Wells Fargo Earns Record $3.05 Billion, $0.56 EPS

Strong Momentum Across Diversified Businesses

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

“Deposit performance continued to benefit from deeper market penetration, flight to quality and mortgage escrow activity”

  • Record profits reflected business momentum across the newly combined Wells Fargo-Wachovia
    • Record Wells Fargo net income of $3.05 billion
    • Record net income applicable to common stock of $2.38 billion
    • Earnings per common share of $0.56, after merger-related and restructuring expense of $206 million ($0.03 per common share) and $1.3 billion credit reserve build ($0.19 per common share)
    • Preferred dividends of $661 million included $372 million paid to U.S. taxpayers on the U.S. Treasury’s Capital Purchase Program investment
    • Record pre-tax pre-provision profit of $9.2 billion
  • Revenue of $21.0 billion reflected growth in both net interest income and fee income resulting from diversified business model
    • Record legacy Wells Fargo revenue of $12.3 billion, up 16 percent from prior year
    • Best mortgage origination quarter since 2003
    • Net interest margin of 4.16 percent, highest among large bank peers
    • Total core deposits of $756.2 billion at March 31, 2009, up 6 percent (annualized) from $745.4 billion at December 31, 2008, despite maturity of $34 billion of higher-rate Wachovia certificates of deposit (CDs)
    • Consumer checking and savings deposits up 31 percent (annualized) from December 31, 2008
  • Significant credit extended to U.S. taxpayers
    • $175 billion in loan commitments, mortgage originations and mortgage securities purchases
    • $190 billion in mortgage applications, including record $83 billion in applications in March
    • $101 billion in mortgage originations, helping over 450,000 homeowners purchase a home or refinance
    • More than $225 billion of credit extended to U.S. taxpayers since last October, nine times the amount received from U.S. taxpayers through the U.S. Treasury’s Capital Purchase Program investment
  • Wachovia merger on track and profit contribution exceeded expectations in first quarter
    • 41 percent of combined revenue from Wachovia
    • Loan, deposit and business activity has resumed and customers have returned
    • Reconfirmed $5 billion of expected annual merger-related savings, which will begin emerging in second quarter and are expected to be fully realized when the integration is completed
    • Purchase accounting adjustments overall remain in line with December 31, 2008, marks
  • Strengthened capital position
    • Tangible common equity (TCE) of $41.1 billion at quarter end, an increase of $4.5 billion to TCE during the quarter (see table TANGIBLE COMMON EQUITY, below)
    • TCE ratio of 3.28 percent, up from 2.86 percent at December 31, 2008 (see table TANGIBLE COMMON EQUITY, below)
    • TCE of 3.83 percent of estimated risk-weighted assets (see table TANGIBLE COMMON EQUITY, below)
    • Tier 1 capital of $88.9 billion, Tier 1 capital ratio of 8.28 percent, up from 7.84 percent at December 31, 2008
    • The $40 billion of SOP 03-3 nonaccretable difference (credit write-downs) from the Wachovia acquisition is the equivalent of approximately 190 basis points of additional TCE
  • Balance sheet well-positioned for economic environment
    • Allowance for credit losses of $22.8 billion; at March 31, 2009, allowance adequate to cover expected consumer losses for at least the next 12 months and to provide approximately 24 months of anticipated commercial loss coverage
    • Allowance for credit losses covers 2.7 percent of total loans, 2.9 percent of non-SOP 03-3 loans, and 2.2 times nonperforming loans
    • Reduced risk in balance sheet and future earnings stream through write-downs already taken at December 31, 2008, on Wachovia’s higher-risk loan and securities portfolios; combined nonperforming loans were 1.25 percent of total loans at March 31, 2009, lowest ratio among large bank peers
    • Securities portfolio written down by $516 million of other-than-temporary impairment
    • Reduced the ratio of capitalized mortgage servicing rights (MSRs) to owned servicing to 74 basis points; lowest ratio since 2003
    • Higher-risk loan portfolios reduced by $4.5 billion (indirect home equity, Pick-a-Pay and indirect auto at legacy Wells Fargo) and Trading Assets reduced by $8.4 billion

Wells Fargo & Company (NYSE:WFC) reported diluted earnings per common share of $0.56 for first quarter 2009. Wells Fargo net income was a record $3.05 billion. “The best way to generate capital is to earn it,” said President and CEO John Stumpf. “This has long been the hallmark of our company and we’re now seeing the initial signs of the earnings and capital-generating power of the combined Wells Fargo-Wachovia in our first quarter together, serving one of every three U.S. households. We’re also seeing the benefits of our actions to reduce the risk in the Wachovia portfolio at the close of the merger through write-downs and credit reserve builds. Our talented team has built solid momentum for 2009. We are open for business and we’re gaining wallet share and market share, as we’ve always done in economically challenging times, because we make fewer mistakes than our competitors in the so-called ‘good times’ and have fewer problems to fix. The last six months we’ve extended more than $225 billion in credit to U.S. taxpayers, nine times the amount U.S. taxpayers invested in our company through the U.S. Treasury. We now service one of every six mortgages in the U.S., up from one in eight last year. This quarter, Wells Fargo helped almost a half million U.S. homeowners buy a home or lower their monthly payments through refinancing – an 84 percent increase in homeowners we helped compared with the previous quarter. We also delivered 158,000 solutions to homeowners to help them remain in their homes. The integration of Wachovia into Wells Fargo is on track and we expect to begin, as scheduled, the first phase of state-by-state banking conversions later this year.”

Financial Performance

“First quarter results, including a record pre-tax pre-provision profit of $9.2 billion, were largely driven by growth in many of our diversified businesses and the new contribution to growth now coming from Wachovia. Results also reflected lower net charge-offs partly because Wachovia’s higher-risk loan portfolios already were written down at December 31, 2008, leaving the remainder of Wachovia’s loan portfolios with naturally lower loss content,” said Chief Financial Officer Howard Atkins. “Our net interest margin of 4.16 percent was the highest among our large bank peers. We again had above-peer growth in deposits. Average consumer checking accounts rose a net 6.8 percent at legacy Wells Fargo year over year. Checking and savings deposits were up 31 percent on an annualized linked-quarter basis. Actions we took over the past two years to shrink or exit certain indirect lending businesses and more recently to write down higher-risk loan and securities portfolios have significantly reduced asset risk and should continue to help moderate credit losses if the economy continues to deteriorate.”

