<PAGE>
UNITED STATES
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 19, 1999
WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)
Delaware 001-2979 No. 41-0449260
(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: 1-800-411-4932
Not applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5: Other Events
------------
Wells Fargo & Company is placing on file as Exhibit 99 a copy of
the Company's financial results for the quarter ended June 30, 1999.
Final financial statements with additional analyses will be filed as
part of the Company's Form 10-Q for the quarter ended June 30, 1999.
Item 7: Financial Statements and Exhibits
---------------------------------
(c) Exhibits
27 Financial Data Schedule
99 Wells Fargo & Company's financial results for the quarter
ended June 30, 1999
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 19, 1999.
WELLS FARGO & COMPANY
By: /s/ LES L. QUOCK
------------------------------------
Les L. Quock
Senior Vice President and Controller
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 8-K FOR
THE PERIOD ENDED JUNE 30, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 12,633
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,692
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,710
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 111,646
<ALLOWANCE> 3,165
<TOTAL-ASSETS> 205,421
<DEPOSITS> 132,542
<SHORT-TERM> 20,155
<LIABILITIES-OTHER> 9,296
<LONG-TERM> 22,053
0
460
<COMMON> 2,777
<OTHER-SE> 18,138
<TOTAL-LIABILITIES-AND-EQUITY> 205,421
<INTEREST-LOAN> 5,188
<INTEREST-INVEST> 1,027
<INTEREST-OTHER> 769
<INTEREST-TOTAL> 6,984
<INTEREST-DEPOSIT> 1,396
<INTEREST-EXPENSE> 2,407
<INTEREST-INCOME-NET> 4,577
<LOAN-LOSSES> 530
<SECURITIES-GAINS> 21
<EXPENSE-OTHER> 4,706
<INCOME-PRETAX> 2,882
<INCOME-PRE-EXTRAORDINARY> 1,815
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,815
<EPS-BASIC> 1.09<F1>
<EPS-DILUTED> 1.08
<YIELD-ACTUAL> 5.64
<LOANS-NON> 687
<LOANS-PAST> 0
<LOANS-TROUBLED> 1
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,134
<CHARGE-OFFS> 741
<RECOVERIES> 207
<ALLOWANCE-CLOSE> 3,165
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Amount represents basic earnings per common share pursuant to FAS 128.
</FN>
</TABLE>
<PAGE>
Exhibit 99
Wells Fargo & Company's financial results for the quarter ended June 30, 1999
Wells Fargo & Company reported net income of $931 million for the second
quarter of 1999, compared with $719 million for the second quarter of 1998,
an increase of 29 percent. Net income for the first six months of 1999 was
$1,815 million, an increase of 29 percent over the same period a year ago.
Diluted earnings per common share were $.55 for the second quarter of 1999
and $1.08 for the first six months of 1999, compared with $.43 and $.85 for
the same periods of 1998. Return on average assets was 1.86 percent for the
second quarter of 1999 and 1.83 percent for the first six months of 1999,
compared with 1.55 percent and 1.53 percent for the same periods a year ago.
Return on average common equity was 17.50 percent for the second quarter of
1999 and 17.42 percent for the first six months of 1999, compared with 14.72
percent and 14.46 percent for the same periods of 1998.
Diluted cash earnings were $.63 per share for the second quarter of 1999
and $1.24 per share for the first half of 1999, compared with $.52 per share
and $1.02 per share for the same periods of 1998. Cash return on average
assets was 2.23 percent for the second quarter of 1999 and 2.20 percent for
the first half of 1999, compared with 1.95 percent and 1.94 percent for the
same periods a year ago. Cash return on average tangible common equity was
33.43 percent for the second quarter of 1999 and 33.89 percent for the first
half of 1999, compared with 32.49 percent and 32.33 percent for the same
periods of 1998. Cash earnings are earnings before the amortization of
goodwill and nonqualifying core deposit intangible (related primarily to the
1996 acquisition of First Interstate Bancorp).
Net interest income on a taxable-equivalent basis was $2,328 million in
the second quarter of 1999, compared with $2,247 million for the same quarter
a year ago and $4,608 million for the first six months of 1999, compared with
$4,456 million for the same period a year ago. The net interest margin was
5.68 percent for the second quarter of 1999 and 5.64 percent for the first
six months of 1999, compared with 5.88 percent and 5.89 percent in the same
periods of 1998. The decrease in the net interest margin for both the second
quarter and the first six months was primarily due to lower yields on
consumer and commercial loans as well as higher balances of lower yielding
investment securities, partially offset by decreased rates on consumer
deposits.
