SAN FRANCISCO, April 17 /CNW/ - Wells Fargo & Company (NYSE:WFC):
-- Record diluted earnings per share of $0.66, up 10 percent from prior
year's $0.60, up 13 percent (annualized) from fourth quarter 2006
-- Record net income of $2.24 billion, up 11 percent from prior year's
$2.02 billion, up 12 percent (annualized) from fourth quarter 2006
-- Record revenue up 10 percent from prior year
-- Average loans up 12 percent (annualized) from prior quarter, up 3
percent from prior year; up 13 percent from prior year excluding real estate
1-4 family first mortgages
-- Average core deposits(a) up 10 percent from prior year, up 9 percent
(annualized) from prior quarter
-- Net interest margin of 4.95 percent, up 10 basis points from prior
year, up 2 basis points from prior quarterQuarter ended
---------------------------------------
Mar. 31, Dec. 31, Mar. 31,
2007 2006 2006
-------- -------- --------
Earnings
Diluted earnings per share $ 0.66 $ 0.64 $ 0.60
Net income (in billions) 2.24 2.18 2.02
Asset Quality
Net charge-offs as % of avg.
total loans 0.90% 0.92% 0.56%
Nonperforming assets as %
of total loans 0.82 0.76 0.60
Other
Revenue (in billions) $ 9.44 $ 9.41 $ 8.56
Average loans (in billions) 321.4 312.2 311.1
Average core deposits(a)
(in billions) 290.6 283.8 257.5
Net interest margin 4.95% 4.93% 4.85%(a) See Footnote 2 to Summary Financial Data.
Wells Fargo & Company (NYSE:WFC) reported record diluted earnings per
common share of $0.66 for first quarter 2007, up 10 percent from $0.60 in
first quarter 2006. Net income was a record $2.24 billion, up 11 percent from
$2.02 billion in first quarter 2006.
"Once again, our talented team delivered outstanding, industry-leading
results with solid double-digit growth in revenue, net income and earnings per
share," said Chairman and CEO Dick Kovacevich. "We achieved this broad-based,
record breaking performance despite a downturn in some housing markets and a
flat to inverted yield curve because our team members, guided by our vision
and values, are relentlessly focused on satisfying all our customers'
financial needs and helping them succeed financially. By collaborating
together effectively as 'One Wells Fargo,' they're also, instinctively and
naturally, putting what's best for the customer first and thus making it
easier and adding greater value for our customers to do more business with us.
As a result of our outstanding financial performance and conservative risk
management, Wells Fargo Bank, N.A. is now the only U.S. bank, and one of only
two worldwide, to have the highest credit rating from both Moody's Investors
Service and Standard & Poor's Ratings Services."
Financial Performance
Diluted earnings per share were a record $0.66, up 10 percent from $0.60
earned in first quarter 2006 and up 13 percent (annualized) from $0.64 in
fourth quarter 2006. "We are very pleased to report, once again, solid,
double-digit growth and record results," said Chief Financial Officer Howard
Atkins. "In the last five years, Wells Fargo has grown earnings per share at a
double-digit pace in 17 of the past 20 quarters. The results in first quarter
2007 were notable for the balance across our broadly diverse business
segments, for continued improvement in operating margins, and for a modest
decline in net credit losses from fourth quarter levels. In terms of business
performance, growth was once again well balanced between consumer and
commercial with most of our 80 plus businesses producing double-digit earnings
or revenue growth in the quarter. In terms of operating margins, net interest
margin improved to 4.95 percent, up 10 basis points from a year ago; return on
assets, which includes credit costs, improved to 1.89 percent, up 17 basis
points from a year ago; operating leverage was positive with revenue growth of
10 percent exceeding 9 percent expense growth; and return on equity remained
strong at 19.7 percent, among the best in the industry. Earnings growth and
operating margins were solid and improved in first quarter, despite an
increase in nonperforming assets and credit charge-offs from a year ago,
reflecting in large part our ongoing discipline in managing our businesses and
balance sheet for industry-leading risk-adjusted returns."
Revenue
Revenue of $9.4 billion was another record, up $886 million, or 10
percent, from a year ago. "Community Banking and Wholesale Banking revenue
growth was 12 percent and 15 percent, respectively, reflecting the strength
and balance of our business model," said Atkins. Businesses with double-digit,
or near double-digit, year-over-year revenue growth included commercial
banking, asset-based lending, asset management, international/trade finance,
capital markets, real estate brokerage, business direct, wealth management,
card services, home equity lending, personal credit management, corporate
trust and home mortgage. Year-over-year revenue growth was driven by growth in
net interest income and particularly strong increases in fee income across
products and services, reflecting continued growth in cross-sell. "Given the
deterioration in the nonprime mortgage market during the first quarter, we
took a number of actions that reduced revenue by approximately $90 million
(pre tax), including reducing the carrying value of all nonprime loans in our
mortgage warehouse and providing for additional estimated early payment
default losses on securitized mortgages. In addition, given the decline in
mortgage rates during the quarter, revenue was reduced by $34 million (pre
tax) reflecting the decline in the value of mortgage servicing rights net of
hedging," said Atkins.
Loans
Average loans increased $10.3 billion, or 3 percent, to $321.4 billion
from a year ago. Excluding real estate 1-4 family first mortgages -- the loan
category affected by the sales of adjustable rate mortgages (ARMs) last year
-- total average loans grew by $30.2 billion, or 13 percent, from first
quarter 2006. On a linked-quarter basis, average total loans grew $9.3
billion, or 12 percent (annualized). Since the ARM sales were completed prior
to fourth quarter 2006, the 12 percent (annualized) linked-quarter loan growth
was not impacted by any ARM sales.
Average commercial and commercial real estate loans increased $12.3
billion, or 11 percent, from first quarter 2006 and increased $3.5 billion, or
12 percent (annualized), from fourth quarter 2006, marking the 10th
consecutive quarter of double-digit, year-over-year commercial loan growth.
Middle market lending, specialized financial services, commercial real estate,
small business lending (Business Direct) and asset-based lending all had
double-digit loan growth from first quarter 2006.
Average consumer loans decreased $2.8 billion from first quarter 2006 due
to the previous sales of ARMs. Excluding real estate 1-4 family first
mortgages, average consumer loans increased $17.1 billion, or 14 percent, from
a year ago. Average real estate 1-4 family junior lien mortgages, credit card,
and other revolving credit and installment loans grew at double-digit rates
from a year ago. On a linked-quarter basis, average consumer loans grew 12
percent (annualized).
Deposits
Average core deposits increased $33.1 billion, or 13 percent, to $290.6
billion year over year and increased 10 percent (annualized) on a
linked-quarter basis. Core deposits now include certain funds that were
previously swept into non-deposit products. Including only the growth in these
funds from the date of conversion to deposits, average core deposits grew 10
percent year over year and 9 percent (annualized) on a linked-quarter basis.
Average mortgage escrow deposits were $20.6 billion, up $5.1 billion from
first quarter 2006 and up $0.4 billion on a linked-quarter basis. Average
retail core deposits grew $9.9 billion, or 5 percent, from first quarter 2006
and increased $3.7 billion, or 7 percent (annualized), on a linked-quarter
basis. Average net new consumer checking accounts grew 5.2 percent from first
quarter 2006.
Net Interest Income
Net interest income increased 3 percent from first quarter 2006 driven by
a one percent increase in average earnings assets and a 10 basis point
increase in the net interest margin. The completion of the sales of ARMs and
lower-yielding investment securities last year reduced the earning asset
growth rate year over year, but also helped boost net interest margin. Net
interest margin continued to benefit from growth in core deposits. On a
linked-quarter basis, net interest income was down $40 million, or 3 percent
(annualized), largely due to two fewer days in the quarter, and a decline in
the mortgage loan warehouse. On a linked-quarter basis, net interest margin
increased two basis points to 4.95 percent.
Noninterest Income
Noninterest income increased $746 million, or 20 percent, from first
quarter 2006. "Growth in fee income was strong across the board, reflecting
our ongoing success in cross-selling products and services to both consumer
and commercial relationships," said Atkins. Deposit service fees rose 10
percent reflecting solid growth in deposit balances and accounts; trust and
investment fees rose 10 percent reflecting increases in equity/bond markets
from a year ago and success in building new wealth management relationships;
debit and credit card fees rose 22 percent reflecting deeper penetration rates
and increased activity; insurance fees rose 10 percent reflecting higher
sales; and mortgage banking fee income increased due to an increase in
originations and a 41 percent increase in gross servicing income, including
the $140 billion servicing portfolio acquired last year. Capital markets
activities were generally strong in the quarter, although at $97 million,
equity gains were $88 million below 2006 average quarterly gains of $185
million. In line with its asset/liability management process, the Company sold
$4 billion of its lowest-yielding bonds in the quarter at a gain of $29
million. At March 31, 2007, the net unrealized gain on securities available
for sale was $948 million.
Noninterest Expense
Noninterest expense was up $452 million, or 9 percent, from first quarter
2006. In the last 12 months, the Company opened 104 retail banking stores and
added 7,600 team members (full-time equivalents). On a linked-quarter basis,
noninterest expense increased $115 million, or 9 percent (annualized).
Expenses in first quarter 2007 included $50 million of stock option expense,
$29 million of seasonal FICA expenses and $16 million of acquisition-related
integration costs.
Income Taxes
On January 1, 2007, the Company adopted FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes (FIN 48). Implementation of FIN 48
did not result in a cumulative effect adjustment to retained earnings. At
January 1, 2007, the total amount of unrecognized tax benefits was $3.1
billion, of which $1.4 billion related to tax benefits that, if recognized,
would not impact the annual effective tax rate. During the quarter, $119
million of net tax benefits were recorded, primarily reflecting the resolution
of certain outstanding Federal income tax matters.