Revenue

Revenue of $21.0 billion included another quarter of record, double-digit revenue growth at legacy Wells Fargo, up 16 percent year over year, as well as a strong contribution from Wachovia, which generated 41 percent of the Company’s combined revenue. “This quarter’s revenue growth reflected the traditional revenue-generating capacity of Wells Fargo’s diversified business model, which has produced revenue growth in all economic environments,” said Atkins. “As we’ve said before, money never declines. It just moves due to economic cycles and our customers’ life cycles. Our diversified portfolio of businesses and cross-selling prowess allow us to satisfy our customers’ financial needs throughout these cycles. Wells Fargo has had double-digit revenue growth in eight of the past 12 quarters. As demonstrated this quarter, the Wachovia merger brings even greater scope and diversification to our revenue growth by applying the Wells Fargo revenue engine to almost twice as many customers, extending our Community Banking network across the United States, while expanding our capabilities in businesses such as retail brokerage, wealth management, asset management and customer-centric investment banking for corporate and commercial relationships.”

Revenue

  Quarter ended March 31, 2009
(in millions) Legacy
Wells Fargo (1) 		 

 Wachovia

 

 Consolidated

 
Net interest income $ 6,823 $ 4,553 $ 11,376
 
Noninterest income
Service charges on deposit accounts 767 627 1,394
Trust and investment fees 612 1,603 2,215
Card fees 585 268 853
Other fees 572 329 901
Mortgage banking 2,442 62 2,504
Insurance 497 84 581
Net gains from trading activities 190 597 787
Net gains (losses) on debt securities available for sale (170 ) 51 (119 )
Net gains (losses) from equity investments (223 ) 66 (157 )
Other   205     477   682  
Total noninterest income   5,477     4,164   9,641  
Total revenue $ 12,300   $ 8,717 $ 21,017  
 
(1 ) Includes Wells Fargo parent company funding and investing activities.

Net Interest Income

Net interest income of $11.4 billion reflected a strong combined net interest margin on average earning assets of $1.1 trillion. “At 4.16 percent, the net interest margin of the combined Company remained the best among our large bank peers, in part due to continued growth in core deposits, deposit pricing discipline and an increase in the mortgage warehouse due to higher originations,” said Atkins. Legacy Wells Fargo net interest income of $6.8 billion rose $1.1 billion, or 18 percent, from a year ago largely reflecting growth in loans and other earning assets.

Loans

Total loans were $843.6 billion at March 31, 2009, compared with $864.8 billion at December 31, 2008. “Total loans included $119.4 billion of consumer loans at quarter end, and $123.8 billion at year end, in portfolios that the Company exited or will continue to run-off, such as indirect auto and indirect home equity at legacy Wells Fargo, and the Wachovia Pick-a-Pay portfolio,” said Atkins. Apart from these liquidating portfolios, total loans were down $16.8 billion, largely the result of seasonality, reduced consumer spending, attrition in the mortgage and home equity portfolios as customers take advantage of low first mortgage rates, movement into the commercial paper and bond markets, and efforts by some commercial borrowers to de-leverage their businesses. However, the attrition in mortgages held for investment was more than offset by an increase in our mortgage loans held for sale resulting from our strong originations this quarter.

Deposits

Total core deposits were $756.2 billion at March 31, 2009, up $10.8 billion from December 31, 2008. $33.6 billion of high-rate CDs at legacy Wachovia matured in the quarter, including $13.2 billion from CD-only households. “Higher-rate CDs are rolling off and we are successfully retaining many of these deposits at today’s lower rates,” said Atkins. The combination of noninterest-bearing and interest-bearing transaction and savings deposits increased 31 percent (annualized) to $570.7 billion at March 31, 2009, from $529.9 billion at December 31, 2008. Mortgage escrow deposits were $26.0 billion at March 31, 2009, compared with $16.5 billion at year end. Average consumer checking accounts at legacy Wells Fargo grew a net 6.8 percent from first quarter 2008. “Deposit performance continued to benefit from deeper market penetration, flight to quality and mortgage escrow activity,” said Atkins.

Noninterest Income

Noninterest income reached $9.6 billion, driven by continued success in satisfying customers’ financial needs and the combined Company’s expanded breadth of products and services. Noninterest income included:

  • Mortgage banking fees of $2.5 billion:
    • $1.6 billion in revenue from mortgage loan originations/sales activities on $101 billion in new originations, including a reduction to revenue of $138 million to increase the mortgage repurchase reserve and net write-down of the mortgage warehouse for spread and other liquidity-related valuation adjustments
    • Unclosed application pipeline of $100 billion at quarter end, up 41 percent from prior quarter, indicates solid origination momentum coming into the second quarter
    • $875 million MSRs mark to market, net of hedge results, reflecting a $2.8 billion reduction in the fair value of the MSRs offset by a $3.7 billion hedge gain, with the net difference largely due to hedge carry income due to low short-term interest rates, which are likely to continue
      • MSRs as a percent of loans serviced for others declined to 0.74 percent, the lowest level since the last big refinance wave in mid-2003
  • Trust and investment fees of $2.2 billion reflected solid results in retail brokerage commissions, managed account fees and asset management fees
    • Approximately 11 percent of the Company’s total revenue in the quarter was from trust and investment fees, compared with 5 percent for legacy Wells Fargo, an example of how the Wachovia merger has further diversified Wells Fargo’s revenue sources in non-capital intensive businesses
  • Service charges on deposit accounts of $1.4 billion reflected continued growth in checking accounts and the effect of higher average checking account balances
  • Card and other fees totaling $1.8 billion included the effects of seasonally lower purchase volume
  • Trading revenue of $787 million; approximately two-thirds from customer business, including revenue earned on sales of foreign exchange and interest rate products and services
    • Trading results included only $18 million of gain from the application of FSP FAS 157-4
  • $516 million write-down through earnings for other-than-temporary impairment on debt and equity securities, with an additional $334 million pre-tax of non-credit-related impairment on debt securities charged directly to equity through other comprehensive income from the application of FSP FAS 115-2 and FAS 124-2

The net unrealized loss on securities available for sale declined to $4.7 billion at March 31, 2009, from $9.9 billion at December 31, 2008. Approximately $850 million of the improvement was due to declining interest rates and narrower credit spreads. The remainder was due to the early adoption of FAS FSP 157-4, which clarified the use of trading prices in determining fair value for distressed securities in illiquid markets, thus moderating the need to use excessively distressed prices in valuing these securities in illiquid markets as we had done in prior periods.