Noninterest income in the second quarter of 1999 was $1,814 million,
compared with $1,715 million in the same quarter of 1998. For the first half
of 1999, noninterest income was $3,541 million, compared with $3,249 million
in the same period of 1998. The increase for the first half of 1999 was
primarily due to higher trust and investment fees and commissions and net
gains on sales of mortgages.
Noninterest expense was $2,364 million in the second quarter of 1999, a
decrease from $2,452 million in the same quarter of 1998. In the first six
months of 1999, noninterest expense was $4,706 million, a decrease from
$4,749 million in the same period of 1998. The efficiency ratio improved to
57.3 percent for the second quarter of 1999 and
-1-
<PAGE>
58.0 percent for the first half of 1999, compared with 62.1 percent and 61.9
percent for the same periods a year ago.
The loan loss provision was $260 million for the second quarter of 1999,
compared with $309 million for the same period in 1998. Net charge-offs
totaled $261 million, or .96 percent of average loans (annualized), in the
second quarter of 1999. Net charge-offs totaled $303 million, or 1.16
percent of average loans (annualized), for the second quarter of 1998. For
the six months ended June 30, 1999 the loan loss provision was $530 million
and net charge-offs totaled $534 million, or .99 percent of average loans
(annualized), compared with a loan loss provision of $614 million and net
charge-offs of $613 million, or 1.17 percent of average loans (annualized)
for the same period of 1998.
At June 30, 1999, the allowance for loan losses of $3,165 million was
2.83 percent of total loans, compared with 2.90 percent at December 31, 1998
and 2.91 percent at June 30, 1998. Total nonaccrual and restructured loans
were $688 million at June 30, 1999, down from $710 million at December 31,
1998 and $733 million at June 30, 1998.
ON NOVEMBER 2, 1998, WELLS FARGO & COMPANY (THE FORMER WELLS FARGO)
MERGED WITH WFC HOLDINGS CORPORATION (WFC HOLDINGS), A WHOLLY-OWNED
SUBSIDIARY OF NORWEST CORPORATION. IN CONNECTION WITH THE MERGER, NORWEST
CORPORATION CHANGED ITS NAME TO "WELLS FARGO & COMPANY." THE MERGER WAS
ACCOUNTED FOR AS A POOLING OF INTERESTS AND, ACCORDINGLY, THE INFORMATION
INCLUDED IN THIS FILING PRESENTS THE COMBINED RESULTS OF WELLS FARGO &
COMPANY AND ITS SUBSIDIARIES (THE COMPANY) AS IF THE MERGER HAD BEEN IN
EFFECT FOR ALL PERIODS PRESENTED.
- ---------------
The following appears in accordance with the Securities Litigation
Reform Act:
This discussion of financial results includes forward-looking statements
about the Company's financial condition, results of operations, plans,
objectives and future performance and business. These statements generally
include the words "believe," "expect," "anticipate," "estimate," "may,"
"will" or similar expressions that suggest the statements are forward looking
in nature.
These forward-looking statements involve inherent risks and uncertainties.
The Company cautions readers that a number of factors--many of which are
beyond the control of the Company--could cause actual results to differ
materially from those in the forward-looking statements. Among these factors
are changes in political and economic conditions, interest rate fluctuations,
technological changes (including the "Year 2000" data systems compliance
issue), customer disintermediation, competitive product and pricing pressures
in the Company's geographic and product markets, equity and fixed income
market fluctuations, personal and commercial customers' bankruptcies,
inflation, changes in law, changes in fiscal, monetary, regulatory and tax
policies, monetary fluctuations, credit quality and credit risk management,
mergers and acquisitions, the integration of merged and acquired companies,
and success in gaining regulatory approvals when required.
Also, actual results may differ materially from those in the forward-looking
statements because of factors relating to the combination of the former Wells
Fargo and the former Norwest Corporation, including the following: expected
cost savings from the merger are not fully realized within the expected time
frame or additional or unexpected costs are incurred; and costs or
difficulties related to the integration of the former Wells Fargo and the
former Norwest Corporation are greater than expected.
