Wells Fargo Reports Record Quarterly Net Income

Q1 Net Income of $3.8 billion

SAN FRANCISCO--()--Wells Fargo & Company (NYSE:WFC):

  • Continued strong financial results:
    • Record net income of $3.8 billion, up 48 percent from prior year, up 10 percent from prior quarter
    • Diluted earnings per common share of $0.67, up 49 percent from prior year, up 10 percent from prior quarter
    • All business segments contributed to earnings
    • Return on assets of 1.23 percent, up 14 basis points from prior quarter, highest in 3 years
    • Revenue of $20.3 billion, down $1.2 billion from prior quarter, reflecting $741 million decline in mortgage banking fee income
    • Noninterest expense down $607 million from prior quarter
    • Average checking and savings deposits up 9 percent from prior year; consumer checking accounts up a net 7.4 percent from March 31, 2010
    • Average loans of $754.1 billion, up $402 million from prior quarter
  • Capital strength; returned more capital to shareholders:
    • Capital ratios increased, with Tier 1 common equity ratio of 8.9 percent under Basel I at March 31, 2011, and an estimated Tier 1 common equity ratio of 7.2 percent under current Basel III capital proposals1
    • Increased quarterly dividend rate to $0.12 per share, fully paid in first quarter
    • Additional 200 million share repurchase authority
    • Called $3.2 billion of high-cost trust preferred securities
  • Significant improvement in credit quality:
    • Net loan charge-offs declined to $3.2 billion, down $629 million from prior quarter
    • Nonperforming assets declined $1.8 billion from prior quarter to $30.6 billion and nonperforming loans declined $1.3 billion
    • Reserve release2 of $1.0 billion (pre tax) reflected improved portfolio performance; expect future reductions in the allowance absent significant deterioration in the economy
  • Wachovia merger integration remained on track:
    • Converted retail banking stores in Connecticut, Delaware, New Jersey and New York in first quarter
    • Completed conversion to one common retail brokerage platform
    • Pennsylvania banking stores converted April 15th
    • Florida banking stores expected to convert in June and July; remaining Eastern banking markets expected to convert by year end
  • Supplied $151 billion in credit to consumers and businesses during the quarter, up from $128 billion in first quarter 2010
  • As of March 31, 2011, over 665,000 active trial or completed loan modifications had been initiated since the beginning of 2009; of this total, over 85 percent were through Wells Fargo’s own modification programs and the remainder were through the federal government’s Home Affordable Modification Program (HAMP)

1 See FIVE QUARTER TIER 1 COMMON EQUITY table for more information on Tier 1 common equity.

2 Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.

Selected Financial Information

             
Quarter ended
Mar. 31, Dec. 31, Mar. 31,
            2011     2010   2010
Earnings
Diluted earnings per common share $ 0.67 0.61 0.45
Wells Fargo net income (in billions) 3.76 3.41 2.55
 
Asset Quality
Net charge-offs as a % of avg. total loans (annualized) 1.73 % 2.02 2.71
Allowance as a % of total loans 2.98 3.10 3.28
Allowance as a % of annualized net charge-offs 172 154 119
 
Other
Revenue (in billions) $ 20.33 21.49 21.45
Average loans (in billions) 754.1 753.7 797.4
Average core deposits (in billions) 796.8 794.8 759.2
Net interest margin 4.05 % 4.16 4.27
                 

Wells Fargo & Company (NYSE:WFC) reported record net income of $3.8 billion, or $0.67 per diluted common share, for first quarter 2011, up from $2.5 billion, or $0.45 per share, for first quarter 2010.

“Our strong first quarter results reflected positive trends in our business fundamentals as credit quality improved, capital ratios increased and cross-selling reached new highs,” said Chairman and CEO John Stumpf. “As the economy continued an uneven recovery, our business customers increased borrowing and utilization of credit lines – a hopeful sign that businesses are once again investing for growth. Consumers continue to be hesitant to borrow, yet our robust deposit growth reflects the strong loyalty and market share we enjoy among customers. We also marked an historic return of the Wells Fargo name to the New York market as we celebrated our 159th anniversary and converted banking stores in Connecticut, Delaware, New Jersey and New York during the quarter. Our Pennsylvania banking stores were converted successfully this past weekend and we expect to convert all remaining Wachovia stores by the end of this year.

“We were extremely pleased to return additional capital to our shareholders in the first quarter with an increased common stock dividend. This action, coupled with the reinstatement of our common stock repurchase program and the calling of certain high-cost trust preferred securities, reflects the continued strength of our capital position. The diversity of Wells Fargo's business lines enables us to better serve all our customers' financial needs and enhances the stability and strength of our earnings – which in turn provides the foundation that supports us in doing the right thing for our customers and our shareholders every day, for the long term. Our focus is on improving our efficiency, investing wisely, making every good loan we can, helping customers emerge from the economic downturn, and building an ever-stronger capital base.”

Financial Performance

“In the first quarter, our businesses again produced strong results for shareholders – demonstrating the power of our diversified business model and risk discipline,” said Chief Financial Officer Tim Sloan. “Our focus on expanding customer relationships was evident in this quarter’s growth in core deposits, net checking accounts and many commercial loan portfolios. While revenue declined from the prior quarter, our expense and risk management discipline helped produce record results – evidence of the benefits our business model provides our shareholders. Expenses declined significantly from fourth quarter and credit quality continued to improve, with the second consecutive quarterly decline in nonperforming loans and the fifth consecutive quarter of lower net charge-offs. Capital levels grew once again, with Tier 1 common equity reaching 8.9 percent under Basel I at March 31, 2011, and an estimated 7.2 percent under current Basel III capital proposals. Integration activities remain on track and, after converting customers in Pennsylvania, we now have 74 percent of our banking customers company-wide on a single system. We believe our franchise has never been better positioned to capture future growth opportunities.”

Revenue

Revenue was $20.3 billion, compared with $21.5 billion in fourth quarter 2010 and $21.4 billion in first quarter 2010. The linked-quarter decline in revenue was primarily due to lower mortgage banking revenue (down $741 million) and lower net interest income. Many businesses generated linked-quarter revenue growth, including commercial mortgage servicing, fixed income and equity sales and trading, global remittance, real estate capital markets, retail brokerage, retirement services, SBA lending and wealth management.

Net Interest Income

Net interest income was $10.7 billion, compared with $11.1 billion in fourth quarter 2010. The net interest margin was 4.05 percent, down 11 basis points from 4.16 percent in fourth quarter 2010. Approximately one-half of the decline in margin was due to a lower level of accelerated income from purchased credit-impaired (PCI) loan resolutions and securities redemptions predominantly related to legacy Wachovia positions. The remaining portion of the decline in margin was attributable to higher levels of low-yielding cash and short-term investments reflecting the Company’s interest rate risk management discipline. Other than these items, the margin was essentially flat compared with last quarter.

Noninterest Income

Noninterest income was $9.7 billion, down $623 million, or 6 percent, from first quarter 2010, and down $753 million from fourth quarter 2010, almost entirely attributable to the decline in mortgage banking income. On a linked-quarter basis, card fees were higher driven by new account growth and increased card usage by existing customers. Gains on trading assets were up (improved fixed income environment) as were debt securities results (lower losses from sales of lower-yielding bonds) and gains from equity investments. Trust and investment fees were down modestly, reflecting lower bond and equity originations after a particularly strong fourth quarter, partially offset by higher retail brokerage asset-based fees. Insurance fees were seasonally lower.

Mortgage banking noninterest income was $2.02 billion, down $741 million from fourth quarter 2010 on $84 billion of originations compared with $128 billion of originations in fourth quarter. Mortgage banking noninterest income in first quarter included a $249 million provision for mortgage loan repurchase losses compared with $464 million in fourth quarter (included in net gains from mortgage loan origination/sales activities). Net mortgage servicing rights (MSRs) results were a $379 million gain compared with a $143 million loss in fourth quarter 2010. The ratio of MSRs to related loans serviced for others was 92 basis points and the average note rate on the servicing portfolio was 5.31 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 March 31, 2011, was $45 billion compared with $73 billion at December 31, 2010.

The Company had net unrealized securities gains of $8.9 billion at March 31, 2011, up $549 million from fourth quarter 2010. Net realized equity gains of $353 million were partially offset by $166 million of realized bond losses.

Noninterest Expense

Noninterest expense was $12.7 billion, down $607 million from fourth quarter 2010 and up $616 million from a year ago. First quarter expenses included $440 million of merger integration costs (down from $534 million in fourth quarter 2010), $472 million of operating losses (up from $193 million in fourth quarter 2010) substantially all from additional litigation accruals for foreclosure-related matters, and seasonally higher incentive compensation expenses. “We continue to focus on managing costs across our company, without compromising future growth opportunities,” said Sloan. “Certain expenses in the quarter remained elevated, including loan resolution costs and merger costs. As we conclude the integration process, and as the economy continues to recover, we expect these expenses to decline. It’s also important to note that expense reductions in some of our large variable-cost businesses, such as consumer mortgage origination, can sometimes lag related reductions in revenue.”

Loans

Total loans were $751.2 billion at March 31, 2011, compared with $757.3 billion at December 31, 2010, including non-strategic/liquidating portfolios. These portfolios (legacy Wells Fargo Financial indirect auto, liquidating home equity, legacy Wells Fargo Financial debt consolidation, education finance government loans, Pick-a-Pay mortgage, and other PCI) declined $6.5 billion in the quarter. Excluding this planned reduction, total loans increased modestly from the prior quarter. Average loans increased $402 million from last quarter and many portfolios had linked-quarter average loan growth, including auto dealer services, asset-backed finance, brokerage, commercial banking, commercial real estate, corporate banking, government banking, international, private student lending and SBA lending. “The increase in loan balances this quarter reflected new customer relationships, as well as increased borrowing by existing commercial customers,” said Sloan.

