<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 15, 1997
WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-6214 No. 13-2553920
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
420 Montgomery Street, San Francisco, California 94163
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 477-1000
Not applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5: OTHER EVENTS
Attached hereto as Exhibit 99 is a Press Release announcing Wells
Fargo & Company's financial results for the quarter ended June 30,
1997. Final financial statements with additional analyses will be
filed as part of the Company's Form 10-Q in August 1997.
Item 7: FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
27 Financial Data Schedule
99 Copy of the Press Release announcing Wells Fargo & Company's
financial results for the quarter ended June 30, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on July 15, 1997.
WELLS FARGO & COMPANY
By: /s/ Frank A. Moeslein
---------------------------------------
Frank A. Moeslein
Executive Vice President and Controller
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 8-K
DATED JULY 15, 1997 FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 8,037
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 224
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,530
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 65,689
<ALLOWANCE> 1,850
<TOTAL-ASSETS> 100,180
<DEPOSITS> 73,748
<SHORT-TERM> 4,445
<LIABILITIES-OTHER> 3,065
<LONG-TERM> 5,719
0
275
<COMMON> 440
<OTHER-SE> 12,391
<TOTAL-LIABILITIES-AND-EQUITY> 100,180
<INTEREST-LOAN> 3,057
<INTEREST-INVEST> 398
<INTEREST-OTHER> 24
<INTEREST-TOTAL> 3,490
<INTEREST-DEPOSIT> 851
<INTEREST-EXPENSE> 1,131
<INTEREST-INCOME-NET> 2,359
<LOAN-LOSSES> 245
<SECURITIES-GAINS> 7
<EXPENSE-OTHER> 2,363
<INCOME-PRETAX> 1,070
<INCOME-PRE-EXTRAORDINARY> 568
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 568
<EPS-PRIMARY> 6.12
<EPS-DILUTED> 0
<YIELD-ACTUAL> 6.03
<LOANS-NON> 602
<LOANS-PAST> 0
<LOANS-TROUBLED> 10
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,018
<CHARGE-OFFS> 545
<RECOVERIES> 132
<ALLOWANCE-CLOSE> 1,850
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE>
Exhibit 99
Cindy Koehn 415/396-3099
Investor Relations
FOR IMMEDIATE RELEASE
Tues., July 15, 1997
WELLS FARGO REPORTS SECOND QUARTER EARNINGS
Per Share Earnings of $2.49 vs. $3.61 a year ago
Wells Fargo & Co. (NYSE:WFC) today reported net income of $228 million for
the second quarter of 1997, compared with $363 million for the second quarter of
1996, a decrease of 37 percent. Per share earnings for the quarter were $2.49,
compared with $3.61 in the second quarter of 1996, a decrease of 31 percent.
Return on average assets (ROA) was .92 percent and return on average common
equity (ROE) was 6.88 percent in the second quarter of 1997. In the year-ago
period, ROA was 1.35 percent and ROE was 9.77 percent.
Cash earnings for the second quarter of 1997 were $3.79 per share compared
with $4.89 for the second quarter of 1996. Cash ROA was 1.51 percent and cash
ROE was 29.27 percent for the second quarter of 1997, compared with 1.96 percent
and 33.43 percent, respectively, for the second quarter of 1996. Cash earnings
are earnings before the amortization of goodwill and nonqualifying core deposit
intangible.
"The earnings we reported this morning are clearly a disappointment for
shareholders, employees and the senior management of this Company," said Paul
Hazen, chairman. "We have encountered difficulties in the past that slowed our
progress for awhile. With the help of our dedicated employees, we are confident
we will work through our current issues and establish momentum in the second
half of 1997."
Net interest income on a taxable-equivalent basis was $1,150 million in the
second quarter of 1997, compared with $1,304 million a year ago, a decrease of
12 percent. The decrease was predominantly due to a decline in earning assets.
The Company's net interest margin for the quarter was 5.93 percent, compared
with 6.03 percent a year ago.
-more-
<PAGE>
2/WF Earnings
Noninterest income (NII) for the second quarter of 1997 was $679 million,
compared with $639 million in the same period a year ago, an increase of 6
percent. Noninterest expense (NIE) for the second quarter of 1997 was $1,246
million, and during the second quarter of 1996 was $1,277 million. This
decrease resulted from cost savings achieved subsequent to the merger with First
Interstate, substantially offset by an increase in operating losses that
resulted from the resolution of various operational and back-office issues
related to the First Interstate integration, including clearing accounts with
other banks. The operations and back office issues are past problems, not new
ones. Operating losses for the second quarter of 1997 totaled $180 million,
compared to first quarter 1997 losses of $42 million. One example of the issues
resolved is the incorrect posting of some of the Company's customer deposits,
which occurred several months ago. A customer made a deposit and found that the
deposited amount had not been added to his or her account. The Company
immediately gave the customer credit and sent the discrepancy to be researched,
in an attempt to recover from the account to which the deposit was incorrectly
added. "This research has been slow and difficult, and in many cases we have
been unable to locate the account to which the deposit was incorrectly posted
and recover the money," explained Hazen. "As a result, the Company has written
off the amount of the deposit credit to the original customer."