-2-
<PAGE>
-3-
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, ended June 30,
--------------------- % --------------------- %
(in millions, except per share amounts) 1999 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOR THE PERIOD
Net income $ 931 $ 719 29 % $ 1,815 $ 1,403 29%
Net income applicable to common stock 922 710 30 1,798 1,385 30
Earnings per common share $ .56 $ .44 27 $ 1.09 $ .86 27
Diluted earnings per common share .55 .43 28 1.08 .85 27
Dividends declared per common share .20 .165 21 .385 .33 17
Average common shares outstanding 1,651.4 1,610.3 3 1,649.2 1,613.0 2
Diluted average common shares outstanding 1,672.3 1,632.2 2 1,668.2 1,635.7 2
Profitability ratios (annualized)
Net income to average total assets (ROA) 1.86% 1.55% 20 1.83% 1.53% 20
Net income applicable to common stock to
average common stockholders' equity (ROE) 17.50 14.72 19 17.42 14.46 20
Total revenue $ 4,125 $ 3,947 5 $ 8,118 $ 7,675 6
Efficiency ratio (1) 57.3% 62.1% (8) 58.0% 61.9% (6)
Average loans $108,996 $105,523 3 $108,418 $ 105,462 3
Average assets 200,342 185,607 8 199,537 184,444 8
Average core deposits 127,563 122,354 4 127,847 121,804 5
Net interest margin 5.68% 5.88% (3) 5.64% 5.89% (4)
NET INCOME AND RATIOS EXCLUDING
GOODWILL AND NONQUALIFYING CORE DEPOSIT
INTANGIBLE AMORTIZATION AND BALANCES
("CASH" OR "TANGIBLE") (2)
Net income applicable to common stock $ 1,054 $ 848 24 $ 2,062 $ 1,662 24
Earnings per common share .64 .53 21 1.25 1.03 21
Diluted earnings per common share .63 .52 21 1.24 1.02 22
ROA 2.23% 1.95% 14 2.20% 1.94% 13
ROE 33.43 32.49 3 33.89 32.33 5
Efficiency ratio 53.7 58.1 (8) 54.3 57.7 (6)
AT PERIOD END
Securities available for sale $ 35,710 $ 26,676 34 $ 35,710 $ 26,676 34
Loans 111,646 106,301 5 111,646 106,301 5
Allowance for loan losses 3,165 3,098 2 3,165 3,098 2
Goodwill 7,598 7,856 (3) 7,598 7,856 (3)
Assets 205,421 186,084 10 205,421 186,084 10
Core deposits 127,256 122,851 4 127,256 122,851 4
Common stockholders' equity 20,915 19,696 6 20,915 19,696 6
Stockholders' equity 21,375 20,158 6 21,375 20,158 6
Capital ratios
Common stockholders' equity to assets 10.18% 10.59% (4) 10.18% 10.59% (4)
Stockholders' equity to assets 10.41 10.83 (4) 10.41 10.83 (4)
Risk-based capital (3)
Tier 1 capital 8.40 8.34 1 8.40 8.34 1
Total capital 11.00 11.26 (2) 11.00 11.26 (2)
Leverage (3) 7.05 6.89 2 7.05 6.89 2
Book value per common share $ 12.67 $ 12.23 4 $ 12.67 $ 12.23 4
Staff (active, full-time equivalent) 91,182 89,988 1 91,182 89,988 1
COMMON STOCK PRICE
High $ 44.88 $ 43.75 3 $ 44.88 $ 43.88 2
Low 34.38 34.00 1 32.13 34.00 (6)
Period end 42.75 37.50 14 42.75 37.50 14
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The efficiency ratio is defined as noninterest expense divided by total
revenue (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 and ROA ratios, net of applicable taxes. The pre-tax amount for
the average balance of nonqualifying CDI was $1,343 million for the quarter
ended June 30, 1999 and $1,367 million for the six months ended June 30,
1999. The after-tax amounts for the amortization and average balance of
nonqualifying CDI were $28 million and $833 million, respectively, for the
quarter ended June 30, 1999 and $57 million and $848 million, respectively,
for the six months ended June 30, 1999. Goodwill amortization and average
balance (which are not tax effected) were $104 million and $7,657 million,
respectively, for the quarter ended June 30, 1999 and $208 million and
$7,695 million, respectively, for the six months ended June 30, 1999.
(3) The June 30, 1999 ratios are preliminary.
