178			2			12,602		12,690

Income (loss) before income tax expense (benefit)		5,697		4,821		1,862		1,643		592		534		(114	)		—			8,037		6,998
Income tax expense (benefit)		1,968		1,638		666		580		214		202		(40	)		—			2,808		2,420

Net income (loss)	$	3,729	$	3,183	$	1,196	$	1,063	$	378	$	332	$	(74	)	$	—		$	5,229	$	4,578

Average loans	$	185.4	$	136.7	$	52.0	$	49.4	$	28.3	$	19.3	$	—		$	—		$	265.7	$	205.4
Average assets		293.4		271.8		76.3		76.1		29.9		21.1		6.0			6.2			405.6		375.2
Average core deposits		195.6		184.1		25.3		21.8		.1		.1		—			—			221.0		206.0

We are a variable interest holder in certain special-purpose entities that are consolidated because we will absorb a majority of each entity’s expected losses, receive a majority of each entity’s expected returns or both. We do not hold a majority voting interest in these entities. Substantially all of these entities were formed to invest in securities and to securitize real estate investment trust securities and had approximately $6 billion in total assets at September 30, 2004 and $5 billion at December 31, 2003. The primary activities of these entities consist of acquiring and disposing of, and investing and reinvesting in securities, and issuing beneficial interests secured by those securities to investors. The creditors of substantially all of these consolidated entities have no recourse against us.

We hold variable interests greater than 20% but less than 50% in certain special-purpose entities formed to provide affordable housing and to securitize high-yield corporate debt that had approximately $3 billion in total assets at September 30, 2004 and $2 billion at December 31, 2003. We are not required to consolidate these entities. Our maximum exposure to loss related to these unconsolidated entities was approximately $700 million at September 30, 2004 and $450 million at December 31, 2003.

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

Each quarter, we evaluate mortgage servicing rights (MSRs) for possible impairment based on the difference between the carrying amount and current fair value of the MSRs. If a temporary impairment exists, we establish a valuation allowance for any excess of amortized cost, as adjusted for hedge accounting, over the current fair value through a charge to income. We have a policy of reviewing MSRs for other-than-temporary impairment each quarter and recognize a direct write-down when the recoverability of a recorded valuation allowance is determined to be remote. Unlike a valuation allowance, a direct write-down permanently reduces the carrying value of the MSRs and the valuation allowance, precluding subsequent reversals. (See Note 1 (Summary of Significant Accounting Policies – Transfer and Servicing of Financial Assets) to Financial Statements in our 2003 Form 10-K for additional discussion of our policy for valuation of MSRs.)

Net gains (losses) on mortgage loan origination/sales activities reflect the periodic evaluation of our portfolios, which are carried at the lower of cost or market value. Mortgages held for sale include residential mortgages that were originated in accordance with secondary market pricing and underwriting standards and certain mortgages originated initially for investment and not underwritten to secondary market standards.



	Quarter ended Sept. 30					,	Nine months ended Sept. 30					,
(in millions)	2004			2003			2004			2003

Mortgage servicing rights:
Balance, beginning of period	$	10,100		$	6,375		$	8,848		$	6,677
Originations (1)		465			1,377			1,400			2,872
Purchases (1)		261			874			995			1,730
Amortization		(411	)		(572	)		(1,353	)		(2,301	)
Write-down		—			(492	)		(169	)		(1,338	)
Other (includes changes in mortgage servicing rights due to hedging)		(848	)		27			(154	)		(51	)

Balance, end of period	$	9,567		$	7,589		$	9,567		$	7,589

Valuation allowance:
Balance, beginning of period	$	1,588		$	2,554		$	1,942		$	2,188
Provision (reversal of provision) for mortgage servicing rights in excess of fair value		211			(238	)		26			974
Write-down of mortgage servicing rights		—			(492	)		(169	)		(1,338	)

Balance, end of period	$	1,799		$	1,824		$	1,799		$	1,824

Mortgage servicing rights, net	$	7,768		$	5,765		$	7,768		$	5,765

Ratio of mortgage servicing rights to related loans serviced for others		1.18	%		1.03	%		1.18	%		1.03	%

Following are the condensed consolidating financial statements of the Parent and Wells Fargo Financial, Inc. and its wholly-owned subsidiaries (WFFI). The Wells Fargo Financial business segment for management reporting (See Note 12) consists of WFFI and other affiliated consumer finance entities managed by WFFI that are included within other consolidating subsidiaries in the following tables.



