SAN FRANCISCO--()--Wells Fargo & Company (NYSE:WFC):
“Wells Fargo has earned strong and consistent profits in each of the eight quarters since the 2008 merger with Wachovia – $24.6 billion in profit in two years, including a record $3.4 billion in profit in the fourth quarter”
Continued strong financial results in fourth quarter 2010:
- Record net income of $3.4 billion, up 21 percent from prior year
- Diluted earnings per common share of $0.61
- Revenue of $21.5 billion, up 12 percent (annualized) from prior quarter
- Net interest margin of 4.16 percent, return on assets of 1.09 percent (annualized), and return on equity of 10.95 percent (annualized)
Diverse sources of franchise growth in fourth quarter 2010:
- All business segments contributed to earnings; Wholesale Banking up 11 percent from prior quarter
- Double-digit revenue growth across multiple businesses
- Loan growth in major loan categories – commercial and industrial, commercial real estate mortgage and real estate 1-4 mortgages; total loans up $3.6 billion, or 2 percent (annualized), from September 30, 2010; non-strategic/liquidating loans down $6.0 billion, all other loans up $9.6 billion from September 30, 2010
- Average checking and savings deposit growth accelerated to 17 percent (annualized) from prior quarter
- Supplied $210 billion in credit to consumers and businesses during the quarter, up $34.5 billion, or 20 percent, from prior quarter; highest quarterly volume of credit extended since merger
Continued and significant improvement in credit quality:
- Net loan charge-offs declined to $3.8 billion, down $256 million from prior quarter and 29 percent below fourth quarter 2009 peak
- Nonperforming assets declined to $32.4 billion and nonperforming loans declined to $26.2 billion, down $2.1 billion from prior quarter
- Most leading credit quality metrics stable to improving
- Reserve release1 of $850 million (pre tax) reflected improved portfolio performance; expect future reductions in the allowance absent significant deterioration in the economy
- Allowance for credit losses of $23.5 billion = 6 times quarterly charge-offs
- Remaining purchased credit-impaired (PCI) nonaccretable of $13.4 billion = 29.5% of remaining unpaid principal balance
1 Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.
Completed 2nd year of Wachovia integration; merger on track and exceeding original expectations:
- Completed conversion of retail banking stores in Georgia and finished the replacement of Wachovia ATM network with Envelope-FreeSM webATM machines
- Remaining Eastern banking markets will convert by year end 2011
- Converted brokerage platform the weekend of January 15th
Capital ratios continued to increase, driven by $13 billion (12 percent) internal capital generation since December 31, 2009:
| Dec. 31, | Sept. 30, | Dec. 31, | |||||||||
| (as a percent of total risk-weighted assets) | 2010 (1) | 2010 | 2009 | ||||||||
| Tier 1 capital | 11.3 |
% |
10.9 | 9.3 | |||||||
| Total capital | 15.1 | 14.9 | 13.3 | ||||||||
| Tier 1 leverage | 9.2 | 9.0 | 7.9 | ||||||||
| Tier 1 common equity (2) | 8.4 | 8.0 | 6.5 | ||||||||
| (1) December 31, 2010, ratios are preliminary. | |||||||||||
|
(2) See the FIVE QUARTER TIER 1 COMMON EQUITY table for more information on Tier 1 common equity. |
|||||||||||
- Company’s estimated Tier 1 common ratio under Basel III capital proposals was 6.9 percent at December 31, 20102
Industry leader in loan modifications for homeowners:
- As of December 31, 2010, more than 620,000 active trial or completed loan modifications had been initiated since beginning of 2009; of this total, 530,000 were through Wells Fargo’s own programs, with the remaining 90,000 under the federal government’s Home Affordable Modification Program (HAMP)
Full Year 2010:
- Record net income of $12.4 billion
- Revenue of $85.2 billion
- Diluted earnings per common share of $2.21
- Net interest margin of 4.26 percent, return on assets of 1.01 percent, and return on equity of 10.33 percent
2 Pro forma calculations based on reported Tier 1 common equity, as adjusted to reflect management’s interpretation of current Basel III capital proposals. These pro forma calculations and management’s estimates are subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory authorities. Please see page 44 of the Fourth Quarter 2010 Quarterly Supplement for additional information.
| Selected Financial Information | ||||||||||||||||
| Quarter ended | ||||||||||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | Year ended Dec. 31, | |||||||||||||
| 2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||
| Earnings | ||||||||||||||||
| Diluted earnings per common share | $ | 0.61 | 0.60 | 0.08 | 2.21 | 1.75 | ||||||||||
| Wells Fargo net income (in billions) | 3.41 | 3.34 | 2.82 | 12.36 | 12.28 | |||||||||||
| Asset Quality | ||||||||||||||||
| Net charge-offs as a % of avg. total loans | 2.02 |
% |
2.14 | 2.71 | 2.30 | 2.21 | ||||||||||
| Allowance as a % of total loans | 3.10 | 3.23 | 3.20 | 3.10 | 3.20 | |||||||||||
| Allowance as a % of annualized net charge-offs | 154 | 150 | 117 | 132 | 138 | |||||||||||
| Other | ||||||||||||||||
| Revenue (in billions) | $ | 21.49 | 20.87 | 22.70 | 85.21 | 88.69 | ||||||||||
| Loans (in billions) | 757.3 | 753.7 | 782.8 | 757.3 | 782.8 | |||||||||||
| Average core deposits (in billions) | 794.8 | 772.0 | 770.8 | 772.0 | 762.5 | |||||||||||
| Net interest margin | 4.16 |
% |
4.25 | 4.31 | 4.26 | 4.28 | ||||||||||
Wells Fargo & Company (NYSE:WFC) reported record net income of $12.4 billion, or $2.21 per diluted common share, for 2010, up from $12.3 billion, or $1.75 per share, for 2009. Fourth quarter 2010 net income was a record $3.4 billion, or $0.61 per common share, compared with $3.3 billion, or $0.60 per common share, for third quarter 2010 and $2.8 billion, or $0.08 per common share, for fourth quarter 2009. Earnings per share for fourth quarter 2009 were reduced by $0.47 for the combined dividends and deemed dividend upon redemption and full repayment of TARP preferred stock.
“In 2010 Wells Fargo saw solid growth in a variety of businesses, with record net income for the full year as well as the fourth quarter,” said Chairman and CEO John Stumpf. “As the U.S. economy showed continued signs of improvement, our diversified model continued to perform for our stakeholders, as demonstrated by growth in loans and deposits, solid capital levels and improving credit quality.
“Wells Fargo was once again ranked No. 1 in the American Customer Satisfaction Index (ACSI), an independent survey of consumer satisfaction of the largest banks in the U.S., for 2010. Our internal metrics indicate greater customer retention and deepening customer relationships. Of course, our engaged team members are one of the main reasons for these customer satisfaction results.
“As we look to the future, it is within the larger context of the ‘new normal’ for the industry, U.S. economy, our customers and our Company that we focus on long-term growth. We’re beginning our third year of the Wachovia integration, which we expect to complete by the end of 2011. We are very pleased with our progress to date and, since the merger in December 2008, Wells Fargo has earned $24.6 billion – a real testament to the power of this combined franchise. A sincere thank you to our 281,000 team members for their continued work in making Wells Fargo one of America’s great companies.”
Financial Performance
“Wells Fargo has earned strong and consistent profits in each of the eight quarters since the 2008 merger with Wachovia – $24.6 billion in profit in two years, including a record $3.4 billion in profit in the fourth quarter,” said Chief Financial Officer Howard Atkins. “Our results in the fourth quarter were driven by broad-based revenue growth – up 12 percent (annualized) from the prior quarter in total, including revenue growth in roughly two-thirds of our businesses. In addition, we experienced a significant improvement in credit quality, with a $2.1 billion decline in nonperforming loans, along with the fourth consecutive quarter of lower charge-offs, down 29 percent from the fourth quarter 2009 peak. The Wachovia merger is already proving to be a financial success, with substantially all of the expected expense savings already realized and growing revenue synergies reflective of market share gains in many businesses including deposits, mortgage, auto dealer services and investment banking. Our capital is substantially stronger than it has ever been – with Tier 1 common equity reaching 8.4 percent as of December 31, 2010, under Basel I and an estimated 6.9 percent under Basel III capital proposals. Capital continued to grow, reflecting a 1.1 percent return on assets and 3 percent rate of internal capital generation in the fourth quarter.”
Revenue
Revenue of $21.5 billion increased 12 percent (annualized) from third quarter 2010. Revenue growth was broad-based, with a wide variety of businesses again generating double-digit (annualized) linked-quarter revenue growth, including asset management, auto dealer services, brokerage, capital finance, commercial banking, commercial mortgage originations, commercial real estate, debit card, equipment finance, global remittance, insurance, international, investment banking, mortgage banking, real estate brokerage, shareowner services, SBA lending and wealth management. Over 60 percent of the Company’s total revenue in the quarter was earned in businesses that produced double-digit revenue growth.
Net Interest Income
Net interest income was $11.06 billion, compared with $11.10 billion in third quarter 2010. PCI loan resolution interest income declined to $78 million in fourth quarter from $153 million in third quarter, accounting for 3 basis points of the 9 basis point decline in the net interest margin, with the remainder of the margin decline largely attributable to the first linked-quarter growth in average earning assets since fourth quarter 2009 – up nearly $18 billion from third quarter.
Noninterest Income
Noninterest income was $10.4 billion, up $655 million, or 27 percent (annualized), from third quarter. On a linked-quarter basis, declines in deposit service charges (down $97 million from third quarter largely due to Regulation E impact offset by core deposit growth of 3 percent) and operating leases (down $143 million) were more than offset by growth in mortgage banking noninterest income (up $258 million, primarily driven by higher net gains on origination/sales), trust and investment fees (up $394 million, or 15 percent, on higher volumes and market gains), insurance (up $167 million on stronger crop underwriting results), and trading gains (up $62 million, or 13 percent).
Mortgage banking noninterest income was $2.8 billion, up 10 percent from third quarter 2010 on $128 billion of originations compared with $101 billion of originations in third quarter. Mortgage banking noninterest income in fourth quarter included a $464 million provision for mortgage loan repurchase losses compared with $370 million in third quarter (included in net gains from mortgage loan origination/sales activities) and a $143 million mortgage servicing rights (MSR) value reduction due to higher estimated future servicing and foreclosure costs (reduction in net servicing income). Net MSR results were $(143) million, inclusive of the $143 million MSR adjustment. The ratio of MSRs as a percent of loans serviced for others was 86 basis points and the average note rate on the servicing portfolio was 5.39 percent, compared with an average 4.86 percent published rate in the Freddie Mac Primary Mortgage Market Survey at quarter-end. The unclosed pipeline at December 31, 2010, was $73 billion compared with $101 billion at September 30, 2010.
The Company had net unrealized securities gains of $8.3 billion at December 31, 2010. Net realized equity gains of $317 million were largely offset by $268 million of realized bond losses, reflecting the Company’s decision to sell its lowest-yielding bonds, which were repositioned at the higher long-term interest rates prevailing late in the quarter.
Noninterest Expense
Noninterest expense was $13.3 billion, up from $12.3 billion in third quarter 2010. Fourth quarter expenses included $534 million of merger integration costs (up $58 million from third quarter) and a $400 million charitable contribution to the Wells Fargo Foundation, covering three years of estimated funding for the foundation. Fourth quarter also included approximately $200 million of seasonally higher year-end expenses, including higher advertising, equipment, software and travel costs. The quarter included approximately $200 million of incremental mortgage volume-related costs, which will likely decline if mortgage production declines. Finally, there were continued elevated loan resolution costs, including an additional $86 million of foreclosed asset expense, largely due to additional workout costs and sales. The Company’s efficiency ratio was 62.1 percent compared with 58.7 percent in third quarter 2010 and 56.5 percent in fourth quarter 2009.
Loans
At December 31, 2010, total loans were $757.3 billion, up from $753.7 billion at September 30, 2010. “We’ve seen signs of increased lending activity for several quarters and, during the fourth quarter, loans grew $3.6 billion. We had linked-quarter loan growth in many portfolios, including asset-backed finance, auto, brokerage lines of credit, capital finance, commercial banking, commercial real estate, equipment finance, government banking, international, mortgage, private student lending and SBA lending,” said Atkins. “We also continued to run-off the non-strategic/liquidating loan portfolios (legacy Wells Fargo Financial indirect auto, liquidating home equity, legacy Wells Fargo Financial debt consolidation, Pick-a-Pay mortgage, and other PCI), which declined $6.0 billion in the quarter.”
Deposits
Average core deposits were $794.8 billion, up 12 percent (annualized) from $772.0 billion in third quarter 2010. Consumer checking accounts grew a net 7.5 percent from December 31, 2009. Average checking and savings deposits increased 8 percent from a year ago to $715.7 billion. Average mortgage escrow deposits were $36.0 billion compared with $30.2 billion in third quarter 2010. “We continued to attract high-quality core deposits in the form of checking and savings accounts, which we view as the cornerstone of the banking relationship with our consumer and business customers,” said Atkins. Average checking and savings deposits were 90 percent of average core deposits, up from 86 percent a year ago. The average deposit cost for fourth quarter 2010 was 31 basis points.
Capital
Capital ratios increased in the fourth quarter, driven by internal capital generation of $3.5 billion. As a percentage of total risk-weighted assets, Tier 1 capital increased to 11.3 percent, total capital to 15.1 percent and Tier 1 common equity to 8.4 percent at December 31, 2010, up from 10.9 percent, 14.9 percent and 8.0 percent, respectively, at September 30, 2010. The Tier 1 leverage ratio was 9.2 percent at December 31, 2010, up from 9.0 percent at September 30, 2010. Under Basel III capital proposals, the Company’s estimated Tier 1 common ratio was 6.9 percent at December 31, 2010.
Credit Quality
“We saw meaningful improvement in credit quality in the fourth quarter, with virtually every metric showing positive movement,” said Mike Loughlin, Chief Risk Officer. “Net charge-offs peaked a year ago and continued to decline in the fourth quarter. We’ve now experienced a decline in nonperforming assets as well, driven by a $2.1 billion reduction in nonperforming loans. Thirty days past due loans declined 5 percent in consumer portfolios, and delinquency data across the majority of portfolios improved even with the typical seasonal headwinds. The significant decline in loans 90 days past due and still accruing is another indicator of a positive shift in credit quality. Additionally, the improvement was evident in the PCI portfolio, which consists of loans acquired through the Wachovia merger that were deemed to have probable loss and therefore written down at acquisition. The PCI portfolio continued to perform better than originally expected. Reflecting the improved overall portfolio performance, the provision for credit losses was $850 million less than net charge-offs. Absent significant deterioration in the economy, we expect future reductions in the allowance for credit losses.”
Credit Losses
Fourth quarter net charge-offs were $3.8 billion, or 2.02 percent (annualized) of average loans, down $256 million from third quarter net charge-offs of $4.1 billion (2.14 percent). Virtually all major loan categories experienced lower charge-offs in the quarter, including commercial and industrial, commercial real estate construction, residential real estate and all other consumer. The small increase in commercial real estate mortgage losses was related to write-downs based on regular appraisal updates. Total net credit losses included $954 million of commercial losses (1.19 percent), down $111 million from third quarter, and $2.9 billion of consumer losses (2.63 percent), down $145 million from third quarter, as shown in the following table.
| Net Loan Charge-Offs | |||||||||||||||||||
|
|
|
Quarter ended |
|||||||||||||||||
| December 31, 2010 | September 30, 2010 | June 30, 2010 | |||||||||||||||||
| As a | As a | As a | |||||||||||||||||
| Net loan | % of | Net loan | % of | Net loan | % of | ||||||||||||||
| charge- | average | charge- | average | charge- | average | ||||||||||||||
| ($ in millions) | offs | loans (1) | offs | loans (1) | offs | loans (1) | |||||||||||||
| Commercial: | |||||||||||||||||||
| Commercial and industrial | $ | 500 | 1.34 |
% |
$ | 509 | 1.38 |
% |
$ | 689 | 1.87 |
% |
|||||||
| Real estate mortgage | 234 | 0.94 | 218 | 0.87 | 360 | 1.47 | |||||||||||||
| Real estate construction | 171 | 2.51 | 276 | 3.72 | 238 | 2.90 | |||||||||||||
| Lease financing | 21 | 0.61 | 23 | 0.71 | 27 | 0.78 | |||||||||||||
| Foreign | 28 | 0.36 | 39 | 0.52 | 42 | 0.57 | |||||||||||||
| Total commercial | 954 | 1.19 | 1,065 | 1.33 | 1,356 | 1.69 | |||||||||||||
| Consumer: | |||||||||||||||||||
| Real estate 1-4 family first mortgage | 1,024 | 1.77 | 1,034 | 1.78 | 1,009 | 1.70 | |||||||||||||
| Real estate 1-4 family junior lien mortgage | 1,005 | 4.08 | 1,085 | 4.30 | 1,184 | 4.62 | |||||||||||||
| Credit card | 452 | 8.21 | 504 | 9.06 | 579 | 10.45 | |||||||||||||
| Other revolving credit and installment | 404 | 1.84 | 407 | 1.83 | 361 | 1.64 | |||||||||||||
| Total consumer | 2,885 | 2.63 | 3,030 | 2.72 | 3,133 | 2.79 | |||||||||||||
| Total | $ | 3,839 | 2.02 |
% |
$ | 4,095 | 2.14 |
% |
$ | 4,489 | 2.33 |
% |
|||||||
|
(1) Quarterly net charge-offs as a percentage of average loans are annualized. See explanation in the PURCHASED CREDIT-IMPAIRED (PCI) LOANS table of the accounting for purchased credit-impaired (PCI) loans from Wachovia and the impact on selected financial ratios. |
|||||||||||||||||||
Nonperforming Assets
Nonperforming assets declined for the first time since the merger with Wachovia, ending the quarter at $32.4 billion, down 6 percent from $34.6 billion in the third quarter. Nonaccrual loans declined to $26.2 billion from $28.3 billion for the third quarter, with reductions in commercial and industrial, commercial real estate construction and each of the consumer categories: 1-4 family first mortgage, 1-4 family junior lien mortgage, and other revolving credit and installment.
| Nonaccrual Loans and Other Nonperforming Assets | |||||||||||||||||
| December 31, 2010 | September 30, 2010 | June 30, 2010 | |||||||||||||||
| As a | As a | As a | |||||||||||||||
| % of | % of | % of | |||||||||||||||
| Total | total | Total | total | Total | total | ||||||||||||
| ($ in millions) | balances | loans | balances | loans | balances | loans | |||||||||||
| Commercial: | |||||||||||||||||
| Commercial and industrial | $ | 3,213 | 2.12 |
% |
$ | 4,103 |
2.79 |
% |
$ | 3,843 | 2.63 |
% |
|||||
| Real estate mortgage | 5,227 | 5.26 | 5,079 | 5.14 | 4,689 | 4.71 | |||||||||||
| Real estate construction | 2,676 | 10.56 | 3,198 | 11.46 | 3,429 | 11.10 | |||||||||||
| Lease financing | 108 | 0.82 | 138 | 1.06 | 163 | 1.21 | |||||||||||
| Foreign | 127 | 0.39 | 126 | 0.42 | 115 | 0.38 | |||||||||||
| Total commercial | 11,351 | 3.52 | 12,644 | 3.99 | 12,239 | 3.82 | |||||||||||
| Consumer: | |||||||||||||||||
| Real estate 1-4 family first mortgage | 12,289 | 5.34 | 12,969 | 5.69 | 12,865 | 5.50 | |||||||||||
| Real estate 1-4 family junior lien mortgage | 2,302 | 2.39 | 2,380 | 2.40 | 2,391 | 2.36 | |||||||||||
| Other revolving credit and installment | 300 | 0.35 | 312 | 0.35 | 316 | 0.36 | |||||||||||
| Total consumer | 14,891 | 3.42 | 15,661 | 3.58 | 15,572 | 3.49 | |||||||||||
| Total nonaccrual loans | 26,242 | 3.47 | 28,305 | 3.76 | 27,811 | 3.63 | |||||||||||
| Foreclosed assets: | |||||||||||||||||
| GNMA | 1,479 | 1,492 | 1,344 | ||||||||||||||
| All other | 4,530 | 4,635 | 3,650 | ||||||||||||||
| Total foreclosed assets | 6,009 | 6,127 | 4,994 | ||||||||||||||
|
Real estate and other nonaccrual investments |
120 | 141 | 131 | ||||||||||||||
|
Total nonaccrual loans and other nonperforming assets |
$ | 32,371 | 4.27 |
% |
$ | 34,573 | 4.59 |
% |
$ | 32,936 | 4.30 |
% |
|||||
| Change from prior quarter: | |||||||||||||||||
| Total nonaccrual loans | $ | (2,063 | ) | $ | 494 | $ | 510 | ||||||||||
| Total nonperforming assets | (2,202 | ) | 1,637 | 1,436 | |||||||||||||
While nonaccrual loans are not free of loss content, the loss exposure remaining in these balances is expected to be significantly mitigated by four factors. First, 99 percent of consumer nonaccrual loans and 95 percent of commercial nonaccruals are secured. Second, losses have already been recognized on 41 percent of the consumer nonaccruals and commercial nonaccruals have been written down by $2.6 billion. Residential nonaccrual loans are generally written down to net realizable value at 180 days past due. Third, as of December 31, 2010, 57 percent of commercial nonaccrual loans were current on interest. Fourth, the inherent risk of loss in all nonaccruals is adequately covered by the allowance for loan losses.
