-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, bswxver42IvW+0IHHnEtT6M9UYBiQtyrRBzYO4SWOAfX3mQJcSb1BUVPx+WWs2R5 jUAqkbOJ4rMTWFYhbBXgxg== 0000912057-94-002350.txt : 19940722 0000912057-94-002350.hdr.sgml : 19940722 ACCESSION NUMBER: 0000912057-94-002350 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940719 ITEM INFORMATION: Other events FILED AS OF DATE: 19940720 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLS FARGO & CO CENTRAL INDEX KEY: 0000105598 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 132553920 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06214 FILM NUMBER: 94539287 BUSINESS ADDRESS: STREET 1: 420 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94163 BUSINESS PHONE: 4154771000 MAIL ADDRESS: STREET 1: 343 SANSOME ST 3RD FL STREET 2: WELLS FARGO BANK CITY: SAN FRANCISCO STATE: CA ZIP: 94163 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): July 19, 1994 WELLS FARGO & COMPANY (Exact name of registrant as specified in its charter) Delaware 1-6214 No. 13-2553920 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 420 Montgomery Street, San Francisco, California 94163 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 477-1000 Not applicable (Former name or former address, if changed since last report) Item 5: OTHER EVENTS Attached are the Press Releases announcing: (1) Wells Fargo & Company's financial results for the quarter ended June 30, 1994. Final financial statements with additional analyses will be filed as part of the Company's Form 10-Q in August 1994. (2) The Company's share repurchase program and common stock dividend. (3) The retirement of Carl E. Reichardt as chairman and chief executive officer of Wells Fargo & Company as of December 31, 1994, and naming Paul Hazen as chairman and chief executive officer and William Zuendt as president and chief operating officer as of January 1, 1995. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on July 19, 1994. WELLS FARGO & COMPANY By: FRANK A. MOESLEIN ---------------------------- Frank A. Moeslein Executive Vice President and Controller FOR IMMEDIATE RELEASE Tues., July 19, 1994 WELLS FARGO REPORTS SECOND QUARTER EARNINGS OF $206 MILLION; PER SHARE EARNINGS $3.57 VS. $2.46 A YEAR AGO Wells Fargo & Co. (NYSE:WFC) today reported net income of $206 million for the second quarter of 1994, compared with $149 million for the second quarter of 1993, an increase of 38 percent. Per share earnings for the second quarter of 1994 were $3.57, compared with $2.46 in the second quarter of 1993. Second quarter 1994 results were higher than a year ago primarily due to a lower loan loss provision. Return on average assets (ROA) was 1.59 percent and return on average common equity (ROE) was 21.67 percent in the second quarter of 1994. In the year-ago period, ROA was 1.18 percent and ROE was 16.73 percent. Net interest income on a taxable-equivalent basis was $656 million in the second quarter of 1994, roughly flat with $658 million a year ago. The company's net interest margin for the second quarter of 1994 was 5.56 percent, down from 5.71 percent in the same quarter of 1993. The decrease was substantially due to lower yields on earning assets. Loan balances declined 1 percent since the end of the second quarter of 1993, dropping from $34.353 billion to $34.172 billion. However, as Chairman Carl E. Reichardt noted, "A weak recovery appears to have taken hold in the California economy. Loan balances rose for the second consecutive quarter and are up over 3% from the end of the year." Noninterest income in the second quarter of 1994 was $299 million, compared with $275 million in the same quarter of 1993, an increase of 9 percent. A significant portion of this increase was due to a $14 million growth in service charges on deposit accounts. Noninterest expense in the second quarter of 1994 was $526 million, down 1 percent from $531 million in the same quarter of 1993. A decline in foreclosed assets expense contributed to the drop. The provision for loan losses in the second quarter of 1994 was $60 million, compared with $140 million in the second quarter of 1993. Continued improvement in the company's loan portfolio resulted in the reduction of the provision. -more- -2- Net charge-offs in the second quarter of 1994 totaled $61 million, or .73 percent of average total loans (annualized). The largest categories of net charge-offs were credit card loans ($28 million) and real estate mortgage loans other than 1-4 family ($20 million). For the second quarter of 1993, net charge-offs totaled $138 million, or 1.60 percent of average total loans (annualized). The largest categories of net charge-offs were real estate mortgage loans other than 1-4 family ($45 million) and credit card loans ($42 million). At June 30, 1994, the allowance for loan losses equaled 6.20 percent of total loans, compared with 6.34 percent at March 31, 1994 and 6.18 percent at June 30, 1993. At June 30, 1994, total nonaccrual and restructured loans decreased to $717 million (2.1 percent of total