	Quarter ended September 30, 2004
					Other
					consolidating					Consolidated
(in millions)	Parent		WFFI		subsidiaries		Eliminations			Company

Dividends from subsidiaries:
Bank	$	1,200	$	—	$	—	$	(1,200	)	$	—
Nonbank		—		—		—		—			—
Interest income from loans		—		915		3,356		—			4,271
Interest income from subsidiaries		308		—		—		(308	)		—
Other interest income		22		21		1,091		—			1,134

Total interest income		1,530		936		4,447		(1,508	)		5,405

Short-term borrowings		30		11		113		(49	)		105
Long-term debt		224		283		93		(205	)		395
Other interest expense		—		—		487		—			487

Total interest expense		254		294		693		(254	)		987

NET INTEREST INCOME		1,276		642		3,754		(1,254	)		4,418
Provision for credit losses		—		211		197		—			408

Net interest income after provision for credit losses		1,276		431		3,557		(1,254	)		4,010

NONINTEREST INCOME
Fee income – nonaffiliates		—		58		1,840		—			1,898
Other		23		77		923		(21	)		1,002

Total noninterest income		23		135		2,763		(21	)		2,900

NONINTEREST EXPENSE
Salaries and benefits		1		237		1,984		—			2,222
Other		12		171		1,873		(58	)		1,998

Total noninterest expense		13		408		3,857		(58	)		4,220

INCOME BEFORE INCOME TAX EXPENSE AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES		1,286		158		2,463		(1,217	)		2,690
Income tax expense		12		56		874		—			942
Equity in undistributed income of subsidiaries		474		—		—		(474	)		—

NET INCOME	$	1,748	$	102	$	1,589	$	(1,691	)	$	1,748



	Quarter ended September 30, 2003
						Other
						consolidating					Consolidated
(in millions)	Parent			WFFI		subsidiaries		Eliminations			Company

Dividends from subsidiaries:
Bank	$	1,041		$	—	$	—	$	(1,041	)	$	—
Nonbank		100			—		—		(100	)		—
Interest income from loans		—			731		2,751		—			3,482
Interest income from subsidiaries		155			—		—		(155	)		—
Other interest income		20			19		1,458		—			1,497

Total interest income		1,316			750		4,209		(1,296	)		4,979

Short-term borrowings		19			18		92		(57	)		72
Long-term debt		145			199		85		(80	)		349
Other interest expense		—			—		416		—			416

Total interest expense		164			217		593		(137	)		837

NET INTEREST INCOME		1,152			533		3,616		(1,159	)		4,142
Provision for credit losses		—			219		207		—			426

Net interest income after provision for credit losses		1,152			314		3,409		(1,159	)		3,716

NONINTEREST INCOME
Fee income – nonaffiliates		—			55		1,729		—			1,784
Other		35			51		1,342		(21	)		1,407

Total noninterest income		35			106		3,071		(21	)		3,191

NONINTEREST EXPENSE
Salaries and benefits		37			188		1,955		—			2,180
Other		(45	)		139		2,340		(39	)		2,395

Total noninterest expense		(8	)		327		4,295		(39	)		4,575

INCOME BEFORE INCOME TAX EXPENSE AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES		1,195			93		2,185		(1,141	)		2,332
Income tax expense		30			35		706		—			771
Equity in undistributed income of subsidiaries		396			—		—		(396	)		—

NET INCOME	$	1,561		$	58	$	1,479	$	(1,537	)	$	1,561



	Nine months ended September 30, 2004
						Other
						consolidating					Consolidated
(in millions)	Parent			WFFI		subsidiaries		Eliminations			Company

Dividends from subsidiaries:
Bank	$	2,701		$	—	$	—	$	(2,701	)	$	—
Nonbank		264			—		—		(264	)		—
Interest income from loans		—			2,576		9,663		—			12,239
Interest income from subsidiaries		746			—		—		(746	)		—
Other interest income		67			61		2,965		—			3,093

Total interest income		3,778			2,637		12,628		(3,711	)		15,332

Short-term borrowings		69			25		301		(168	)		227
Long-term debt		579			791		283		(493	)		1,160
Other interest expense		—			—		1,251		—			1,251

Total interest expense		648			816		1,835		(661	)		2,638

NET INTEREST INCOME		3,130			1,821		10,793		(3,050	)		12,694
Provision for credit losses		—			605		647		—			1,252

Net interest income after provision for credit losses		3,130			1,216		10,146		(3,050	)		11,442

NONINTEREST INCOME
Fee income – nonaffiliates		—			167		5,439		—			5,606
Other		82			162		3,401		(54	)		3,591

Total noninterest income		82			329		8,840		(54	)		9,197

NONINTEREST EXPENSE
Salaries and benefits		30			686		5,793		—			6,509
Other		71			554		5,608		(140	)		6,093

Total noninterest expense		101			1,240		11,401		(140	)		12,602

INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES		3,111			305		7,585		(2,964	)		8,037
Income tax expense (benefit)		(17	)		108		2,717		—			2,808
Equity in undistributed income of subsidiaries		2,101			—		—		(2,101	)		—