 
          March 31, 2011     December 31, 2010
(in millions)   Core   Liquidating (1)   Total     Core   Liquidating (1)   Total
Commercial   $ 315,715   7,507   323,222     314,123   7,935   322,058
Consumer     308,619   119,314   427,933     309,840   125,369   435,209
Total loans   $ 624,334   126,821   751,155     623,963   133,304   757,267
       

(1) See NON-STRATEGIC AND LIQUIDATING LOAN PORTFOLIOS table for additional information on non-strategic and liquidating loan portfolios. Management believes that the above information provides useful disclosure regarding the Company’s ongoing loan portfolios.

 

Deposits

Average core deposits were $796.8 billion, up 5 percent from a year ago and 1 percent (annualized) from fourth quarter 2010. Consumer checking accounts grew a net 7.4 percent from March 31, 2010. Average checking and savings deposits were $722.5 billion, up 9 percent from a year ago and up 4 percent (annualized) from fourth quarter 2010. Average mortgage escrow deposits were $27.9 billion compared with $24.6 billion a year ago and $36.0 billion in fourth quarter 2010. Average checking and savings deposits were 91 percent of average core deposits, up from 88 percent a year ago. The average deposit cost for first quarter 2011 was 30 basis points compared with 31 basis points in fourth quarter 2010. Total core deposits were 106 percent of total loans at March 31, 2011.

Capital

Capital ratios increased again in the quarter, reflecting continued strong internal capital generation. The Company took several capital actions contemplated in its capital plan submitted to the Federal Reserve, including increasing the quarterly common stock dividend rate to $0.12 a share, reinstating the common stock repurchase program, and calling $3.2 billion of high-cost trust preferred securities that will no longer count as Tier 1 capital under Dodd-Frank and Basel III. “We have confidence in our capital plan, which recognizes the continued strength of our capital position and supports our goal of returning over time to a more normalized common stock dividend payout ratio of 30 percent,” said Sloan. “We appreciate the patience and loyalty our shareholders have demonstrated and look forward to returning more capital over time.”

 
(as a percent of total risk-weighted assets)   Mar. 31,
2011
    Dec. 31,
2010
    Mar. 31,
2010
Ratios under Basel I (1):        
Tier 1 common equity (2) 8.9 % 8.3 7.1
Tier 1 capital 11.5 11.2 9.9
Tier 1 leverage 9.3 9.2 8.3
Tier 1 common equity under Basel III, estimated (3) 7.2 6.9 N/A
                         
       

(1) March 31, 2011, ratios are preliminary.

(2) See FIVE QUARTER TIER 1 COMMON EQUITY table for more information on Tier 1 common equity.

(3) Estimates are based on reported Tier 1 common equity and management’s current interpretation of Basel III capital proposals. These estimates are subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory authorities.

 

Income Tax Expense

The Company’s effective income tax rate was 29.5 percent for first quarter 2011. This rate included the benefit associated with the realization for tax purposes of a previously written down investment. Currently, the Company’s estimate of its full year 2011 effective tax rate is approximately 32 percent.

Credit Quality

Net charge-offs decreased significantly from $3.8 billion in the fourth quarter of 2010 to $3.2 billion in the first quarter. “The first quarter marked the fifth consecutive quarter of declining loan losses and the second consecutive quarter of reduced nonperforming assets,” said Mike Loughlin, Chief Risk Officer. “Delinquency trends continued to improve across the portfolio for both early and late stage delinquencies. Six percent of the retail loan portfolio was 30 days or more past due, down 15 percent from the previous quarter. While these improvements were partially driven by seasonal factors, the improving economic landscape and customer optimism also contributed to a more positive credit environment. Reflecting the improved overall portfolio performance, the provision for credit losses was $1.0 billion less than net charge-offs. Absent significant deterioration in the economy, we expect future reserve releases,” said Loughlin.

Credit Losses

First quarter net charge-offs were $3.2 billion, or 1.73 percent (annualized) of average loans, down $629 million from fourth quarter net charge-offs of $3.8 billion (2.02 percent). Net charge-offs improved across all major portfolio segments. “We continue to be optimistic about the improvements in credit quality and remain focused on managing through this cycle,” said Loughlin.

Net Loan Charge-Offs
  Quarter ended
    March 31, 2011     December 31, 2010     September 30, 2010
($ in millions)  

Net loan
charge-
offs

 

As a
% of
average
loans (1)

   

Net loan
charge
-offs

 

As a
% of
average
loans (1)

   

Net loan
charge-
offs

 

As a
% of
average
loans (1)

   
Commercial:
Commercial and industrial $ 354 0.96 % $ 500 1.34 % $ 509 1.38 %
Real estate mortgage 152 0.62 234 0.94 218 0.87
Real estate construction 83 1.38 171 2.51 276 3.72
Lease financing 6 0.18 21 0.61 23 0.71
Foreign     28 0.34   28 0.36   39 0.52
Total commercial     623 0.79   954 1.19   1,065 1.33
 
Consumer:
Real estate 1-4 family first mortgage 904 1.60 1,024 1.77 1,034 1.78
Real estate 1-4 family junior lien mortgage 994 4.25 1,005 4.08 1,085 4.30
Credit card 382 7.21 452 8.21 504 9.06
Other revolving credit and installment     307 1.42   404 1.84   407 1.83
Total consumer     2,587 2.42   2,885 2.63   3,030 2.72
Total   $ 3,210 1.73 % $ 3,839 2.02 % $ 4,095 2.14 %
                             
 

(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 ended the quarter at $30.6 billion, down 5 percent from $32.4 billion in the fourth quarter. Nonaccrual loans declined to $25.0 billion from $26.2 billion in the fourth 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
    March 31, 2011     December 31, 2010    

September 30, 2010

($ in millions)  

Total
balances

 

As a
% of
total
loans

   

Total
balances

  As a
% of
total
loans
    Total
balances
  As a
% of
total
loans
           
Commercial:
Commercial and industrial $ 2,653 1.76 % $ 3,213 2.12 % $ 4,103 2.79 %
Real estate mortgage 5,239 5.18 5,227 5.26 5,079 5.14
Real estate construction 2,239 9.79 2,676 10.56 3,198 11.46
Lease financing 95 0.73 108 0.82 138 1.06
Foreign     86   0.24   127   0.39   126 0.42
Total commercial     10,312   3.19   11,351   3.52   12,644 3.99
 
Consumer:
Real estate 1-4 family first mortgage 12,143 5.36 12,289 5.34 12,969 5.69
Real estate 1-4 family junior lien mortgage 2,235 2.40 2,302 2.39 2,380 2.40
Other revolving credit and installment     275   0.31   300   0.35   312 0.35
Total consumer     14,653   3.42   14,891   3.42   15,661 3.58
Total nonaccrual loans     24,965   3.32   26,242   3.47   28,305 3.76
 
Foreclosed assets:
GNMA 1,457 1,479 1,492
Non GNMA     4,055     4,530     4,635
Total foreclosed assets     5,512     6,009     6,127
Other     140     120     141

Total nonaccrual loans and other nonperforming assets

  $ 30,617   4.08 % $ 32,371   4.27 % $ 34,573 4.59 %
 
Change from prior quarter:
Total nonaccrual loans $ (1,277 ) $ (2,063 ) $ 494
Total nonperforming assets (1,754 ) (2,202 ) 1,637
                                         

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 $17.9 billion at March 31, 2011, compared with $18.5 billion at December 31, 2010. For the same dates, the totals included $15.5 billion in mortgage loans and $15.8 billion in student loans whose repayments are insured by the Federal Housing Administration or predominantly guaranteed by the Department of Veterans Affairs for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program. Excluding these insured guaranteed loan balances, 90 days past due and accruing balances were down 8 percent from the prior quarter.

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $22.4 billion at March 31, 2011, down from $23.5 billion at December 31, 2010. The allowance coverage to total loans remained stable with the first quarter at 2.98 percent. The allowance covered 1.72 times annualized first quarter net charge-offs compared with 1.54 times in the prior quarter. The allowance coverage to nonaccrual loans was 90 percent at March 31, 2011, compared with 89 percent at December 31, 2010. “We believe the allowance was adequate for losses inherent in the loan portfolio at March 31, 2011,” 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
Mar. 31,   Dec. 31,   Mar. 31,
(in millions)   2011   2010   2010
Community Banking $ 2,175 1,924 1,415
Wholesale Banking 1,652 1,690 1,237
Wealth, Brokerage and Retirement     339   197   282
 

More financial information about the business segments is in 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
Mar. 31,   Dec. 31,   Mar. 31,
(in millions)   2011   2010   2010
Total revenue $ 12,637 13,472 13,964
Provision for credit losses 2,065 2,785 4,519
Noninterest expense 7,605 7,855 7,205
Segment net income 2,175 1,924 1,415
 
(in billions)
Average loans 509.8 514.1 550.4
Average assets 759.9 771.6 776.8
Average core deposits     548.1   544.4   531.5
 

Community Banking reported net income of $2.2 billion, up $251 million, or 13 percent, from prior quarter and up $760 million, or 54 percent, from first quarter 2010. Revenue decreased $835 million, from fourth quarter 2010 driven primarily by a decrease in mortgage banking income, as lower originations/sales activities more than offset an increase in servicing income, and by the expected reduction in the liquidating loan portfolios, mitigated by gains on asset disposition. Revenue decreased $1.3 billion, or 10 percent, from first quarter 2010 largely due to lower mortgage banking income, lower deposit service charges due to Regulation E and the expected reduction in the liquidating loan portfolios. Noninterest expense decreased $250 million, or 3 percent, from fourth quarter 2010, which included a $400 million charitable contribution to the Wells Fargo Foundation, reflecting in part lower software license and equipment maintenance expense, partially offset by an increase in operating losses (substantially all from litigation accruals for foreclosure-related matters) and seasonally higher personnel expenses. The provision for credit losses decreased $720 million from fourth quarter 2010 due to a $520 million decrease in net loan charge-offs and an $850 million reserve release compared with a $650 million reserve release in fourth quarter 2010.