<PAGE>
-4-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, ended June 30,
--------------------- % --------------------- %
(in millions, except per share amounts) 1999 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Securities available for sale $ 517 $ 447 16 % $ 1,027 $ 906 13 %
Mortgages held for sale 215 208 3 473 378 25
Loans held for sale 101 89 13 200 180 11
Loans 2,609 2,682 (3) 5,188 5,343 (3)
Other interest income 54 64 (16) 96 122 (21)
-------- -------- -------- --------
Total interest income 3,496 3,490 -- 6,984 6,929 1
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 679 775 (12) 1,396 1,551 (10)
Short-term borrowings 201 191 5 408 363 12
Long-term debt 290 267 9 573 539 6
Guaranteed preferred beneficial interests
in Company's subordinated debentures 15 25 (40) 30 50 (40)
-------- -------- -------- --------
Total interest expense 1,185 1,258 (6) 2,407 2,503 (4)
-------- -------- -------- --------
NET INTEREST INCOME 2,311 2,232 4 4,577 4,426 3
Provision for loan losses 260 309 (16) 530 614 (14)
-------- -------- -------- --------
Net interest income after
provision for loan losses 2,051 1,923 7 4,047 3,812 6
-------- -------- -------- --------
NONINTEREST INCOME
Service charges on deposit accounts 367 332 11 711 637 12
Trust and investment fees and commissions 315 269 17 615 527 17
Credit card fee revenue 126 128 (2) 258 249 4
Other fees and commissions 267 232 15 505 453 11
Mortgage banking 324 303 7 651 579 12
Insurance 119 111 7 204 205 --
Net venture capital gains 13 53 (75) 126 112 13
Net gains on securities available for sale 23 66 (65) 21 85 (75)
Other 260 221 18 450 402 12
-------- -------- -------- --------
Total noninterest income 1,814 1,715 6 3,541 3,249 9
-------- -------- -------- --------
NONINTEREST EXPENSE
Salaries 750 717 5 1,475 1,402 5
Incentive compensation 135 150 (10) 269 285 (6)
Employee benefits 217 187 16 416 376 11
Equipment 182 196 (7) 373 381 (2)
Net occupancy 185 187 (1) 371 376 (1)
Goodwill 104 104 -- 208 208 --
Core deposit intangible 50 61 (18) 102 124 (18)
Net (gains) losses on dispositions of premises
and equipment (13) 41 -- (11) 48 --
Other 754 809 (7) 1,503 1,549 (3)
-------- -------- -------- --------
Total noninterest expense 2,364 2,452 (4) 4,706 4,749 (1)
-------- -------- -------- --------
INCOME BEFORE INCOME TAX EXPENSE 1,501 1,186 27 2,882 2,312 25
Income tax expense 570 467 22 1,067 909 17
-------- -------- -------- --------
NET INCOME $ 931 $ 719 29 % $ 1,815 $ 1,403 29 %
======== ======== === ======== ======== ===
NET INCOME APPLICABLE TO
COMMON STOCK $ 922 $ 710 30 % $ 1,798 $ 1,385 30 %
======== ======== ==== ======== ======== ===
EARNINGS PER COMMON SHARE $ .56 $ .44 27 % $ 1.09 $ .86 27 %
======== ======== ==== ======== ======== ===
DILUTED EARNINGS PER COMMON SHARE $ .55 $ .43 28 % $ 1.08 $ .85 27 %
======== ======== ==== ======== ======== ===
DIVIDENDS DECLARED PER COMMON SHARE $ .20 $ .165 21 % $ .385 $ .33 17 %
======== ======== ==== ======== ======== ===
Average common shares outstanding 1,651.4 1,610.3 3 % 1,649.2 1,613.0 2 %
======== ======== ==== ======== ======== ===
Diluted average common shares outstanding 1,672.3 1,632.2 2 % 1,668.2 1,635.7 2 %
======== ======== ==== ======== ======== ===
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-5-
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
% Change
June 30, 1999 from
----------------------
JUNE 30, Dec. 31, June 30, Dec. 31, June 30,
(in millions, except shares) 1999 1998 1998 1998 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 12,633 $ 12,731 $ 12,083 (1)% 5 %
Federal funds sold and securities
purchased under resale agreements 1,692 1,517 1,456 12 16
Securities available for sale 35,710 31,997 26,676 12 34
Mortgages held for sale 11,781 19,770 12,510 (40) (6)
Loans held for sale 4,192 5,322 4,561 (21) (8)
Loans 111,646 107,994 106,301 3 5
Allowance for loan losses 3,165 3,134 3,098 1 2
-------- -------- --------
Net loans 108,481 104,860 103,203 3 5
-------- -------- --------
Mortgage servicing rights 4,080 3,080 2,904 32 40
Premises and equipment, net 3,141 3,130 3,290 -- (5)
Core deposit intangible 1,381 1,510 1,609 (9) (14)
Goodwill 7,598 7,664 7,856 (1) (3)
Interest receivable and other assets 14,732 10,894 9,936 35 48
-------- -------- --------
Total assets $205,421 $202,475 $186,084 1 % 10 %
======== ======== ======== === ===
LIABILITIES
Noninterest-bearing deposits $ 43,708 $ 46,732 $ 41,207 (6)% 6 %
Interest-bearing deposits 88,834 90,056 86,038 (1) 3
-------- -------- --------
