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8-K - FORM 8-K - WELLS FARGO & COMPANY/MN | f53807e8vk.htm |
EX-99.2 - EX-99.2 - WELLS FARGO & COMPANY/MN | f53807exv99w2.htm |
News
Release
Corporate Communications
Corporate Communications
Media | Investors | |||||||
Mary Eshet | Julia Tunis Bernard | Bob Strickland | Jim Rowe | |||||
704-383-7777 | 415-222-3858 | 415-396-0523 | 415-396-8216 |
Wednesday, October 21, 2009
WELLS FARGO REPORTS RECORD Q3 AND YEAR-TO-DATE NET INCOME
WELLS FARGO REPORTS RECORD Q3 AND YEAR-TO-DATE NET INCOME
| 3rd consecutive quarter of record earnings |
| Record Wells Fargo net income of $3.2 billion, up 98 percent from last year; $9.5 billion year to date, up 75 percent from last year | ||
| Diluted earnings per common share of $0.56, up 14 percent from last year; $1.69 per share year to date | ||
| Results driven by record $10.8 billion pre-tax, pre-provision profit (PTPP); PTPP has been more than two times quarterly net charge-offs each quarter this year, despite cyclically elevated net charge-offs. (See footnote 4 on page 20 for information on PTPP) |
| Continued strong revenue |
| Revenue of $22.5 billion, flat with record revenue in second quarter 2009 | ||
| $169 billion of credit extended to customers in the quarter | ||
| Average checking and savings deposits up 11 percent (annualized) from prior quarter | ||
| Net interest margin of 4.36 percent, up 6 basis points from prior quarter | ||
| Cross-sell for legacy Wells Fargo a record 5.90 for retail bank households | ||
| Broad-based revenue contribution from diverse businesses, including double-digit linked-quarter growth in asset management, auto lending, consumer finance, debit cards, retirement services, SBA lending and wealth management, along with continued strong performance from regional banking and mortgage banking |
| Significant increases in capital, reduction in risk |
| Wells Fargo stockholders equity increased to $122 billion (10 percent of total assets), up $23 billion from year end | ||
| Generated $20 billion during the past six months toward the $13.7 billion Supervisory Capital Assessment Program (SCAP) buffer requirement; PTPP tracking above Companys internal SCAP estimates and 35 percent above supervisory adverse scenario estimate | ||
| Credit reserves built by $1.0 billion ($3.0 billion year to date), reaching $24.5 billion, or 3.07 percent of total loans and 118 percent of nonaccrual loans | ||
| Substantial increases in capital ratios driven by record retained earnings and other sources of internal capital generation |
- 2 -
Sept. 30, | June 30, | Dec. 31, | ||||||||||
(as a percent of total risk-weighted assets) | 2009 (1) | 2009 | 2008 | |||||||||
Tier 1 capital |
10.6 | % | 9.8 | 7.8 | ||||||||
Tier 1 common equity (2) |
5.2 | 4.5 | 3.1 | |||||||||
Tier 1 leverage |
9.0 | 8.3 | 14.5 | (3) | ||||||||
Total capital |
14.7 | 13.8 | 11.8 |
(1) | September 30, 2009, ratios are preliminary. | |
(2) | See table on page 38 for more information on Tier 1 common equity. | |
(3) | Based on average Q4 2008 Wells Fargo assets only, excludes Wachovia. |
| Reduced non-strategic/liquidating loans by $5.7 billion in the quarter | ||
| FAS 166/167 expected to add approximately $28 billion to risk-weighted assets upon adoption in 2010 |
| Current projections show credit losses peaking in 2010, with consumer losses potentially peaking in first half of the year and gradually declining, absent further economic deterioration |
| Growth in nonperforming loans and net charge-offs slowing as of third quarter, for consumer and commercial portfolios | ||
| Credit performance of recent vintage legacy Wells Fargo consumer portfolios improving, largely the result of proactive credit management over past two years | ||
| 90 days past due and still accruing levels flat with second quarter; consumer 90 days past due and still accruing declined from prior quarter | ||
| Significantly smaller credit card portfolio than large bank peers | ||
| Pick-a-Pay portfolio currently estimated to have lower life-of-loan losses than originally estimated, driven in part by extensive and successful loan modification efforts | ||
| Collateral values improving in auto market and housing prices stabilizing in many regions | ||
| Legacy Wells Fargo commercial and commercial real estate portfolio well underwritten and diversified; Wachovia commercial and commercial real estate portfolio marked down at merger close at end of last year | ||
| Legacy Wells Fargo loss rate of 3.37 percent, below large bank peers; overall loss rate of 2.50 percent reflected benefit of purchase accounting on Wachovia loan portfolio; combined losses less than half of Companys quarterly PTPP |
| Wachovia integration on track and on schedule |
| Estimated cumulative merger expenses reduced to approximately $5.5 billion from $7.9 billion; on track to achieve $5.0 billion annual run-rate cost savings by completion of integration in 2011 | ||
| Cross-sell revenues already being realized | ||
| Credit overall performing in line with original expectations | ||
| First state community bank conversion (Colorado) scheduled for November; conversion of remaining overlapping markets expected in 2010 |
- 3 -
| Increased loan modifications |
| Provided 62,989 trial and completed modifications through the Home Affordable Modification Program (HAMP) and 292,005 through Companys proprietary programs, bringing total this year through September 30, 2009, to 354,994 | ||
| Refinanced 987,000 customers mortgages using the Home Affordable Refinance Program (HARP) and other standard refinance programs | ||
| Over 20 percent of PCI Pick-a-Pay portfolio modified through September 30, 2009, with positive early performance |
Selected Financial Information
Nine | ||||||||||||
months | ||||||||||||
Quarter ended | ended | |||||||||||
Sept. 30, | June 30, | Sept. 30, | ||||||||||
2009 | 2009 | 2009 | ||||||||||
Earnings |
||||||||||||
Diluted earnings per share |
$ | 0.56 | 0.57 | 1.69 | ||||||||
Wells Fargo net income (in billions) |
3.24 | 3.17 | 9.45 | |||||||||
Asset Quality |
||||||||||||
Net charge-offs as % of avg. total loans |
2.50 | % | 2.11 | 2.05 | ||||||||
Nonperforming loans as % of total loans |
2.61 | 1.92 | 2.61 | |||||||||
Allowance as a % of total loans |
3.07 | 2.86 | 3.07 | |||||||||
Other |
||||||||||||
Revenue (in billions) |
$ | 22.47 | 22.51 | 65.99 | ||||||||
Average loans (in billions) |
810.2 | 833.9 | 833.1 | |||||||||
Average core deposits (in billions) |
759.3 | 765.7 | 759.7 | |||||||||
Net interest margin |
4.36 | % | 4.30 | 4.27 |
SAN FRANCISCO Wells Fargo & Company (NYSE: WFC) reported diluted earnings per common share of
$0.56 for third quarter 2009 compared with $0.57 for second quarter 2009 and $0.49 for third
quarter 2008. (Results prior to January 1, 2009, do not include Wachovia.) Wells Fargo net income
was a record $3.24 billion for third quarter 2009, up 98 percent from last year, and a record
$9.45 billion for the first nine months of 2009, up 75 percent from last year.
Doing whats right for our customers again proved to be right for our stockholders as our talented
team members earned even more of our customers business, enabling us to achieve our third
consecutive quarter of record earnings, said President and CEO John Stumpf. The Wells
Fargo-Wachovia merger, agreed to a year ago, is exceeding our expectations and already adding value
for many of our 70 million customers across North America. Merger costs have been significantly
less than originally expected. With our 80-plus businesses pulling the stagecoach, the diversity of
our business model again showed significant power to generate capital internally. We had solid
performance across our company especially among counter-cyclical businesses such as deposits,
residential mortgages, debit card and asset-based lending. Were also doing whats right for our
mortgage customers having difficulty making their payments on time. Weve offered home payment
relief to 1.3 million customers so far this year,
- 4 -
including 355,000 loan modifications. We now have 13,000 team members working on helping
customers stay in their homes and our delinquency and foreclosure rates continue to be well below
the industry average. As weve already announced, Dick Kovacevich will step down as chairman and a
director at the end of 2009 and retire from the Company in early 2010. I am grateful to Dick and
to Wells Fargos leadership team and believe we have the strongest, most experienced team of senior
leaders in all of financial services. Theyve led our businesses to a strong third quarter,
following two consecutive quarters of record earnings, despite the economic recession. This is
something that few, if any, financial services companies have achieved and during the most
challenging credit cycle in recent memory and while we continue to build reserves.
Wells Fargo has
always been committed to providing clear, complete, and transparent communication about the
Companys results to all of its stakeholders. As we enter the second year of the merger with
Wachovia, we will be expanding our quarterly communications to include a live quarterly earnings
conference call starting in January for our fourth quarter and full year 2009 results and we
will also host an investor day in 2010.
Financial Performance
Third quarter results again illustrated the Companys ability to profitably grow, even through the
downward cycle despite elevated credit losses, said Chief Financial Officer Howard Atkins. Since
the merger with Wachovia at year-end 2008, weve earned a record $9.45 billion, even after building
credit reserves by $3.0 billion and recording $1.4 billion of other-than-temporary impairment
(OTTI) charges. Pre-tax pre-provision profit has grown every quarter this year, reaching a record
$10.8 billion in the third quarter, more than double quarterly net charge-offs. While mortgage
origination and hedging results contributed to our performance, collectively all of our other
businesses have also grown PTPP each quarter this year reflecting the breadth of our diversified
business model, record levels of sales and cross-sell, the realization of revenue synergies from
the combination with Wachovia, and further improvements in our net interest margin to 4.36 percent
and efficiency ratio to 52.0 percent. We continued to maintain what we believe is one of the
strongest balance sheets in banking, building credit reserves by $1.0 billion in the quarter to
$24.5 billion, or 3.07 percent of total loans, reducing previously identified non-strategic and
liquidating loan portfolios to $152.7 billion, down over $14 billion from year end, and reducing the
value of our debt and equity investment portfolios through $396 million of OTTI. Also, in line with
lower mortgage rates, the ratio of mortgage servicing rights (MSRs) as a percentage of loans
serviced for others was 83 basis points, the third lowest ratio in our Companys history and a
level considerably lower than our mortgage peers.
We have significantly built capital, increasing common stockholders equity to $123 billion, up $23
billion so far in 2009 and increasing Tier 1 common to 5.2 percent, nearly two times our capital
position at year-end 2008. Nonperforming loans and net charge-offs increased in the quarter, but
the rate of growth of nonperforming loans has declined each quarter so far this year. While the
level of nonperforming assets and losses is expected to remain elevated for a period of time, we
currently expect
- 5 -
total credit losses to
peak in 2010, with consumer losses potentially peaking in the first half of the year and gradually declining as the year progresses, absent any
further deterioration in the U.S. economy. Our credit reserves as of September 30, 2009, reflect an
improvement in consumer loss emergence with almost all of the current quarter reserve build
covering higher commercial loss emergence.
Operationally and financially, the Wachovia merger is exceeding our expectations. Structurally,
the merger leaves us with an even more diversified business than legacy Wells Fargo alone less
geographic concentration, an even wider array of products and services, better balance between
consumer and commercial businesses, and an equal split between spread income and fee income. We are
currently on track to realize our objective of $5.0 billion in annual run-rate savings when we
complete the integration in 2011, with about 30-40 percent of those savings now beginning to be
realized in our expense run-rate. We now expect to spend about $2.4 billion less in merger and
integration costs than previously expected to achieve the run-rate savings, largely because
proportionately more of the labor savings are being realized through attrition instead of severance
and because were spending less than planned on building disposition, as we fill unoccupied space
with third party tenants. We are ahead of plan in shedding asset risk from businesses that do not
meet our financial and strategic criteria and in retaining deposits and customers. Were already
realizing meaningful revenue synergies, an important driver of our earnings this year. Because
Wachovias credit-impaired loan portfolios were written down at the close of the merger at the end
of last year, Wachovia is now contributing to the Companys rapid internal capital growth.
Revenue
Revenue of $22.5 billion remained at near-record levels following strong first and second quarters.
Relative to the pre-Wachovia third quarter a year ago, the Companys assets almost doubled, while
total revenue has substantially more than doubled, despite the weak economy and despite the
reduction in non-strategic/liquidating loan and asset portfolios. The high levels of revenue
generated in the third quarter related to several factors:
| Continued strong core deposits reflecting 11 percent (annualized) growth in checking and savings, 25 percent (annualized) growth in wholesale banking core deposits and 10 percent (annualized) growth in wealth management core deposits. Wachovias deposit pricing has been conformed to that of Wells Fargo, with continued better-than-planned retention of Wachovias maturing higher-rate CDs (57 percent retained in third quarter). The average cost of all core deposits declined to 41 basis points in the quarter, the principal reason for the Companys 4.36 net interest margin, highest among large bank peers. | |
| The Company remained an industry leader in making credit available to U.S. consumers and businesses. Total credit supplied in the quarter through mortgage originations and new/increased credit facilities was $169 billion, one of the main drivers of continued strong loan fees, even though loan demand remained soft in the quarter. | |
| Record core product solutions (sales) and record cross-sell in regional banking for legacy Wells Fargo. |
- 6 -
| Broad-based revenue growth across multiple businesses, including double-digit (annualized) linked-quarter growth in asset management, auto lending, consumer finance, debit card, retirement services, SBA lending and wealth management. Linked-quarter growth in these businesses was partially offset by more modest mortgage revenue, lower investment banking revenue and seasonal decline in insurance revenue. | |
| While mortgage originations and servicing revenue remained high, total mortgage banking noninterest income represented less than 15 percent of consolidated company revenue, reflecting the breadth and depth of the Companys business model. |
Net Interest Income
Net interest income was $11.7 billion, compared with $11.8 billion in second quarter 2009. While
the net interest margin improved to 4.36 percent, average earning assets were down $23.7 billion
linked quarter, reflecting soft loan demand and reductions in non-strategic/liquidating assets.
While average investment securities were up $7.3 billion, this largely reflected the averaging
effect in the quarter of mortgage-backed securities (MBS) purchased late in the second quarter at
yields more than 1 percent above current market. During the third quarter, $23 billion of the
lowest-yielding MBS were sold to reduce exposure to higher long-term interest rates.
Loans
Average total loans were $810.2 billion compared with $833.9 billion in second quarter 2009, as
consumer and commercial demand for credit remained moderate and the Company continued to reduce
certain higher-risk loan portfolios. The decline in average loans included a reduction of $5.7
billion linked quarter in the non-strategic and liquidating loan portfolios that the Company has
been exiting, such as indirect home equity and indirect auto from legacy Wells Fargo, and
Wachovias Pick-a-Pay and commercial real estate portfolios.
Deposits
Average total core deposits were $759.3 billion compared with $765.7 billion in second quarter
2009. During the quarter, $38 billion of Wachovias higher-rate certificates of deposit matured,
with $22 billion of those balances retained. We continued to gain new deposit customers and deepen
our relationship with existing customers, said Atkins. Average checking and savings deposits
increased 11 percent (annualized) to $629.6 billion from $613.3 billion in second quarter 2009.
Average mortgage escrow deposits were $28.7 billion compared with $32.0 billion in second quarter
2009. Average consumer checking accounts at legacy Wells Fargo grew a
net 6.4 percent from third
quarter 2008 and, for Wells Fargo and Wachovia combined, grew a net 5.2 percent in California for
the same period.
- 7 -
Noninterest Income
Noninterest income of $10.8 billion was flat compared with $10.7 billion in second quarter 2009 and
included:
| Mortgage banking income of $3.1 billion, including: |
| $1.1 billion in revenue from mortgage loan originations/sales activities on $96 billion of residential mortgage originations |
| $1.5 billion combined market-related valuation changes to mortgage servicing rights (MSRs) and economic hedges (consisting of a $2.1 billion decrease in the fair value of the MSRs more than offset by a $3.6 billion economic hedge gain in the quarter), largely due to hedge-carry income reflecting the current low short-term interest rate environment, which is expected to continue into the fourth quarter; MSRs as a percentage of loans serviced for others reduced to 0.83 percent; average servicing portfolio note rate was only 5.72 percent. |
| Trust and investment fees of $2.5 billion, up 15 percent (annualized) linked quarter primarily reflecting an increase in client assets, bond origination fees, and higher brokerage revenue as the Company further builds its retail securities brokerage business | |
| Service charges on deposit accounts of $1.5 billion, up 8 percent (annualized) linked quarter driven by continued strong checking account growth | |
| Card fees of $946 million, up 10 percent (annualized) linked quarter reflecting seasonally higher purchase volumes and higher customer penetration rates | |
| Net losses on debt and equity securities totaling $11 million, including $396 million of OTTI write-downs and $120 million of realized gains on the sale of MBS in the third quarter. After having purchased over $34 billion of agency MBS in the second quarter of 2009 at yields more than 1 percent above the current market, the Company sold $23 billion of its lowest-yielding MBS after long-term interest rates declined in the third quarter. |
Due to the general decline in long-term yields and narrowing of credit spreads in the quarter, the
Companys net unrealized securities gains, reflected in equity, increased to $6.6 billion at
September 30, 2009, from net losses of $400 million at June 30, 2009.
Noninterest Expense
Noninterest expense declined to $11.7 billion from $12.7 billion in the second quarter, which
included $565 million of FDIC deposit insurance assessments. The balance of the decline in third
quarter expense was due to merger consolidation savings and ongoing expense management initiatives.
We currently expect cumulative merger integration costs of approximately $5.5 billion, down from
our previous $7.9 billion estimate, said Atkins. The revised estimate reflects lower owned real
estate write-downs and lower estimated severance costs since a greater proportion of labor savings
is being realized through attrition. Of this $5.5 billion, weve spent $1.0 billion merger to date,
including $200 million in the third quarter. Of the amount spent thus far, $444 million has been
recorded through the income statement and $559 million has been recorded through purchase
accounting adjustments to goodwill. A portion of the
- 8 -
remaining integration costs will be charged to
goodwill in the fourth quarter under purchase accounting. The balance of the cumulative estimated
integration costs are expected to be expensed over the next two years, and are likely to be offset
by merger-related savings during this period. We remain on track to achieve $5.0 billion in annual
run-rate savings upon completion of the integration in 2011. To date, we have achieved
approximately 30-40 percent of these savings. Noninterest expense also included
$100 million of additional insurance reserve at the Companys captive mortgage reinsurance
operation and $49 million of non-Wachovia-related integration costs. As we reduce expenses through
consolidation and other expense initiatives, we continue to reinvest in our businesses for
long-term revenue growth, said Atkins. During 2009, weve opened 41 banking stores and converted
1,274 ATMs to Envelope-FreeSM webATM machines. We have also continued to increase the
level and productivity of our sales force in community banking, commercial banking and wealth
management. We continue to manage to a variable expense base in the mortgage company. Part-time
staff was reduced in third quarter as application volume declined, and increased again in September
and early in the fourth quarter as applications increased. The Companys efficiency ratio improved
to 52.0 percent from 56.4 percent in second quarter and 56.2 percent in first quarter.
Capital
We have rebuilt capital significantly this year, said Atkins, with most of our capital ratios
now higher in some cases substantially so than they were just before the Wachovia merger a year
ago.
Sept. 30, | Sept. 30, | |||||||
(as a percent of total risk-weighted assets) | 2009 (1) | 2008 (2) | ||||||
Tier 1 common equity |
5.2 | % | 6.4 | |||||
Tier 1 capital |
10.6 | 8.6 | ||||||
Tier 1 leverage |
9.0 | 7.5 | ||||||
Total capital |
14.7 | 11.5 |
(1) | September 30, 2009, ratios are preliminary | |
(2) | Wells Fargo only, excludes Wachovia |
Stockholders equity now stands at $122 billion, up $50 billion from a year ago (excluding the U.S.
Treasurys $25 billion Capital Purchase Program investment), up $23 billion from post-merger
closing year-end equity and up $8 billion just in the third quarter of this year alone. In the
past year, we have more than doubled stockholders equity while significantly reducing risk and
increasing internal capital momentum, said Atkins. Tier 1 common equity grew from second quarter
2009 entirely from internally generated sources record retained earnings, realization of deferred
tax assets and stock issued to the Companys benefit plans. Through September 30, 2009, the Company
generated $20 billion, including the $8.6 billion equity raise in the second quarter, toward the
$13.7 billion regulatory capital buffer under SCAP, exceeding the requirement by $6 billion. A
major contributor to our strong results compared with the regulatory SCAP requirement has been our
consistent outperformance on pre-tax pre-provision profit year to date, which confirmed the
confidence weve had from the beginning of this process in the underlying revenue strength of our
company and the consistency of our revenue generation even in
- 9 -
adverse scenarios, said Atkins. See
footnote (4) on page 20 and the table on page 38 for more information.