Regional Banking Highlights

  • Strong growth in checking accounts from March 31, 2010 (combined Regional Banking)
    • Consumer checking accounts up a net 7.4 percent
    • Business checking accounts up a net 5.3 percent
    • Consumer checking accounts up a net 7.9 percent in California, 8.5 percent in North Carolina and 12.0 percent in Florida
  • Record solutions in first quarter 2011
    • Western footprint including converted Wachovia
      • Record core product solutions (sales) of 8.93 million, up 16 percent from prior year on a comparable basis
      • Record core sales per platform banker FTE (active, full-time equivalent) of 7.10 per day, up from 6.70 in prior year on a comparable basis
      • Sales of Wells Fargo Packages® (a checking account and three other products) up 15 percent from prior year, purchased by 84 percent of new checking account customers
    • Eastern footprint including converted Wachovia
      • Platform banker FTEs grew by more than 1,700, or 19 percent, from prior year
      • In the southeastern states, which were on Wells Fargo systems the entire quarter, 79 percent of new checking account customers purchased Wells Fargo Packages
  • Retail bank household cross-sell showed growth for combined company
    • Retail bank household cross-sell ratio for total combined company of 5.79 products per household, up from 5.60 in first quarter 2010
    • This ratio reflects the opportunity to earn more business from customers in the East; the cross-sell in the West is 6.21, compared with the cross-sell ratio in the East of 5.22
  • Small Business/Business Banking
    • Wells Fargo, America’s #1 small business lender, made 31,000 loans totaling $3.7 billion in new loan commitments to its small business customers in first quarter 2011, a 27 percent increase in dollars lent from prior year
    • Store-based business solutions up 31 percent from prior year on a comparable basis (Western footprint including converted Wachovia)
    • Sales of Wells Fargo Business Services Packages (business checking account and at least three other business products) up 58 percent from prior year, purchased by 70 percent of new business checking account customers (Western footprint including converted Wachovia)
    • Business Banking household cross-sell of 4.09 products per household (Western footprint including Wells Fargo and Wachovia customers)
  • Online and Mobile Banking
    • 19.4 million combined active online customers
    • 5.5 million combined active mobile customers

Wells Fargo Home Mortgage (Home Mortgage)

  • Home Mortgage applications of $102 billion, compared with $158 billion in prior quarter
  • Home Mortgage application pipeline of $45 billion at quarter end, compared with $73 billion at December 31, 2010
  • Home Mortgage originations of $84 billion, down from $128 billion in prior quarter
  • Owned residential mortgage servicing portfolio of $1.8 trillion

Wholesale Banking provides financial solutions to businesses across the United States with annual sales generally in excess of $20 million and to financial institutions globally. 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
Mar. 31,   Dec. 31,   Mar. 31,
(in millions)   2011   2010   2010
Total revenue $ 5,460 5,840 5,423
Provision for credit losses 134 195 810
Noninterest expense 2,800 2,992 2,685
Segment net income 1,652 1,690 1,237
 
(in billions)
Average loans 234.7 229.6 237.0
Average assets 399.6 384.4 369.5
Average core deposits     184.8   185.1   161.6

 

Wholesale Banking reported net income of $1.7 billion, up $415 million, or 34 percent, from first quarter 2010 and down $38 million, or 2 percent, from prior quarter. Revenue increased $37 million, or 1 percent, from prior year driven by growth in net interest income due to stronger earnings assets, solid deposit growth and higher loan portfolio yields. Noninterest income declined from first quarter 2010 as growth in investment banking and capital markets, corporate banking, foreign exchange and real estate capital markets was more than offset by reduced levels of PCI portfolio recoveries, crop insurance gains and trading portfolio income. Revenue decreased $380 million, or 7 percent, from the prior quarter as strong loan growth in commercial banking and international was more than offset by lower PCI-related recoveries and other gains. Noninterest expense increased $115 million, or 4 percent, from prior year related to higher personnel expenses and decreased $192 million from prior quarter related to lower litigation expense. Total provision for credit losses of $134 million declined $676 million, or 83 percent, from first quarter 2010. The decrease included a $150 million allowance release in the first quarter along with a $526 million improvement in credit losses.

  • Linked-quarter average loan growth in many portfolios including commercial banking, international, commercial real estate, asset-backed finance, government banking and corporate banking driven by both utilization increases and new customer activity
  • Strong year-over-year average core deposit growth of 14 percent
  • Continued improvement in nonperforming assets and loan losses
  • Investment Banking revenue from corporate and commercial customers increased 68 percent from first quarter 2010 due to attractive capital markets conditions and continued momentum in cross selling investment banking products and services to wholesale customer base
  • 42 percent of Wells Fargo Advantage Funds® rated 4 or 5 stars by Morningstar versus industry average of 32.5 percent
  • Within Treasury Management, the CEO Mobile® service continued to process an increasing volume of wires for Wells Fargo corporate, commercial and institutional customers. Through first quarter 2011, $5.4 billion has been processed in the past two years.

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
Mar. 31,   Dec. 31,   Mar. 31,
(in millions)   2011   2010   2010
Total revenue $ 3,150 3,041 2,910
Provision for credit losses 41 113 63
Noninterest expense 2,559 2,608 2,390
Segment net income 339 197 282
 
(in billions)
Average loans 42.7 43.0 43.8
Average assets 146.5 140.2 137.8
Average core deposits     125.4   121.5   121.1
 

Wealth, Brokerage and Retirement reported net income of $339 million, up $142 million from fourth quarter 2010 and up $57 million from first quarter 2010. Revenue was $3.2 billion, up 4 percent from fourth quarter 2010 driven by asset-based revenues and brokerage securities gains and up 8 percent from first quarter 2010 driven by higher asset-based revenues and net interest income. Total provision for credit losses decreased $72 million from fourth quarter 2010 and $22 million from first quarter 2010. Noninterest expense declined 2 percent from fourth quarter on reduced non-personnel costs but increased 7 percent from first quarter 2010 due to growth in personnel costs, primarily broker commissions driven by higher production levels. Average core deposits increased $4 billion from fourth quarter 2010 and first quarter 2010.

Retail Brokerage

  • Client assets of $1.2 trillion, up 6 percent from prior year
  • Managed account assets increased $45 billion, or 21 percent, from prior year driven by strong net flows and solid market gains
  • Successfully completed the brokerage conversion in January, converting legacy Wells Fargo brokerage customers to the Wells Fargo Advisors common platform, providing greater access to more products and services

Wealth Management

  • Investment management and trust asset-based revenue up 8 percent from prior year
  • Strong deposit growth, with average balances up $1.9 billion, or 4 percent, from prior year

Retirement

  • Institutional retirement plan assets of $244 billion, up $20 billion, or 9 percent, from prior year
  • Institutional retirement sales up 40 percent from prior year
  • IRA assets of $284 billion, up $26 billion, or 10 percent, from prior year

Conference Call

The Company will host a live conference call on Wednesday, April 20, at 6:30 a.m. PDT (9:30 a.m. EDT). 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=296339&s=1&k=F045CCDCDDD6B9CB7191D93FDBDD1147.

A replay of the conference call will be available beginning at approximately noon PDT (3 p.m. EDT) on April 20 through Wednesday, April 27. Please dial 800-642-1687 (U.S. and Canada) or 706-645-9291 (international) and enter Conference ID #51667731. The replay will also be available online at wellsfargo.com/invest_relations/earnings.

Cautionary Statement about Forward-Looking Information

In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about our future financial performance and business. We make forward-looking statements when we use words such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “may,” “can,” “will,” “outlook,” “project,” “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, and the adequacy of the allowance for loan losses, including our current expectation of future reductions in the allowance for loan losses; (ii) our current estimate of our full year 2011 tax rate; (iii) our estimates regarding our Tier 1 common equity ratio as of March 31, 2011, and December 31, 2010, under proposed Basel III capital regulations; and (iv) the timing of expected integration activities related to the Wachovia merger, as well as other expectations regarding future expenses.

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 servicing and other 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, 2010, including the discussion under “Risk Factors” in that report, 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 $1.2 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 280,000 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
Noninterest Income and Noninterest Expense 23-24
 

Balance Sheet

Consolidated Balance Sheet 25-26
Average Balances 27
 

Loans

Loans 28
Nonaccrual Loans and Other Nonperforming Assets 28
Loans 90 Days or More Past Due and Still Accruing 29
Purchased Credit-Impaired Loans 30-32
Pick-A-Pay Portfolio 33
Non-Strategic and Liquidating Loan Portfolios 34
Home Equity Portfolios 34
Allowance for Credit Losses 35
 

Equity

Condensed Consolidated Statement of Changes in Total Equity 36
Tier 1 Common Equity 37
 

Operating Segments

Operating Segment Results 38
 

Other

Mortgage Servicing and other related data 39-41
     
 
Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
           

 

% Change

Quarter ended Mar. 31, 2011 from
($ in millions, except per share amounts)     Mar. 31,
2011
    Dec. 31,
2010
  Mar. 31,
2010
    Dec. 31,
2010
    Mar. 31,
2010
For the Period
Wells Fargo net income $ 3,759 3,414 2,547 10 % 48
Wells Fargo net income applicable to common stock 3,570 3,232 2,372 10 51
Diluted earnings per common share 0.67 0.61 0.45 10 49
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.23 % 1.09 0.84 13 46

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders' equity (ROE)