loans), of which an estimated 34 percent were current as to payment of principal and interest. This compares with $900 million (2.7 percent of total loans) at March 31, 1994, of which an estimated 41 percent were current, and $1.905 billion (5.5 percent of total loans) at June 30, 1993, of which an estimated 53 percent were current. Foreclosed assets were $344 million at June 30, 1994, compared with $354 million at March 31, 1994 and $391 million at June 30, 1993. During the second quarter of 1994, an estimated $18 million of cash interest payments were received from all loans that were on nonaccrual during the quarter. Of that amount, $7 million was recognized as interest income and $11 million was used to reduce book loan balances. The average nonaccrual book loan balance (net of charge-offs and interest applied to principal) was $830 million for the quarter. The estimated average cash yield was 8.7 percent. During the first quarter of 1994, an estimated $23 million of cash interest payments were received from all loans that were on nonaccrual during the quarter. Of that amount, $6 million was recognized as interest income and $17 million was used to reduce book loan balances. The average nonaccrual book loan balance (net of charge-offs and interest applied to principal) was $1.094 billion for the quarter. The estimated average cash yield was 8.5 percent. At June 30, 1994, the company's preliminary risk-based capital ratios were 14.60 percent for total risk-based capital and 10.10 percent for Tier 1 risk- based capital, exceeding the minimum regulatory guidelines of 8 percent and 4 percent, respectively. At March 31, 1994, these risk-based capital ratios were 14.83 percent and 10.23 percent, respectively. The decrease in total and Tier 1 risk-based capital ratios between March 31, 1994 and June 30, 1994 resulted primarily from the repurchase of 1,082,061 shares of common stock during the quarter (net of 42,795 shares issued under employee benefit and dividend reinvestment programs). At June 30, 1993, the company's total risk-based capital ratio was 14.33 percent and the Tier 1 risk-based capital ratio was 9.31 percent. The ratio of common equity to total assets at June 30, 1994 was 6.96 percent, compared with 7.09 percent at March 31, 1994 and 6.57 percent at June 30, 1993. ### -3- Wells Earnings Wells Fargo & Company and Subsidiaries SUMMARY FINANCIAL DATA -- NEWS RELEASE
================================================================================================================================== % Change Quarter ended June 30, 1994 from Six months ended ---------------------------- ------------------ ------------------ June 30, Mar. 31, June 30, Mar. 31, June 30, June 30, June 30, % (in millions) 1994 1994 1993 1994 1993 1994 1993 Change - - ---------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Net income $ 206 $ 202 $ 149 2 % 38 % $ 408 $ 257 59 % Per common share Net income $ 3.57 $ 3.41 $ 2.46 5 45 $ 6.98 $ 4.18 67 Dividends declared 1.00 1.00 .50 -- 100 2.00 1.00 100 Average common shares outstanding 55 56 56 (2) (2) 55 55 -- Profitability ratios (annualized) Net income to average total assets (ROA) 1.59% 1.60% 1.18% (1) 35 1.59% 1.02% 56 Net income applicable to common stock to average common stockholders' equity (ROE) 21.67 21.09 16.73 3 30 21.38 14.46 48 Efficiency ratio (1) 55.2% 55.5% 56.9% (1) (3) 55.3% 57.2% (3) Average loans $ 33,630 $ 32,848 $ 34,582 2 (3) $ 33,242 $ 35,205 (6) Average assets 52,013 51,220 50,866 2 2 51,619 50,913 1 Average core deposits 40,232 40,385 40,203 -- -- 40,309 40,295 -- Net interest margin 5.56% 5.56% 5.71% -- (3) 5.56% 5.81% (4) Average staff (full-time equivalent) 19,500 19,400 21,300 1 (8) 19,500 21,200 (8) AT PERIOD END Investment securities $ 13,328 $ 13,766 $ 11,700 (3) 14 $ 13,328 $ 11,700 14 Loans 34,172 33,452 34,353 2 (1) 34,172 34,353 (1) Allowance for loan losses 2,120 2,121 2,124 -- -- 2,120 2,124 -- Assets 52,287 52,176 51,329 -- 2 52,287 51,329 2 Core deposits 40,249 41,145 40,592 (2) (1) 40,249 40,592 (1) Common stockholders' equity 3,637 3,700 3,372 (2) 8 3,637 3,372 8 Stockholders' equity 4,126 4,189 4,011 (2) 3 4,126 4,011 3 Capital ratios Common stockholders' equity to assets 6.96% 7.09% 6.57% (2) 6 6.96% 6.57% 6 Stockholders' equity to assets 7.89 8.03 7.82 (2) 1 7.89 7.82 1 Risk-based capital (2) Tier 1 capital 10.10 10.23 9.31 (1) 8 10.10 9.31 8 Total capital 14.60 14.83 14.33 (2) 2 14.60 14.33 2 Leverage (2) 7.20 7.34 6.94 (2) 4 7.20 6.94 4 Book value per common share $ 67.04 $ 66.87 $ 60.72 -- 10 $ 67.04 $ 60.72 10 COMMON STOCK PRICE High $159-1/2 $147-1/2 $120 8 33 $159-1/2 $120 33 Low 136-5/8 127-5/8 95-3/4 7 43 127-5/8 75-1/2 69 Period end 150-3/8 139-3/8 110-1/4 8 36 150-3/8 110-1/4 36 ================================================================================================================================== (1) The efficiency ratio is defined as noninterest expense divided by the total of net interest income and noninterest income. (2) The June 30, 1994 ratios are preliminary.