The loan loss provision was $140 million in the second quarter of 1997.
There was no loan loss provision in the second quarter of 1996. Net charge-offs
in the second quarter of 1997 totaled $212 million, or 1.32 percent of average
loans (annualized). The largest category of net charge-offs was credit card
loans ($122 million). For the second quarter of 1996, net charge-offs totaled
$178 million, or 1.01 percent of average loans (annualized). The largest
category of net charge-offs in that period was also credit card loans ($90
million).
At June 30, 1997, the allowance for loan losses of $1,850 million equaled
2.82 percent of total loans, compared with 2.94 percent at March 31, 1997 and
3.22 percent at June 30, 1996. Total nonaccrual and restructured loans were $612
million at June 30, 1997, compared with $655 million at March 31, 1997 and $742
million at June 30, 1996. Foreclosed assets were $194 million at June 30, 1997,
compared with $207 million at March 31, 1997 and $238 million at June 30, 1996.
-more-
<PAGE>
3/WF Earnings
At June 30, 1997, the Company's preliminary risk-based capital ratios were
11.40 percent for total risk-based capital and 7.45 percent for Tier 1 risk-
based capital, exceeding the minimum regulatory guidelines of 8 percent and 4
percent, respectively. At March 31, 1997, these risk-based capital ratios were
12.05 percent and 7.80 percent, respectively. At June 30, 1996, the Company's
total risk-based capital ratio was 11.18 percent and the Tier 1 risk-based
capital ratio was 7.40 percent. The leverage ratio at June 30, 1997 was 6.65
percent, compared with 6.61 percent at March 31, 1997 and 6.37 percent at June
30, 1996. The ratio of common equity to total assets was 12.81 percent at June
30, 1997, 12.93 percent at March 31, 1997 and 13.07 percent at June 30, 1996.
________________
The following appears in accordance with the Securities Litigation Reform Act:
This press release includes forward-looking statements that involve inherent
risks and uncertainties. A number of important factors could cause actual
results to differ materially from those in the forward-looking statements. Those
factors include fluctuations in interest rates, inflation, government
regulations, the progress of integrating First Interstate and economic
conditions and competition in the geographic and business areas in which the
Company conducts its operations.
###
VISIT WELLS FARGO ON THE WORLD WIDE WEB AT HTTP://WWW.WELLSFARGO.COM
###
<PAGE>
- 4 -
Wells Earnings
Wells Fargo & Company and Subsidiaries
<TABLE>
<CAPTION>
SUMMARY FINANCIAL DATA - NEWS RELEASE
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
% Change
Quarter ended June 30, 1997 from Six months ended
---------------------------- ------------------ ------------------
JUNE 30, Mar. 31, June 30, Mar. 31, June 30, JUNE 30, June 30, %
(in millions) 1997 1997 1996 1997 1996 1997 1996 Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Net income $ 228 $ 339 $ 363 (33)% (37)% $ 568 $ 627 (9)%
Net income applicable to common stock 222 329 344 (33) (35) 551 598 (8)
Per common share
Net income $ 2.49 $ 3.62 $ 3.61 (31) (31) $ 6.12 $ 8.39 (27)
Dividends declared 1.30 1.30 1.30 -- -- 2.60 2.60 --
Average common shares outstanding 89.0 90.8 95.6 (2) (7) 89.9 71.3 26
Profitability ratios (annualized)
Net income to average total assets (ROA) .92% 1.31% 1.35% (30) (32) 1.12% 1.60% (30)
Net income applicable to common stock to
average common stockholders' equity (ROE) 6.88 10.02 9.77 (31) (30) 8.46 13.52 (37)
Efficiency ratio (1) 68.2% 60.3% 65.8% 13 4 64.2% 62.1% 3
Average loans $ 64,618 $ 65,493 $ 70,734 (1) (9) $ 65,053 $ 52,880 23
Average assets 99,739 105,430 108,430 (5) (8) 102,569 78,782 30
Average core deposits 73,524 77,622 83,356 (5) (12) 75,562 60,087 26
Net interest margin 5.93% 6.14% 6.03% (3) (2) 6.03% 6.08% (1)
NET INCOME AND RATIOS EXCLUDING
GOODWILL AND NONQUALIFYING CORE DEPOSIT
INTANGIBLE AMORTIZATION AND BALANCES
("CASH" OR "TANGIBLE") (2)
Net income applicable to common stock $ 338 $ 443 $ 468 (24) (28) $ 781 $ 730 7
Net income per common share 3.79 4.88 4.89 (22) (22) 8.69 10.24 (15)
ROA 1.51% 1.90% 1.96% (21) (23) 1.71% 2.05% (17)
ROE 29.27 36.67 33.43 (20) (12) 33.06 33.18 --
Efficiency ratio 60.6 52.9 58.0 15 4 56.7 56.7 --
AT PERIOD END