11.98 10.95 8.96 9 34
Efficiency ratio (1) 62.6 62.1 56.5 1 11
Total revenue $ 20,329 21,494 21,448 (5 ) (5 )
Pre-tax pre-provision profit (PTPP) (2) 7,596 8,154 9,331 (7 ) (19 )
Dividends declared per common share 0.12 0.05 0.05 140 140
Average common shares outstanding 5,278.8 5,256.2 5,190.4 - 2
Diluted average common shares outstanding 5,333.1 5,293.8 5,225.2 1 2
Average loans $ 754,077 753,675 797,389 - (5 )
Average assets 1,241,176 1,237,037 1,226,120 - 1
Average core deposits (3) 796,826 794,799 759,169 - 5
Average retail core deposits (4) 584,100 573,843 573,653 2 2
Net interest margin 4.05 % 4.16 4.27 (3 ) (5 )
At Period End
Securities available for sale $ 167,906 172,654 162,487 (3 ) 3
Loans 751,155 757,267 781,430 (1 ) (4 )
Allowance for loan losses 21,983 23,022 25,123 (5 ) (12 )
Goodwill 24,777 24,770 24,819 - -
Assets 1,244,666 1,258,128 1,223,630 (1 ) 2
Core deposits (3) 795,038 798,192 756,050 - 5
Wells Fargo stockholders' equity 133,471 126,408 116,142 6 15
Total equity 134,943 127,889 118,154 6 14
Capital ratios:
Total equity to assets 10.84 % 10.16 9.66 7 12
Risk-based capital (5):
Tier 1 capital 11.50 11.16 9.93 3 16
Total capital 15.29 15.01 13.90 2 10
Tier 1 leverage (5) 9.27 9.19 8.34 1 11
Tier 1 common equity (6) 8.92 8.30 7.09 7 26
Book value per common share $ 23.18 22.49 20.76 3 12
Team members (active, full-time equivalent) 270,200 272,200 267,400 (1 ) 1
Common stock price:
High $ 34.25 31.61 31.99 8 7
Low 29.82 23.37 26.37 28 13
Period end 31.71 30.99 31.12 2 2
                             
 
(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 March 31, 2011, 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
($ in millions, except per share amounts)     Mar. 31,
2011
    Dec. 31,
2010
  Sept. 30,
2010
  June 30,
2010
  Mar. 31,
2010
For the Quarter
Wells Fargo net income $ 3,759 3,414 3,339 3,062 2,547
Wells Fargo net income applicable to common stock 3,570 3,232 3,150 2,878 2,372
Diluted earnings per common share 0.67 0.61 0.60 0.55 0.45
Profitability ratios (annualized):
Wells Fargo net income to average assets (ROA) 1.23 % 1.09 1.09 1.00 0.84

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders' equity (ROE)

11.98 10.95 10.90 10.40 8.96
Efficiency ratio (1) 62.6 62.1 58.7 59.6 56.5
Total revenue $ 20,329 21,494 20,874 21,394 21,448
Pre-tax pre-provision profit (PTPP) (2) 7,596 8,154 8,621 8,648 9,331
Dividends declared per common share 0.12 0.05 0.05 0.05 0.05
Average common shares outstanding 5,278.8 5,256.2 5,240.1 5,219.7 5,190.4
Diluted average common shares outstanding 5,333.1 5,293.8 5,273.2 5,260.8 5,225.2
Average loans $ 754,077 753,675 759,483 772,460 797,389
Average assets 1,241,176 1,237,037 1,220,368 1,224,180 1,226,120
Average core deposits (3) 796,826 794,799 771,957 761,767 759,169
Average retail core deposits (4) 584,100 573,843 571,062 574,436 573,653
Net interest margin 4.05 % 4.16 4.25 4.38 4.27
At Quarter End
Securities available for sale $ 167,906 172,654 176,875 157,927 162,487
Loans 751,155 757,267 753,664 766,265 781,430
Allowance for loan losses 21,983 23,022 23,939 24,584 25,123
Goodwill 24,777 24,770 24,831 24,820 24,819
Assets 1,244,666 1,258,128 1,220,784 1,225,862 1,223,630
Core deposits (3) 795,038 798,192 771,792 758,680 756,050
Wells Fargo stockholders' equity 133,471 126,408 123,658 119,772 116,142
Total equity 134,943 127,889 125,165 121,398 118,154
Capital ratios:
Total equity to assets 10.84 % 10.16 10.25 9.90 9.66
Risk-based capital (5):
Tier 1 capital 11.50 11.16 10.90 10.51 9.93
Total capital 15.29 15.01 14.88 14.53 13.90
Tier 1 leverage (5) 9.27 9.19 9.01 8.66 8.34
Tier 1 common equity (6) 8.92 8.30 8.01 7.61 7.09
Book value per common share $ 23.18 22.49 22.04 21.35 20.76
Team members (active, full-time equivalent) 270,200 272,200 266,900 267,600 267,400
Common stock price:
High $ 34.25 31.61 28.77 34.25 31.99
Low 29.82 23.37 23.02 25.52 26.37
Period end 31.71 30.99 25.12 25.60 31.12
                         
 

(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 March 31, 2011, 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 March 31, %
(in millions, except per share amounts)   2011   2010   Change
Interest income
Trading assets $ 350 267 31 %
Securities available for sale 2,164 2,415 (10 )
Mortgages held for sale 437 387 13
Loans held for sale 12 34 (65 )
Loans 9,387 10,038 (6 )
Other interest income     122     84   45  
Total interest income     12,472     13,225   (6 )
Interest expense
Deposits 615 735 (16 )
Short-term borrowings 26 18 44
Long-term debt 1,104 1,276 (13 )
Other interest expense     76     49   55  
Total interest expense     1,821     2,078   (12 )
Net interest income 10,651 11,147 (4 )
Provision for credit losses     2,210     5,330   (59 )
Net interest income after provision for credit losses     8,441     5,817   45  
Noninterest income
Service charges on deposit accounts 1,012 1,332 (24 )
Trust and investment fees 2,916 2,669 9
Card fees 957 865 11
Other fees 989 941 5
Mortgage banking 2,016 2,470 (18 )
Insurance 503 621 (19 )
Net gains from trading activities 612 537 14
Net gains (losses) on debt securities available for sale (166 ) 28 NM
Net gains from equity investments 353 43 721
Operating leases 77 185 (58 )
Other     409     610   (33 )
Total noninterest income     9,678     10,301   (6 )
Noninterest expense
Salaries 3,454 3,314 4
Commission and incentive compensation 2,347 1,992 18
Employee benefits 1,392 1,322 5
Equipment 632 678 (7 )
Net occupancy 752 796 (6 )
Core deposit and other intangibles 483 549 (12 )
FDIC and other deposit assessments 305 301 1
Other     3,368     3,165   6  
Total noninterest expense     12,733     12,117   5  
Income before income tax expense 5,386 4,001 35
Income tax expense     1,572     1,401   12  
Net income before noncontrolling interests 3,814 2,600 47
Less: Net income from noncontrolling interests     55     53   4  
Wells Fargo net income   $ 3,759     2,547   48  
Less: Preferred stock dividends and other     189     175   8  
Wells Fargo net income applicable to common stock   $ 3,570     2,372   51  
Per share information
Earnings per common share $ 0.68 0.46 48
Diluted earnings per common share 0.67 0.45 49
Dividends declared per common share 0.12 0.05 140
Average common shares outstanding 5,278.8 5,190.4 2
Diluted average common shares outstanding 5,333.1 5,225.2 2
               
 
NM - Not meaningful
 
Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME

         
  Quarter ended
(in millions, except per share amounts)     Mar. 31,
2011
  Dec. 31,
2010
  Sept. 30,
2010
  June 30,
2010
  Mar. 31,
2010
Interest income
Trading assets $ 350 295 270 266 267
Securities available for sale 2,164 2,374 2,492 2,385 2,415

Mortgages held for sale

437 495 449 405 387
Loans held for sale 12 15 22 30 34
Loans 9,387 9,666 9,779 10,277 10,038
Other interest income     122     124     118     109   84
Total interest income     12,472     12,969     13,130     13,472   13,225
Interest expense
Deposits 615 662 721 714 735
Short-term borrowings 26 26 27 21 18
Long-term debt 1,104 1,153 1,226 1,233 1,276
Other interest expense     76     65     58     55   49
Total interest expense     1,821     1,906     2,032     2,023   2,078
Net interest income 10,651 11,063 11,098 11,449 11,147
Provision for credit losses     2,210     2,989     3,445     3,989   5,330
Net interest income after provision for credit losses     8,441     8,074     7,653     7,460   5,817
Noninterest income
Service charges on deposit accounts 1,012 1,035 1,132 1,417 1,332
Trust and investment fees 2,916 2,958 2,564 2,743 2,669
Card fees 957 941 935 911 865
Other fees 989 1,063 1,004 982 941
Mortgage banking 2,016 2,757 2,499 2,011 2,470
Insurance 503 564 397 544 621
Net gains from trading activities 612 532 470 109 537
Net gains (losses) on debt securities available for sale (166 ) (268 ) (114 ) 30 28
Net gains from equity investments 353 317 131 288 43
Operating leases 77 79 222 329 185
Other     409     453     536     581   610
Total noninterest income     9,678     10,431     9,776     9,945   10,301
Noninterest expense
Salaries 3,454 3,513 3,478 3,564 3,314
Commission and incentive compensation 2,347 2,195 2,280 2,225 1,992
Employee benefits 1,392 1,192 1,074 1,063 1,322
Equipment 632 813 557 588 678
Net occupancy 752 750 742 742 796
Core deposit and other intangibles 483 549 548 553 549
FDIC and other deposit assessments 305 301 300 295 301
Other     3,368     4,027     3,274     3,716   3,165
Total noninterest expense     12,733     13,340     12,253     12,746   12,117
Income before income tax expense 5,386 5,165 5,176 4,659 4,001
Income tax expense     1,572     1,672     1,751     1,514   1,401
Net income before noncontrolling interests 3,814 3,493 3,425 3,145 2,600
Less: Net income from noncontrolling interests     55     79     86     83   53
Wells Fargo net income   $ 3,759     3,414     3,339     3,062   2,547
Less: Preferred stock dividends and other     189     182     189     184   175
Wells Fargo net income applicable to common stock   $ 3,570     3,232     3,150     2,878   2,372
Per share information
Earnings per common share $ 0.68 0.62 0.60 0.55 0.46
Diluted earnings per common share 0.67 0.61 0.60 0.55 0.45
Dividends declared per common share 0.12 0.05 0.05 0.05 0.05
Average common shares outstanding 5,278.8 5,256.2 5,240.1 5,219.7 5,190.4
Diluted average common shares outstanding 5,333.1 5,293.8 5,273.2 5,260.8 5,225.2
                             
 
Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)
             
Quarter ended March 31,
2011 2010
(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

