Total : 148 View more »
Robert Steel, Former Wachovia President and CEO, Named to Hospital for Special Surgery Board of Trustees.
Wells Fargo announced today that it is closing a mortgage processing center in Durham, a move that will put 62 employees out of work.
http://blogs.newsobserver.com/business/wells-fargo-eliminates-62-jobs-in-durham
Becomes Wells Fargo 1031 Exchange Services and continues to host its annual 1031 Like-kind Exchange Seminar
Wells Fargo Company (WFC)Q3 2009 Earnings Call October 21, 2009 8:30 am ET<a
Total : 40 View more »
Nov 5, 2009 (GlobeNewswire via COMTEX) --
New Facility Extends to October 2013 and Will Allow for
Increased Borrowing Capacity
Company Intends to Redeem Remaining Senior Notes by Year-end
TORONTO, Nov. 5, 2009 (GLOBE NEWSWIRE) -- IMAX Corporation (Nasdaq:IMAX) (TSX:IMX) today announced that it has entered into a commitment letter with Wachovia Capital Finance Corporation pursuant to which Wachovia, with the participation of Export Development Canada, has committed to provide a four-year senior secured $75 million credit facility. Upon execution of definitive documents, the credit facility will consist of revolving loans of up to $40 million and a term loan of $35 million. Once completed, the Company intends to use the new facility to finance its future growth and working capital requirements. The proposed credit facility matures on October 31, 2013 and will replace the Company's previous $40 million credit facility which was to mature in October of 2010.
As currently contemplated, borrowings under the credit facility will bear interest at variable rates based on LIBOR or Wachovia's prime rate plus variable margins at the Borrower's option, under which applicable interest rates currently range from 3.03% to 4.03% per annum.
As previously announced on October 2, 2009, the Company called $75 million of its Senior Notes for redemption on December 1, 2009. The Company intends to redeem the remaining $29.4 million of its Senior Notes by year-end.
"This proposed new facility, combined with the redemption of our remaining senior notes, are very important steps toward creating a capital structure that will enable the Company to further realize the growth potential for the IMAX brand," said Richard L. Gelfond, Chief Executive Officer of IMAX Corporation. "We believe our progress throughout this year to strengthen our balance sheet and enhance our financial flexibility is reflective of the early success we have achieved with our new business model and our entry in the digital arena."
About IMAX Corporation
IMAX Corporation is one of the world's leading entertainment technology companies, specializing in immersive motion picture technologies. The worldwide IMAX network is among the most important and successful theatrical distribution platforms for major event Hollywood films around the globe, with IMAX(R) theatres delivering the world's best cinematic presentations using proprietary IMAX, IMAX(R) 3D, and IMAX DMR(R) technology. IMAX DMR is the Company's groundbreaking digital re-mastering technology that allows it to digitally transform virtually any conventional motion picture into the unparalleled image and sound quality of The IMAX Experience(R). The IMAX brand is recognized throughout the world for extraordinary and immersive entertainment experiences for consumers. As of September 30, 2009, there were 403 IMAX theatres (280 commercial, 123 institutional) operating in 44 countries.
IMAX(R), IMAX(R) 3D, IMAX(R) DMR, Experience It In IMAX(R), The IMAX 3D Experience(R) and The IMAX Experience(R) are trademarks of IMAX Corporation. More information about the Company can be found at www.imax.com. You may also connect with IMAX on Facebook (www.facebook.com/imax), Twitter (www.twitter.com/imax) and YouTube (www.youtube.com/imaxmovies).