-4- Wells Fargo & Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME
======================================================================================================================== Quarter Six months ended June 30, ended June 30, ----------------- % ------------------ % (in millions) 1994 1993 Change 1994 1993 Change ------------------------------------------------------------------------------------------------------------------------ INTEREST INCOME (1) Loans $ 733 $ 763 (4)% $1,438 $1,577 (9)% (2) Investment securities 197 168 17 382 320 19 Federal funds sold and securities purchased (3) under resale agreements 1 5 (80) 5 9 (44) (4) Other 1 -- -- 2 -- -- ----- ----- ------ ------ (5) Total interest income 932 936 -- 1,827 1,906 (4) ----- ----- ------ ------ INTEREST EXPENSE (6) Deposits 210 216 (3) 406 448 (9) Federal funds purchased and securities sold (7) under repurchase agreements 18 9 100 26 16 63 (8) Commercial paper and other short-term borrowings 2 1 100 3 3 -- (9) Senior and subordinated debt 47 52 (10) 95 103 (8) ----- ----- ------ ------ (10) Total interest expense 277 278 -- 530 570 (7) ----- ----- ------ ------ (11) NET INTEREST INCOME 655 658 -- 1,297 1,336 (3) (12) Provision for loan losses 60 140 (57) 120 350 (66) ----- ----- ------ ------ Net interest income after (13) provision for loan losses 595 518 15 1,177 986 19 ----- ----- ------ ------ NONINTEREST INCOME (14) Service charges on deposit accounts 119 105 13 236 205 15 (15) Fees and commissions 92 99 (7) 177 187 (5) (16) Trust and investment services income 50 48 4 100 94 6 (17) Investment securities gains 3 -- -- 7 -- -- (18) Other 35 23 52 79 48 65 ----- ----- ------ ------ (19) Total noninterest income 299 275 9 599 534 12 ----- ----- ------ ------ NONINTEREST EXPENSE (20) Salaries 196 198 (1) 385 381 1 (21) Employee benefits 51 54 (6) 108 109 (1) (22) Net occupancy 53 57 (7) 108 110 (2) (23) Equipment 41 34 21 80 68 18 (24) Federal deposit insurance 25 26 (4) 51 58 (12) (25) Other 160 162 (1) 317 344 (8) ----- ----- ------ ------ (26) Total noninterest expense 526 531 (1) 1,049 1,070 (2) ----- ----- ------ ------ INCOME BEFORE INCOME TAX (27) EXPENSE 368 262 40 727 450 62 (28) Income tax expense 162 113 43 319 193 65 ----- ----- ------ ------ (29) NET INCOME $ 206 $ 149 38 % $ 408 $ 257 59 % ===== ===== ===== ====== ====== ===== NET INCOME APPLICABLE TO (30) COMMON STOCK $ 195 $ 137 42 % $ 385 $ 232 66 % ===== ===== ===== ====== ====== ===== PER COMMON SHARE (31) Net income $3.57 $2.46 45 % $ 6.98 $ 4.18 67 % ===== ===== ===== ====== ====== ===== (32) Dividends declared $1.00 $ .50 100 % $ 2.00 $ 1.00 100 % ===== ===== ===== ====== ====== ===== (33) Average common shares outstanding 55 56 (2)% 55 55 -- % ===== ===== ===== ====== ====== ===== ========================================================================================================================
-5- Wells Fargo & Company and Subsidiaries CONSOLIDATED BALANCE SHEET
====================================================================================================================== % Change June 30, 1994 from -------------------- June 30, Dec. 31, June 30, Dec. 31, June 30, (in millions) 1994 1993 1993 1993 1993 ---------------------------------------------------------------------------------------------------------------------- ASSETS (1) Cash and due from banks $ 2,653 $ 2,644 $ 2,535 -- % 5 % Investment securities: At cost (estimated fair value $9,996, $9,978 (2) and $11,921) 10,261 9,887 11,700 4 (12) (3) At fair value 3,067 3,171 -- (3) -- ------- ------- ------- (4) Total investment securities 13,328 13,058 11,700 2 14 Federal funds sold and securities (5) purchased under resale agreements 55 1,668 551 (97) (90) (6) Loans 34,172 33,099 34,353 3 (1) (7) Allowance for loan losses 2,120 2,122 2,124 -- -- ------- ------- ------- (8) Net loans 32,052 30,977 32,229 3 (1) ------- ------- ------- (9) Due from customers on acceptances 69 70 79 (1) (13) (10) Accrued interest receivable 316 297 310 6 2 (11) Premises and equipment, net 886 898 917 (1) (3) (12) Goodwill 459 477 504 (4) (9) (13) Other assets 2,469 2,424 2,504 2 (1) ------- ------- ------- (14) Total assets $52,287 $52,513 $51,329 -- % 2 % ======= ======= ======= ===== ===== LIABILITIES (15) Noninterest-bearing deposits $ 9,475 $ 9,719 $ 9,047 (3)% 5 % (16) Interest-bearing deposits 31,730 31,925 31,887 (1) -- ------- ------- ------- (17) Total deposits 41,205 41,644 40,934 (1) 1 Federal funds purchased and securities (18) sold under repurchase agreements 2,331 1,079 1,145 116 104 (19) Commercial paper and other short-term borrowings 195 188 153 4 27 (20) Acceptances outstanding 69 70 79 (1) (13) (21) Accrued interest payable 68 63 86 8 (21) (22) Other liabilities 848 933 838 (9) 1 (23) Senior debt 1,990 2,256 2,163 (12) (8) (24) Subordinated debt 1,455 1,965 1,920 (26) (24) ------- ------- ------- (25) Total liabilities 48,161 48,198 47,318 -- 2 ------- ------- ------- STOCKHOLDERS' EQUITY (26) Preferred stock 489 639 639 (23) (23) Common stock - $5 par value, authorized 150,000,000 shares; issued and outstanding 54,255,187 shares, (27) 55,812,592 shares and 55,544,255 shares 271 279 278 (3) (3) (28) Additional paid-in capital 330 551 530 (40) (38) (29) Retained earnings 3,103 2,829 2,568 10 21 (30) Cumulative foreign currency translation adjustments (4) (4) (4) -- -- (31) Investment securities valuation allowance (63) 21 -- -- -- ------- ------- ------- (32) Total stockholders' equity 4,126 4,315 4,011 (4) 3 ------- ------- ------- (33) Total liabilities and stockholders' equity $52,287 $52,513 $51,329 -- % 2 % ======= ======= ======= ===== ===== ======================================================================================================================