In January, the Company will adopt FAS 166/167, which will result in the consolidation of certain
off-balance sheet assets not currently included in its financial statements. The Companys current
estimate is that FAS 166/167 is expected to add approximately $28 billion in risk-weighted assets.
This latest analysis
is lower than originally projected primarily due to a reduction in the amount of securitized
residential mortgages expected to be consolidated. In addition, the
Company continues to explore the sale of
certain interests held in securitized residential mortgage loans, which would be expected to
reduce further the amount of incremental GAAP assets and incremental risk-weighted assets.
Credit Quality
While the challenging credit cycle continues and losses remain elevated, we have begun to see
early indications of consumer credit stability, said Chief Credit and Risk Officer Mike Loughlin.
In the third quarter, this stabilization was evident in several consumer loan portfolios, while
the consumer real estate portfolio continued to vary across geography. Some real estate markets,
such as California, have had increased home sales and home price stabilization and, as these
conditions improve in more markets, we expect to see improvement in credit results. Third quarter
commercial and commercial real estate losses remained at manageable levels, reflecting the
high-quality of Wells Fargos commercial loan portfolio and the fact that Wachovias commercial and
commercial real estate loan portfolios were already written down at the end of last year.
Nonperforming assets and credit losses increased during the quarter, and once again we increased
reserve levels to provide for the additional risk. We expect credit losses and nonperforming assets
to continue to increase in the near term, but at a slower rate as we have seen the pace of
deterioration slow. Based on our current economic outlook, we expect losses to peak in 2010, with
consumer losses expected to peak in the first half of 2010 and commercial and commercial real
estate losses expected to peak in the second half of 2010. The recovery may take some time to gain
momentum and changes in the economic outlook could affect this time horizon.
Credit Losses
Third quarter net charge-offs were $5.1 billion, or 2.50 percent of average loans, compared with
second quarter net charge-offs of $4.4 billion, or 2.11 percent of average loans. While losses were
up in the quarter, the increase in terms of both dollars and percentages moderated from prior
quarter growth. The overall quarterly loss rate in the third quarter, 2.50 percent, is
substantially lower than reported large peer loss rates partly because Wells Fargo had already
written down Wachovias higher-risk loan portfolios at year end. Reflecting, in part, stabilizing
credit performance, legacy Wells Fargo net charge-offs were
$3.4 billion, or 3.37 percent of
average loans. Wachovias net charge-offs increased to
$1.7 billion, or 1.66 percent of average
loans, compared with $984 million in second quarter 2009, due to some deterioration in its
portfolios and the lagging effect of purchase accounting.
- 10 -
Total credit losses of $5.1 billion included $1.5 billion of commercial and commercial real estate
loans (1.78 percent of average loans) and $3.6 billion in consumer loans (3.13 percent of average
loans), as shown in the following table.
Net
Loan Charge-Offs (1)
Quarter ended | ||||||||||||||||||||||||
September 30, 2009 | June 30, 2009 | March 31, 2009 | ||||||||||||||||||||||
As a | As a | As a | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
Net loan | average | Net loan | average | Net loan | average | |||||||||||||||||||
charge- | loans | charge- | loans | charge- | loans | |||||||||||||||||||
($ in millions) | offs | (annualized) | offs | (annualized) | offs | (annualized) | ||||||||||||||||||
Commercial and
commercial real estate: |
||||||||||||||||||||||||
Legacy Wells Fargo |
$ | 862 | 1.96 | % | $ | 897 | 2.01 | % | $ | 667 | 1.48 | % | ||||||||||||
Wachovia |
602 | 1.57 | 246 | 0.61 | 30 | 0.07 | ||||||||||||||||||
Total commercial and
commercial real estate |
1,464 | 1.78 | 1,143 | 1.35 | 697 | 0.80 | ||||||||||||||||||
Consumer: |
||||||||||||||||||||||||
Legacy Wells Fargo |
2,480 | 4.50 | 2,462 | 4.44 | 2,175 | 3.90 | ||||||||||||||||||
Wachovia |
1,107 | 1.87 | 735 | 1.22 | 341 | 0.56 | ||||||||||||||||||
Total consumer |
3,587 | 3.13 | 3,197 | 2.77 | 2,516 | 2.16 | ||||||||||||||||||
Foreign |
||||||||||||||||||||||||
Legacy Wells Fargo |
43 | 3.00 | 43 | 3.05 | 45 | 3.13 | ||||||||||||||||||
Wachovia |
17 | 0.28 | 3 | 0.05 | | | ||||||||||||||||||
Total foreign |
60 | 0.79 | 46 | 0.61 | 45 | 0.56 | ||||||||||||||||||
Total Legacy Wells Fargo |
3,385 | 3.37 | 3,402 | 3.35 | 2,887 | 2.82 | ||||||||||||||||||
Total Wachovia |
1,726 | 1.66 | 984 | 0.92 | 371 | 0.34 | ||||||||||||||||||
Total |
$ | 5,111 | 2.50 | % | $ | 4,386 | 2.11 | % | $ | 3,258 | 1.54 | % | ||||||||||||
(1) | See explanation on page 40 of the accounting for purchased credit-impaired (PCI) loans from Wachovia and the impact on selected financial ratios. |
Commercial and commercial real estate charge-offs remained manageable in the third quarter,
said Loughlin. In fact, legacy Wells Fargos commercial and commercial real estate losses declined
$35 million, or 4 percent, in the quarter. The increase in commercial and commercial real estate
losses was entirely in the Wachovia non-impaired portfolio, in part reflecting the fact that
charge-offs are just now coming through Wachovias portfolio after having eliminated nonaccruals
through purchase accounting at the end of last year. The overall loss rate in third quarter for
Wachovias commercial and commercial real estate portfolio was roughly comparable to Wells Fargos
higher-quality commercial portfolio. While the industry is likely to experience elevated commercial
and commercial real estate losses, we continue to believe we have one of the best commercial and
commercial real estate loan portfolios among large bank peers given our long-standing underwriting
discipline and because we wrote down Wachovias commercial and commercial real estate portfolio
when we closed the acquisition at year end.
Consumer losses were up 12 percent in the third quarter, with virtually all of the increase in
Wachovias consumer portfolios. Over 40 percent of the increase in Wachovia consumer loan losses
came from the non-impaired Pick-a-Pay portfolio, in large part reflecting the lagging effect
of purchase accounting. We are currently expecting lower life-of-loan losses on the non-impaired
Pick-a-Pay portfolio than originally assumed at the time of the merger, said Loughlin. Overall
losses on legacy Wells Fargos consumer
- 11 -
portfolio were essentially flat linked quarter. Given the
actions weve previously taken to reduce higher-risk portfolios, given the life-of-loan loss
write-downs we have taken through purchase accounting and given the substantially smaller exposure
to credit cards and sub-prime loans, we are
expecting
consumer losses to potentially peak in the first half of 2010 and gradually decline as the year progresses.
We remain comfortable with our original loss estimates for the impaired portfolio from Wachovia,
and currently expect life-of-loan losses on the purchased credit-impaired (PCI) Pick-a-Pay
portfolio to be lower than original estimates. Also, while increasing this year, losses in the
non-impaired Pick-a-Pay portion of the Wachovia portfolio are tracking below our original estimates
at the time we acquired Wachovia. We continue to expect the non-impaired portfolios to perform
significantly better than the impaired portfolios that have already been written down through
purchase accounting, and the Pick-a-Pay portfolio to perform better than other companies option
adjustable-rate mortgage portfolios.
Nonperforming assets
Total nonperforming assets (NPAs) were $23.5 billion (2.93 percent of total loans) at September 30,
2009, and included $20.9 billion of nonaccrual loans and $2.5 billion of foreclosed assets
(repossessed real estate and vehicles).
Nonaccrual Loans and Other Nonperforming Assets
September 30, 2009 | June 30, 2009 | March 31, 2009 | ||||||||||||||||||||||
As a | As a | As a | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
total | total | total | ||||||||||||||||||||||
($ in millions) | Balances | loans | Balances | loans | Balances | loans | ||||||||||||||||||
Commercial and
commercial real estate: |
||||||||||||||||||||||||
Legacy Wells Fargo |
$ | 6,037 | 3.53 | % | $ | 5,260 | 3.02 | % | $ | 3,860 | 2.13 | % | ||||||||||||
Wachovia |
4,227 | 2.86 | 2,333 | 1.46 | 645 | 0.39 | ||||||||||||||||||
Total commercial and
commercial real estate |
10,264 | 3.22 | 7,593 | 2.28 | 4,505 | 1.30 | ||||||||||||||||||
Consumer: |
||||||||||||||||||||||||
Legacy Wells Fargo |
6,293 | 2.90 | 5,687 | 2.59 | 4,970 | 2.22 | ||||||||||||||||||
Wachovia |
4,168 | 1.78 | 2,292 | 0.96 | 966 | 0.40 | ||||||||||||||||||
Total consumer |
10,461 | 2.32 | 7,979 | 1.74 | 5,936 | 1.27 | ||||||||||||||||||
Foreign |
144 | 0.48 | 226 | 0.75 | 75 | 0.24 | ||||||||||||||||||
Total nonaccrual loans |
20,869 | 2.61 | 15,798 | 1.92 | 10,516 | 1.25 | ||||||||||||||||||
Foreclosed assets: |
||||||||||||||||||||||||
Legacy Wells Fargo |
1,756 | 1,741 | 1,421 | |||||||||||||||||||||
Wachovia |
771 | 783 | 641 | |||||||||||||||||||||
Total foreclosed assets |
2,527 | 2,524 | 2,062 | |||||||||||||||||||||
Real estate and other
nonaccrual investments |
55 | 20 | 34 | |||||||||||||||||||||
Total nonaccrual loans and
other nonperforming assets |
$ | 23,451 | 2.93 | % | $ | 18,342 | 2.23 | % | $ | 12,612 | 1.50 | % | ||||||||||||
Change from prior quarter |
$ | 5,109 | $ | 5,730 | $ | 3,603 |
While commercial and commercial real estate nonaccrual loans were up in the quarter, the dollar
amount of the increase declined in the quarter and the rate of growth slowed considerably. Legacy
Wells Fargos commercial and commercial real estate nonaccrual loans increased $777 million.
The rate of growth in
- 12 -
Wachovias
commercial and commercial real estate nonaccrual loans reflected some deterioration but was in line
with managements expectations.
Similarly, the growth rate in consumer nonaccrual loans also slowed in the quarter. Legacy Wells
Fargos consumer nonaccrual loans increased $606 million, about 11 percent, reflecting the more
moderate deterioration the Company has experienced in consumer loans. Wachovias Pick-a-Pay
portfolio represents the largest portion of consumer nonaccrual loans. While up $1.2 billion in the
third quarter, the increase in nonaccrual loans in the non-impaired Pick-a-Pay portfolio reflected
the inflows to nonaccruals expected in the first few quarters after purchase accounting
write-downs. The Company continued to actively modify non-PCI Pick-a-Pay loans through the use of
troubled debt restructurings (TDRs), which temporarily keeps NPA levels elevated until the modified
loans can demonstrate performance. To the extent these nonperforming loans return to accrual
status, NPA growth should moderate.
The loss exposure expected in the nonperforming assets is significantly mitigated by three factors.
First, 96 percent of our nonperforming loans (NPLs) are secured. Second, losses have already been
recognized on 36 percent of the total. Residential real estate NPLs greater than 180 days old, or
41 percent of the total NPLs balance, have been written down to net realizable value. Third, there
is a segment of NPLs for which there are specific reserves in the allowance, while other NPLs are
covered by general reserves. We believe that the allowance as of September 30, 2009, fully covers
loss content embedded in the September 30, 2009 nonaccrual balances, said Loughlin.
Loans 90 Days or More Past Due and Still Accruing (1)
(Excluding Insured/Guaranteed GNMA and Similar Loans)
Includes Wells Fargo and Wachovia
(Excluding Insured/Guaranteed GNMA and Similar Loans)
Includes Wells Fargo and Wachovia
Sept. 30, | June 30, | |||||||
(in millions) | 2009 | 2009 | ||||||
Commercial and commercial real estate: |
||||||||
Commercial |
$ | 458 | 415 | |||||
Real estate mortgage |
693 | 702 | ||||||
Real estate construction |
930 | 860 | ||||||
Total commercial and commercial real estate |
2,081 | 1,977 | ||||||
Consumer: |
||||||||
Real estate 1-4 family first mortgage |
1,552 | 1,497 | ||||||
Real estate 1-4 family junior lien mortgage |
484 | 660 | ||||||
Credit card |
683 | 680 | ||||||
Other revolving credit and installment |
1,138 | 1,160 | ||||||
Total consumer |
3,857 | 3,997 | ||||||
Foreign |
76 | 32 | ||||||
Total loans |
$ | 6,014 | 6,006 | |||||
(1) | The table above does not include PCI loans that were contractually 90 days past due and still accruing. These loans have a related nonaccretable difference that will absorb future losses; therefore charge-offs on these loans are not expected to reduce income in future periods to the extent that actual future loan performance is consistent with original estimates. |
Loans 90 days or more past due and still accruing totaled $18.9 billion at September 30, 2009, and
$16.7 billion at June 30, 2009. For the same periods, the totals included $12.9 billion and $10.7
billion,
- 13 -
respectively, in advances pursuant to the Companys servicing agreement to Government
National Mortgage Association (GNMA) mortgage pools and similar loans whose repayments are insured by the
Federal Housing Administration or guaranteed by the Department of Veterans Affairs.
Allowance for Credit Losses
(Includes Wells Fargo and, beginning December 31, 2008, Wachovia)
The allowance for credit losses, including the reserve for unfunded commitments, totaled $24.5
billion at September 30, 2009, compared with $23.5 billion at June 30, 2009. The credit reserve is
driven by managements estimate of inherent losses in the loan portfolio at September 30, 2009. Of
the $1.0 billion reserve increase in the third quarter, approximately $900 million reflected
continued deterioration in the commercial portfolios. We continued to see a decline in the quality
of our performing commercial and commercial real estate portfolio as well as an increase in the
amount of life-of-loan reserves taken on large commercial loans where we believe it is probable
that we will not collect all amounts due, said Loughlin.
The remaining $100 million increase in the reserve relates mostly to the consumer loan portfolio
and is principally due to the increasing level of residential real estate loan modifications
classified as TDRs. The increased modifications this quarter resulted in an increase in the
allowance of approximately $400 million compared with approximately $265 million last quarter. This
increase was offset by approximately $345 million release in reserves related to performing
consumer loans. Based on our expectation that consumer related losses will peak in the first half
of 2010 and then begin to gradually decline, the allowance required for performing consumer loans
has decreased when compared to the allowance at the end of the second quarter 2009, said Loughlin.
The allowance coverage to total loans increased to 3.07 percent compared with 2.86 percent at June
30, 2009. The allowance coverage to NPLs was 118 percent as of September 30, 2009. We believe the
allowance was adequate for losses inherent in the loan portfolio at September 30, 2009, including
both performing and nonperforming loans, said Loughlin.
Credit Summary
We are two years into the most difficult credit cycle in recent memory, said Loughlin. Economic
challenges continue and we expect that credit costs will remain elevated in the fourth quarter.
However, based on portfolio trends and our current economic outlook, and assuming no unexpected
further deterioration in the economy, we believe consumer loan losses will peak in the first half
of 2010 then gradually decline, while commercial and commercial real estate loan losses will peak
in the second half of 2010 and then gradually decline. We expect nonperforming assets to continue
to increase in the near term, but at a slower pace as credit deterioration slows. NPAs are expected
to remain elevated through 2010. We are working closely with customers who are having difficulties
to understand their challenges, identify possible solutions and minimize loss. We believe our
experienced and stable management team is well equipped to navigate
through the end of this cycle.
For additional detail on credit quality and trends, please refer to the quarterly supplement.
- 14 -
Business Segment Performance
Wells Fargo defines its operating segments by product type and customer segment. Segment net income
for each of the three business segments was:
Quarter ended | ||||||||
Sept. 30, | June 30, | |||||||
(in millions) | 2009 | 2009 | ||||||
Community Banking |
$ | 2,667 | 2,008 | |||||
Wholesale Banking |
598 | 1,067 | ||||||
Wealth, Brokerage and Retirement |
244 | 363 |
More financial information about the business segments is on pages 39 and 40.
Community Banking offers a complete line of diversified financial products and services for
consumers and small businesses including investment, insurance and trust services in 39 states and
D.C., and mortgage and home equity loans in all 50 states and D.C.
Selected Financial Information
Quarter ended | ||||||||
Sept. 30, | June 30, | |||||||
(in millions) | 2009 | 2009 | ||||||
Total revenue |
$ | 15,143 | 14,807 | |||||
Provision for credit losses |
4,572 | 4,264 | ||||||
Noninterest expense |
6,802 | 7,665 | ||||||
Segment net income |
2,667 | 2,008 | ||||||
(in billions) |
||||||||
Average loans |
534.7 | 540.7 | ||||||
Average assets |
785.2 | 799.2 | ||||||
Average core deposits |
530.3 | 543.9 |
Community Banking reported net income of $2.7 billion, up $659 million, or 131 percent
(annualized), from second quarter. Revenue increased $336 million, or 9 percent (annualized),
driven by strong regional banking and mortgage fee income partially offset by a decrease in net
interest margin. Noninterest income increased $420 million, or 28 percent (annualized), from prior
quarter driven by continued strength in mortgage banking and strong growth in deposit service
charges and card fees. Noninterest expense decreased $863 million, or 45 percent (annualized),
driven by higher second quarter FDIC deposit insurance assessments as well as expense reductions
due to Wachovia merger-related cost saves. The provision for credit losses increased $308 million,
and included a $236 million credit reserve build compared with a $479 million credit reserve build
in the prior quarter.
Regional Banking Highlights for Legacy Wells Fargo
| Record core product solutions (sales) of 6.84 million, up 10 percent from prior year on a comparable basis | |
| Core sales per platform banker FTE (active, full-time equivalent) of 5.88 per day, up from 5.65 in prior year on a comparable basis | |
| Record retail bank household cross-sell of Wells Fargo products of 5.90 products per household; 25 percent of retail bank households had 8 or more products, the Companys long-term goal |
- 15 -
| Sales of Wells Fargo Packages® (a checking account and at least three other products) up 14 percent from prior year, purchased by 78 percent of new checking account customers | |
| Customer loyalty scores up 3 percent, and welcoming and wait time scores improved 7 percent from prior year (based on customers conducting transactions with tellers) | |
| Business Banking |
| Store-based business solutions up 11 percent from prior year | ||
| Business Banking household cross-sell of 3.72 products per household | ||
| Sales of Wells Fargo Business Services Packages (business checking account and at least three other business products) up 18 percent from prior year, purchased by 55 percent of new business checking account customers |
Regional Banking Highlights for Wachovia
| Retail bank household cross-sell of Wachovia products of 4.65 products per household | |
| Wachovia maintained its very high customer experience levels; scores continued to surpass prior year |
Combined Regional Banking
| Consumer checking accounts up a net 5.2 percent from prior year | |
| Business checking accounts up a net 4.1 percent from prior year | |
| Opened 15 banking stores for retail network total of 6,653 stores | |
| 12,352 ATMs across our network, including 3,260 Envelope-FreeSM webATM machines | |
| Americas #1 small business lender for 7th consecutive year (in loans under $100,000), according to 2008 Community Reinvestment Act (CRA) data |
Online Banking
| 16.2 million combined active online customers | |
| 3.9 million combined active Bill Pay customers | |
| Global Finance Magazine ranked Wells Fargo the Best Consumer Internet Bank in the U.S. (July 2009) | |
| Wells Fargo launched customer-to-customer mobile banking money transfers, a simple and secure way to send funds to family and friends |
Wells Fargo Home Mortgage (Home Mortgage)
| Home Mortgage applications of $123 billion, compared with $194 billion in prior quarter | |
| Home Mortgage application pipeline of $62 billion at quarter end, compared with $90 billion at June 30, 2009 | |
| Home Mortgage originations of $96 billion, down from $129 billion in prior quarter | |
| Owned residential mortgage servicing portfolio of $1.7 trillion |
- 16 -
Wholesale Banking provides financial solutions to businesses across the United States with
annual sales generally in excess of $10 million and financial institutions globally. Products
include middle market banking, corporate banking, commercial real estate, treasury management,
asset-based lending, insurance brokerage, foreign exchange, correspondent banking, trade services,
specialized lending, equipment finance, corporate trust, investment banking, capital markets and
asset management.