Foreclosed assets were $6.0 billion at December 31, 2010, down $118 million from third quarter. The $6.0 billion of foreclosed assets includes $2.0 billion from the PCI portfolios and $1.5 billion from fully insured GNMA loans. The quarterly reduction reflects a balance between inflows and outflows during the period. Given the current levels of nonaccruing loans, we would expect a higher than normal inflow into foreclosed assets over the near term as we resolve these loans,” said Loughlin. “However, as the majority of the loss content in these assets has already been accounted for, or the assets are government insured, there should be limited additional impact to expected loss levels.”
Loans 90 Days or More Past Due and Still Accruing
Loans 90 days or more past due and still accruing also improved in the quarter, totaling $18.5 billion at December 31, 2010, compared with $18.8 billion at September 30, 2010. For the same dates, the totals included $14.7 billion and $14.5 billion, respectively, in loans whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. “Excluding these insured loan balances, 90 days past due and accruing balances were down 12 percent from the prior quarter,” said Loughlin. “Leading the decrease, commercial loans 90 days or more past due and still accruing improved significantly, down $417 million, or 40 percent, from last quarter – additional evidence of improving credit performance trends.”
Allowance for Credit Losses
The allowance for credit losses, including the allowance for unfunded commitments, totaled $23.5 billion at December 31, 2010, down from $24.4 billion at September 30, 2010. The allowance coverage to total loans was 3.10 percent compared with 3.23 percent at September 30, 2010. The allowance covered 1.54 times annualized fourth quarter net charge-offs compared with 1.50 times in the prior quarter. The allowance coverage to nonaccrual loans was 89 percent at December 31, 2010, compared with 86 percent at September 30, 2010. “We believe the allowance was adequate for losses inherent in the loan portfolio at December 31, 2010, and continues to reflect prudent acknowledgement of uncertainty in the economic environment,” said Loughlin.
Additional detail on credit quality is included in the quarterly supplement, available on the Investor Relations page at www.wellsfargo.com/invest_relations/investor_relations/
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 | ||||||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | ||||||||||
| (in millions) | 2010 | 2010 | 2009 | |||||||||
| Community Banking | $ | 1,970 | 1,971 | 2,176 | ||||||||
| Wholesale Banking | 1,644 | 1,476 | 1,029 | |||||||||
| Wealth, Brokerage and Retirement | 197 | 256 | (16 | ) | ||||||||
In fourth quarter 2010, we realigned certain lending businesses into Wholesale Banking from Community Banking to reflect our previously announced restructuring of Wells Fargo Financial. Prior periods have been revised to reflect this change. More financial information about the business segments is in the OPERATING SEGMENT RESULTS table and the FIVE QUARTER OPERATING SEGMENT RESULTS table.
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. through its Regional Banking and Wells Fargo Home Mortgage business units.
|
Selected Financial Information |
|||||||||||
| Quarter ended | |||||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | |||||||||
| (in millions) | 2010 | 2010 | 2009 | ||||||||
| Total revenue | $ | 13,548 | 13,505 | 15,511 | |||||||
| Provision for credit losses | 2,785 | 3,155 | 4,943 | ||||||||
| Noninterest expense | 7,857 | 7,333 | 7,650 | ||||||||
| Segment net income | 1,970 | 1,971 | 2,176 | ||||||||
| (in billions) | |||||||||||
| Average loans | 514.1 | 522.2 | 538.9 | ||||||||
| Average assets | 772.4 | 770.8 | 796.5 | ||||||||
| Average core deposits | 544.4 | 537.1 | 542.2 | ||||||||
Community Banking reported net income of $2.0 billion, flat compared with third quarter 2010 and down $206 million, or 9 percent, from fourth quarter 2009. Revenue increased $43 million from third quarter 2010, driven primarily by an increase in mortgage banking income, as higher origination/sales activities more than made up for lower servicing income, offset by lower deposit service charges due to changes to Regulation E and the planned reduction in certain liquidating loan portfolios. Revenue decreased $2 billion, or 13 percent, from fourth quarter 2009 largely due to lower mortgage banking income, lower deposit service charges due to Regulation E and the planned reduction in certain liquidating loan portfolios. Noninterest expense increased $524 million, or 7 percent, from third quarter 2010, driven by a $400 million charitable contribution to the Wells Fargo Foundation, increases in foreclosed assets expense and seasonal software license and equipment maintenance expense, partially offset by lower litigation expense. Noninterest expense increased $207 million, or 3 percent, from a year ago primarily due to the $400 million charitable contribution offset by lower litigation expense and Wachovia merger-related cost savings. The provision for credit losses decreased $370 million from third quarter 2010 due to a $120 million decrease in net loan charge-offs and a $650 million reserve release compared with a $400 million reserve release in third quarter 2010. Provision decreased $2.2 billion from fourth quarter 2009 on lower net charge-offs across consumer, small business and credit card portfolios, and a $650 million fourth quarter 2010 reserve release compared with a reserve build of $385 million a year ago.
Regional Banking Highlights
-
Strong growth in checking accounts from December 31, 2009 (combined
Regional Banking)
- Consumer checking accounts up a net 7.5 percent
- Business checking accounts up a net 4.8 percent
- Consumer checking accounts up a net 8.2 percent in California and 10.0 percent in Florida
-
Record solutions in 2010
-
Western footprint including converted Wachovia
- Core product solutions (sales) of 30.1 million, up 16 percent from 2009
- Core sales per platform banker FTE (active, full-time equivalent) of 6.05 per day, up from 5.75 in 2009
- Sales of Wells Fargo Packages® (a checking account and three other products) up 21 percent from 2009, purchased by 81 percent of new checking account customers
-
Eastern footprint including converted Wachovia
- Eastern core product solutions and platform banker productivity grew by double digits in 2010
- Platform banker FTEs in the East grew by more than 1,950, or 22 percent, in 2010
- As of the end of fourth quarter, and after only a few months on the Wells Fargo systems, over 75 percent of new checking account customers purchased Wells Fargo Packages® in the converted southeastern states
-
Western footprint including converted Wachovia
-
Retail bank household cross-sell showing growth for combined company
- For first time since the merger, Regional Banking now reporting a Retail Bank household cross-sell ratio for total combined company of 5.70 products per household, up from 5.47 in December 2009
- This ratio, lower than legacy Wells Fargo’s stand-alone cross-sell, reflects the opportunity to earn more of the business from our legacy Wachovia customers; the cross-sell in the West is 6.14, compared with the cross-sell ratio in the East of 5.11
-
Customer experience (combined Regional Banking)
- Surveyed over 250,000 customers about their experience with Wells Fargo stores and contact centers in fourth quarter; nearly 8 out of 10 customers were “extremely satisfied,” the highest rating, with their recent call or visit with Wells Fargo
-
Continued focus on distribution
- Converted 279 Wachovia banking stores in Georgia to Wells Fargo in October 2010; total of 749 nationwide converted in 2010
- Opened 47 banking stores in 2010 for retail network total of 6,314 stores
- Converted 4,190 ATMs to Envelope-FreeSM webATM machines in 2010
-
Small Business/Business Banking
- Store-based business solutions up 22 percent from 2009 (Western footprint including converted Wachovia)
- Sales of Wells Fargo Business Services Packages (business checking account and at least three other business products) up 42 percent from 2009, purchased by 65 percent of new business checking account customers (Western footprint including converted Wachovia)
- Business Banking household cross-sell of 4.04 products per household (Western footprint including Wells Fargo and Wachovia customers)
- Wells Fargo, America’s #1 small business lender and the largest SBA lender (in dollars), extended $14.9 billion of new lending (new lending to existing or new borrowers, and increases to existing lines of credit) to small business owners in 2010. This includes $4.6 billion of new loans during the fourth quarter, representing an 18 percent increase from fourth quarter 2009 lending.
-
Online and Mobile Banking
- 18.3 million combined active online customers
- 4.7 million combined active Bill Pay customers
- Global Finance ranked Wells Fargo Best Consumer Internet Bank in North America (November, 2010)
Wells Fargo Home Mortgage (Home Mortgage)
- Home Mortgage applications of $158 billion, compared with $194 billion in prior quarter
- Home Mortgage application pipeline of $73 billion at quarter end, compared with $101 billion at September 30, 2010
- Home Mortgage originations of $128 billion, up 27 percent from $101 billion in prior quarter
- Owned residential mortgage servicing portfolio of $1.8 trillion
Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $20 million. Products & business units include Middle Market Commercial Banking, Government & Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Investment Banking & Capital Markets, Securities Investment Portfolio, Asset Backed Finance, and Asset Management.
|
Selected Financial Information |
|||||||||||
| Quarter ended | |||||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | |||||||||
| (in millions) | 2010 | 2010 | 2009 | ||||||||
| Total revenue | $ | 5,764 | 5,330 | 5,324 | |||||||
| Provision for credit losses | 195 | 280 | 964 | ||||||||
| Noninterest expense | 2,990 | 2,719 | 2,729 | ||||||||
| Segment net income | 1,644 | 1,476 | 1,029 | ||||||||
| (in billions) | |||||||||||
| Average loans | 229.6 | 227.3 | 243.4 | ||||||||
| Average assets | 383.6 | 371.0 | 366.8 | ||||||||
| Average core deposits | 185.1 | 170.8 | 163.0 | ||||||||
|
|
|||||||||||
Wholesale Banking reported net income of $1.6 billion, up $615 million, or 60 percent, from fourth quarter 2009 and up $168 million, or 11 percent, from third quarter 2010. Revenue increased $440 million, or 8 percent, from fourth quarter 2009 driven by strong growth in net interest income, as margins improved due to solid deposit gains and substantial gains in loan portfolio yields from fourth quarter 2009, as well as solid growth in noninterest income, driven by investment banking and capital markets, commercial mortgage origination and servicing, corporate banking fees, and strong Eastdil Secured results from private market real estate deal activity. Revenue increased $434 million, or 8 percent, from third quarter 2010 as strong investment banking and capital markets, commercial mortgage origination and rural crop insurance results and the impact of higher loan portfolio balances more than offset lower recoveries in the PCI portfolio. Noninterest expense increased $261 million, or 10 percent, from fourth quarter 2009 related to higher personnel expenses tied to revenue growth and litigation expense. Total provision for credit losses of $195 million declined $769 million, or 80 percent, from fourth quarter 2009. The decrease included a $454 million improvement in credit losses from fourth quarter 2009 and a $200 million reserve release compared with a $115 million credit reserve build in fourth quarter 2009. Nonperforming assets declined roughly $1.1 billion from third quarter 2010.
- Revenue up 8 percent from fourth quarter 2009
- Loan growth in many portfolios, including asset-backed finance, capital finance, commercial banking, commercial real estate, equipment finance, government banking and international, from third quarter 2010
- Continued strong deposit growth, with average core deposits up 14 percent from fourth quarter 2009
- Named Best Corporate/Institutional Internet bank in North America by Global Finance (November, 2010)
- Processed $1 trillion in deposits by commercial banking customers using Desktop Deposit® service
- Wells Fargo Shareowner ServicesSM is industry’s highest rated transfer agency for client satisfaction based on study by GROUP FIVE
- CEO Mobile® named one of the five best applications by Bank Technology News (October, 2010)
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 | ||||||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | ||||||||||
| (in millions) | 2010 | 2010 | 2009 | |||||||||
| Total revenue | $ | 3,041 | 2,912 | 2,654 | ||||||||
| Provision for credit losses | 113 | 77 | 93 | |||||||||
| Noninterest expense | 2,608 | 2,420 | 2,558 | |||||||||
| Segment net income | 197 | 256 | (16 | ) | ||||||||
| (in billions) | ||||||||||||
| Average loans | 43.0 | 42.6 | 44.8 | |||||||||
| Average assets | 140.2 | 138.2 | 137.7 | |||||||||
| Average core deposits | 121.5 | 120.7 | 124.1 | |||||||||
Wealth, Brokerage and Retirement reported net income of $197 million, down $59 million from third quarter 2010 and up $213 million from fourth quarter 2009, which included the previously disclosed auction rate securities settlement. Revenue was $3.0 billion, up 15 percent from fourth quarter 2009, as higher asset-based revenues, brokerage transactional revenue and net interest income were partially offset by lower securities gains and other fees in the brokerage business. Total provision for credit losses increased $20 million from fourth quarter 2009. Noninterest expense was up 2 percent from fourth quarter 2009 due to growth in broker commissions primarily driven by higher production levels. Average core deposits decreased $3 billion, or 2 percent, from fourth quarter 2009.
Retail Brokerage
- Client assets of $1.2 trillion, up 6 percent from fourth quarter 2009
- Managed account assets increased $38 billion, or 20 percent, from fourth quarter 2009 driven by strong market gains and solid net flows
Wealth Management
- Investment management and trust asset-based revenue up 6 percent from fourth quarter 2009
Retirement
- Institutional retirement plan assets of $231 billion, up $14 billion, or 6 percent, from fourth quarter 2009
- IRA assets of $266 billion up $24 billion, or 10 percent, from fourth quarter 2009
Conference Call
The Company will host a live conference call on Wednesday, January 19, at 6:30 a.m. PST (9:30 a.m. EST). To access the call, please dial 866-872-5161 (U.S. and Canada) or 706-643-1962 (international). No password is required. The call is also available online at wellsfargo.com/invest_relations/earnings and http://event.meetingstream.com/r.htm?e=263478&s=1&k=F1D152CEE9CE3D0916C517D8308EEABD
A replay of the conference call will be available beginning at approximately noon PST (3 p.m. EST) on January 19 through Wednesday, January 26. Please dial 800-642-1687 (U.S. and Canada) or 706-645-9291 (international) and enter Conference ID #48998396. The replay will also be available online at wellsfargo.com/invest_relations/earnings and http://event.meetingstream.com/r.htm?e=263478&s=1&k=F1D152CEE9CE3D0916C517D8308EEABD
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,” “appears” or similar expressions. Forward-looking statements in this news release include, among others, statements about: (i) future credit quality and expected or estimated future loan losses in our loan portfolios; the level and loss content of nonperforming assets and nonaccrual loans, as well as the level of inflows and outflows into nonperforming assets; and the adequacy of the allowance for loan losses, including our current expectation of future reductions in the allowance for loan losses; (ii) reduction or mitigation of risk in our loan portfolios; (iii) our estimates regarding our Tier 1 common ratio as of December 31, 2010 under proposed Basel III capital regulations; and (iv) the amount and timing of expected integration activities, expenses and cost savings relating to the Wachovia merger and expected synergies and benefits of the merger, as well as other expectations regarding future expenses, including mortgage volume-related costs.
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 (including under regulatory capital standards as determined and interpreted by applicable regulatory authorities such as the proposed Basel III capital regulations) and our ability to generate capital internally or raise capital on favorable terms; financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses (including the Dodd-Frank Wall Street Reform and Consumer Protection Act); the extent of success in our loan modification efforts, including the effects of regulatory requirements, or changes in regulatory requirements, relating to loan modifications; the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties; negative effects relating to mortgage foreclosures, including changes in our procedures or practices and/or industry standards or practices, regulatory or judicial requirements, penalties or fines, increased costs, or delays or moratoriums on foreclosures; 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; changes in our credit ratings and changes in the credit ratings of our customers or counterparties; 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 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. 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 Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010, and September 30, 2010, 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 (NYSE:WFC) is a nationwide, diversified, community-based financial services company with $1.3 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (wellsfargo.com and wachovia.com), and other distribution channels across North America and internationally. With approximately 281,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked No. 19 on Fortune’s 2009 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.