-6- Wells Fargo & Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
=============================================================================================== Six months ended June 30, ------------------------ (in millions) 1994 1993 - - ----------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $4,315 $3,809 Net income 408 257 Common stock issued under employee benefit and dividend reinvestment plans 13 26 Preferred stock redeemed (150) -- Common stock repurchased (242) -- Preferred stock dividends (23) (25) Common stock dividends (111) (56) Change in investment securities valuation allowance (84) -- ------ ------ BALANCE, END OF PERIOD $4,126 $4,011 ====== ====== ===============================================================================================
LOANS
=============================================================================================== JUNE 30, December 31, June 30, (in millions) 1994 1993 1993 - - ----------------------------------------------------------------------------------------------- Commercial (1) $ 7,184 $ 6,912 $ 7,323 Real estate 1-4 family first mortgage 8,681 7,458 6,634 Other real estate mortgage 7,965 8,286 9,510 Real estate construction 985 1,110 1,290 Consumer: Real estate 1-4 family junior lien mortgage 3,355 3,583 3,946 Credit card 2,706 2,600 2,569 Other revolving credit and monthly payment 1,998 1,920 1,899 ------- ------- ------- Total consumer 8,059 8,103 8,414 Lease financing 1,267 1,212 1,181 Foreign 31 18 1 ------- ------- ------- Total loans $34,172 $33,099 $34,353 ======= ======= ======= =============================================================================================== (1) Includes loans to real estate developers of $415 million, $505 million and $598 million at June 30, 1994, December 31, 1993 and June 30, 1993, respectively.
-7- Wells Fargo & Company and Subsidiaries CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
===================================================================================================================== Quarter ended Six months ended --------------------------------- -------------------- June 30, March 31, June 30, June 30, June 30, (in millions) 1994 1994 1993 1994 1993 - - --------------------------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $2,121 $2,122 $2,122 $2,122 $2,067 Provision for loan losses 60 60 140 120 350 Loan charge-offs: Commercial (1) (5) (25) (29) (30) (58) Real estate 1-4 family first mortgage (6) (5) (7) (11) (12) Other real estate mortgage (22) (13) (49) (35) (115) Real estate construction (1) (4) (16) (5) (40) Consumer: Real estate 1-4 family junior lien mortgage (7) (8) (6) (15) (14) Credit card (35) (40) (48) (75) (95) Other revolving credit and monthly payment (10) (8) (10) (18) (23) ------ ------ ------ ------ ------ Total consumer (52) (56) (64) (108) (132) Lease financing (4) (4) (5) (8) (10) ------ ------ ------ ------ ------ Total loan charge-offs (90) (107) (170) (197) (367) ------ ------ ------ ------ ------ Loan recoveries: Commercial (2) 12 8 15 20 37 Real estate 1-4 family first mortgage 1 3 1 4 1 Other real estate mortgage 2 10 4 12 12 Real estate construction 2 5 1 7 1 Consumer: Real estate 1-4 family junior lien mortgage 1 1 -- 2 1 Credit card 7 5 6 12 11 Other revolving credit and monthly payment 2 3 3 5 6 ------ ------ ------ ------ ------ Total consumer 10 9 9 19 18 Lease financing 2 11 2 13 5 ------ ------ ------ ------ ------ Total loan recoveries 29 46 32 75 74 ------ ------ ------ ------ ------ Total net loan charge-offs (61) (61) (138) (122) (293) ------ ------ ------ ------ ------ BALANCE, END OF PERIOD $2,120 $2,121 $2,124 $2,120 $2,124 ====== ====== ====== ====== ====== Total net loan charge-offs as a percentage of average total loans (annualized) .73% .74% 1.60% .74% 1.67% ====== ====== ====== ====== ====== Allowance as a percentage of total loans 6.20% 6.34% 6.18% 6.20% 6.18% ====== ====== ====== ====== ====== ===================================================================================================================== (1) Includes charge-offs of loans to real estate developers of none, $10 million and none in the quarters ended June 30, 1994, March 31, 1994 and June 30, 1993, respectively, and $10 million and $4 million in the six months ended June 30, 1994 and 1993, respectively. (2) Includes recoveries from loans to real estate developers of none in the quarters ended June 30, 1994, March 31, 1994 and June 30, 1993, and none and $1 million in the six months ended June 30, 1994 and 1993, respectively.