Selected Financial Information
Quarter ended | ||||||||
Sept. 30, | June 30, | |||||||
(in millions) | 2009 | 2009 | ||||||
Total revenue |
$ | 4,916 | 5,238 | |||||
Provision for credit losses |
1,361 | 738 | ||||||
Noninterest expense |
2,630 | 2,807 | ||||||
Segment net income |
598 | 1,067 | ||||||
(in billions) |
||||||||
Average loans |
247.0 | 263.5 | ||||||
Average assets |
369.3 | 381.7 | ||||||
Average core deposits |
146.9 | 138.1 |
Wholesale Banking reported net income of $598 million compared with $1.07 billion in second quarter
2009. Revenue decreased $322 million, primarily due to strength in investment banking and capital
markets revenue in the prior quarter, as well as insurance revenue seasonality. Average core
deposits were $147 billion up 25 percent (annualized) from the prior quarter. Noninterest expense
decreased $177 million, primarily due to lower FDIC deposit insurance assessments. The provision
for credit losses was $1.36 billion, an increase of $623 million from the prior quarter, and
included $627 million of additional provision recorded to build reserves for the wholesale
portfolio, compared with a credit reserve build of $162 million in the prior quarter.
| Government and Institutional Banking core deposits up 3 percent and noninterest income up 9 percent, driven by creation of integrated national platform of Wachovia and Wells Fargo capabilities, continued support of client credit needs and expansion in Public Finance | |
| Total core deposits up 13 percent and noninterest income up 2 percent in Global Financial Institutions and Trade Services, as international bank liquidity continued to improve and trade and payment volumes increased | |
| For 7th time in 8 years, Wells Fargo Shareowner ServicesSM received the TALON award as transfer agent ranked highest in Overall Satisfaction | |
| Treasury Management introduced enhanced version of CEO Workstation®, an easy-to-use online cash management tool | |
| Merger of Wachovia wholesale businesses on track to meet or exceed expected cost saves and is producing significant new growth opportunities from acquired businesses such as Government and Institutional Banking, Global Finance and Institutional Trade, and Investment Banking and Capital Markets |
- 17 -
Wealth, Brokerage and Retirement provides a full range of financial advisory services to
clients using a comprehensive planning approach to meet each clients needs. Wealth Management
provides affluent and high net worth clients with a complete range of wealth management solutions
including financial planning, private banking, credit, investment management and trust. Family
Wealth meets the unique needs of the ultra high net worth customers. Retail Brokerages financial
advisors serve customers advisory, brokerage and financial needs as part of one of the largest
full-service brokerage firms in the U.S. Retirement provides retirement services for individual
investors and is a national leader in 401(k) and pension record keeping.
Selected Financial Information
Quarter ended | ||||||||
Sept. 30, | June 30, | |||||||
(in millions) | 2009 | 2009 | ||||||
Total revenue |
$ | 2,966 | 2,986 | |||||
Provision for credit losses |
234 | 115 | ||||||
Noninterest expense |
2,314 | 2,289 | ||||||
Segment net income |
244 | 363 | ||||||
(in billions) |
||||||||
Average loans |
45.4 | 45.9 | ||||||
Average assets |
108.6 | 110.2 | ||||||
Average core deposits |
116.4 | 113.5 |
Wealth, Brokerage and Retirement reported net income of $244 million, compared with $363 million in
the prior quarter. Revenue was $3.0 billion consistent with the prior quarters levels as the
strong equity market recovery led to increases in client assets across the brokerage, wealth and
retirement businesses, driving solid revenue growth, partially offset by lower realized gains on
sales of securities available for sale in the brokerage business. Total provision for credit losses
increased $119 million from the prior quarter, largely reflecting a credit reserve build of $137
million in third quarter due to higher loss rates. Average core deposits increased $2.9 billion, or
10 percent (annualized), from second quarter, reflecting continued success in attracting client
assets, including deposits.
Retail Brokerage
| Client assets increased 8 percent to $1.1 trillion from prior quarter | |
| Managed account assets increased $23 billion, or 14 percent, from prior quarter, including net inflows of $8 billion | |
| Brokerage transactional revenue increased 2 percent from prior quarter |
Wealth Management
| Continued strong deposit growth, with average balances up 8 percent from prior quarter | |
| Trust assets of $119 billion, up 7 percent from prior quarter |
Retirement
| Retirement plan assets of $271 billion increased $22 billion, or 9 percent, from prior quarter | |
| IRA assets of $231 billion increased $20 billion, or 9 percent, from prior quarter |
- 18 -
| Integrated sales approach, firm stability and scale in the business, drove key new business wins in institutional retirement |
Recorded Message
A recorded message reviewing Wells Fargos results is available at 5:30 a.m. Pacific Time through
October 24, 2009. Dial 866-416-0522 (domestic) or 706-902-3479 (international). No password is
required. The call is also available online at wellsfargo.com/invest_relations/earnings.
Cautionary Statement About Forward-Looking Information
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about our future financial performance and business. We make forward-looking statements when we use words such as believe, expect, anticipate, estimate, should, may, can, will, outlook, project or similar expressions. Forward-looking statements in this news release include, among others, statements about: (i) future credit quality, the adequacy of the allowance for loan losses, the level of nonperforming assets and nonaccrual loans, expected or estimated future losses in our loan portfolios and life-of-loan loss estimates, including that we currently expect that credit losses will peak in 2010, absent further deterioration in the economy, with consumer loan losses expected to peak in the first half of 2010 and commercial and commercial real estate loan losses expected to peak later in 2010, and that the pick-a-pay portfolios, both purchased credit-impaired and non-impaired, will perform better than managements expectations at the time of the Wachovia merger; (ii) reduction or mitigation of risk in our loan portfolios and the effects of loan modification programs; (iii) the amount and timing of expected integration activities, expenses and cost savings relating to the Wachovia merger, as well as the expected synergies and benefits of the merger, including that we currently estimate merger expenses of approximately $5.5 billion and that we currently are on track to achieve $5.0 billion annual run rate cost savings by the expected completion of the integration in 2011; (iv) the status of our capital requirements under the Supervisory Capital Assessment Program; and (v) our preliminary estimates to add assets to our consolidated financial statements upon the implementation of FAS 166 and FAS 167.
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about our future financial performance and business. We make forward-looking statements when we use words such as believe, expect, anticipate, estimate, should, may, can, will, outlook, project or similar expressions. Forward-looking statements in this news release include, among others, statements about: (i) future credit quality, the adequacy of the allowance for loan losses, the level of nonperforming assets and nonaccrual loans, expected or estimated future losses in our loan portfolios and life-of-loan loss estimates, including that we currently expect that credit losses will peak in 2010, absent further deterioration in the economy, with consumer loan losses expected to peak in the first half of 2010 and commercial and commercial real estate loan losses expected to peak later in 2010, and that the pick-a-pay portfolios, both purchased credit-impaired and non-impaired, will perform better than managements expectations at the time of the Wachovia merger; (ii) reduction or mitigation of risk in our loan portfolios and the effects of loan modification programs; (iii) the amount and timing of expected integration activities, expenses and cost savings relating to the Wachovia merger, as well as the expected synergies and benefits of the merger, including that we currently estimate merger expenses of approximately $5.5 billion and that we currently are on track to achieve $5.0 billion annual run rate cost savings by the expected completion of the integration in 2011; (iv) the status of our capital requirements under the Supervisory Capital Assessment Program; and (v) our preliminary estimates to add assets to our consolidated financial statements upon the implementation of FAS 166 and FAS 167.
Do not unduly rely on forward-looking statements as actual results could differ materially from
expectations. Forward-looking statements speak only as of the date made, and we do not undertake to
update them to reflect changes or events that occur after that date. Several factors could cause
actual results to differ materially from expectations including: current and future economic and
market conditions, including the effects of further declines in housing prices and high
unemployment rates; our capital requirements and our ability to generate capital internally or
raise capital on favorable terms; the terms of capital investments or other financial assistance
provided by the U.S. government; legislative proposals to allow mortgage cram-downs in bankruptcy
or force other loan modifications; the extent of success in our loan modification efforts; our
ability to successfully and timely integrate the Wachovia merger and realize the expected cost
savings and other benefits, including delays or disruptions in system conversions and higher
severance costs; our ability to realize efficiency initiatives to lower expenses when and in the
amount expected; recognition of other-than-temporary impairment on securities held in our
available-for-sale portfolio; the effect of changes in interest rates on our net interest margin
and our mortgage originations, mortgage servicing rights and mortgages held for sale; hedging gains
or losses; disruptions in the capital markets and reduced investor demand for mortgage loans; our
ability to sell more products to our customers; the effect of the economic recession on the demand
for our products and services; the effect of fluctuations in stock market prices on fee income from
our brokerage, asset and wealth management businesses; our election to provide support to our
mutual funds for structured credit products they may hold; changes in the value of our venture
capital investments; changes in our accounting policies or in accounting standards or in how
accounting standards are to be applied, including the implementation of FAS 166 and FAS 167 and its
effects on the consolidation of additional assets on our balance sheet; mergers and acquisitions;
federal and state regulations; reputational damage from negative publicity, fines, penalties and
other negative consequences from regulatory violations, the loss of checking and saving account
deposits to other investments such as the stock market, and fiscal and monetary policies of the
Federal Reserve Board. There is no assurance that our allowance for credit losses
- 19 -
will be adequate to cover future credit losses, especially if credit markets, housing prices, and
unemployment do not stabilize or improve. Increases in loan charge-offs or in the allowance for
credit losses and related provision expense could materially adversely affect our financial results
and condition. There is no assurance that we will meet the SCAP capital requirement on the November
9, 2009, deadline established by the Federal Reserve Board. Although we exceeded the requirement at
September 30, 2009, our common equity capital could fall between now and the deadline, causing us
not to meet the requirement. Failure to meet the requirement could result in the issuance of equity
securities or the conversion of preferred securities into common stock, resulting in substantial
dilution to existing stockholders. There is no assurance as to when or how we will repay the
governments investment or that we will be able to repay the investment in a manner that does not
require the issuance of equity securities resulting in substantial dilution to existing
stockholders. For more information about factors that could cause actual results to differ
materially from our expectations, refer to our reports filed with the Securities and Exchange
Commission, including our Quarterly Reports on Form 10-Q for the
periods ended March 31, 2009, and
June 30, 2009, and our Annual Report on Form 10-K for the year ended December 31, 2008, including
the discussions under Risk Factors in each of those reports, as filed with the SEC and available
on the SECs website at www.sec.gov. Any factor described above or in our SEC reports
could, by itself or together with one or more other factors, adversely affect our financial results
and condition.
About Wells Fargo
Wells Fargo & Company is a diversified financial services company with $1.2 trillion in assets,
providing banking, insurance, investments, mortgage and consumer finance through more than 10,000
stores, over 12,000 ATMs and the internet (wellsfargo.com) across North America and
internationally.
# # #
-20-
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA (1) (2)
SUMMARY FINANCIAL DATA (1) (2)
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||||||
($ in millions, except per share amounts) | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
For the Period |
||||||||||||||||||||
Wells Fargo net income |
$ | 3,235 | 1,637 | 9,452 | 5,389 | |||||||||||||||
Wells Fargo net income applicable to common stock |
2,637 | 1,637 | 7,596 | 5,389 | ||||||||||||||||
Diluted earnings per common share |
0.56 | 0.49 | 1.69 | 1.62 | ||||||||||||||||
Profitability ratios (annualized): |
||||||||||||||||||||
Wells Fargo net income to average assets (ROA) |
1.03 | % | 1.06 | 1.00 | 1.21 | |||||||||||||||
Net income to average assets |
1.06 | 1.07 | 1.02 | 1.22 | ||||||||||||||||
Wells Fargo net income applicable to common stock to
average Wells Fargo
common stockholders
equity (ROE) |
12.04 | 13.63 | 13.29 | 15.02 | ||||||||||||||||
Net income to average total equity |
10.57 | 13.66 | 11.32 | 15.06 | ||||||||||||||||
Efficiency ratio (3) |
52.0 | 53.0 | 54.9 | 51.8 | ||||||||||||||||
Total revenue |
$ | 22,466 | 10,377 | 65,990 | 32,400 | |||||||||||||||
Pre-tax pre-provision profit (PTPP) (4) |
10,782 | 4,876 | 29,791 | 15,612 | ||||||||||||||||
Dividends declared per common share |
0.05 | 0.34 | 0.44 | 0.96 | ||||||||||||||||
Average common shares outstanding |
4,678.3 | 3,316.4 | 4,471.2 | 3,309.6 | ||||||||||||||||
Diluted average common shares outstanding |
4,706.4 | 3,331.0 | 4,485.3 | 3,323.4 | ||||||||||||||||
Average loans |
$ | 810,191 | 404,203 | 833,076 | 393,262 | |||||||||||||||
Average assets |
1,246,051 | 614,194 | 1,270,071 | 594,717 | ||||||||||||||||
Average core deposits (5) |
759,319 | 320,074 | 759,668 | 318,582 | ||||||||||||||||
Average retail core deposits (6) |
584,414 | 234,140 | 590,499 | 230,935 | ||||||||||||||||
Net interest margin |
4.36 | % | 4.79 | 4.27 | 4.80 | |||||||||||||||
At Period End |
||||||||||||||||||||
Securities available for sale |
$ | 183,814 | 86,882 | 183,814 | 86,882 | |||||||||||||||
Loans |
799,952 | 411,049 | 799,952 | 411,049 | ||||||||||||||||
Allowance for loan losses |
24,028 | 7,865 | 24,028 | 7,865 | ||||||||||||||||
Goodwill |
24,052 | 13,520 | 24,052 | 13,520 | ||||||||||||||||
Assets |
1,228,625 | 622,361 | 1,228,625 | 622,361 | ||||||||||||||||
Core deposits (5) |
747,913 | 334,076 | 747,913 | 334,076 | ||||||||||||||||
Wells Fargo stockholders equity |
122,150 | 46,957 | 122,150 | 46,957 | ||||||||||||||||
Total equity |
128,924 | 47,259 | 128,924 | 47,259 | ||||||||||||||||
Capital ratios: |
||||||||||||||||||||
Wells Fargo common stockholders equity to assets |
7.41 | % | 7.54 | 7.41 | 7.54 | |||||||||||||||
Total equity to assets |
10.49 | 7.59 | 10.49 | 7.59 | ||||||||||||||||
Average Wells Fargo common stockholders equity to average assets |
6.98 | 7.78 | 6.02 | 8.06 | ||||||||||||||||
Average total equity to average assets |
9.99 | 7.83 | 8.98 | 8.11 | ||||||||||||||||
Risk-based capital (7) |
||||||||||||||||||||
Tier 1 capital |
10.63 | 8.59 | 10.63 | 8.59 | ||||||||||||||||
Total capital |
14.66 | 11.51 | 14.66 | 11.51 | ||||||||||||||||
Tier 1 leverage (7) |
9.03 | 7.54 | 9.03 | 7.54 | ||||||||||||||||
Book value per common share |
$ | 19.46 | 14.14 | 19.46 | 14.14 | |||||||||||||||
Team members (active, full-time equivalent) |
265,100 | 159,000 | 265,100 | 159,000 | ||||||||||||||||
Common stock price: |
||||||||||||||||||||
High |
$ | 29.56 | 44.68 | 30.47 | 44.68 | |||||||||||||||
Low |
22.08 | 20.46 | 7.80 | 20.46 | ||||||||||||||||
Period end |
28.18 | 37.53 | 28.18 | 37.53 | ||||||||||||||||