Total deposits 132,542 136,788 127,245 (3) 4
Short-term borrowings 20,155 15,897 13,738 27 47
Accrued expenses and other liabilities 9,296 8,537 7,119 9 31
Long-term debt 21,268 19,709 16,730 8 27
Guaranteed preferred beneficial interests
in Company's subordinated debentures 785 785 1,094 -- (28)
STOCKHOLDERS' EQUITY
Preferred stock 590 547 560 8 5
Unearned ESOP shares (130) (84) (98) 55 33
-------- -------- --------
Total preferred stock 460 463 462 (1) --
Common stock - $1-2/3 par value,
authorized 4,000,000,000 shares;
issued 1,666,095,285 shares, 1,661,392,590 shares
and 1,622,027,659 shares 2,777 2,769 2,703 -- 3
Additional paid-in capital 8,764 8,673 7,837 1 12
Retained earnings 10,028 9,045 9,064 11 11
Cumulative other comprehensive income (10) 463 440 -- --
Note receivable from ESOP (1) (3) (5) (67) (80)
Treasury stock - 15,465,932 shares,
17,334,787 shares and 10,850,171 shares (643) (651) (343) (1) 87
-------- -------- --------
Total stockholders' equity 21,375 20,759 20,158 3 6
-------- -------- --------
Total liabilities and stockholders' equity $205,421 $202,475 $186,084 1 % 10 %
======== ======== ======== === ===
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-6-
Wells Fargo & Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Six months ended June 30,
----------------------------
(in millions) 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BALANCE, BEGINNING OF PERIOD $20,759 $19,778
Net income 1,815 1,403
Other comprehensive income (loss), net of tax:
Change in foreign currency translation adjustments 3 (2)
Change in investment securities valuation allowance (476) (22)
Common stock issued 372 150
Common stock issued for acquisitions 67 11
Common stock repurchased (547) (693)
Preferred stock released to ESOP 32 18
Preferred stock dividends (17) (18)
Common stock dividends (635) (472)
Cash payments received on notes receivable from ESOP 2 5
------- -------
BALANCE, END OF PERIOD $21,375 $20,158
======= =======
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LOANS
- -------------------------------------------------------------------------------------------------------------------
JUNE 30, December 31, June 30,
(in millions) 1999 1998 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial $ 36,633 $ 35,450 $ 33,875
Real estate 1-4 family first mortgage 11,941 11,496 12,832
Other real estate mortgage 17,157 16,668 16,103
Real estate construction 4,103 3,790 3,548
Consumer:
Real estate 1-4 family junior lien mortgage 11,494 11,128 10,641
Credit card 5,294 5,795 6,042
Other revolving credit and monthly payment 16,652 15,809 16,323
-------- -------- --------
Total consumer 33,440 32,732 33,006
Lease financing 6,875 6,380 5,487
Foreign 1,497 1,478 1,450
-------- -------- --------
Total loans (net of unearned discount) $111,646 $107,994 $106,301
======== ======== ========
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-7-
Wells Fargo & Company and Subsidiaries
CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
Quarter ended Six months ended
---------------------------------- ---------------------
JUNE 30, March 31, June 30, JUNE 30, June 30,
(in millions) 1999 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, BEGINNING OF PERIOD $3,161 $3,134 $3,066 $3,134 $3,062
Allowance related to business combinations, net 5 30 26 35 35
Provision for loan losses 260 270 309 530 614
Loan charge-offs:
Commercial (111) (81) (64) (192) (122)
Real estate 1-4 family first mortgage (18) (1) (7) (19) (12)
Other real estate mortgage (4) (8) (16) (12) (19)
Real estate construction (1) -- (1) (1) (2)
Consumer:
Real estate 1-4 family junior lien mortgage (6) (9) (7) (15) (13)
Credit card (96) (110) (141) (206) (282)
Other revolving credit and monthly payment (109) (127) (157) (236) (336)
------ ------ ------ ------- ------
Total consumer (211) (246) (305) (457) (631)
Lease financing (10) (11) (12) (21) (24)
Foreign (24) (15) (12) (39) (22)
------ ------ ------ ------ ------
Total loan charge-offs (379) (362) (417) (741) (832)
------ ------ ------ ------ ------
Loan recoveries:
Commercial 23 13 17 36 42
Real estate 1-4 family first mortgage 2 1 1 3 5
Other real estate mortgage 12 17 30 29 41
Real estate construction 4 -- 1 4 2
Consumer:
Real estate 1-4 family junior lien mortgage 4 3 2 7 4
Credit card 13 13 15 26 30
Other revolving credit and monthly payment 53 36 40 89 82
------ ------ ------ ------ ------
Total consumer 70 52 57 122 116
Lease financing 3 3 3 6 6
Foreign 4 3 5 7 7
------ ------ ------ ------ ------
Total loan recoveries 118 89 114 207 219