-8- Wells Fargo & Company and Subsidiaries NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
===================================================================================================================== June 30, March 31, Dec. 31, Sept. 30, June 30, (in millions) 1994 1994 1993 1993 1993 - - --------------------------------------------------------------------------------------------------------------------- Nonaccrual loans: Commercial (1) $ 121 $ 165 $ 252 $ 441 $ 486 Real estate 1-4 family first mortgage 88 90 99 96 95 Other real estate mortgage 410 413 578 850 1,035 Real estate construction 72 202 235 278 241 Consumer: Real estate 1-4 family junior lien mortgage 19 22 27 25 28 Other revolving credit and monthly payment 2 3 3 6 13 ------ ------ ------ ------ ------ Total nonaccrual loans 712 895 1,194 1,696 1,898 Restructured loans 5 5 6 6 7 ------ ------ ------ ------ ------ Nonaccrual and restructured loans 717 900 1,200 1,702 1,905 As a percentage of total loans 2.1% 2.7% 3.6% 5.1% 5.5% Foreclosed assets 344 354 348 357 391 Real estate investments (2) 11 11 15 15 23 ------ ------ ------ ------ ------ Total nonaccrual and restructured loans and other assets $1,072 $1,265 $1,563 $2,074 $2,319 ====== ====== ====== ====== ====== ===================================================================================================================== (1) Includes loans to real estate developers of $41 million, $47 million, $91 million, $116 million and $115 million at June 30, 1994, March 31, 1994, December 31, 1993, September 30, 1993 and June 30, 1993, respectively. (2) Represents the amount of real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if such assets were loans. Real estate investments totaled $28 million, $29 million, $34 million, $39 million and $51 million at June 30, 1994, March 31, 1994, December 31, 1993, September 30, 1993 and June 30, 1993, respectively.
QUARTERLY TREND OF CHANGES IN NONACCRUAL LOANS (1)
===================================================================================================================== June 30, March 31, Dec. 31, Sept. 30, June 30, (in millions) 1994 1994 1993 1993 1993 - - --------------------------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF QUARTER $895 $1,194 $1,696 $1,898 $1,966 New loans placed on nonaccrual 133 52 113 195 264 Charge-offs (27) (35) (55) (90) (71) Payments (91) (121) (309) (188) (144) Transfers to foreclosed assets (27) (37) (64) (32) (104) Transfers from foreclosed assets (2) -- -- -- -- 99 Loans returned to accrual (172) (157) (188) (81) (107) Loans sold -- (3) -- (2) (5) Other additions (deductions) 1 2 1 (4) -- ---- ------ ------ ------ ------ BALANCE, END OF QUARTER $712 $ 895 $1,194 $1,696 $1,898 ==== ====== ====== ====== ====== ===================================================================================================================== (1) The June 30, 1994 amounts are preliminary. (2) Reclassification due to clarification of criteria used in determining when a loan is in-substance foreclosed.
-9- Wells Fargo & Company and Subsidiaries NONACCRUAL LOANS BY PERFORMANCE CATEGORY (1)
========================================================================================================= Cumulative cash Book interest Contractual principal Cumulative applied to principal (in millions) balance charge-offs(6) principal(6) balance - - --------------------------------------------------------------------------------------------------------- JUNE 30, 1994 --------------------------------------------------------------------- Contractually past due (2): Payments not made (3): 90 days or more past due $155 $ 4 $ -- $159 Less than 90 days past due 14 1 -- 15 ---- ---- ---- ------ 169 5 -- 174 ---- ---- ---- ------ Payments made (4): 90 days or more past due 221 80 27 328 Less than 90 days past due 80 43 20 143 ---- ---- ---- ------ 301 123 47 471 ---- ---- ---- ------ Total past due 470 128 47 645 Contractually current (5) 242 125 61 428 ---- ---- ---- ------ Total nonaccrual loans $712 $253 $108 $1,073 ==== ==== ==== ====== - - --------------------------------------------------------------------------------------------------------- March 31, 1994 --------------------------------------------------------------------- Contractually past due (2): Payments not made (3): 90 days or more past due $136 $ 4 $ -- $ 140 Less than 90 days past due 4 6 -- 10 ---- ---- ---- ------ 140 10 -- 150 ---- ---- ---- ------ Payments made (4): 90 days or more past due 270 127 38 435 Less than 90 days past due 122 61 36 219 ---- ---- ---- ------ 392 188 74 654 ---- ---- ---- ------ Total past due 532 198 74 804 Contractually current (5) 363 102 55 520 ---- ---- ---- ------ Total nonaccrual loans $895 $300 $129 $1,324 ==== ==== ==== ====== ========================================================================================================= (1) There can be no assurance that individual borrowers will continue to perform at the level indicated or that the performance characteristics will not change significantly. The June 30, 1994 amounts are preliminary. (2) Contractually past due is defined as a borrower whose loan principal or interest payment is 30 days or more past due. (3) Borrower has made no payments since being placed on nonaccrual. (4) Borrower has made some payments since being placed on nonaccrual. Approximately $239 million and $283 million of these loans had some payments made on them during the second and first quarters of 1994, respectively. (5) Contractually current is defined as a loan for which principal and interest are being paid in accordance with the terms of the loan. All of the contractually current loans were placed on nonaccrual due to uncertainty of receiving full timely collection of interest or principal. (6) Cumulative amounts recorded since inception of the loan.