Credit Quality
"First quarter 2007 credit results were in line with our expectations,"
said Chief Credit Officer Mike Loughlin. First quarter 2007 net credit losses
were $715 million (0.90 percent of average loans, annualized), down from $726
million (0.92 percent) in fourth quarter 2006, and up from $433 million (0.56
percent) in first quarter 2006, which was positively impacted by historically
low personal bankruptcies after the fourth quarter 2005 bankruptcy spike
caused by the then impending change in the bankruptcy law.
"We are pleased that auto related losses, while still at historically
elevated levels, have stabilized, and our intensive management efforts, in
both collections and underwriting, resulted in lower first quarter loss rates
compared with third and fourth quarter 2006," said Loughlin. "Total 30 day or
greater auto delinquency balances have declined about 25 percent from peak
December 2006 levels due to seasonality and improved collections. Losses
remained at predicted levels in our consumer unsecured and small business
portfolios, and we continued to experience historically low losses in our
commercial portfolios.
"We are experiencing higher losses in our home equity portfolio relative
to the historically low and unsustainable levels experienced in 2006. We see
particular stress in certain regional markets and in loans acquired from
correspondents. We have tightened our underwriting standards and are focusing
additional collections resources on targeted portfolio segments. We expect
higher but manageable losses throughout 2007 in the home equity portfolio.
"With the well-publicized disruption in the nonprime residential real
estate market, let me highlight a few important facts about Wells Fargo's
nonprime mortgages. The vast majority of nonprime mortgages originated at
Wells Fargo Home Mortgage are sold to the secondary market. Most nonprime
loans held on our balance sheet were offered through Wells Fargo Financial.
Most of these loans were debt consolidation refinances to help the customer
improve their financial situation. We conduct a tangible benefits test for
each loan, and we do not offer negative amortization products. Approximately
half these loans are fixed rate and we underwrite all loans to the customer's
ability to afford current and projected payments based on a fully indexed
rate. All of these loans at Wells Fargo Financial were originated by team
members; none were from third party brokers or correspondents.
"We conservatively underwrite Wells Fargo Financial real estate secured
loans. Income is verified for all borrowers; there are no reduced
documentation or stated income programs. Borrowers must have what we call
minimum 'residual' income or cash flow after all debt service to qualify for
these loans. While we are confident our portfolio will continue to perform
better than the industry, we purchased private mortgage insurance on higher
loan-to-value loans to mitigate our risk. Our total residential real estate
portfolio is geographically diverse and we believe the portfolio has a minimal
amount of adjustable mortgage rate reset risk in the next 12 months."
Total nonperforming assets were $2.67 billion (0.82 percent of loans) at
March 31, 2007 compared with $2.42 billion (0.76 percent) at December 31, 2006
and $1.85 billion (0.60 percent) one year ago, including, respectively, $381
million, $322 million, and $227 million of Government National Mortgage
Association (GNMA) repurchased loans, fully insured or guaranteed. "Commercial
nonperforming assets continued to be at historically low levels, and our loan
impairment analysis indicates only modest loss potential," said Loughlin. "We
are constantly monitoring residential mortgage and auto nonperforming levels
and have active programs to determine the best strategy to hold and workout or
sell these assets."
The total of loans 90 days or more past due and still accruing was $4.81
billion, $5.07 billion and $3.41 billion at March 31, 2007, December 31, 2006,
and March 31, 2006, respectively. For the same periods, the total included
$3.68 billion, $3.91 billion and $2.68 billion, respectively, in advances
pursuant to our servicing agreements to GNMA mortgage pools whose repayments
are insured by the Federal Housing Administration or guaranteed by the
Department of Veterans Affairs.Loans 90 Days or More Past Due and Still Accruing
(Excluding Insured/Guaranteed GNMA Balances)
Mar. 31, Dec. 31, Mar. 31,
(in millions) 2007 2006 2006
-------- -------- --------
Commercial and commercial
real estate:
Commercial $ 29 $ 15 $ 17
Other real estate mortgage 4 3 4
Real estate construction 5 3 13
-------- -------- --------
Total commercial and
commercial real estate 38 21 34
Consumer:
Real estate 1-4 family
first mortgage 159 154 92
Real estate 1-4 family
junior lien mortgage 64 63 47
Credit card 272 262 158
Other revolving credit
and installment 560 616 364
-------- -------- --------
Total consumer 1,055 1,095 661
Foreign 36 44 37
-------- -------- --------
Total $ 1,129 $ 1,160 $ 732
-------- -------- --------Business Segment Performance
Wells Fargo has three lines of business for management reporting:
Community Banking, Wholesale Banking and Wells Fargo Financial. Net income for
each of the three business segments was:First Quarter %
---------------------
(in millions) 2007 2006 Change
------- ------- ------
Community Banking $1,532 $1,210 27%
Wholesale Banking 598 528 13
Wells Fargo Financial 114 280 (59)"As 'One Wells Fargo,' our team continues to focus on working together to
satisfy all of our customers' financial needs," said President and COO John
Stumpf. "Yet again this quarter we saw the tremendous power of our diversified
business model as our Company produced strong, broad-based results. Our
customers are deepening their relationships with us, adding products and
services, as illustrated by a new record in consumer cross-sell this quarter.
At the same time, we continued to see significant improvement in customer
loyalty and satisfaction measures."
More financial information about the business segments can be found in
table entitled 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 primarily in 23 midwestern and western states,
and mortgage and home equity loans in all 50 states.Selected Financial Information
First Quarter %
--------------------
(in millions) 2007 2006 Change
------- ------- ------
Total revenue $ 6,071 $ 5,399 12%
Provision for credit losses 306 189 62
Noninterest expense 3,640 3,387 7
Net income 1,532 1,210 27
Average loans (in billions) 180.8 190.4 (5)
Average assets (in billions) 307.0 314.8 (2)-- Wealth Management Group Highlights
-- Revenue up 12 percent from prior year
-- Brokerage assets under administration up 17 percent from
prior year
-- Brokerage revenue up 25 percent from prior year
-- Private bankers up 13 percent from prior year to 800 at
March 31, 2007
-- Internet Highlights
-- Active online consumers of 9.0 million, up 18 percent from
prior year, reaching 63 percent of consumer checking
accounts
-- Bill payment and presentment customers of 5.1 million, up
38 percent from prior year
-- 880,000 active online small business customers, up
24 percent from prior yearCommunity Banking reported net income of $1.53 billion, up 27 percent
from first quarter 2006 due primarily to growth in retail banking and home
mortgage net income. Net interest income declined $32 million, or 1 percent,
compared with first quarter 2006, due to a decline in earning assets that
resulted from sales of ARMs at the end of first quarter 2006. The decline
related to ARM sales was partially offset by an improvement in net interest
margin of 21 basis points to 5.03 percent in first quarter 2007, despite
pressures from the flat-to-inverted yield curve. Noninterest income increased
$704 million, or 33 percent, compared with first quarter 2006. The growth was
due primarily to higher fee income related to mortgage and consumer loans,
cards, brokerage and deposit service charges. Noninterest expense increased
$253 million, or 7 percent, primarily due to growth in personnel expenses,
while the provision for credit losses increased $117 million, or 62 percent,
primarily due to higher losses in credit card and equity lending.
Regional Banking Highlights-- Core product solutions (sales) of 4.96 million, up 13 percent from
prior year on a comparable basis
-- Record retail bank household cross-sell of 5.3 products per retail
bank household
-- Sales of Wells Fargo Packages(R) (a checking account and at least
three other products) up 29 percent from prior year
-- Net consumer checking accounts up 5.2 percent from prior year
-- Store-based customer loyalty scores continued to improve, up
12 percent from prior year
-- Business Banking
-- Store-based business solutions up 19 percent from prior year
on a comparable basis
-- Loans to small businesses (loans primarily less than $100,000
on our Business Direct platform) grew 19 percent from prior
year
-- Net business checking accounts up 4.5 percent from prior year
-- Business Banking household cross-sell at 3.4, up from 3.0 in
prior year"Our highly-engaged, talented and hard-working team members continued to
make progress on delivering a great experience for our customers," said Carrie
Tolstedt, group EVP, Community Banking. "We had another strong quarter, with
4.96 million core product solutions provided to customers, up 13 percent from
prior year on a comparable basis. Our retail bank household cross-sell rose to
a record high of 5.3, and 65 percent of new checking account customers
purchased Wells Fargo Packages. We've conducted more than 1.6 million
store-based customer surveys since January 2004, and we continue to perform
50,000 surveys per month. For customers transacting at the teller line,
welcoming and wait time survey scores were up 20 percent and customer loyalty
scores improved 12 percent from same period last year. During first quarter,
we also opened 18 banking stores, added 57 new webATM(R) machines and
converted 151 ATMs in Central California to Envelope-Free(SM) webATM machines
to better serve our customers."
Home Mortgage and Home Equity Highlights
-- Mortgage originations of $68 billion, up 3 percent from prior year
-- Mortgage applications of $113 billion, up 19 percent from prior year
-- Mortgage application pipeline of $57 billion, up 19 percent from
prior quarter
-- Record owned mortgage servicing portfolio of $1.40 trillion, up 34
percent from prior year and up 9 percent (annualized) from prior quarter
-- National Home Equity Group portfolio of $79 billion
"Our culture of conservative underwriting of nonprime credit and a very
strong commitment to fair and responsible lending to customers across the
credit spectrum has served us well in these turbulent times in the mortgage
industry," said Mark Oman, senior EVP, Home and Consumer Finance Group. "Wells
Fargo's responsible lending principles, with a focus on the consumer's ability
to repay, and setting loan terms and features that are appropriate to the
consumer's circumstances have resulted in significantly better credit
performance than the majority of the competitors in the industry. However,
given the current uncertainties in the housing and capital markets, Home
Mortgage has further tightened its underwriting guidelines. Loans underwritten
prior to these guideline changes were either sold or marked to market during
the quarter and have been fully reflected in first quarter results. Nonprime
applications of $7.4 billion were down 15 percent on a linked-quarter basis,
reflecting the underwriting changes made during the quarter.