| Wells Fargo & Company and Subsidiaries | ||||||
| QUARTERLY FINANCIAL DATA | ||||||
| TABLE OF CONTENTS | ||||||
| Pages | ||||||
|
Summary Information |
||||||
| Summary Financial Data | 18-19 | |||||
|
Income |
||||||
| Consolidated Statement of Income | 20-21 | |||||
| Average Balances, Yields and Rates Paid | 22-23 | |||||
| Noninterest Income and Noninterest Expense | 24-25 | |||||
|
Balance Sheet |
||||||
| Consolidated Balance Sheet | 26-27 | |||||
| Average Balances | 28 | |||||
|
Loans |
||||||
| Loans | 29 | |||||
| Nonaccrual Loans and Other Nonperforming Assets | 29 | |||||
| Loans 90 Days or More Past Due and Still Accruing | 30 | |||||
| Purchased Credit-Impaired Loans | 31-33 | |||||
| Pick-A-Pay Portfolio | 34 | |||||
| Home Equity Portfolios | 35 | |||||
| Allowance for Credit Losses | 36-37 | |||||
|
Equity |
||||||
| Condensed Consolidated Statement of Changes in Total Equity | 38 | |||||
| Tier 1 Common Equity | 39 | |||||
|
Operating Segments |
||||||
| Operating Segment Results | 40-41 | |||||
|
Other |
||||||
| Mortgage Servicing and other related data | 42-44 | |||||
| Wells Fargo & Company and Subsidiaries | ||||||||||||||||||||
| SUMMARY FINANCIAL DATA | ||||||||||||||||||||
|
|
Quarter ended Dec. 31, | % | Year ended Dec. 31, | % | ||||||||||||||||
|
($ in millions, except per share amounts) |
2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||||
| For the Period | ||||||||||||||||||||
| Wells Fargo net income | $ | 3,414 | 2,823 | 21 |
% |
$ | 12,362 | 12,275 | 1 |
% |
||||||||||
|
Wells Fargo net income applicable to common stock |
3,232 | 394 | 720 | 11,632 | 7,990 | 46 | ||||||||||||||
| Diluted earnings per common share | 0.61 | 0.08 | 663 | 2.21 | 1.75 | 26 | ||||||||||||||
| Profitability ratios (annualized): | ||||||||||||||||||||
|
Wells Fargo net income to average assets (ROA) |
1.09 |
% |
0.90 | 21 | 1.01 | 0.97 | 4 | |||||||||||||
|
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders' equity (ROE) |
10.95 | 1.66 | 560 | 10.33 | 9.88 | 5 | ||||||||||||||
| Efficiency ratio (1) | 62.1 | 56.5 | 10 | 59.2 | 55.3 | 7 | ||||||||||||||
| Total revenue | $ | 21,494 | 22,696 | (5 | ) | $ | 85,210 | 88,686 | (4 | ) | ||||||||||
| Pre-tax pre-provision profit (PTPP) (2) | 8,154 | 9,875 | (17 | ) | 34,754 | 39,666 | (12 | ) | ||||||||||||
| Dividends declared per common share | 0.05 | 0.05 | - | 0.20 | 0.49 | (59 | ) | |||||||||||||
| Average common shares outstanding | 5,256.2 | 4,764.8 | 10 | 5,226.8 | 4,545.2 | 15 | ||||||||||||||
|
Diluted average common shares outstanding |
5,293.8 | 4,796.1 | 10 | 5,263.1 | 4,562.7 | 15 | ||||||||||||||
| Average loans | $ | 753,675 | 792,440 | (5 | ) | $ | 770,601 | 822,833 | (6 | ) | ||||||||||
| Average assets | 1,237,037 | 1,239,456 | - | 1,226,938 | 1,262,354 | (3 | ) | |||||||||||||
| Average core deposits (3) | 794,799 | 770,750 | 3 | 772,021 | 762,461 | 1 | ||||||||||||||
| Average retail core deposits (4) | 609,807 | 580,873 | 5 | 602,033 | 588,072 | 2 | ||||||||||||||
| Net interest margin | 4.16 |
% |
4.31 | (3 | ) | 4.26 | 4.28 | - | ||||||||||||
| At Period End | ||||||||||||||||||||
| Securities available for sale | $ | 172,654 | 172,710 | - | $ | 172,654 | 172,710 | - | ||||||||||||
| Loans | 757,267 | 782,770 | (3 | ) | 757,267 | 782,770 | (3 | ) | ||||||||||||
| Allowance for loan losses | 23,022 | 24,516 | (6 | ) | 23,022 | 24,516 | (6 | ) | ||||||||||||
| Goodwill | 24,770 | 24,812 | - | 24,770 | 24,812 | - | ||||||||||||||
| Assets | 1,258,128 | 1,243,646 | 1 | 1,258,128 | 1,243,646 | 1 | ||||||||||||||
| Core deposits (3) | 798,192 | 780,737 | 2 | 798,192 | 780,737 | 2 | ||||||||||||||
| Wells Fargo stockholders' equity | 126,408 | 111,786 | 13 | 126,408 | 111,786 | 13 | ||||||||||||||
| Total equity | 127,889 | 114,359 | 12 | 127,889 | 114,359 | 12 | ||||||||||||||
| Capital ratios: | ||||||||||||||||||||
| Total equity to assets | 10.16 |
% |
9.20 | 10 | 10.16 | 9.20 | 10 | |||||||||||||
| Risk-based capital (5): | ||||||||||||||||||||
| Tier 1 capital | 11.25 | 9.25 | 22 | 11.25 | 9.25 | 22 | ||||||||||||||
| Total capital | 15.13 | 13.26 | 14 | 15.13 | 13.26 | 14 | ||||||||||||||
| Tier 1 leverage (5) | 9.19 | 7.87 | 17 | 9.19 | 7.87 | 17 | ||||||||||||||
| Tier 1 common equity (6) | 8.37 | 6.46 | 30 | 8.37 | 6.46 | 30 | ||||||||||||||
| Book value per common share | $ | 22.49 | 20.03 | 12 | $ | 22.49 | 20.03 | 12 | ||||||||||||
|
Team members (active, full-time equivalent) |
272,200 | 267,300 | 2 | 272,200 | 267,300 | 2 | ||||||||||||||
| Common stock price: | ||||||||||||||||||||
| High | $ | 31.61 | 31.53 | - | $ | 34.25 | 31.53 | 9 | ||||||||||||
| Low | 23.37 | 25.00 | (7 | ) | 23.02 | 7.80 | 195 | |||||||||||||
| Period end | 30.99 | 26.99 | 15 | 30.99 | 26.99 | 15 | ||||||||||||||
|
(1) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). |
||||||||||||||||||||
|
(2) 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. |
|
|||||||||||||||||||
|
(3) Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). |
|
|||||||||||||||||||
|
(4) Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. |
||||||||||||||||||||
|
(5) The December 31, 2010, ratios are preliminary. |
||||||||||||||||||||
|
(6) See the FIVE QUARTER TIER 1 COMMON EQUITY table for additional information. |
||||||||||||||||||||
| Wells Fargo & Company and Subsidiaries | ||||||||||||||
| FIVE QUARTER SUMMARY FINANCIAL DATA | ||||||||||||||
| Quarter ended | ||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | ||||||||||
| ($ in millions, except per share amounts) | 2010 | 2010 | 2010 | 2010 | 2009 | |||||||||
| For the Quarter | ||||||||||||||
| Wells Fargo net income | $ | 3,414 | 3,339 | 3,062 | 2,547 | 2,823 | ||||||||
| Wells Fargo net income applicable to common stock | 3,232 | 3,150 | 2,878 | 2,372 | 394 | |||||||||
| Diluted earnings per common share | 0.61 | 0.60 | 0.55 | 0.45 | 0.08 | |||||||||
| Profitability ratios (annualized): | ||||||||||||||
| Wells Fargo net income to average assets (ROA) | 1.09 |
% |
1.09 | 1.00 | 0.84 | 0.90 | ||||||||
|
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders' equity (ROE) |
10.95 | 10.90 | 10.40 | 8.96 | 1.66 | |||||||||
| Efficiency ratio (1) | 62.1 | 58.7 | 59.6 | 56.5 | 56.5 | |||||||||
| Total revenue | $ | 21,494 | 20,874 | 21,394 | 21,448 | 22,696 | ||||||||
| Pre-tax pre-provision profit (PTPP) (2) | 8,154 | 8,621 | 8,648 | 9,331 | 9,875 | |||||||||
| Dividends declared per common share | 0.05 | 0.05 | 0.05 | 0.05 | 0.05 | |||||||||
| Average common shares outstanding | 5,256.2 | 5,240.1 | 5,219.7 | 5,190.4 | 4,764.8 | |||||||||
| Diluted average common shares outstanding | 5,293.8 | 5,273.2 | 5,260.8 | 5,225.2 | 4,796.1 | |||||||||
| Average loans | $ | 753,675 | 759,483 | 772,460 | 797,389 | 792,440 | ||||||||
| Average assets | 1,237,037 | 1,220,368 | 1,224,180 | 1,226,120 | 1,239,456 | |||||||||
| Average core deposits (3) | 794,799 | 771,957 | 761,767 | 759,169 | 770,750 | |||||||||
| Average retail core deposits (4) | 609,807 | 571,062 | 574,436 | 573,653 | 580,873 | |||||||||
| Net interest margin | 4.16 |
% |
4.25 | 4.38 | 4.27 | 4.31 | ||||||||
| At Quarter End | ||||||||||||||
| Securities available for sale | $ | 172,654 | 176,875 | 157,927 | 162,487 | 172,710 | ||||||||
| Loans | 757,267 | 753,664 | 766,265 | 781,430 | 782,770 | |||||||||
| Allowance for loan losses | 23,022 | 23,939 | 24,584 | 25,123 | 24,516 | |||||||||
| Goodwill | 24,770 | 24,831 | 24,820 | 24,819 | 24,812 | |||||||||
| Assets | 1,258,128 | 1,220,784 | 1,225,862 | 1,223,630 | 1,243,646 | |||||||||
| Core deposits (3) | 798,192 | 771,792 | 758,680 | 756,050 | 780,737 | |||||||||
| Wells Fargo stockholders' equity | 126,408 | 123,658 | 119,772 | 116,142 | 111,786 | |||||||||
| Total equity | 127,889 | 125,165 | 121,398 | 118,154 | 114,359 | |||||||||
| Capital ratios: | ||||||||||||||
| Total equity to assets | 10.16 |
% |
10.25 | 9.90 | 9.66 | 9.20 | ||||||||
| Risk-based capital (5): | ||||||||||||||
| Tier 1 capital | 11.25 | 10.90 | 10.51 | 9.93 | 9.25 | |||||||||
| Total capital | 15.13 | 14.88 | 14.53 | 13.90 | 13.26 | |||||||||
| Tier 1 leverage (5) | 9.19 | 9.01 | 8.66 | 8.34 | 7.87 | |||||||||
| Tier 1 common equity (6) | 8.37 | 8.01 | 7.61 | 7.09 | 6.46 | |||||||||
| Book value per common share | $ | 22.49 | 22.04 | 21.35 | 20.76 | 20.03 | ||||||||
| Team members (active, full-time equivalent) | 272,200 | 266,900 | 267,600 | 267,400 | 267,300 | |||||||||
| Common stock price: | ||||||||||||||
| High | $ | 31.61 | 28.77 | 34.25 | 31.99 | 31.53 | ||||||||
| Low | 23.37 | 23.02 | 25.52 | 26.37 | 25.00 | |||||||||
| Period end | 30.99 | 25.12 | 25.60 | 31.12 | 26.99 | |||||||||
|
(1) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). |
||||||||||||||
|
(2) 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. |
||||||||||||||
|
(3) Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). |
||||||||||||||
|
(4) Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. |
||||||||||||||
|
(5) The December 31, 2010, ratios are preliminary. |
||||||||||||||
|
(6) See the FIVE QUARTER TIER 1 COMMON EQUITY table for additional information. |
||||||||||||||
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF INCOME | |||||||||||||||||||||||||
| Quarter ended Dec. 31, | % | Year ended Dec. 31, | % | ||||||||||||||||||||||
| (in millions, except per share amounts) | 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||||
| Trading assets | $ | 295 | 230 | 28 |
% |
$ | 1,098 | 918 | 20 |
% |
|||||||||||||||
| Securities available for sale | 2,374 | 2,776 | (14 | ) | 9,666 | 11,319 | (15 | ) | |||||||||||||||||
| Mortgages held for sale | 495 | 446 | 11 | 1,736 | 1,930 | (10 | ) | ||||||||||||||||||
| Loans held for sale | 15 | 32 | (53 | ) | 101 | 183 | (45 | ) | |||||||||||||||||
| Loans | 9,666 | 10,122 | (5 | ) | 39,760 | 41,589 | (4 | ) | |||||||||||||||||
| Other interest income | 124 | 86 | 44 | 435 | 335 | 30 | |||||||||||||||||||
| Total interest income | 12,969 | 13,692 | (5 | ) | 52,796 | 56,274 | (6 | ) | |||||||||||||||||
| Interest expense | |||||||||||||||||||||||||
| Deposits | 662 | 913 | (27 | ) | 2,832 | 3,774 | (25 | ) | |||||||||||||||||
| Short-term borrowings | 26 | 12 | 117 | 92 | 222 | (59 | ) | ||||||||||||||||||
| Long-term debt | 1,153 | 1,217 | (5 | ) | 4,888 | 5,782 | (15 | ) | |||||||||||||||||
| Other interest expense | 65 | 50 | 30 | 227 | 172 | 32 | |||||||||||||||||||
| Total interest expense | 1,906 | 2,192 | (13 | ) | 8,039 | 9,950 | (19 | ) | |||||||||||||||||
| Net interest income | 11,063 | 11,500 | (4 | ) | 44,757 | 46,324 | (3 | ) | |||||||||||||||||
| Provision for credit losses | 2,989 | 5,913 | (49 | ) | 15,753 | 21,668 | (27 | ) | |||||||||||||||||
| Net interest income after provision for credit losses | 8,074 | 5,587 | 45 | 29,004 | 24,656 | 18 | |||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||
| Service charges on deposit accounts | 1,035 | 1,421 | (27 | ) | 4,916 | 5,741 | (14 | ) | |||||||||||||||||
| Trust and investment fees | 2,958 | 2,605 | 14 | 10,934 | 9,735 | 12 | |||||||||||||||||||
| Card fees | 941 | 961 | (2 | ) | 3,652 | 3,683 | (1 | ) | |||||||||||||||||
| Other fees | 1,063 | 990 | 7 | 3,990 | 3,804 | 5 | |||||||||||||||||||
| Mortgage banking | 2,757 | 3,411 | (19 | ) | 9,737 | 12,028 | (19 | ) | |||||||||||||||||
| Insurance | 564 | 482 | 17 | 2,126 | 2,126 | - | |||||||||||||||||||
| Net gains from trading activities | 532 | 516 | 3 | 1,648 | 2,674 | (38 | ) | ||||||||||||||||||
| Net gains (losses) on debt securities available for sale | (268 | ) | 110 | NM | (324 | ) | (127 | ) | 155 | ||||||||||||||||
| Net gains from equity investments | 317 | 273 | 16 | 779 | 185 | 321 | |||||||||||||||||||
| Operating leases | 79 | 163 | (52 | ) | 815 | 685 | 19 | ||||||||||||||||||
| Other | 453 | 264 | 72 | 2,180 | 1,828 | 19 | |||||||||||||||||||
| Total noninterest income | 10,431 | 11,196 | (7 | ) | 40,453 | 42,362 | (5 | ) | |||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||
| Salaries | 3,513 | 3,505 | - | 13,869 | 13,757 | 1 | |||||||||||||||||||
| Commission and incentive compensation | 2,195 | 2,086 | 5 | 8,692 | 8,021 | 8 | |||||||||||||||||||
| Employee benefits | 1,192 | 1,144 | 4 | 4,651 | 4,689 | (1 | ) | ||||||||||||||||||
| Equipment | 813 | 681 | 19 | 2,636 | 2,506 | 5 | |||||||||||||||||||
| Net occupancy | 750 | 770 | (3 | ) | 3,030 | 3,127 | (3 | ) | |||||||||||||||||
| Core deposit and other intangibles | 549 | 642 | (14 | ) | 2,199 | 2,577 | (15 | ) | |||||||||||||||||
| FDIC and other deposit assessments | 301 | 302 | - | 1,197 | 1,849 | (35 | ) | ||||||||||||||||||
| Other | 4,027 | 3,691 | 9 | 14,182 | 12,494 | 14 | |||||||||||||||||||
| Total noninterest expense | 13,340 | 12,821 | 4 | 50,456 | 49,020 | 3 | |||||||||||||||||||
| Income before income tax expense | 5,165 | 3,962 | 30 | 19,001 | 17,998 | 6 | |||||||||||||||||||
| Income tax expense | 1,672 | 949 | 76 | 6,338 | 5,331 | 19 | |||||||||||||||||||
| Net income before noncontrolling interests | 3,493 | 3,013 | 16 | 12,663 | 12,667 | - | |||||||||||||||||||
| Less: Net income from noncontrolling interests | 79 | 190 | (58 | ) | 301 | 392 | (23 | ) | |||||||||||||||||
| Wells Fargo net income | $ | 3,414 | 2,823 | 21 | $ | 12,362 | 12,275 | 1 | |||||||||||||||||
|
Wells Fargo net income applicable to common stock |
$ | 3,232 | 394 | 720 | $ | 11,632 | 7,990 | 46 | |||||||||||||||||
| Per share information | |||||||||||||||||||||||||
| Earnings per common share | $ | 0.62 | 0.08 | 675 | $ | 2.23 | 1.76 | 27 | |||||||||||||||||
| Diluted earnings per common share | 0.61 | 0.08 | 663 | 2.21 | 1.75 | 26 | |||||||||||||||||||
| Dividends declared per common share | 0.05 | 0.05 | - | 0.20 | 0.49 | (59 | ) | ||||||||||||||||||
| Average common shares outstanding | 5,256.2 | 4,764.8 | 10 | 5,226.8 | 4,545.2 | 15 | |||||||||||||||||||
| Diluted average common shares outstanding | 5,293.8 | 4,796.1 | 10 | 5,263.1 | 4,562.7 | 15 | |||||||||||||||||||
| NM - Not meaningful | |||||||||||||||||||||||||
| Wells Fargo & Company and Subsidiaries | |||||||||||||||||
| FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME | |||||||||||||||||
| Quarter ended | |||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Dec. 31, | |||||||||||||
| (in millions, except per share amounts) | 2010 | 2010 | 2010 | 2010 | 2009 | ||||||||||||
| Interest income | |||||||||||||||||
| Trading assets | $ | 295 | 270 | 266 | 267 | 230 | |||||||||||
| Securities available for sale | 2,374 | 2,492 | 2,385 | 2,415 | 2,776 | ||||||||||||
| Mortgages held for sale | 495 | 449 | 405 | 387 | 446 | ||||||||||||
| Loans held for sale | 15 | 22 | 30 | 34 | 32 | ||||||||||||
| Loans | 9,666 | 9,779 | 10,277 | 10,038 | 10,122 | ||||||||||||
| Other interest income | 124 | 118 | 109 | 84 | 86 | ||||||||||||
| Total interest income | 12,969 | 13,130 | 13,472 | 13,225 | 13,692 | ||||||||||||
| Interest expense | |||||||||||||||||
| Deposits | 662 | 721 | 714 | 735 | 913 | ||||||||||||
| Short-term borrowings | 26 | 27 | 21 | 18 | 12 | ||||||||||||
| Long-term debt | 1,153 | 1,226 | 1,233 | 1,276 | 1,217 | ||||||||||||
| Other interest expense | 65 | 58 | 55 | 49 | 50 | ||||||||||||
| Total interest expense | 1,906 | 2,032 | 2,023 | 2,078 | 2,192 | ||||||||||||
| Net interest income | 11,063 | 11,098 | 11,449 | 11,147 | 11,500 | ||||||||||||
| Provision for credit losses | 2,989 | 3,445 | 3,989 | 5,330 | 5,913 | ||||||||||||
| Net interest income after provision for credit losses | 8,074 | 7,653 | 7,460 | 5,817 | 5,587 | ||||||||||||
| Noninterest income | |||||||||||||||||
| Service charges on deposit accounts | 1,035 | 1,132 | 1,417 | 1,332 | 1,421 | ||||||||||||
| Trust and investment fees | 2,958 | 2,564 | 2,743 | 2,669 | 2,605 | ||||||||||||
| Card fees | 941 | 935 | 911 | 865 | 961 | ||||||||||||
| Other fees | 1,063 | 1,004 | 982 | 941 | 990 | ||||||||||||
| Mortgage banking | 2,757 | 2,499 | 2,011 | 2,470 | 3,411 | ||||||||||||
| Insurance | 564 | 397 | 544 | 621 | 482 | ||||||||||||
| Net gains from trading activities | 532 | 470 | 109 | 537 | 516 | ||||||||||||
| Net gains (losses) on debt securities available for sale | (268 | ) | (114 | ) | 30 | 28 | 110 | ||||||||||
| Net gains from equity investments | 317 | 131 | 288 | 43 | 273 | ||||||||||||
| Operating leases | 79 | 222 | 329 | 185 | 163 | ||||||||||||
| Other | 453 | 536 | 581 | 610 | 264 | ||||||||||||
| Total noninterest income | 10,431 | 9,776 | 9,945 | 10,301 | 11,196 | ||||||||||||
| Noninterest expense | |||||||||||||||||
| Salaries | 3,513 | 3,478 | 3,564 | 3,314 | 3,505 | ||||||||||||
| Commission and incentive compensation | 2,195 | 2,280 | 2,225 | 1,992 | 2,086 | ||||||||||||
| Employee benefits | 1,192 | 1,074 | 1,063 | 1,322 | 1,144 | ||||||||||||
| Equipment | 813 | 557 | 588 | 678 | 681 | ||||||||||||
| Net occupancy | 750 | 742 | 742 | 796 | 770 | ||||||||||||
| Core deposit and other intangibles | 549 | 548 | 553 | 549 | 642 | ||||||||||||
| FDIC and other deposit assessments | 301 | 300 | 295 | 301 | 302 | ||||||||||||
| Other | 4,027 | 3,274 | 3,716 | 3,165 | 3,691 | ||||||||||||
| Total noninterest expense | 13,340 | 12,253 | 12,746 | 12,117 | 12,821 | ||||||||||||
| Income before income tax expense | 5,165 | 5,176 | 4,659 | 4,001 | 3,962 | ||||||||||||
| Income tax expense | 1,672 | 1,751 | 1,514 | 1,401 | 949 | ||||||||||||
| Net income before noncontrolling interests | 3,493 | 3,425 | 3,145 | 2,600 | 3,013 | ||||||||||||
| Less: Net income from noncontrolling interests | 79 | 86 | 83 | 53 | 190 | ||||||||||||
| Wells Fargo net income | $ | 3,414 | 3,339 | 3,062 | 2,547 | 2,823 | |||||||||||
| Wells Fargo net income applicable to common stock | $ | 3,232 | 3,150 | 2,878 | 2,372 | 394 | |||||||||||
| Per share information | |||||||||||||||||
| Earnings per common share | $ | 0.62 | 0.60 | 0.55 | 0.46 | 0.08 | |||||||||||