$ 83,386 0.35 % $ 72 40,833 0.33 % $ 33
Trading assets 37,403 3.81 356 27,911 3.91 272
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies 1,575 2.87 11 2,278 3.62 20
Securities of U.S. states and political subdivisions 19,570 5.45 270 13,696 6.60 221
Mortgage-backed securities:
Federal agencies 73,466 4.72 832 79,730 5.39 1,023
Residential and commercial     32,934   9.68   732 32,768   9.67   790
Total mortgage-backed securities 106,400 6.21 1,564 112,498 6.67 1,813
Other debt securities (4)     35,920   5.55   465 32,346   6.51   492
Total debt securities available for sale (4) 163,465 5.94 2,310 160,818 6.59 2,546
Mortgages held for sale (5) 38,742 4.51 437 31,368 4.93 387
Loans held for sale (5) 975 4.88 12 6,406 2.15 34
Loans:
Commercial:
Commercial and industrial 150,047 4.65 1,723 156,466 4.51 1,743
Real estate mortgage 99,797 3.92 967 97,967 3.68 889
Real estate construction 24,281 4.26 255 35,852 3.07 272
Lease financing 13,020 7.83 255 14,008 9.22 323
Foreign     33,638   2.83 235 28,561   3.62   256
Total commercial     320,783   4.33 3,435 332,854   4.23   3,483
Consumer:
Real estate 1-4 family first mortgage 229,570 5.01 2,867 245,024 5.26 3,210
Real estate 1-4 family junior lien mortgage 94,708 4.35 1,018 105,640 4.47 1,168
Credit card 21,509 13.18 709 23,345 13.15 767
Other revolving credit and installment     87,507   6.36   1,371 90,526   6.40   1,427
Total consumer     433,294   5.54   5,965 464,535   5.70   6,572
Total loans (5)     754,077   5.03 9,400 797,389 5.09 10,055
Other     5,228   3.90   50 6,069   3.36   50
Total earning assets   $ 1,083,276   4.73 % $ 12,637 1,070,794   5.06 % $ 13,377
Funding sources
Deposits:
Interest-bearing checking $ 58,503 0.10 % $ 14 62,021 0.15 % $ 23
Market rate and other savings 443,586 0.22 237 403,945 0.29 286
Savings certificates 74,371 1.39 255 94,763 1.36 317
Other time deposits 13,850 2.24 76 15,878 2.03 80
Deposits in foreign offices     57,473   0.23   33 55,434   0.21   29
Total interest-bearing deposits 647,783 0.38 615 632,041 0.47 735
Short-term borrowings 54,751 0.22 30 45,081 0.18 19
Long-term debt 150,144 2.95 1,104 209,008 2.45 1,276
Other liabilities     9,472   3.24   76 5,664   3.43   49
Total interest-bearing liabilities 862,150 0.85 1,825 891,794 0.94 2,079
Portion of noninterest-bearing funding sources     221,126   -   - 179,000   -   -
Total funding sources   $ 1,083,276   0.68   1,825 1,070,794   0.79   2,079

Net interest margin and net interest income on a taxable-equivalent basis (6)

4.05

%   $

10,812

4.27 %   $ 11,298
Noninterest-earning assets
Cash and due from banks $ 17,360 18,049
Goodwill 24,775 24,816
Other     115,765   112,461  
Total noninterest-earning assets   $ 157,900   155,326  
Noninterest-bearing funding sources
Deposits $ 193,100 172,039
Other liabilities 55,316 44,739
Total equity 130,610 117,548
Noninterest-bearing funding sources used to fund earning assets     (221,126 ) (179,000 )
Net noninterest-bearing funding sources   $ 157,900   155,326  
Total assets   $ 1,241,176   1,226,120  
                                     
 
(1) Our average prime rate was 3.25% for the quarters ended March 31, 2011 and 2010. The average three-month London Interbank Offered Rate (LIBOR) was 0.31% and 0.26% for the same quarters, respectively.
(2) Yield/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 of $161 million and $151 million for March 31, 2011 and 2010, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate utilized was 35% for the periods presented.
 
Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
     

Quarter ended March 31,

%
(in millions)   2011     2010   Change  
Service charges on deposit accounts $ 1,012 1,332 (24 ) %
Trust and investment fees:
Trust, investment and IRA fees 1,060 1,049 1
Commissions and all other fees     1,856     1,620 15
Total trust and investment fees     2,916     2,669 9
Card fees 957 865 11
Other fees:
Cash network fees 81 55 47
Charges and fees on loans 397 419 (5 )
Processing and all other fees     511     467 9
Total other fees     989     941 5
Mortgage banking:
Servicing income, net 866 1,366 (37 )
Net gains on mortgage loan origination/sales activities     1,150     1,104 4
Total mortgage banking     2,016     2,470 (18 )
Insurance 503 621 (19 )
Net gains from trading activities 612 537 14
Net gains (losses) on debt securities available for sale (166 ) 28 NM
Net gains from equity investments 353 43 721
Operating leases 77 185 (58 )
All other     409     610 (33 )
Total   $ 9,678     10,301   (6 )
 
NM - Not meaningful
 
NONINTEREST EXPENSE                
 
Quarter ended March 31, %
(in millions)   2011     2010   Change  
Salaries $ 3,454 3,314 4 %
Commission and incentive compensation 2,347 1,992 18
Employee benefits 1,392 1,322 5
Equipment 632 678 (7 )
Net occupancy 752 796 (6 )
Core deposit and other intangibles 483 549 (12 )
FDIC and other deposit assessments 305 301 1
Outside professional services 580 484 20
Contract services 369 347 6
Foreclosed assets 408 386 6
Operating losses 472 208 127
Outside data processing 220 272 (19 )
Postage, stationery and supplies 235 242 (3 )
Travel and entertainment 206 171 20
Advertising and promotion 116 112 4
Telecommunications 134 143 (6 )
Insurance 133 148 (10 )
Operating leases 24 37 (35 )
All other  

 

471     615 (23 )
Total   $ 12,733     12,117   5    
 
Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
         
  Quarter ended
(in millions)   Mar. 31,
2011
  Dec. 31,
2010
  Sept. 30,
2010
  June 30,
2010
  Mar. 31,
2010
Service charges on deposit accounts $ 1,012 1,035 1,132 1,417 1,332
Trust and investment fees:
Trust, investment and IRA fees 1,060 1,030 924 1,035 1,049
Commissions and all other fees     1,856     1,928     1,640     1,708   1,620
Total trust and investment fees     2,916     2,958     2,564     2,743   2,669
Card fees 957 941 935 911 865
Other fees:
Cash network fees 81 74 73 58 55
Charges and fees on loans 397 446 424 401 419
Processing and all other fees     511     543     507     523   467
Total other fees     989     1,063     1,004     982   941
Mortgage banking:
Servicing income, net 866 240 516 1,218 1,366
Net gains on mortgage loan origination/sales activities     1,150     2,517     1,983     793   1,104
Total mortgage banking     2,016     2,757     2,499     2,011   2,470
Insurance 503 564 397 544 621
Net gains from trading activities 612 532 470 109 537
Net gains (losses) on debt securities available for sale (166 ) (268 ) (114 ) 30 28
Net gains from equity investments 353 317 131 288 43
Operating leases 77 79 222 329 185
All other     409     453     536     581   610
Total   $ 9,678     10,431     9,776     9,945   10,301
 
FIVE QUARTER NONINTEREST EXPENSE                      
 
  Quarter ended
(in millions)   Mar. 31,
2011
  Dec. 31,
2010
  Sept. 30,
2010
  June 30,
2010
  Mar. 31,
2010
Salaries $ 3,454 3,513 3,478 3,564 3,314
Commission and incentive compensation 2,347 2,195 2,280 2,225 1,992
Employee benefits 1,392 1,192 1,074 1,063 1,322
Equipment 632 813 557 588 678
Net occupancy 752 750 742 742 796
Core deposit and other intangibles 483 549 548 553 549
FDIC and other deposit assessments 305 301 300 295 301
Outside professional services 580 781 533 572 484
Contract services 369 481 430 384 347
Foreclosed assets 408 452 366 333 386
Operating losses 472 193 230 627 208
Outside data processing 220 235 263 276 272
Postage, stationery and supplies 235 239 233 230 242
Travel and entertainment 206 221 195 196 171
Advertising and promotion 116 192 170 156 112
Telecommunications 134 151 146 156 143
Insurance 133 90 62 164 148
Operating leases 24 24 21 27 37
All other     471     968     625     595   615
Total   $ 12,733     13,340     12,253     12,746   12,117
 
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in millions, except shares)     Mar. 31,
2011
  Dec. 31,
2010
  %
Change
Assets      
Cash and due from banks $ 16,978 16,044 6 %
Federal funds sold, securities purchased under resale agreements and other short-term investments 93,041 80,637 15
Trading assets 57,890 51,414 13
Securities available for sale 167,906 172,654 (3)
Mortgages held for sale (includes $28,931 and $47,531 carried at fair value) 33,121 51,763 (36)
Loans held for sale (includes $1,003 and $873 carried at fair value) 1,428 1,290 11
 
Loans (includes $98 and $309 carried at fair value) 751,155 757,267 (1)
Allowance for loan losses     (21,983)   (23,022) (5)
Net loans     729,172   734,245 (1)
Mortgage servicing rights:
Measured at fair value 15,648 14,467 8
Amortized 1,423 1,419 -
Premises and equipment, net 9,545 9,644 (1)
Goodwill 24,777 24,770 -
Other assets     93,737   99,781 (6)
Total assets   $ 1,244,666   1,258,128 (1)
Liabilities
Noninterest-bearing deposits $ 190,959 191,256 -
Interest-bearing deposits     646,703   656,686 (2)
Total deposits 837,662 847,942 (1)
Short-term borrowings 54,737 55,401 (1)
Accrued expenses and other liabilities 68,721 69,913 (2)
Long-term debt (includes $99 and $306 carried at fair value)     148,603   156,983 (5)
Total liabilities     1,109,723   1,130,239 (2)
Equity
Wells Fargo stockholders' equity:
Preferred stock 11,897 8,689 37