(1) | Wells Fargo & Company (Wells Fargo) acquired Wachovia Corporation (Wachovia) on December 31, 2008. Because the acquisition was completed on December 31, 2008, Wachovias results are included in the income statement, average balances and related metrics beginning in 2009. Wachovias assets and liabilities are included in the consolidated balance sheet beginning on December 31, 2008. | |
(2) | On January 1, 2009, we adopted new accounting guidance on noncontrolling interests contained in FASB ASC 810-10, Consolidation (Statement of Financial Accounting Standards (FAS) No. 160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51), on a retrospective basis for disclosure and, accordingly, prior period information reflects the adoption. The guidance requires that noncontrolling interests be reported as a component of total equity. | |
(3) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). | |
(4) | Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Companys ability to generate capital to cover credit losses through a credit cycle. | |
(5) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). | |
(6) | Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. | |
(7) | The September 30, 2009, ratios are preliminary. |
-21-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA (1) (2)
FIVE QUARTER SUMMARY FINANCIAL DATA (1) (2)
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
($ in millions, except per share amounts) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
For the Quarter |
||||||||||||||||||||
Wells Fargo net income (loss) |
$ | 3,235 | 3,172 | 3,045 | (2,734 | ) | 1,637 | |||||||||||||
Wells Fargo net income (loss) applicable to common stock |
2,637 | 2,575 | 2,384 | (3,020 | ) | 1,637 | ||||||||||||||
Diluted earnings (loss) per common share |
0.56 | 0.57 | 0.56 | (0.84 | ) | 0.49 | ||||||||||||||
Profitability ratios (annualized): |
||||||||||||||||||||
Wells Fargo net income (loss) to average assets (ROA) |
1.03 | % | 1.00 | 0.96 | (1.72 | ) | 1.06 | |||||||||||||
Net income (loss) to average assets |
1.06 | 1.02 | 0.97 | (1.72 | ) | 1.07 | ||||||||||||||
Wells Fargo net income (loss) applicable to common stock to
average Wells Fargo common
stockholders equity (ROE) |
12.04 | 13.70 | 14.49 | (22.32 | ) | 13.63 | ||||||||||||||
Net income (loss) to average total equity |
10.57 | 11.56 | 11.97 | (15.53 | ) | 13.66 | ||||||||||||||
Efficiency ratio (3) |
52.0 | 56.4 | 56.2 | 61.3 | 53.0 | |||||||||||||||
Total revenue |
$ | 22,466 | 22,507 | 21,017 | 9,477 | 10,377 | ||||||||||||||
Pre-tax pre-provision profit (PTPP) (4) |
10,782 | 9,810 | 9,199 | 3,667 | 4,876 | |||||||||||||||
Dividends declared per common share |
0.05 | 0.05 | 0.34 | 0.34 | 0.34 | |||||||||||||||
Average common shares outstanding |
4,678.3 | 4,483.1 | 4,247.4 | 3,582.4 | 3,316.4 | |||||||||||||||
Diluted average common shares outstanding |
4,706.4 | 4,501.6 | 4,249.3 | 3,593.6 | 3,331.0 | |||||||||||||||
Average loans |
$ | 810,191 | 833,945 | 855,591 | 413,940 | 404,203 | ||||||||||||||
Average assets |
1,246,051 | 1,274,926 | 1,289,716 | 633,223 | 614,194 | |||||||||||||||
Average core deposits (5) |
759,319 | 765,697 | 753,928 | 344,957 | 320,074 | |||||||||||||||
Average retail core deposits (6) |
584,414 | 596,648 | 590,502 | 243,464 | 234,140 | |||||||||||||||
Net interest margin |
4.36 | % | 4.30 | 4.16 | 4.90 | 4.79 | ||||||||||||||
At Quarter End |
||||||||||||||||||||
Securities available for sale |
$ | 183,814 | 206,795 | 178,468 | 151,569 | 86,882 | ||||||||||||||
Loans |
799,952 | 821,614 | 843,579 | 864,830 | 411,049 | |||||||||||||||
Allowance for loan losses |
24,028 | 23,035 | 22,281 | 21,013 | 7,865 | |||||||||||||||
Goodwill |
24,052 | 24,619 | 23,825 | 22,627 | 13,520 | |||||||||||||||
Assets |
1,228,625 | 1,284,176 | 1,285,891 | 1,309,639 | 622,361 | |||||||||||||||
Core deposits (5) |
747,913 | 761,122 | 756,183 | 745,432 | 334,076 | |||||||||||||||
Wells Fargo stockholders equity |
122,150 | 114,623 | 100,295 | 99,084 | 46,957 | |||||||||||||||
Total equity |
128,924 | 121,382 | 107,057 | 102,316 | 47,259 | |||||||||||||||
Capital ratios: |
||||||||||||||||||||
Wells Fargo common stockholders equity to assets |
7.41 | % | 6.51 | 5.40 | 5.21 | 7.54 | ||||||||||||||
Total equity to assets |
10.49 | 9.45 | 8.33 | 7.81 | 7.59 | |||||||||||||||
Average Wells Fargo common stockholders equity to average assets |
6.98 | 5.92 | 5.17 | 8.50 | 7.78 | |||||||||||||||
Average total equity to average assets |
9.99 | 8.85 | 8.11 | 11.09 | 7.83 | |||||||||||||||
Risk-based capital (7) |
||||||||||||||||||||
Tier 1 capital |
10.63 | 9.80 | 8.30 | 7.84 | 8.59 | |||||||||||||||
Total capital |
14.66 | 13.84 | 12.30 | 11.83 | 11.51 | |||||||||||||||
Tier 1 leverage (7) |
9.03 | 8.32 | 7.09 | 14.52 | 7.54 | |||||||||||||||
Book value per common share |
$ | 19.46 | 17.91 | 16.28 | 16.15 | 14.14 | ||||||||||||||
Team members (active, full-time equivalent) |
265,100 | 269,900 | 272,800 | 270,800 | 159,000 | |||||||||||||||
Common stock price: |
||||||||||||||||||||
High |
$ | 29.56 | 28.45 | 30.47 | 38.95 | 44.68 | ||||||||||||||
Low |
22.08 | 13.65 | 7.80 | 19.89 | 20.46 | |||||||||||||||
Period end |
28.18 | 24.26 | 14.24 | 29.48 | 37.53 | |||||||||||||||
(1) | Wells Fargo & Company (Wells Fargo) acquired Wachovia Corporation (Wachovia) on December 31, 2008. Because the acquisition was completed on December 31, 2008, Wachovias results are included in the income statement, average balances and related metrics beginning in 2009. Wachovias assets and liabilities are included in the consolidated balance sheet beginning on December 31, 2008. | |
(2) | On January 1, 2009, we adopted new accounting guidance on noncontrolling interests contained in FASB ASC 810-10, Consolidation (Statement of Financial Accounting Standards (FAS) No. 160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51), on a retrospective basis for disclosure and, accordingly, prior period information reflects the adoption. The guidance requires that noncontrolling interests be reported as a component of total equity. | |
(3) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). | |
(4) | Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Companys ability to generate capital to cover credit losses through a credit cycle. | |
(5) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). | |
(6) | Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. | |
(7) | The September 30, 2009, ratios are preliminary. Because the Wachovia acquisition was completed on December 31, 2008, the Tier 1 leverage ratio at December 31, 2008, which considers period-end Tier 1 capital and quarterly average assets in the computation of the ratio, does not reflect average assets of Wachovia for 2008. |
-22-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
CONSOLIDATED STATEMENT OF INCOME
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions, except per share amounts) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Interest income |
||||||||||||||||
Trading assets |
$ | 216 | 41 | 688 | 126 | |||||||||||
Securities available for sale |
2,947 | 1,397 | 8,543 | 3,753 | ||||||||||||
Mortgages held for sale |
524 | 394 | 1,484 | 1,211 | ||||||||||||
Loans held for sale |
34 | 12 | 151 | 34 | ||||||||||||
Loans |
10,170 | 6,888 | 31,467 | 20,906 | ||||||||||||
Other interest income |
77 | 42 | 249 | 140 | ||||||||||||
Total interest income |
13,968 | 8,774 | 42,582 | 26,170 | ||||||||||||
Interest expense |
||||||||||||||||
Deposits |
905 | 1,019 | 2,861 | 3,676 | ||||||||||||
Short-term borrowings |
32 | 492 | 210 | 1,274 | ||||||||||||
Long-term debt |
1,301 | 882 | 4,565 | 2,801 | ||||||||||||
Other interest expense |
46 | - | 122 | - | ||||||||||||
Total interest expense |
2,284 | 2,393 | 7,758 | 7,751 | ||||||||||||
Net interest income |
11,684 | 6,381 | 34,824 | 18,419 | ||||||||||||
Provision for credit losses |
6,111 | 2,495 | 15,755 | 7,535 | ||||||||||||
Net interest income after provision for credit losses |
5,573 | 3,886 | 19,069 | 10,884 | ||||||||||||
Noninterest income |
||||||||||||||||
Service charges on deposit accounts |
1,478 | 839 | 4,320 | 2,387 | ||||||||||||
Trust and investment fees |
2,502 | 738 | 7,130 | 2,263 | ||||||||||||
Card fees |
946 | 601 | 2,722 | 1,747 | ||||||||||||
Other fees |
950 | 552 | 2,814 | 1,562 | ||||||||||||
Mortgage banking |
3,067 | 892 | 8,617 | 2,720 | ||||||||||||
Insurance |
468 | 439 | 1,644 | 1,493 | ||||||||||||
Net gains (losses) on debt securities available for sale
(includes impairment losses of $273 and $850, consisting of $314 and $1,889
of total other-than-temporary impairment losses, net of $41 and $1,039
recognized in other comprehensive income, for the quarter and nine months
ended September 30, 2009, respectively) |
(40 | ) | 84 | (237 | ) | 316 | ||||||||||
Net gains (losses) from equity investments |
29 | (509 | ) | (88 | ) | (149 | ) | |||||||||
Other |
1,382 | 360 | 4,244 | 1,642 | ||||||||||||
Total noninterest income |
10,782 | 3,996 | 31,166 | 13,981 | ||||||||||||
Noninterest expense |
||||||||||||||||
Salaries |
3,428 | 2,078 | 10,252 | 6,092 | ||||||||||||
Commission and incentive compensation |
2,051 | 555 | 5,935 | 2,005 | ||||||||||||
Employee benefits |
1,034 | 486 | 3,545 | 1,666 | ||||||||||||
Equipment |
563 | 302 | 1,825 | 955 | ||||||||||||
Net occupancy |
778 | 402 | 2,357 | 1,201 | ||||||||||||
Core deposit and other intangibles |
642 | 47 | 1,935 | 139 | ||||||||||||
FDIC and other deposit assessments |
228 | 37 | 1,547 | 63 | ||||||||||||
Other |
2,960 | 1,594 | 8,803 | 4,667 | ||||||||||||
Total noninterest expense |
11,684 | 5,501 | 36,199 | 16,788 | ||||||||||||
Income before income tax expense |
4,671 | 2,381 | 14,036 | 8,077 | ||||||||||||
Income tax expense |
1,355 | 730 | 4,382 | 2,638 | ||||||||||||
Net income before noncontrolling interests |
3,316 | 1,651 | 9,654 | 5,439 | ||||||||||||
Less: Net income from noncontrolling interests |
81 | 14 | 202 | 50 | ||||||||||||
Wells Fargo net income |
$ | 3,235 | 1,637 | 9,452 | 5,389 | |||||||||||
Wells Fargo net income applicable to common stock |
$ | 2,637 | 1,637 | 7,596 | 5,389 | |||||||||||
Per share information |
||||||||||||||||
Earnings per common share |
$ | 0.56 | 0.49 | 1.70 | 1.63 | |||||||||||
Diluted earnings per common share |
0.56 | 0.49 | 1.69 | 1.62 | ||||||||||||
Dividends declared per common share |
0.05 | 0.34 | 0.44 | 0.96 | ||||||||||||
Average common shares outstanding |
4,678.3 | 3,316.4 | 4,471.2 | 3,309.6 | ||||||||||||
Diluted average common shares outstanding |
4,706.4 | 3,331.0 | 4,485.3 | 3,323.4 | ||||||||||||
-23-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions, except per share amounts) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Interest income |
||||||||||||||||||||
Trading assets |
$ | 216 | 206 | 266 | 51 | 41 | ||||||||||||||
Securities available for sale |
2,947 | 2,887 | 2,709 | 1,534 | 1,397 | |||||||||||||||
Mortgages held for sale |
524 | 545 | 415 | 362 | 394 | |||||||||||||||
Loans held for sale |
34 | 50 | 67 | 14 | 12 | |||||||||||||||
Loans |
10,170 | 10,532 | 10,765 | 6,726 | 6,888 | |||||||||||||||
Other interest income |
77 | 81 | 91 | 41 | 42 | |||||||||||||||
Total interest income |
13,968 | 14,301 | 14,313 | 8,728 | 8,774 | |||||||||||||||
Interest expense |
||||||||||||||||||||
Deposits |
905 | 957 | 999 | 845 | 1,019 | |||||||||||||||
Short-term borrowings |
32 | 55 | 123 | 204 | 492 | |||||||||||||||
Long-term debt |
1,301 | 1,485 | 1,779 | 955 | 882 | |||||||||||||||
Other interest expense |
46 | 40 | 36 | - | - | |||||||||||||||
Total interest expense |
2,284 | 2,537 | 2,937 | 2,004 | 2,393 | |||||||||||||||
Net interest income |
11,684 | 11,764 | 11,376 | 6,724 | 6,381 | |||||||||||||||
Provision for credit losses |
6,111 | 5,086 | 4,558 | 8,444 | 2,495 | |||||||||||||||
Net interest income after provision for credit losses |
5,573 | 6,678 | 6,818 | (1,720 | ) | 3,886 | ||||||||||||||
Noninterest income |
||||||||||||||||||||
Service charges on deposit accounts |
1,478 | 1,448 | 1,394 | 803 | 839 | |||||||||||||||
Trust and investment fees |
2,502 | 2,413 | 2,215 | 661 | 738 | |||||||||||||||
Card fees |
946 | 923 | 853 | 589 | 601 | |||||||||||||||
Other fees |
950 | 963 | 901 | 535 | 552 | |||||||||||||||
Mortgage banking |
3,067 | 3,046 | 2,504 | (195 | ) | 892 | ||||||||||||||
Insurance |
468 | 595 | 581 | 337 | 439 | |||||||||||||||
Net gains (losses) on debt securities available for sale |
(40 | ) | (78 | ) | (119 | ) | 721 | 84 | ||||||||||||
Net gains (losses) from equity investments |
29 | 40 | (157 | ) | (608 | ) | (509 | ) | ||||||||||||
Other |
1,382 | 1,393 | 1,469 | (90 | ) | 360 | ||||||||||||||
Total noninterest income |
10,782 | 10,743 | 9,641 | 2,753 | 3,996 | |||||||||||||||
Noninterest expense |
||||||||||||||||||||
Salaries |
3,428 | 3,438 | 3,386 | 2,168 | 2,078 | |||||||||||||||
Commission and incentive compensation |
2,051 | 2,060 | 1,824 | 671 | 555 | |||||||||||||||
Employee benefits |
1,034 | 1,227 | 1,284 | 338 | 486 | |||||||||||||||
Equipment |
563 | 575 | 687 | 402 | 302 | |||||||||||||||
Net occupancy |
778 | 783 | 796 | 418 | 402 | |||||||||||||||
Core deposit and other intangibles |
642 | 646 | 647 | 47 | 47 | |||||||||||||||
FDIC and other deposit assessments |
228 | 981 | 338 | 57 | 37 | |||||||||||||||
Other |
2,960 | 2,987 | 2,856 | 1,709 | 1,594 | |||||||||||||||
Total noninterest expense |
11,684 | 12,697 | 11,818 | 5,810 | 5,501 | |||||||||||||||
Income (loss) before income tax expense (benefit) |
4,671 | 4,724 | 4,641 | (4,777 | ) | 2,381 | ||||||||||||||
Income tax expense (benefit) |
1,355 | 1,475 | 1,552 | (2,036 | ) | 730 | ||||||||||||||
Net income (loss) before noncontrolling interests |
3,316 | 3,249 | 3,089 | (2,741 | ) | 1,651 | ||||||||||||||
Less: Net income (loss) from noncontrolling interests |
81 | 77 | 44 | (7 | ) | 14 | ||||||||||||||
Wells Fargo net income (loss) |
$ | 3,235 | 3,172 | 3,045 | (2,734 | ) | 1,637 | |||||||||||||
Wells Fargo net income (loss) applicable to common stock |
$ | 2,637 | 2,575 | 2,384 | (3,020 | ) | 1,637 | |||||||||||||
Per share information |
||||||||||||||||||||
Earnings (loss) per common share |
$ | 0.56 | 0.58 | 0.56 | (0.84 | ) | 0.49 | |||||||||||||
Diluted earnings (loss) per common share |
0.56 | 0.57 | 0.56 | (0.84 | ) | 0.49 | ||||||||||||||
Dividends declared per common share |
0.05 | 0.05 | 0.34 | 0.34 | 0.34 | |||||||||||||||
Average common shares outstanding |
4,678.3 | 4,483.1 | 4,247.4 | 3,582.4 | 3,316.4 | |||||||||||||||
Diluted average common shares outstanding |
4,706.4 | 4,501.6 | 4,249.3 | 3,593.6 | 3,331.0 | |||||||||||||||
-24-
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Quarter ended September 30, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||||
Average | Yields/ | income/ | Average | Yields/ | income/ | |||||||||||||||||||
(in millions) | balance | rates | expense | balance | rates | expense | ||||||||||||||||||
Earning assets |
||||||||||||||||||||||||
Federal funds sold, securities purchased under resale agreements and other short-term investments |
$ | 16,356 | 0.66 | % | $ | 27 | 3,463 | 2.09 | % | $ | 18 | |||||||||||||
Trading assets |
20,518 | 4.29 | 221 | 4,838 | 3.72 | 46 | ||||||||||||||||||
Debt securities available for sale (3): |
||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies |
2,545 | 3.79 | 24 | 1,141 | 3.99 | 11 | ||||||||||||||||||
Securities of U.S. states and political subdivisions |
12,818 | 6.28 | 204 | 7,211 | 6.65 | 124 | ||||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||||||||||
Federal agencies |
94,457 | 5.34 | 1,221 | 50,528 | 5.83 | 731 | ||||||||||||||||||
Residential and commercial |
43,214 | 9.56 | 1,089 | 21,358 | 5.82 | 346 | ||||||||||||||||||
Total mortgage-backed securities |
137,671 | 6.75 | 2,310 | 71,886 | 5.83 | 1,077 | ||||||||||||||||||
Other debt securities (4) |
33,294 | 7.00 | 568 | 12,622 | 7.17 | 248 | ||||||||||||||||||
Total debt securities available for sale (4) |
186,328 | 6.72 | 3,106 | 92,860 | 6.06 | 1,460 | ||||||||||||||||||
Mortgages held for sale (5) |
40,604 | 5.16 | 524 | 24,990 | 6.31 | 394 | ||||||||||||||||||
Loans held for sale (5) |
4,975 | 2.67 | 34 | 677 | 6.95 | 12 | ||||||||||||||||||
Loans: |
||||||||||||||||||||||||
Commercial and commercial real estate: |
||||||||||||||||||||||||
Commercial |
175,642 | 4.34 | 1,919 | 100,688 | 5.92 | 1,496 | ||||||||||||||||||
Real estate mortgage |
103,450 | 3.39 | 883 | 43,616 | 5.60 | 615 | ||||||||||||||||||
Real estate construction |
32,649 | 3.02 | 249 | 19,715 | 4.82 | 238 | ||||||||||||||||||
Lease financing |
14,360 | 9.14 | 328 | 7,250 | 5.48 | 100 | ||||||||||||||||||
Total commercial and commercial real estate |
326,101 | 4.12 | 3,379 | 171,269 | 5.69 | 2,449 | ||||||||||||||||||
Consumer: |
||||||||||||||||||||||||
Real estate 1-4 family first mortgage |
235,051 | 5.35 | 3,154 | 76,197 | 6.64 | 1,265 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage |
105,779 | 4.62 | 1,229 | 75,379 | 6.36 | 1,206 | ||||||||||||||||||
Credit card |
23,448 | 11.65 | 683 | 19,948 | 12.19 | 609 | ||||||||||||||||||
Other revolving credit and installment |
90,199 | 6.48 | 1,473 | 54,104 | 8.64 | 1,175 | ||||||||||||||||||
Total consumer |
454,477 | 5.73 | 6,539 | 225,628 | 7.52 | 4,255 | ||||||||||||||||||
Foreign |
29,613 | 3.61 | 270 | 7,306 | 10.28 | 188 | ||||||||||||||||||
Total loans (5) |
810,191 | 5.00 | 10,188 | 404,203 | 6.79 | 6,892 | ||||||||||||||||||
Other |
6,088 | 3.29 | 49 | 2,126 | 4.64 | 24 | ||||||||||||||||||