| Diluted earnings per common share | 0.61 | 0.60 | 0.55 | 0.45 | 0.08 | ||||||||||||
| Dividends declared per common share | 0.05 | 0.05 | 0.05 | 0.05 | 0.05 | ||||||||||||
| Average common shares outstanding | 5,256.2 | 5,240.1 | 5,219.7 | 5,190.4 | 4,764.8 | ||||||||||||
| Diluted average common shares outstanding | 5,293.8 | 5,273.2 | 5,260.8 | 5,225.2 | 4,796.1 | ||||||||||||
|
Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2) |
||||||||||||||||
| Quarter ended December 31, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| (in millions) |
Average balance |
Yields/ rates |
Interest income/ expense |
Average balance |
Yields/ rates |
Interest income/ expense |
||||||||||
| Earning assets | ||||||||||||||||
|
Federal funds sold, securities purchased under resale agreements and other short-term investments |
$ | 72,029 | 0.40 |
% |
$ | 74 | 46,031 | 0.33 |
% |
$ | 39 | |||||
| Trading assets | 33,871 | 3.56 | 302 | 23,179 | 4.05 | 235 | ||||||||||
| Debt securities available for sale (3): | ||||||||||||||||
| Securities of U.S. Treasury and federal agencies | 1,670 | 2.80 | 12 | 2,381 | 3.54 | 21 | ||||||||||
| Securities of U.S. states and political subdivisions | 18,398 | 5.58 | 255 | 13,574 | 6.48 | 217 | ||||||||||
| Mortgage-backed securities: | ||||||||||||||||
| Federal agencies | 80,459 | 4.48 | 859 | 85,063 | 5.43 | 1,099 | ||||||||||
| Residential and commercial | 33,365 | 10.95 | 850 | 43,243 | 9.20 | 1,000 | ||||||||||
| Total mortgage-backed securities | 113,824 | 6.35 | 1,709 | 128,306 | 6.74 | 2,099 | ||||||||||
| Other debt securities (4) | 37,793 | 6.15 | 545 | 33,710 | 7.60 | 600 | ||||||||||
| Total debt securities available for sale (4) | 171,685 | 6.18 | 2,521 | 177,971 | 6.84 | 2,937 | ||||||||||
| Mortgages held for sale (5) | 45,063 | 4.39 | 495 | 34,750 | 5.13 | 446 | ||||||||||
| Loans held for sale (5) | 1,140 | 5.15 | 15 | 5,104 | 2.48 | 32 | ||||||||||
| Loans: | ||||||||||||||||
| Commercial: | ||||||||||||||||
| Commercial and industrial | 147,866 | 4.71 | 1,755 | 164,050 | 4.65 | 1,918 | ||||||||||
| Real estate mortgage | 99,188 | 3.85 | 961 | 97,296 | 3.49 | 855 | ||||||||||
| Real estate construction | 26,882 | 3.68 | 250 | 38,364 | 2.98 | 289 | ||||||||||
| Lease financing | 13,033 | 9.00 | 293 | 14,107 | 10.20 | 360 | ||||||||||
| Foreign | 30,986 | 3.57 | 279 | 30,086 | 3.74 | 283 | ||||||||||
| Total commercial | 317,955 | 4.42 | 3,538 | 343,903 | 4.28 | 3,705 | ||||||||||
| Consumer: | ||||||||||||||||
| Real estate 1-4 family first mortgage | 228,802 | 5.06 | 2,901 | 232,273 | 5.26 | 3,066 | ||||||||||
| Real estate 1-4 family junior lien mortgage | 97,673 | 4.37 | 1,075 | 103,584 | 4.58 | 1,195 | ||||||||||
| Credit card | 21,888 | 13.44 | 736 | 23,717 | 12.18 | 723 | ||||||||||
| Other revolving credit and installment | 87,357 | 6.48 | 1,427 | 88,963 | 6.46 | 1,450 | ||||||||||
| Total consumer | 435,720 | 5.61 | 6,139 | 448,537 | 5.71 | 6,434 | ||||||||||
| Total loans (5) | 753,675 | 5.11 | 9,677 | 792,440 | 5.09 | 10,139 | ||||||||||
| Other | 5,338 | 3.93 | 51 | 6,147 | 3.13 | 49 | ||||||||||
| Total earning assets | $ | 1,082,801 | 4.87 |
% |
$ | 13,135 | 1,085,622 | 5.12 |
% |
$ | 13,877 | |||||
| Funding sources | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Interest-bearing checking | $ | 60,879 | 0.09 |
% |
$ | 15 | 61,229 | 0.15 |
% |
$ | 23 | |||||
| Market rate and other savings | 431,171 | 0.25 | 266 | 389,905 | 0.31 | 303 | ||||||||||
| Savings certificates | 79,146 | 1.43 | 285 | 109,306 | 1.66 | 458 | ||||||||||
| Other time deposits | 13,438 | 2.00 | 67 | 16,501 | 2.28 | 94 | ||||||||||
| Deposits in foreign offices | 55,463 | 0.21 | 29 | 59,870 | 0.23 | 35 | ||||||||||
| Total interest-bearing deposits | 640,097 | 0.41 | 662 | 636,811 | 0.57 | 913 | ||||||||||
| Short-term borrowings | 50,609 | 0.24 | 31 | 32,757 | 0.18 | 14 | ||||||||||
| Long-term debt | 160,801 | 2.86 | 1,153 | 210,707 | 2.31 | 1,218 | ||||||||||
| Other liabilities | 8,258 | 3.13 | 65 | 5,587 | 3.49 | 50 | ||||||||||
| Total interest-bearing liabilities | 859,765 | 0.89 | 1,911 | 885,862 | 0.99 | 2,195 | ||||||||||
| Portion of noninterest-bearing funding sources | 223,036 | - | - | 199,760 | - | - | ||||||||||
| Total funding sources | $ | 1,082,801 | 0.71 | 1,911 | 1,085,622 | 0.81 | 2,195 | |||||||||
|
Net interest margin and net interest income on a taxable-equivalent basis (6) |
4.16 |
% |
$ | 11,224 | 4.31 |
% |
$ | 11,682 | ||||||||
| Noninterest-earning assets | ||||||||||||||||
| Cash and due from banks | $ | 18,016 | 19,216 | |||||||||||||
| Goodwill | 24,832 | 24,093 | ||||||||||||||
| Other | 111,388 | 110,525 | ||||||||||||||
| Total noninterest-earning assets | $ | 154,236 | 153,834 | |||||||||||||
| Noninterest-bearing funding sources | ||||||||||||||||
| Deposits | $ | 197,943 | 179,204 | |||||||||||||
| Other liabilities | 52,930 | 45,058 | ||||||||||||||
| Total equity | 126,399 | 129,332 | ||||||||||||||
| Noninterest-bearing funding sources used to fund earning assets | (223,036 | ) | (199,760 | ) | ||||||||||||
| Net noninterest-bearing funding sources | $ | 154,236 | 153,834 | |||||||||||||
| Total assets | $ | 1,237,037 | 1,239,456 | |||||||||||||
| (1)Our average prime rate was 3.25% for the quarters ended December 31, 2010 and 2009. The average three-month London Interbank Offered Rate (LIBOR) was 0.29% and 0.27% 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 and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts include the effects of any unrealized gain or loss marks but those marks carried in other comprehensive income are not included in yield determination of affected earning assets. Thus 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) |
|||||||||||||||||||
| Year ended December 31, | |||||||||||||||||||
| 2010 | 2009 | ||||||||||||||||||
| (in millions) |
Average balance |
Yields/ rates |
Interest income/ expense |
Average balance |
Yields/ |
Interest income/ expense |
|||||||||||||
| Earning assets | |||||||||||||||||||
|
Federal funds sold, securities purchased under resale agreements and other short-term investments |
$ | 62,961 | 0.36 | % | $ | 230 | 26,869 | 0.56 | % | $ | 150 | ||||||||
| Trading assets | 29,920 | 3.75 | 1,121 | 21,092 | 4.48 | 944 | |||||||||||||
| Debt securities available for sale (3): | |||||||||||||||||||
| Securities of U.S. Treasury and federal agencies | 1,926 | 3.24 | 61 | 2,480 | 2.83 | 69 | |||||||||||||
| Securities of U.S. states and political subdivisions | 16,392 | 6.09 | 980 | 12,702 | 6.42 | 840 | |||||||||||||
| Mortgage-backed securities: | |||||||||||||||||||
| Federal agencies | 75,875 | 5.14 | 3,697 | 87,197 | 5.45 | 4,591 | |||||||||||||
| Residential and commercial | 33,191 | 10.67 | 3,396 | 41,618 | 9.09 | 4,150 | |||||||||||||
| Total mortgage-backed securities | 109,066 | 6.84 | 7,093 | 128,815 | 6.73 | 8,741 | |||||||||||||
| Other debt securities (4) | 34,752 | 6.45 | 2,102 | 32,011 | 7.16 | 2,291 | |||||||||||||
| Total debt securities available for sale (4) | 162,136 | 6.63 | 10,236 | 176,008 | 6.73 | 11,941 | |||||||||||||
| Mortgages held for sale (5) | 36,716 | 4.73 | 1,736 | 37,416 | 5.16 | 1,930 | |||||||||||||
| Loans held for sale (5) | 3,773 | 2.67 | 101 | 6,293 | 2.90 | 183 | |||||||||||||
| Loans: | |||||||||||||||||||
| Commercial: | |||||||||||||||||||
| Commercial and industrial | 149,576 | 4.80 | 7,186 | 180,924 | 4.22 | 7,643 | |||||||||||||
| Real estate mortgage | 98,497 | 3.89 | 3,836 | 96,273 | 3.50 | 3,365 | |||||||||||||
| Real estate construction | 31,286 | 3.36 | 1,051 | 40,885 | 2.91 | 1,190 | |||||||||||||
| Lease financing | 13,451 | 9.21 | 1,239 | 14,751 | 9.32 | 1,375 | |||||||||||||
| Foreign | 29,726 | 3.49 | 1,037 | 30,661 | 3.95 | 1,212 | |||||||||||||
| Total commercial | 322,536 | 4.45 | 14,349 | 363,494 | 4.07 | 14,785 | |||||||||||||
| Consumer: | |||||||||||||||||||
| Real estate 1-4 family first mortgage | 235,568 | 5.18 | 12,206 | 238,359 | 5.45 | 12,992 | |||||||||||||
| Real estate 1-4 family junior lien mortgage | 101,537 | 4.45 | 4,519 | 106,957 | 4.76 | 5,089 | |||||||||||||
| Credit card | 22,375 | 13.35 | 2,987 | 23,357 | 12.16 | 2,841 | |||||||||||||
| Other revolving credit and installment | 88,585 | 6.49 | 5,747 | 90,666 | 6.56 | 5,952 | |||||||||||||
| Total consumer | 448,065 | 5.68 | 25,459 | 459,339 | 5.85 | 26,874 | |||||||||||||
| Total loans (5) | 770,601 | 5.17 | 39,808 | 822,833 | 5.06 | 41,659 | |||||||||||||
| Other | 5,849 | 3.56 | 207 | 6,113 | 3.05 | 186 | |||||||||||||
| Total earning assets | $ | 1,071,956 | 5.02 | % | $ | 53,439 | 1,096,624 | 5.19 | % | $ | 56,993 | ||||||||
| Funding sources | |||||||||||||||||||
| Deposits: | |||||||||||||||||||
| Interest-bearing checking | $ | 60,941 | 0.12 | % | $ | 72 | 70,179 | 0.14 | % | $ | 100 | ||||||||
| Market rate and other savings | 416,877 | 0.26 | 1,088 | 351,892 | 0.39 | 1,375 | |||||||||||||
| Savings certificates | 87,133 | 1.43 | 1,247 | 140,197 | 1.24 | 1,738 | |||||||||||||
| Other time deposits | 14,654 | 2.07 | 302 | 20,459 | 2.03 | 415 | |||||||||||||
| Deposits in foreign offices | 55,097 | 0.22 | 123 | 53,166 | 0.27 | 146 | |||||||||||||
| Total interest-bearing deposits | 634,702 | 0.45 | 2,832 | 635,893 | 0.59 | 3,774 | |||||||||||||
| Short-term borrowings | 46,824 | 0.22 | 106 | 51,972 | 0.44 | 231 | |||||||||||||
| Long-term debt | 185,426 | 2.64 | 4,888 | 231,801 | 2.50 | 5,786 | |||||||||||||
| Other liabilities | 6,863 | 3.31 | 227 | 4,904 | 3.50 | 172 | |||||||||||||
| Total interest-bearing liabilities | 873,815 | 0.92 | 8,053 | 924,570 | 1.08 | 9,963 | |||||||||||||
| Portion of noninterest-bearing funding sources | 198,141 | - | - | 172,054 | - | - | |||||||||||||
| Total funding sources | $ | 1,071,956 | 0.76 | 8,053 | 1,096,624 | 0.91 | 9,963 | ||||||||||||
|
Net interest margin and net interest income on a taxable-equivalent basis (6) |
4.26 | % | $ | 45,386 | 4.28 | % | $ | 47,030 | |||||||||||
| Noninterest-earning assets | |||||||||||||||||||
| Cash and due from banks | $ | 17,618 | 19,218 | ||||||||||||||||
| Goodwill | 24,824 | 23,997 | |||||||||||||||||
| Other | 112,540 | 122,515 | |||||||||||||||||
| Total noninterest-earning assets | $ | 154,982 | 165,730 | ||||||||||||||||
| Noninterest-bearing funding sources | |||||||||||||||||||
| Deposits | $ | 183,008 | 171,712 | ||||||||||||||||
| Other liabilities | 47,877 | 48,193 | |||||||||||||||||
| Total equity | 122,238 | 117,879 | |||||||||||||||||
| Noninterest-bearing funding sources used to fund earning assets | (198,141 | ) | (172,054 | ) | |||||||||||||||
| Net noninterest-bearing funding sources | $ | 154,982 | 165,730 | ||||||||||||||||
| Total assets | $ | 1,226,938 | 1,262,354 | ||||||||||||||||
| (1) Our average prime rate was 3.25% for the years ended December 31, 2010 and 2009. The average three-month London Interbank Offered Rate (LIBOR) was 0.34% and 0.69% 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 and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts include the effects of any unrealized gain or loss marks but those marks carried in other comprehensive income are not included in yield determination of affected earning assets. Thus 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 Dec. 31, | % | Year ended Dec. 31, | % | ||||||||||||||||||
| (in millions) | 2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||
| Service charges on deposit accounts | $ | 1,035 | 1,421 | (27 | ) |
% |
$ | 4,916 | 5,741 | (14 | ) | % | |||||||||
| Trust and investment fees: | |||||||||||||||||||||
| Trust, investment and IRA fees | 1,030 | 1,038 | (1 | ) | 4,038 | 3,588 | 13 | ||||||||||||||
| Commissions and all other fees | 1,928 | 1,567 | 23 | 6,896 | 6,147 | 12 | |||||||||||||||
| Total trust and investment fees | 2,958 | 2,605 | 14 | 10,934 | 9,735 | 12 | |||||||||||||||
| Card fees | 941 | 961 | (2 | ) | 3,652 | 3,683 | (1 | ) | |||||||||||||
| Other fees: | |||||||||||||||||||||
| Cash network fees | 74 | 55 | 35 | 260 | 231 | 13 | |||||||||||||||
| Charges and fees on loans | 446 | 475 | (6 | ) | 1,690 | 1,801 | (6 | ) | |||||||||||||
| Processing and all other fees | 543 | 460 | 18 | 2,040 | 1,772 | 15 | |||||||||||||||
| Total other fees | 1,063 | 990 | 7 | 3,990 | 3,804 | 5 | |||||||||||||||
| Mortgage banking (1): | |||||||||||||||||||||
| Servicing income, net | 240 | 2,150 | (89 | ) | 3,340 | 5,791 | (42 | ) | |||||||||||||
|
Net gains on mortgage loan origination/sales activities |
2,517 | 1,261 | 100 | 6,397 | 6,237 | 3 | |||||||||||||||
| Total mortgage banking | 2,757 | 3,411 | (19 | ) | 9,737 | 12,028 | (19 | ) | |||||||||||||
| Insurance | 564 | 482 | 17 | 2,126 | 2,126 | - | |||||||||||||||
| Net gains from trading activities | 532 | 516 | 3 | 1,648 | 2,674 | (38 | ) | ||||||||||||||
|
Net gains (losses) on debt securities available for sale |
(268 | ) | 110 | NM | (324 | ) | (127 | ) | 155 | ||||||||||||
| Net gains from equity investments | 317 | 273 | 16 | 779 | 185 | 321 | |||||||||||||||
| Operating leases | 79 | 163 | (52 | ) | 815 | 685 | 19 | ||||||||||||||
| All other | 453 | 264 | 72 | 2,180 | 1,828 | 19 | |||||||||||||||
| Total | $ | 10,431 | 11,196 | (7 | ) | $ | 40,453 | 42,362 | (5 | ) | |||||||||||
| NM - Not meaningful | |||||||||||||||||||||
|
(1) 2009 categories have been revised to conform to current presentation. |
|||||||||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||
|
|
Quarter ended Dec. 31, |
% |
|
Year ended Dec. 31, |
% | |||||||||||||
| (in millions) | 2010 | 2009 | Change | 2010 | 2009 | Change | ||||||||||||
| Salaries | $ | 3,513 | 3,505 | - |
% |
$ | 13,869 | 13,757 | 1 |
% |
||||||||
| Commission and incentive compensation | 2,195 | 2,086 | 5 | 8,692 | 8,021 | 8 | ||||||||||||
| Employee benefits | 1,192 | 1,144 | 4 | 4,651 | 4,689 | (1 | ) | |||||||||||
| Equipment | 813 | 681 | 19 | 2,636 | 2,506 | 5 | ||||||||||||
| Net occupancy | 750 | 770 | (3 | ) | 3,030 | 3,127 | (3 | ) | ||||||||||
| Core deposit and other intangibles | 549 | 642 | (14 | ) | 2,199 | 2,577 | (15 | ) | ||||||||||
| FDIC and other deposit assessments | 301 | 302 | - | 1,197 | 1,849 | (35 | ) | |||||||||||
| Outside professional services | 781 | 632 | 24 | 2,370 | 1,982 | 20 | ||||||||||||
| Contract services | 481 | 362 | 33 | 1,642 | 1,088 | 51 | ||||||||||||
| Foreclosed assets | 452 | 393 | 15 | 1,537 | 1,071 | 44 | ||||||||||||
| Operating losses | 193 | 427 | (55 | ) | 1,258 | 875 | 44 | |||||||||||
| Outside data processing | 235 | 282 | (17 | ) | 1,046 | 1,027 | 2 | |||||||||||
| Postage, stationery and supplies | 239 | 232 | 3 | 944 | 933 | 1 | ||||||||||||
| Travel and entertainment | 221 | 188 | 18 | 783 | 575 | 36 | ||||||||||||
| Advertising and promotion | 192 | 176 | 9 | 630 | 572 | 10 | ||||||||||||
| Telecommunications | 151 | 146 | 3 | 596 | 610 | (2 | ) | |||||||||||
| Insurance | 90 | 111 | (19 | ) | 464 | 845 | (45 | ) | ||||||||||
| Operating leases | 24 | 44 | (45 | ) | 109 | 227 | (52 | ) | ||||||||||
| All other | 968 | 698 | 39 | 2,803 | 2,689 | 4 | ||||||||||||
| Total |
|
$ |
13,340 |
12,821 | 4 |
$ |
50,456 |
49,020 | 3 | |||||||||
|
Wells Fargo & Company and Subsidiaries FIVE QUARTER NONINTEREST INCOME |
|||||||||||||
| Quarter ended | |||||||||||||
| (in millions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
||||||||
| Service charges on deposit accounts | $ | 1,035 | 1,132 | 1,417 | 1,332 | 1,421 | |||||||
| Trust and investment fees: | |||||||||||||
| Trust, investment and IRA fees | 1,030 | 924 | 1,035 | 1,049 | 1,038 | ||||||||
| Commissions and all other fees | 1,928 | 1,640 | 1,708 | 1,620 | 1,567 | ||||||||
| Total trust and investment fees | 2,958 | 2,564 | 2,743 | 2,669 | 2,605 | ||||||||
| Card fees | 941 | 935 | 911 | 865 | 961 | ||||||||
| Other fees: | |||||||||||||
| Cash network fees | 74 | 73 | 58 | 55 | 55 | ||||||||
| Charges and fees on loans | 446 | 424 | 401 | 419 | 475 | ||||||||
| Processing and all other fees | 543 | 507 | 523 | 467 | 460 | ||||||||
| Total other fees | 1,063 | 1,004 | 982 | 941 | 990 | ||||||||
| Mortgage banking (1): | |||||||||||||
| Servicing income, net | 240 | 516 | 1,218 | 1,366 | 2,150 | ||||||||
| Net gains on mortgage loan origination/sales activities | 2,517 | 1,983 | 793 | 1,104 | 1,261 | ||||||||
| Total mortgage banking | 2,757 | 2,499 | 2,011 | 2,470 | 3,411 | ||||||||
| Insurance | 564 | 397 | 544 | 621 | 482 | ||||||||
| Net gains from trading activities | 532 | 470 | 109 | 537 | 516 | ||||||||
| Net gains (losses) on debt securities available for sale | (268 | ) | (114 | ) | 30 | 28 | 110 | ||||||
| Net gains from equity investments | 317 | 131 | 288 | 43 | 273 | ||||||||
| Operating leases | 79 | 222 | 329 | 185 | 163 | ||||||||
| All other | 453 | 536 | 581 | 610 | 264 | ||||||||
| Total | $ | 10,431 | 9,776 | 9,945 | 10,301 | 11,196 | |||||||
| (1) 2009 categories have been revised to conform to current presentation. | |||||||||||||
| FIVE QUARTER NONINTEREST EXPENSE | |||||||||||||
| Quarter ended | |||||||||||||
| (in millions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
||||||||
| Salaries | $ | 3,513 | 3,478 | 3,564 | 3,314 | 3,505 | |||||||
| Commission and incentive compensation | 2,195 | 2,280 | 2,225 | 1,992 | 2,086 | ||||||||
| Employee benefits | 1,192 | 1,074 | 1,063 | 1,322 | 1,144 | ||||||||
| Equipment | 813 | 557 | 588 | 678 | 681 | ||||||||
| Net occupancy | 750 | 742 | 742 | 796 | 770 | ||||||||
| Core deposit and other intangibles | 549 | 548 | 553 | 549 | 642 | ||||||||
| FDIC and other deposit assessments | 301 | 300 | 295 | 301 | 302 | ||||||||
| Outside professional services | 781 | 533 | 572 | 484 | 632 | ||||||||
| Contract services | 481 | 430 | 384 | 347 | 362 | ||||||||
| Foreclosed assets | 452 | 366 | 333 | 386 | 393 | ||||||||