The IMAX Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6469
This press release contains forward looking statements that are based on management's assumptions and existing information and involve certain risks and uncertainties which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Important factors that could affect these statements include, but are not limited to, general economic, market or business conditions, including the length and severity of the current economic downturn, the opportunities that may be presented to and pursued by the Company, the performance of IMAX DMR films, conditions in the in-home and out-of home entertainment industries, the signing of theatre system agreements, changes and developments in the commercial exhibition industry, the failure to convert theatre system backlog into revenue, investments and operations in foreign jurisdictions, foreign currency fluctuations and the Company's prior restatements and the related litigation and ongoing inquiries by the SEC and the OSC. These factors and other risks and uncertainties are discussed in the Company's most recent Annual Report on Form 10-K and most recent Quarterly Reports on Form 10-Q.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: IMAX Corporation
CONTACT: IMAX Corporation, New York Media: Sarah Gormley 212-821-0155 sgormley@imax.com Investors: Heather Anthony 212-821-0121 hanthony@imax.com Rogers & Cowan, Los Angeles Entertainment Media: Elliot Fischoff/Jason Magner 310-854-8128 jmagner@rogersandcowan.com Sloane & Company, New York Business Media: Whit Clay 212-446-1864 wclay@sloanepr.com
Tags: annual report business canada ceo commercial entertainment export finance interest rates nasdaq prime rate rates revenue technology toronto
Oct 29, 2009 (MarketNewsVideo.com via COMTEX) --
NorthStar Realty Finance (NRF) announced it completed a three year renewal of its credit facility with Wachovia Bank, a subsidiary of Wells Fargo (WFC), for three years. With the renewal, NorthStar agreed to make 15 million dollar semi-annual reductions of the facility over the three year term, and Wachovia agreed to eliminate margin call provisions as well as fixed charge and recourse debt covenants. Wachovia also gets 2 million warrants to purchase shares of NorthStar at exercise prices ranging from 7.50 to 10.50 per share. The interest rate on the credit facility will be LIBOR plus three and a half percent. Shares of NorthStar were up nearly 5% in Thursday trading.
And MCG Capital (MCGC) announced an amendment package for two series of senior unsecured notes. For the 2005-A series, the maturity date was extended by one year to October 11, 2011 and in exchange the interest rate was increased by one percent. The company also agreed to a 5 million dollar prepayment, made on a pro-rata basis, and agreed to a modification of cash sweep provisions. Going forward, for any unencumbered asset monetizations, cash proceeds will first go toward a 7.5% sweep required by the SunTrust (STI) Warehouse facility, and then a second 45% sweep will go to reduce the principal balance of the unsecured notes. The prior sweep to the unsecured notes was 5%. On Thursday, shares of MCGC were trading up over 7 and a half percent.
The preceeding is a transcript of the MarketNewsVideo.com video published at: http://www.marketnewsvideo.com/?id=200910DebtDeals102909&mv=1.
http://www.marketnewsvideo.com/
Tags: bank debt dollar exercise finance prices video
Companies: MCG Capital Corp. (MCGC), NorthStar Realty Finance Corp (NRF), SunTrust Banks, Inc. (STI), Wells Fargo & Co. (WFC)
SAN FRANCISCO, Oct 21, 2009 (BUSINESS WIRE) --
Wells Fargo & Company (NYSE:WFC):
-- 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 Company's 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
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 Company's 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
-- Increased loan modifications -- Provided 62,989 trial and completed modifications through the Home Affordable Modification Program (HAMP) and 292,005 through Company's 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
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 what's 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. We're also doing what's right for our mortgage customers having difficulty making their payments on time. We've offered home payment relief to 1.3 million customers so far this year, 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 we've 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 Fargo's leadership team and believe we have the strongest, most experienced team of senior leaders in all of financial services. They've 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 Company's 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 Company's 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, we've 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 Company's 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 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 we're 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. We're already realizing meaningful revenue synergies, an important driver of our earnings this year. Because Wachovia's 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 Company's 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 Company's 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. Wachovia's deposit pricing has been conformed to that of Wells Fargo, with continued better-than-planned retention of Wachovia's 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 Company's 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
-- 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 Company's 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 Wachovia's 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 Wachovia's 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.