Total earning assets |
$ | 1,085,060 | 5.20 | % | $ | 14,149 | 533,157 | 6.57 | % | $ | 8,846 | |||||||||||||
Funding sources |
||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||
Interest-bearing checking |
$ | 59,467 | 0.15 | % | $ | 21 | 5,483 | 0.87 | % | $ | 12 | |||||||||||||
Market rate and other savings |
369,120 | 0.34 | 317 | 166,710 | 1.18 | 495 | ||||||||||||||||||
Savings certificates |
129,698 | 1.35 | 442 | 37,192 | 2.57 | 240 | ||||||||||||||||||
Other time deposits |
18,248 | 1.93 | 89 | 7,930 | 2.59 | 53 | ||||||||||||||||||
Deposits in foreign offices |
56,820 | 0.25 | 36 | 49,054 | 1.78 | 219 | ||||||||||||||||||
Total interest-bearing deposits |
633,353 | 0.57 | 905 | 266,369 | 1.52 | 1,019 | ||||||||||||||||||
Short-term borrowings |
39,828 | 0.35 | 36 | 83,458 | 2.35 | 492 | ||||||||||||||||||
Long-term debt |
222,580 | 2.33 | 1,301 | 103,745 | 3.43 | 892 | ||||||||||||||||||
Other liabilities |
5,620 | 3.30 | 46 | - | - | - | ||||||||||||||||||
Total interest-bearing liabilities |
901,381 | 1.01 | 2,288 | 453,572 | 2.11 | 2,403 | ||||||||||||||||||
Portion of noninterest-bearing funding sources |
183,679 | - | - | 79,585 | - | - | ||||||||||||||||||
Total funding sources |
$ | 1,085,060 | 0.84 | 2,288 | 533,157 | 1.78 | 2,403 | |||||||||||||||||
Net interest margin and net interest income on a taxable-equivalent basis (6) |
4.36 | % | $ | 11,861 | 4.79 | % | $ | 6,443 | ||||||||||||||||
Noninterest-earning assets |
||||||||||||||||||||||||
Cash and due from banks |
$ | 18,084 | 11,024 | |||||||||||||||||||||
Goodwill |
24,435 | 13,531 | ||||||||||||||||||||||
Other |
118,472 | 56,482 | ||||||||||||||||||||||
Total noninterest-earning assets |
$ | 160,991 | 81,037 | |||||||||||||||||||||
Noninterest-bearing funding sources |
||||||||||||||||||||||||
Deposits |
$ | 172,588 | 87,095 | |||||||||||||||||||||
Other liabilities |
47,646 | 25,452 | ||||||||||||||||||||||
Total equity |
124,436 | 48,075 | ||||||||||||||||||||||
Noninterest-bearing funding sources used to fund earning assets |
(183,679 | ) | (79,585 | ) | ||||||||||||||||||||
Net noninterest-bearing funding sources |
$ | 160,991 | 81,037 | |||||||||||||||||||||
Total assets |
$ | 1,246,051 | 614,194 | |||||||||||||||||||||
(1) | Our average prime rate was 3.25% and 5.00% for the quarters ended September 30, 2009 and 2008, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 0.41% and 2.91% for the same quarters, respectively. | ||
(2) | Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. | ||
(3) | Yields are based on amortized cost balances 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. |
-25-
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
Nine months ended September 30, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||||
Average | Yields/ | income/ | Average | Yields/ | income/ | |||||||||||||||||||
(in millions) | balance | rates | expense | balance | rates | expense | ||||||||||||||||||
Earning assets |
||||||||||||||||||||||||
Federal funds sold, securities purchased under
resale agreements and other short-term investments |
$ | 20,411 | 0.73 | % | $ | 111 | 3,734 | 2.59 | % | $ | 72 | |||||||||||||
Trading assets |
20,389 | 4.64 | 709 | 4,960 | 3.57 | 133 | ||||||||||||||||||
Debt securities available for sale (3): |
||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies |
2,514 | 2.61 | 48 | 1,055 | 3.88 | 30 | ||||||||||||||||||
Securities of U.S. states and political subdivisions |
12,409 | 6.39 | 623 | 6,848 | 6.88 | 362 | ||||||||||||||||||
Mortgage-backed securities: |
||||||||||||||||||||||||
Federal agencies |
87,916 | 5.45 | 3,492 | 42,448 | 5.93 | 1,854 | ||||||||||||||||||
Residential and commercial |
41,070 | 9.05 | 3,150 | 21,589 | 5.92 | 1,010 | ||||||||||||||||||
Total mortgage-backed securities |
128,986 | 6.72 | 6,642 | 64,037 | 5.92 | 2,864 | ||||||||||||||||||
Other debt securities (4) |
31,437 | 7.01 | 1,691 | 12,351 | 6.78 | 670 | ||||||||||||||||||
Total debt securities available for sale (4) |
175,346 | 6.69 | 9,004 | 84,291 | 6.11 | 3,926 | ||||||||||||||||||
Mortgages held for sale (5) |
38,315 | 5.16 | 1,484 | 26,417 | 6.11 | 1,211 | ||||||||||||||||||
Loans held for sale (5) |
6,693 | 3.01 | 151 | 686 | 6.66 | 34 | ||||||||||||||||||
Loans: |
||||||||||||||||||||||||
Commercial and commercial real estate: |
||||||||||||||||||||||||
Commercial |
186,610 | 4.10 | 5,725 | 95,697 | 6.29 | 4,509 | ||||||||||||||||||
Real estate mortgage |
104,003 | 3.44 | 2,677 | 40,351 | 5.91 | 1,788 | ||||||||||||||||||
Real estate construction |
33,660 | 2.92 | 734 | 19,288 | 5.29 | 763 | ||||||||||||||||||
Lease financing |
14,968 | 9.04 | 1,015 | 7,055 | 5.63 | 298 | ||||||||||||||||||
Total commercial and commercial real estate |
339,241 | 4.00 | 10,151 | 162,391 | 6.05 | 7,358 | ||||||||||||||||||
Consumer: |
||||||||||||||||||||||||
Real estate 1-4 family first mortgage |
240,409 | 5.51 | 9,926 | 74,064 | 6.77 | 3,761 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage |
108,094 | 4.81 | 3,894 | 75,220 | 6.78 | 3,820 | ||||||||||||||||||
Credit card |
23,236 | 12.16 | 2,118 | 19,256 | 12.11 | 1,749 | ||||||||||||||||||
Other revolving credit and installment |
91,240 | 6.60 | 4,502 | 54,949 | 8.84 | 3,637 | ||||||||||||||||||
Total consumer |
462,979 | 5.90 | 20,440 | 223,489 | 7.74 | 12,967 | ||||||||||||||||||
Foreign |
30,856 | 4.02 | 929 | 7,382 | 10.72 | 592 | ||||||||||||||||||
Total loans (5) |
833,076 | 5.05 | 31,520 | 393,262 | 7.10 | 20,917 | ||||||||||||||||||
Other |
6,102 | 3.02 | 137 | 1,995 | 4.55 | 68 | ||||||||||||||||||
Total earning assets |
$ | 1,100,332 | 5.21 | % | $ | 43,116 | 515,345 | 6.81 | % | $ | 26,361 | |||||||||||||
Funding sources |
||||||||||||||||||||||||
Deposits: |
||||||||||||||||||||||||
Interest-bearing checking |
$ | 73,195 | 0.14 | % | $ | 77 | 5,399 | 1.31 | % | $ | 53 | |||||||||||||
Market rate and other savings |
339,081 | 0.42 | 1,072 | 162,792 | 1.45 | 1,765 | ||||||||||||||||||
Savings certificates |
150,607 | 1.14 | 1,280 | 38,907 | 3.23 | 940 | ||||||||||||||||||
Other time deposits |
21,794 | 1.97 | 321 | 6,163 | 2.87 | 133 | ||||||||||||||||||
Deposits in foreign offices |
50,907 | 0.29 | 111 | 49,192 | 2.13 | 785 | ||||||||||||||||||
Total interest-bearing deposits |
635,584 | 0.60 | 2,861 | 262,453 | 1.87 | 3,676 | ||||||||||||||||||
Short-term borrowings |
58,447 | 0.50 | 217 | 67,714 | 2.51 | 1,274 | ||||||||||||||||||
Long-term debt |
238,909 | 2.55 | 4,568 | 101,668 | 3.71 | 2,825 | ||||||||||||||||||
Other liabilities |
4,675 | 3.50 | 122 | - | - | - | ||||||||||||||||||
Total interest-bearing liabilities |
937,615 | 1.11 | 7,768 | 431,835 | 2.40 | 7,775 | ||||||||||||||||||
Portion of noninterest-bearing funding sources |
162,717 | - | - | 83,510 | - | - | ||||||||||||||||||
Total funding sources |
$ | 1,100,332 | 0.94 | 7,768 | 515,345 | 2.01 | 7,775 | |||||||||||||||||
Net interest margin and net interest income on a taxable-equivalent basis (6) |
4.27 | % | $ | 35,348 | 4.80 | % | $ | 18,586 | ||||||||||||||||
Noninterest-earning assets |
||||||||||||||||||||||||
Cash and due from banks |
$ | 19,218 | 11,182 | |||||||||||||||||||||
Goodwill |
23,964 | 13,289 | ||||||||||||||||||||||
Other |
126,557 | 54,901 | ||||||||||||||||||||||
Total noninterest-earning assets |
$ | 169,739 | 79,372 | |||||||||||||||||||||
Noninterest-bearing funding sources |
||||||||||||||||||||||||
Deposits |
$ | 169,187 | 86,676 | |||||||||||||||||||||
Other liabilities |
49,249 | 27,973 | ||||||||||||||||||||||
Total equity |
114,020 | 48,233 | ||||||||||||||||||||||
Noninterest-bearing funding sources used to fund earning assets |
(162,717 | ) | (83,510 | ) | ||||||||||||||||||||
Net noninterest-bearing funding sources |
$ | 169,739 | 79,372 | |||||||||||||||||||||
Total assets |
$ | 1,270,071 | 594,717 | |||||||||||||||||||||
(1) | Our average prime rate was 3.25% and 5.43% for the nine months ended September 30, 2009 and 2008, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 0.83% and 2.98% for the same periods, respectively. | |
(2) | Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. | |
(3) | Yields are based on amortized cost balances 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. |
-26-
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
NONINTEREST INCOME
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Service charges on deposit accounts |
$ | 1,478 | 839 | 4,320 | 2,387 | |||||||||||
Trust and investment fees: |
||||||||||||||||
Trust, investment and IRA fees |
989 | 549 | 2,550 | 1,674 | ||||||||||||
Commissions and all other fees |
1,513 | 189 | 4,580 | 589 | ||||||||||||
Total trust and investment fees |
2,502 | 738 | 7,130 | 2,263 | ||||||||||||
Card fees |
946 | 601 | 2,722 | 1,747 | ||||||||||||
Other fees: |
||||||||||||||||
Cash network fees |
60 | 48 | 176 | 143 | ||||||||||||
Charges and fees on loans |
453 | 266 | 1,326 | 765 | ||||||||||||
All other fees |
437 | 238 | 1,312 | 654 | ||||||||||||
Total other fees |
950 | 552 | 2,814 | 1,562 | ||||||||||||
Mortgage banking: |
||||||||||||||||
Servicing income, net |
1,873 | 525 | 3,469 | 1,019 | ||||||||||||
Net gains on mortgage loan origination/sales activities |
1,125 | 276 | 4,910 | 1,419 | ||||||||||||
All other |
69 | 91 | 238 | 282 | ||||||||||||
Total mortgage banking |
3,067 | 892 | 8,617 | 2,720 | ||||||||||||
Insurance |
468 | 439 | 1,644 | 1,493 | ||||||||||||
Net gains from trading activities |
622 | 65 | 2,158 | 684 | ||||||||||||
Net gains (losses) on debt securities available for sale |
(40 | ) | 84 | (237 | ) | 316 | ||||||||||
Net gains (losses) from equity investments |
29 | (509 | ) | (88 | ) | (149 | ) | |||||||||
Operating leases |
224 | 102 | 522 | 365 | ||||||||||||
All other |
536 | 193 | 1,564 | 593 | ||||||||||||
Total |
$ | 10,782 | 3,996 | 31,166 | 13,981 | |||||||||||
NONINTEREST EXPENSE
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Salaries |
$ | 3,428 | 2,078 | 10,252 | 6,092 | |||||||||||
Commission and incentive compensation |
2,051 | 555 | 5,935 | 2,005 | ||||||||||||
Employee benefits |
1,034 | 486 | 3,545 | 1,666 | ||||||||||||
Equipment |
563 | 302 | 1,825 | 955 | ||||||||||||
Net occupancy |
778 | 402 | 2,357 | 1,201 | ||||||||||||
Core deposit and other intangibles |
642 | 47 | 1,935 | 139 | ||||||||||||
FDIC and other deposit assessments |
228 | 37 | 1,547 | 63 | ||||||||||||
Outside professional services |
489 | 206 | 1,350 | 589 | ||||||||||||
Insurance |
208 | 144 | 734 | 511 | ||||||||||||
Postage, stationery and supplies |
211 | 136 | 701 | 415 | ||||||||||||
Outside data processing |
251 | 122 | 745 | 353 | ||||||||||||
Travel and entertainment |
151 | 113 | 387 | 330 | ||||||||||||
Foreclosed assets |
243 | 99 | 678 | 298 | ||||||||||||
Contract services |
254 | 88 | 726 | 300 | ||||||||||||
Operating leases |
52 | 90 | 183 | 308 | ||||||||||||
Advertising and promotion |
160 | 96 | 396 | 285 | ||||||||||||
Telecommunications |
142 | 78 | 464 | 238 | ||||||||||||
Operating losses |
117 | 63 | 448 | 46 | ||||||||||||
All other |
682 | 359 | 1,991 | 994 | ||||||||||||
Total |
$ | 11,684 | 5,501 | 36,199 | 16,788 | |||||||||||
-27-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
FIVE QUARTER NONINTEREST INCOME
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Service charges on deposit accounts |
$ | 1,478 | 1,448 | 1,394 | 803 | 839 | ||||||||||||||
Trust and investment fees: |
||||||||||||||||||||
Trust, investment and IRA fees |
989 | 839 | 722 | 487 | 549 | |||||||||||||||
Commissions and all other fees |
1,513 | 1,574 | 1,493 | 174 | 189 | |||||||||||||||
Total trust and investment fees |
2,502 | 2,413 | 2,215 | 661 | 738 | |||||||||||||||
Card fees |
946 | 923 | 853 | 589 | 601 | |||||||||||||||
Other fees: |
||||||||||||||||||||
Cash network fees |
60 | 58 | 58 | 45 | 48 | |||||||||||||||
Charges and fees on loans |
453 | 440 | 433 | 272 | 266 | |||||||||||||||
All other fees |
437 | 465 | 410 | 218 | 238 | |||||||||||||||
Total other fees |
950 | 963 | 901 | 535 | 552 | |||||||||||||||
Mortgage banking: |
||||||||||||||||||||
Servicing income, net |
1,873 | 753 | 843 | (40 | ) | 525 | ||||||||||||||
Net gains (losses) on mortgage loan
origination/sales activities |
1,125 | 2,203 | 1,582 | (236 | ) | 276 | ||||||||||||||
All other |
69 | 90 | 79 | 81 | 91 | |||||||||||||||
Total mortgage banking |
3,067 | 3,046 | 2,504 | (195 | ) | 892 | ||||||||||||||
Insurance |
468 | 595 | 581 | 337 | 439 | |||||||||||||||
Net gains (losses) from trading activities |
622 | 749 | 787 | (409 | ) | 65 | ||||||||||||||
Net gains (losses) on debt securities available for sale |
(40 | ) | (78 | ) | (119 | ) | 721 | 84 | ||||||||||||
Net gains (losses) from equity investments |
29 | 40 | (157 | ) | (608 | ) | (509 | ) | ||||||||||||
Operating leases |
224 | 168 | 130 | 62 | 102 | |||||||||||||||
All other |
536 | 476 | 552 | 257 | 193 | |||||||||||||||
Total |
$ | 10,782 | 10,743 | 9,641 | 2,753 | 3,996 | ||||||||||||||
FIVE QUARTER NONINTEREST EXPENSE
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Salaries |
$ | 3,428 | 3,438 | 3,386 | 2,168 | 2,078 | ||||||||||||||
Commission and incentive compensation |
2,051 | 2,060 | 1,824 | 671 | 555 | |||||||||||||||
Employee benefits |
1,034 | 1,227 | 1,284 | 338 | 486 | |||||||||||||||
Equipment |
563 | 575 | 687 | 402 | 302 | |||||||||||||||
Net occupancy |
778 | 783 | 796 | 418 | 402 | |||||||||||||||
Core deposit and other intangibles |
642 | 646 | 647 | 47 | 47 | |||||||||||||||
FDIC and other deposit assessments |
228 | 981 | 338 | 57 | 37 | |||||||||||||||
Outside professional services |
489 | 451 | 410 | 258 | 206 | |||||||||||||||
Insurance |
208 | 259 | 267 | 214 | 144 | |||||||||||||||
Postage, stationery and supplies |
211 | 240 | 250 | 141 | 136 | |||||||||||||||
Outside data processing |
251 | 282 | 212 | 127 | 122 | |||||||||||||||
Travel and entertainment |
151 | 131 | 105 | 117 | 113 | |||||||||||||||
Foreclosed assets |
243 | 187 | 248 | 116 | 99 | |||||||||||||||
Contract services |
254 | 256 | 216 | 107 | 88 | |||||||||||||||
Operating leases |
52 | 61 | 70 | 81 | 90 | |||||||||||||||
Advertising and promotion |
160 | 111 | 125 | 93 | 96 | |||||||||||||||
Telecommunications |
142 | 164 | 158 | 83 | 78 | |||||||||||||||
Operating losses |
117 | 159 | 172 | 96 | 63 | |||||||||||||||
All other |
682 | 686 | 623 | 276 | 359 | |||||||||||||||
Total |
$ | 11,684 | 12,697 | 11,818 | 5,810 | 5,501 | ||||||||||||||
-28-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
Sept. 30, | Dec. 31, | |||||||
(in millions, except shares) | 2009 | 2008 | ||||||
Assets |
||||||||
Cash and due from banks |
$ | 17,233 | 23,763 | |||||
Federal funds sold, securities purchased under
resale agreements and other short-term investments |
17,491 | 49,433 | ||||||
Trading assets |
43,198 | 54,884 | ||||||
Securities available for sale |
183,814 | 151,569 | ||||||
Mortgages held for sale (includes $33,435 and $18,754 carried at fair value) |
35,538 | 20,088 | ||||||
Loans held for sale (includes $201 and $398 carried at fair value) |
5,846 | 6,228 | ||||||
Loans |
799,952 | 864,830 | ||||||
Allowance for loan losses |
(24,028 | ) | (21,013 | ) | ||||
Net loans |
775,924 | 843,817 | ||||||
Mortgage servicing rights: |
||||||||
Measured at fair value (residential MSRs) |
14,500 | 14,714 | ||||||
Amortized |
1,162 | 1,446 | ||||||
Premises and equipment, net |
11,040 | 11,269 | ||||||
Goodwill |
24,052 | 22,627 | ||||||
Other assets |
98,827 | 109,801 | ||||||
Total assets |
$ | 1,228,625 | 1,309,639 | |||||
Liabilities |
||||||||
Noninterest-bearing deposits |
$ | 165,260 | 150,837 | |||||
Interest-bearing deposits |
631,488 | 630,565 | ||||||
Total deposits |
796,748 | 781,402 | ||||||
Short-term borrowings |
30,800 | 108,074 | ||||||
Accrued expenses and other liabilities |
57,861 | 50,689 | ||||||
Long-term debt |
214,292 | 267,158 | ||||||
Total liabilities |
1,099,701 | 1,207,323 | ||||||
Equity |
||||||||
Wells Fargo stockholders equity: |
||||||||
Preferred stock |
31,589 | 31,332 | ||||||
Common stock
- $1-2/3 par value, authorized 6,000,000,000 shares;
issued 4,756,071,429 shares and 4,363,921,429 shares |
7,927 | 7,273 | ||||||
Additional paid-in capital |
40,343 | 36,026 | ||||||
Retained earnings |
41,485 | 36,543 | ||||||
Cumulative other comprehensive income (loss) |
4,088 | (6,869 | ) | |||||
Treasury stock - 76,876,271 shares and 135,290,540 shares |
(2,771 | ) | (4,666 | ) | ||||
Unearned ESOP shares |
(511 | ) | (555 | ) | ||||
Total Wells Fargo stockholders equity |
122,150 | 99,084 | ||||||
Noncontrolling interests |
6,774 | 3,232 | ||||||
Total equity |
128,924 | 102,316 | ||||||
Total liabilities and equity |
$ | 1,228,625 | 1,309,639 | |||||
-29-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
FIVE QUARTER CONSOLIDATED BALANCE SHEET
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Assets |
||||||||||||||||||||
Cash and due from banks |
$ | 17,233 | 20,632 | 22,186 | 23,763 | 12,861 | ||||||||||||||
Federal funds sold, securities purchased under
resale agreements and other short-term investments |
17,491 | 15,976 | 18,625 | 49,433 | 8,093 | |||||||||||||||
Trading assets |
43,198 | 40,110 | 46,497 | 54,884 | 9,097 | |||||||||||||||
Securities available for sale |
183,814 | 206,795 | 178,468 | 151,569 | 86,882 | |||||||||||||||
Mortgages held for sale |