NET INCOME	$	5,229		$	197	$	4,868	$	(5,065	)	$	5,229



	Nine months ended September 30, 2003
						Other
						consolidating					Consolidated
(in millions)	Parent			WFFI		subsidiaries		Eliminations			Company

Dividends from subsidiaries:
Bank	$	2,831		$	—	$	—	$	(2,831	)	$	—
Nonbank		820			—		—		(820	)		—
Interest income from loans		2			2,038		8,184		—			10,224
Interest income from subsidiaries		390			—		—		(390	)		—
Other interest income		55			57		4,227		—			4,339

Total interest income		4,098			2,095		12,411		(4,041	)		14,563

Short-term borrowings		61			62		323		(192	)		254
Long-term debt		406			511		255		(152	)		1,020
Other interest expense		—			—		1,324		—			1,324

Total interest expense		467			573		1,902		(344	)		2,598

NET INTEREST INCOME		3,631			1,522		10,509		(3,697	)		11,965
Provision for credit losses		—			549		709		—			1,258

Net interest income after provision for credit losses		3,631			973		9,800		(3,697	)		10,707

NONINTEREST INCOME
Fee income – nonaffiliates		—			155		4,938		—			5,093
Other		110			160		3,680		(62	)		3,888

Total noninterest income		110			315		8,618		(62	)		8,981

NONINTEREST EXPENSE
Salaries and benefits		104			527		5,564		—			6,195
Other		(1	)		398		6,206		(108	)		6,495

Total noninterest expense		103			925		11,770		(108	)		12,690

INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES		3,638			363		6,648		(3,651	)		6,998
Income tax expense (benefit)		(43	)		137		2,326		—			2,420
Equity in undistributed income of subsidiaries		897			—		—		(897	)		—

NET INCOME	$	4,578		$	226	$	4,322	$	(4,548	)	$	4,578



	September 30, 2004
						Other
						consolidating						Consolidated
(in millions)	Parent		WFFI			subsidiaries			Eliminations			Company

ASSETS
Cash and cash equivalents due from:
Subsidiary banks	$	10,525	$	130		$	—		$	(10,655	)	$	—
Nonaffiliates		244		214			16,660			—			17,118
Securities available for sale		1,406		1,823			31,897			(5	)		35,121
Mortgages and loans held for sale		—		27			39,190			—			39,217
Loans		1		31,243			248,066			—			279,310
Loans to nonbank subsidiaries		34,929		868			—			(35,797	)		—
Allowance for loan losses		—		(931	)		(2,851	)		—			(3,782	)

Net loans		34,930		31,180			245,215			(35,797	)		275,528

Investments in subsidiaries:
Bank		34,694		—			—			(34,694	)		—
Nonbank		4,200		—			—			(4,200	)		—
Other assets		4,071		738			50,275			(519	)		54,565

Total assets	$	90,070	$	34,112		$	383,237		$	(85,870	)	$	421,549

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	—	$	85		$	279,357		$	(10,655	)	$	268,787
Short-term borrowings		255		4,177			30,647			(10,801	)		24,278
Accrued expenses and other liabilities		2,028		1,136			18,671			(1,351	)		20,484
Long-term debt		49,113		26,405			18,140			(22,338	)		71,320
Indebtedness to subsidiaries		1,994		—			—			(1,994	)		—

Total liabilities		53,390		31,803			346,815			(47,139	)		384,869
Stockholders’ equity		36,680		2,309			36,422			(38,731	)		36,680

Total liabilities and stockholders’ equity	$	90,070	$	34,112		$	383,237		$	(85,870	)	$	421,549



	September 30, 2003
						Other
						consolidating						Consolidated
(in millions)	Parent		WFFI			subsidiaries			Eliminations			Company

ASSETS
Cash and cash equivalents due from:
Subsidiary banks	$	4,922	$	24		$	—		$	(4,946	)	$	—
Nonaffiliates		233		158			17,724			—			18,115
Securities available for sale		1,093		1,663			27,511			(7	)		30,260
Mortgages and loans held for sale		—		—			62,638			—			62,638
Loans		1		21,718			206,418			—			228,137
Loans to nonbank subsidiaries		23,856		802			—			(24,658	)		—
Allowance for loan losses		—		(753	)		(3,101	)		—			(3,854	)

Net loans		23,857		21,767			203,317			(24,658	)		224,283

Investments in subsidiaries:
Bank		32,684		—			—			(32,684	)		—
Nonbank		3,777		—			—			(3,777	)		—
Other assets		2,831		737			52,596			(710	)		55,454