Common stock – $1-2/3 par value, authorized 9,000,000,000 shares; issued 5,312,696,671 and 5,272,414,622 shares

8,854 8,787 1
Additional paid-in capital 54,815 53,426 3
Retained earnings 54,855 51,918 6
Cumulative other comprehensive income 5,021 4,738 6
Treasury stock – 11,818,765 shares and 10,131,394 shares (541) (487) 11
Unearned ESOP shares     (1,430)   (663) 116
Total Wells Fargo stockholders' equity 133,471 126,408 6
Noncontrolling interests     1,472   1,481 (1)
Total equity     134,943   127,889 6
Total liabilities and equity   $ 1,244,666   1,258,128   (1)
 
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
 
(in millions)     Mar. 31,
2011
    Dec. 31,
2010
    Sept. 30,
2010
    June 30,
2010
    Mar. 31,
2010
 
Assets          
Cash and due from banks $ 16,978 16,044 16,001 17,571 16,301

Federal funds sold, securities purchased under resale agreements and other short-term investments

93,041 80,637 56,549 73,898 54,192
Trading assets 57,890 51,414 49,271 47,132 47,028
Securities available for sale 167,906 172,654 176,875 157,927 162,487
Mortgages held for sale 33,121 51,763 46,001 38,581 34,737
Loans held for sale 1,428 1,290 1,188 3,999 5,140
 
Loans 751,155 757,267 753,664 766,265 781,430
Allowance for loan losses     (21,983 )   (23,022 )   (23,939 )   (24,584 )   (25,123 )
Net loans     729,172     734,245     729,725     741,681     756,307  
Mortgage servicing rights:
Measured at fair value 15,648 14,467 12,486 13,251 15,544
Amortized 1,423 1,419 1,013 1,037 1,069
Premises and equipment, net 9,545 9,644 9,636 10,508 10,405
Goodwill 24,777 24,770 24,831 24,820 24,819
Other assets     93,737     99,781     97,208     95,457     95,601  
Total assets   $ 1,244,666     1,258,128     1,220,784     1,225,862     1,223,630  
Liabilities
Noninterest-bearing deposits $ 190,959 191,256 184,451 175,015 170,518
Interest-bearing deposits     646,703     656,686     630,061     640,608     634,375  
Total deposits 837,662 847,942 814,512 815,623 804,893
Short-term borrowings 54,737 55,401 50,715 45,187 46,333
Accrued expenses and other liabilities 68,721 69,913 67,249 58,582 54,371
Long-term debt     148,603     156,983     163,143     185,072     199,879  
Total liabilities     1,109,723     1,130,239     1,095,619     1,104,464     1,105,476  
Equity
Wells Fargo stockholders' equity:
Preferred stock 11,897 8,689 8,840 8,980 9,276
Common stock 8,854 8,787 8,756 8,743 8,743
Additional paid-in capital 54,815 53,426 52,899 52,687 53,156
Retained earnings 54,855 51,918 48,953 46,126 43,636
Cumulative other comprehensive income 5,021 4,738 5,502 4,844 4,087
Treasury stock (541 ) (487 ) (466 ) (631 ) (1,460 )
Unearned ESOP shares     (1,430 )   (663 )   (826 )   (977 )   (1,296 )
Total Wells Fargo stockholders' equity 133,471 126,408 123,658 119,772 116,142
Noncontrolling interests     1,472     1,481     1,507     1,626     2,012  
Total equity     134,943     127,889     125,165     121,398     118,154  
Total liabilities and equity   $ 1,244,666     1,258,128     1,220,784     1,225,862     1,223,630  
 
Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
  Quarter ended
Mar. 31, 2011   Dec. 31, 2010   Sept. 30, 2010   June 30, 2010   Mar. 31, 2010
($ in billions)  

 

Average
balance

    Yields/
rates
 

 

Average
balance

    Yields/
rates
 

 

Average
balance

    Yields/
rates
 

 

Average
balance

    Yields/
rates
 

 

Average
balance

    Yields/
rates
Earning assets          

Federal funds sold, securities purchased under resale agreements and other short-term investments

$ 83.4 0.35

$ 72.0 0.40

$ 70.8 0.38

$ 67.7 0.33

$ 40.8 0.33 %
Trading assets 37.4 3.81 33.9 3.56 29.0 3.77 28.8 3.79 27.9 3.91
Debt securities available for sale:
Securities of U.S. Treasury and federal agencies 1.6 2.87 1.7 2.80 1.7 2.79 2.0 3.50 2.3 3.62
Securities of U.S. states and political subdivisions 19.6 5.45 18.4 5.58 17.2 5.89 16.2 6.48

13.7

6.60
Mortgage-backed securities:
Federal agencies 73.5 4.72 80.4 4.48 70.5 5.35 72.9 5.39 79.7 5.39
Residential and commercial     32.9   9.68   33.4   10.95   33.4   12.53   33.2   9.59   32.8   9.67
Total mortgage-backed securities 106.4 6.21 113.8 6.35 103.9 7.67 106.1 6.72 112.5 6.67
Other debt securities     35.9   5.55   37.8   6.15   35.5   6.02   33.3   7.21   32.3   6.51

Total debt securities available for sale

163.5 5.94 171.7 6.18 158.3 7.05 157.6 6.75 160.8 6.59
Mortgages held for sale 38.7 4.51 45.1 4.39 38.1 4.72 32.2 5.04 31.4 4.93
Loans held for sale 1.0 4.88 1.1 5.15 3.2 2.71 4.4 2.73 6.4 2.15
Loans:
Commercial:
Commercial and industrial 150.0 4.65 147.9 4.71 146.1 4.57 148.0 5.44 156.5 4.51
Real estate mortgage 99.9 3.92 99.2 3.85 99.0 4.15 97.7 3.89 97.9 3.68
Real estate construction 24.3 4.26 26.9 3.68 29.5 3.31 33.1 3.44 35.9 3.07
Lease financing 13.0 7.83 13.0 9.00 13.2 9.07 13.6 9.54 14.0 9.22
Foreign     33.6   2.83   31.0   3.57   30.3   3.15   29.0   3.62   28.6   3.62
Total commercial     320.8   4.33   318.0   4.42   318.1   4.37   321.4   4.78   332.9   4.23
Consumer:
Real estate 1-4 family first mortgage 229.6 5.01 228.8 5.06 231.2 5.16 237.5 5.24 245.0 5.26
Real estate 1-4 family junior lien mortgage 94.7 4.35 97.7 4.37 100.3 4.41 102.7 4.53 105.6 4.47
Credit card 21.5 13.18 21.9 13.44 22.0 13.57 22.2 13.24 23.3 13.15
Other revolving credit and installment     87.5   6.36   87.3   6.48   87.9   6.50   88.6   6.57   90.6   6.40
Total consumer     433.3   5.54   435.7   5.61   441.4   5.68   451.0   5.74   464.5   5.70
Total loans 754.1 5.03 753.7 5.11 759.5 5.13 772.4 5.34 797.4 5.09
Other     5.2   3.90   5.3   3.93   6.0   3.53   6.1   3.44   6.1   3.36
Total earning assets   $ 1,083.3   4.73

$ 1,082.8   4.87

$ 1,064.9   5.01

$ 1,069.2   5.14

$ 1,070.8   5.06 %
Funding sources
Deposits:
Interest-bearing checking $ 58.5 0.10

$ 60.9 0.09

$ 59.7 0.10

$ 61.2 0.13

$ 62.0 0.15 %
Market rate and other savings 443.6 0.22 431.2 0.25 420.0 0.25 412.1 0.26 403.9 0.29
Savings certificates 74.4 1.39 79.1 1.43 85.0 1.50 89.8 1.44 94.8 1.36
Other time deposits 13.8 2.24 13.4 2.00 14.4 2.33 14.8 1.90 15.9 2.03
Deposits in foreign offices     57.5   0.23   55.5   0.21   52.1   0.24   57.5   0.23   55.4   0.21
Total interest-bearing deposits 647.8 0.38 640.1 0.41 631.2 0.45 635.4 0.45 632.0 0.47
Short-term borrowings 54.8 0.22 50.6 0.24 46.5 0.26 45.1 0.22 45.1 0.18
Long-term debt 150.1 2.95 160.8 2.86 177.1 2.76 195.4 2.52 209.0 2.45
Other liabilities     9.5   3.24   8.3   3.13   6.7   3.39   6.8   3.33   5.7   3.43
Total interest-bearing liabilities 862.2 0.85 859.8 0.89 861.5 0.94 882.7 0.92 891.8 0.94
Portion of noninterest-bearing funding sources     221.1   -   223.0   -   203.4   -   186.5   -   179.0   -
Total funding sources   $ 1,083.3     0.68 $ 1,082.8     0.71 $ 1,064.9     0.76 $ 1,069.2     0.76 $ 1,070.8     0.79

Net interest margin on a taxable-equivalent basis

4.05

4.16

4.25

4.38

4.27 %
Noninterest-earning assets
Cash and due from banks $ 17.4 18.0 17.0 17.4 18.0
Goodwill 24.8 24.8 24.8 24.8 24.8
Other     115.7     111.4     113.7     112.8     112.5  
Total noninterest-earnings assets   $ 157.9     154.2     155.5     155.0     155.3  
Noninterest-bearing funding sources
Deposits $ 193.1 197.9 184.8 176.9 172.0
Other liabilities 55.3 52.9 50.1 43.7 44.8
Total equity 130.6 126.4 124.0 120.9 117.5

Noninterest-bearing funding sources used to fund earning assets

    (221.1 )   (223.0 )   (203.4 )   (186.5 )   (179.0 )

Net noninterest-bearing funding sources

  $ 157.9     154.2     155.5     155.0     155.3  
Total assets   $ 1,241.2     1,237.0     1,220.4     1,224.2     1,226.1  
                                                             
(1) Our average prime rate was 3.25% for quarters ended March 31, 2011, and December 31, September 30, June 30 and March 31, 2010. The average three-month London Interbank Offered Rate (LIBOR) was 0.31%, 0.29%, 0.39%, 0.44% and 0.26% for the same quarters, respectively.