35,538 | 41,991 | 36,807 | 20,088 | 18,739 | |||||||||||||||
Loans held for sale |
5,846 | 5,413 | 8,306 | 6,228 | 635 | |||||||||||||||
Loans |
799,952 | 821,614 | 843,579 | 864,830 | 411,049 | |||||||||||||||
Allowance for loan losses |
(24,028 | ) | (23,035 | ) | (22,281 | ) | (21,013 | ) | (7,865 | ) | ||||||||||
Net loans |
775,924 | 798,579 | 821,298 | 843,817 | 403,184 | |||||||||||||||
Mortgage servicing rights: |
||||||||||||||||||||
Measured at fair value (residential MSRs) |
14,500 | 15,690 | 12,391 | 14,714 | 19,184 | |||||||||||||||
Amortized |
1,162 | 1,205 | 1,257 | 1,446 | 433 | |||||||||||||||
Premises and equipment, net |
11,040 | 11,151 | 11,215 | 11,269 | 5,054 | |||||||||||||||
Goodwill |
24,052 | 24,619 | 23,825 | 22,627 | 13,520 | |||||||||||||||
Other assets |
98,827 | 102,015 | 105,016 | 109,801 | 44,679 | |||||||||||||||
Total assets |
$ | 1,228,625 | 1,284,176 | 1,285,891 | 1,309,639 | 622,361 | ||||||||||||||
Liabilities |
||||||||||||||||||||
Noninterest-bearing deposits |
$ | 165,260 | 173,149 | 166,497 | 150,837 | 89,446 | ||||||||||||||
Interest-bearing deposits |
631,488 | 640,586 | 630,772 | 630,565 | 264,128 | |||||||||||||||
Total deposits |
796,748 | 813,735 | 797,269 | 781,402 | 353,574 | |||||||||||||||
Short-term borrowings |
30,800 | 55,483 | 72,084 | 108,074 | 85,187 | |||||||||||||||
Accrued expenses and other liabilities |
57,861 | 64,160 | 58,831 | 50,689 | 28,991 | |||||||||||||||
Long-term debt |
214,292 | 229,416 | 250,650 | 267,158 | 107,350 | |||||||||||||||
Total liabilities |
1,099,701 | 1,162,794 | 1,178,834 | 1,207,323 | 575,102 | |||||||||||||||
Equity |
||||||||||||||||||||
Wells Fargo stockholders equity: |
||||||||||||||||||||
Preferred stock |
31,589 | 31,497 | 31,411 | 31,332 | 625 | |||||||||||||||
Common stock |
7,927 | 7,927 | 7,273 | 7,273 | 5,788 | |||||||||||||||
Additional paid-in capital |
40,343 | 40,270 | 32,414 | 36,026 | 8,348 | |||||||||||||||
Retained earnings |
41,485 | 39,165 | 36,949 | 36,543 | 40,853 | |||||||||||||||
Cumulative other comprehensive income (loss) |
4,088 | (590 | ) | (3,624 | ) | (6,869 | ) | (2,783 | ) | |||||||||||
Treasury stock |
(2,771 | ) | (3,126 | ) | (3,593 | ) | (4,666 | ) | (5,207 | ) | ||||||||||
Unearned ESOP shares |
(511 | ) | (520 | ) | (535 | ) | (555 | ) | (667 | ) | ||||||||||
Total Wells Fargo stockholders equity |
122,150 | 114,623 | 100,295 | 99,084 | 46,957 | |||||||||||||||
Noncontrolling interests |
6,774 | 6,759 | 6,762 | 3,232 | 302 | |||||||||||||||
Total equity |
128,924 | 121,382 | 107,057 | 102,316 | 47,259 | |||||||||||||||
Total liabilities and equity |
$ | 1,228,625 | 1,284,176 | 1,285,891 | 1,309,639 | 622,361 | ||||||||||||||
-30-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES
FIVE QUARTER AVERAGE BALANCES
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Earning assets |
||||||||||||||||||||
Federal funds sold, securities purchased under
resale agreements and other short-term investments |
$ | 16,356 | 20,889 | 24,074 | 9,938 | 3,463 | ||||||||||||||
Trading assets |
20,518 | 18,464 | 22,203 | 5,004 | 4,838 | |||||||||||||||
Debt securities available for sale: |
||||||||||||||||||||
Securities of U.S. Treasury and federal agencies |
2,545 | 2,102 | 2,899 | 1,165 | 1,141 | |||||||||||||||
Securities of U.S. states and political subdivisions |
12,818 | 12,189 | 12,213 | 7,124 | 7,211 | |||||||||||||||
Mortgage-backed securities: |
||||||||||||||||||||
Federal agencies |
94,457 | 92,550 | 76,545 | 51,714 | 50,528 | |||||||||||||||
Residential and commercial |
43,214 | 41,257 | 38,690 | 18,245 | 21,358 | |||||||||||||||
Total mortgage-backed securities |
137,671 | 133,807 | 115,235 | 69,959 | 71,886 | |||||||||||||||
Other debt securities (1) |
33,294 | 30,901 | 30,080 | 14,217 | 12,622 | |||||||||||||||
Total debt securities available for sale (1) |
186,328 | 178,999 | 160,427 | 92,465 | 92,860 | |||||||||||||||
Mortgages held for sale (2) |
40,604 | 43,177 | 31,058 | 23,390 | 24,990 | |||||||||||||||
Loans held for sale (2) |
4,975 | 7,188 | 7,949 | 1,287 | 677 | |||||||||||||||
Loans: |
||||||||||||||||||||
Commercial and commercial real estate: |
||||||||||||||||||||
Commercial |
175,642 | 187,501 | 196,923 | 107,325 | 100,688 | |||||||||||||||
Real estate mortgage |
103,450 | 104,297 | 104,271 | 45,555 | 43,616 | |||||||||||||||
Real estate construction |
32,649 | 33,857 | 34,493 | 19,943 | 19,715 | |||||||||||||||
Lease financing |
14,360 | 14,750 | 15,810 | 7,397 | 7,250 | |||||||||||||||
Total commercial and commercial real estate |
326,101 | 340,405 | 351,497 | 180,220 | 171,269 | |||||||||||||||
Consumer: |
||||||||||||||||||||
Real estate 1-4 family first mortgage |
235,051 | 240,798 | 245,494 | 78,251 | 76,197 | |||||||||||||||
Real estate 1-4 family junior lien mortgage |
105,779 | 108,422 | 110,128 | 75,838 | 75,379 | |||||||||||||||
Credit card |
23,448 | 22,963 | 23,295 | 20,626 | 19,948 | |||||||||||||||
Other revolving credit and installment |
90,199 | 90,729 | 92,820 | 52,638 | 54,104 | |||||||||||||||
Total consumer |
454,477 | 462,912 | 471,737 | 227,353 | 225,628 | |||||||||||||||
Foreign |
29,613 | 30,628 | 32,357 | 6,367 | 7,306 | |||||||||||||||
Total loans (2) |
810,191 | 833,945 | 855,591 | 413,940 | 404,203 | |||||||||||||||
Other |
6,088 | 6,079 | 6,140 | 1,690 | 2,126 | |||||||||||||||
Total earning assets |
$ | 1,085,060 | 1,108,741 | 1,107,442 | 547,714 | 533,157 | ||||||||||||||
Funding sources |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Interest-bearing checking |
$ | 59,467 | 79,955 | 80,393 | 6,396 | 5,483 | ||||||||||||||
Market rate and other savings |
369,120 | 334,067 | 313,445 | 178,301 | 166,710 | |||||||||||||||
Savings certificates |
129,698 | 152,444 | 170,122 | 41,189 | 37,192 | |||||||||||||||
Other time deposits |
18,248 | 21,660 | 25,555 | 8,128 | 7,930 | |||||||||||||||
Deposits in foreign offices |
56,820 | 49,885 | 45,896 | 42,771 | 49,054 | |||||||||||||||
Total interest-bearing deposits |
633,353 | 638,011 | 635,411 | 276,785 | 266,369 | |||||||||||||||
Short-term borrowings |
39,828 | 59,844 | 76,068 | 60,210 | 83,458 | |||||||||||||||
Long-term debt |
222,580 | 235,590 | 258,957 | 104,112 | 103,745 | |||||||||||||||
Other liabilities |
5,620 | 4,604 | 3,778 | - | - | |||||||||||||||
Total interest-bearing liabilities |
901,381 | 938,049 | 974,214 | 441,107 | 453,572 | |||||||||||||||
Portion of noninterest-bearing funding sources |
183,679 | 170,692 | 133,228 | 106,607 | 79,585 | |||||||||||||||
Total funding sources |
$ | 1,085,060 | 1,108,741 | 1,107,442 | 547,714 | 533,157 | ||||||||||||||
Noninterest-earning assets |
||||||||||||||||||||
Cash and due from banks |
$ | 18,084 | 19,340 | 20,255 | 11,155 | 11,024 | ||||||||||||||
Goodwill |
24,435 | 24,261 | 23,183 | 13,544 | 13,531 | |||||||||||||||
Other |
118,472 | 122,584 | 138,836 | 60,810 | 56,482 | |||||||||||||||
Total noninterest-earning assets |
$ | 160,991 | 166,185 | 182,274 | 85,509 | 81,037 | ||||||||||||||
Noninterest-bearing funding sources |
||||||||||||||||||||
Deposits |
$ | 172,588 | 174,529 | 160,308 | 91,229 | 87,095 | ||||||||||||||
Other liabilities |
47,646 | 49,570 | 50,566 | 30,651 | 25,452 | |||||||||||||||
Total equity |
124,436 | 112,778 | 104,628 | 70,236 | 48,075 | |||||||||||||||
Noninterest-bearing funding sources used to
fund earning assets |
(183,679 | ) | (170,692 | ) | (133,228 | ) | (106,607 | ) | (79,585 | ) | ||||||||||
Net noninterest-bearing funding sources |
$ | 160,991 | 166,185 | 182,274 | 85,509 | 81,037 | ||||||||||||||
Total assets |
$ | 1,246,051 | 1,274,926 | 1,289,716 | 633,223 | 614,194 | ||||||||||||||
(1) | Includes certain preferred securities. | |
(2) | Nonaccrual loans are included in their respective loan categories. |
-31-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER LOANS
FIVE QUARTER LOANS
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Commercial and commercial real estate: |
||||||||||||||||||||
Commercial |
$ | 169,610 | 182,037 | 191,711 | 202,469 | 104,281 | ||||||||||||||
Real estate mortgage |
103,442 | 103,654 | 104,934 | 103,108 | 44,741 | |||||||||||||||
Real estate construction |
31,719 | 33,238 | 33,912 | 34,676 | 19,681 | |||||||||||||||
Lease financing |
14,115 | 14,555 | 14,792 | 15,829 | 7,271 | |||||||||||||||
Total commercial and commercial real estate |
318,886 | 333,484 | 345,349 | 356,082 | 175,974 | |||||||||||||||
Consumer: |
||||||||||||||||||||
Real estate 1-4 family first mortgage |
232,622 | 237,289 | 242,947 | 247,894 | 77,870 | |||||||||||||||
Real estate 1-4 family junior lien mortgage |
104,538 | 107,024 | 109,748 | 110,164 | 75,617 | |||||||||||||||
Credit card |
23,597 | 23,069 | 22,815 | 23,555 | 20,358 | |||||||||||||||
Other revolving credit and installment |
90,027 | 90,654 | 91,252 | 93,253 | 54,327 | |||||||||||||||
Total consumer |
450,784 | 458,036 | 466,762 | 474,866 | 228,172 | |||||||||||||||
Foreign |
30,282 | 30,094 | 31,468 | 33,882 | 6,903 | |||||||||||||||
Total loans (net of unearned income) (1) |
$ | 799,952 | 821,614 | 843,579 | 864,830 | 411,049 | ||||||||||||||
(1) | Includes $54.3 billion, $55.2 billion, $58.2 billion and $58.8 billion of purchased credit-impaired (PCI) loans at September 30, June 30 and March 31, 2009, and December 31, 2008, respectively. See table on page 32 for detail of PCI loans. |
FIVE QUARTER NONACCRUAL LOANS AND OTHER NONPERFORMING ASSETS
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Nonaccrual loans: |
||||||||||||||||||||
Commercial and commercial real estate: |
||||||||||||||||||||
Commercial |
$ | 4,540 | 2,910 | 1,696 | 1,253 | 846 | ||||||||||||||
Real estate mortgage |
2,856 | 2,343 | 1,324 | 594 | 296 | |||||||||||||||
Real estate construction |
2,711 | 2,210 | 1,371 | 989 | 736 | |||||||||||||||
Lease financing |
157 | 130 | 114 | 92 | 69 | |||||||||||||||
Total commercial and commercial real estate |
10,264 | 7,593 | 4,505 | 2,928 | 1,947 | |||||||||||||||
Consumer: |
||||||||||||||||||||
Real estate 1-4 family first mortgage |
8,132 | 6,000 | 4,218 | 2,648 | 1,975 | |||||||||||||||
Real estate 1-4 family junior lien mortgage |
1,985 | 1,652 | 1,418 | 894 | 780 | |||||||||||||||
Other revolving credit and installment |
344 | 327 | 300 | 273 | 232 | |||||||||||||||
Total consumer |
10,461 | 7,979 | 5,936 | 3,815 | 2,987 | |||||||||||||||
Foreign |
144 | 226 | 75 | 57 | 61 | |||||||||||||||
Total nonaccrual loans (1) (2) |
20,869 | 15,798 | 10,516 | 6,800 | 4,995 | |||||||||||||||
As a percentage of total loans |
2.61 | % | 1.92 | 1.25 | 0.79 | 1.22 | ||||||||||||||
Foreclosed assets: |
||||||||||||||||||||
GNMA loans (3) |
$ | 840 | 932 | 768 | 667 | 596 | ||||||||||||||
Other |
1,687 | 1,592 | 1,294 | 1,526 | 644 | |||||||||||||||
Real estate and other nonaccrual investments (4) |
55 | 20 | 34 | 16 | 56 | |||||||||||||||
Total nonaccrual loans and other
nonperforming assets |
$ | 23,451 | 18,342 | 12,612 | 9,009 | 6,291 | ||||||||||||||
As a percentage of total loans |
2.93 | % | 2.23 | 1.50 | 1.04 | 1.53 | ||||||||||||||
(1) | Includes nonaccrual mortgages held for sale and loans held for sale in their respective loan categories. | |
(2) | Excludes PCI loans from Wachovia. | |
(3) | Consistent with regulatory reporting requirements, foreclosed real estate securing Government National Mortgage Association (GNMA) loans is classified as nonperforming. Both principal and interest for GNMA loans secured by the foreclosed real estate are collectible because the GNMA loans are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. | |
(4) | Includes real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if these assets were recorded as loans, and nonaccrual debt securities. |
-32-
Wells Fargo & Company and Subsidiaries
PURCHASED CREDIT-IMPAIRED (PCI) LOANS
PURCHASED CREDIT-IMPAIRED (PCI) LOANS
Certain loans acquired from Wachovia have evidence of credit deterioration
since origination and it is probable that we will not collect all contractually
required principal and interest payments (referred to as purchased
credit-impaired"(PCI) loans). Such loans are accounted for under ASC 310-30,
Receivables (American Institute of Certified Public Accountants Statement of
Position 03-3, Accounting for Certain Loans or Debt Securities Acquired in a
Transfer). The accounting provisions contained in ASC 310-30 require acquired
loans be recorded at fair value at the acquisition date and prohibits carryover
of the related allowance for loan losses. The difference between contractually
required payments and cash flows expected to be collected is referred to as the
nonaccretable difference. The difference between the cash flows expected to be
collected and the fair value is referred to as the accretable yield.
Because PCI loans have been written down in purchase accounting to an amount
estimated to be collectible, such loans are not classified as nonaccrual even
though they may be contractually past due. Also, losses on such loans are
charged against the nonaccretable difference established in purchase accounting
and, as such, are not reported as charge-offs.
As a result of the application of ASC 310-30 to credit-impaired Wachovia loans,
certain ratios of the combined company cannot be used to compare a portfolio
that includes PCI loans against one that does not, or to compare ratios across
quarters or years. The ratios particularly affected by the accounting under ASC
310-30 include the allowance for loan losses and allowance for credit losses as
percentages of loans, of nonaccrual loans and of nonperforming assets;
nonaccrual loans and nonperforming assets as a percentage of total loans; and
net charge-offs as a percentage of loans.
September 30, 2009 (1) | December 31, 2008 | |||||||||||||||||||||||
All | All | |||||||||||||||||||||||
PCI | other | PCI | other | |||||||||||||||||||||
(in millions) | loans | loans | Total | loans | loans | Total | ||||||||||||||||||
Commercial and commercial real estate: |
||||||||||||||||||||||||
Commercial |
$ | 2,407 | 167,203 | 169,610 | 4,580 | 197,889 | 202,469 | |||||||||||||||||
Real estate mortgage |
5,950 | 97,492 | 103,442 | 7,762 | 95,346 | 103,108 | ||||||||||||||||||
Real estate construction |
4,250 | 27,469 | 31,719 | 4,503 | 30,173 | 34,676 | ||||||||||||||||||
Lease financing |
| 14,115 | 14,115 | | 15,829 | 15,829 | ||||||||||||||||||
Total commercial and commercial real estate (CRE)
|
12,607 | 306,279 | 318,886 | 16,845 | 339,237 | 356,082 | ||||||||||||||||||
Consumer: |
||||||||||||||||||||||||
Real estate 1-4 family first mortgage |
39,538 | 193,084 | 232,622 | 39,214 | 208,680 | 247,894 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage |
425 | 104,113 | 104,538 | 728 | 109,436 | 110,164 | ||||||||||||||||||
Credit card |
| 23,597 | 23,597 | | 23,555 | 23,555 | ||||||||||||||||||
Other revolving credit and installment |
| 90,027 | 90,027 | 151 | 93,102 | 93,253 | ||||||||||||||||||
Total consumer |
39,963 | 410,821 | 450,784 | 40,093 | 434,773 | 474,866 | ||||||||||||||||||
Foreign |
1,768 | 28,514 | 30,282 | 1,859 | 32,023 | 33,882 | ||||||||||||||||||
Total loans |
$ | 54,338 | 745,614 | 799,952 | 58,797 | 806,033 | 864,830 | |||||||||||||||||
(1) | In the first three quarters of 2009, we refined certain of our preliminary purchase accounting adjustments based on additional information as of December 31, 2008. These refinements include a net increase to the nonaccretable difference of $3.8 billion ($2.2 billion of which related to Pick-a-Pay loans), and a net increase to the accretable yield of $1.9 billion ($2.0 billion of which related to Pick-a-Pay loans and reflects changes in the amount and timing of cash flows). The effect on goodwill of these adjustments amounted to a net increase to goodwill of $1.9 billion. |
CHANGES IN NONACCRETABLE DIFFERENCE FOR PCI LOANS
The nonaccretable difference was established in purchase accounting for PCI
loans to absorb losses expected at that time on those loans. Amounts absorbed
by the nonaccretable difference do not affect the income statement or the
allowance for credit losses.
Commercial, | ||||||||||||||||
Other | CRE and | |||||||||||||||
(in millions) | Pick-a-Pay | consumer | foreign | Total | ||||||||||||
Balance at December 31, 2008, with refinements |
$ | (26,485 | ) | (4,082 | ) | (10,378 | ) | (40,945 | ) | |||||||
Release of nonaccretable difference due to: |
||||||||||||||||
Loans resolved by payment in full |
| | 194 | 194 | ||||||||||||
Loans resolved by sales to third parties |
| 85 | 28 | 113 | ||||||||||||
Loans with improving cash flows reclassified to accretable yield |
| | 21 | 21 | ||||||||||||
Use of nonaccretable difference due to: |
||||||||||||||||
Losses from loan resolutions and write-downs (1) |
8,320 | 1,796 | 3,552 | 13,668 | ||||||||||||
Balance at September 30, 2009 |
$ | (18,165 | ) | (2,201 | ) | (6,583 | ) | (26,949 | ) | |||||||
(1) | Use of nonaccretable difference through June 30, 2009, was $8.5 billion (including $5.1 billion for Pick-a-Pay loans); revised from second quarter to include all losses due to resolution of loans and write-downs. |
CHANGES IN ALLOWANCE FOR LOAN LOSSES FOR PCI LOANS
Deterioration in expected credit losses for PCI loans subsequent to the
acquisition on December 31, 2008, results the establishment of an allowance,
provided for through a charge to income. Losses and improvements in expected
losses will reduce the allowance.