Total assets	$	69,397	$	24,349		$	363,786		$	(66,782	)	$	390,750

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	—	$	107		$	256,288		$	(4,959	)	$	251,436
Short-term borrowings		786		4,597			31,702			(11,496	)		25,589
Accrued expenses and other liabilities		1,399		970			20,423			(3,977	)		18,815
Long-term debt		30,253		16,574			20,538			(8,373	)		58,992
Indebtedness to subsidiaries		1,976		—			—			(1,976	)		—
Guaranteed preferred beneficial interests in Company’s subordinated debentures		2,650		—			935			—			3,585

Total liabilities		37,064		22,248			329,886			(30,781	)		358,417
Stockholders’ equity		32,333		2,101			33,900			(36,001	)		32,333

Total liabilities and stockholders’ equity	$	69,397	$	24,349		$	363,786		$	(66,782	)	$	390,750



	Nine months ended September 30, 2004
							Other
							consolidating
							subsidiaries/			Consolidated
(in millions)	Parent			WFFI			eliminations			Company

Cash flows from operating activities:
Net cash provided by operating activities	$	2,974		$	1,052		$	14,856		$	18,882

Cash flows from investing activities:
Securities available for sale:
Proceeds from sales		68			157			5,087			5,312
Proceeds from prepayments and maturities		143			120			6,845			7,108
Purchases		(170	)		(417	)		(14,493	)		(15,080	)
Net cash paid for acquisitions		—			—			(45	)		(45	)
Increase in banking subsidiaries’ loan originations, net of collections		—			—			(26,990	)		(26,990	)
Proceeds from sales (including participations) of loans by banking subsidiaries		—			—			972			972
Purchases (including participations) of loans by banking subsidiaries		—			—			(4,583	)		(4,583	)
Principal collected on nonbank entities’ loans		—			12,583			191			12,774
Loans originated by nonbank entities		—			(20,238	)		(60	)		(20,298	)
Net advances to nonbank entities		945			—			(945	)		—
Capital notes and term loans made to subsidiaries		(10,174	)		—			10,174			—
Principal collected on notes/loans made to subsidiaries		496			—			(496	)		—
Net decrease (increase) in investment in subsidiaries		(351	)		—			351			—
Other, net		—			(99	)		(5,330	)		(5,429	)

Net cash used by investing activities		(9,043	)		(7,894	)		(29,322	)		(46,259	)

Cash flows from financing activities:
Net increase (decrease) in deposits		—			(24	)		21,280			21,256
Net increase (decrease) in short-term borrowings		(751	)		(802	)		1,172			(381	)
Proceeds from issuance of long-term debt		16,544			11,483			(3,091	)		24,936
Repayment of long-term debt		(2,431	)		(3,632	)		(11,468	)		(17,531	)
Proceeds from issuance of common stock		917			—			—			917
Repurchase of common stock		(1,909	)		—			—			(1,909	)
Payment of cash dividends on common stock		(2,337	)		—			—			(2,337	)
Other, net		—			—			128			128

Net cash provided by financing activities		10,033			7,025			8,021			25,079

Net change in cash and due from banks		3,964			183			(6,445	)		(2,298	)
Cash and due from banks at beginning of period		6,805			161			8,581			15,547

Cash and due from banks at end of period	$	10,769		$	344		$	2,136		$	13,249



	Nine months ended September 30, 2003
							Other
							consolidating
							subsidiaries/			Consolidated
(in millions)	Parent			WFFI			eliminations			Company

Cash flows from operating activities:
Net cash provided (used) by operating activities	$	3,866		$	1,057		$	(3,008	)	$	1,915

Cash flows from investing activities:
Securities available for sale:
Proceeds from sales		138			309			5,610			6,057
Proceeds from prepayments and maturities		128			178			9,919			10,225
Purchases		(333	)		(612	)		(18,172	)		(19,117	)
Net cash paid for acquisitions		(33	)		(600	)		(183	)		(816	)
Increase in banking subsidiaries’ loan originations, net of collections		—			—			(18,421	)		(18,421	)
Proceeds from sales (including participations) of loans by banking subsidiaries		—			—			1,259			1,259
Purchases (including participations) of loans by banking subsidiaries		—			—			(13,468	)		(13,468	)
Principal collected on nonbank entities’ loans		3,683			9,622			449			13,754
Loans originated by nonbank entities		—			(14,842	)		(568	)		(15,410	)
Purchases of loans by nonbank entities		(3,682	)		—			—			(3,682	)
Net advances to nonbank entities		(1,042	)		—			1,042			—
Capital notes and term loans made to subsidiaries		(11,225	)		—			11,225			—
Principal collected on notes/loans made to subsidiaries		3,583			—			(3,583	)		—
Net decrease (increase) in investment in subsidiaries		37			—			(37	)		—
Other, net		—			85			(1,256	)		(1,171	)

Net cash used by investing activities		(8,746	)		(5,860	)		(26,184	)		(40,790	)