"With prime mortgage rates in the 6.00-6.25 percent range, the issues
confronting the nonprime segment did not dampen demand for prime mortgages. In
fact, total first quarter 2007 application volume of $113 billion was up 26
percent on a linked-quarter basis. Prime applications of $105.1 billion were
up 29 percent on a linked-quarter basis."
Wholesale Banking serves customers coast to coast, including middle
market banking, corporate banking, commercial real estate, treasury
management, asset-based lending, insurance brokerage, foreign exchange, trade
services, specialized lending, equipment finance, capital markets activities
and institutional investments.Selected Financial Information
First Quarter %
-------------------
(in millions) 2007 2006 Change
------- ------- ------
Total revenue $ 2,046 $ 1,776 15%
Provision (reversal
of provision) for credit losses 13 (2) --
Noninterest expense 1,137 992 15
Net income 598 528 13
Average loans (in billions) 77.9 67.6 15
Average assets (in billions) 101.0 95.9 5-- Eastdil Secured represented Blackstone Group in its purchase of
Equity Office Properties Trust
-- Electronic collection transactions surpassed paper collection
transactions for the first time in February
-- Desktop Deposit(R) service named Computerworld magazine's "Best in
Class for 2007"
"The Wholesale Banking team achieved strong results across a broad
spectrum of business lines," said Dave Hoyt, senior EVP, Wholesale Banking
Group. "We continue to deliver a wide range of products and services to our
customers through robust sales and distribution teams.
"After integrating recent acquisitions with our existing funds business,
half of our mutual funds were in Lipper's top two quintiles for performance
over the three year period ending February 28, 2007. We're making strong gains
in the asset management business, with 11 percent growth in assets under
management year over year and now have the third-largest bank-owned portfolio
of mutual funds.
"Our customers continue to transition from paper to electronic financial
services; their electronic collections surpassed paper collections for the
first time in February. Active users of our Commercial Electronic Office(R)
portal were up nearly 30 percent from the same period last year. Checks
processed electronically through our internet-based industry-leading remote
Desktop Deposit service during the quarter totaled $38 billion. With Wells
Fargo, business customers of every size and type can successfully and
affordably share in the benefits of the paper-to-electronic evolution."
Wholesale Banking reported net income of $598 million in first quarter
2007, up 13 percent from a year ago. Revenue increased 15 percent, driven by
strong loan and deposit growth and higher fee income. Average loans reached
$78 billion, up 15 percent from first quarter 2006, with double digit
increases across nearly all wholesale lending businesses. Average deposits
grew $25 billion, all in interest-bearing balances, reflecting a mix of
organic growth and the conversions in 2006 of customer sweep accounts from
off-balance sheet money market funds into Wells Fargo deposits. Noninterest
income increased $169 million due to higher trust and investment income,
insurance revenue, commercial real estate brokerage fees and capital markets
activity. Noninterest expense increased $145 million mainly from higher
personnel-related costs including team member additions and higher incentive
payments, along with higher expenses from our acquisitions, expenses related
to higher sales volumes and investments in new offices, businesses and
systems. On a linked-quarter basis, Wholesale Banking net income rose $90
million, or 18 percent, driven by capital markets activity and seasonality in
our insurance businesses.
Wells Fargo Financial offers consumer loans primarily through real
estate-secured debt consolidation products, automobile financing, consumer and
private-label credit cards and commercial services to consumers and businesses
throughout the United States, Canada, Puerto Rico and the Pacific Rim.Selected Financial Information
First Quarter %
-------------------
(in millions) 2007 2006 Change
------- ------- ------
Total revenue $ 1,324 $ 1,380 (4)%
Provision for credit losses 396 246 61
Noninterest expense 749 695 8
Net income 114 280 (59)
Average loans (in billions) 62.7 53.1 18
Average assets (in billions) 68.3 58.7 16-- Average loans up 18 percent from first quarter 2006
-- Real estate-secured receivables up 20 percent to $23.6 billion
-- Auto finance receivables up 23 percent to $27.6 billion"Net income decreased over the first quarter of 2006 because of the $127
million gain we realized on the sale of our consumer lending business in
Puerto Rico a year ago, plus the higher provision we took for credit losses
this year," said Tom Shippee, Wells Fargo Financial president and CEO. "The
higher credit losses year over year were due, in part, to lower than normal
bankruptcy charge-offs and higher recoveries early in 2006. Additionally, the
auto lending losses were up from a year ago, but declined on a linked-quarter
basis.
"Our real estate lending business remained on solid ground. Wells Fargo
Financial's real estate-secured lending portfolio performed well in a quarter
when many other companies' nonprime lending businesses suffered. We attribute
our strong credit quality to our disciplined business model and underwriting
at Wells Fargo Financial, where we do not offer riskier residential real
estate products such as teaser rates, stated-income loans and no documentation
loans. Real estate delinquencies continued to be within our expectations,
well-below industry trends and showed improvement over the fourth quarter.
"In terms of auto lending -- our other large business -- we continued to
make steady progress as a result of changes we implemented in the second half
of 2006 to reduce delinquencies and charge-offs. Improved processes, reduced
originations -- intended to improve collections capacity -- and increased
staffing levels in collections have all had a positive impact. These changes
in the auto business resulted in decreased losses of $27 million in the first
quarter and an improvement of approximately 25 percent in the auto portfolio's
30-plus day delinquency rates."
Wells Fargo Financial reported net income of $114 million, down 59
percent from a year ago. Revenue of $1.32 billion was driven by an increase in
net interest income from continued growth in the real estate and auto loan
portfolios. Revenue decreased $56 million from first quarter 2006, despite
growth in net interest income, because of the gain in first quarter 2006 from
the sale of the Puerto Rican business. Average loans grew 18 percent to $62.7
billion. Noninterest expense was $749 million, up 8 percent from first quarter
2006, driven by normal annual increases in personnel costs, as well as the
staffing level increases in collections and other investments in business
processes.
Recorded Message
A recorded message reviewing Wells Fargo's results and characteristics of
several of the loan portfolios will be available at 5:30 a.m. Pacific Time
through April 20, 2007. Dial 877-660-6853 (domestic) or 201-612-7415
(international). Enter the account number 286 and conference ID 236054#. The
call is also available on the internet at www.wellsfargo.com/ir and
http://www.vcall.com/IC/CEPage.asp?ID=115230.
The following appears in accordance with the Private Securities
Litigation Reform Act of 1995:
This news release contains forward-looking statements about the Company,
including statements about credit quality and credit loss potential generally
and specifically the statements that we expect higher but manageable losses in
our home equity loan portfolio throughout 2007, that we believe our
residential real estate loan portfolio has a minimal amount of adjustable
mortgage rate reset risk in the next 12 months, and that we are confident that
our Wells Fargo Financial real estate secured loan portfolio will continue to
perform better than the industry generally. Do not unduly rely on
forward-looking statements. They give our expectations about the future and
are not guarantees. Forward-looking statements speak only as of the date they
are made, and we do not undertake any obligation to update them to reflect
changes that occur after that date.
There are a number of factors that could cause results to differ
significantly from our expectations, including a deterioration of the credit
quality of our home equity and real estate loan portfolios due to higher
interest rates, increased unemployment, a decline in home values or other
economic factors. For a discussion of factors that may cause actual results to
differ from expectations, refer to our Annual Report on Form 10-K for the year
ended December 31, 2006, including information incorporated into the Form 10-K
from our 2006 Annual Report to Stockholders, filed as Exhibit 13 to the Form
10-K.
Any factor described in this news release or in any document referred to
in this news release could, by itself or together with one or more other
factors, adversely affect the Company's business, earnings and/or financial
condition.