-10- Wells Fargo & Company and Subsidiaries NONINTEREST INCOME
============================================================================================================================= Quarter Six months ended June 30, ended June 30, -------------- % -------------- % (in millions) 1994 1993 Change 1994 1993 Change - - ----------------------------------------------------------------------------------------------------------------------------- Service charges on deposit accounts $119 $105 13 % $236 $205 15 % Fees and commissions: Credit card membership and other credit card fees 15 18 (17) 31 35 (11) Debit and credit card merchant fees 13 22 (41) 25 41 (39) Charges and fees on loans 11 12 (8) 21 23 (9) Mutual fund and annuity sales fees 12 12 -- 21 23 (9) Shared ATM network fees 11 9 22 20 18 11 All other 30 26 15 59 47 26 ---- ---- ---- ---- Total fees and commissions 92 99 (7) 177 187 (5) Trust and investment services income: Asset management and custody fees 32 32 -- 63 63 -- Mutual fund management fees 11 9 22 22 17 29 All other 7 7 -- 15 14 7 ---- ---- ---- ---- Total trust and investment services income 50 48 4 100 94 6 Investment securities gains 3 -- -- 7 -- -- Income (loss) from equity investments accounted for by the: Cost method 9 (1) -- 17 13 31 Equity method 7 5 40 16 13 23 Check printing charges 10 10 -- 20 19 5 Gains from dispositions of operations -- 1 (100) 10 1 900 Real estate investment gains (losses) 1 -- -- 3 (7) -- Gains on sales of loans 1 3 (67) 2 6 (67) All other 7 5 40 11 3 267 ---- ---- ---- ---- Total $299 $275 9 % $599 $534 12 % ==== ==== ==== ==== ==== ==== =============================================================================================================================
NONINTEREST EXPENSE
============================================================================================================================= Quarter Six months ended June 30, ended June 30, -------------- % ---------------- % (in millions) 1994 1993 Change 1994 1993 Change - - ----------------------------------------------------------------------------------------------------------------------------- Salaries $196 $198 (1)% $ 385 $ 381 1 % Employee benefits 51 54 (6) 108 109 (1) Net occupancy 53 57 (7) 108 110 (2) Equipment 41 34 21 80 68 18 Federal deposit insurance 25 26 (4) 51 58 (12) Contract services 25 14 79 44 26 69 Advertising and promotion 18 19 (5) 33 34 (3) Certain identifiable intangibles 16 19 (16) 32 42 (24) Operating losses 11 10 10 25 26 (4) Telecommunications 12 11 9 23 22 5 Postage 11 11 -- 22 22 -- Outside professional services 10 11 (9) 19 21 (10) Goodwill 9 9 -- 18 19 (5) Check printing 7 8 (13) 15 17 (12) Stationery and supplies 8 8 -- 15 15 -- Travel and entertainment 8 7 14 15 13 15 Escrow and collection agency fees 5 6 (17) 10 13 (23) Security 5 4 25 10 9 11 Foreclosed assets -- 9 (100) 6 35 (83) Outside data processing 2 4 (50) 5 8 (38) All other 13 12 8 25 22 14 ---- ---- ------ ------ Total $526 $531 (1)% $1,049 $1,070 (2)% ==== ==== ==== ====== ====== ==== =============================================================================================================================
-11- Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
========================================================================================================================== Quarter ended June 30, ---------------------------------------------------------------- 1994 1993 ---------------------------- ---------------------------- INTEREST Interest AVERAGE YIELDS/ INCOME/ Average Yields/ income/ (in millions) BALANCE RATES EXPENSE balance rates expense -------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Investment securities: At cost: (1) U.S. Treasury securities $ 2,734 4.84% $ 33 $ 2,287 5.13% $ 29 Securities of U.S. government agencies (2) and corporations 6,155 6.02 93 8,041 6.44 129 (3) Obligations of states and political subdivisions 18 -- -- 24 7.11 1 (4) Private collateralized mortgage obligations 