Investment securities $ 11,530 $ 12,634 $ 13,692 (9) (16) $ 11,530 $ 13,692 (16)
Loans 65,689 65,436 70,541 -- (7) 65,689 70,541 (7)
Allowance for loan losses 1,850 1,922 2,273 (4) (19) 1,850 2,273 (19)
Goodwill 7,231 7,312 7,479 (1) (3) 7,231 7,479 (3)
Assets 100,180 101,863 108,586 (2) (8) 100,180 108,586 (8)
Core deposits 73,545 76,156 83,331 (3) (12) 73,545 83,331 (12)
Common stockholders' equity 12,831 13,170 14,191 (3) (10) 12,831 14,191 (10)
Stockholders' equity 13,106 13,595 15,030 (4) (13) 13,106 15,030 (13)
Capital ratios
Common stockholders' equity to assets 12.81% 12.93% 13.07% (1) (2) 12.81% 13.07% (2)
Stockholders' equity to assets 13.08 13.35 13.84 (2) (5) 13.08 13.84 (5)
Risk-based capital (3)
Tier 1 capital 7.45 7.80 7.40 (4) 1 7.45 7.40 1
Total capital 11.40 12.05 11.18 (5) 2 11.40 11.18 2
Leverage (3) 6.65 6.61 6.37 1 4 6.65 6.37 4
Book value per common share $ 145.68 $ 146.37 $ 149.52 -- (3) $ 145.68 $ 149.52 (3)
Staff (active, full-time equivalent) 33,216 34,486 41,548 (4) (20) 33,216 41,548 (20)
COMMON STOCK PRICE
High $ 287.88 $ 319.25 $ 264.50 (10) 9 $ 319.25 $ 264.50 21
Low 246.00 271.00 232.13 (9) 6 246.00 203.13 21
Period end 269.50 284.13 239.13 (5) 13 269.50 239.13 13
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The efficiency ratio is defined as noninterest expense divided by the total
of net interest income and noninterest income.
(2) Nonqualifying core deposit intangible (CDI) amortization and average
balance excluded from these calculations are, with the exception of the
efficiency ratio, net of applicable taxes. The after-tax amounts for the
amortization and average balance of nonqualifying CDI were $35 million and
$1,034 million, respectively, for the quarter ended June 30, 1997 and $66
million and $1,064 million, respectively, for the six months ended June 30,
1997. Goodwill amortization and average balance (which are not tax
effected) were $81 million and $7,271 million, respectively, for the
quarter ended June 30, 1997 and $164 million and $7,288 million,
respectively, for the six months ended June 30, 1997.
(3) The June 30, 1997 ratios are preliminary.
<PAGE>
- 5 -
<TABLE>
<CAPTION>
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, ended June 30,
---------------- % ---------------- %
(in millions) 1997 1996 Change 1997 1996 Change
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Federal funds sold and securities purchased
(1) under resale agreements $ 6 $ 8 (25)% $ 11 $ 10 10 %
(2) Investment securities 190 225 (16) 398 353 13
(3) Loans 1,507 1,618 (7) 3,057 2,494 23
(4) Other 13 7 86 24 7 243
------ ------ ------ ------
(5) Total interest income 1,716 1,858 (8) 3,490 2,864 22
------ ------ ------ ------
INTEREST EXPENSE
(6) Deposits 429 454 (6) 851 695 22
Federal funds purchased and securities sold
(7) under repurchase agreements 34 21 62 65 57 14
(8) Commercial paper and other short-term borrowings 3 3 -- 6 8 (25)
(9) Senior and subordinated debt 78 80 (3) 159 128 24
Guaranteed preferred beneficial interests in
(10) Company's subordinated debentures 25 -- -- 50 -- --
------ ------ ------ ------
(11) Total interest expense 569 558 2 1,131 888 27
------ ------ ------ ------
(12) NET INTEREST INCOME 1,147 1,300 (12) 2,359 1,976 19
(13) Provision for loan losses 140 -- -- 245 -- --
------ ------ ------ ------
Net interest income after
(14) provision for loan losses 1,007 1,300 (23) 2,114 1,976 7
------ ------ ------ ------
NONINTEREST INCOME
(15) Service charges on deposit accounts 214 258 (17) 434 380 14
(16) Fees and commissions 234 211 11 448 329 36
(17) Trust and investment services income 112 104 8 221 164 35
(18) Investment securities gains 3 3 -- 7 2 250
(19) Other 116 63 84 209 118 77
------ ------ ------ ------
(20) Total noninterest income 679 639 6 1,319 993 33
------ ------ ------ ------
NONINTEREST EXPENSE
(21) Salaries 316 400 (21) 656 581 13
(22) Incentive compensation 49 61 (20) 89 93 (4)
(23) Employee benefits 81 102 (21) 176 157 12
(24) Equipment 98 111 (12) 192 167 15
(25) Net occupancy 95 108 (12) 196 161 22
(26) Goodwill 81 81 -- 164 89 84
(27) Core deposit intangible 67 82 (18) 129 91 42
(28) Operating losses 180 27 567 222 42 429
(29) Other 279 305 (9) 539 463 16
------ ------ ------ ------
(30) Total noninterest expense 1,246 1,277 (2) 2,363 1,844 28