------ ------ ------ ------ ------
Total net loan charge-offs (261) (273) (303) (534) (613)
------ ------ ------ ------ ------
BALANCE, END OF PERIOD $3,165 $3,161 $3,098 $3,165 $3,098
====== ====== ====== ====== ======
Total net loan charge-offs as a percentage
of average loans (annualized) .96% 1.03% 1.16% .99% 1.17%
====== ====== ====== ====== ======
Allowance as a percentage of total loans 2.83 % 2.92% 2.91% 2.83 % 2.91%
====== ====== ====== ====== ======
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-8-
Wells Fargo & Company and Subsidiaries
NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
JUNE 30, December 31, June 30,
(in millions) 1999 1998 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans $687 $709 $732
Restructured loans 1 1 1
---- ---- ----
Nonaccrual and restructured loans 688 710 733
As a percentage of total loans .6% .7% .7%
Foreclosed assets 203 167 176
Real estate investments (1) -- 1 3
---- ---- ----
Total nonaccrual and restructured loans
and other assets $891 $878 $912
==== ==== ====
- -------------------------------------------------------------------------------------------------------------------
</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 $133 million, $128
million and $162 million at June 30, 1999, December 31, 1998 and June 30,
1998, respectively.
<PAGE>
-9-
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, ended June 30,
--------------------- % ---------------------- %
(in millions) 1999 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts $ 367 $ 332 11 % $ 711 $ 637 12 %
Trust and investment fees and commissions:
Asset management and custody fees 190 167 14 375 328 14
Mutual fund and annuity sales fees 98 77 27 188 151 25
All other 27 25 8 52 48 8
------ ------ ------ ------
Total trust and investment fees
and commissions 315 269 17 615 527 17
Credit card fee revenue 126 128 (2) 258 249 4
Other fees and commissions:
Cash network fees 70 56 25 128 107 20
Charges and fees on loans 87 71 23 163 142 15
All other 110 105 5 214 204 5
------ ------ ------ ------
Total other fees and commissions 267 232 15 505 453 11
Mortgage banking:
Origination and other closing fees 115 129 (11) 228 238 (4)
Servicing fees, net of amortization 99 (16) -- 54 41 32
Gain on sale of mortgage servicing rights -- 17 (100) -- 16 (100)
Net gains on sales of mortgages 44 110 (60) 244 165 48
All other 66 63 5 125 119 5
------ ------ ------ ------
Total mortgage banking 324 303 7 651 579 12
Insurance 119 111 7 204 205 --
Net venture capital gains 13 53 (75) 126 112 13
Net gains on securities available for sale 23 66 (65) 21 85 (75)
Income from equity investments accounted
for by the:
Cost method 30 34 (12) 64 83 (23)
Equity method 20 16 25 41 31 32
Net gains on sales of loans 12 6 100 25 23 9
Net gains from dispositions of operations 103 74 39 102 71 44
All other 95 91 4 218 194 12
------ ------ ------ ------
Total $1,814 $1,715 6 % $3,541 $3,249 9 %
====== ====== ==== ====== ====== ====
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NONINTEREST EXPENSE
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------
Quarter Six months
ended June 30, ended June 30,
--------------------- % ---------------------- %
(in millions) 1999 1998 Change 1999 1998 Change
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salaries $ 750 $ 717 5 % $1,475 $ 1,402 5 %
Incentive compensation 135 150 (10) 269 285 (6)
Employee benefits 217 187 16 416 376 11
Equipment 182 196 (7) 373 381 (2)
Net occupancy 185 187 (1) 371 376 (1)
Goodwill 104 104 -- 208 208 --
Core deposit intangible:
Nonqualifying (1) 45 54 (17) 92 110 (16)
Qualifying 5 7 (29) 10 14 (29)
Net (gains) losses on dispositions of premises
and equipment (13) 41 -- (11) 48 --
Operating losses 37 33 12 66 71 (7)
Outside professional services 88 80 10 160 139 15
Contract services 110 82 34 200 155 29
Telecommunications 64 63 2 125 121 3
Outside data processing 62 59 5 138 108 28
Advertising and promotion 56 65 (14) 106 119 (11)
Postage 58 57 2 115 111 4
Travel and entertainment 60 52 15 115 100 15
Stationery and supplies 39 41 (5) 77 82 (6)
Insurance 50 44 14 86 82 5
Security 21 19 11 43 40 8
All other 109 214 (49) 272 421 (35)
------ ------ ------ ------
Total $2,364 $2,452 (4)% $4,706 $4,749 (1)%
====== ====== === ====== ====== ===
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amortization of core deposit intangible acquired after February 1992 that is
subtracted from stockholders' equity in computing regulatory capital for
bank holding companies.