Commercial, | ||||||||||||||||
Other | CRE and | |||||||||||||||
(in millions) | Pick-a-Pay | consumer | foreign | Total | ||||||||||||
Balance at December 31, 2008 |
$ | | | | | |||||||||||
Provision for losses due to credit deterioration |
| | 458 | 458 | ||||||||||||
Charge-offs |
| | (225 | ) | (225 | ) | ||||||||||
Balance at September 30, 2009 |
$ | | | 233 | 233 | |||||||||||
-33-
Wells Fargo & Company and Subsidiaries
PICK-A-PAY PORTFOLIO
PICK-A-PAY PORTFOLIO
PCI loans | All other loans | |||||||||||||||||||||||||||
Ratio of | ||||||||||||||||||||||||||||
carrying | ||||||||||||||||||||||||||||
Unpaid | Current | value to | Unpaid | Current | ||||||||||||||||||||||||
principal | LTV | Carrying | current | principal | LTV | Carrying | ||||||||||||||||||||||
(in millions) | balance | ratio (1) | value (2) | value | balance | ratio (1) | value | |||||||||||||||||||||
Sept. 30, 2009 |
||||||||||||||||||||||||||||
California |
$ | 39,034 | 150 | % | $ | 25,492 | 98 | % | $ | 24,447 | 95 | % | $ | 24,395 | ||||||||||||||
Florida |
5,929 | 144 | 3,532 | 85 | 5,166 | 108 | 5,117 | |||||||||||||||||||||
New Jersey |
1,676 | 101 | 1,309 | 78 | 3,017 | 82 | 3,021 | |||||||||||||||||||||
Texas |
452 | 81 | 395 | 71 | 2,031 | 66 | 2,039 | |||||||||||||||||||||
Arizona |
1,481 | 155 | 742 | 78 | 1,160 | 105 | 1,152 | |||||||||||||||||||||
Other states |
8,738 | 110 | 6,520 | 82 | 14,128 | 85 | 14,120 | |||||||||||||||||||||
Total Pick-a-Pay
loans |
$ | 57,310 | $ | 37,990 | $ | 49,949 | $ | 49,844 | ||||||||||||||||||||
June 30, 2009 |
||||||||||||||||||||||||||||
California |
$ | 40,657 | 146 | % | $ | 26,177 | 95 | % | $ | 25,117 | 90 | % | $ | 25,170 | ||||||||||||||
Florida |
6,117 | 130 | 3,903 | 84 | 5,276 | 96 | 5,287 | |||||||||||||||||||||
New Jersey |
1,717 | 99 | 1,226 | 71 | 3,162 | 80 | 3,169 | |||||||||||||||||||||
Texas |
466 | 80 | 341 | 59 | 2,108 | 66 | 2,112 | |||||||||||||||||||||
Arizona |
1,553 | 148 | 1,001 | 96 | 1,195 | 99 | 1,197 | |||||||||||||||||||||
Other states |
9,041 | 108 | 6,227 | 75 | 14,607 | 83 | 14,640 | |||||||||||||||||||||
Total Pick-a-Pay
loans |
$ | 59,551 | $ | 38,875 | $ | 51,465 | $ | 51,575 | ||||||||||||||||||||
(1) | The current loan-to-value (LTV) ratio is calculated as the unpaid principal balance plus the unpaid principal balance of any equity lines of credit that share common collateral divided by the collateral value. Collateral values are generally determined using automated valuation models (AVMs) and are updated quarterly. AVMs are computer-based tools used to estimate market values of homes based on processing large volumes of market data including market comparables and price trends for local market areas. | |
(2) | Carrying value, which does not reflect the allowance for loan losses, includes purchase accounting adjustments, which, for PCI loans, are the nonaccretable difference and the accretable yield, and for all other loans, an adjustment to mark the loans to a market yield at date of merger less any subsequent charge-offs. |
-34-
Wells Fargo & Company and Subsidiaries
HOME EQUITY PORTFOLIOS (1)
HOME EQUITY PORTFOLIOS (1)
% of loans | ||||||||||||||||||||||||
two payments | Annualized | |||||||||||||||||||||||
Outstanding balances | or more past due | loss rate | ||||||||||||||||||||||
Sept. 30, | June 30, | Sept. 30, | June 30, | Sept. 30, | June 30, | |||||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2009 | 2009 | 2009 | ||||||||||||||||||
Core portfolio (2) |
||||||||||||||||||||||||
California |
$ | 30,841 | 31,479 | 3.97 | % | 3.63 | 6.52 | 5.36 | ||||||||||||||||
Florida |
11,496 | 11,697 | 5.08 | 3.91 | 4.82 | 4.55 | ||||||||||||||||||
New Jersey |
8,119 | 8,224 | 2.22 | 1.70 | 1.41 | 1.37 | ||||||||||||||||||
Virginia |
5,736 | 5,805 | 1.60 | 1.26 | 1.22 | 0.99 | ||||||||||||||||||
Pennsylvania |
4,971 | 5,048 | 1.95 | 1.46 | 1.51 | 1.29 | ||||||||||||||||||
Other |
54,152 | 55,248 | 2.64 | 2.22 | 2.65 | 2.46 | ||||||||||||||||||
Total |
115,315 | 117,501 | 3.13 | 2.65 | 3.69 | 3.25 | ||||||||||||||||||
Liquidating portfolio |
||||||||||||||||||||||||
California |
3,406 | 3,616 | 8.75 | 8.16 | 18.22 | 17.13 | ||||||||||||||||||
Florida |
435 | 460 | 9.83 | 9.14 | 16.97 | 18.11 | ||||||||||||||||||
Arizona |
206 | 219 | 8.25 | 8.16 | 22.33 | 18.13 | ||||||||||||||||||
Texas |
161 | 169 | 1.68 | 1.13 | 2.15 | 2.96 | ||||||||||||||||||
Minnesota |
112 | 117 | 3.39 | 3.88 | 8.52 | 7.41 | ||||||||||||||||||
Other |
4,546 | 4,764 | 4.68 | 4.00 | 7.14 | 6.25 | ||||||||||||||||||
Total |
8,866 | 9,345 | 6.51 | 5.91 | 12.17 | 11.29 | ||||||||||||||||||
Total core and
liquidating
portfolios |
$ | 124,181 | 126,846 | 3.37 | 2.89 | 4.31 | 3.85 | |||||||||||||||||
(1) | Consists of real estate 1-4 family junior lien mortgages and lines of credit secured by real
estate from all groups, excluding PCI loans. |
|
(2) | Includes equity lines of credit and closed-end second liens associated with the Pick-a-Pay portfolio totaling $1.9 billion and $2.0 billion at September 30 and June 30, 2009, respectively. |
-35-
Wells Fargo & Company and Subsidiaries
CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES (1)
Quarter ended Sept. 30, | Nine months ended Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | |||||||||||||
Balance, beginning of period |
$ | 23,530 | 7,517 | 21,711 | 5,518 | ||||||||||||
Provision for credit losses |
6,111 | 2,495 | 15,755 | 7,535 | |||||||||||||
Loan charge-offs: |
|||||||||||||||||
Commercial and commercial real estate: |
|||||||||||||||||
Commercial |
(986 | ) | (305 | ) | (2,337 | ) | (897 | ) | |||||||||
Real estate mortgage |
(215 | ) | (9 | ) | (398 | ) | (19 | ) | |||||||||
Real estate construction |
(254 | ) | (36 | ) | (595 | ) | (93 | ) | |||||||||
Lease financing |
(88 | ) | (19 | ) | (173 | ) | (44 | ) | |||||||||
Total commercial and commercial real estate |
(1,543 | ) | (369 | ) | (3,503 | ) | (1,053 | ) | |||||||||
Consumer: |
|||||||||||||||||
Real estate 1-4 family first mortgage |
(1,015 | ) | (146 | ) | (2,229 | ) | (330 | ) | |||||||||
Real estate 1-4 family junior lien mortgage |
(1,340 | ) | (669 | ) | (3,428 | ) | (1,476 | ) | |||||||||
Credit card |
(691 | ) | (396 | ) | (2,025 | ) | (1,078 | ) | |||||||||
Other revolving credit and installment |
(860 | ) | (586 | ) | (2,562 | ) | (1,617 | ) | |||||||||
Total consumer |
(3,906 | ) | (1,797 | ) | (10,244 | ) | (4,501 | ) | |||||||||
Foreign |
(71 | ) | (59 | ) | (181 | ) | (185 | ) | |||||||||
Total loan charge-offs |
(5,520 | ) | (2,225 | ) | (13,928 | ) | (5,739 | ) | |||||||||
Loan recoveries: |
|||||||||||||||||
Commercial and commercial real estate: |
|||||||||||||||||
Commercial |
62 | 27 | 153 | 90 | |||||||||||||
Real estate mortgage |
6 | 1 | 22 | 4 | |||||||||||||
Real estate construction |
5 | - | 11 | 2 | |||||||||||||
Lease financing |
6 | 3 | 13 | 9 | |||||||||||||
Total commercial and commercial real estate |
79 | 31 | 199 | 105 | |||||||||||||
Consumer: |
|||||||||||||||||
Real estate 1-4 family first mortgage |
49 | 7 | 114 | 20 | |||||||||||||
Real estate 1-4 family junior lien mortgage |
49 | 28 | 119 | 63 | |||||||||||||
Credit card |
43 | 35 | 131 | 113 | |||||||||||||
Other revolving credit and installment |
178 | 117 | 580 | 363 | |||||||||||||
Total consumer |
319 | 187 | 944 | 559 | |||||||||||||
Foreign |
11 | 12 | 30 | 40 | |||||||||||||
Total loan recoveries |
409 | 230 | 1,173 | 704 | |||||||||||||
Net loan charge-offs |
(5,111 | ) | (1,995 | ) | (12,755 | ) | (5,035 | ) | |||||||||
Allowances related to business combinations/other |
(2 | ) | 10 | (183 | ) | 9 | |||||||||||
Balance, end of period |
$ | 24,528 | 8,027 | 24,528 | 8,027 | ||||||||||||
Components: |
|||||||||||||||||
Allowance for loan losses |
$ | 24,028 | 7,865 | 24,028 | 7,865 | ||||||||||||
Reserve for unfunded credit commitments |
500 | 162 | 500 | 162 | |||||||||||||
Allowance for credit losses |
$ | 24,528 | 8,027 | 24,528 | 8,027 | ||||||||||||
Net loan charge-offs (annualized) as a
percentage of average total loans |
2.50 | % | 1.96 | 2.05 | 1.71 | ||||||||||||
(1) | Because the Wachovia acquisition was completed on December 31, 2008, charge-offs and recoveries for 2008 include only those of Wells Fargo, and exclude those of Wachovia for that period. Purchased credit-impaired loans (PCI) loans from Wachovia are included in total loans net of related purchase accounting adjustments. For PCI loans, charge-offs are only recorded to the extent that losses exceed the purchase accounting adjustments. The Wachovia merger and the accounting for PCI loans both affect the comparability of certain ratios as described on page 32. |
-36-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES (1)
Quarter ended | |||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | ||||||||||||||||
Balance, beginning of quarter |
$ | 23,530 | 22,846 | 21,711 | 8,027 | 7,517 | |||||||||||||||
Provision for credit losses (2) |
6,111 | 5,086 | 4,558 | 8,444 | 2,495 | ||||||||||||||||
Loan charge-offs: |
|||||||||||||||||||||
Commercial and commercial real estate: |
|||||||||||||||||||||
Commercial |
(986 | ) | (755 | ) | (596 | ) | (756 | ) | (305 | ) | |||||||||||
Real estate mortgage |
(215 | ) | (152 | ) | (31 | ) | (10 | ) | (9 | ) | |||||||||||
Real estate construction |
(254 | ) | (236 | ) | (105 | ) | (85 | ) | (36 | ) | |||||||||||
Lease financing |
(88 | ) | (65 | ) | (20 | ) | (21 | ) | (19 | ) | |||||||||||
Total commercial and commercial real estate |
(1,543 | ) | (1,208 | ) | (752 | ) | (872 | ) | (369 | ) | |||||||||||
Consumer: |
|||||||||||||||||||||
Real estate 1-4 family first mortgage |
(1,015 | ) | (790 | ) | (424 | ) | (210 | ) | (146 | ) | |||||||||||
Real estate 1-4 family junior lien mortgage |
(1,340 | ) | (1,215 | ) | (873 | ) | (728 | ) | (669 | ) | |||||||||||
Credit card |
(691 | ) | (712 | ) | (622 | ) | (485 | ) | (396 | ) | |||||||||||
Other revolving credit and installment |
(860 | ) | (802 | ) | (900 | ) | (683 | ) | (586 | ) | |||||||||||
Total consumer |
(3,906 | ) | (3,519 | ) | (2,819 | ) | (2,106 | ) | (1,797 | ) | |||||||||||
Foreign |
(71 | ) | (56 | ) | (54 | ) | (60 | ) | (59 | ) | |||||||||||
Total loan charge-offs |
(5,520 | ) | (4,783 | ) | (3,625 | ) | (3,038 | ) | (2,225 | ) | |||||||||||
Loan recoveries: |
|||||||||||||||||||||
Commercial and commercial real estate: |
|||||||||||||||||||||
Commercial |
62 | 51 | 40 | 24 | 27 | ||||||||||||||||
Real estate mortgage |
6 | 6 | 10 | 1 | 1 | ||||||||||||||||
Real estate construction |
5 | 4 | 2 | 1 | - | ||||||||||||||||
Lease financing |
6 | 4 | 3 | 4 | 3 | ||||||||||||||||
Total commercial and commercial real estate |
79 | 65 | 55 | 30 | 31 | ||||||||||||||||
Consumer: |
|||||||||||||||||||||
Real estate 1-4 family first mortgage |
49 | 32 | 33 | 17 | 7 | ||||||||||||||||
Real estate 1-4 family junior lien mortgage |
49 | 44 | 26 | 26 | 28 | ||||||||||||||||
Credit card |
43 | 48 | 40 | 34 | 35 | ||||||||||||||||
Other revolving credit and installment |
178 | 198 | 204 | 118 | 117 | ||||||||||||||||
Total consumer |
319 | 322 | 303 | 195 | 187 | ||||||||||||||||
Foreign |
11 | 10 | 9 | 9 | 12 | ||||||||||||||||
Total loan recoveries |
409 | 397 | 367 | 234 | 230 | ||||||||||||||||
Net loan charge-offs |
(5,111 | ) | (4,386 | ) | (3,258 | ) | (2,804 | ) | (1,995 | ) | |||||||||||
Allowances related to business combinations/other |
(2 | ) | (16 | ) | (165 | ) | 8,044 | 10 | |||||||||||||
Balance, end of quarter |
$ | 24,528 | 23,530 | 22,846 | 21,711 | 8,027 | |||||||||||||||
Components: |
|||||||||||||||||||||
Allowance for loan losses |
$ | 24,028 | 23,035 | 22,281 | 21,013 | 7,865 | |||||||||||||||
Reserve for unfunded credit commitments |
500 | 495 | 565 | 698 | 162 | ||||||||||||||||
Allowance for credit losses |
$ | 24,528 | 23,530 | 22,846 | 21,711 | 8,027 | |||||||||||||||
Net loan
charge-offs (annualized) as a percentage of average total loans |
2.50 | % | 2.11 | 1.54 | 2.69 | 1.96 | |||||||||||||||
Allowance for loan losses as a percentage of: |
|||||||||||||||||||||
Total loans |
3.00 | 2.80 | 2.64 | 2.43 | 1.91 | ||||||||||||||||
Nonaccrual loans |
115 | 146 | 212 | 309 | 157 | ||||||||||||||||
Nonaccrual loans and other nonperforming assets |
102 | 126 | 177 | 233 | 125 | ||||||||||||||||
Allowance for credit losses as a percentage of: |
|||||||||||||||||||||
Total loans |
3.07 | 2.86 | 2.71 | 2.51 | 1.95 | ||||||||||||||||
Nonaccrual loans |
118 | 149 | 217 | 319 | 161 | ||||||||||||||||
Nonaccrual loans and other nonperforming assets |
105 | 128 | 181 | 241 | 128 | ||||||||||||||||
(1) | Because the Wachovia acquisition was completed on December 31, 2008, charge-offs and recoveries for 2008 include only those of Wells Fargo, and exclude those of Wachovia for that period. Purchased credit-impaired loans (PCI) loans from Wachovia are included in total loans net of related purchase accounting adjustments. For PCI loans, charge-offs are only recorded to the extent that losses exceed the purchase accounting adjustments. The Wachovia merger and the accounting for PCI loans both affect the comparability of certain ratios as described on page 32. | |
(2) | Provision for credit losses for the quarter ended December 31, 2008, included $3.9 billion to conform reserve practices of Wells Fargo and Wachovia. |
-37-
Wells Fargo & Company and Subsidiaries
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY (1)
Nine months ended September 30, | |||||||||
(in millions) | 2009 | 2008 | |||||||
Balance, beginning of period (2) |
$ | 102,316 | 47,914 | ||||||
Cumulative effect from change in accounting for postretirement benefits
(3) |
- | (20 | ) | ||||||
Adjustment for change of measurement date related to pension and other
postretirement benefits (4) |
- | (8 | ) | ||||||
Net income before noncontrolling interests |
9,654 | 5,439 | |||||||
Wells Fargo other comprehensive income (loss), net of tax, related to: |
|||||||||
Translation adjustments |
63 | (20 | ) | ||||||
Investment securities (5): |
|||||||||
Unrealized losses
related to factors
other than credit (2) |
(654 | ) | - | ||||||
All other |
11,220 | (3,485 | ) | ||||||
Derivative instruments and hedging activities |
(189 | ) | (6 | ) | |||||
Defined benefit pension plans |
570 | 3 | |||||||
Common stock issued |
9,590 | 1,269 | |||||||
Common stock repurchased |
(80 | ) | (1,162 | ) | |||||
Preferred stock released to ESOP |
41 | 346 | |||||||
Common stock dividends |
(1,891 | ) | (3,178 | ) | |||||
Preferred stock dividends |
(1,558 | ) | - | ||||||
Other, net |
(158 | ) | 167 | ||||||
Balance, end of period |
$ | 128,924 | 47,259 | ||||||
(1) | On January 1, 2009, we adopted new accounting guidance on noncontrolling interests contained in Financial Accounting Standards Board (FASB) Accounting Standards Codification 810-10 (ASC 810-10), Consolidation (Statement of Financial Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No. 51), on a retrospective basis for disclosure and, accordingly, prior period information reflects the adoption. ASC 810-10 requires that noncontrolling interests be reported as a component of total equity. | |
(2) | The impact on prior periods of adopting new accounting provisions for recording other-than-temporary impairment on debt securities as prescribed in ASC 320-10, Investments Debt and Equity Securities (FASB Staff Position (FSP) FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments), was to increase the beginning balance of retained earnings and reduce the beginning balance of other comprehensive income by $85 million ($53 million after tax). The unrealized losses in Wells Fargo other comprehensive income in the first nine months of 2009 that related to factors other than credit, where the credit portion was recorded as other-than-temporary impairment in earnings, amounted to $1.04 billion ($654 million after tax). | |
(3) | On January 1, 2008, we adopted new accounting guidance for postretirement benefits in accordance with ASC 715, Compensation - Retirement Benefits (Emerging Issues Task Force (EITF) Issue No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements, and Issue No. 06-10, Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements). | |
(4) | We adjusted the 2008 beginning balance of retained earnings to reflect the change in the measurement date for our pension and postretirement plan assets and benefit obligations as required by ASC 715, Compensation - Retirement Benefits (FAS 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R)). | |
(5) | On March 31, 2009, we early adopted new fair value measurement provisions contained in ASC 820-10, Fair Value Measurements and Disclosures (FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly). This guidance addresses determining fair values for securities in circumstances where the market for such securities is illiquid and transactions involve distressed sales. In such circumstances, ASC 820-10 permits use of other inputs in estimating fair value that may include pricing models. |
-38-
Wells Fargo & Company and Subsidiaries
TIER 1 COMMON EQUITY (1)
Quarter ended | ||||||||||||||
Sept. 30, | June 30, | Dec. 31, | ||||||||||||
(in billions) |
2009 | 2009 | 2008 | |||||||||||
Total equity |
$ | 128.9 | 121.4 | 102.3 | ||||||||||
Less: Noncontrolling interests |
(6.8 | ) | (6.8 | ) | (3.2 | ) | ||||||||
Total Wells Fargo stockholders equity |
122.1 | 114.6 | 99.1 | |||||||||||
Less: Preferred equity |
(31.1 | ) | (31.0 | ) | (30.8 | ) | ||||||||
Goodwill and intangible assets (other than
MSRs) |
(37.5 | ) | (38.7 | ) | (38.1 | ) | ||||||||
Applicable deferred assets |
5.3 | 5.5 | 5.6 | |||||||||||
Deferred tax asset limitation |
- | (2.0 | ) | (6.0 | ) | |||||||||
MSRs over specified limitations |
(1.5 | ) | (1.6 | ) | (1.5 | ) | ||||||||
Cumulative other comprehensive income |
(4.0 | ) | 0.6 | 6.9 | ||||||||||
Other |
(0.3 | ) | (0.3 | ) | (0.8 | ) | ||||||||
Tier 1 common equity |
(A) | $ | 53.0 | 47.1 | 34.4 | |||||||||
Total risk-weighted assets (2) |
(B) | $ | 1,022.9 | 1,047.7 | 1,101.3 | |||||||||
Tier 1 common equity to total risk-weighted assets |
(A)/(B) | 5.18 | % | 4.49 | 3.13 | |||||||||