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 Company's 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, we've 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 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 Company's 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, we've opened 41 banking stores and converted 1,274 ATMs to Envelope-Free(SM) 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 Company's 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. Treasury's $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 Company's 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 we've had from the beginning of this process in the underlying revenue strength of our company and the consistency of our revenue generation even in 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 Company's 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 Fargo's commercial loan portfolio and the fact that Wachovia's 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 Wachovia's 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. Wachovia's 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.
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 Fargo's 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 Wachovia's portfolio after having eliminated nonaccruals through purchase accounting at the end of last year. The overall loss rate in third quarter for Wachovia's commercial and commercial real estate portfolio was roughly comparable to Wells Fargo's 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 Wachovia's 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 Wachovia's 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 Fargo's consumer portfolio were essentially flat linked quarter. "Given the actions we've 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 Fargo's commercial and commercial real estate nonaccrual loans increased $777 million. The rate of growth in Wachovia's commercial and commercial real estate nonaccrual loans reflected some deterioration but was in line with management's expectations. Similarly, the growth rate in consumer nonaccrual loans also slowed in the quarter. Legacy Wells Fargo's consumer nonaccrual loans increased $606 million, about 11 percent, reflecting the more moderate deterioration the Company has experienced in consumer loans. Wachovia's 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
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, respectively, in advances pursuant to the Company's 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 management's 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.
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 Company's long-term goal
-- Sales of Wells Fargo Packages(R) (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-Free(SM) webATM machines
-- America's #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
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 Services(SM) received the TALON award as transfer agent ranked highest in Overall Satisfaction
-- Treasury Management introduced enhanced version of CEO Workstation(R), 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
Wealth, Brokerage and Retirement provides a full range of financial advisory services to clients using a comprehensive planning approach to meet each client's 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 Brokerage's 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 quarter's 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
-- 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 Fargo's 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 management's 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 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 government's 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 SEC's 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 $1.2 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores, over 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA (1) (2)
Quarter ended Sept. 30, Nine months ended Sept. 30,
($ 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 12.04 13.63 13.29 15.02
Fargo common stockholders' equity (ROE)
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, Wachovia's results are included in
the income statement, average balances and related metrics beginning
in 2009. Wachovia's 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 Company's 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.
Wells Fargo & Company and Subsidiaries
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 12.04 13.70 14.49 (22.32 ) 13.63
average Wells Fargo common stockholders' equity (ROE)
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, Wachovia's results are included in
the income statement, average balances and related metrics beginning
in 2009. Wachovia's 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 Company's 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.
Wells Fargo & Company and Subsidiaries
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 (40 ) 84 (237 ) 316
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)
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
Wells Fargo & Company and Subsidiaries
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
Wells Fargo & Company and Subsidiaries
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 $ 16,356 0.66 % $ 27 3,463 2.09 % $ 18
and other short-term investments
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 4.36 % $ 11,861 4.79 % $ 6,443
taxable-equivalent basis (6)
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.
Wells Fargo & Company and Subsidiaries
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 $ 20,411 0.73 % $ 111 3,734 2.59 % $ 72
and other short-term investments
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 4.27 % $ 35,348 4.80 % $ 18,586
taxable-equivalent basis (6)
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.
Wells Fargo & Company and Subsidiaries
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
Wells Fargo & Company and Subsidiaries
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
Wells Fargo & Company and Subsidiaries
CONSOLIDATED
BALANCE SHEET
(in millions, except shares) Sept. 30, Dec. 31,
2009 2008
Assets
Cash and due from banks $ 17,233 23,763
Federal funds sold, securities purchased under resale agreements 17,491 49,433
and other short-term investments
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 35,538 20,088
fair value)
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; 7,927 7,273
issued 4,756,071,429 shares and 4,363,921,429 shares
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
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
CONSOLIDATED BALANCE SHEET
(in millions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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 17,491 15,976 18,625 49,433 8,093
and other short-term investments
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
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
AVERAGE BALANCES
Quarter ended
(in millions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
2009 2009 2009 2008 2008
Earning assets
Federal funds sold, securities purchased under resale agreements $ 16,356 20,889 24,074 9,938 3,463
and other short-term investments
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.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER LOANS
(in millions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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
(in millions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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.