------ ------ ------ ------
INCOME BEFORE INCOME TAX
(31) EXPENSE 440 662 (34) 1,070 1,125 (5)
(32) Income tax expense 212 299 (29) 502 498 1
------ ------ ------ ------
(33) NET INCOME $ 228 $ 363 (37)% $ 568 $ 627 (9)%
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
NET INCOME APPLICABLE TO
(34) COMMON STOCK $ 222 $ 344 (35)% $ 551 $ 598 (8)%
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
PER COMMON SHARE
(35) Net income $ 2.49 $ 3.61 (31)% $ 6.12 $ 8.39 (27)%
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
(36) Dividends declared $ 1.30 $ 1.30 -- % $ 2.60 $ 2.60 -- %
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
(37) Average common shares outstanding 89.0 95.6 (7)% 89.9 71.3 26 %
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- 6 -
<TABLE>
<CAPTION>
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
% Change
June 30, 1997 from
------------------
June 30, Dec. 31, June 30, Dec. 31, June 30,
(in millions) 1997 1996 1996 1996 1996
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
(1) Cash and due from banks $ 8,037 $ 11,736 $ 8,882 (32)% (10)%
Federal funds sold and securities
(2) purchased under resale agreements 224 187 1,344 20 (83)
(3) Investment securities at fair value 11,530 13,505 13,692 (15) (16)
(4) Loans 65,689 67,389 70,541 (3) (7)
(5) Allowance for loan losses 1,850 2,018 2,273 (8) (19)
------- ------- -------
(6) Net loans 63,839 65,371 68,268 (2) (6)
------- ------- -------
(7) Due from customers on acceptances 97 197 210 (51) (54)
(8) Accrued interest receivable 519 665 591 (22) (12)
(9) Premises and equipment, net 2,262 2,406 2,400 (6) (6)
(10) Core deposit intangible 1,835 2,038 2,208 (10) (17)
(11) Goodwill 7,231 7,322 7,479 (1) (3)
(12) Other assets 4,606 5,461 3,512 (16) 31
------- ------- -------
(13) Total assets $100,180 $108,888 $108,586 (8)% (8)%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
LIABILITIES
(14) Noninterest-bearing deposits $ 24,284 $ 29,073 $ 27,535 (16)% (12)%
(15) Interest-bearing deposits 49,464 52,748 56,333 (6) (12)
------- ------- -------
(16) Total deposits 73,748 81,821 83,868 (10) (12)
Federal funds purchased and securities
(17) sold under repurchase agreements 4,237 2,029 944 109 349
(18) Commercial paper and other short-term borrowings 208 401 262 (48) (21)
(19) Acceptances outstanding 97 197 210 (51) (54)
(20) Accrued interest payable 196 171 177 15 11
(21) Other liabilities 2,869 3,947 2,865 (27) --
(22) Senior debt 1,734 2,120 2,586 (18) (33)
(23) Subordinated debt 2,686 2,940 2,644 (9) 2
Guaranteed preferred beneficial interests in
(24) Company's subordinated debentures 1,299 1,150 -- 13 --
STOCKHOLDERS' EQUITY
(25) Preferred stock 275 600 839 (54) (67)
Common stock - $5 par value,
authorized 150,000,000 shares;
issued and outstanding 88,078,690 shares,
(26) 91,474,425 shares and 94,912,532 shares 440 457 475 (4) (7)
(27) Additional paid-in capital 9,305 10,287 11,207 (10) (17)
(28) Retained earnings 3,064 2,749 2,586 11 18
(29) Cumulative foreign currency translation adjustments -- (4) (4) (100) (100)
(30) Investment securities valuation allowance 22 23 (73) (4) --
------- ------- -------
(31) Total stockholders' equity 13,106 14,112 15,030 (7) (13)
------- ------- -------
(32) Total liabilities and stockholders' equity $100,180 $108,888 $108,586 (8)% (8)%
------- ------- ------- ------- -------
------- ------- ------- ------- -------
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- 7 -
Wells Fargo & Company and Subsidiaries
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Six months ended June 30,
-------------------------
(in millions) 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
BALANCE, BEGINNING OF PERIOD $14,112 $ 4,055
Net income 568 627
Common stock issued to First Interstate stockholders -- 11,299
Common stock issued under employee benefit and
dividend reinvestment plans 45 55
Preferred stock issued to First Interstate stockholders -- 360
Preferred stock redeemed (325) --
Common stock repurchased (1,044) (1,163)
Preferred stock dividends (17) (29)
Common stock dividends (236) (186)
Change in foreign currency translation adjustments 4 --
Change in investment securities valuation allowance (1) (99)
Fair value adjustment related to First Interstate stock options -- 111
------- -------