(1) | Tier 1 common equity is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies, including the Federal Reserve in the Supervisory Capital Assessment Program, to assess the capital position of financial services companies. Tier 1 common equity includes total Wells Fargo stockholders equity, less preferred equity, goodwill and intangible assets (excluding MSRs), net of related deferred taxes, adjusted for specified Tier 1 regulatory capital limitations covering deferred taxes, MSRs, and cumulative other comprehensive income. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. | |
(2) | Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. The Companys September 30, 2009, preliminary risk-weighted assets reflect estimated on-balance sheet risk-weighted assets of $848.5 billion and derivative and off-balance sheet risk-weighted assets of $174.4 billion. |
-39-
Wells Fargo & Company and Subsidiaries
OPERATING SEGMENT RESULTS (1)
OPERATING SEGMENT RESULTS (1)
Community | Wholesale | Wealth, Brokerage | Consolidated | |||||||||||||||||||||||||||||||||||||
(income/expense in millions, |
Banking | Banking | and Retirement | Other (2) | Company | |||||||||||||||||||||||||||||||||||
average balances in billions) |
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||||||
Quarter ended Sept. 30, |
||||||||||||||||||||||||||||||||||||||||
Net interest income (3) |
$ | 8,700 | 5,293 | 2,535 | 1,065 | 743 | 223 | (294 | ) | (200 | ) | 11,684 | 6,381 | |||||||||||||||||||||||||||
Provision for credit losses |
4,572 | 2,202 | 1,361 | 294 | 234 | 3 | (56 | ) | (4 | ) | 6,111 | 2,495 | ||||||||||||||||||||||||||||
Noninterest income |
6,443 | 3,209 | 2,381 | 631 | 2,223 | 458 | (265 | ) | (302 | ) | 10,782 | 3,996 | ||||||||||||||||||||||||||||
Noninterest expense |
6,802 | 3,982 | 2,630 | 1,329 | 2,314 | 498 | (62 | ) | (308 | ) | 11,684 | 5,501 | ||||||||||||||||||||||||||||
Income (loss) before income
tax expense (benefit) |
3,769 | 2,318 | 925 | 73 | 418 | 180 | (441 | ) | (190 | ) | 4,671 | 2,381 | ||||||||||||||||||||||||||||
Income tax expense (benefit) |
1,046 | 764 | 325 | (30 | ) | 151 | 68 | (167 | ) | (72 | ) | 1,355 | 730 | |||||||||||||||||||||||||||
Net income (loss) before
noncontrolling interests |
2,723 | 1,554 | 600 | 103 | 267 | 112 | (274 | ) | (118 | ) | 3,316 | 1,651 | ||||||||||||||||||||||||||||
Less: Net income from
noncontrolling interests |
56 | 14 | 2 | - | 23 | - | - | - | 81 | 14 | ||||||||||||||||||||||||||||||
Net income (loss) (4) |
$ | 2,667 | 1,540 | 598 | 103 | 244 | 112 | (274 | ) | (118 | ) | 3,235 | 1,637 | |||||||||||||||||||||||||||
Average loans |
$ | 534.7 | 287.1 | 247.0 | 116.3 | 45.4 | 15.9 | (16.9 | ) | (15.1 | ) | 810.2 | 404.2 | |||||||||||||||||||||||||||
Average assets |
785.2 | 452.3 | 369.3 | 158.1 | 108.6 | 19.1 | (17.0 | ) | (15.3 | ) | 1,246.1 | 614.2 | ||||||||||||||||||||||||||||
Average core deposits |
530.3 | 252.8 | 146.9 | 64.4 | 116.4 | 23.5 | (34.3 | ) | (20.6 | ) | 759.3 | 320.1 | ||||||||||||||||||||||||||||
Nine months ended Sept. 30, |
||||||||||||||||||||||||||||||||||||||||
Net interest income (3) |
$ | 25,981 | 15,246 | 7,381 | 3,116 | 2,244 | 576 | (782 | ) | (519 | ) | 34,824 | 18,419 | |||||||||||||||||||||||||||
Provision for credit losses |
12,840 | 6,833 | 2,644 | 701 | 374 | 9 | (103 | ) | (8 | ) | 15,755 | 7,535 | ||||||||||||||||||||||||||||
Noninterest income |
17,922 | 10,328 | 7,680 | 3,170 | 6,347 | 1,422 | (783 | ) | (939 | ) | 31,166 | 13,981 | ||||||||||||||||||||||||||||
Noninterest expense |
21,625 | 12,187 | 7,968 | 4,031 | 6,822 | 1,480 | (216 | ) | (910 | ) | 36,199 | 16,788 | ||||||||||||||||||||||||||||
Income (loss) before income
tax expense (benefit) |
9,438 | 6,554 | 4,449 | 1,554 | 1,395 | 509 | (1,246 | ) | (540 | ) | 14,036 | 8,077 | ||||||||||||||||||||||||||||
Income tax expense (benefit) |
2,734 | 2,265 | 1,590 | 385 | 531 | 193 | (473 | ) | (205 | ) | 4,382 | 2,638 | ||||||||||||||||||||||||||||
Net income (loss) before
noncontrolling interests |
6,704 | 4,289 | 2,859 | 1,169 | 864 | 316 | (773 | ) | (335 | ) | 9,654 | 5,439 | ||||||||||||||||||||||||||||
Less: Net income (loss) from
noncontrolling interests |
190 | 43 | 14 | 7 | (2 | ) | - | - | - | 202 | 50 | |||||||||||||||||||||||||||||
Net income (loss) (4) |
$ | 6,514 | 4,246 | 2,845 | 1,162 | 866 | 316 | (773 | ) | (335 | ) | 9,452 | 5,389 | |||||||||||||||||||||||||||
Average loans |
$ | 542.7 | 284.4 | 260.7 | 108.3 | 46.0 | 14.8 | (16.3 | ) | (14.2 | ) | 833.1 | 393.3 | |||||||||||||||||||||||||||
Average assets |
794.1 | 441.3 | 384.8 | 149.9 | 107.6 | 17.9 | (16.4 | ) | (14.4 | ) | 1,270.1 | 594.7 | ||||||||||||||||||||||||||||
Average core deposits |
537.4 | 250.2 | 141.2 | 65.8 | 110.9 | 22.3 | (29.8 | ) | (19.7 | ) | 759.7 | 318.6 | ||||||||||||||||||||||||||||
(1) | The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment. As a result of the combination of Wells Fargo and Wachovia, management realigned its segments into the following three lines of business: Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement. We revised prior period information to reflect this realignment; however, segment information for periods prior to first quarter 2009 does not include Wachovia information. | |
(2) | Other includes integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing wealth management customers serviced and products sold in the stores. | |
(3) | 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. | |
(4) | Represents segment net income (loss) for Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement segments and Wells Fargo net income for the Consolidated Company. |
-40-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(income/expense in millions, average balances in billions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
COMMUNITY BANKING |
||||||||||||||||||||
Net interest income (2) |
$ | 8,700 | 8,784 | 8,497 | 5,296 | 5,293 | ||||||||||||||
Provision for credit losses |
4,572 | 4,264 | 4,004 | 6,789 | 2,202 | |||||||||||||||
Noninterest income |
6,443 | 6,023 | 5,456 | 2,096 | 3,209 | |||||||||||||||
Noninterest expense |
6,802 | 7,665 | 7,158 | 4,320 | 3,982 | |||||||||||||||
Income (loss) before income tax expense (benefit) |
3,769 | 2,878 | 2,791 | (3,717 | ) | 2,318 | ||||||||||||||
Income tax expense (benefit) |
1,046 | 798 | 890 | (1,606 | ) | 764 | ||||||||||||||
Net income (loss) before noncontrolling interests |
2,723 | 2,080 | 1,901 | (2,111 | ) | 1,554 | ||||||||||||||
Less: Net income (loss) from noncontrolling interests |
56 | 72 | 62 | (11 | ) | 14 | ||||||||||||||
Segment net income (loss) |
$ | 2,667 | 2,008 | 1,839 | (2,100 | ) | 1,540 | |||||||||||||
Average loans |
534.7 | 540.7 | 552.8 | 288.9 | 287.1 | |||||||||||||||
Average assets |
785.2 | 799.2 | 797.9 | 466.0 | 452.3 | |||||||||||||||
Average core deposits |
530.3 | 543.9 | 538.0 | 260.6 | 252.8 | |||||||||||||||
WHOLESALE BANKING |
||||||||||||||||||||
Net interest income (2) |
$ | 2,535 | 2,479 | 2,367 | 1,400 | 1,065 | ||||||||||||||
Provision for credit losses |
1,361 | 738 | 545 | 414 | 294 | |||||||||||||||
Noninterest income |
2,381 | 2,759 | 2,540 | 515 | 631 | |||||||||||||||
Noninterest expense |
2,630 | 2,807 | 2,531 | 1,251 | 1,329 | |||||||||||||||
Income before income tax expense (benefit) |
925 | 1,693 | 1,831 | 250 | 73 | |||||||||||||||
Income tax expense (benefit) |
325 | 618 | 647 | 31 | (30 | ) | ||||||||||||||
Net income before noncontrolling interests |
600 | 1,075 | 1,184 | 219 | 103 | |||||||||||||||
Less: Net income from noncontrolling interests |
2 | 8 | 4 | 4 | - | |||||||||||||||
Segment net income |
$ | 598 | 1,067 | 1,180 | 215 | 103 | ||||||||||||||
Average loans |
247.0 | 263.5 | 271.9 | 124.2 | 116.3 | |||||||||||||||
Average assets |
369.3 | 381.7 | 403.8 | 163.2 | 158.1 | |||||||||||||||
Average core deposits |
146.9 | 138.1 | 138.5 | 81.0 | 64.4 | |||||||||||||||
WEALTH, BROKERAGE AND RETIREMENT |
||||||||||||||||||||
Net interest income (2) |
$ | 743 | 764 | 737 | 251 | 223 | ||||||||||||||
Provision for credit losses |
234 | 115 | 25 | 293 | 3 | |||||||||||||||
Noninterest income |
2,223 | 2,222 | 1,902 | 417 | 458 | |||||||||||||||
Noninterest expense |
2,314 | 2,289 | 2,219 | 512 | 498 | |||||||||||||||
Income (loss) before income tax expense (benefit) |
418 | 582 | 395 | (137 | ) | 180 | ||||||||||||||
Income tax expense (benefit) |
151 | 222 | 158 | (52 | ) | 68 | ||||||||||||||
Net income (loss) before noncontrolling interests |
267 | 360 | 237 | (85 | ) | 112 | ||||||||||||||
Less: Net income (loss) from noncontrolling interests |
23 | (3 | ) | (22 | ) | - | - | |||||||||||||
Segment net income (loss) |
$ | 244 | 363 | 259 | (85 | ) | 112 | |||||||||||||
Average loans |
45.4 | 45.9 | 46.7 | 16.5 | 15.9 | |||||||||||||||
Average assets |
108.6 | 110.2 | 104.0 | 20.0 | 19.1 | |||||||||||||||
Average core deposits |
116.4 | 113.5 | 102.6 | 25.6 | 23.5 | |||||||||||||||
OTHER (3) |
||||||||||||||||||||
Net interest income (2) |
$ | (294 | ) | (263 | ) | (225 | ) | (223 | ) | (200 | ) | |||||||||
Provision for credit losses |
(56 | ) | (31 | ) | (16 | ) | 948 | (4 | ) | |||||||||||
Noninterest income |
(265 | ) | (261 | ) | (257 | ) | (275 | ) | (302 | ) | ||||||||||
Noninterest expense |
(62 | ) | (64 | ) | (90 | ) | (273 | ) | (308 | ) | ||||||||||
Loss before income tax benefit |
(441 | ) | (429 | ) | (376 | ) | (1,173 | ) | (190 | ) | ||||||||||
Income tax benefit |
(167 | ) | (163 | ) | (143 | ) | (409 | ) | (72 | ) | ||||||||||
Net loss before noncontrolling interests |
(274 | ) | (266 | ) | (233 | ) | (764 | ) | (118 | ) | ||||||||||
Less: Net income from noncontrolling interests |
- | - | - | - | - | |||||||||||||||
Other net loss |
$ | (274 | ) | (266 | ) | (233 | ) | (764 | ) | (118 | ) | |||||||||
Average loans |
(16.9 | ) | (16.2 | ) | (15.8 | ) | (15.7 | ) | (15.1 | ) | ||||||||||
Average assets |
(17.0 | ) | (16.2 | ) | (16.0 | ) | (16.0 | ) | (15.3 | ) | ||||||||||
Average core deposits |
(34.3 | ) | (29.8 | ) | (25.2 | ) | (22.2 | ) | (20.6 | ) | ||||||||||
CONSOLIDATED COMPANY |
||||||||||||||||||||
Net interest income (2) |
$ | 11,684 | 11,764 | 11,376 | 6,724 | 6,381 | ||||||||||||||
Provision for credit losses |
6,111 | 5,086 | 4,558 | 8,444 | 2,495 | |||||||||||||||
Noninterest income |
10,782 | 10,743 | 9,641 | 2,753 | 3,996 | |||||||||||||||
Noninterest expense |
11,684 | 12,697 | 11,818 | 5,810 | 5,501 | |||||||||||||||
Income (loss) before income tax expense (benefit) |
4,671 | 4,724 | 4,641 | (4,777 | ) | 2,381 | ||||||||||||||
Income tax expense (benefit) |
1,355 | 1,475 | 1,552 | (2,036 | ) | 730 | ||||||||||||||
Net income (loss) before noncontrolling interests |
3,316 | 3,249 | 3,089 | (2,741 | ) | 1,651 | ||||||||||||||
Less: Net income (loss) from noncontrolling interests |
81 | 77 | 44 | (7 | ) | 14 | ||||||||||||||
Wells Fargo net income (loss) |
$ | 3,235 | 3,172 | 3,045 | (2,734 | ) | 1,637 | |||||||||||||
Average loans |
810.2 | 833.9 | 855.6 | 413.9 | 404.2 | |||||||||||||||
Average assets |
1,246.1 | 1,274.9 | 1,289.7 | 633.2 | 614.2 | |||||||||||||||
Average core deposits |
759.3 | 765.7 | 753.9 | 345.0 | 320.1 | |||||||||||||||
(1) | The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment. As a result of the combination of Wells Fargo and Wachovia, management realigned its segments into the following three lines of business: Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement. We revised prior period information to reflect this realignment; however, segment information for periods prior to first quarter 2009 does not include Wachovia information. | |
(2) | 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. | |
(3) | Other includes integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing wealth management customers serviced and products sold in the stores. Other also includes the $1.2 billion provision for credit losses recorded at the enterprise level in fourth quarter 2008 to conform Wachovia estimated loss emergence coverage periods to Wells Fargo policies. |
-41-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Residential MSRs measured using the fair value method: |
||||||||||||||||||||
Fair value, beginning of quarter |
$ | 15,690 | 12,391 | 14,714 | 19,184 | 19,333 | ||||||||||||||
Purchases |
- | - | - | - | 57 | |||||||||||||||
Acquired from Wachovia (1) |
- | - | 34 | 479 | - | |||||||||||||||
Servicing from securitizations or asset transfers |
1,517 | 2,081 | 1,447 | 808 | 851 | |||||||||||||||
Net additions |
1,517 | 2,081 | 1,481 | 1,287 | 908 | |||||||||||||||
Changes in fair value: |
||||||||||||||||||||
Due to changes in valuation model inputs
or assumptions (2) |
(2,078 | ) | 2,316 | (2,824 | ) | (5,129 | ) | (546 | ) | |||||||||||
Other changes in fair value (3) |
(629 | ) | (1,098 | ) | (980 | ) | (628 | ) | (511 | ) | ||||||||||
Total changes in fair value |
(2,707 | ) | 1,218 | (3,804 | ) | (5,757 | ) | (1,057 | ) | |||||||||||
Fair value, end of quarter |
$ | 14,500 | 15,690 | 12,391 | 14,714 | 19,184 | ||||||||||||||
(1) | First quarter 2009 results reflect refinements to initial purchase accounting adjustments. | |
(2) | Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. | |
(3) | Represents changes due to collection/realization of expected cash flows over time. |
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Amortized MSRs: |
||||||||||||||||||||
Balance, beginning of quarter |
$ | 1,205 | 1,257 | 1,446 | 433 | 442 | ||||||||||||||
Purchases |
- | 6 | 4 | 3 | 2 | |||||||||||||||
Acquired from Wachovia (1) |
- | (8 | ) | (127 | ) | 1,021 | - | |||||||||||||
Servicing from securitizations or asset transfers |
21 | 18 | 4 | 7 | 8 | |||||||||||||||
Amortization |
(64 | ) | (68 | ) | (70 | ) | (18 | ) | (19 | ) | ||||||||||
Balance, end of quarter (2) |
$ | 1,162 | 1,205 | 1,257 | 1,446 | 433 | ||||||||||||||
Fair value of amortized MSRs: |
||||||||||||||||||||
Beginning of quarter |
$ | 1,311 | 1,392 | 1,555 | 622 | 595 | ||||||||||||||
End of quarter |
1,277 | 1,311 | 1,392 | 1,555 | 622 | |||||||||||||||
(1) | 2009 periods reflect refinements to initial purchase accounting adjustments. | |
(2) | There was no valuation allowance recorded for the periods presented. |
-42-
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in millions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Servicing income, net: |
||||||||||||||||||||
Servicing fees (1) |
$ | 1,039 | 888 | 1,018 | 952 | 980 | ||||||||||||||
Changes in fair value of residential MSRs: |
||||||||||||||||||||
Due to changes in valuation model inputs
or assumptions (2) |
(2,078 | ) | 2,316 | (2,824 | ) | (5,129 | ) | (546 | ) | |||||||||||
Other changes in fair value (3) |
(629 | ) | (1,098 | ) | (980 | ) | (628 | ) | (511 | ) | ||||||||||
Total changes in fair value of residential MSRs |
(2,707 | ) | 1,218 | (3,804 | ) | (5,757 | ) | (1,057 | ) | |||||||||||
Amortization |
(64 | ) | (68 | ) | (70 | ) | (18 | ) | (19 | ) | ||||||||||
Net derivative gains (losses) from economic hedges (4) |
3,605 | (1,285 | ) | 3,699 | 4,783 | 621 | ||||||||||||||
Total servicing income, net |
$ | 1,873 | 753 | 843 | (40 | ) | 525 | |||||||||||||
Market-related valuation changes to MSRs
and economic hedges (2)+(4) |
$ | 1,527 | 1,031 | 875 | (346 | ) | 75 | |||||||||||||
(1) | Includes contractually specified servicing fees, late charges and other ancillary revenues. | |
(2) | Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. | |
(3) | Represents changes due to collection/realization of expected cash flows over time. | |
(4) | Represents results from free-standing derivatives (economic hedges) used to hedge the risk of changes in fair value of MSRs. |
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in billions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Managed servicing portfolio: |
||||||||||||||||||||
Residential mortgage loans serviced for others (1) |
$ | 1,419 | 1,394 | 1,379 | 1,388 | 1,323 | ||||||||||||||
Owned loans serviced (2) |
260 | 270 | 267 | 268 | 96 | |||||||||||||||
Total owned servicing of residential mortgage loans |
1,679 | 1,664 | 1,646 | 1,656 | 1,419 | |||||||||||||||
Commercial mortgage loans serviced for others |
458 | 470 | 474 | 472 | 142 | |||||||||||||||
Total owned servicing of loans |
2,137 | 2,134 | 2,120 | 2,128 | 1,561 | |||||||||||||||
Sub-servicing |
21 | 22 | 23 | 26 | 19 | |||||||||||||||
Total managed servicing portfolio |
$ | 2,158 | 2,156 | 2,143 | 2,154 | 1,580 | ||||||||||||||
Ratio of MSRs to related loans serviced for others |
0.83 | % | 0.91 | 0.74 | 0.87 | 1.34 | ||||||||||||||
Weighted-average note rate
(mortgage loans serviced for others) |
5.72 | 5.74 | 5.83 | 5.92 | 5.98 | |||||||||||||||
(1) | Consists of 1-4 family first mortgage loans. | |
(2) | Consists of residential mortgages held for sale and 1-4 family first mortgage loans. |
-43-
Wells Fargo & Company and Subsidiaries
SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA
Quarter ended | ||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | ||||||||||||||||
(in billions) | 2009 | 2009 | 2009 | 2008 | 2008 | |||||||||||||||
Application data: |
||||||||||||||||||||
Wells Fargo Home Mortgage first mortgage
quarterly applications |
$ | 123 | 194 | 190 | 116 | 83 | ||||||||||||||
Refinances as a percentage of applications |
62 | % | 73 | 82 | 68 | 39 | ||||||||||||||
Wells Fargo Home Mortgage first mortgage
unclosed pipeline, at quarter end |
$ | 62 | 90 | 100 | 71 | 41 | ||||||||||||||
Quarter ended | |||||||||||||||||||||
Sept. 30, | June 30, | Mar. 31, | Dec. 31, | Sept. 30, | |||||||||||||||||
(in billions) | 2009 | 2009 | 2009 | 2008 | 2008 | ||||||||||||||||
Residential Real Estate Originations: (1) |
|||||||||||||||||||||
Wells Fargo Home Mortgage first mortgage loans: |
|||||||||||||||||||||
Retail |
$ | 50 | 71 | 51 | 20 | 23 | |||||||||||||||
Correspondent/Wholesale |
45 | 57 | 49 | 28 | 25 | ||||||||||||||||
Home equity loans and lines |
1 | 1 | 1 | 1 | 2 | ||||||||||||||||
Wells Fargo Financial |
- | - | - | 1 | 1 | ||||||||||||||||
Total quarter-to-date |
$ | 96 | 129 | 101 | 50 | 51 | |||||||||||||||
Total year-to-date |
$ | 326 | 230 | 101 | 230 | 180 | |||||||||||||||
(1) | Consists of residential real estate originations from all Wells Fargo channels. |