1,337 6.14 21 433 5.82 6 (5) Other securities 118 5.50 2 171 5.32 3 ------- ---- ------- ---- (6) Total investment securities at cost 10,362 5.72 149 10,956 6.12 168 At fair value (2): (7) U.S. Treasury securities 97 6.84 2 -- -- -- Securities of U.S. government agencies (8) and corporations 1,594 5.79 24 -- -- -- (9) Private collateralized mortgage obligations 1,230 6.91 22 -- -- -- (10) Other securities 72 13.77 1 -- -- -- ------- ---- ------- ---- (11) Total investment securities at fair value 2,993 6.40 49 -- -- -- ------- ---- ------- ---- (12) Total investment securities 13,355 5.87 198 10,956 6.12 168 Federal funds sold and securities purchased (13) under resale agreements 60 4.03 1 581 3.15 5 Loans: (14) Commercial 6,854 9.26 157 7,314 9.05 165 (15) Real estate 1-4 family first mortgage 8,463 6.76 143 6,585 8.20 135 (16) Other real estate mortgage 8,089 8.52 172 9,653 8.04 193 (17) Real estate construction 910 8.92 20 1,319 8.69 29 Consumer: (18) Real estate 1-4 family junior lien mortgage 3,385 7.59 64 4,012 6.65 67 (19) Credit card 2,614 15.27 100 2,600 15.62 101 (20) Other revolving credit and monthly payment 2,016 9.27 47 1,917 9.20 44 ------- ---- ------- ---- (21) Total consumer 8,015 10.52 211 8,529 9.96 212 (22) Lease financing 1,261 9.21 29 1,182 9.84 29 (23) Foreign 38 4.72 1 -- -- -- ------- ---- ------- ---- (24) Total loans 33,630 8.74 733 34,582 8.84 763 (25) Other 52 6.00 1 1 -- -- ------- ---- ------- ---- (26) Total earning assets $47,097 7.91 933 $46,120 8.13 936 ======= ---- ======= ---- FUNDING SOURCES Interest-bearing liabilities: Deposits: (27) Interest-bearing checking $ 4,679 .98 11 $ 4,596 1.23 15 (28) Savings deposits 2,600 1.99 13 2,797 2.24 16 (29) Market rate savings 16,974 2.34 99 16,366 2.28 91 (30) Savings certificates 7,022 4.18 73 8,118 4.39 89 (31) Certificates of deposit 202 7.58 4 218 8.01 4 (32) Other time deposits 108 6.70 2 113 2.58 1 (33) Deposits in foreign offices 780 4.06 8 10 -- -- ------- ---- ------- ---- (34) Total interest-bearing deposits 32,365 2.60 210 32,218 2.70 216 Federal funds purchased and securities sold (35) under repurchase agreements 1,876 3.86 18 1,141 2.79 9 (36) Commercial paper and other short-term borrowings 176 3.78 2 163 2.68 1 (37) Senior debt 2,034 5.05 26 2,187 4.92 27 (38) Subordinated debt 1,449 5.87 21 1,974 5.11 25 ------- ---- ------- ---- (39) Total interest-bearing liabilities 37,900 2.93 277 37,683 2.96 278 (40) Portion of noninterest-bearing funding sources 9,197 -- -- 8,437 -- -- ------- ---- ------- ---- (41) Total funding sources $47,097 2.35 277 $46,120 2.42 278 ======= ---- ======= ---- NET INTEREST MARGIN AND NET INTEREST INCOME ON (42) A TAXABLE-EQUIVALENT BASIS (3) 5.56% $656 5.71% $658 ==== ==== ==== ==== NONINTEREST-EARNING ASSETS (43) Cash and due from banks $ 2,613 $ 2,454 (44) Other 2,303 2,292 ------- ------- Total noninterest-earning assets $ 4,916 $ 4,746 ======= ======= NONINTEREST-BEARING FUNDING SOURCES (45) Deposits $ 8,957 $ 8,326 (46) Other liabilities 1,049 941 (47) Preferred stockholders' equity 489 639 (48) Common stockholders' equity 3,618 3,277 Noninterest-bearing funding sources used to (49) fund earning assets (9,197) (8,437) ------- ------- (50) Net noninterest-bearing funding sources $ 4,916 $ 4,746 ======= ======= (51) TOTAL ASSETS $52,013 $50,866 ======= ======= ========================================================================================================================== (1) The average prime rate of Wells Fargo Bank was 6.90% and 6.00% for the quarters ended June 30, 1994 and 1993, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 4.46% and 3.24% for the same quarters, respectively. (2) Yields are based on amortized cost balances. (3) Includes taxable-equivalent adjustments that primarily relate to income on certain loans and securities that is exempt from federal and applicable state income taxes. The federal statutory tax rate was 35% and 34% for the quarters ended June 30, 1994 and 1993, respectively.