BALANCE, END OF PERIOD $13,106 $15,030
------- -------
------- -------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LOANS
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
JUNE 30, December 31, June 30,
(in millions) 1997 1996 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial $19,464 $19,515 $19,575
Real estate 1-4 family first mortgage 9,757 10,425 11,811
Other real estate mortgage 11,747 11,860 12,920
Real estate construction 2,378 2,303 2,401
Consumer:
Real estate 1-4 family junior lien mortgage 6,008 6,278 6,736
Credit card 5,090 5,462 5,276
Other revolving credit and monthly payment 7,749 8,374 9,075
------- ------- -------
Total consumer 18,847 20,114 21,087
Lease financing 3,373 3,003 2,689
Foreign 123 169 58
------- ------- -------
Total loans $65,689 $67,389 $70,541
------- ------- -------
------- ------- -------
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- 8 -
Wells Fargo & Company and Subsidiaries
<TABLE>
<CAPTION>
CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Quarter ended Six months ended
------------------------------- -------------------
JUNE 30, March 31, June 30, JUNE 30, June 30,
(in millions) 1997 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, BEGINNING OF PERIOD $1,922 $2,018 $1,681 $2,018 $1,794
Allowance of First Interstate -- -- 770 -- 770
Provision for loan losses 140 105 -- 245 --
Loan charge-offs:
Commercial (60) (69) (48) (129) (61)
Real estate 1-4 family first mortgage (5) (5) (5) (10) (9)
Other real estate mortgage (2) (8) (13) (10) (16)
Real estate construction (2) (1) (4) (3) (5)
Consumer:
Real estate 1-4 family junior lien mortgage (6) (6) (13) (12) (17)
Credit card (133) (115) (101) (248) (187)
Other revolving credit and monthly payment (57) (56) (51) (113) (71)
------ ------ ------ ------ ------
Total consumer (196) (177) (165) (373) (275)
Lease financing (10) (10) (8) (20) (14)
------ ------ ------ ------ ------
Total loan charge-offs (275) (270) (243) (545) (380)
------ ------ ------ ------ ------
Loan recoveries:
Commercial 20 13 8 33 13
Real estate 1-4 family first mortgage 1 1 2 2 5
Other real estate mortgage 8 22 19 30 23
Real estate construction -- 1 4 1 5
Consumer:
Real estate 1-4 family junior lien mortgage 1 2 4 3 5
Credit card 11 11 11 22 16
Other revolving credit and monthly payment 19 16 15 35 18
------ ------ ------ ------ ------
Total consumer 31 29 30 60 39
Lease financing 3 3 2 6 4
------ ------ ------ ------ ------
Total loan recoveries 63 69 65 132 89
------ ------ ------ ------ ------
Total net loan charge-offs (212) (201) (178) (413) (291)
------ ------ ------ ------ ------
BALANCE, END OF PERIOD $1,850 $1,922 $2,273 $1,850 $2,273
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total net loan charge-offs as a percentage
of average loans (annualized) 1.32% 1.23% 1.01% 1.28% 1.10%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Allowance as a percentage of total loans 2.82% 2.94% 3.22% 2.82% 3.22%
------ ------ ------ ------ ------
------ ------ ------ ------ ------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- 9 -
Wells Fargo & Company and Subsidiaries
<TABLE>
<CAPTION>
NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
JUNE 30, December 31, June 30,
(in millions) 1997 1996 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans:
Commercial $179 $223 $208
Real estate 1-4 family first mortgage 102 99 87
Other real estate mortgage 283 349 363
Real estate construction 19 25 47
Consumer:
Real estate 1-4 family junior lien mortgage 17 15 22
Other revolving credit and monthly payment 2 1 1
Lease financing -- 2 3
---- ---- ----
Total nonaccrual loans 602 714 731
Restructured loans 10 10 11
---- ---- ----
Nonaccrual and restructured loans 612 724 742
As a percentage of total loans .9% 1.1% 1.1%
Foreclosed assets 194 219 238
Real estate investments (1) 5 4 7
---- ---- ----
Total nonaccrual and restructured loans
and other assets $811 $947 $987
---- ---- ----
---- ---- ----
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the amount of real estate investments (contingent interest loans
accounted for as investments) that would be classified as nonaccrual if
such assets were loans. Real estate investments totaled $158 million,
$154 million and $124 million at June 30, 1997, December 31, 1996 and June
30, 1996, respectively.