Wells Fargo & Company is a diversified financial services company with
$486 billion in assets, providing banking, insurance, investments, mortgage
and consumer finance through more than 6,000 stores and the internet
(wellsfargo.com) across North America and internationally. Wells Fargo Bank,
N.A. is the only bank in the U.S., and one of only two banks worldwide, to
have the highest credit rating from both Moody's Investors Service, "Aaa," and
Standard & Poor's Ratings Services, "AAA."Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA
----------------------------------------------------------------------
% Change
Quarter ended Mar. 31, 2007 from
----------------------------- ------------------
($ in millions,
except per share Mar. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
amounts) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
For the Quarter
Net income $2,244 $2,181 $2,018 3% 11%
Diluted earnings per
common share 0.66 0.64 0.60 3 10
Profitability ratios
(annualized):
Net income to
average total
assets (ROA) 1.89% 1.79% 1.72% 6 10
Net income to
average
stockholders'
equity (ROE) 19.65 18.99 19.89 3 (1)
Efficiency ratio (1) 58.5 57.5 59.3 2 (1)
Total revenue $9,441 $9,413 $8,555 -- 10
Dividends declared
per common share 0.28 0.28 0.26 -- 8
Average common shares
outstanding 3,376.0 3,379.4 3,358.3 -- 1
Diluted average
common shares
outstanding 3,416.1 3,424.0 3,395.7 -- 1
Average loans $321,429 $312,166 $311,132 3 3
Average assets 482,105 482,585 475,195 -- 1
Average core deposits
(2) 290,586 283,790 257,466 2 13
Average retail core
deposits (3) 223,729 220,025 213,876 2 5
Net interest margin 4.95% 4.93% 4.85% -- 2
At Quarter End
Securities available
for sale $45,443 $42,629 $51,195 7 (11)
Loans 325,487 319,116 306,676 2 6
Allowance for loan
losses 3,772 3,764 3,845 -- (2)
Goodwill 11,275 11,275 11,050 -- 2
Assets 485,901 481,996 492,428 1 (1)
Core deposits (2) 296,469 288,068 263,136 3 13
Stockholders' equity 46,135 45,876 41,961 1 10
Capital ratios:
Stockholders'
equity to assets 9.49% 9.52% 8.52% -- 11
Risk-based capital
(4)
Tier 1 capital 8.71 8.95 8.30 (3) 5
Total capital 12.11 12.50 11.49 (3) 5
Tier 1 leverage (4) 7.83 7.89 7.13 (1) 10
Book value per common
share $13.77 $13.58 $12.50 1 10
Team members (active,
full-time
equivalent) 159,600 158,000 152,000 1 5
Common Stock Price
High $36.64 $36.99 $32.76 (1) 12
Low 33.01 34.90 30.31 (5) 9
Period end 34.43 35.56 31.94 (3) 8
----------------------------------------------------------------------
(1)The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(2)Core deposits are noninterest-bearing deposits, interest-bearing
checking, savings certificates, market rate and other savings, and
certain foreign deposits (Eurodollar sweep balances). During 2006,
certain customer accounts (largely Wholesale Banking) were converted
to deposit balances in the form of Eurodollar sweep accounts from
off-balance sheet money market funds and repurchase agreements.
Included in average core deposits were converted balances of $9,888
million, $8,888 million and $1,234 million for the quarters ended
March 31, 2007, December 31, 2006, and March 31, 2006, respectively.
Average core deposits increased 10% from first quarter 2006 and 9%
(annualized) from fourth quarter 2006, not including these converted
balances.
(3)Retail core deposits are total core deposits excluding Wholesale
Banking core deposits and retail mortgage escrow deposits.
(4)The March 31, 2007, ratios are preliminary.Wells Fargo & Company and Subsidiaries
FIVE QUARTER SUMMARY FINANCIAL DATA
----------------------------------------------------------------------
Quarter ended
-------------------------------------------------
($ in millions,
except per share Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
amounts) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
For the Quarter
Net income $2,244 $2,181 $2,194 $2,089 $2,018
Diluted earnings per
common share 0.66 0.64 0.64 0.61 0.60
Profitability ratios
(annualized):
Net income to
average total
assets (ROA) 1.89% 1.79% 1.76% 1.71% 1.72%
Net income to
average
stockholders'
equity (ROE) 19.65 18.99 20.00 19.76 19.89
Efficiency ratio (1) 58.5 57.5 56.9 58.9 59.3
Total revenue $9,441 $9,413 $8,934 $8,789 $8,555
Dividends declared
per common share 0.28 0.28 -- 0.54 0.26
Average common
shares outstanding 3,376.0 3,379.4 3,371.9 3,363.8 3,358.3
Diluted average
common shares
outstanding 3,416.1 3,424.0 3,416.0 3,404.4 3,395.7
Average loans $321,429 $312,166 $303,980 $300,388 $311,132
Average assets 482,105 482,585 494,679 491,456 475,195
Average core
deposits (2) 290,586 283,790 269,725 264,129 257,466
Average retail core
deposits (3) 223,729 220,025 214,294 214,904 213,876
Net interest margin 4.95% 4.93% 4.79% 4.76% 4.85%
At Quarter End
Securities available
for sale $45,443 $42,629 $52,635 $71,420 $51,195
Loans 325,487 319,116 307,491 300,622 306,676
Allowance for loan
losses 3,772 3,764 3,799 3,851 3,845
Goodwill 11,275 11,275 11,192 11,091 11,050
Assets 485,901 481,996 483,441 499,516 492,428
Core deposits (2) 296,469 288,068 270,818 268,350 263,136
Stockholders' equity 46,135 45,876 44,862 41,894 41,961
Capital ratios:
Stockholders'
equity to assets 9.49% 9.52% 9.28% 8.39% 8.52%
Risk-based capital
(4)
Tier 1 capital 8.71 8.95 8.74 8.35 8.30
Total capital 12.11 12.50 12.34 11.82 11.49
Tier 1 leverage
(4) 7.83 7.89 7.41 6.99 7.13
Book value per
common share $13.77 $13.58 $13.30 $12.46 $12.50
Team members
(active, full-time
equivalent) 159,600 158,000 156,400 154,300 152,000
Common Stock Price
High $36.64 $36.99 $36.89 $34.86 $32.76
Low 33.01 34.90 33.36 31.90 30.31
Period end 34.43 35.56 36.18 33.54 31.94
----------------------------------------------------------------------
(1)The efficiency ratio is noninterest expense divided by total
revenue (net interest income and noninterest income).
(2)Core deposits are noninterest-bearing deposits, interest-bearing
checking, savings certificates, market rate and other savings, and
certain foreign deposits (Eurodollar sweep balances). During 2006,
certain customer accounts (largely Wholesale Banking) were converted
to deposit balances in the form of Eurodollar sweep accounts from
off-balance sheet money market funds and repurchase agreements.
Included in average core deposits were converted balances of $9,888
million, $8,888 million, $3,343 million, $2,771 million and $1,234
million for the quarters ended March 31, 2007, December 31, 2006,
September 30, 2006, June 30, 2006, and March 31, 2006, respectively.
(3)Retail core deposits are total core deposits excluding Wholesale
Banking core deposits and retail mortgage escrow deposits.
(4)The March 31, 2007, ratios are preliminary.Wells Fargo & Company and Subsidiaries
CONSOLIDATED STATEMENT OF INCOME
----------------------------------------------------------------------
Quarter ended
March 31, %
-----------------
(in millions, except per share amounts) 2007 2006 Change
----------------------------------------------------------------------
INTEREST INCOME
Trading assets $53 $69 (23)%
Securities available for sale 686 663 3
Mortgages held for sale 530 609 (13)
Loans held for sale 15 11 36
Loans 6,764 6,110 11
Other interest income 91 70 30
-------- --------
Total interest income 8,139 7,532 8
-------- --------
INTEREST EXPENSE
Deposits 1,857 1,482 25
Short-term borrowings 136 270 (50)
Long-term debt 1,136 910 25
-------- --------
Total interest expense 3,129 2,662 18
-------- --------
NET INTEREST INCOME 5,010 4,870 3
Provision for credit losses 715 433 65
-------- --------
Net interest income after provision for
credit losses 4,295 4,437 (3)
-------- --------
NONINTEREST INCOME
Service charges on deposit accounts 685 623 10
Trust and investment fees 731 663 10
Card fees 470 384 22
Other fees 511 488 5
Mortgage banking 790 415 90
Operating leases 192 201 (4)
Insurance 399 364 10
Net gains (losses) on debt securities
available for sale 31 (35) --
Net gains from equity investments 97 190 (49)
Other 525 392 34
-------- --------
Total noninterest income 4,431 3,685 20
-------- --------
NONINTEREST EXPENSE
Salaries 1,867 1,672 12
Incentive compensation 742 668 11
Employee benefits 665 589 13
Equipment 337 335 1
Net occupancy 365 336 9
Operating leases 153 161 (5)
Other 1,397 1,313 6
-------- --------
Total noninterest expense 5,526 5,074 9
-------- --------
INCOME BEFORE INCOME TAX EXPENSE 3,200 3,048 5
Income tax expense 956 1,030 (7)
-------- --------
NET INCOME $2,244 $2,018 11
-------- --------
EARNINGS PER COMMON SHARE $0.66 $0.60 10
DILUTED EARNINGS PER COMMON SHARE $0.66 $0.60 10
DIVIDENDS DECLARED PER COMMON SHARE $0.28 $0.26 8