Noninterest Expense

Noninterest expense was $11.8 billion reflecting the expanded geographic platform and capabilities in businesses such as retail brokerage, asset management and investment banking, which, like mortgage banking, typically include higher revenue-based incentive expense than the more traditional banking businesses. FDIC and other deposit assessments totaled $338 million compared with $8 million in first quarter 2008 for legacy Wells Fargo. Noninterest expense included $122 million of additional insurance reserve at the Company’s captive mortgage reinsurance operation and $206 million of merger-related costs. “We still expect to generate $5 billion of annual merger-related expense savings, which will begin to emerge in the second quarter and are expected to be fully realized upon completion of the integration,” said Atkins. “After refining our initial models, we now expect total integration expense to be less than $7.9 billion and to be spread over the integration period rather than all by year-end 2009. We also expect recently announced efficiency initiatives to lower expenses over the remainder of 2009.” The efficiency ratio was 56 percent.

Credit Quality

SOP 03-3 Purchase Accounting Update1

Wells Fargo’s reported first quarter 2009 credit quality metrics were affected by the Wachovia merger and particularly by the purchase accounting adjustments recorded when the merger was completed on December 31, 2008. “At that time, we evaluated Wachovia’s higher-risk loan portfolios to identify loans with evidence of credit deterioration and provide an estimate of loss potential,” said Chief Credit Officer Mike Loughlin. “These loss estimates were then used to assess the value of the loan portfolio as part of the purchase accounting process and certain loans were written down for the expected life-of-loan losses inherent in the portfolios. As expected, these estimates were updated during the first quarter to reflect additional available data relating to the Wachovia portfolio as of year end. A total of $40 billion of credit write-downs have already been taken through purchase accounting adjustments. We have now evaluated Wachovia’s high-risk loan portfolios multiple times since the merger was announced and loss estimates remain within our initial expectations. As a result of having already written down Wachovia’s higher-risk portfolios for their expected losses, the remaining portfolio will have lower loss rates because of its reduced loss content. As a result, Wachovia’s total net charge-offs in first quarter were only $371 million. While the remaining Wachovia portfolios have significantly lower probability of default than the portfolio that has already been written down, losses in the remaining lower-risk portfolios are likely to grow as the defaults in these lower-risk portfolios actually occur. Since the allowance covers all consumer losses for the next 12 months as well as any commercial losses for at least 24 months, the potential losses in Wachovia’s lower-risk portfolio, as well as any increase for the legacy Wells Fargo loan portfolio, are reflected in the $23 billion allowance for credit losses, including the $1.3 billion credit reserve build this quarter.

“Purchase accounting also significantly reduced Wachovia’s nonaccrual loans at year end since we believe the remaining balance of these loans after write-down is fully collectible. As a result, despite the fact that the remaining Wachovia portfolio has relatively lower risk, even modest increases in new nonaccrual loans will appear as higher percentage increases from this low base until the remaining portfolios season.”

(1 See explanation in table LOANS SUBJECT TO SOP 03-3 of the accounting for credit-impaired loans acquired from Wachovia accounted for under SOP 03-3, and the impact on selected financial ratios.)

Net Loan Charge-Offs

            Quarter ended
Quarter ended March 31, 2009 December 31, 2008
Legacy Wells Fargo Wachovia Consolidated Legacy Wells Fargo

($ in millions)

Net loan
charge-offs 		As a
% of
average
loans 		Net loan
charge-offs 		As a
% of
average
loans 		Net loan
charge-offs 		As a
% of
average
loans 		Net loan
charge-offs 		  As a
% of
average
loans
 

Commercial and commercial real estate:

Commercial $ 530 2.01 % $ 26 0.12 % $ 556 1.15 % $ 732 2.71 %
Other real estate mortgage 20 0.17 1 0.01 21 0.08 9 0.09
Real estate construction 101 2.10 2 0.04 103 1.21 84 1.67
Lease financing   16 0.87   1 0.02   17 0.43   17 0.90

Total commercial and commercial real estate

667 1.48 30 0.07 697 0.80 842 1.86
Consumer:

Real estate 1-4 family first mortgage

310 1.56 81 0.20 391 0.65 193 0.98

Real estate 1-4 family junior lien mortgage

801 4.31 46 0.53 847 3.12 702 3.68
Credit card 534 10.36 48 8.13 582 10.13 451 8.69

Other revolving credit and installment

530 4.37 166 1.55 696 3.05 565 4.29
Total consumer 2,175 3.90 341 0.56 2,516 2.16 1,911 3.35
 
Foreign   45 3.13   -- --   45 0.56   51 3.14
Total $ 2,887 2.82 $ 371 0.34 $ 3,258 1.54 $ 2,804 2.69

First quarter net charge-offs for the combined Company were $3.3 billion, or 1.54 percent of average loans, including $371 million in the Wachovia portfolio. Legacy Wells Fargo charge-offs were $2.9 billion compared with $2.8 billion in fourth quarter 2008. Commercial and commercial real estate losses remained at relatively low levels reflecting the historically disciplined underwriting standards applied by Wells Fargo and the customer-relationship focus in this portfolio. Losses in residential real estate and credit cards rose modestly in the quarter, in line with expectations, while other credit losses, principally indirect auto, declined due to seasonality and our risk reduction actions in indirect auto over the last two years.