<PAGE>
- 10 -
Wells Fargo & Company and Subsidiaries
<TABLE>
<CAPTION>
NONINTEREST INCOME
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, ended June 30,
----------------- % ---------------- %
(in millions) 1997 1996 Change 1997 1996 Change
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts $214 $258 (17)% $ 434 $380 14%
Fees and commissions:
Credit card membership and other credit card fees 55 26 112 100 53 89
Debit and credit card merchant fees 24 37 (35) 46 52 (12)
Charges and fees on loans 33 32 3 64 50 28
Shared ATM network fees 43 27 59 82 39 110
Mutual fund and annuity sales fees 16 18 (11) 32 27 19
All other 63 71 (11) 124 108 15
---- ---- ------ ----
Total fees and commissions 234 211 11 448 329 36
Trust and investment services income:
Asset management and custody fees 61 60 2 122 95 28
Mutual fund management fees 45 34 32 84 55 53
All other 6 10 (40) 15 14 7
---- ---- ------ ----
Total trust and investment services income 112 104 8 221 164 35
Investment securities gains 3 3 -- 7 2 250
Income from equity investments accounted for by the:
Cost method 40 20 100 91 55 65
Equity method 15 8 88 30 10 200
Check printing charges 18 15 20 36 24 50
Gains on sales of loans 7 1 600 13 5 160
Gains from dispositions of operations 1 1 -- 8 5 60
Losses on dispositions of premises and equipment (6) (5) 20 (36) (17) 112
All other 41 23 78 67 36 86
---- ---- ------ ----
Total $679 $639 6% $1,319 $993 33%
---- ---- ---- ------ ---- ----
---- ---- ---- ------ ---- ----
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NONINTEREST EXPENSE
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, ended June 30,
------------------ % ------------------ %
(in millions) 1997 1996 Change 1997 1996 Change
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 316 $ 400 (21)% $ 656 $ 581 13%
Incentive compensation 49 61 (20) 89 93 (4)
Employee benefits 81 102 (21) 176 157 12
Equipment 98 111 (12) 192 167 15
Net occupancy 95 108 (12) 196 161 22
Goodwill 81 81 -- 164 89 84
Core deposit intangible:
Nonqualifying (1) 59 72 (18) 113 72 57
Qualifying 8 10 (20) 16 19 (16)
Operating losses 180 27 567 222 42 429
Contract services 59 66 (11) 115 108 6
Telecommunications 36 28 29 73 44 66
Postage 22 26 (15) 45 41 10
Security 22 17 29 44 23 91
Outside professional services 21 31 (32) 36 44 (18)
Stationery and supplies 16 21 (24) 36 31 16
Advertising and promotion 21 21 -- 34 34 --
Check printing 14 10 40 30 16 88
Travel and entertainment 15 16 (6) 29 26 12
Outside data processing 13 15 (13) 26 18 44
Foreclosed assets 5 1 400 (4) 3 --
All other 35 53 (34) 75 75 --
------ ------ ------ ------ ------ -----
Total $1,246 $1,277 (2)% $2,363 $1,844 28%
------ ------ ------ ------ ------ -----
------ ------ ------ ------ ------ -----
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amortization of core deposit intangibles acquired after February 1992 that
are subtracted from stockholders' equity in computing regulatory capital
for bank holding companies.