Average common shares outstanding 3,376.0 3,358.3 1
Diluted average common shares outstanding 3,416.1 3,395.7 1
----------------------------------------------------------------------Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
(in millions, except per Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
share amounts) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
INTEREST INCOME
Trading assets $53 $46 $45 $65 $69
Securities available for
sale 686 726 1,014 875 663
Mortgages held for sale 530 627 702 808 609
Loans held for sale 15 13 12 11 11
Loans 6,764 6,701 6,555 6,245 6,110
Other interest income 91 118 71 73 70
-------- -------- --------- -------- --------
Total interest income 8,139 8,231 8,399 8,077 7,532
-------- -------- --------- -------- --------
INTEREST EXPENSE
Deposits 1,857 1,901 1,997 1,794 1,482
Short-term borrowings 136 162 271 289 270
Long-term debt 1,136 1,118 1,084 1,010 910
-------- -------- --------- -------- --------
Total interest
expense 3,129 3,181 3,352 3,093 2,662
-------- -------- --------- -------- --------
NET INTEREST INCOME 5,010 5,050 5,047 4,984 4,870
Provision for credit
losses 715 726 613 432 433
-------- -------- --------- -------- --------
Net interest income
after provision for
credit losses 4,295 4,324 4,434 4,552 4,437
-------- -------- --------- -------- --------
NONINTEREST INCOME
Service charges on
deposit accounts 685 695 707 665 623
Trust and investment
fees 731 735 664 675 663
Card fees 470 481 464 418 384
Other fees 511 550 509 510 488
Mortgage banking 790 677 484 735 415
Operating leases 192 190 192 200 201
Insurance 399 299 313 364 364
Net gains (losses) on
debt securities
available for sale 31 51 121 (156) (35)
Net gains from equity
investments 97 256 159 133 190
Other 525 429 274 261 392
-------- -------- --------- -------- --------
Total noninterest
income 4,431 4,363 3,887 3,805 3,685
-------- -------- --------- -------- --------
NONINTEREST EXPENSE
Salaries 1,867 1,812 1,769 1,754 1,672
Incentive compensation 742 793 710 714 668
Employee benefits 665 501 458 487 589
Equipment 337 339 294 284 335
Net occupancy 365 367 357 345 336
Operating leases 153 157 155 157 161
Other 1,397 1,442 1,338 1,435 1,313
-------- -------- --------- -------- --------
Total noninterest
expense 5,526 5,411 5,081 5,176 5,074
-------- -------- --------- -------- --------
INCOME BEFORE INCOME TAX
EXPENSE 3,200 3,276 3,240 3,181 3,048
Income tax expense 956 1,095 1,046 1,092 1,030
-------- -------- --------- -------- --------
NET INCOME $2,244 $2,181 $2,194 $2,089 $2,018
-------- -------- --------- -------- --------
EARNINGS PER COMMON
SHARE $0.66 $0.65 $0.65 $0.62 $0.60
DILUTED EARNINGS PER
COMMON SHARE $0.66 $0.64 $0.64 $0.61 $0.60
DIVIDENDS DECLARED PER
COMMON SHARE $0.28 $0.28 $-- $0.54 $0.26
Average common shares
outstanding 3,376.0 3,379.4 3,371.9 3,363.8 3,358.3
Diluted average common
shares outstanding 3,416.1 3,424.0 3,416.0 3,404.4 3,395.7
----------------------------------------------------------------------Wells Fargo & Company and Subsidiaries
CONSOLIDATED BALANCE SHEET
----------------------------------------------------------------------
% Change
Mar. 31, 2007 from
------------------
(in millions, except Mar. 31, Dec. 31, Mar. 31, Dec. 31, Mar. 31,
shares) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
ASSETS
Cash and due from
banks $12,485 $15,028 $13,224 (17)% (6)%
Federal funds sold,
securities purchased
under resale
agreements and other
short-term
investments 4,668 6,078 4,954 (23) (6)
Trading assets 6,525 5,607 9,930 16 (34)
Securities available
for sale 45,443 42,629 51,195 7 (11)
Mortgages held for
sale (includes
$25,807 million
carried at fair
value at March 31,
2007) 32,286 33,097 43,521 (2) (26)
Loans held for sale 829 721 629 15 32
Loans 325,487 319,116 306,676 2 6
Allowance for loan
losses (3,772) (3,764) (3,845) -- (2)
--------- --------- ---------
Net loans 321,715 315,352 302,831 2 6
--------- --------- ---------
Mortgage servicing
rights:
Measured at fair
value (residential
MSRs) 17,779 17,591 13,800 1 29
Amortized 400 377 142 6 182
Premises and
equipment, net 4,864 4,698 4,493 4 8
Goodwill 11,275 11,275 11,050 -- 2
Other assets 27,632 29,543 36,659 (6) (25)
--------- --------- ---------
Total assets $485,901 $481,996 $492,428 1 (1)
--------- --------- ---------
LIABILITIES
Noninterest-bearing
deposits $89,067 $89,119 $88,701 -- --
Interest-bearing
deposits 222,090 221,124 219,604 -- 1
--------- --------- ---------
Total deposits 311,157 310,243 308,305 -- 1
Short-term borrowings 13,181 12,829 21,350 3 (38)
Accrued expenses and
other liabilities 25,101 25,903 36,312 (3) (31)
Long-term debt 90,327 87,145 84,500 4 7
--------- --------- ---------
Total
liabilities 439,766 436,120 450,467 1 (2)
--------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred stock 740 384 634 93 17
Common stock - $1-2/3
par value,
authorized
6,000,000,000
shares; issued
3,472,762,050 shares 5,788 5,788 5,788 -- --
Additional paid-in
capital 7,875 7,739 7,479 2 5
Retained earnings 36,439 35,277 31,750 3 15
Cumulative other
comprehensive income 289 302 576 (4) (50)
Treasury stock -
122,242,186 shares,
95,612,189 shares
and 115,124,934
shares (4,204) (3,203) (3,587) 31 17
Unearned ESOP shares (792) (411) (679) 93 17
--------- --------- ---------
Total
stockholders'
equity 46,135 45,876 41,961 1 10
--------- --------- ---------
Total
liabilities
and
stockholders'
equity $485,901 $481,996 $492,428 1 (1)
--------- --------- ---------
----------------------------------------------------------------------Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED BALANCE SHEET
----------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
ASSETS
Cash and due from
banks $12,485 $15,028 $12,591 $14,069 $13,224
Federal funds sold,
securities
purchased under
resale agreements
and other short-
term investments 4,668 6,078 4,079 5,367 4,954
Trading assets 6,525 5,607 5,300 7,344 9,930
Securities available
for sale 45,443 42,629 52,635 71,420 51,195
Mortgages held for
sale 32,286 33,097 39,913 39,714 43,521
Loans held for sale 829 721 617 594 629
Loans 325,487 319,116 307,491 300,622 306,676
Allowance for loan
losses (3,772) (3,764) (3,799) (3,851) (3,845)
--------- --------- --------- --------- ---------
Net loans 321,715 315,352 303,692 296,771 302,831
--------- --------- --------- --------- ---------
Mortgage servicing
rights:
Measured at fair
value
(residential
MSRs) 17,779 17,591 17,712 15,650 13,800
Amortized 400 377 328 175 142
Premises and
equipment, net 4,864 4,698 4,645 4,529 4,493
Goodwill 11,275 11,275 11,192 11,091 11,050
Other assets 27,632 29,543 30,737 32,792 36,659
--------- --------- --------- --------- ---------
Total assets $485,901 $481,996 $483,441 $499,516 $492,428
--------- --------- --------- --------- ---------
LIABILITIES
Noninterest-bearing
deposits $89,067 $89,119 $86,849 $89,448 $88,701
Interest-bearing
deposits 222,090 221,124 227,470 237,004 219,604
--------- --------- --------- --------- ---------
Total deposits 311,157 310,243 314,319 326,452 308,305
Short-term
borrowings 13,181 12,829 13,800 13,619 21,350
Accrued expenses and
other liabilities 25,101 25,903 26,369 33,794 36,312
Long-term debt 90,327 87,145 84,091 83,757 84,500
--------- --------- --------- --------- ---------
Total liabilities 439,766 436,120 438,579 457,622 450,467
--------- --------- --------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred stock 740 384 465 548 634
Common stock 5,788 5,788 5,788 5,788 5,788
Additional paid-in
capital 7,875 7,739 7,667 7,562 7,479
Retained earnings 36,439 35,277 34,080 31,964 31,750
Cumulative other
comprehensive
income 289 302 633 155 576
Treasury stock (4,204) (3,203) (3,273) (3,537) (3,587)
Unearned ESOP shares (792) (411) (498) (586) (679)
--------- --------- --------- --------- ---------
Total
stockholders'
equity 46,135 45,876 44,862 41,894 41,961
--------- --------- --------- --------- ---------
Total
liabilities
and
stockholders'
equity $485,901 $481,996 $483,441 $499,516 $492,428
--------- --------- --------- --------- ---------
----------------------------------------------------------------------Wells Fargo & Company and Subsidiaries
FIVE QUARTER AVERAGE BALANCES
----------------------------------------------------------------------
Quarter ended
-------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
EARNING ASSETS
Federal funds sold,
securities
purchased under
resale agreements
and other short-
term investments $5,867 $7,751 $4,247 $4,855 $5,192
Trading assets 4,305 3,950 3,880 5,938 6,099
Debt securities
available for sale:
Securities of U.S.
Treasury and
federal agencies 753 786 912 935 866
Securities of U.S.