| Operating losses | 193 | 230 | 627 | 208 | 427 | ||||||||
| Outside data processing | 235 | 263 | 276 | 272 | 282 | ||||||||
| Postage, stationery and supplies | 239 | 233 | 230 | 242 | 232 | ||||||||
| Travel and entertainment | 221 | 195 | 196 | 171 | 188 | ||||||||
| Advertising and promotion | 192 | 170 | 156 | 112 | 176 | ||||||||
| Telecommunications | 151 | 146 | 156 | 143 | 146 | ||||||||
| Insurance | 90 | 62 | 164 | 148 | 111 | ||||||||
| Operating leases | 24 | 21 | 27 | 37 | 44 | ||||||||
| All other | 968 | 625 | 595 | 615 | 698 | ||||||||
| Total | $ | 13,340 | 12,253 | 12,746 | 12,117 | 12,821 | |||||||
|
Wells Fargo & Company and Subsidiaries CONSOLIDATED BALANCE SHEET |
|||||||||||
| December 31, | % | ||||||||||
| (in millions, except shares) | 2010 | 2009 | Change | ||||||||
| Assets | |||||||||||
| Cash and due from banks | $ | 16,044 | 27,080 | (41 | ) | % | |||||
|
Federal funds sold, securities purchased under resale agreements and other short-term investments |
80,637 | 40,885 | 97 | ||||||||
| Trading assets | 51,414 | 43,039 | 19 | ||||||||
| Securities available for sale | 172,654 | 172,710 | - | ||||||||
| Mortgages held for sale (includes $47,531 and $36,962 carried at fair value) | 51,763 | 39,094 | 32 | ||||||||
| Loans held for sale (includes $873 and $149 carried at fair value) | 1,290 | 5,733 | (77 | ) | |||||||
| Loans (includes $309 carried at fair value at December 31, 2010) | 757,267 | 782,770 | (3 | ) | |||||||
| Allowance for loan losses | (23,022 | ) | (24,516 | ) | (6 | ) | |||||
| Net loans | 734,245 | 758,254 | (3 | ) | |||||||
| Mortgage servicing rights: | |||||||||||
| Measured at fair value | 14,467 | 16,004 | (10 | ) | |||||||
| Amortized | 1,419 | 1,119 | 27 | ||||||||
| Premises and equipment, net | 9,644 | 10,736 | (10 | ) | |||||||
| Goodwill | 24,770 | 24,812 | - | ||||||||
| Other assets | 99,781 | 104,180 | (4 | ) | |||||||
| Total assets | $ | 1,258,128 | 1,243,646 | 1 | |||||||
| Liabilities | |||||||||||
| Noninterest-bearing deposits | $ | 191,256 | 181,356 | 5 | |||||||
| Interest-bearing deposits | 656,686 | 642,662 | 2 | ||||||||
| Total deposits | 847,942 | 824,018 | 3 | ||||||||
| Short-term borrowings | 55,401 | 38,966 | 42 | ||||||||
| Accrued expenses and other liabilities | 69,913 | 62,442 | 12 | ||||||||
| Long-term debt (includes $306 carried at fair value at December 31, 2010) | 156,983 | 203,861 | (23 | ) | |||||||
| Total liabilities | 1,130,239 | 1,129,287 | - | ||||||||
| Equity | |||||||||||
| Wells Fargo stockholders' equity: | |||||||||||
| Preferred stock | 8,689 | 8,485 | 2 | ||||||||
|
Common stock - $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,272,414,622 and 5,245,971,422 shares |
8,787 | 8,743 | 1 | ||||||||
| Additional paid-in capital | 53,426 | 52,878 | 1 | ||||||||
| Retained earnings | 51,918 | 41,563 | 25 | ||||||||
| Cumulative other comprehensive income | 4,738 | 3,009 | 57 | ||||||||
| Treasury stock - 10,131,394 shares and 67,346,829 shares | (487 | ) | (2,450 | ) | (80 | ) | |||||
| Unearned ESOP shares | (663 | ) | (442 | ) | 50 | ||||||
| Total Wells Fargo stockholders' equity | 126,408 | 111,786 | 13 | ||||||||
| Noncontrolling interests | 1,481 | 2,573 | (42 | ) | |||||||
| Total equity | 127,889 | 114,359 | 12 | ||||||||
| Total liabilities and equity | $ | 1,258,128 | 1,243,646 | 1 | |||||||
|
Wells Fargo & Company and Subsidiaries FIVE QUARTER CONSOLIDATED BALANCE SHEET |
||||||||||||||||
| (in millions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||||||||
| Assets | ||||||||||||||||
| Cash and due from banks | $ | 16,044 | 16,001 | 17,571 | 16,301 | 27,080 | ||||||||||
|
Federal funds sold, securities purchased under resale agreements and other short-term investments |
80,637 | 56,549 | 73,898 | 54,192 | 40,885 | |||||||||||
| Trading assets | 51,414 | 49,271 | 47,132 | 47,028 | 43,039 | |||||||||||
| Securities available for sale | 172,654 | 176,875 | 157,927 | 162,487 | 172,710 | |||||||||||
| Mortgages held for sale | 51,763 | 46,001 | 38,581 | 34,737 | 39,094 | |||||||||||
| Loans held for sale | 1,290 | 1,188 | 3,999 | 5,140 | 5,733 | |||||||||||
| Loans | 757,267 | 753,664 | 766,265 | 781,430 | 782,770 | |||||||||||
| Allowance for loan losses | (23,022 | ) | (23,939 | ) | (24,584 | ) | (25,123 | ) | (24,516 | ) | ||||||
| Net loans | 734,245 | 729,725 | 741,681 | 756,307 | 758,254 | |||||||||||
| Mortgage servicing rights: | ||||||||||||||||
| Measured at fair value | 14,467 | 12,486 | 13,251 | 15,544 | 16,004 | |||||||||||
| Amortized | 1,419 | 1,013 | 1,037 | 1,069 | 1,119 | |||||||||||
| Premises and equipment, net | 9,644 | 9,636 | 10,508 | 10,405 | 10,736 | |||||||||||
| Goodwill | 24,770 | 24,831 | 24,820 | 24,819 | 24,812 | |||||||||||
| Other assets | 99,781 | 97,208 | 95,457 | 95,601 | 104,180 | |||||||||||
| Total assets | $ | 1,258,128 | 1,220,784 | 1,225,862 | 1,223,630 | 1,243,646 | ||||||||||
| Liabilities | ||||||||||||||||
| Noninterest-bearing deposits | $ | 191,256 | 184,451 | 175,015 | 170,518 | 181,356 | ||||||||||
| Interest-bearing deposits | 656,686 | 630,061 | 640,608 | 634,375 | 642,662 | |||||||||||
| Total deposits | 847,942 | 814,512 | 815,623 | 804,893 | 824,018 | |||||||||||
| Short-term borrowings | 55,401 | 50,715 | 45,187 | 46,333 | 38,966 | |||||||||||
| Accrued expenses and other liabilities | 69,913 | 67,249 | 58,582 | 54,371 | 62,442 | |||||||||||
| Long-term debt | 156,983 | 163,143 | 185,072 | 199,879 | 203,861 | |||||||||||
| Total liabilities | 1,130,239 | 1,095,619 | 1,104,464 | 1,105,476 | 1,129,287 | |||||||||||
| Equity | ||||||||||||||||
| Wells Fargo stockholders' equity: | ||||||||||||||||
| Preferred stock | 8,689 | 8,840 | 8,980 | 9,276 | 8,485 | |||||||||||
| Common stock | 8,787 | 8,756 | 8,743 | 8,743 | 8,743 | |||||||||||
| Additional paid-in capital | 53,426 | 52,899 | 52,687 | 53,156 | 52,878 | |||||||||||
| Retained earnings | 51,918 | 48,953 | 46,126 | 43,636 | 41,563 | |||||||||||
| Cumulative other comprehensive income | 4,738 | 5,502 | 4,844 | 4,087 | 3,009 | |||||||||||
| Treasury stock | (487 | ) | (466 | ) | (631 | ) | (1,460 | ) | (2,450 | ) | ||||||
| Unearned ESOP shares | (663 | ) | (826 | ) | (977 | ) | (1,296 | ) | (442 | ) | ||||||
| Total Wells Fargo stockholders' equity | 126,408 | 123,658 | 119,772 | 116,142 | 111,786 | |||||||||||
| Noncontrolling interests | 1,481 | 1,507 | 1,626 | 2,012 | 2,573 | |||||||||||
| Total equity | 127,889 | 125,165 | 121,398 | 118,154 | 114,359 | |||||||||||
| Total liabilities and equity | $ | 1,258,128 | 1,220,784 | 1,225,862 | 1,223,630 | 1,243,646 | ||||||||||
|
Wells Fargo & Company and Subsidiaries FIVE QUARTER AVERAGE BALANCES |
||||||||||||||||
| Quarter ended | ||||||||||||||||
| (in millions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||||||||
| Earning assets | ||||||||||||||||
|
Federal funds sold, securities purchased under resale agreements and other short-term investments |
$ | 72,029 | 70,839 | 67,712 | 40,833 | 46,031 | ||||||||||
| Trading assets | 33,871 | 29,080 | 28,760 | 27,911 | 23,179 | |||||||||||
| Debt securities available for sale: | ||||||||||||||||
| Securities of U.S. Treasury and federal agencies | 1,670 | 1,673 | 2,094 | 2,278 | 2,381 | |||||||||||
| Securities of U.S. states and political subdivisions | 18,398 | 17,220 | 16,192 | 13,696 | 13,574 | |||||||||||
| Mortgage-backed securities: | ||||||||||||||||
| Federal agencies | 80,459 | 70,486 | 72,876 | 79,730 | 85,063 | |||||||||||
| Residential and commercial | 33,365 | 33,425 | 33,197 | 32,768 | 43,243 | |||||||||||
| Total mortgage-backed securities | 113,824 | 103,911 | 106,073 | 112,498 | 128,306 | |||||||||||
| Other debt securities (1) | 37,793 | 35,533 | 33,270 | 32,346 | 33,710 | |||||||||||
| Total debt securities available for sale (1) | 171,685 | 158,337 | 157,629 | 160,818 | 177,971 | |||||||||||
| Mortgages held for sale (2) | 45,063 | 38,073 | 32,196 | 31,368 | 34,750 | |||||||||||
| Loans held for sale (2) | 1,140 | 3,223 | 4,386 | 6,406 | 5,104 | |||||||||||
| Loans: | ||||||||||||||||
| Commercial: | ||||||||||||||||
| Commercial and industrial | 147,866 | 146,139 | 147,965 | 156,466 | 164,050 | |||||||||||
| Real estate mortgage | 99,188 | 99,082 | 97,731 | 97,967 | 97,296 | |||||||||||
| Real estate construction | 26,882 | 29,469 | 33,060 | 35,852 | 38,364 | |||||||||||
| Lease financing | 13,033 | 13,156 | 13,622 | 14,008 | 14,107 | |||||||||||
| Foreign | 30,986 | 30,276 | 29,048 | 28,561 | 30,086 | |||||||||||
| Total commercial | 317,955 | 318,122 | 321,426 | 332,854 | 343,903 | |||||||||||
| Consumer: | ||||||||||||||||
| Real estate 1-4 family first mortgage | 228,802 | 231,172 | 237,500 | 245,024 | 232,273 | |||||||||||
| Real estate 1-4 family junior lien mortgage | 97,673 | 100,257 | 102,678 | 105,640 | 103,584 | |||||||||||
| Credit card | 21,888 | 22,048 | 22,239 | 23,345 | 23,717 | |||||||||||
| Other revolving credit and installment | 87,357 | 87,884 | 88,617 | 90,526 | 88,963 | |||||||||||
| Total consumer | 435,720 | 441,361 | 451,034 | 464,535 | 448,537 | |||||||||||
| Total loans (2) | 753,675 | 759,483 | 772,460 | 797,389 | 792,440 | |||||||||||
| Other | 5,338 | 5,912 | 6,082 | 6,069 | 6,147 | |||||||||||
| Total earning assets | $ | 1,082,801 | 1,064,947 | 1,069,225 | 1,070,794 | 1,085,622 | ||||||||||
| Funding sources | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Interest-bearing checking | $ | 60,879 | 59,677 | 61,212 | 62,021 | 61,229 | ||||||||||
| Market rate and other savings | 431,171 | 419,996 | 412,062 | 403,945 | 389,905 | |||||||||||
| Savings certificates | 79,146 | 85,044 | 89,773 | 94,763 | 109,306 | |||||||||||
| Other time deposits | 13,438 | 14,400 | 14,936 | 15,878 | 16,501 | |||||||||||
| Deposits in foreign offices | 55,463 | 52,061 | 57,461 | 55,434 | 59,870 | |||||||||||
| Total interest-bearing deposits | 640,097 | 631,178 | 635,444 | 632,041 | 636,811 | |||||||||||
| Short-term borrowings | 50,609 | 46,468 | 45,082 | 45,081 | 32,757 | |||||||||||
| Long-term debt | 160,801 | 177,077 | 195,440 | 209,008 | 210,707 | |||||||||||
| Other liabilities | 8,258 | 6,764 | 6,737 | 5,664 | 5,587 | |||||||||||
| Total interest-bearing liabilities | 859,765 | 861,487 | 882,703 | 891,794 | 885,862 | |||||||||||
| Portion of noninterest-bearing funding sources | 223,036 | 203,460 | 186,522 | 179,000 | 199,760 | |||||||||||
| Total funding sources | $ | 1,082,801 | 1,064,947 | 1,069,225 | 1,070,794 | 1,085,622 | ||||||||||
| Noninterest-earning assets | ||||||||||||||||
| Cash and due from banks | $ | 18,016 | 17,000 | 17,415 | 18,049 | 19,216 | ||||||||||
| Goodwill | 24,832 | 24,829 | 24,820 | 24,816 | 24,093 | |||||||||||
| Other | 111,388 | 113,592 | 112,720 | 112,461 | 110,525 | |||||||||||
| Total noninterest-earning assets | $ | 154,236 | 155,421 | 154,955 | 155,326 | 153,834 | ||||||||||
| Noninterest-bearing funding sources | ||||||||||||||||
| Deposits | $ | 197,943 | 184,837 | 176,908 | 172,039 | 179,204 | ||||||||||
| Other liabilities | 52,930 | 50,013 | 43,713 | 44,739 | 45,058 | |||||||||||
| Total equity | 126,399 | 124,031 | 120,856 | 117,548 | 129,332 | |||||||||||
| Noninterest-bearing funding sources used to fund earning assets | (223,036 | ) | (203,460 | ) | (186,522 | ) | (179,000 | ) | (199,760 | ) | ||||||
| Net noninterest-bearing funding sources | $ | 154,236 | 155,421 | 154,955 | 155,326 | 153,834 | ||||||||||
| Total assets | $ | 1,237,037 | 1,220,368 | 1,224,180 | 1,226,120 | 1,239,456 | ||||||||||
| (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) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
||||||
| Commercial: | |||||||||||
| Commercial and industrial | $ | 151,284 | 147,321 | 146,084 | 150,587 | 158,352 | |||||
| Real estate mortgage (1) | 99,435 | 98,755 | 99,626 | 97,846 | 97,527 | ||||||
| Real estate construction (1) | 25,333 | 27,911 | 30,879 | 34,505 | 36,978 | ||||||
| Lease financing | 13,094 | 12,993 | 13,492 | 13,887 | 14,210 | ||||||
| Foreign | 32,912 | 29,691 | 30,474 | 28,289 | 29,398 | ||||||
| Total commercial | 322,058 | 316,671 | 320,555 | 325,114 | 336,465 | ||||||
| Consumer: | |||||||||||
| Real estate 1-4 family first mortgage | 230,235 | 228,081 | 233,812 | 240,528 | 229,536 | ||||||
| Real estate 1-4 family junior lien mortgage | 96,149 | 99,060 | 101,327 | 103,800 | 103,708 | ||||||
| Credit card | 22,260 | 21,890 | 22,086 | 22,525 | 24,003 | ||||||
| Other revolving credit and installment | 86,565 | 87,962 | 88,485 | 89,463 | 89,058 | ||||||
| Total consumer | 435,209 | 436,993 | 445,710 | 456,316 | 446,305 | ||||||
| Total loans (net of unearned income) (2) | $ | 757,267 | 753,664 | 766,265 | 781,430 | 782,770 | |||||
| (1) Effective June 30, 2010, real estate construction outstanding balances and all other related data include certain commercial real estate secured loans acquired from Wachovia previously classified as real estate mortgage. Prior periods have been revised to conform with the current presentation. | |||||||||||
|
(2) Includes $41.4 billion, $43.8 billion, $46.5 billion, $49.5 billion and $51.7 billion of purchased credit-impaired (PCI) loans at December 31, September 30, June 30, and March 31, 2010, and December 31, 2009, respectively. See PURCHASED CREDIT-IMPAIRED (PCI) LOANS table for detail of PCI loans. |
|||||||||||
| FIVE QUARTER NONACCRUAL LOANS AND OTHER NONPERFORMING ASSETS | |||||||||||
| (in millions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
||||||
| Nonaccrual loans: | |||||||||||
| Commercial: | |||||||||||
| Commercial and industrial | $ | 3,213 | 4,103 | 3,843 | 4,273 | 4,397 | |||||
| Real estate mortgage | 5,227 | 5,079 | 4,689 | 4,345 | 3,696 | ||||||
| Real estate construction | 2,676 | 3,198 | 3,429 | 3,327 | 3,313 | ||||||
| Lease financing | 108 | 138 | 163 | 185 | 171 | ||||||
| Foreign | 127 | 126 | 115 | 135 | 146 | ||||||
| Total commercial | 11,351 | 12,644 | 12,239 | 12,265 | 11,723 | ||||||
| Consumer: | |||||||||||
| Real estate 1-4 family first mortgage | 12,289 | 12,969 | 12,865 | 12,347 | 10,100 | ||||||
| Real estate 1-4 family junior lien mortgage | 2,302 | 2,380 | 2,391 | 2,355 | 2,263 | ||||||
| Other revolving credit and installment | 300 | 312 | 316 | 334 | 332 | ||||||
| Total consumer | 14,891 | 15,661 | 15,572 | 15,036 | 12,695 | ||||||
| Total nonaccrual loans (1)(2) | 26,242 | 28,305 | 27,811 | 27,301 | 24,418 | ||||||
| As a percentage of total loans | 3.47 |
% |
3.76 | 3.63 | 3.49 | 3.12 | |||||
| Foreclosed assets: | |||||||||||
| GNMA (3) | $ | 1,479 | 1,492 | 1,344 | 1,111 | 960 | |||||
| Other | 4,530 | 4,635 | 3,650 | 2,970 | 2,199 | ||||||
| Real estate and other nonaccrual investments (4) | 120 | 141 | 131 | 118 | 62 | ||||||
|
Total nonaccrual loans and other nonperforming assets |
$ | 32,371 | 34,573 | 32,936 | 31,500 | 27,639 | |||||
| As a percentage of total loans | 4.27 |
% |
4.59 | 4.30 | 4.03 | 3.53 | |||||
| (1) Includes nonaccrual mortgages held for sale and loans held for sale in their respective loan categories. | |||||||||||
| (2) Excludes loans acquired from Wachovia that are accounted for as PCI loans because they continue to earn interest income from accretable yield, independent of performance in accordance with their contractual terms. | |||||||||||
| (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 LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING (EXCLUDING INSURED/GUARANTEED GNMA AND SIMILAR LOANS) (1) |
|||||||||||
| (in millions) |
|
Dec. 31, |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||
| Commercial: | |||||||||||
| Commercial and industrial | $ | 308 | 222 | 540 | 561 | 590 | |||||
| Real estate mortgage | 104 | 463 | 654 | 947 | 1,014 | ||||||
| Real estate construction | 193 | 332 | 471 | 787 | 909 | ||||||
| Foreign | 22 | 27 | 21 | 29 | 73 | ||||||
| Total commercial | 627 | 1,044 | 1,686 | 2,324 | 2,586 | ||||||
| Consumer: | |||||||||||
| Real estate 1-4 family first mortgage (2) | 941 | 1,016 | 1,049 | 1,281 | 1,623 | ||||||
| Real estate 1-4 family junior lien mortgage (2) | 366 | 361 | 352 | 414 | 515 | ||||||
| Credit card | 516 | 560 | 610 | 719 | 795 | ||||||
| Other revolving credit and installment | 1,305 | 1,305 | 1,300 | 1,219 | 1,333 | ||||||
| Total consumer | 3,128 | 3,242 | 3,311 | 3,633 | 4,266 | ||||||
| Total | $ | 3,755 | 4,286 | 4,997 | 5,957 | 6,852 | |||||
|
(1) The carrying value of purchased credit-impaired (PCI) loans contractually 90 days or more past due was $11.6 billion, $13.0 billion, $15.1 billion, $16.8 billion, and $16.1 billion at December 31, September 30, June 30 and March 31, 2010, and December 31, 2009, respectively. These amounts are excluded from the above table as PCI loan accretable yield interest recognition is independent from the underlying contractual loan delinquency status. See PURCHASED CREDIT-IMPAIRED (PCI) LOANS table for detail of PCI loans. |
|||||||||||
| (2) Includes mortgage loans held for sale 90 days or more past due and still accruing. | |||||||||||
|
Wells Fargo & Company and Subsidiaries PURCHASED CREDIT-IMPAIRED (PCI) LOANS |
|||||||
|
Loans purchased with evidence of credit deterioration since
origination and for which it is probable that all contractually
required payments will not be collected are considered to be credit
impaired. PCI loans represent loans acquired from Wachovia that were
deemed to be credit impaired. Evidence of credit quality
deterioration as of the purchase date may include statistics such as
past due and nonaccrual status, recent borrower credit scores and
recent LTV percentages. PCI loans are initially measured at fair
value, which includes estimated future credit losses expected to be
incurred over the life of the loan. Accordingly, the associated
allowance for credit losses related to these loans is not carried
over at the acquisition date.