Wells Fargo & Company and Subsidiaries
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
(in millions) PCI All Total PCI All Total
loans other loans other
loans loans
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.
(in millions) Pick-a-Pay Other Commercial, Total
consumer CRE and
foreign
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.
(in millions) Pick-a-Pay Other Commercial, Total
consumer CRE and
foreign
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
Wells Fargo & Company and Subsidiaries
PICK-A-PAY
PORTFOLIO
PCI loans All other loans
(in millions) Unpaid Current Carrying Ratio of Unpaid Current Carrying
principal LTV value (2) carrying principal LTV value
balance ratio (1) value to balance ratio (1)
current
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 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 (AVM) 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.
Wells Fargo & Company and Subsidiaries
HOME EQUITY
PORTFOLIOS (1)
Outstanding balances % of loans Annualized
two payments loss rate
or more past due
(in millions) Sept. 30, June 30, Sept. 30, June 30, Sept. 30, June 30,
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.
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 2.50 % 1.96 2.05 1.71
loans
(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.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES (1)
Quarter ended
(in millions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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 2.50 % 2.11 1.54 2.69 1.96
loans
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.
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 - (20 )
benefits (3)
Adjustment for change of measurement date related to pension and - (8 )
other postretirement benefits (4)
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.
Wells Fargo & Company and Subsidiaries
TIER 1 COMMON
EQUITY (1)
Quarter ended
(in billions) Sept. 30, June 30, Dec. 31,
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 Company's 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.
Wells Fargo & Company and Subsidiaries
OPERATING SEGMENT
RESULTS (1)
(income/expense in millions, average balances in billions) Community Wholesale Wealth, Brokerage Other (2) Consolidated
Banking Banking and Retirement Company
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.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
OPERATING SEGMENT RESULTS (1)
Quarter ended
(income/expense in millions, average balances in billions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
CONSOLIDATED MORTGAGE SERVICING
Quarter ended
(in millions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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
(in millions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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.
Wells Fargo & Company and Subsidiaries
FIVE QUARTER
CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
Quarter ended
(in millions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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 $ 1,527 1,031 875 (346 ) 75
(2)+(4)
(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.
(in billions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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.
Wells Fargo & Company and Subsidiaries
SELECTED FIVE
QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA
Quarter ended
(in billions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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 $ 62 90 100 71 41
quarter end
Quarter ended
(in billions) Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
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.
SOURCE: Wells Fargo & Company
Wells Fargo & Company Media Mary Eshet, 704-383-7777 Julia Tunis Bernard, 415-222-3858 or Investors Bob Strickland, 415-396-0523 Jim Rowe, 415-396-8216
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Companies: Wells Fargo & Co. (WFC)
NEW YORK, Oct 13, 2009 /PRNewswire via COMTEX/ --
Two of the nation's top-performing Community Development Financial Institutions (CDFIs) -- New Hampshire-based Community Loan Fund and Kentucky-based Federation of Appalachian Housing Enterprises (FAHE) -- are the recipients of the 2009 Wachovia NEXT Awards for Opportunity Finance. The two CDFIs will receive $8.25 million in grants and low-cost loans and will be honored on Wednesday, October 28th at the Opportunity Finance Network (OFN) Conference in Charlotte, North Carolina.