“As long as the U.S. economy remains weak, losses on the combined portfolio will increase,” said Loughlin. “Over the last two years, we have taken and will continue to take actions to enable the Company to navigate through this down cycle. In addition to the significant write-downs taken to reduce risk in the Wachovia portfolio at close, we ceased originations in and are liquidating certain higher-risk, lower-return portfolios, such as Pick-a-Pay and legacy Wells Fargo indirect auto and liquidating broker-originated home equity portfolios. In addition, during the first quarter, we successfully incorporated Wells Fargo’s risk policies and procedures into Wachovia, which is essential to our ability to properly manage risk. We believe these risk reduction actions better position us for the expected continued credit deterioration and economic headwinds.”

Net charge-offs in the 1-4 family first mortgage portfolio totaled $391 million. These results included $310 million from legacy Wells Fargo, which increased $117 million linked quarter. “Our relatively high-quality 1-4 family first mortgage portfolio continued to reflect relatively low loss rates although, until housing prices fully stabilize, these credit results will continue to deteriorate,” said Loughlin. Credit card charge-offs increased $131 million linked quarter to $582 million, including $48 million relating to the $2.4 billion Wachovia portfolio. “We continued to see increases in delinquency and loss levels in the consumer unsecured loan portfolios as a result of higher unemployment.” Losses in the auto portfolio decreased $47 million from fourth quarter 2008 reflecting improvements from seasonality and portfolio balance reduction over the past several quarters.

Net charge-offs in the real estate 1-4 family junior lien portfolio of $847 million included $801 million in the legacy Wells Fargo portfolio, which increased $99 million from fourth quarter 2008 as residential real estate values continued to be depressed. “These results aren’t solely because of declining home values,” said Loughlin. “As more customers seek to modify their first mortgages, there may be an adverse effect on the credit performance of junior lien holders behind these modifications.” More information about the Home Equity portfolio is available in table HOME EQUITY PORTFOLIOS.

Commercial and commercial real estate net charge-offs of $697 million included $667 million from the legacy Wells Fargo portfolio, down $175 million from $842 million in fourth quarter 2008, which included $294 million related to the customers of the Madoff investment firm. The linked-quarter trends also reflected a $100 million increase in losses in our Business Direct portfolio while other commercial losses declined and remained at relatively low levels. “Wholesale credit results continued to deteriorate,” said Loughlin. “Commercial lending requests slowed during the quarter as borrowers reduced their receivable and inventory levels to conserve cash.”

Nonaccrual Loans and Other Nonperforming Assets

                 
March 31, 2009   December 31, 2008
($ in millions) Legacy
Wells Fargo 		As a %
of total
loans 		Wachovia As a %
of total
loans 		Consolidated As a %
of total
loans 		Consolidated (1) As a %
of total
loans
 

Commercial and commercial real estate:

Commercial $ 1,611 1.54 % $ 85 0.10 % $ 1,696 0.88 % $ 1,253 0.62 %
Other real estate mortgage 949 1.92 375 0.68 1,324 1.26 594 0.58
Real estate construction 1,200 6.31 171 1.15 1,371 4.04 989 2.85
Lease financing   100 1.32   14 0.19   114 0.77   92 0.58

Total commercial and commercial real estate

3,860 2.13 645 0.39 4,505 1.30 2,928 0.82
Consumer:

Real estate 1-4 family first mortgage

3,420 4.22 798 0.49 4,218 1.74 2,648 1.07

Real estate 1-4 family junior lien mortgage

1,259 1.69 159 0.45 1,418 1.29 894 0.81

Other revolving credit and installment

  291 0.61   9 0.02   300 0.33   273 0.29
Total consumer 4,970 2.22 966 0.40 5,936 1.27 3,815 0.80
Foreign   59 1.06   16 0.06   75 0.24   57 0.17
Total nonaccrual loans   8,889 2.17   1,627 0.38   10,516 1.25   6,800 0.79
 
Foreclosed assets:
GNMA loans 768 -- 768 667
All other   653   641   1,294   1,526
Total foreclosed assets   1,421   641   2,062   2,193

Real estate and other nonaccrual investments

  34   --   34   16

Total nonaccrual loans and other nonperforming assets

$ 10,344 2.52 $ 2,268 0.52 $ 12,612 1.50 $ 9,009 1.04
 
(1)

Includes Wachovia commercial and commercial real estate, and consumer nonaccrual loans and foreclosed assets of $15 million, $82 million and $885 million, respectively.

Total nonperforming assets were $12.6 billion (1.50 percent of total loans) at March 31, 2009, and included $10.5 billion of nonperforming loans and $2.1 billion of foreclosed assets and repossessed real estate and vehicles. Nonperforming loans increased $3.7 billion, or 44 basis points as a percentage of loan balances, from December 31, 2008, with increases in both the commercial and retail segments. The increase included $1.5 billion relating to Wachovia, which grew from a relatively low $97 million at year end as virtually all of the associated nonaccrual loans were no longer considered nonaccrual after applying required purchase accounting. The vast majority of nonperforming loans are secured. The increases in nonperforming loans were concentrated in portfolios secured by residential real estate or with borrowers dependent on the housing industry.

“We expect nonperforming asset balances to continue to grow, reflecting an environment where retaining these assets is the most viable economic option, as well as our efforts to modify more mortgage loans to reduce foreclosures and keep customers in their homes,” said Loughlin. “We remain focused on proactively identifying problem credits, moving them to nonperforming status and recording the loss content in a timely manner. We’ve increased and will continue to increase staffing in our workout and collection organizations to ensure these troubled borrowers receive the attention and help they need.”

Loans 90 days or more past due and still accruing totaled $15.1 billion, $12.7 billion, and $6.9 billion at March 31, 2009, December 31, 2008, and March 31, 2008, respectively. For the same periods, the totals included $9.5 billion, $8.2 billion and $5.3 billion, respectively, in advances pursuant to the Company’s servicing agreement to GNMA mortgage pools and similar loans whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veteran Affairs.