<PAGE>
- 11 -
Wells Fargo & Company and Subsidiaries
<TABLE>
<CAPTION>
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Quarter ended June 30,
--------------------------------------------------------------------
1997 1996
------------------------------- --------------------------------
Interest Interest
Average Yields/ income/ Average Yields/ income/
(in millions) balance rates expense balance rates expense
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Federal funds sold and securities purchased
(1) under resale agreements $ 451 5.67% $ 6 $ 588 5.36% $ 8
Investment securities at fair value (2):
(2) U.S. Treasury securities 2,688 6.06 41 3,177 5.52 44
Securities of U.S. government agencies
(3) and corporations 5,926 6.44 96 8,434 6.07 129
(4) Private collateralized mortgage obligations 2,939 6.64 49 2,653 6.23 42
(5) Other securities 322 6.50 4 668 6.83 10
-------- -------- -------- --------
(6) Total investment securities at fair value 11,875 6.40 190 14,932 6.01 225
Loans:
(7) Commercial 18,432 9.10 418 19,460 8.75 424
(8) Real estate 1-4 family first mortgage 9,927 7.53 187 11,924 7.50 224
(9) Other real estate mortgage 11,573 9.23 266 13,006 9.32 300
(10) Real estate construction 2,262 10.03 57 2,385 10.07 60
Consumer:
(11) Real estate 1-4 family junior lien mortgage 6,035 9.37 141 6,790 8.96 152
(12) Credit card 5,164 14.44 186 5,183 14.61 189
(13) Other revolving credit and monthly payment 7,835 9.35 183 9,151 9.35 213
-------- -------- -------- --------
(14) Total consumer 19,034 10.74 510 21,124 10.51 554
(15) Lease financing 3,264 8.65 71 2,599 8.76 57
(16) Foreign 126 6.43 2 236 4.72 3
-------- -------- -------- --------
(17) Total loans 64,618 9.37 1,511 70,734 9.20 1,622
(18)Other 721 6.84 13 396 6.62 7
-------- -------- -------- --------
(19) Total earning assets $ 77,665 8.87 1,720 $ 86,650 8.62 1,862
-------- -------- -------- --------
-------- -------- -------- --------
FUNDING SOURCES
Deposits:
(20) Interest-bearing checking $ 1,895 1.33 6 $ 7,060 1.24 22
(21) Market rate and other savings 32,519 2.60 211 32,921 2.68 220
(22) Savings certificates 15,669 5.09 199 16,779 4.84 201
(23) Other time deposits 165 4.51 2 483 5.89 7
(24) Deposits in foreign offices 833 5.45 11 303 5.17 4
-------- -------- -------- --------
(25) Total interest-bearing deposits 51,081 3.37 429 57,546 3.17 454
Federal funds purchased and securities sold
(26) under repurchase agreements 2,492 5.42 34 1,667 5.08 21
(27)Commercial paper and other short-term borrowings 216 7.11 4 296 4.19 3
(28)Senior debt 1,751 6.36 28 2,289 6.07 35
(29)Subordinated debt 2,884 6.94 50 2,580 7.03 45
Guaranteed preferred beneficial interests in Company's
(30) subordinated debentures 1,299 7.81 25 -- -- --
-------- -------- -------- --------
(31) Total interest-bearing liabilities 59,723 3.83 570 64,378 3.49 558
(32)Portion of noninterest-bearing funding sources 17,942 -- -- 22,272 -- --
-------- -------- -------- --------
(33) Total funding sources $ 77,665 2.94 570 $ 86,650 2.59 558
-------- -------- -------- --------
-------- --------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
(34) A TAXABLE-EQUIVALENT BASIS (3) 5.93% $ 1,150 6.03% $ 1,304
---- -------- ---- -------
---- -------- ---- -------
NONINTEREST-EARNING ASSETS
(35)Cash and due from banks $ 7,654 $ 8,569
(36)Goodwill 7,271 7,238
(37)Other 7,149 5,973
-------- --------
Total noninterest-earning assets $ 22,074 $ 21,780
-------- --------
-------- --------
NONINTEREST-BEARING FUNDING SOURCES
(38)Deposits $ 23,441 $ 26,596
(39)Other liabilities 3,273 2,414
(40)Preferred stockholders' equity 371 839
(41)Common stockholders' equity 12,931 14,203
Noninterest-bearing funding sources used to
(42) fund earning assets (17,942) (22,272)
-------- --------
(43) Net noninterest-bearing funding sources $ 22,074 $ 21,780
-------- --------
-------- --------
(44) TOTAL ASSETS $ 99,739 $108,430
-------- --------
-------- --------
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average prime rate of Wells Fargo Bank was 8.50% and 8.25% for the
quarters ended June 30, 1997 and 1996, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 5.81% and 5.52%
for the same quarters, respectively.
(2) Yields are based on amortized cost balances. The average amortized
cost balances for investment securities at fair value totaled $11,897
million and $15,012 million for the quarters ended June 30, 1997 and
1996, respectively.
(3) Includes taxable-equivalent adjustments that primarily relate to
income on certain loans and securities that is exempt from federal and
applicable state income taxes. The federal statutory tax rate was 35%
for all periods presented.