<PAGE>
-10-
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Quarter ended June 30,
--------------------------------------------------------------------
1999 1998
------------------------------- ---------------------------------
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
under resale agreements $ 1,446 4.74% $ 17 $ 1,268 5.64% $ 18
Securities available for sale (3):
Securities of U.S. Treasury and federal agencies 6,180 5.25 82 6,454 5.90 94
Securities of U.S. states and political subdivisions 1,855 8.36 37 1,510 8.67 31
Mortgage-backed securities:
Federal agencies 19,261 6.59 315 15,721 7.11 273
Private collateralized mortgage obligations 3,160 6.81 54 2,437 6.80 41
-------- ------ ------- ------
Total mortgage-backed securities 22,421 6.62 369 18,158 7.06 314
Other securities 3,142 6.69 43 1,401 6.83 20
-------- ------ ------- ------
Total securities available for sale 33,598 6.46 531 27,523 6.86 459
Loans held for sale (3) 5,618 7.22 101 4,612 7.69 89
Mortgages held for sale (3) 12,254 6.96 215 11,904 6.98 208
Loans:
Commercial 35,638 8.57 762 32,885 9.00 738
Real estate 1-4 family first mortgage 12,075 8.40 254 13,106 8.26 271
Other real estate mortgage 16,977 8.71 368 16,137 9.80 394
Real estate construction 4,039 9.30 94 3,489 9.49 83
Consumer:
Real estate 1-4 family junior lien mortgage 11,210 9.09 254 10,601 9.86 261
Credit card 5,337 13.61 182 6,109 15.12 231
Other revolving credit and monthly payment 15,416 12.59 485 16,480 12.73 524
-------- ------ ------- ------
Total consumer 31,963 11.53 921 33,190 12.25 1,016
Lease financing 6,789 7.79 132 5,367 8.30 111
Foreign 1,515 21.05 80 1,349 21.09 71
-------- ------ ------- ------
Total loans (4) 108,996 9.60 2,611 105,523 10.19 2,684
Other 2,867 5.33 38 2,867 6.57 47
-------- ------ -------- ------
Total earning assets $164,779 8.57 3,513 $153,697 9.18 3,505
======== ------ ======== ------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 2,844 .79 6 $ 2,723 1.55 11
Market rate and other savings 56,064 2.24 314 51,815 2.63 340
Savings certificates 25,926 4.72 305 27,514 5.25 360
Other time deposits 3,600 4.92 43 4,115 5.52 56
Deposits in foreign offices 1,032 4.28 11 626 4.88 8
------- ------ ------- -----
Total interest-bearing deposits 89,466 3.05 679 86,793 3.58 775
Short-term borrowings 17,496 4.61 201 14,150 5.43 191
Long-term debt 20,663 5.61 290 16,826 6.35 267
Guaranteed preferred beneficial interests in Company's
subordinated debentures 785 7.52 15 1,231 8.21 25
-------- ------ ------- -----
Total interest-bearing liabilities 128,410 3.70 1,185 119,000 4.24 1,258
Portion of noninterest-bearing funding sources 36,369 -- -- 34,697 -- --
-------- ------ -------- -----
Total funding sources $164,779 2.89 1,185 $153,697 3.30 1,258
======== ------ ======== -----
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (5) 5.68% $2,328 5.88% $2,247
===== ====== ===== ======
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 11,116 $ 10,460
Goodwill 7,657 7,923
Other 16,790 13,527
-------- --------
Total noninterest-earning assets $ 35,563 $ 31,910
======== ========
NONINTEREST-BEARING FUNDING SOURCES
Deposits $ 42,729 $ 40,302
Other liabilities 7,603 6,494
Preferred stockholders' equity 459 460
Common stockholders' equity 21,141 19,351
Noninterest-bearing funding sources used to
fund earning assets (36,369) (34,697)
-------- --------
Net noninterest-bearing funding sources $ 35,563 $ 31,910
======== ========
TOTAL ASSETS $200,342 $185,607
======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average prime rate of the Company was 7.75% and 8.50% for the quarters
ended June 30, 1999 and 1998, respectively. The average three-month London
Interbank Offered Rate (LIBOR) was 5.07% and 5.69% 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.
(4) Nonaccrual loans and related income are included in their respective loan
categories.
(5) 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 both quarters
presented.