The Community Loan Fund will receive $5.5 million -- a $5 million low-cost loan and a $500,000 unrestricted grant. The Community Loan Fund was selected for its expansion of an innovative financing program for manufactured housing mortgage loans, which has the potential to change mortgage financing in the manufactured home sector across the U.S. The Community Loan Fund turns investments into fixed-rate loans and education to create opportunity and transform the lives of people across New Hampshire. Since 1984 the Community Loan Fund has enabled 93 manufactured housing communities throughout New Hampshire, or 20 percent of the market in that state, to convert to resident ownership. The Community Loan Fund has financed more than 1,400 loans totaling more than $100 million, and leveraging more than $348 million, to build housing, create jobs, and support essential services like child care and community facilities.
FAHE will receive $2.75 million -- a $2.5 million low-cost loan and a $250,000 unrestricted grant. The Selection Committee chose FAHE for its innovation and bold strategy in eliminating substandard housing conditions prevalent in the Central Appalachian region. FAHE is the largest provider of community investment capital in highly distressed Central Appalachia. Last year, FAHE provided $41 million in direct financing and its members produced 3,800 housing units. This figure is on target against FAHE's bold goal to quadruple their performance and achieve 8,000 housing units annually by 2015.
CDFIs are market-driven, private sector institutions dedicated to meeting the financial needs of disadvantaged and hard-to-serve markets nationwide. They include banks, credit unions, loan funds, and venture capital funds. There are more than 700 CDFIs in the United States.
Since 2007, the Wachovia NEXT Awards for Opportunity Finance in partnership with the John D. and Catherine T. MacArthur Foundation, has been run by and funded through OFN with support from the Wachovia Foundation and the John D. and Catherine T. MacArthur Foundation. The program recognizes excellence within the CDFI field and is designed to propel high-potential organizations to a next level of growth, success, and staying power.
A distinguished national selection committee chose the two recipients from a highly competitive field of seven semi-finalist organizations. The award amounts are based on each organization's asset size -- $5.5 million for CDFIs with assets over $50 million and $2.75 for those with assets in the $10-$50 million range.
"Each award recipient has blazed an unlikely trail on solid ground against expectations," said Mark Pinsky, president and CEO of the Philadelphia-based OFN, the leading national network of high-performance CDFIs. "These awards recognize the outstanding achievements and extraordinary future potential of two leading CDFIs. The Wachovia NEXT Awards also spotlight how the entire opportunity finance field benefits our nation's economy through responsible lending, investing, and financial services."
"We congratulate the Community Loan Fund and FAHE on their exceptional accomplishments in helping to transform underserved communities," said Michael Rizer, executive vice president for Wachovia, a Wells Fargo Company. "We're proud to continue our long-standing support for the opportunity finance industry with our investment in the Wachovia NEXT Awards for Opportunity Finance, which helps innovative, up-and-coming CDFIs grow and create even more economic opportunity for families and communities through access to credit."
"The services provided by CDFIs are especially critical today, as the country struggles with the economic crisis and access to capital is constrained," said Debra Schwartz, director of program related investments for the MacArthur Foundation. "We hope these awards will help more policymakers and investors appreciate the vital role that CDFIs play in our financial system and the valuable contributions they are poised to make in the years ahead."
Last year's awardees were IFF, based in Illinois and Homewise, Inc., located in New Mexico. IFF is using its $5.5 million award to support staff investments needed to expand its geographic, financing, and policy reach and to support their goal of doubling financing throughout the five-state region of Illinois, Missouri, Iowa, Indiana, and Wisconsin. Homewise is using its $2.75 million award to build organization infrastructure to expand geographically and replicate its unique, vertically integrated housing model with other CDFIs. They are also expanding their home purchase and improvement loans products in New Mexico.
Headshots of Juliana Eades, president of the Community Loan Fund, and Jim King, president and CEO of FAHE are available at http://www.nextawards.org/news/photos.asp.
SOURCE Opportunity Finance Network
http://www.opportunityfinance.net
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George Budig, President of George E. Fern, explains the sale with two words: estate planning. At the same time, Budig says he has no plans to retire and plans to stay on with the George E. Fern Co. He will also continue running other businesses jointly owned with his brother, Otto Budig, Jr.