Cash flows from financing activities:
Net increase in deposits		—			19			34,501			34,520
Net decrease in short-term borrowings		(1,502	)		(1,057	)		(5,298	)		(7,857	)
Proceeds from issuance of long-term debt		13,553			7,976			4,148			25,677
Repayment of long-term debt		(3,364	)		(1,648	)		(9,676	)		(14,688	)
Proceeds from issuance of guaranteed preferred beneficial interests in Company’s subordinated debentures		700			—			—			700
Proceeds from issuance of common stock		544			—			—			544
Repurchase of common stock		(1,289	)		—			—			(1,289	)
Payment of cash dividends on preferred and common stock		(1,767	)		(600	)		600			(1,767	)
Other, net		—			—			638			638

Net cash provided by financing activities		6,875			4,690			24,913			36,478

Net change in cash and due from banks		1,995			(113	)		(4,279	)		(2,397	)
Cash and due from banks at beginning of period		3,160			295			14,365			17,820

Cash and due from banks at end of period	$	5,155		$	182		$	10,086		$	15,423

Significant guarantees that we provide to third parties include standby letters of credit, various indemnification agreements, guarantees accounted for as derivatives, contingent consideration related to business combinations and contingent performance guarantees.

We issue standby letters of credit, which include performance and financial guarantees, for customers in connection with contracts between the customers and third parties. Standby letters of credit assure that the third parties will receive specified funds if customers fail to meet their contractual obligations. We are obliged to make payment if a customer defaults. Standby letters of credit were $8.9 billion and $8.3 billion at September 30, 2004 and December 31, 2003, respectively, including financial guarantees of $4.9 billion and $4.7 billion, respectively, that we had issued or purchased participations in. Standby letters of credit are reported net of participations sold to other institutions of $1.7 billion and $1.5 billion at September 30, 2004 and December 31, 2003, respectively. We consider the credit risk in standby letters of credit in determining the allowance for credit losses. Deferred fees for these standby letters of credit were not significant to our financial statements. We also had commitments for commercial and similar letters of credit of $836 million and $810 million at September 30, 2004 and December 31, 2003, respectively.

We enter into indemnification agreements in the ordinary course of business under which we agree to indemnify third parties against any damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with us. These relationships or transactions include those arising from service as a director or officer of the Company, underwriting agreements relating to our securities, securities lending, acquisition agreements, and various other business transactions or arrangements. Because the extent of our obligations under these agreements depends entirely upon the occurrence of future events, our potential future liability under these agreements is not determinable.

We write options, floors and caps. Options are exercisable based on favorable market conditions. Periodic settlements occur on floors and caps based on market conditions. At September 30, 2004 and December 31, 2003, the fair value of the written options liability in our balance sheet was $321 million and $382 million, respectively, and the written floors and caps liability was $252 million and $213 million, respectively. Our ultimate obligation under written options, floors and caps is based on future market conditions and is only quantifiable at settlement. We offset substantially all options written to customers with purchased options; we enter into other written options to mitigate balance sheet risk.

We also enter into credit default swaps under which we buy protection from or sell protection to a counterparty in the event of default of a reference obligation. The carrying amount of the contracts sold was a $4 million liability at September 30, 2004 and a $5 million liability at December 31, 2003. The maximum amount we would be required to pay under the swaps in which we sold protection, assuming all reference obligations default at a total loss, without recoveries, was $2.6 billion and $2.7 billion at September 30, 2004 and December 31, 2003, respectively. We purchased $2.7 billion and $2.8 billion of protection to mitigate the exposure at September 30, 2004 and December 31, 2003, respectively. Almost all of the protection purchases offset (i.e., use the same reference obligation and maturity) the contracts in which we are providing protection to a counterparty.

In connection with certain brokerage, asset management and insurance agency acquisitions we have made, the terms of the acquisition agreements provide for deferred payments or additional consideration based on certain performance targets. At September 30, 2004 and December 31, 2003, the amount of contingent consideration we expected to pay was not significant to our financial statements.

We have entered into various contingent performance guarantees through credit risk participation arrangements with terms ranging from 1 to 30 years. We will be required to make payments under these guarantees if a customer defaults on its obligation to perform under certain credit agreements with third parties. Because the extent of our obligations under these guarantees depends entirely on future events, our potential future liability under these agreements is not fully determinable, however our exposure under most of the agreements can be quantified and for those agreements our exposure was contractually limited to an aggregate liability of approximately $372 million at September 30, 2004 and $330 million at December 31, 2003.

The Company and each of its 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, respectively.

On December 31, 2003, we deconsolidated our wholly-owned trusts (the Trusts) that were formed to issue trust preferred securities and related common securities of the Trusts. The $3.8 billion of junior subordinated debentures were reflected as long-term debt on the consolidated balance sheet at December 31, 2003. (See Note 8.) The subordinated debentures issued to the Trusts, less the common securities of the Trusts, continue to qualify as Tier 1 capital under guidance issued by the Federal Reserve Board.