states and
political
subdivisions 3,532 3,406 3,240 3,013 3,106
Mortgage-backed
securities:
Federal agencies 30,640 31,718 47,009 40,160 27,718
Private
collateralized
mortgage
obligations 3,993 5,130 7,696 7,176 6,562
--------- --------- --------- --------- ---------
Total mortgage-
backed
securities 34,633 36,848 54,705 47,336 34,280
Other debt
securities (1) 5,778 6,406 6,865 6,246 5,280
--------- --------- --------- --------- ---------
Total debt
securities
available for
sale (1) 44,696 47,446 65,722 57,530 43,532
Mortgages held for
sale (2) 32,343 37,878 42,369 51,675 39,523
Loans held for sale 794 659 622 585 651
Loans:
Commercial and
commercial real
estate:
Commercial 71,063 68,402 66,216 65,424 62,769
Other real estate
mortgage 30,590 29,882 29,851 28,938 28,686
Real estate
construction 15,892 15,775 15,073 14,517 13,850
Lease financing 5,503 5,500 5,385 5,429 5,436
--------- --------- --------- --------- ---------
Total commercial
and commercial
real estate 123,048 119,559 116,525 114,308 110,741
Consumer:
Real estate 1-4
family first
mortgage 54,444 50,836 50,138 55,019 74,383
Real estate 1-4
family junior
lien mortgage 69,079 68,208 65,991 62,740 59,972
Credit card 14,557 13,737 12,810 11,947 11,765
Other revolving
credit and
installment 53,539 53,206 51,988 50,098 48,329
--------- --------- --------- --------- ---------
Total consumer 191,619 185,987 180,927 179,804 194,449
Foreign 6,762 6,620 6,528 6,276 5,942
--------- --------- --------- --------- ---------
Total loans (2) 321,429 312,166 303,980 300,388 311,132
Other 1,327 1,333 1,348 1,363 1,389
--------- --------- --------- --------- ---------
Total earning
assets $410,761 $411,183 $422,168 $422,334 $407,518
--------- --------- --------- --------- ---------
FUNDING SOURCES
Deposits:
Interest-bearing
checking $4,615 $4,477 $4,370 $4,288 $4,069
Market rate and
other savings 140,934 135,673 132,906 134,182 134,228
Savings
certificates 38,514 36,382 33,909 30,308 28,718
Other time deposits 9,312 19,838 36,920 38,288 33,726
Deposits in foreign
offices 27,647 24,425 22,303 20,898 15,152
--------- --------- --------- --------- ---------
Total interest-
bearing deposits 221,022 220,795 230,408 227,964 215,893
Short-term
borrowings 11,498 13,470 21,539 24,836 26,180
Long-term debt 89,027 85,809 84,112 84,486 81,686
--------- --------- --------- --------- ---------
Total interest-
bearing
liabilities 321,547 320,074 336,059 337,286 323,759
Portion of
noninterest-bearing
funding sources 89,214 91,109 86,109 85,048 83,759
--------- --------- --------- --------- ---------
Total funding
sources $410,761 $411,183 $422,168 $422,334 $407,518
--------- --------- --------- --------- ---------
NONINTEREST-EARNING
ASSETS
Cash and due from
banks $11,862 $12,379 $12,159 $12,437 $12,897
Goodwill 11,274 11,259 11,156 11,075 10,963
Other 48,208 47,764 49,196 45,610 43,817
--------- --------- --------- --------- ---------
Total
noninterest-
earning assets $71,344 $71,402 $72,511 $69,122 $67,677
--------- --------- --------- --------- ---------
NONINTEREST-BEARING
FUNDING SOURCES
Deposits $88,769 $91,259 $89,245 $88,917 $86,997
Other liabilities 25,474 25,687 25,839 22,835 23,320
Stockholders' equity 46,315 45,565 43,536 42,418 41,119
Noninterest-bearing
funding sources
used to fund
earning assets (89,214) (91,109) (86,109) (85,048) (83,759)
--------- --------- --------- --------- ---------
Net noninterest-
bearing funding
sources $71,344 $71,402 $72,511 $69,122 $67,677
--------- --------- --------- --------- ---------
TOTAL ASSETS $482,105 $482,585 $494,679 $491,456 $475,195
--------- --------- --------- --------- ---------
----------------------------------------------------------------------
(1) Includes certain preferred securities.
(2) Nonaccrual loans are included in their respective loan categories.Wells Fargo & Company and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
----------------------------------------------------------------------
Quarter ended
March 31,
-----------------
(in millions) 2007 2006
----------------------------------------------------------------------
Balance, beginning of period $45,876 $40,660
Cumulative effect from adoption of:
FAS 156 (1) -- 101
FSP 13-2 (2) (71) --
Net income 2,244 2,018
Other comprehensive income (loss), net of tax,
related to:
Translation adjustments 1 --
Investment securities and other interests held 18 (205)
Derivative instruments and hedging activities (38) 119
Defined benefit pension plans 6 (3)
Common stock issued 448 485
Common stock repurchased (1,631) (646)
Preferred stock released to ESOP 128 105
Common stock dividends (948) (874)
Other, net 102 201
-------- --------
Balance, end of period $46,135 $41,961
-------- --------
----------------------------------------------------------------------
(1)Financial Accounting Standard No. 156, Accounting for Servicing of
Financial Assets - an amendment of FASB Statement No. 140.
(2)FASB Staff Position 13-2, Accounting for a Change or Projected
Change in the Timing of Cash Flows Related to Income Taxes Generated
by a Leveraged Lease Transaction.Wells Fargo & Company and Subsidiaries
FIVE QUARTER LOANS
----------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Commercial and
commercial real
estate:
Commercial $72,268 $70,404 $66,797 $66,014 $63,836
Other real estate
mortgage 31,542 30,112 29,914 29,281 28,754
Real estate
construction 15,869 15,935 15,397 14,764 14,308
Lease financing 5,494 5,614 5,443 5,301 5,402
--------- --------- --------- --------- ---------
Total commercial
and commercial
real estate 125,173 122,065 117,551 115,360 112,300
Consumer:
Real estate 1-4
family first
mortgage 55,982 53,228 49,765 50,491 66,106
Real estate 1-4
family junior
lien mortgage 69,489 68,926 67,185 64,727 61,115
Credit card 14,594 14,697 13,343 12,387 11,618
Other revolving
credit and
installment 53,445 53,534 53,080 51,236 49,295
--------- --------- --------- --------- ---------
Total consumer 193,510 190,385 183,373 178,841 188,134
Foreign 6,804 6,666 6,567 6,421 6,242
--------- --------- --------- --------- ---------
Total loans
(net of
unearned
income) $325,487 $319,116 $307,491 $300,622 $306,676
--------- --------- --------- --------- ---------
----------------------------------------------------------------------
FIVE QUARTER NONACCRUAL LOANS AND OTHER ASSETS
----------------------------------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Nonaccrual loans:
Commercial and
commercial real
estate:
Commercial $350 $331 $256 $253 $256
Other real estate
mortgage 114 105 116 137 163
Real estate
construction 82 78 90 31 21
Lease financing 31 29 27 26 31
--------- --------- --------- --------- ---------
Total commercial
and commercial
real estate 577 543 489 447 471
Consumer:
Real estate 1-4
family first
mortgage (1) 701 688 595 585 508
Real estate 1-4
family junior
lien mortgage 233 212 200 179 190
Other revolving
credit and
installment 195 180 167 139 188
--------- --------- --------- --------- ---------
Total consumer 1,129 1,080 962 903 886
Foreign 46 43 38 45 37
--------- --------- --------- --------- ---------
Total nonaccrual
loans 1,752 1,666 1,489 1,395 1,394
As a percentage
of total loans 0.54% 0.52% 0.48% 0.46% 0.45%
Foreclosed assets:
GNMA loans (2) 381 322 266 238 227
Other 528 423 342 275 228
Real estate and
other nonaccrual
investments (3) 5 5 3 9 --
--------- --------- --------- --------- ---------
Total
nonaccrual
loans and
other assets $2,666 $2,416 $2,100 $1,917 $1,849
--------- --------- --------- --------- ---------
As a
percentage of
total loans 0.82% 0.76% 0.68% 0.64% 0.60%
--------- --------- --------- --------- ---------
----------------------------------------------------------------------
(1)Includes nonaccrual mortgages held for sale.
(2)Consistent with regulatory reporting requirements, foreclosed real
estate securing Government National Mortgage Association (GNMA) loans
is classified as nonperforming. These assets are fully collectible
because the corresponding GNMA loans are insured by the Federal
Housing Administration or guaranteed by the Department of Veterans
Affairs.