<PAGE>
-11-
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30,
--------------------------------------------------------------------
1999 1998
------------------------------- ---------------------------------
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
under resale agreements $ 1,304 4.86% $ 31 $ 1,232 5.62% $ 34
Securities available for sale (3):
Securities of U.S. Treasury and federal agencies 5,452 5.41 148 5,640 5.95 165
Securities of U.S. states and political subdivisions 1,771 8.38 70 1,512 8.68 62
Mortgage-backed securities:
Federal agencies 19,457 6.65 640 16,594 7.16 580
Private collateralized mortgage obligations 3,234 6.78 110 2,419 6.84 82
-------- ------ -------- ------
Total mortgage-backed securities 22,691 6.67 750 19,013 7.12 662
Other securities 2,993 6.75 85 1,423 6.76 40
-------- ------ -------- ------
Total securities available for sale 32,907 6.55 1,053 27,588 6.94 929
Loans held for sale (3) 5,590 7.23 200 4,679 7.70 180
Mortgages held for sale (3) 13,822 6.82 473 10,853 6.97 378
Loans:
Commercial 35,258 8.55 1,496 32,330 9.11 1,461
Real estate 1-4 family first mortgage 12,082 8.35 504 13,567 8.20 556
Other real estate mortgage 16,855 8.87 743 16,247 9.52 769
Real estate construction 3,971 9.33 184 3,429 9.51 162
Consumer:
Real estate 1-4 family junior lien mortgage 11,092 9.11 503 10,479 10.01 521
Credit card 5,442 13.62 371 6,268 15.04 471
Other revolving credit and monthly payment 15,542 12.55 973 16,683 12.78 1,065
-------- ------ -------- ------
Total consumer 32,076 11.55 1,847 33,430 12.34 2,057
Lease financing 6,682 7.84 261 5,239 8.35 219
Foreign 1,494 21.05 157 1,220 20.82 127
-------- ------ -------- ------
Total loans (4) 108,418 9.62 5,192 105,462 10.19 5,351
Other 2,417 5.49 66 2,587 6.73 87
-------- ------ -------- ------
Total earning assets $164,458 8.60 7,015 $152,401 9.21 6,959
======== ------ ======== ------
FUNDING SOURCES
Deposits:
Interest-bearing checking $ 2,784 .88 12 $ 2,682 1.59 21
Market rate and other savings 55,822 2.31 639 51,594 2.63 672
Savings certificates 26,491 4.81 632 27,787 5.28 727
Other time deposits 3,657 5.02 91 4,150 5.53 114
Deposits in foreign offices 1,039 4.24 22 704 4.95 17
-------- ------ -------- ------
Total interest-bearing deposits 89,793 3.14 1,396 86,917 3.60 1,551
Short-term borrowings 17,526 4.70 408 13,444 5.44 363
Long-term debt 19,780 5.80 573 16,885 6.39 539
Guaranteed preferred beneficial interests in Company's
subordinated debentures 785 7.52 30 1,265 8.00 50
-------- ------ -------- ------
Total interest-bearing liabilities 127,884 3.79 2,407 118,511 4.25 2,503
Portion of noninterest-bearing funding sources 36,574 -- -- 33,890 -- --
-------- ------ -------- ------
Total funding sources $164,458 2.96 2,407 $152,401 3.32 2,503
======== ------ ======== ------
NET INTEREST MARGIN AND NET INTEREST INCOME ON
A TAXABLE-EQUIVALENT BASIS (5) 5.64% $4,608 5.89% $4,456
==== ====== ===== ======
NONINTEREST-EARNING ASSETS
Cash and due from banks $ 11,177 $ 10,604
Goodwill 7,695 7,972
Other 16,207 13,467
-------- --------
Total noninterest-earning assets $ 35,079 $ 32,043
======== ========
NONINTEREST-BEARING FUNDING SOURCES
Deposits $ 42,750 $ 39,741
Other liabilities 7,627 6,416
Preferred stockholders' equity 461 461
Common stockholders' equity 20,815 19,315
Noninterest-bearing funding sources used to
fund earning assets (36,574) (33,890)
-------- --------
Net noninterest-bearing funding sources $ 35,079 $ 32,043
======== ========
TOTAL ASSETS $199,537 $184,444
======== ========
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average prime rate of the Company was 7.75% and 8.50% for the six months
ended June 30, 1999 and 1998, respectively. The average three-month London
Interbank Offered Rate (LIBOR) was 5.03% and 5.68% 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.
(4) Nonaccrual loans and related income are included in their respective loan
categories.
(5) 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 the six
months ended June 30, 1999 and 1998.