Wells Fargo Bank, N.A., through its mortgage banking division, is an approved seller/servicer, and is required to maintain minimum levels of shareholders’ equity, as specified by various agencies, including the United States Department of Housing and Urban Development, Government National Mortgage Association, Federal Home Loan Mortgage Corporation and Federal National Mortgage Association. At September 30, 2004, Wells Fargo Bank, N.A. met these requirements.

We use derivatives to manage the risk of changes in the fair value of mortgage servicing rights and other retained interests. Derivative gains or losses caused by market conditions (volatility) and the spread between spot and forward rates priced into the derivative contracts (the passage of time) are excluded from the evaluation of hedge effectiveness, but are reflected in earnings. The change in value of derivatives excluded from the assessment of hedge effectiveness was a net gain of $265 million and $616 million in the third quarter and first nine months of 2004, respectively, compared with a net gain of $267 million and $916 million in the same periods of 2003. The ineffective portion of the change in value of these derivatives was a net loss of $184 million and $201 million in the third quarter and first nine months of 2004, respectively, compared with a net loss of $473 million and $164 million in the same periods of 2003. The net derivative gain was $81 million and $415 million in the third quarter and first nine months of 2004, respectively, compared with a net derivative loss of $206 million and net derivative gain of $752 million in the same periods of 2003. Net derivative gains and losses are included in “Servicing fees, net of provision for impairment and amortization” in Note 14.

We also use derivatives to hedge changes in fair value of certain of our commercial real estate mortgages due to changes in LIBOR interest rates. We originate a portion of these loans with the intent to sell them. The ineffective portion of these fair value hedges was a net loss of $6 million and $16 million in the third quarter and first nine months of 2004, respectively, and $6 million and $17 million in the same periods of 2003. The net losses on these derivatives resulting from ineffectiveness are recorded as part of mortgage banking noninterest income in the statement of income. For the commercial real estate hedges, all parts of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

We also enter into interest rate swaps, designated as fair value hedges, to convert certain of our fixed-rate long-term debt to floating-rate debt. The ineffective part of these fair value hedges was not significant in the third quarter and first nine months of 2004 and 2003. For long-term debt, all parts of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

At September 30, 2004, all designated fair value hedges continued to qualify as fair value hedges.

We use derivatives to convert floating-rate loans and certain of our floating-rate senior debt to fixed rates and to hedge forecasted sales of mortgage loans. We recognized a net loss of $29 million and a net gain of $4 million in the third quarter and first nine months of 2004, respectively, compared with a net gain of $131 million and $77 million in the same periods of 2003, respectively, which represents the total ineffectiveness of cash flow hedges. Net gains and losses on derivatives resulting from ineffectiveness are included in the line item in which the hedged item’s effect in earnings is recorded. All parts of gain or loss on these derivatives are included in the assessment of hedge effectiveness. As of September 30, 2004, all designated cash flow hedges continued to qualify as cash flow hedges.

At September 30, 2004, we expected that $37 million of deferred net losses on derivatives in other comprehensive income will be reclassified as earnings during the next twelve months, compared with $389 million of deferred net losses at September 30, 2003. Derivative gains or losses recorded to other comprehensive income are reclassified to earnings in the period the hedged item impacts earnings. We are hedging our exposure to the variability of future cash flows for all forecasted transactions for a maximum of two years for floating-rate loans, one year for forecasted sales of mortgage loans and ten years for long-term debt.

	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)

	3(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 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

	3(d)		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

	(e)		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

	(f)		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

	(g)		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

	(h)		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

	(i)		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

	(j)		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

	(k)		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

	(l)		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

	(m)		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

	(n)		Certificate of Designations for the Company’s 2003 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 15, 2003

	3(o)		Certificate of Designations for the Company’s 2004 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, 2004

	(p)		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(p)

	(b)		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		Amendment to Directors Stock Compensation and Deferral Plan, filed herewith

	31(a)		Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

	(b)		Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

	32(a)		Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350, furnished herewith

	(b)		Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350, furnished herewith

	99(a)		Computation of Ratios of Earnings to Fixed Charges, filed herewith. The ratios of earnings to fixed charges, including interest on deposits, were 3.59 and 3.62 for the quarters ended September 30, 2004 and 2003, respectively, and 3.88 and 3.55 for the nine months ended September 30, 2004 and 2003, respectively. The ratios of earnings to fixed charges, excluding interest on deposits, were 5.89 and 5.62 for the quarters ended September 30, 2004 and 2003, respectively, and 6.23 and 5.64 for the nine months ended September 30, 2004 and 2003, respectively.