Under the accounting guidance for PCI loans, the excess of cash flows expected to be collected over the estimated fair value is referred to as the accretable yield and is recognized in interest income over the remaining life of the loan, or pool of loans, in situations where there is a reasonable expectation about the timing and amount of cash flows expected to be collected. Accordingly, such loans are not classified as nonaccrual and they are considered to be accruing because their interest income relates to the accretable yield recognized under accounting for PCI loans and not to contractual interest payments. The difference between the contractually required payments and the cash flows expected to be collected at acquisition, considering the impact of prepayments, is referred to as the nonaccretable difference.
Subsequent to acquisition, we regularly evaluate our estimates of cash flows expected to be collected. These evaluations, performed quarterly, require the continued usage of key assumptions and estimates, similar to the initial estimate of fair value. If we have probable decreases in the expected cash flows (other than due to a decrease in rate indices), we charge the provision for credit losses, resulting in an increase to the allowance for loan losses. If we have probable and significant increases in the expected cash flows subsequent to establishing an additional allowance, we first reverse any previously established allowance and then increase interest income over the remaining life of the loan, or pool of loans.
As a result of PCI loan accounting, certain credit-related ratios 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 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. |
|||||||
| December 31, | |||||||
| (in millions) | 2010 | 2009 | 2008 | ||||
| Commercial: | |||||||
| Commercial and industrial | $ | 718 | 1,911 | 4,580 | |||
| Real estate mortgage | 2,855 | 4,137 | 5,803 | ||||
| Real estate construction | 2,949 | 5,207 | 6,462 | ||||
| Foreign | 1,413 | 1,733 | 1,859 | ||||
| Total commercial | 7,935 | 12,988 | 18,704 | ||||
| Consumer: | |||||||
| Real estate 1-4 family first mortgage | 33,245 | 38,386 | 39,214 | ||||
| Real estate 1-4 family junior lien mortgage | 250 | 331 | 728 | ||||
| Other revolving credit and installment | - | - | 151 | ||||
| Total consumer | 33,495 | 38,717 | 40,093 | ||||
| Total loans | $ | 41,430 | 51,705 | 58,797 | |||
|
Wells Fargo & Company and Subsidiaries CHANGES IN NONACCRETABLE DIFFERENCE FOR PCI LOANS |
|||||||||||||
| A 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. Substantially all our commercial, CRE and foreign PCI loans are accounted for as individual loans. Conversely, Pick-a-Pay and other consumer PCI loans have been aggregated into several pools based on common risk characteristics. Each pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Resolutions of loans may include sales of loans to third parties, receipt of payments in settlement with the borrower, or foreclosure of the collateral. Our policy is to remove an individual loan from a pool based on comparing the amount received from its resolution with its contractual amount. Any difference between these amounts is absorbed by the nonaccretable difference established for the entire pool. This removal method assumes that the amount received from resolution approximates pool performance expectations. The remaining accretable yield balance is unaffected and any material change in remaining effective yield caused by this removal method is addressed by our quarterly cash flow evaluation process for each pool. For loans in pools that are resolved by payment in full, there is no release of the nonaccretable difference since there is no difference between the amount received at resolution and the contractual amount of the loan. Modified PCI loans are not removed from a pool even if those loans would otherwise be deemed troubled debt restructurings (TDRs). Modified PCI loans that are accounted for individually are considered TDRs if there has been a concession granted in excess of the original nonaccretable difference. The following table provides an analysis of changes in the nonaccretable difference related to principal that is not expected to be collected. | |||||||||||||
| (in millions) |
|
Commercial, |
Pick-a-Pay |
Other consumer |
Total | ||||||||
| Balance at December 31, 2008 | $ | 10,410 | 26,485 | 4,069 | 40,964 | ||||||||
| Release of nonaccretable difference due to: | |||||||||||||
| Loans resolved by settlement with borrower (1) | (330 | ) | - | - | (330 | ) | |||||||
| Loans resolved by sales to third parties (2) | (86 | ) | - | (85 | ) | (171 | ) | ||||||
|
Reclassification to accretable yield for loans with improving cash flows (3) |
(138 | ) | (27 | ) | (276 | ) | (441 | ) | |||||
| Use of nonaccretable difference due to: | |||||||||||||
| Losses from loan resolutions and write-downs (4) | (4,853 | ) | (10,218 | ) | (2,086 | ) | (17,157 | ) | |||||
| Balance at December 31, 2009 | 5,003 | 16,240 | 1,622 | 22,865 | |||||||||
| Release of nonaccretable difference due to: | |||||||||||||
| Loans resolved by settlement with borrower (1) | (817 | ) | - | - | (817 | ) | |||||||
| Loans resolved by sales to third parties (2) | (172 | ) | - | - | (172 | ) | |||||||
|
Reclassification to accretable yield for loans with improving cash flows (3) |
(726 | ) | (2,356 | ) | (317 | ) | (3,399 | ) | |||||
| Use of nonaccretable difference due to: | |||||||||||||
| Losses from loan resolutions and write-downs (4) | (1,698 | ) | (2,959 | ) | (391 | ) | (5,048 | ) | |||||
| Balance at December 31, 2010 | $ | 1,590 | 10,925 | 914 | 13,429 | ||||||||
| Balance at September 30, 2010 | $ | 2,074 | 11,475 | 980 | 14,529 | ||||||||
| Release of nonaccretable difference due to: | |||||||||||||
| Loans resolved by settlement with borrower (1) | (78 | ) | - | - | (78 | ) | |||||||
| Loans resolved by sales to third parties (2) | (21 | ) | - | - | (21 | ) | |||||||
|
Reclassification to accretable yield for loans with improving cash flows (3) |
(165 |
) |
- |
- |
(165 |
) |
|||||||
| Use of nonaccretable difference due to: | |||||||||||||
| Losses from loan resolutions and write-downs (4) | (220 | ) | (550 | ) | (66 | ) | (836 | ) | |||||
| Balance at December 31, 2010 | $ | 1,590 | 10,925 | 914 | 13,429 | ||||||||
| (1) Release of the nonaccretable difference for settlement with borrower, on individually accounted PCI loans, increases interest income in the period of settlement. Pick-a-Pay and Other consumer PCI loans do not reflect nonaccretable difference releases due to pool accounting for those loans, which assumes that the amount received approximates the pool performance expectations. | |||||||||||||
| (2) Release of the nonaccretable difference as a result of sales to third parties increases noninterest income in the period of the sale. | |||||||||||||
| (3) Reclassification of nonaccretable difference for increased cash flow estimates to the accretable yield will result in increasing income over the estimated remaining life of the loan or pool of loans and thus the rate of return realized. | |||||||||||||
| (4) Write-downs to net realizable value of PCI loans are absorbed by the nonaccretable difference when severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan. | |||||||||||||
| Wells Fargo & Company and Subsidiaries |
|
CHANGES IN ACCRETABLE YIELD RELATED TO PCI LOANS |
The excess of cash flows expected to be collected over the carrying value of PCI loans is referred to as the accretable yield and is accreted into interest income over the estimated lives of the PCI loans using the effective yield method. The accretable yield is affected by:
- Changes in interest rate indices for variable rate PCI loans – Expected future cash flows are based on the variable rates in effect at the time of the quarterly assessment of expected cash flows;
- Changes in prepayment assumptions – Prepayments affect the estimated life of PCI loans which may change the amount of interest income, and possibly principal, expected to be collected; and
- Changes in the expected principal and interest payments over the estimated life – Updates to changes in expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the quarterly assessment.
The change in the accretable yield related to PCI loans is presented in the following table.
|
Quarter ended Dec. 31, |
Year ended Dec. 31, | |||||||||
| (in millions) | 2010 | 2010 | 2009 | |||||||
| Total, beginning of period | $ | 16,679 | 14,559 | 10,447 | ||||||
| Accretion | (578 | ) | (2,435 | ) | (2,606 | ) | ||||
| Reclassification from nonaccretable difference for loans with improving cash flows | 165 | 3,399 | 441 | |||||||
| Changes in expected cash flows that do not affect nonaccretable difference (1) | 448 | 1,191 | 6,277 | |||||||
| Total, end of period | $ | 16,714 | 16,714 | 14,559 | ||||||
| (1) Represents changes in interest cash flows due to the impact of modifications incorporated into the quarterly assessment of expected future cash flows and/or changes in interest rates on variable rate PCI loans. | ||||||||||
|
CHANGES IN ALLOWANCE FOR PCI LOAN LOSSES
When it is estimated that the expected cash flows have decreased subsequent to acquisition for a PCI loan or pool of loans, an allowance is established and a provision for additional loss is recorded as a charge to income. The following table summarizes the changes in allowance for PCI loan losses. |
||||||||||||
| (in millions) |
|
Commercial, |
Pick-a-Pay |
Other consumer |
Total | |||||||
| Balance at December 31, 2008 | $ | - | - | - | - | |||||||
| Provision for losses due to credit deterioration | 850 | - | 3 | 853 | ||||||||
| Charge-offs | (520 | ) | - | - | (520 | ) | ||||||
| Balance at December 31, 2009 | 330 | - | 3 | 333 | ||||||||
| Provision for losses due to credit deterioration | 712 | - | 59 | 771 | ||||||||
| Charge-offs | (776 | ) | - | (30 | ) | (806 | ) | |||||
| Total, December 31, 2010 | $ | 266 | - | 32 | 298 | |||||||
| Balance at September 30, 2010 | $ | 362 | - | 17 | 379 | |||||||
| Provision for losses due to credit deterioration | (3 | ) | - | 24 | 21 | |||||||
| Charge-offs | (93 | ) | - | (9 | ) | (102 | ) | |||||
| Total, December 31, 2010 | $ | 266 | - | 32 | 298 | |||||||
|
Wells Fargo & Company and Subsidiaries PICK-A-PAY PORTFOLIO (1) |
|||||||||||||||||
| PCI loans | All other loans | ||||||||||||||||
| (in millions) |
Unpaid principal balance (2) |
Current LTV ratio (3) |
Carrying value (4) |
Ratio of carrying value to current value |
Unpaid principal balance |
Current LTV ratio (3) |
Carrying value (4) |
||||||||||
| December 31, 2010 | |||||||||||||||||
| California | $ | 31,075 | 127 |
% |
$ | 21,623 | 88 |
% |
$ | 21,243 | 83 |
% |
$ | 20,866 | |||
| Florida | 4,924 | 146 | 2,960 | 88 | 4,575 | 106 | 4,335 | ||||||||||
| New Jersey | 1,544 | 97 | 1,242 | 78 | 2,608 | 78 | 2,578 | ||||||||||
| Texas | 377 | 80 | 337 | 72 | 1,729 | 64 | 1,732 | ||||||||||
| Washington | 559 | 102 | 488 | 89 | 1,316 | 82 | 1,293 | ||||||||||
| Other states | 7,809 | 113 | 5,727 | 83 | 11,849 | 86 | 11,635 | ||||||||||
| Total Pick-a-Pay loans | $ | 46,288 | $ | 32,377 | $ | 43,320 | $ | 42,439 | |||||||||
| December 31, 2009 | |||||||||||||||||
| California | $ | 37,341 | 140 |
% |
$ | 25,022 | 94 |
% |
$ | 23,795 | 91 |
% |
$ | 23,626 | |||
| Florida | 5,751 | 137 | 3,199 | 76 | 5,046 | 102 | 4,942 | ||||||||||
| New Jersey | 1,646 | 99 | 1,269 | 76 | 2,914 | 80 | 2,912 | ||||||||||
| Texas | 442 | 82 | 399 | 74 | 1,967 | 66 | 1,973 | ||||||||||
| Washington | 633 | 101 | 543 | 87 | 1,439 | 82 | 1,435 | ||||||||||
| Other states | 9,283 | 114 | 6,597 | 81 | 13,401 | 85 | 13,321 | ||||||||||
| Total Pick-a-Pay loans | $ | 55,096 | $ | 37,029 | $ | 48,562 | $ | 48,209 | |||||||||
| (1) The individual states shown in this table represent the top five states based on the total net carrying value of the Pick-a-Pay loans at the beginning of 2010. The December 31, 2009, table has been revised to conform to the 2010 presentation of top five states. | |||||||||||||||||
| (2) Unpaid principal balance for PCI loans does not include write-downs taken on loans where severe delinquency (normally 180 days) or other indications of severe borrower financial stress exist that indicate there will be a loss of contractually due amounts upon final resolution of the loan. | |||||||||||||||||
| (3) The current loan-to-value (LTV) ratio is calculated as the unpaid principal balance for the Pick-a-Pay loans 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. Various vendors provide collateral value estimates for the AVM tool and we select the vendors based on the accuracy of their estimates compared to actual realized sales prices for the properties. We continually test the accuracy of these vendor models and based on the results of this analysis, we may switch vendors to improve the accuracy in the estimates. Switching vendors can contribute to changes in the LTV ratios presented on a quarterly basis that are not market driven. The December 31, 2009 table has been revised to remove the unpaid principal balance of any equity lines of credit that share common collateral from the calculation of the LTV ratio to conform to the 2010 presentation. | |||||||||||||||||
| (4) 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 two payments or more past due |
|
Loss rate (annualized) Quarter ended |
||||||||
| December 31, | December 31, | December 31, | |||||||||
| (in millions) | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||
| Core portfolio (2) | |||||||||||
| California | $ | 27,850 | 30,264 | 3.30 |
% |
4.12 | 3.95 | 6.12 | |||
| Florida | 12,036 | 12,038 | 5.46 | 5.48 | 5.84 | 6.98 | |||||
| New Jersey | 8,629 | 8,379 | 3.44 | 2.50 | 1.83 | 1.51 | |||||
| Virginia | 5,667 | 5,855 | 2.33 | 1.91 | 1.70 | 1.13 | |||||
| Pennsylvania | 5,432 | 5,051 | 2.48 | 2.03 | 1.11 | 1.81 | |||||
| Other | 50,976 | 53,811 | 2.83 | 2.85 | 2.86 | 3.04 | |||||
| Total | 110,590 | 115,398 | 3.24 | 3.35 | 3.24 | 3.90 | |||||
| Liquidating portfolio | |||||||||||
| California | 2,555 | 3,205 | 6.66 | 8.78 | 13.48 | 17.94 | |||||
| Florida | 330 | 408 | 8.85 | 9.45 | 10.59 | 19.53 | |||||
| Arizona | 149 | 193 | 6.91 | 10.46 | 18.45 | 19.29 | |||||
| Texas | 125 | 154 | 2.02 | 1.94 | 2.95 | 2.40 | |||||
| Minnesota | 91 | 108 | 5.39 | 4.15 | 8.73 | 7.53 | |||||
| Other | 3,654 | 4,361 | 4.53 | 5.06 | 6.46 | 7.33 | |||||
| Total | 6,904 | 8,429 | 5.54 | 6.74 | 9.49 | 12.16 | |||||
| Total core and liquidating portfolios | $ | 117,494 | 123,827 | 3.37 | 3.58 | 3.61 | 4.48 | ||||
|
(1) Consists of real estate 1-4 family junior lien mortgages and lines of credit secured by real estate, excluding PCI loans. |
|||||||||||
|
(2) Includes equity lines of credit and closed-end second liens associated with the Pick-a-Pay portfolio totaling $1.7 billion and $1.8 billion at December 31, 2010 and 2009, respectively. |
|||||||||||
|
Wells Fargo & Company and Subsidiaries CHANGES IN ALLOWANCE FOR CREDIT LOSSES |
||||||||||||
| Quarter ended Dec. 31, | Year ended Dec. 31, | |||||||||||
| (in millions) | 2010 | 2009 | 2010 | 2009 | ||||||||
| Balance, beginning of period | $ | 24,372 | 24,528 | 25,031 | 21,711 | |||||||
| Provision for credit losses | 2,989 | 5,913 | 15,753 | 21,668 | ||||||||
| Adjustment for passage of time on certain impaired loans (1) | (63 | ) | - | (266 | ) | - | ||||||
| Loan charge-offs: | ||||||||||||
| Commercial: | ||||||||||||
| Commercial and industrial | (610 | ) | (1,028 | ) | (2,775 | ) | (3,365 | ) | ||||
| Real estate mortgage | (270 | ) | (326 | ) | (1,151 | ) | (670 | ) | ||||
| Real estate construction | (199 | ) | (414 | ) | (1,189 | ) | (1,063 | ) | ||||