 

 
Wells Fargo & Company and Subsidiaries
FIVE QUARTER LOANS
(in millions)     Mar. 31,
2011
  Dec. 31,
2010
  Sept. 30,
2010
  June 30,
2010
  Mar. 31,
2010
Commercial:          
Commercial and industrial $ 150,857 151,284 147,321 146,084 150,587
Real estate mortgage 101,084 99,435 98,755 99,626 97,846
Real estate construction 22,868 25,333 27,911 30,879 34,505
Lease financing 12,937 13,094 12,993 13,492 13,887
Foreign (1)     35,476   32,912   29,691   30,474   28,289
Total commercial     323,222   322,058   316,671   320,555   325,114
Consumer:
Real estate 1-4 family first mortgage 226,509 230,235 228,081 233,812 240,528
Real estate 1-4 family junior lien mortgage 93,041 96,149 99,060 101,327 103,800
Credit card 20,996 22,260 21,890 22,086 22,525
Other revolving credit and installment     87,387   86,565   87,962   88,485   89,463
Total consumer     427,933   435,209   436,993   445,710   456,316
Total loans (net of unearned income) (2)   $ 751,155   757,267   753,664   766,265   781,430
(1) Substantially all of our foreign loan portfolio is commercial loans. Loans are classified as foreign if the borrower's primary address is outside of the United States.

(2) Includes $40.0 billion, $41.4 billion, $43.8 billion, $46.5 billion, and $49.5 billion of purchased credit-impaired (PCI) loans at March 31, 2011, and December 31, September 30, June 30, and March 31, 2010, respectively. See PURCHASED CREDIT-IMPAIRED (PCI) LOANS table for detail of PCI loans.

 
FIVE QUARTER NONACCRUAL LOANS AND OTHER NONPERFORMING ASSETS
(in millions)     Mar. 31,
2011
  Dec. 31,
2010
  Sept. 30,
2010
  June 30,
2010
  Mar. 31,
2010
Nonaccrual loans:        
Commercial:
Commercial and industrial $ 2,653 3,213 4,103 3,843 4,273
Real estate mortgage 5,239 5,227 5,079 4,689 4,345
Real estate construction 2,239 2,676 3,198 3,429 3,327
Lease financing 95 108 138 163 185
Foreign     86   127   126   115   135
Total commercial     10,312   11,351   12,644   12,239   12,265
Consumer:
Real estate 1-4 family first mortgage 12,143 12,289 12,969 12,865 12,347
Real estate 1-4 family junior lien mortgage 2,235 2,302 2,380 2,391 2,355
Other revolving credit and installment     275   300   312   316   334
Total consumer     14,653   14,891   15,661   15,572   15,036
Total nonaccrual loans (1)(2)(3)     24,965   26,242   28,305   27,811   27,301
As a percentage of total loans 3.32

3.47 3.76 3.63 3.49
Foreclosed assets:
GNMA (4) $ 1,457 1,479 1,492 1,344 1,111
Non-GNMA 4,055 4,530 4,635 3,650 2,970
Other (5)     140   120   141   131   118

Total nonaccrual loans and other nonperforming assets

  $ 30,617   32,371   34,573   32,936   31,500
As a percentage of total loans 4.08

4.27 4.59 4.30 4.03
                       
(1) Also 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) Real estate 1-4 family mortgage loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) and student loans predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program are not placed on nonaccrual status since they are insured or guaranteed.
(4) 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 FHA or guaranteed by the VA.
(5) Includes real estate investments (loans for which any yield is based on performance of the underlying real estate collateral and are 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
(in millions)  

 

Mar. 31,

2011

  Dec. 31,
2010
  Sept. 30,
2010
  June 30,
2010
  Mar. 31,
2010
         
Total (excluding PCI)(1): $ 17,901 18,488 18,815 19,384 21,822
Less: FHA insured/guaranteed by the VA (2) 14,353 14,733 14,529 14,387 15,865
Less: Student loans guaranteed under the FFELP (3)     1,120   1,106   1,113   1,122   1,072
Total, not insured/guaranteed   $ 2,428   2,649   3,173   3,875   4,885
 
By segment and class, not insured/guaranteed:
Commercial:
Commercial and industrial $ 338 308 222 540 561
Real estate mortgage 177 104 463 654 947
Real estate construction 156 193 332 471 787
Foreign     16   22   27   21   29
Total commercial     687   627   1,044   1,686   2,324
Consumer:
Real estate 1-4 family first mortgage (4) 858 941 1,016 1,049 1,281
Real estate 1-4 family junior lien mortgage (4) 325 366 361 352 414
Credit card 413 516 560 610 719
Other revolving credit and installment     145   199   192   178   147
Total consumer     1,741   2,022   2,129   2,189   2,561
Total, not insured/guaranteed   $ 2,428   2,649   3,173   3,875   4,885
 
(1) The carrying value of purchased credit-impaired (PCI) loans contractually 90 days or more past due was $10.8 billion, $11.6 billion, $13.0 billion, $15.1 billion, and $16.8 billion, at March 31, 2011, and December 31, September 30, June 30 and March 31, 2010, 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.
(2) Represents loans whose repayments are insured by the FHA or guaranteed by the VA.
(3) Represents loans whose repayments are predominantly guaranteed by agencies on behalf of the U.S. Department of Education under the Federal Family Education Loan Program (FFELP).
(4) Includes mortgages 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.

                   
Mar. 31, Dec. 31,
(in millions)     2011   2010   2009   2008
Commercial:
Commercial and industrial $ 608 718 1,911 4,580
Real estate mortgage 2,964 2,855 4,137 5,803
Real estate construction 2,447 2,949 5,207 6,462
Foreign     1,488   1,413   1,733   1,859
Total commercial     7,507   7,935   12,988   18,704
Consumer:
Real estate 1-4 family first mortgage 32,241 33,245 38,386 39,214
Real estate 1-4 family junior lien mortgage 239 250 331 728
Other revolving credit and installment     -   -   -   151
Total consumer     32,480   33,495   38,717   40,093
Total PCI loans (carrying value)   $ 39,987   41,430   51,705   58,797
 
Wells Fargo & Company and Subsidiaries
CHANGES IN NONACCRETABLE DIFFERENCE FOR PCI LOANS
       
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. 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
Release of nonaccretable difference due to:
Loans resolved by settlement with borrower (1) (53 ) - - (53 )
Loans resolved by sales to third parties (2) (18 ) - - (18 )
Reclassification to accretable yield for loans with improving cash flows (3) (94 ) - (21 ) (115 )
Use of nonaccretable difference due to:
Losses from loan resolutions and write-downs (4)     (30 )   (299 )   (64 )   (393 )
Balance at March 31, 2011   $ 1,395     10,626     829     12,850  
(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 other noninterest income in the period of the sale.
(3) Reclassification of nonaccretable difference to accretable yield for loans with increased cash flow estimates will result in increased interest income as a prospective yield adjustment over the remaining life of the loan or pool of loans.
(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
Mar. 31,
  Year ended Dec. 31,  
(in millions)     2011     2010     2009  
Total, beginning of period $ 16,714 14,559 10,447
Accretion (1) (701 ) (2,435 ) (2,606 )
Reclassification from nonaccretable difference for loans with improving cash flows 115 3,399 441
Changes in expected cash flows that do not affect nonaccretable difference (2)     (247 )   1,191     6,277  
Total, end of period   $ 15,881     16,714     14,559  
(1) Includes accretable yield released as a result of settlements with borrowers, which are included in interest income, and sales to third parties, which are included in noninterest income ($155 million in first quarter 2011).
(2) Represents changes in cash flows expected to be collected due to changes in interest rates on variable rate PCI loans and the impact of modifications.
 

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 )
Balance at December 31, 2010 266 - 32 298
Provision for losses due to credit deterioration 11 - (1 ) 10
Charge-offs   (43 )   -   (8 )   (51 )
Balance at March 31, 2011 $ 234     -   23     257  
 
Wells Fargo & Company and Subsidiaries
PICK-A-PAY PORTFOLIO (1)
  March 31, 2011
PCI loans All other loans
(in millions)  

 

Adjusted
unpaid
principal
balance (2)

  Current
LTV
ratio (3)
 

 

Carrying
value (4)

  Ratio of
carrying
value to
current
value
 

 

Carrying
value (4)

  Current
LTV
ratio (3)
California $ 27,645   119

$ 20,952   90

$ 19,571   83 %
Florida 3,782 125 2,878 90 4,152 103
New Jersey 1,409 93 1,235 80 2,512 78
Texas 365 79 332 72 1,636 65
New York 781 92 682 79 1,087 81
Other states     6,692 109   5,353 86   11,116 86
Total Pick-a-Pay loans   $ 40,674 $ 31,432 $ 40,074
                               
(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 2011.
(2) Adjusted unpaid principal balance includes 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 LTV ratio is calculated as the adjusted unpaid principal balance 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.

 

(4) Carrying value, which does not reflect the allowance for loan losses, includes remaining purchase accounting adjustments, which, for PCI loans may include 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
NON-STRATEGIC AND LIQUIDATING LOAN PORTFOLIOS
(in millions)                  

 

Mar. 31,
2011

  Dec. 31,
2010
Commercial:  
Commercial and industrial, commercial real estate and foreign PCI loans (1)   $ 7,507   7,935
Total commercial     7,507   7,935
Consumer:
Pick-a-Pay mortgage (1) 71,506 74,815
Liquidating home equity 6,568 6,904
Legacy Wells Fargo Financial indirect auto 4,941 6,002
Legacy Wells Fargo Financial debt consolidation 18,344 19,020
Education Finance - government guaranteed (2) 16,907 17,510
Other PCI loans (1)     1,048   1,118
Total consumer     119,314   125,369
Total non-strategic and liquidating loan portfolios   $ 126,821   133,304
(1) Net of purchase accounting adjustments related to PCI loans.
(2) Effective first quarter 2011, we included our education finance government guaranteed loan portfolio as there is no longer a U. S. Government guaranteed student loan program available to private financial institutions, pursuant to legislation in 2010. Prior periods have been adjusted to reflect this change.
     