99(b)

Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends, filed herewith. The ratios of earnings to fixed charges and preferred dividends, including interest on deposits, were 3.59 and 3.62 for the quarters ended September 30, 2004 and 2003, respectively, and 3.88 and 3.54 for the nine months ended September 30, 2004 and 2003, respectively. The ratios of earnings to fixed charges and preferred dividends, excluding interest on deposits, were 5.89 and 5.61 for the quarters ended September 30, 2004 and 2003, respectively, and 6.23 and 5.62 for the nine months ended September 30, 2004 and 2003, respectively.

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.


		Shares Outstanding
		October 29, 2004
Common stock, $1-2/3 par value		1,691,869,391


PART I	Financial Information
Item 1.	Financial Statements	Page
	Consolidated Statement of Income		32
	Consolidated Balance Sheet		33
	Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income		34
	Consolidated Statement of Cash Flows		35
	Notes to Financial Statements		36

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (Financial Review)
	Summary Financial Data		2
	Overview		3
	Critical Accounting Policies		7
	Earnings Performance		7
	Net Interest Income		7
	Noninterest Income		10
	Noninterest Expense		13
	Income Taxes		13
	Operating Segment Results		14
	Balance Sheet Analysis		15
	Securities Available for Sale (table on page 38)		15
	Loan Portfolio (table on page 39)		15
	Deposits		16
	Off-Balance Sheet Arrangements and Aggregate Contractual Obligations		16
	Risk Management		16
	Credit Risk Management Process		16
	Nonaccrual Loans and Other Assets		17
	Loans 90 Days or More Past Due and Still Accruing		17
	Allowance for Credit Losses (table on page 40)		18
	Asset/Liability and Market Risk Management		19
	Interest Rate Risk		19
	Mortgage Banking Interest Rate Risk		20
	Market Risk – Trading Activities		21
	Market Risk – Equity Markets		21
	Liquidity and Funding		22
	Capital Management		23
	Factors that May Affect Future Results		24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19

Item 4.	Controls and Procedures		31

PART II	Other Information
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		65

Item 6.	Exhibits		65
Signature			68

EXHIBIT 10
EXHIBIT 31.(A)
EXHIBIT 31.(B)
EXHIBIT 32.(A)
EXHIBIT 32.(B)
EXHIBIT 99.(A)
EXHIBIT 99.(B)



(in millions)	Sept. 30, 2004			Dec. 31, 2003			Sept. 30, 2003

Estimated unrealized gross gains	$	1,454		$	1,502		$	1,542
Estimated unrealized gross losses		(44	)		(64	)		(76	)

Estimated unrealized net gains	$	1,410		$	1,438		$	1,466



	Sept. 30		,	Dec. 31		,	Sept. 30		,
(in millions)	2004			2003			2003

Commercial and commercial real estate:
Commercial	$	50,750		$	48,729		$	47,720
Other real estate mortgage		29,406			27,592			25,723
Real estate construction		9,211			8,209			7,777
Lease financing		5,075			4,477			4,478

Total commercial and commercial real estate		94,442			89,007			85,698
Consumer:
Real estate 1-4 family first mortgage		87,587			83,535			66,760
Real estate 1-4 family junior lien mortgage		49,557			36,629			33,601
Credit card		9,439			8,351			7,836
Other revolving credit and installment		34,435			33,100			31,919

Total consumer		181,018			161,615			140,116
Foreign		3,850			2,451			2,323

Total loans	$	279,310		$	253,073		$	228,137



	Sept. 30		,	Dec. 31		,	Sept. 30		,
(in millions)	2004			2003			2003

Trading assets	$	8,107		$	8,919		$	10,279
Accounts receivable		2,548			2,456			3,709
Nonmarketable equity investments:
Private equity investments		1,548			1,714			1,713
Federal bank stock		1,693			1,765			1,691
All other		1,824			1,542			1,600

Total nonmarketable equity investments		5,065			5,021			5,004
Operating lease assets		3,547			3,448			3,654
Interest receivable		1,416			1,287			1,209
Core deposit intangibles		636			737			761
Interest-earning deposits		1,160			988			608
Foreclosed assets		190			198			196
Due from customers on acceptances		165			137			161
Other		9,810			6,845			10,742

Total other assets	$	32,644		$	30,036		$	36,323


Delaware (State or other jurisdiction of incorporation or organization)		41-0449260 (I.R.S. Employer Identification No.)

(1)		The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
(2)		Core deposits consist of noninterest-bearing deposits, interest-bearing checking, savings certificates and market rate and other savings.
(3)		See Note 17 (Regulatory and Agency Capital Requirements) to Financial Statements for additional information.