| Lease financing | (26 | ) | (56 | ) | (120 | ) | (229 | ) | ||||
| Foreign | (50 | ) | (56 | ) | (198 | ) | (237 | ) | ||||
| Total commercial | (1,155 | ) | (1,880 | ) | (5,433 | ) | (5,564 | ) | ||||
| Consumer: | ||||||||||||
| Real estate 1-4 family first mortgage | (1,199 | ) | (1,089 | ) | (4,900 | ) | (3,318 | ) | ||||
| Real estate 1-4 family junior lien mortgage | (1,059 | ) | (1,384 | ) | (4,934 | ) | (4,812 | ) | ||||
| Credit card | (505 | ) | (683 | ) | (2,396 | ) | (2,708 | ) | ||||
| Other revolving credit and installment | (573 | ) | (861 | ) | (2,437 | ) | (3,423 | ) | ||||
| Total consumer | (3,336 | ) | (4,017 | ) | (14,667 | ) | (14,261 | ) | ||||
| Total loan charge-offs | (4,491 | ) | (5,897 | ) | (20,100 | ) | (19,825 | ) | ||||
| Loan recoveries: | ||||||||||||
| Commercial: | ||||||||||||
| Commercial and industrial | 110 | 101 | 427 | 254 | ||||||||
| Real estate mortgage | 36 | 11 | 68 | 33 | ||||||||
| Real estate construction | 28 | 5 | 110 | 16 | ||||||||
| Lease financing | 5 | 7 | 20 | 20 | ||||||||
| Foreign | 22 | 10 | 53 | 40 | ||||||||
| Total commercial | 201 | 134 | 678 | 363 | ||||||||
| Consumer: | ||||||||||||
| Real estate 1-4 family first mortgage | 175 | 71 | 522 | 185 | ||||||||
| Real estate 1-4 family junior lien mortgage | 54 | 55 | 211 | 174 | ||||||||
| Credit card | 53 | 49 | 218 | 180 | ||||||||
| Other revolving credit and installment | 169 | 175 | 718 | 755 | ||||||||
| Total consumer | 451 | 350 | 1,669 | 1,294 | ||||||||
| Total loan recoveries | 652 | 484 | 2,347 | 1,657 | ||||||||
| Net loan charge-offs (2) | (3,839 | ) | (5,413 | ) | (17,753 | ) | (18,168 | ) | ||||
| Allowances related to business combinations/other (3) | 4 | 3 | 698 | (180 | ) | |||||||
| Balance, end of period | $ | 23,463 | 25,031 | 23,463 | 25,031 | |||||||
| Components: | ||||||||||||
| Allowance for loan losses | $ | 23,022 | 24,516 | 23,022 | 24,516 | |||||||
| Allowance for unfunded credit commitments | 441 | 515 | 441 | 515 | ||||||||
| Allowance for credit losses (4) | $ | 23,463 | 25,031 | 23,463 | 25,031 | |||||||
|
Net loan charge-offs (annualized) as a percentage of average total loans (2) |
2.02 |
% |
2.71 | 2.30 | 2.21 | |||||||
| Allowance for loan losses as a percentage of total loans (4) | 3.04 | 3.13 | 3.04 | 3.13 | ||||||||
| Allowance for credit losses as a percentage of total loans (4) | 3.10 | 3.20 | 3.10 | 3.20 | ||||||||
| (1) Certain impaired loans have a valuation allowance determined by discounting expected cash flows at the respective loan's effective interest rate. Accordingly, the valuation allowance for these impaired loans reduces with the passage of time and that reduction is recognized as interest income. | ||||||||||||
| (2) For PCI loans, charge-offs are only recorded to the extent that losses exceed the purchase accounting estimates. | ||||||||||||
| (3) Includes $693 million related to the adoption of consolidation accounting guidance on January 1, 2010. | ||||||||||||
| (4) The allowance for credit losses includes $298 million and $333 million at December 31, 2010 and 2009, respectively, related to PCI loans acquired from Wachovia. Loans acquired from Wachovia are included in total loans net of related purchase accounting net write-downs. | ||||||||||||
|
Wells Fargo & Company and Subsidiaries FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES |
||||||||||||||||
| Quarter ended | ||||||||||||||||
| (in millions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||||||||
| Balance, beginning of quarter | $ | 24,372 | 25,085 | 25,656 | 25,031 | 24,528 | ||||||||||
| Provision for credit losses | 2,989 | 3,445 | 3,989 | 5,330 | 5,913 | |||||||||||
| Adjustment for passage of time on certain impaired loans (1) | (63 | ) | (67 | ) | (62 | ) | (74 | ) | - | |||||||
| Loan charge-offs: | ||||||||||||||||
| Commercial: | ||||||||||||||||
| Commercial and industrial | (610 | ) | (588 | ) | (810 | ) | (767 | ) | (1,028 | ) | ||||||
| Real estate mortgage | (270 | ) | (236 | ) | (364 | ) | (281 | ) | (326 | ) | ||||||
| Real estate construction | (199 | ) | (296 | ) | (289 | ) | (405 | ) | (414 | ) | ||||||
| Lease financing | (26 | ) | (29 | ) | (31 | ) | (34 | ) | (56 | ) | ||||||
| Foreign | (50 | ) | (49 | ) | (52 | ) | (47 | ) | (56 | ) | ||||||
| Total commercial | (1,155 | ) | (1,198 | ) | (1,546 | ) | (1,534 | ) | (1,880 | ) | ||||||
| Consumer: | ||||||||||||||||
| Real estate 1-4 family first mortgage | (1,199 | ) | (1,164 | ) | (1,140 | ) | (1,397 | ) | (1,089 | ) | ||||||
| Real estate 1-4 family junior lien mortgage | (1,059 | ) | (1,140 | ) | (1,239 | ) | (1,496 | ) | (1,384 | ) | ||||||
| Credit card | (505 | ) | (556 | ) | (639 | ) | (696 | ) | (683 | ) | ||||||
| Other revolving credit and installment | (573 | ) | (572 | ) | (542 | ) | (750 | ) | (861 | ) | ||||||
| Total consumer | (3,336 | ) | (3,432 | ) | (3,560 | ) | (4,339 | ) | (4,017 | ) | ||||||
| Total loan charge-offs | (4,491 | ) | (4,630 | ) | (5,106 | ) | (5,873 | ) | (5,897 | ) | ||||||
| Loan recoveries: | ||||||||||||||||
| Commercial: | ||||||||||||||||
| Commercial and industrial | 110 | 79 | 121 | 117 | 101 | |||||||||||
| Real estate mortgage | 36 | 18 | 4 | 10 | 11 | |||||||||||
| Real estate construction | 28 | 20 | 51 | 11 | 5 | |||||||||||
| Lease financing | 5 | 6 | 4 | 5 | 7 | |||||||||||
| Foreign | 22 | 10 | 10 | 11 | 10 | |||||||||||
| Total commercial | 201 | 133 | 190 | 154 | 134 | |||||||||||
| Consumer: | ||||||||||||||||
| Real estate 1-4 family first mortgage | 175 | 130 | 131 | 86 | 71 | |||||||||||
| Real estate 1-4 family junior lien mortgage | 54 | 55 | 55 | 47 | 55 | |||||||||||
| Credit card | 53 | 52 | 60 | 53 | 49 | |||||||||||
| Other revolving credit and installment | 169 | 165 | 181 | 203 | 175 | |||||||||||
| Total consumer | 451 | 402 | 427 | 389 | 350 | |||||||||||
| Total loan recoveries | 652 | 535 | 617 | 543 | 484 | |||||||||||
| Net loan charge-offs | (3,839 | ) | (4,095 | ) | (4,489 | ) | (5,330 | ) | (5,413 | ) | ||||||
| Allowances related to business combinations/other | 4 | 4 | (9 | ) | 699 | 3 | ||||||||||
| Balance, end of quarter | $ | 23,463 | 24,372 | 25,085 | 25,656 | 25,031 | ||||||||||
| Components: | ||||||||||||||||
| Allowance for loan losses | $ | 23,022 | 23,939 | 24,584 | 25,123 | 24,516 | ||||||||||
| Allowance for unfunded credit commitments | 441 | 433 | 501 | 533 | 515 | |||||||||||
| Allowance for credit losses | $ | 23,463 | 24,372 | 25,085 | 25,656 | 25,031 | ||||||||||
| Net loan charge-offs (annualized) as a percentage of average total loans | 2.02 |
% |
2.14 | 2.33 | 2.71 | 2.71 | ||||||||||
| Allowance for loan losses as a percentage of: | ||||||||||||||||
| Total loans | 3.04 | 3.18 | 3.21 | 3.22 | 3.13 | |||||||||||
| Nonaccrual loans | 88 | 85 | 88 | 92 | 100 | |||||||||||
| Nonaccrual loans and other nonperforming assets | 71 | 69 | 75 | 80 | 89 | |||||||||||
| Allowance for credit losses as a percentage of: | ||||||||||||||||
| Total loans | 3.10 | 3.23 | 3.27 | 3.28 | 3.20 | |||||||||||
| Nonaccrual loans | 89 | 86 | 90 | 94 | 103 | |||||||||||
| Nonaccrual loans and other nonperforming assets | 72 | 70 | 76 | 81 | 91 | |||||||||||
|
(1) Certain impaired loans have a valuation allowance determined by discounting expected cash flows at the respective loan's effective interest rate. Accordingly, the valuation allowance for these impaired loans reduces with the passage of time and that reduction is recognized as interest income. |
||||||||||||||||
|
Wells Fargo & Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY |
||||||
|
Year ended December 31, |
||||||
| (in millions) | 2010 | 2009 | ||||
| Balance, beginning of period (1) | $ | 114,359 | 102,316 | |||
| Cumulative effect from change in accounting for VIEs (2) | 183 | - | ||||
| Cumulative effect from change in accounting for embedded credit derivatives (3) | (28 | ) | - | |||
| Wells Fargo net income | 12,362 | 12,275 | ||||
| Wells Fargo other comprehensive income (loss), net of tax, related to: | ||||||
| Translation adjustments | 45 | 73 | ||||
| Investment securities (4) | 1,525 | 9,806 | ||||
| Derivative instruments and hedging activities | 89 | (221 | ) | |||
| Defined benefit pension plans | 70 | 273 | ||||
| Common stock issued | 1,375 | 21,976 | ||||
| Common stock repurchased | (91 | ) | (220 | ) | ||
| Preferred stock redeemed | - | (25,000 | ) | |||
| Preferred stock discount accretion | - | 2,259 | ||||
| Preferred stock released to ESOP | 796 | 106 | ||||
| Common stock warrants repurchased | (545 | ) | - | |||
| Common stock dividends | (1,045 | ) | (2,125 | ) | ||
| Preferred stock dividends, accretion and other | (730 | ) | (4,285 | ) | ||
| Noncontrolling interests and other, net | (476 | ) | (2,874 | ) | ||
| Balance, end of period | $ | 127,889 | 114,359 | |||
|
|
||||||
|
(1) The impact 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 2009 beginning balance of retained earnings and reduce the 2009 beginning balance of other comprehensive income by $85 million ($53 million after tax). |
||||||
|
(2) Effective January 1, 2010, we adopted changes in consolidation accounting pursuant to amendments by ASU 2009-17 to ASC 810 (FAS 167) and, accordingly, consolidated certain VIEs that were not included in our consolidated financial statements at December 31, 2009. We recorded a $183 million increase to beginning retained earnings as a cumulative effect adjustment. |
||||||
|
(3) Effective July 1, 2010, we adopted changes in accounting for embedded credit derivatives pursuant to ASU 2010-11, which provides guidance clarifying the accounting for embedded credit derivative features in certain financial instruments. We recorded a $28 million decrease to beginning retained earnings as a cumulative effect adjustment. |
||||||
|
(4) 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 FIVE QUARTER TIER 1 COMMON EQUITY (1) |
|||||||||||||
| Quarter ended | |||||||||||||
| (in billions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
||||||||
| Total equity | $ | 127.9 | 125.2 | 121.4 | 118.1 | 114.4 | |||||||
| Noncontrolling interests | (1.5 | ) | (1.5 | ) | (1.6 | ) | (2.0 | ) | (2.6 | ) | |||
| Total Wells Fargo stockholders' equity | 126.4 | 123.7 | 119.8 | 116.1 | 111.8 | ||||||||
| Adjustments: | |||||||||||||
| Preferred equity | (8.1 | ) | (8.1 | ) | (8.1 | ) | (8.1 | ) | (8.1 | ) | |||
| Goodwill and intangible assets (other than MSRs) | (35.5 | ) | (36.1 | ) | (36.7 | ) | (37.2 | ) | (37.7 | ) | |||
| Applicable deferred taxes | 4.3 | 4.7 | 5.0 | 5.2 | 5.3 | ||||||||
| Deferred tax asset limitation | - | - | - | - | (1.0 | ) | |||||||
| MSRs over specified limitations | (0.9 | ) | (0.9 | ) | (1.0 | ) | (1.5 | ) | (1.6 | ) | |||
| Cumulative other comprehensive income | (4.6 | ) | (5.4 | ) | (4.8 | ) | (4.0 | ) | (3.0 | ) | |||
| Other | (0.3 | ) | (0.3 | ) | (0.3 | ) | (0.3 | ) | (0.2 | ) | |||
| Tier 1 common equity |
(A) |
$ | 81.3 | 77.6 | 73.9 | 70.2 | 65.5 | ||||||
| Total risk-weighted assets (2) |
(B) |
$ | 971.7 | 968.4 | 970.8 | 990.1 | 1,013.6 | ||||||
| Tier 1 common equity to total risk-weighted assets |
(A)/(B) |
8.37 |
% |
8.01 | 7.61 | 7.09 | 6.46 | ||||||
| (1) Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies 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 December 31, 2010, preliminary risk-weighted assets reflect estimated on-balance sheet risk-weighted assets of $814.4 billion and derivative and off-balance sheet risk-weighted assets of $157.3 billion. | |||||||||||||
|
Wells Fargo & Company and Subsidiaries OPERATING SEGMENT RESULTS (1) |
||||||||||||||||||||||||
|
(income/expense in millions, average balances in billions) |
Community Banking |
Wholesale Banking |
Wealth, Brokerage and Retirement |
Other (2) |
Consolidated Company |
|||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||
| Quarter ended December 31, | ||||||||||||||||||||||||
| Net interest income (3) | $ | 7,744 | 8,486 | 2,972 | 2,732 | 676 | 549 | (329 | ) | (267 | ) | 11,063 | 11,500 | |||||||||||
| Provision for credit losses | 2,785 | 4,943 | 195 | 964 | 113 | 93 | (104 | ) | (87 | ) | 2,989 | 5,913 | ||||||||||||
| Noninterest income | 5,804 | 7,025 | 2,792 | 2,592 | 2,365 | 2,105 | (530 | ) | (526 | ) | 10,431 | 11,196 | ||||||||||||
| Noninterest expense | 7,857 | 7,650 | 2,990 | 2,729 | 2,608 | 2,558 | (115 | ) | (116 | ) | 13,340 | 12,821 | ||||||||||||
|
Income (loss) before income tax expense (benefit) |
2,906 | 2,918 | 2,579 | 1,631 | 320 | 3 | (640 | ) | (590 | ) | 5,165 | 3,962 | ||||||||||||
| Income tax expense (benefit) | 864 | 593 | 930 | 590 | 121 | (10 | ) | (243 | ) | (224 | ) | 1,672 | 949 | |||||||||||
|
Net income (loss) before noncontrolling interests |
2,042 | 2,325 | 1,649 | 1,041 | 199 | 13 | (397 | ) | (366 | ) | 3,493 | 3,013 | ||||||||||||
|
Less: Net income from noncontrolling interests |
72 | 149 | 5 | 12 | 2 | 29 | - | - | 79 | 190 | ||||||||||||||
| Net income (loss) (4) | $ | 1,970 | 2,176 | 1,644 | 1,029 | 197 | (16 | ) | (397 | ) | (366 | ) | 3,414 | 2,823 | ||||||||||
| Average loans | $ | 514.1 | 538.9 | 229.6 | 243.4 | 43.0 | 44.8 | (33.0 | ) | (34.7 | ) | 753.7 | 792.4 | |||||||||||
| Average assets | 772.4 | 796.5 | 383.6 | 366.8 | 140.2 | 137.7 | (59.2 | ) | (61.5 | ) | 1,237.0 | 1,239.5 | ||||||||||||
| Average core deposits | 544.4 | 542.2 | 185.1 | 163.0 | 121.5 | 124.1 | (56.2 | ) | (58.5 | ) | 794.8 | 770.8 | ||||||||||||
| Year ended December 31, | ||||||||||||||||||||||||
| Net interest income (3) | $ | 31,864 | 34,799 | 11,495 | 10,218 | 2,707 | 2,407 | (1,309 | ) | (1,100 | ) | 44,757 | 46,324 | |||||||||||
| Provision for credit losses | 13,807 | 17,866 | 1,920 | 3,648 | 334 | 460 | (308 | ) | (306 | ) | 15,753 | 21,668 | ||||||||||||
| Noninterest income | 22,834 | 25,699 | 10,721 | 10,363 | 9,023 | 8,358 | (2,125 | ) | (2,058 | ) | 40,453 | 42,362 | ||||||||||||
| Noninterest expense | 30,073 | 29,956 | 11,267 | 10,771 | 9,768 | 9,426 | (652 | ) | (1,133 | ) | 50,456 | 49,020 | ||||||||||||
|
Income (loss) before income tax expense (benefit) |
10,818 | 12,676 | 9,029 | 6,162 | 1,628 | 879 | (2,474 | ) | (1,719 | ) | 19,001 | 17,998 | ||||||||||||
| Income tax expense (benefit) | 3,425 | 3,449 | 3,237 | 2,211 | 616 | 324 | (940 | ) | (653 | ) | 6,338 | 5,331 | ||||||||||||
|
Net income (loss) before noncontrolling interests |
7,393 | 9,227 | 5,792 | 3,951 | 1,012 | 555 | (1,534 | ) | (1,066 | ) | 12,663 | 12,667 | ||||||||||||
|
Less: Net income from noncontrolling interests |
275 | 339 | 19 | 27 | 7 | 26 | - | - | 301 | 392 | ||||||||||||||
| Net income (loss) (4) | $ | 7,118 | 8,888 | 5,773 | 3,924 | 1,005 | 529 | (1,534 | ) | (1,066 | ) | 12,362 | 12,275 | |||||||||||
| Average loans | $ | 530.1 | 552.7 | 230.5 | 260.2 | 43.0 | 45.7 | (33.0 | ) | (35.8 | ) | 770.6 | 822.8 | |||||||||||
| Average assets | 773.0 | 806.1 | 373.2 | 383.2 | 139.3 | 127.9 | (58.6 | ) | (54.8 | ) | 1,226.9 | 1,262.4 | ||||||||||||
| Average core deposits | 536.4 | 552.8 | 170.0 | 147.3 | 121.2 | 114.2 | (55.6 | ) | (51.8 | ) | 772.0 | 762.5 | ||||||||||||
| (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. In first quarter 2010, we conformed certain funding and allocation methodologies of legacy Wachovia to those of Wells Fargo; in addition, amounts remaining in “Other” related to integration expense were revised to reflect only integration expense related to the Wachovia merger. In fourth quarter 2010, we realigned certain lending businesses into Wholesale Banking from Community Banking to reflect our previously announced restructuring of Wells Fargo Financial. Prior periods have been revised to reflect these changes. | ||||||||||||||||||||||||
| (2) Includes Wachovia 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) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||||||||