HOME EQUITY PORTFOLIOS (1)
  Outstanding balances % of loans
two payments
or more past due

 

Loss rate (annualized)
Quarter ended

(in millions)     Mar. 31,
2011
  Dec. 31,
2010
  Mar. 31,
2011
  Dec. 31,
2010
  Mar. 31,
2011
  Dec. 31,
2010
Core portfolio (2)
California $ 27,048 27,850 3.17

3.30 3.98 3.95
Florida 11,742 12,036 5.07 5.46 6.16 5.84
New Jersey 8,460 8,629 3.24 3.44 2.83 1.83
Virginia 5,535 5,667 2.30 2.33 1.91 1.70
Pennsylvania 5,304 5,432 2.42 2.48 1.49 1.11
Other     49,491   50,976   2.65 2.83 2.97 2.86
Total     107,580   110,590   3.06 3.24 3.44 3.24
Liquidating portfolio
California 2,421 2,555 6.11 6.66 13.19 13.48
Florida 312 330 7.16 8.85 15.15 10.59
Arizona 139 149 6.25 6.91 20.02 18.45
Texas 118 125 2.15 2.02 3.39 2.95
Minnesota 87 91 4.24 5.39 8.94 8.73
Other     3,491   3,654   3.98 4.53 7.36 6.46
Total     6,568   6,904   4.94 5.54 10.10 9.49
Total core and liquidating portfolios   $ 114,148   117,494   3.17 3.37 3.83 3.61
                           
(1) Consists predominantly of real estate 1-4 family junior lien mortgages and first and junior lines of credit secured by real estate, excluding PCI loans.
(2) Includes $1.6 billion and $1.7 billion at March 31, 2011, and December 31, 2010, respectively, associated with the Pick-a-Pay portfolio.
 
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CHANGES IN ALLOWANCE FOR CREDIT LOSSES
 
    Quarter ended  
(in millions)     Mar. 31,
2011
    Dec. 31,
2010
    Sept. 30,
2010
    June 30,
2010
    Mar. 31,
2010
 
Balance, beginning of quarter $ 23,463 24,372   25,085   25,656   25,031
Provision for credit losses 2,210 2,989 3,445 3,989 5,330
Interest income on certain impaired loans (1) (83 ) (63 ) (67 ) (62 ) (74 )
Loan charge-offs:
Commercial:
Commercial and industrial (468 ) (610 ) (588 ) (810 ) (767 )
Real estate mortgage (179 ) (270 ) (236 ) (364 ) (281 )
Real estate construction (119 ) (199 ) (296 ) (289 ) (405 )
Lease financing (13 ) (26 ) (29 ) (31 ) (34 )
Foreign     (39 )   (50 )   (49 )   (52 )   (47 )
Total commercial     (818 )   (1,155 )   (1,198 )   (1,546 )   (1,534 )
Consumer:
Real estate 1-4 family first mortgage (1,015 ) (1,199 ) (1,164 ) (1,140 ) (1,397 )
Real estate 1-4 family junior lien mortgage (1,046 ) (1,059 ) (1,140 ) (1,239 ) (1,496 )
Credit card (448 ) (505 ) (556 ) (639 ) (696 )
Other revolving credit and installment     (500 )   (573 )   (572 )   (542 )   (750 )
Total consumer     (3,009 )   (3,336 )   (3,432 )   (3,560 )   (4,339 )
Total loan charge-offs     (3,827 )   (4,491 )   (4,630 )   (5,106 )   (5,873 )
Loan recoveries:
Commercial:
Commercial and industrial 114 110 79 121 117
Real estate mortgage 27 36 18 4 10
Real estate construction 36 28 20 51 11
Lease financing 7 5 6 4 5
Foreign     11     22     10     10     11  
Total commercial     195     201     133     190     154  
Consumer:
Real estate 1-4 family first mortgage 111 175 130 131 86
Real estate 1-4 family junior lien mortgage 52 54 55 55 47
Credit card 66 53 52 60 53
Other revolving credit and installment     193     169     165     181     203  
Total consumer     422     451     402     427     389  
Total loan recoveries     617     652     535     617     543  
Net loan charge-offs     (3,210 )   (3,839 )   (4,095 )   (4,489 )   (5,330 )
Allowances related to business combinations/other     3     4     4     (9 )   699  
Balance, end of quarter   $ 22,383     23,463     24,372     25,085     25,656  
Components:
Allowance for loan losses $ 21,983 23,022 23,939 24,584 25,123
Allowance for unfunded credit commitments     400     441     433     501     533  
Allowance for credit losses   $ 22,383     23,463     24,372     25,085     25,656  
Net loan charge-offs (annualized) as a percentage of average total loans 1.73

2.02 2.14 2.33 2.71
Allowance for loan losses as a percentage of:
Total loans 2.93 3.04 3.18 3.21 3.22
Nonaccrual loans 88 88 85 88 92
Nonaccrual loans and other nonperforming assets 72 71 69 75 80
Allowance for credit losses as a percentage of:
Total loans 2.98 3.10 3.23 3.27 3.28
Nonaccrual loans 90 89 86 90 94
Nonaccrual loans and other nonperforming assets 73 72 70 76 81
                                 
(1) Certain impaired loans with an allowance calculated by discounting expected cash flows using the loan's effective interest rate over the remaining life of the loan recognize reductions in allowance as interest income.
 
Wells Fargo & Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY
 
    Quarter ended March 31,  
(in millions)     2011     2010  
Balance, beginning of period $ 127,889   114,359
Cumulative effect from change in accounting for VIEs (1) - 183
Wells Fargo net income 3,759 2,547
Wells Fargo other comprehensive income (loss), net of tax, related to:
Translation adjustments 15 5
Investment securities 352 984
Derivative instruments and hedging activities (99 ) 73
Defined benefit pension plans 15 16
Common stock issued 634 464
Common stock repurchased (55 ) (38 )
Preferred stock released by ESOP 493 209
Preferred stock issued 2,501 -
Common stock dividends (634 ) (260 )
Preferred stock dividends and other (189 ) (175 )
Noncontrolling interests and other, net     262     (213 )
Balance, end of period   $ 134,943     118,154  

(1) 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.

 
Wells Fargo & Company and Subsidiaries
FIVE QUARTER TIER 1 COMMON EQUITY (1)
 
    Quarter ended  
(in billions)       Mar. 31,
2011
    Dec. 31,
2010
    Sept. 30,
2010
    June 30,
2010
    Mar. 31,
2010
 
Total equity $ 134.9 127.9   125.2   121.4   118.1
Noncontrolling interests       (1.5 )   (1.5 )   (1.5 )   (1.6 )   (2.0 )
Total Wells Fargo stockholders' equity       133.4     126.4     123.7     119.8     116.1  
Adjustments:
Preferred equity (10.6 ) (8.1 ) (8.1 ) (8.1 ) (8.1 )
Goodwill and intangible assets (other than MSRs) (35.1 ) (35.5 ) (36.1 ) (36.7 ) (37.2 )
Applicable deferred taxes 4.2 4.3 4.7 5.0 5.2
MSRs over specified limitations (0.9 ) (0.9 ) (0.9 ) (1.0 ) (1.5 )
Cumulative other comprehensive income (4.9 ) (4.6 ) (5.4 ) (4.8 ) (4.0 )
Other       (0.2 )   (0.3 )   (0.3 )   (0.3 )   (0.3 )
Tier 1 common equity   (A) $ 85.9     81.3     77.6     73.9     70.2  
Total risk-weighted assets (2)   (B) $ 963.5     980.0     968.4     970.8     990.1  
Tier 1 common equity to total risk-weighted assets   (A)/(B)   8.92  

8.30     8.01     7.61     7.09  
(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 March 31, 2011, preliminary risk-weighted assets reflect estimated on-balance sheet risk-weighted assets of $797.7 billion and derivative and off-balance sheet risk-weighted assets of $165.8 billion.
 
Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
 
    Quarter ended  
(income/expense in millions, average balances in billions)     Mar. 31,
2011
    Dec. 31,
2010
    Sept. 30,
2010
    June 30,
2010
    Mar. 31,
2010
 
COMMUNITY BANKING        
Net interest income (2) $ 7,543 7,751 7,818 8,063 8,253
Provision for credit losses 2,065 2,785 3,155 3,348 4,519
Noninterest income 5,094 5,721 5,629 5,543 5,711
Noninterest expense     7,605     7,855     7,333     7,678     7,205  
Income before income tax expense 2,967 2,832 2,959 2,580 2,240
Income tax expense     742     836     951     783     777  
Net income before noncontrolling interests 2,225 1,996 2,008 1,797 1,463
Less: Net income from noncontrolling interests     50     72     73     81     48  
Segment net income   $ 2,175     1,924     1,935     1,716     1,415  
Average loans $ 509.8 514.1 522.2 534.3 550.4
Average assets 759.9 771.6 770.0 771.3 776.8
Average core deposits 548.1 544.4 537.1 532.6 531.5
                                 
WHOLESALE BANKING
Net interest income (2) $ 2,755 2,965 2,927 3,028 2,554
Provision for credit losses 134 195 280 635 810
Noninterest income 2,705 2,875 2,461 2,746 2,869
Noninterest expense     2,800     2,992     2,719     2,873     2,685  
Income before income tax expense 2,526 2,653 2,389 2,266 1,928
Income tax expense     872     958     866     803     688  
Net income before noncontrolling interests 1,654 1,695 1,523 1,463 1,240
Less: Net income from noncontrolling interests     2     5     11     1     3  
Segment net income   $ 1,652     1,690     1,512     1,462     1,237  
Average loans $ 234.7 229.6 227.3 228.2 237.0
Average assets 399.6 384.4 371.8 369.5 369.5
Average core deposits 184.8 185.1 170.8 162.3 161.6
                                 
WEALTH, BROKERAGE AND RETIREMENT