(3)Includes real estate investments (contingent interest loans
accounted for as investments) that would be classified as nonaccrual
if these assets were recorded as loans.Wells Fargo & Company and Subsidiaries
FIVE QUARTER CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Balance, beginning of
quarter $3,964 $3,978 $4,035 $4,025 $4,057
Provision for credit
losses 715 726 613 432 433
Loan charge-offs:
Commercial and
commercial real
estate:
Commercial (126) (139) (103) (93) (79)
Other real estate
mortgage (1) (2) (1) (1) (1)
Real estate
construction -- (1) (1) -- --
Lease financing (7) (8) (6) (7) (9)
-------- -------- --------- -------- --------
Total commercial and
commercial real
estate (134) (150) (111) (101) (89)
Consumer:
Real estate 1-4 family
first mortgage (24) (22) (30) (22) (29)
Real estate 1-4 family
junior lien mortgage (83) (56) (36) (28) (34)
Credit card (183) (154) (133) (113) (105)
Other revolving credit
and installment (474) (513) (501) (349) (322)
-------- -------- --------- -------- --------
Total consumer (764) (745) (700) (512) (490)
Foreign (62) (59) (74) (74) (74)
-------- -------- --------- -------- --------
Total loan charge-
offs (960) (954) (885) (687) (653)
-------- -------- --------- -------- --------
Loan recoveries:
Commercial and
commercial real
estate:
Commercial 24 27 26 31 27
Other real estate
mortgage 2 5 8 5 1
Real estate
construction 1 1 -- 1 1
Lease financing 5 5 4 6 6
-------- -------- --------- -------- --------
Total commercial and
commercial real
estate 32 38 38 43 35
Consumer:
Real estate 1-4 family
first mortgage 6 6 8 9 3
Real estate 1-4 family
junior lien mortgage 9 9 9 10 8
Credit card 31 24 23 25 24
Other revolving credit
and installment 149 136 124 148 129
-------- -------- --------- -------- --------
Total consumer 195 175 164 192 164
Foreign 18 15 20 20 21
-------- -------- --------- -------- --------
Total loan
recoveries 245 228 222 255 220
-------- -------- --------- -------- --------
Net loan charge-
offs (715) (726) (663) (432) (433)
-------- -------- --------- -------- --------
Other 1 (14) (7) 10 (32)
-------- -------- --------- -------- --------
Balance, end of quarter $3,965 $3,964 $3,978 $4,035 $4,025
-------- -------- --------- -------- --------
Components:
Allowance for loan
losses $3,772 $3,764 $3,799 $3,851 $3,845
Reserve for unfunded
credit commitments 193 200 179 184 180
-------- -------- --------- -------- --------
Allowance for credit
losses $3,965 $3,964 $3,978 $4,035 $4,025
-------- -------- --------- -------- --------
Net loan charge-offs
(annualized) as a
percentage of average
total loans 0.90% 0.92% 0.86% 0.58% 0.56%
Allowance for loan
losses as a percentage
of:
Total loans 1.16% 1.18% 1.24% 1.28% 1.25%
Nonaccrual loans 215 226 255 276 276
Nonaccrual loans and
other assets 141 156 181 201 208
Allowance for credit
losses as a percentage
of:
Total loans 1.22% 1.24% 1.29% 1.34% 1.31%
Nonaccrual loans 226 238 267 289 289
Nonaccrual loans and
other assets 149 164 189 210 218
----------------------------------------------------------------------Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME
----------------------------------------------------------------------
Quarter ended
March 31, %
----------------
(in millions) 2007 2006 Change
----------------------------------------------------------------------
Service charges on deposit accounts $685 $623 10%
Trust and investment fees:
Trust, investment and IRA fees 537 491 9
Commissions and all other fees 194 172 13
------- --------
Total trust and investment fees 731 663 10
Card fees 470 384 22
Other fees:
Cash network fees 45 44 2
Charges and fees on loans 238 242 (2)
All other 228 202 13
------- --------
Total other fees 511 488 5
Mortgage banking:
Servicing income, net 216 81 167
Net gains on mortgage loan origination/sales
activities 495 273 81
All other 79 61 30
------- --------
Total mortgage banking 790 415 90
Operating leases 192 201 (4)
Insurance 399 364 10
Trading assets 265 134 98
Net gains (losses) on debt securities
available for sale 31 (35) --
Net gains from equity investments 97 190 (49)
All other 260 258 1
------- --------
Total $4,431 $3,685 20
------- --------
----------------------------------------------------------------------
NONINTEREST EXPENSE
----------------------------------------------------------------------
Quarter ended
March 31, %
----------------
(in millions) 2007 2006 Change
----------------------------------------------------------------------
Salaries $1,867 $1,672 12%
Incentive compensation 742 668 11
Employee benefits 665 589 13
Equipment 337 335 1
Net occupancy 365 336 9
Operating leases 153 161 (5)
Outside professional services 192 193 (1)
Contract services 118 132 (11)
Travel and entertainment 109 130 (16)
Advertising and promotion 91 106 (14)
Outside data processing 111 104 7
Postage 87 81 7
Telecommunications 81 70 16
Insurance 128 76 68
Stationery and supplies 53 51 4
Operating losses 87 62 40
Security 43 43 -
Core deposit intangibles 26 29 (10)
All other 271 236 15
------- --------
Total $5,526 $5,074 9
------- --------
----------------------------------------------------------------------Wells Fargo & Company and Subsidiaries
FIVE QUARTER NONINTEREST INCOME
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Service charges on
deposit accounts $685 $695 $707 $665 $623
Trust and investment
fees:
Trust, investment and
IRA fees 537 525 508 509 491
Commissions and all
other fees 194 210 156 166 172
-------- -------- --------- -------- --------
Total trust and
investment fees 731 735 664 675 663
Card fees 470 481 464 418 384
Other fees:
Cash network fees 45 44 48 48 44
Charges and fees on
loans 238 241 244 249 242
All other 228 265 217 213 202
-------- -------- --------- -------- --------
Total other fees 511 550 509 510 488
Mortgage banking:
Servicing income, net 216 314 188 310 81
Net gains on mortgage
loan origination/sales
activities 495 305 179 359 273
All other 79 58 117 66 61
-------- -------- --------- -------- --------
Total mortgage banking 790 677 484 735 415
Operating leases 192 190 192 200 201
Insurance 399 299 313 364 364
Trading assets 265 213 106 91 134
Net gains (losses) on
debt securities
available for sale 31 51 121 (156) (35)
Net gains from equity
investments 97 256 159 133 190
All other 260 216 168 170 258
-------- -------- --------- -------- --------
Total $4,431 $4,363 $3,887 $3,805 $3,685
-------- -------- --------- -------- --------
----------------------------------------------------------------------
FIVE QUARTER NONINTEREST EXPENSE
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Salaries $1,867 $1,812 $1,769 $1,754 $1,672
Incentive compensation 742 793 710 714 668
Employee benefits 665 501 458 487 589
Equipment 337 339 294 284 335
Net occupancy 365 367 357 345 336
Operating leases 153 157 155 157 161
Outside professional
services 192 273 240 236 193
Contract services 118 165 143 139 132
Travel and entertainment 109 141 132 139 130
Advertising and
promotion 91 102 123 125 106
Outside data processing 111 113 111 109 104
Postage 87 77 75 79 81
Telecommunications 81 66 70 73 70
Insurance 128 39 43 99 76
Stationery and supplies 53 60 57 55 51
Operating losses 87 40 33 45 62
Security 43 49 43 44 43
Core deposit intangibles 26 27 28 28 29
All other 271 290 240 264 236
-------- -------- --------- -------- --------
Total $5,526 $5,411 $5,081 $5,176 $5,074
-------- -------- --------- -------- --------
----------------------------------------------------------------------Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS)
(1)(2)
----------------------------------------------------------------------
Quarter ended March 31,
-----------------------------------------------------
2007 2006
-------------------------- --------------------------
Interest Interest
Average Yields/ income/ Average Yields/ income/
(in millions) balance rates expense balance rates expense
----------------------------------------------------------------------
EARNING ASSETS
Federal funds
sold,
securities
purchased under
resale
agreements and
other short-
term
investments $5,867 5.15% $75 $5,192 4.21% $54
Trading assets 4,305 5.53 59 6,099 4.61 69
Debt securities
available for
sale (3):
Securities of
U.S. Treasury
and federal
agencies 753 4.31 8 866 4.30 9
Securities of
U.S. states
and political
subdivisions 3,532 7.39 63 3,106 8.13 60
Mortgage-backed
securities:
Federal
agencies 30,640 6.19 467 27,718 5.92 406
Private
collater-
alized
mortgage
obligations 3,993 6.33 62 6,562 6.46 104
--------- -------- --------- --------
Total
mortgage-
backed
securities 34,633 6.21 529 34,280 6.02 510
Other debt
securities (4) 5,778 7.44 106 5,280 7.86 104
--------- -------- --------- --------
Total debt
securities
available
for sale (4) 44,696 6.43 706 43,532 6.36 683
Mortgages held
for sale (5) 32,343 6.55 530 39,523 6.16 609
Loans held for
sale 794 7.82 15 651 6.93 11
Loans:
Commercial and
commercial
real estate:
Commercial 71,063 8.30 1,455 62,769 7.71 1,195
Other real
estate
mortgage 30,590 7.41 560 28,686 7.01 497
Real estate
construction 15,892 8.01 314 13,850 7.59 259
Lease
financing 5,503 5.74 79 5,436 5.80 79
--------- -------- --------- --------
Total
commercial
and
commercial
real estate 123,048 7.93 2,408 110,741 7.42 2,030
Consumer:
Real estate 1-
4 family
first
mortgage 54,444 7.33 995 74,383 6.82 1,259
Real estate 1-
4 family
junior lien
mortgage 69,079 8.17 1,393 59,972 7.65 1,131
Credit card 14,557 13.55 493 11,765 13.23 389
Other
revolving
credit and
installment 53,539 9.75 1,287 48,329 9.39 1,120
--------- -------- --------- --------
Total
consumer 191,619 8.78 4,168 194,449 8.10 3,899
Foreign 6,762 11.54 192 5,942 12.57 185
--------- -------- --------- --------
Total loans
(5) 321,429 8.51 6,768 311,132 7.95 6,114
Other 1,327 5.12 16 1,389 4.62 16
--------- -------- --------- --------
Total
earning
assets $410,761 8.04 8,169 $407,518 7.50 7,556
--------- -------- --------- --------
FUNDING SOURCES
Deposits:
Interest-
bearing
checking $4,615 3.25 37 $4,069 2.23 22
Market rate and
other savings 140,934 2.77 963 134,228 2.08 687
Savings
certificates 38,514 4.43 421 28,718 3.45 245
Other time
deposits 9,312 5.13 118 33,726 4.48 373
Deposits in
foreign
offices 27,647 4.67 318 15,152 4.16 155
--------- -------- --------- --------
Total
interest-
bearing
deposits 221,022 3.41 1,857 215,893 2.78 1,482
Short-term
borrowings 11,498 4.78 136 26,180 4.17 270
Long-term debt 89,027 5.15 1,138 81,686 4.49 910
--------- -------- --------- --------
Total
interest-
bearing
liabilities 321,547 3.94 3,131 323,759 3.33 2,662
Portion of
noninterest-
bearing funding
sources 89,214 -- -- 83,759 -- --
--------- -------- --------- --------
Total
funding
sources $410,761 3.09 3,131 $407,518 2.65 2,662
--------- -------- --------- --------
Net interest
margin and net
interest income
on a taxable-
equivalent
basis
(6) 4.95% $5,038 4.85% $4,894
------- -------- ------- --------
NONINTEREST-EARNING ASSETS
Cash and due
from banks $11,862 $12,897
Goodwill 11,274 10,963
Other 48,208 43,817
--------- ---------
Total
noninterest-
earning
assets $71,344 $67,677
--------- ---------
NONINTEREST-BEARING FUNDING SOURCES
Deposits $88,769 $86,997
Other
liabilities 25,474 23,320
Stockholders'
equity 46,315 41,119
Noninterest-
bearing funding
sources used to
fund earning
assets (89,214) (83,759)
--------- ---------
Net
noninterest-
bearing
funding
sources $71,344 $67,677
--------- ---------
TOTAL
ASSETS $482,105 $475,195
--------- ---------
----------------------------------------------------------------------
(1)Our average prime rate was 8.25% and 7.43% for the quarters ended
March 31, 2007 and 2006, respectively. The average three-month London
Interbank Offered Rate (LIBOR) was 5.36% and 4.76% for the same
quarters, respectively.