Loans 90 Days or More Past Due and Still Accruing*

(Excluding Insured/Guaranteed GNMA and Similar Loans)
Includes Wells Fargo and Wachovia
   
March 31, December 31,
(in millions)   2009   2008
 
Commercial and commercial real estate:
Commercial $ 417 $ 218
Other real estate mortgage 355 88
Real estate construction   624   232
Total commercial and commercial real estate 1,396

538

 
Consumer:
Real estate 1-4 family first mortgage 1,688 1,565
Real estate 1-4 family junior lien mortgage 660 590
Credit card 738 687
Other revolving credit and installment   1,105   1,047
Total consumer 4,191 3,889
Foreign   29   34
Total loans $ 5,616 $ 4,461
 

*The table above does not include loans acquired from Wachovia accounted for under SOP 03-3 that were contractually 90 days past due and still accruing. These loans have a related nonaccretable difference that will absorb future losses, therefore charge-offs on these loans are not expected to reduce income in future periods to the extent the original estimates maintain their accuracy.

Allowance for Credit Losses2

(Includes Wells Fargo and, beginning December 31, 2008, Wachovia)

The allowance for credit losses, including the reserve for unfunded commitments, totaled $22.8 billion at March 31, 2009, compared with $21.7 billion at December 31, 2008. First quarter 2009 results included a credit reserve build of $1.3 billion, primarily for higher projected losses in several consumer credit portfolios, increased levels of residential real estate modifications classified as troubled debt restructurings and expected deterioration in the wholesale portfolios and commercial non-SOP 03-3 impaired loans. The allowance coverage to total loans increased to 2.71 percent, or 2.91 percent of loans excluding SOP 03-3 impaired loans, compared with 2.51 percent at December 31, 2008, and covered expected consumer losses for at least the next 12 months and provided approximately 24 months of anticipated commercial loss coverage. “We believe the allowance was adequate for expected losses inherent in the loan portfolio at March 31, 2009, including both performing and nonperforming loans,” said Loughlin.

(2 See explanation in table LOANS SUBJECT TO SOP 03-3 of the accounting for credit-impaired loans acquired from Wachovia accounted for under SOP 03-3, and the impact on selected financial ratios.)

Capital

Capital ratios increased during the quarter. Tier 1 capital was 8.28 percent. The TCE ratio increased to 3.28 percent of tangible assets, up from 2.86 percent at December 31, 2008. See table TANGIBLE COMMON EQUITY for the TCE calculation. TCE to estimated risk-weighted assets rose to 3.83 percent at March 31, 2009.

“We have built reserves for six consecutive quarters, dating back to fourth quarter 2007 when credit deterioration became evident,” said Atkins. “These reserve builds have strengthened the balance sheet and position us for the future. We view a considerable portion of the $23 billion allowance to be essentially like capital since we won’t draw on this reserve until the credit crisis ends and loan losses decline. Current accounting policies will then require us to reduce the allowance, increasing profit and increasing capital ratios at that time.”

Business Segment Performance

Wells Fargo defines its operating segments by product type and customer segment. As a result of the combination of Wells Fargo and Wachovia, management realigned its business segments into the following three lines of business: Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement Services. The Company revised prior period segment information to reflect this realignment; however, segment information for periods prior to first quarter 2009 does not include Wachovia. Segment net income for each of the three business segments was:

  First Quarter
(in millions) 2009   2008
Community Banking $ 1,839 $ 1,522
Wholesale Banking 1,180 483

Wealth, Brokerage and Retirement Services

259 93

More financial information about the business segments is in table FIVE QUARTER OPERATING SEGMENT RESULTS.

Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C.

Selected Financial Information

  First Quarter
(in millions) 2009   2008
Total revenue $ 13,953 $ 8,200
Provision for credit losses 4,004 1,865
Noninterest expense 7,158 3,905
Segment net income 1,839 1,522
(in billions)
Average loans 552.8 282.7
Average assets 801.3 431.8
Average core deposits 538.0 246.6

Community Banking reported net income of $1.8 billion and pre-tax pre-provision income of $6.8 billion. First quarter results reflected the benefit of the expanded geographic presence and were driven by strength in mortgage banking and record sales in regional banking, partially offset by higher FDIC and other deposit assessments, credit reserve build and net loan charge-offs.

Regional Banking Highlights for Legacy Wells Fargo

  • Record core product solutions (sales) of 6.71 million, up 17 percent from prior year on a comparable basis
  • Record core sales per platform banker FTE (active, full-time equivalent) of 6.20 per day, up from 5.58 in prior year on a comparable basis
  • Record retail bank household cross-sell of 5.81 products per household; 24 percent of retail bank households had 8 or more products, our long-term goal
  • Sales of Wells Fargo Packages® (a checking account and at least three other products) up 31 percent from prior year, purchased by 76 percent of new checking account customers
  • Consumer checking accounts up a net 6.8 percent from prior year
  • Customer loyalty scores up 6 percent and welcoming and wait time scores up 8 percent from prior year (based on customers conducting transactions with tellers)
  • Added 972 platform banker FTEs from prior year through hiring and acquisitions (excluding Wachovia and Century Bancshares)
  • Business Banking
    • Store-based business solutions up 22 percent from prior year
    • Business checking accounts up a net 2.2 percent from prior year
    • Business Banking household cross-sell of 3.66 products per household
    • Sales of Wells Fargo Business Services Packages (business checking account and at least three other business products) up 37 percent from prior year, purchased by a record 56 percent of new business checking account customers

Regional Banking Highlights for Wachovia

  • Consumer checking accounts up a net 5.5 percent from prior year
  • Record customer experience scores, maintained already very high levels

Combined Regional Banking Distribution Metrics

  • Opened 14 banking stores for retail network total of 6,638
  • 12,361 ATMs across our network, including 2,208 Envelope-FreeSM webATM machines

Online Banking

  • 15.5 million active online customers, including Wachovia
  • 3.7 million active Bill Pay customers, including Wachovia

Home Mortgage

  • Mortgage applications of $190 billion, up 64 percent from prior quarter, included record $83 billion applications in March
  • Mortgage application pipeline of $100 billion, up 41 percent from prior quarter
  • Home Mortgage originations of $101 billion, up 102 percent from prior quarter
  • Owned residential mortgage servicing portfolio of $1.6 trillion, up 18 percent from prior year
  • 93 of 100 servicing customers were current at quarter end, stable from year end
  • Merger integration proceeding, with Wachovia Retail Home Mortgage consultants (HMCs) already transitioned to Wells Fargo systems and HMCs assigned to partner with each Wachovia store

Wells Fargo Financial

  • Average loans of $65 billion, down 5 percent from prior year
  • Debt consolidation loans of $25 billion, flat from prior year

Wholesale Banking provides financial solutions to businesses across the United States with annual sales generally in excess of $10 million and financial institutions globally. Products include middle market banking, corporate banking, commercial real estate, treasury management, asset-based lending, insurance brokerage, foreign exchange, correspondent banking, trade services, specialized lending, equipment finance, corporate trust, investment banking, capital markets, and asset management.