| COMMUNITY BANKING | ||||||||||||||||
| Net interest income (2) | $ | 7,744 | 7,811 | 8,056 | 8,253 | 8,486 | ||||||||||
| Provision for credit losses | 2,785 | 3,155 | 3,348 | 4,519 | 4,943 | |||||||||||
| Noninterest income | 5,804 | 5,694 | 5,598 | 5,738 | 7,025 | |||||||||||
| Noninterest expense | 7,857 | 7,333 | 7,678 | 7,205 | 7,650 | |||||||||||
| Income before income tax expense | 2,906 | 3,017 | 2,628 | 2,267 | 2,918 | |||||||||||
| Income tax expense | 864 | 973 | 801 | 787 | 593 | |||||||||||
| Net income before noncontrolling interests | 2,042 | 2,044 | 1,827 | 1,480 | 2,325 | |||||||||||
| Less: Net income from noncontrolling interests | 72 | 73 | 82 | 48 | 149 | |||||||||||
| Segment net income | $ | 1,970 | 1,971 | 1,745 | 1,432 | 2,176 | ||||||||||
| Average loans | $ | 514.1 | 522.2 | 534.3 | 550.4 | 538.9 | ||||||||||
| Average assets | 772.4 | 770.8 | 772.1 | 776.9 | 796.5 | |||||||||||
| Average core deposits | 544.4 | 537.1 | 532.6 | 531.5 | 542.2 | |||||||||||
| WHOLESALE BANKING | ||||||||||||||||
| Net interest income (2) | $ | 2,972 | 2,934 | 3,035 | 2,554 | 2,732 | ||||||||||
| Provision for credit losses | 195 | 280 | 635 | 810 | 964 | |||||||||||
| Noninterest income | 2,792 | 2,396 | 2,691 | 2,842 | 2,592 | |||||||||||
| Noninterest expense | 2,990 | 2,719 | 2,873 | 2,685 | 2,729 | |||||||||||
| Income before income tax expense | 2,579 | 2,331 | 2,218 | 1,901 | 1,631 | |||||||||||
| Income tax expense | 930 | 844 | 785 | 678 | 590 | |||||||||||
| Net income before noncontrolling interests | 1,649 | 1,487 | 1,433 | 1,223 | 1,041 | |||||||||||
| Less: Net income from noncontrolling interests | 5 | 11 | - | 3 | 12 | |||||||||||
| Segment net income | $ | 1,644 | 1,476 | 1,433 | 1,220 | 1,029 | ||||||||||
| Average loans | $ | 229.6 | 227.3 | 228.2 | 237.0 | 243.4 | ||||||||||
| Average assets | 383.6 | 371.0 | 368.7 | 369.4 | 366.8 | |||||||||||
| Average core deposits | 185.1 | 170.8 | 162.3 | 161.6 | 163.0 | |||||||||||
| WEALTH, BROKERAGE AND RETIREMENT | ||||||||||||||||
| Net interest income (2) | $ | 676 | 683 | 684 | 664 | 549 | ||||||||||
| Provision for credit losses | 113 | 77 | 81 | 63 | 93 | |||||||||||
| Noninterest income | 2,365 | 2,229 | 2,183 | 2,246 | 2,105 | |||||||||||
| Noninterest expense | 2,608 | 2,420 | 2,350 | 2,390 | 2,558 | |||||||||||
| Income before income tax expense (benefit) | 320 | 415 | 436 | 457 | 3 | |||||||||||
| Income tax expense (benefit) | 121 | 157 | 165 | 173 | (10 | ) | ||||||||||
| Net income before noncontrolling interests | 199 | 258 | 271 | 284 | 13 | |||||||||||
| Less: Net income from noncontrolling interests | 2 | 2 | 1 | 2 | 29 | |||||||||||
| Segment net income (loss) | $ | 197 | 256 | 270 | 282 | (16 | ) | |||||||||
| Average loans | $ | 43.0 | 42.6 | 42.6 | 43.8 | 44.8 | ||||||||||
| Average assets | 140.2 | 138.2 | 141.0 | 137.8 | 137.7 | |||||||||||
| Average core deposits | 121.5 | 120.7 | 121.5 | 121.1 | 124.1 | |||||||||||
| OTHER (3) | ||||||||||||||||
| Net interest income (2) | $ | (329 | ) | (330 | ) | (326 | ) | (324 | ) | (267 | ) | |||||
| Provision for credit losses | (104 | ) | (67 | ) | (75 | ) | (62 | ) | (87 | ) | ||||||
| Noninterest income | (530 | ) | (543 | ) | (527 | ) | (525 | ) | (526 | ) | ||||||
| Noninterest expense | (115 | ) | (219 | ) | (155 | ) | (163 | ) | (116 | ) | ||||||
| Loss before income tax benefit | (640 | ) | (587 | ) | (623 | ) | (624 | ) | (590 | ) | ||||||
| Income tax benefit | (243 | ) | (223 | ) | (237 | ) | (237 | ) | (224 | ) | ||||||
| Net loss before noncontrolling interests | (397 | ) | (364 | ) | (386 | ) | (387 | ) | (366 | ) | ||||||
| Less: Net income from noncontrolling interests | - | - | - | - | - | |||||||||||
| Other net loss | $ | (397 | ) | (364 | ) | (386 | ) | (387 | ) | (366 | ) | |||||
| Average loans | $ | (33.0 | ) | (32.6 | ) | (32.6 | ) | (33.8 | ) | (34.7 | ) | |||||
| Average assets | (59.2 | ) | (59.6 | ) | (57.6 | ) | (58.0 | ) | (61.5 | ) | ||||||
| Average core deposits | (56.2 | ) | (56.6 | ) | (54.6 | ) | (55.0 | ) | (58.5 | ) | ||||||
| CONSOLIDATED COMPANY | ||||||||||||||||
| Net interest income (2) | $ | 11,063 | 11,098 | 11,449 | 11,147 | 11,500 | ||||||||||
| Provision for credit losses | 2,989 | 3,445 | 3,989 | 5,330 | 5,913 | |||||||||||
| Noninterest income | 10,431 | 9,776 | 9,945 | 10,301 | 11,196 | |||||||||||
| Noninterest expense | 13,340 | 12,253 | 12,746 | 12,117 | 12,821 | |||||||||||
| Income before income tax expense | 5,165 | 5,176 | 4,659 | 4,001 | 3,962 | |||||||||||
| Income tax expense | 1,672 | 1,751 | 1,514 | 1,401 | 949 | |||||||||||
| Net income before noncontrolling interests | 3,493 | 3,425 | 3,145 | 2,600 | 3,013 | |||||||||||
| Less: Net income from noncontrolling interests | 79 | 86 | 83 | 53 | 190 | |||||||||||
| Wells Fargo net income | $ | 3,414 | 3,339 | 3,062 | 2,547 | 2,823 | ||||||||||
| Average loans | $ | 753.7 | 759.5 | 772.5 | 797.4 | 792.4 | ||||||||||
| Average assets | 1,237.0 | 1,220.4 | 1,224.2 | 1,226.1 | 1,239.5 | |||||||||||
| Average core deposits | 794.8 | 772.0 | 761.8 | 759.2 | 770.8 | |||||||||||
| (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. In first quarter 2010, we conformed certain funding and allocation methodologies of legacy Wachovia to those of Wells Fargo; in addition, amounts remaining in “Other” related to integration expense were revised to reflect only integration expense related to the Wachovia merger. In fourth quarter 2010, we realigned certain lending businesses into Wholesale Banking from Community Banking to reflect our previously announced restructuring of Wells Fargo Financial. Prior periods have been revised to reflect these changes. | ||||||||||||||||
| (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) Includes Wachovia 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. | ||||||||||||||||
|
Wells Fargo & Company and Subsidiaries FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING |
||||||||||||||||
| Quarter ended | ||||||||||||||||
| (in millions) |
|
Dec. 31, |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
||||||||||
| MSRs measured using the fair value method: | ||||||||||||||||
| Fair value, beginning of quarter | $ | 12,486 | 13,251 | 15,544 | 16,004 | 14,500 | ||||||||||
| Adjustments from adoption of consolidation accounting guidance | - | - | - | (118 | ) | - | ||||||||||
| Servicing from securitizations or asset transfers | 1,052 | 1,043 | 943 | 1,054 | 1,181 | |||||||||||
| Net additions | 1,052 | 1,043 | 943 | 936 | 1,181 | |||||||||||
| Changes in fair value: | ||||||||||||||||
| Due to changes in valuation model inputs or assumptions (1) | 1,613 | (1,132 | ) | (2,661 | ) | (777 | ) | 1,052 | ||||||||
| Other changes in fair value (2) | (684 | ) | (676 | ) | (575 | ) | (619 | ) | (729 | ) | ||||||
| Total changes in fair value | 929 | (1,808 | ) | (3,236 | ) | (1,396 | ) | 323 | ||||||||
| Fair value, end of quarter | $ | 14,467 | 12,486 | 13,251 | 15,544 | 16,004 | ||||||||||
| (1) Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. | ||||||||||||||||
| (2) Represents changes due to collection/realization of expected cash flows over time. | ||||||||||||||||
| Quarter ended | ||||||||||||||||
| (in millions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||||||||
| Amortized MSRs: | ||||||||||||||||
| Balance, beginning of quarter | $ | 1,013 | 1,037 | 1,069 | 1,119 | 1,162 | ||||||||||
| Adjustments from adoption of consolidation accounting guidance | - | - | - | (5 | ) | - | ||||||||||
| Purchases | 36 | 14 | 7 | 1 | 1 | |||||||||||
| Servicing from securitizations or asset transfers | 432 | 18 | 17 | 11 | 18 | |||||||||||
| Amortization | (59 | ) | (56 | ) | (56 | ) | (57 | ) | (62 | ) | ||||||
| Balance, end of quarter | 1,422 | 1,013 | 1,037 | 1,069 | 1,119 | |||||||||||
| Valuation Allowance: | ||||||||||||||||
| Balance, beginning of quarter | - | - | - | - | - | |||||||||||
| Provision for MSRs in excess of fair value | 3 | - | - | - | - | |||||||||||
| Balance, end of quarter | 3 | - | - | - | - | |||||||||||
| Amortized MSRs, net | $ | 1,419 | 1,013 | 1,037 | 1,069 | 1,119 | ||||||||||
| Fair value of amortized MSRs: | ||||||||||||||||
| Beginning of quarter | $ | 1,349 | 1,307 | 1,283 | 1,261 | 1,277 | ||||||||||
| End of quarter | 1,812 | 1,349 | 1,307 | 1,283 | 1,261 | |||||||||||
|
Wells Fargo & Company and Subsidiaries FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED) |
||||||||||||
| Quarter ended | ||||||||||||
| (in millions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||||
| Servicing income, net: | ||||||||||||
| Servicing fees (1) | $ | 1,129 | 1,192 | 1,223 | 1,053 | 1,059 | ||||||
| Changes in fair value of MSRs carried at fair value: | ||||||||||||
| Due to changes in valuation model inputs or assumptions (2) | 1,613 | (1,132 | ) | (2,661 | ) | (777 | ) | 1,052 | ||||
| Other changes in fair value (3) | (684 | ) | (676 | ) | (575 | ) | (619 | ) | (729 | ) | ||
| Total changes in fair value of MSRs carried at fair value | 929 | (1,808 | ) | (3,236 | ) | (1,396 | ) | 323 | ||||
| Amortization | (59 | ) | (56 | ) | (56 | ) | (57 | ) | (62 | ) | ||
| Provision for MSRs in excess of fair value | (3 | ) | - | - | - | - | ||||||
| Net derivative gains (losses) from economic hedges (4) | (1,756 | ) | 1,188 | 3,287 | 1,766 | 830 | ||||||
| Total servicing income, net | $ | 240 | 516 | 1,218 | 1,366 | 2,150 | ||||||
| Market-related valuation changes to MSRs, net of hedge results (2)+(4) | $ | (143 | ) | 56 | 626 | 989 | 1,882 | |||||
| (1) Includes contractually specified servicing fees, late charges and other ancillary revenues. 2009 amounts have been revised to conform to current presentation. | ||||||||||||
| (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) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||||
| Managed servicing portfolio (1): | ||||||||||||
| Residential mortgage servicing: | ||||||||||||
| Serviced for others | $ | 1,429 | 1,433 | 1,437 | 1,417 | 1,422 | ||||||
| Owned loans serviced | 371 | 365 | 365 | 371 | 364 | |||||||
| Subservicing | 9 | 10 | 10 | 10 | 10 | |||||||
| Total residential servicing | 1,809 | 1,808 | 1,812 | 1,798 | 1,796 | |||||||
| Commercial mortgage servicing: | ||||||||||||
| Serviced for others | 408 | 439 | 441 | 449 | 454 | |||||||
| Owned loans serviced | 99 | 99 | 100 | 105 | 105 | |||||||
| Subservicing | 13 | 10 | 10 | 10 | 10 | |||||||
| Total commercial servicing | 520 | 548 | 551 | 564 | 569 | |||||||
| Total managed servicing portfolio | $ | 2,329 | 2,356 | 2,363 | 2,362 | 2,365 | ||||||
| Total serviced for others | $ | 1,837 | 1,872 | 1,878 | 1,866 | 1,876 | ||||||
| Ratio of MSRs to related loans serviced for others | 0.86 |
% |
0.72 | 0.76 | 0.89 | 0.91 | ||||||
| Weighted-average note rate (mortgage loans serviced for others) | 5.39 | 5.46 | 5.53 | 5.59 | 5.66 | |||||||
| (1) The components of our managed servicing portfolio are presented at unpaid principal balance for loans serviced and subserviced for others and at book value for owned loans serviced. | ||||||||||||
| SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA | ||||||||||||
| Quarter ended | ||||||||||||
| (in billions) |
Dec. 31, 2010 |
Sept. 30, 2010 |
June 30, 2010 |
Mar. 31, 2010 |
Dec. 31, 2009 |
|||||||
| Application data: | ||||||||||||
| Wells Fargo Home Mortgage first mortgage quarterly applications | $ | 158 | 194 | 143 | 125 | 144 | ||||||
| Refinances as a percentage of applications | 73 |
% |
80 | 58 | 61 | 72 | ||||||
| Wells Fargo Home Mortgage first mortgage unclosed pipeline, at quarter end | $ | 73 | 101 | 68 | 59 | 57 | ||||||
| Residential Real Estate Originations: | ||||||||||||
| Wells Fargo Home Mortgage first mortgage loans: | ||||||||||||
| Retail | $ | 70 | 53 | 44 | 43 | 51 | ||||||
| Correspondent/Wholesale | 57 | 47 | 36 | 32 | 42 | |||||||
| Other (1) | 1 | 1 | 1 | 1 | 1 | |||||||
| Total quarter-to-date | $ | 128 | 101 | 81 | 76 | 94 | ||||||
| Total year-to-date | $ | 386 | 258 | 157 | 76 | 420 | ||||||
| (1) Consists of home equity loans and lines and Wells Fargo Financial. | ||||||||||||
|
Wells Fargo & Company and Subsidiaries CHANGES IN LIABILITY FOR MORTGAGE LOAN REPURCHASE LOSSES |
|||||||||||||||||||
| Quarter ended |
|
||||||||||||||||||
| Dec. 31, | Sept. 30, | June 30, | Mar. 31, | Year ended December 31, | |||||||||||||||
| (in millions) | 2010 | 2010 | 2010 | 2010 | 2010 | 2009 | |||||||||||||
| Balance, beginning of period | $ | 1,331 | 1,375 | 1,263 | 1,033 | 1,033 | 620 | (1) | |||||||||||
| Provision for repurchase losses: | |||||||||||||||||||
| Loan sales | 35 | 29 | 36 | 44 | 144 | 302 | |||||||||||||
|
Change in estimate - primarily due to credit deterioration |
429 | 341 | 346 | 358 | 1,474 | 625 | |||||||||||||
| Total additions | 464 | 370 | 382 | 402 | 1,618 | 927 | |||||||||||||
| Losses | (506 | ) | (414 | ) | (270 | ) | (172 | ) | (1,362 | ) | (514 | ) | |||||||
| Balance, end of period | $ | 1,289 | 1,331 | 1,375 | 1,263 | 1,289 | 1,033 | ||||||||||||
| (1) Reflects purchase accounting refinements. | |||||||||||||||||||
| OUTSTANDING REPURCHASE DEMANDS AND MORTGAGE INSURANCE RESCISSIONS | |||||||||||||||||||
| While original loan balance related to these demands is presented below, the establishment of the repurchase reserve is based on a combination of factors, such as our appeals success rates, reimbursement by correspondent and other third party originators, and projected loss severity, which is driven by the difference between the current loan balance and the estimated collateral value less costs to sell the property. |
|
||||||||||||||||||
| ($ in millions) |
|
Government |
Private |
Total outstanding demands |
Mortgage insurance rescissions (2) |
Total | |||||||||||||
| December 31, 2010 | |||||||||||||||||||
| Number of loans | 6,501 | 2,899 | 9,400 | 3,248 | 12,648 | ||||||||||||||
| Original loan balance |
|
$ |
1,467 | 680 | 2,147 | 801 | 2,948 | ||||||||||||
| September 30, 2010 | |||||||||||||||||||
| Number of loans | 9,887 | 3,605 | 13,492 | 3,035 | 16,527 | ||||||||||||||
| Original loan balance |
|
$ |
2,212 | 882 | 3,094 | 748 | 3,842 | ||||||||||||
| June 30, 2010 | |||||||||||||||||||
| Number of loans | 12,536 | 3,160 | 15,696 | 2,979 | 18,675 | ||||||||||||||
| Original loan balance |
|
$ |
2,840 | 707 | 3,547 | 760 | 4,307 | ||||||||||||
| March 31, 2010 | |||||||||||||||||||
| Number of loans | 10,804 | 2,320 | 13,124 | 2,843 | 15,967 | ||||||||||||||
| Original loan balance |
|
$ |
2,499 | 519 | 3,018 | 737 | 3,755 | ||||||||||||
| December 31, 2009 | |||||||||||||||||||
| Number of loans | 8,354 | 2,929 | 11,283 | 2,965 | 14,248 | ||||||||||||||
| Original loan balance |
|
$ |
1,911 | 886 | 2,797 | 859 | 3,656 | ||||||||||||
| (1) Includes repurchase demands of 1,495 and $291 million, 2,263 and $437 million, 2,141 and $417 million, 1,824 and $372 million, and 1,536 and $322 million for December 31, September 30, June 30, and March 31, 2010, and December 31, 2009, respectively, received from investors on mortgage servicing rights acquired from other originators. We have the right of recourse against the seller for these repurchase demands and would only incur a loss on these demands for counterparty risk associated with the seller. |
|
||||||||||||||||||
| (2) As part of our representations and warranties in our loan sales contracts, we represent that certain loans have mortgage insurance. To the extent the mortgage insurance is rescinded by the mortgage insurer, the lack of insurance may result in a repurchase demand from an investor. |
|
||||||||||||||||||
Facebook
Twitter
LinkedIn
Delicious
Reddit
StumbleUpon
Digg
MySpace
Newsvine
Google Bookmark
Yahoo! Bookmark
Email
Email 