(2)Interest rates and amounts include the effects of hedge and risk
management activities associated with the respective asset and
liability categories.
(3)Yields are based on amortized cost balances computed on a
settlement date basis.
(4)Includes certain preferred securities.
(5)Nonaccrual loans and related income are included in their
respective loan categories.
(6)Includes taxable-equivalent adjustments primarily related to tax-
exempt income on certain loans and securities. The federal statutory
tax rate was 35% for the periods presented.Wells Fargo & Company and Subsidiaries
FIVE QUARTER OPERATING SEGMENT RESULTS (1)
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
(income/expense in
millions, average Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
balances in billions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
COMMUNITY BANKING
Net interest income $3,224 $3,248 $3,292 $3,321 $3,256
Provision for credit
losses 306 275 236 187 189
Noninterest income 2,847 2,882 2,492 2,398 2,143
Noninterest expense 3,640 3,558 3,392 3,485 3,387
-------- -------- --------- -------- --------
Income before income tax
expense 2,125 2,297 2,156 2,047 1,823
Income tax expense 593 785 683 711 613
-------- -------- --------- -------- --------
Net income $1,532 $1,512 $1,473 $1,336 $1,210
-------- -------- --------- -------- --------
Average loans $180.8 $175.7 $172.5 $173.9 $190.4
Average assets 307.0 311.9 326.7 327.2 314.8
Average core deposits 243.9 239.8 233.1 232.0 229.0
WHOLESALE BANKING
Net interest income $781 $787 $751 $706 $680
Provision (reversal of
provision) for credit
losses 13 25 -- (7) (2)
Noninterest income 1,265 1,096 1,033 1,085 1,096
Noninterest expense 1,137 1,105 999 1,018 992
-------- -------- --------- -------- --------
Income before income tax
expense 896 753 785 780 786
Income tax expense 298 245 258 257 258
-------- -------- --------- -------- --------
Net income $598 $508 $527 $523 $528
-------- -------- --------- -------- --------
Average loans $77.9 $75.0 $72.3 $70.4 $67.6
Average assets 101.0 97.9 97.5 97.2 95.9
Average core deposits 46.7 44.0 36.5 32.0 28.4
WELLS FARGO FINANCIAL
Net interest income $1,005 $1,015 $1,004 $957 $934
Provision for credit
losses 396 426 377 252 246
Noninterest income 319 385 362 322 446
Noninterest expense 749 748 690 673 695
-------- -------- --------- -------- --------
Income before income tax
expense 179 226 299 354 439
Income tax expense 65 65 105 124 159
-------- -------- --------- -------- --------
Net income $114 $161 $194 $230 $280
-------- -------- --------- -------- --------
Average loans $62.7 $61.5 $59.2 $56.1 $53.1
Average assets 68.3 67.0 64.7 61.3 58.7
Average core deposits -- -- 0.1 0.1 0.1
CONSOLIDATED COMPANY
Net interest income $5,010 $5,050 $5,047 $4,984 $4,870
Provision for credit
losses 715 726 613 432 433
Noninterest income 4,431 4,363 3,887 3,805 3,685
Noninterest expense 5,526 5,411 5,081 5,176 5,074
-------- -------- --------- -------- --------
Income before income tax
expense 3,200 3,276 3,240 3,181 3,048
Income tax expense 956 1,095 1,046 1,092 1,030
-------- -------- --------- -------- --------
Net income $2,244 $2,181 $2,194 $2,089 $2,018
-------- -------- --------- -------- --------
Average loans $321.4 $312.2 $304.0 $300.4 $311.1
Average assets (2) 482.1 482.6 494.7 491.5 475.2
Average core deposits 290.6 283.8 269.7 264.1 257.5
----------------------------------------------------------------------
(1)The management accounting process measures the performance of the
operating segments based on our management structure and is not
necessarily comparable with other similar information for other
financial services companies. We define our operating segments by
product type and customer segment. If the management structure and/or
the allocation process changes, allocations, transfers and
assignments may change.
(2)The Consolidated Company includes unallocated goodwill held at the
enterprise level of $5.8 billion for all periods presented.Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING
----------------------------------------------------------------------
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Residential MSRs
measured using the fair
value method:
Fair value, beginning
of quarter $17,591 $17,712 $15,650 $13,800 $12,547
Purchases 159 222 2,907 511 219
Servicing from
securitizations or
asset transfers 828 843 965 1,310 989
Sales -- (469) -- -- --
Changes in fair value:
Due to changes in
valuation model
inputs or
assumptions (1) (11) 66 (1,147) 550 522
Other changes in fair
value (2) (788) (783) (663) (521) (477)
-------- -------- --------- -------- --------
Fair value, end of
quarter $17,779 $17,591 $17,712 $15,650 $13,800
-------- -------- --------- -------- --------
----------------------------------------------------------------------
(1)Principally reflects changes in discount rates and prepayment speed
assumptions, mostly due to changes in interest rates.
(2)Represents changes due to collection/realization of expected cash
flows over time.
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Amortized MSRs:
Balance, beginning of
quarter $377 $328 $175 $142 $122
Purchases 29 53 161 39 25
Servicing from
securitizations or
asset transfers 10 9 2 -- --
Amortization (16) (13) (10) (6) (5)
-------- -------- --------- -------- --------
Balance, end of quarter
(1) $400 $377 $328 $175 $142
-------- -------- --------- -------- --------
Fair value of amortized
MSRs:
Beginning of quarter $457 $440 $252 $205 $146
End of quarter 484 457 440 252 205
----------------------------------------------------------------------
(1)There was no valuation allowance for the periods presented.Wells Fargo & Company and Subsidiaries
FIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED)
----------------------------------------------------------------------
Quarter ended
----------------------------------------
Mar. Dec. Sept. June
31, 31, 30, 30, Mar. 31,
(in millions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Servicing income, net:
Servicing fees (1) $1,054 $1,011 $947 $820 $747
Changes in fair value of
residential MSRs:
Due to changes in
valuation model inputs or
assumptions (2) (11) 66 (1,147) 550 522
Other changes in fair
value (3) (788) (783) (663) (521) (477)
Amortization (16) (13) (10) (6) (5)
Net derivative gains
(losses) from economic
hedges (4) (23) 33 1,061 (533) (706)
------- ------- ------- ------- --------
Total servicing income,
net $216 $314 $188 $310 $81
------- ------- ------- ------- --------
Market-related valuation
changes to MSRs, net of
hedge results (2) + (4) $(34) $99 $(86) $17 $(184)
------- ------- ------- ------- --------
----------------------------------------------------------------------
(1)Includes contractually specified servicing fees, late charges and
other ancillary revenues.
(2)Principally reflects changes in discount rates and prepayment speed
assumptions, mostly due to changes in interest rates.
(3)Represents changes due to collection/realization of expected cash
flows over time.
(4)Represents results from free-standing derivatives (economic hedges)
used to hedge the risk of changes in fair value of MSRs.
----------------------------------------------------------------------
Mar. Dec. Sept. June
31, 31, 30, 30, Mar. 31,
(in billions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Managed servicing portfolio:
Loans serviced for others
(1) $1,309 $1,280 $1,235 $1,020 $931
Owned loans serviced (2) 88 86 90 90 110
------- ------- ------- ------- --------
Total owned servicing 1,397 1,366 1,325 1,110 1,041
Sub-servicing 26 19 20 23 25
------- ------- ------- ------- --------
Total managed servicing
portfolio $1,423 $1,385 $1,345 $1,133 $1,066
------- ------- ------- ------- --------
Ratio of MSRs to related
loans serviced for others 1.39% 1.41% 1.46% 1.55% 1.50%
Weighted-average note rate
(owned servicing only) 5.93% 5.92% 5.86% 5.80% 5.75%
----------------------------------------------------------------------
(1)Consists of 1-4 family first mortgage and commercial mortgage
loans.
(2)Consists of mortgages held for sale and 1-4 family first mortgage
loans.Wells Fargo & Company and Subsidiaries
SELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in billions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Application Data:
Wells Fargo Home
Mortgage first
mortgage quarterly
applications $113 $90 $95 $108 $95
Refinances as a
percentage of
applications 46% 50% 41% 34% 39%
Wells Fargo Home
Mortgage first
mortgage unclosed
pipeline, at quarter
end $57 $48 $55 $63 $59
----------------------------------------------------------------------
----------------------------------------------------------------------
Quarter ended
---------------------------------------------
Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,
(in billions) 2007 2006 2006 2006 2006
----------------------------------------------------------------------
Residential Real Estate Originations: (1)
Quarter:
Wells Fargo Home
Mortgage first
mortgage loans:
Retail $26 $29 $29 $33 $26
Correspondent/
Wholesale 31 29 36 35 28
Home equity loans and
lines 8 9 10 11 9
Wells Fargo Financial 3 3 2 2 3
-------- -------- --------- -------- --------
Total $68 $70 $77 $81 $66
-------- -------- --------- -------- --------
Year-to-date $68 $294 $224 $147 $66
-------- -------- --------- -------- --------
----------------------------------------------------------------------
(1)Consists of residential real estate originations from all Wells
Fargo channels.
For further information: Wells Fargo & Company Janis Smith, 415-396-7711
(Media) Bob Strickland, 415-396-0523 (Investors)