Selected Financial Information

First Quarter
(in millions) 2009   2008
Total revenue $4,907 $2,177
Provision for credit losses 545 161
Noninterest expense 2,531 1,344
Segment net income 1,180 483
(in billions)
Average loans 271.9 100.8
Average assets 400.4 140.0
Average core deposits 138.5 68.2
  • Combination of Wells Fargo and Wachovia creates substantial scale and market penetration in key markets, including #1 in middle-market lending, asset based lending, agriculture lending and multifamily lending, and #2 bank-owned equipment finance company
  • Combined Treasury Management services rank #2 in customer relationships with “Best in Class” products, services and customer experience
  • Expanded capabilities for customers include comprehensive investment banking and capital markets capabilities and a more extensive international services and global correspondent banking network
  • Merger with Wachovia on course -- organization is complete, continue to move ahead with business model

Wholesale Banking reported net income of $1.2 billion and pre-tax pre-provision profit of $2.4 billion. First quarter results were driven by the performance of our diverse businesses, such as commercial banking, corporate banking, asset-based lending, international financial services and capital markets and benefited from an increased level of trading revenue in the quarter.

Wealth, Brokerage and Retirement Services Group provides a full range of financial advisory services to clients using a comprehensive planning approach to meet each client’s needs. The Wealth Management Group 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 Office Services 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. The Retirement Group provides retirement services for individual investors and is a national leader in 401(k) and pension record keeping.

Selected Financial Information

  First Quarter
(in millions) 2009   2008
Total revenue $2,639 637
Provision for credit losses 25 2
Noninterest expense 2,219 485
Segment net income 259 93
(in billions)
Average loans 46.7 13.7
Average assets 104.0 16.7
Average core deposits 102.6 21.0

Retail Brokerage

  • While equity markets declined 12 percent in the quarter, client assets declined only 5 percent to $910 billion
  • Strong recruiting of Financial Advisors (FAs) during the quarter, added 183 bringing the total to 15,879; production levels of FAs hired was 70 percent higher than FAs that left the firm
  • Brokerage sweep deposits up 11 percent from year end
  • WellsTrade® net income up 7 percent over last year despite challenging market conditions
  • AG Edwards merger conversion successfully completed

Wealth Management Group

  • Deposits up 22 percent from year end, led by strong growth in the Unlimited NOW account product
  • Private Banking revenue increased $257 million over last year, including 57 percent revenue growth at legacy Wells Fargo driven by strong growth in loans and deposits

Retirement Services

  • $9 billion in IRA inflows
  • Leading retirement record keeper with more than 3.7 million plan participants

Wealth, Brokerage and Retirement Services reported net income of $259 million and pre-tax pre-provision profit of $420 million. First quarter earnings were driven by strong deposit growth in both the brokerage and wealth businesses. Asset-based revenues and brokerage commission income were reduced due to the weak market environment.

Recorded Message

A recorded message reviewing Wells Fargo’s results is available at 5:30 a.m. Pacific Time through April 25, 2009. Dial 866-416-0522 (domestic) or 706-902-3479 (international). No password is required. The call is also available online at wellsfargo.com/invest_relations/earnings.

Cautionary Statement About Forward-Looking Information

In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about our future financial performance and business. We make forward-looking statements when we use words such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “may,” “can,” “will” or similar expressions. Forward-looking statements in this news release include: we expect $5 billion of annual merger-related savings, which will begin emerging in second quarter 2009 and will be fully realized when the integration is completed; we expect recently announced efficiency initiatives to lower expenses over the remainder of 2009; we expect total integration expense to be less than $7.9 billion and to be spread over the integration period rather than all by year-end 2009; we expect the first phase of state-by-state banking conversions to begin later this year; we expect actions taken in the past two years to shrink or exit certain indirect lending businesses and more recently to write down higher-risk loan and securities portfolios should continue to help moderate credit losses; as a result of having written down Wachovia’s higher-risk portfolios for their expected losses, we expect the remaining portfolio will have lower loss rates because of its reduced loss content; we expect losses in the remaining lower risk Wachovia portfolios are likely to grow as the defaults inherent in the portfolios actually occur; we believe the remaining balance of the Wachovia nonaccrual loans after year-end purchase accounting adjustments is fully collectible; as long as the U.S. economy remains weak, losses on the combined portfolio will increase; until housing prices fully stabilize, credit results in 1-4 family first mortgage portfolio will continue to deteriorate; we expect nonperforming balances to continue to grow; charge-offs on Wachovia loans accounted for under SOP 03-3 are not expected to reduce income in future periods to the extent the original estimates maintain their accuracy; we believe certain risk reduction actions better position us for the expected continued credit deterioration and economic headwinds; we expect deterioration in the wholesale credit portfolios; and we believe the allowance for credit losses was adequate for expected losses inherent in the loan portfolio at March 31, 2009.

Do not unduly rely on forward-looking statements as actual results could differ significantly 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 significantly from expectations including: current economic and market conditions; our capital requirements and ability to raise capital on favorable terms; the terms of capital investments or other financial assistance provided by the U.S. government; legislative proposals to allow mortgage cram-downs in bankruptcy or force other loan modifications; our ability to successfully integrate the Wachovia merger and realize the expected cost savings and other benefits; our ability to realize the recently announced efficiency initiatives to lower expenses when and in the amount expected; the adequacy of our allowance for credit losses; 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 mortgages 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 the fall 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; 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 and unemployment do not stabilize. 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 from our expectations, refer to our Annual Report on Form 10-K for the year ended December 31, 2008, including the discussion under “Risk Factors,” as filed with the Securities and Exchange Commission and available on the SEC’s website at www.sec.gov. Any factor described above or in the 2008 Form 10-K could, by itself or together with one or more other factors, adversely affect our financial results and condition.