(1)		Our average prime rate was 4.42% and 4.00% for the quarters ended September 30, 2004 and 2003, respectively, and 4.14% and 4.16% for the nine months ended September 30, 2004 and 2003, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 1.75% and 1.13% for the quarters ended September 30, 2004 and 2003, respectively, and 1.39% and 1.23% for the nine months ended September 30, 2004 and 2003, 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 primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented.

(1)		Includes impaired loans of $453 million, $629 million and $681 million at September 30, 2004, December 31, 2003 and September 30, 2003, respectively. (See Note 4 in this report and Note 5 (Loans and Allowance for Loan Losses) to Financial Statements in our 2003 Form 10-K for further information on impaired loans.)
(2)		Real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if these assets were recorded as loans. Real estate investments totaled $4 million at September 30, 2004, and $9 million at December 31 and September 30, 2003.



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

Nine months ended September 30, 2004 (actual)	$	1,353	$	101	$	18	$	1,472

Estimate for year ended December 31,
2004	$	1,810	$	133	$	24	$	1,967
2005		1,685		123		20		1,828
2006		1,301		110		17		1,428
2007		1,047		100		15		1,162
2008		877		92		14		983
2009		727		85		12		824

(1)		On November 15, 2003, all shares were redeemed at the stated liquidation price of $50 plus accrued dividends.
(2)		Liquidation preference $1,000.
(3)		In accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans, we 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.

(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 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 to other segments.
(2)		The other income and expense items principally relate to Corporate level equity investment activities, and other separately identified transactions recorded at the enterprise level, including, for the nine months ended September 30, 2004, a $176 million loss on debt extinguishment. Average assets principally comprise unallocated goodwill held at the enterprise level.



	Quarter						Nine months
	ended September 30					,	ended September 30				,
(in millions)	2004			2003			2004		2003

Servicing fees, net of amortization and provision for impairment	$	(24	)	$	(82	)	$	603	$	(1,266	)
Net gains on mortgage loan origination/ sales activities		212			712			258		2,790
All other		74			143			209		353

Total mortgage banking noninterest income	$	262		$	773		$	1,070	$	1,877



	September 30				,
(in billions)	2004		2003

Loans serviced for others	$	659	$	560
Owned loans serviced (portfolio and held for sale)		118		121

Total owned servicing		777		681
Sub-servicing		32		18

Total managed servicing portfolio	$	809	$	699



											To be well
											capitalized under
											the FDICIA
						For capital					prompt corrective
	Actual					adequacy purposes					action provisions
(in billions)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2004:
Total capital (to risk-weighted assets)
Wells Fargo & Company	$	40.9		12.15	%	³ $	26.9	³	8.00	%
Wells Fargo Bank, N.A.		29.8		10.96		³	21.8	³	8.00		³ $	27.2	³	10.00	%
Tier 1 capital (to risk-weighted assets)
Wells Fargo & Company	$	28.3		8.40	%	³ $	13.5	³	4.00	%
Wells Fargo Bank, N.A.		23.5		8.63		³	10.9	³	4.00		³ $	16.3	³	6.00	%
Tier 1 capital (to average assets)
(Leverage ratio)
Wells Fargo & Company	$	28.3		6.97	%	³ $	16.2	³	4.00	%(1)
Wells Fargo Bank, N.A.		23.5		6.67		³	14.1	³	4.00	(1)	³ $	17.6	³	5.00	%



	September 30, 2004						December 31, 2003
	Credit			Estimated			Credit			Estimated
	risk			net fair			risk			net fair
(in millions)	amount (1		)	value			amount (1		)	value

ASSET/LIABILITY MANAGEMENT HEDGES
Interest rate contracts	$	1,417		$	1,237		$	1,847		$	1,546
CUSTOMER ACCOMMODATIONS AND TRADING
Interest rate contracts		2,134			18			2,276			3
Commodity contracts		308			(3	)		114			(1	)
Equity contracts		148			(15	)		136			(7	)
Foreign exchange contracts		415			48			580			59
Credit contracts		34			(20	)		37			(16	)


Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

		The following table shows Company repurchases of its common stock for each calendar month in the quarter ended September 30, 2004.



						Total number of
				Weighted-		shares repurchased			Maximum number of
	Total number			average		as part of publicly			shares that may yet
Calendar	of shares			price paid		announced			be repurchased under
month	repurchased		(1)	per share		authorizations		(1)	the authorizations
July		1,330,168		$	57.13		1,330,168			21,162,065
August		2,457,435			57.42		2,457,435			18,704,630
September		1,189,809			59.27		1,189,809			17,514,821

Total		4,977,412					4,977,412


Item 6.		Exhibits

		The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214.


Dated: November 4, 2004	WELLS FARGO & COMPANY

	By:	/s/ Richard D. Levy

		Richard D. Levy Senior Vice President and Controller (Principal Accounting Officer)