<PAGE>
- 12 -
Wells Fargo & Company and Subsidiaries
<TABLE>
<CAPTION>
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
Six months ended June 30,
--------------------------------------------------------------
1997 1996
----------------------------- ------------------------------
Interest Interest
Average Yields/ income/ Average Yields/ income/
(in millions) balance rates expense balance rates expense
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Federal funds sold and securities purchased
(1) under resale agreements $ 413 5.56% $ 11 $ 357 5.42% $ 10
Investment securities at fair value (2):
(2) U.S. Treasury securities 2,801 6.05 84 2,266 5.52 62
Securities of U.S. government agencies
(3) and corporations 6,313 6.42 203 6,712 6.02 203
(4) Private collateralized mortgage obligations 3,036 6.61 101 2,366 6.15 73
(5) Other securities 345 6.42 10 447 7.03 15
------- ------ ------ -------- -------- -------
(6) Total investment securities at fair value 12,495 6.38 398 11,791 5.99 353
Loans:
(7) Commercial 18,419 9.04 827 14,384 9.15 655
(8) Real estate 1-4 family first mortgage 10,080 7.47 376 8,162 7.52 307
(9) Other real estate mortgage 11,562 10.06 576 10,602 9.28 489
(10) Real estate construction 2,280 9.89 112 1,856 10.04 93
Consumer:
(11) Real estate 1-4 family junior lien mortgage 6,102 9.34 283 5,062 8.81 222
(12) Credit card 5,247 14.25 374 4,558 15.02 343
(13) Other revolving credit and monthly payment 8,052 9.30 372 5,875 9.76 285
-------- ------ -------- -------
(14) Total consumer 19,401 10.65 1,029 15,495 10.99 850
(15) Lease financing 3,172 8.74 139 2,248 8.95 101
(16) Foreign 139 6.93 5 133 4.98 3
-------- ------ -------- -------
(17) Total loans 65,053 9.47 3,064 52,880 9.48 2,498
(18)Other 713 6.55 24 231 6.57 7
-------- ------ -------- -------
(19) Total earning assets $ 78,674 8.93 3,497 $ 65,259 8.82 2,868
-------- ------ -------- -------
-------- ------ -------- -------
FUNDING SOURCES
Deposits:
(20) Interest-bearing checking $ 1,904 1.24 12 $ 3,958 1.21 24
(21) Market rate and other savings 33,307 2.57 425 25,456 2.62 332
(22) Savings certificates 15,594 5.07 392 12,707 4.98 315
(23) Other time deposits 171 4.21 4 412 6.46 13
(24) Deposits in foreign offices 697 5.32 18 414 5.33 11
-------- ------ -------- -------
(25) Total interest-bearing deposits 51,673 3.32 851 42,947 3.25 695
Federal funds purchased and securities sold
(26) under repurchase agreements 2,459 5.30 65 2,186 5.25 57
(27)Commercial paper and other short-term borrowings 223 6.06 6 350 4.81 8
(28)Senior debt 1,876 6.27 58 2,000 6.15 61
(29)Subordinated debt 2,911 6.93 101 1,923 6.97 67
Guaranteed preferred beneficial interests in Company's
(30) subordinated debentures 1,275 7.83 50 -- -- --
-------- ------ -------- -------
(31) Total interest-bearing liabilities 60,417 3.77 1,131 49,406 3.61 888
(32)Portion of noninterest-bearing funding sources 18,257 -- -- 15,853 -- --
-------- ------ -------- -------
(33) Total funding sources $ 78,674 2.90 1,131 $ 65,259 2.74 888
-------- ------ -------- -------
-------- ------ -------- -------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
(34) A TAXABLE-EQUIVALENT BASIS (3) 6.03% $ 2,366 6.08% $ 1,980
---- -------- ---- --------
---- -------- ---- --------
NONINTEREST-EARNING ASSETS
(35)Cash and due from banks $ 8,799 $ 5,721
(36)Goodwill 7,288 3,808
(37)Other 7,808 3,994
-------- --------
Total noninterest-earning assets $ 23,895 $ 13,523
-------- --------
-------- --------
NONINTEREST-BEARING FUNDING SOURCES
(38)Deposits $ 24,757 $ 17,966
(39)Other liabilities 3,819 1,846
(40)Preferred stockholders' equity 459 664
(41)Common stockholders' equity 13,117 8,900
Noninterest-bearing funding sources used to
(42) fund earning assets (18,257) (15,853)
-------- --------
(43) Net noninterest-bearing funding sources $ 23,895 $ 13,523
-------- --------
-------- --------
(44) TOTAL ASSETS $102,569 $ 78,782
-------- --------
-------- --------
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average prime rate of Wells Fargo Bank was 8.38% and 8.29% for the
six months ended June 30, 1997 and 1996, respectively. The average
three-month London Interbank Offered Rate (LIBOR) was 5.69% and 5.46%
for the same periods, respectively.
(2) Yields are based on amortized cost balances. The average amortized
cost balances for investment securities at fair value totaled $12,503
million and $11,814 million for the six months ended June 30, 1997 and
1996, respectively.
(3) Includes taxable-equivalent adjustments that primarily relate to
income on certain loans and securities that is exempt from federal and
applicable state income taxes. The federal statutory tax rate was 35%
for all periods presented.