About Wells Fargo

Wells Fargo & Company is a diversified financial services company with $1.3 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,400 stores, over 12,000 ATMs and the internet (wellsfargo.com) across North America and internationally.

Wells Fargo & Company and Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA (1) (2)
 
    Quarter ended

($ in millions, except per share amounts)

  Mar. 31,
2009 		    Dec. 31,
2008 		    Sept. 30,
2008 		    June 30,
2008 		    Mar. 31,
2008
       
For the Quarter
Wells Fargo net income (loss) $ 3,045 $ (2,734 ) $ 1,637 $ 1,753 $ 1,999
Wells Fargo net income (loss) applicable to common stock 2,384 (3,020 ) 1,637 1,753 1,999
Diluted earnings (loss) per common share 0.56 (0.84 ) 0.49 0.53 0.60
 
Profitability ratios (annualized):
Wells Fargo net income (loss) to average assets (ROA) 0.96 % (1.72 ) % 1.06 % 1.19 % 1.40 %
Net income (loss) to average assets 0.97 (1.72 ) 1.07 1.20 1.41

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

14.49 (22.32 ) 13.63 14.58 16.86
Net income (loss) to average total equity 11.97 (15.53 ) 13.66 14.62 16.93
 
Efficiency ratio (3) 56.2 61.3 53.0 51.0 51.5
 
Total revenue $ 21,017 $ 9,477 $ 10,377 $ 11,460 $ 10,563
Pre-tax pre-provision profit (4) 9,199 3,667 4,876 5,615 5,121
 
Dividends declared per common share 0.34 0.34 0.34 0.31 0.31
 
Average common shares outstanding 4,247.4 3,582.4 3,316.4 3,309.8 3,302.4
Diluted average common shares outstanding 4,249.3 3,593.6 3,331.0 3,321.4 3,317.9
 
Average loans $ 855,591 $ 413,940 $ 404,203 $ 391,545 $ 383,919
Average assets 1,289,716 633,223 614,194 594,749 574,994
Average core deposits (5) 753,928 344,957 320,074 318,377 317,278
Average retail core deposits (6) 590,502 243,464 234,140 230,365 228,448
 
Net interest margin 4.16 % 4.90 % 4.79 % 4.92 % 4.69 %
 
At Quarter End
Securities available for sale $ 178,468 $ 151,569 $ 86,882 $ 91,331 $ 81,787
Loans 843,579 864,830 411,049 399,237 386,333
Allowance for loan losses 22,281 21,013 7,865 7,375 5,803
Goodwill 23,825 22,627 13,520 13,191 13,148
Assets 1,285,891 1,309,639 622,361 609,074 595,221
Core deposits (5) 756,183 745,432 334,076 310,410 327,360
Wells Fargo stockholders' equity 100,295 99,084 46,957 47,964 48,159
Total equity 107,057 102,316 47,259 48,265 48,439
 
Capital ratios:
Wells Fargo common stockholders' equity to assets 5.40 % 5.21 % 7.54 % 7.87 % 8.09 %
Total equity to assets 8.33 7.81 7.59 7.92 8.14

Average Wells Fargo common stockholders' equity to average assets

5.17 8.50 7.78 8.13 8.29
Average total equity to average assets 8.11 11.09 7.83 8.18 8.34
Risk-based capital (7)
Tier 1 capital 8.28 7.84 8.59 8.24 7.92
Total capital 12.27 11.83 11.51 11.23 11.01
Tier 1 leverage (7) 7.09 14.52 7.54 7.35 7.04
 
Book value per common share $ 16.28 $ 16.15 $ 14.14 $ 14.48 $ 14.58
 
Team members (active, full-time equivalent) 272,800 270,800 159,000 160,500 160,900
 
Common Stock Price
High $ 30.47 $ 38.95 $ 44.68 $ 32.40 $ 34.56
Low 7.80 19.89 20.46 23.46 24.38
Period end 14.24 29.48 37.53 23.75 29.10
                                     
 
(1) Wells Fargo & Company (Wells Fargo) acquired Wachovia Corporation (Wachovia) on December 31, 2008. Because the acquisition was completed on December 31, 2008, Wachovia's results are included in the income statement, average balances and related metrics beginning in 2009. Wachovia's assets and liabilities are included in the consolidated balance sheet beginning on December 31, 2008.
(2) On January 1, 2009, the Company adopted Statement of Financial Accounting Standards (FAS) 160, Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51, on a retrospective basis for disclosure and, accordingly, prior period information reflects the adoption. FAS 160 requires that noncontrolling interests be reported as a component of stockholders' equity.
(3) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
(4) Total revenue less noninterest expense.
(5) Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).
(6) Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits.
(7) The March 31, 2009, ratios are preliminary. Because the Wachovia acquisition was completed on December 31, 2008, the Tier 1 leverage ratio at December 31, 2008, which considers period-end Tier 1 capital and quarterly average assets in the computation of the ratio, does not reflect average assets of Wachovia for the full period.
 
Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
 
  Quarter ended

(in millions, except per share amounts)

  Mar. 31,
2009 		  Mar. 31,
2008
 
INTEREST INCOME
Trading assets $ 266 $ 47
Securities available for sale 2,709 1,132
Mortgages held for sale 415 394
Loans held for sale 67 12
Loans 10,765 7,212
Other interest income   91     52
Total interest income   14,313     8,849
 
INTEREST EXPENSE
Deposits 999 1,594
Short-term borrowings 123 425
Long-term debt 1,779 1,070
Other interest expense   36     --
Total interest expense   2,937     3,089
 
NET INTEREST INCOME 11,376 5,760
Provision for credit losses   4,558     2,028
Net interest income after provision for credit losses   6,818     3,732
 
NONINTEREST INCOME
Service charges on deposit accounts 1,394 748
Trust and investment fees 2,215 763
Card fees 853 558
Other fees 901 499
Mortgage banking 2,504 631
Insurance 581 504

Net gains (losses) on debt securities available for sale (includes impairment losses of $269, consisting of $603 of total other-than-temporary impairment losses, net of $334 recognized in other comprehensive income, for the quarter ended March 31, 2009)

(119 ) 323
Net gains (losses) from equity investments (157 ) 313
Other   1,469     464
Total noninterest income   9,641     4,803
 
NONINTEREST EXPENSE
Salaries 3,386 1,984
Commission and incentive compensation 1,824 644
Employee benefits 1,284 587
Equipment 687 348
Net occupancy 796 399
Core deposit and other intangibles 647 46
FDIC and other deposit assessments 338 8
Other   2,856     1,426
Total noninterest expense   11,818     5,442
 
INCOME BEFORE INCOME TAX EXPENSE 4,641 3,093
Income tax expense   1,552     1,074
 
NET INCOME BEFORE NONCONTROLLING INTERESTS 3,089 2,019
Less: Net income from noncontrolling interests   44     20
 
WELLS FARGO NET INCOME $ 3,045   $ 1,999
 
WELLS FARGO NET INCOME APPLICABLE TO COMMON STOCK $ 2,384   $ 1,999
 
EARNINGS PER COMMON SHARE $ 0.56 $ 0.61
 
DILUTED EARNINGS PER COMMON SHARE $ 0.56 $ 0.60
 
DIVIDENDS DECLARED PER COMMON SHARE $ 0.34 $ 0.31
 
Average common shares outstanding 4,247.4 3,302.4
Diluted average common shares outstanding  

 

4,249.3       3,317.9
 
Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
  Quarter ended
(in millions, except per share amounts)   Mar. 31,
2009 		  Dec. 31,
2008 		  Sept. 30,
2008 		  June 30,
2008 		  Mar. 31,
2008
       
INTEREST INCOME
Trading assets $ 266 $ 51 $ 41 $ 38 $ 47
Securities available for sale 2,709 1,534 1,397 1,224 1,132
Mortgages held for sale 415 362 394 423 394
Loans held for sale 67 14 12 10 12
Loans 10,765 6,726 6,888 6,806 7,212
Other interest income   91     41     42     46     52
Total interest income   14,313     8,728     8,774     8,547     8,849
 
INTEREST EXPENSE
Deposits 999 845 1,019 1,063 1,594
Short-term borrowings 123 204 492 357 425
Long-term debt 1,779 955 882 849 1,070
Other interest expense   36     --     --     --     --
Total interest expense   2,937     2,004     2,393     2,269     3,089
 
NET INTEREST INCOME 11,376 6,724 6,381 6,278 5,760
Provision for credit losses   4,558     8,444     2,495     3,012     2,028
Net interest income after provision for credit losses   6,818     (1,720 )   3,886     3,266     3,732
 
NONINTEREST INCOME
Service charges on deposit accounts 1,394 803 839 800 748
Trust and investment fees 2,215 661 738 762 763
Card fees 853 589 601 588 558
Other fees 901 535 552 511 499
Mortgage banking 2,504 (195 ) 892 1,197 631
Insurance 581 337 439 550 504
Net gains (losses) on debt securities available for sale (119 ) 721 84 (91 ) 323
Net gains (losses) from equity investments (157 ) (608 ) (509 ) 47 313
Other   1,469     (90 )   360     818     464
Total noninterest income   9,641     2,753     3,996     5,182     4,803
 
NONINTEREST EXPENSE
Salaries 3,386 2,168 2,078 2,030 1,984
Commission and incentive compensation 1,824 671 555 806 644
Employee benefits 1,284 338 486 593 587
Equipment 687 402 302 305 348
Net occupancy 796 418 402 400 399
Core deposit and other intangibles 647 47 47 46 46
FDIC and other deposit assessments 338 57 37 18 8
Other   2,856     1,709     1,594     1,647     1,426
Total noninterest expense   11,818     5,810     5,501     5,845     5,442
 

INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)

4,641 (4,777 ) 2,381 2,603 3,093
Income tax expense (benefit)   1,552     (2,036 )   730     834     1,074
 

NET INCOME (LOSS) BEFORE NONCONTROLLING INTERESTS

3,089 (2,741 ) 1,651 1,769 2,019
Less: Net income (loss) from noncontrolling interests   44     (7 )   14     16     20
 
WELLS FARGO NET INCOME (LOSS) $ 3,045   $ (2,734 ) $ 1,637   $ 1,753   $ 1,999
 

WELLS FARGO NET INCOME (LOSS) APPLICABLE TO COMMON STOCK

$ 2,384   $ (3,020 ) $ 1,637   $ 1,753   $ 1,999
 
EARNINGS (LOSS) PER COMMON SHARE $ 0.56 $ (0.84 ) $ 0.49 $ 0.53 $ 0.61
 
DILUTED EARNINGS (LOSS) PER COMMON SHARE $ 0.56 $ (0.84 ) $ 0.49 $ 0.53 $ 0.60
 
DIVIDENDS DECLARED PER COMMON SHARE $ 0.34 $ 0.34 $ 0.34 $ 0.31 $ 0.31
 
Average common shares outstanding 4,247.4 3,582.4 3,316.4 3,309.8 3,302.4
Diluted average common shares outstanding     4,249.3       3,593.6       3,331.0       3,321.4       3,317.9
 
Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
 
(in millions, except shares)   Mar. 31,
2009 		  Dec. 31,
2008 		  Mar. 31,
2008
     
ASSETS
Cash and due from banks $ 22,186 $ 23,763 $ 13,146

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

18,625 49,433 4,171
Trading assets 46,497 54,884 8,893
Securities available for sale 178,468 151,569 81,787

Mortgages held for sale (includes $35,205, $18,754 and $27,927 carried at fair value)

36,807 20,088 29,708

Loans held for sale (includes $114 carried at fair value at March 31, 2009, and $398 at December 31, 2008)

8,306 6,228 813
 
Loans 843,579 864,830 386,333
Allowance for loan losses   (22,281 )   (21,013 )   (5,803 )
Net loans   821,298     843,817     380,530