-12- Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
========================================================================================================================== Six months ended June 30, ---------------------------------------------------------------- 1994 1993 ---------------------------- ---------------------------- INTEREST Interest AVERAGE YIELDS/ INCOME/ Average Yields/ income/ (in millions) BALANCE RATES EXPENSE balance rates expense -------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Investment securities: At cost: (1) U.S. Treasury securities $ 2,655 4.86% $ 64 $ 2,221 5.19% $ 57 Securities of U.S. government agencies (2) and corporations 6,159 6.08 187 7,746 6.49 251 (3) Obligations of states and political subdivisions 18 7.20 1 24 7.62 1 (4) Private collateralized mortgage obligations 1,144 5.76 33 218 5.80 6 (5) Other securities 118 5.48 3 159 5.32 5 ------- ------ ------- ------ (6) Total investment securities at cost 10,094 5.71 288 10,368 6.18 320 At fair value (2): (7) U.S. Treasury securities 49 6.84 2 -- -- -- Securities of U.S. government agencies (8) and corporations 1,637 5.91 49 -- -- -- (9) Private collateralized mortgage obligations 1,259 6.18 40 -- -- -- (10) Other securities 78 13.94 3 -- -- -- ------- ------ ------- ------ (11) Total investment securities at fair value 3,023 6.15 94 -- -- -- ------- ------ ------- ------ (12) Total investment securities 13,117 5.82 382 10,368 6.18 320 Federal funds sold and securities purchased (13) under resale agreements 316 3.24 5 560 3.22 9 Loans: (14) Commercial 6,742 9.09 303 7,502 9.38 349 (15) Real estate 1-4 family first mortgage 8,117 6.84 278 6,633 8.36 277 (16) Other real estate mortgage 8,124 8.45 341 9,846 7.95 389 (17) Real estate construction 984 8.60 42 1,405 8.85 62 Consumer: (18) Real estate 1-4 family junior lien mortgage 3,439 7.43 128 4,057 7.09 144 (19) Credit card 2,577 15.31 197 2,650 15.71 208 (20) Other revolving credit and monthly payment 1,978 9.27 91 1,931 9.40 90 ------- ------ ------- ------ (21) Total consumer 7,994 10.43 416 8,638 10.25 442 (22) Lease financing 1,245 9.29 58 1,180 9.97 59 (23) Foreign 36 4.54 1 1 -- -- ------- ------ ------- ------ (24) Total loans 33,242 8.69 1,439 35,205 9.00 1,578 (25) Other 52 6.00 2 -- -- -- ------- ------ ------- ------ (26) Total earning assets $46,727 7.84 1,828 $46,133 8.30 1,907 ======= ====== ======= ====== FUNDING SOURCES Interest-bearing liabilities: Deposits: (27) Interest-bearing checking $ 4,695 .98 23 $ 4,610 1.34 31 (28) Savings deposits 2,583 1.99 26 2,855 2.33 33 (29) Market rate savings 17,065 2.28 193 16,202 2.35 188 (30) Savings certificates 7,032 4.16 145 8,415 4.41 184 (31) Certificates of deposit 205 7.67 8 228 8.11 9 (32) Other time deposits 106 6.63 3 117 4.69 3 (33) Deposits in foreign offices 420 4.01 8 8 -- -- ------- ------ ------- ------ (34) Total interest-bearing deposits 32,106 2.55 406 32,435 2.79 448 Federal funds purchased and securities sold (35) under repurchase agreements 1,478 3.57 26 1,112 2.80 16 (36) Commercial paper and other short-term borrowings 163 3.42 3 192 2.84 3 (37) Senior debt 2,118 4.77 50 2,191 4.97 54 (38) Subordinated debt 1,563 5.72 45 1,926 5.13 49 ------- ------ ------- ------ (39) Total interest-bearing liabilities 37,428 2.85 530 37,856 3.03 570 (40) Portion of noninterest-bearing funding sources 9,299 -- -- 8,277 -- -- ------- ------ ------- ------ (41) Total funding sources $46,727 2.28 530 $46,133 2.49 570 ======= ====== ======= ====== NET INTEREST MARGIN AND NET INTEREST INCOME ON (42) A TAXABLE-EQUIVALENT BASIS (3) 5.56% $ 1,298 5.81% $ 1,337 ===== ======= ===== ======= NONINTEREST-EARNING ASSETS (43) Cash and due from banks $ 2,585 $ 2,435 (44) Other 2,307 2,345 ------- ------- Total noninterest-earning assets $ 4,892 $ 4,780 ======= ======= NONINTEREST-BEARING FUNDING SOURCES (45) Deposits $ 8,934 $ 8,213 (46) Other liabilities 1,067 974 (47) Preferred stockholders' equity 554 639 (48) Common stockholders' equity 3,636 3,231 Noninterest-bearing funding sources used to (49) fund earning assets (9,299) (8,277) ------- ------- (50) Net noninterest-bearing funding sources $ 4,892 $ 4,780 ======= ======= (51) TOTAL ASSETS $51,619 $50,913 ======= ======= ========================================================================================================================== (1) The average prime rate of Wells Fargo Bank was 6.46% and 6.00% for the six months ended June 30, 1994 and 1993, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 4.02% and 3.25% for the six months ended June 30, 1994 and 1993, respectively. (2) Yields are based on amortized cost balances. (3) Includes taxable-equivalent adjustments that primarily relate to income on certain loans and securities that is exempt from federal and applicable state income taxes. The federal statutory tax rate was 35% and 34% for the six months ended June 30, 1994 and 1993, respectively.
FOR IMMEDIATE RELEASE Tues., July 19, 1994 WELLS FARGO ANNOUNCES SHARE REPURCHASE PROGRAM AND DECLARES DIVIDEND ON COMMON STOCK The Board of Directors of Wells Fargo & Co. (NYSE:WFC) today authorized the repurchase of up to 5,425,519 shares of the Company's outstanding common stock, representing 10% of Wells Fargo's outstanding common shares as of June 30, 1994. This action reflects the Company's strong capital position and will allow Wells Fargo to effectively manage its overall capital position in the best interests of its shareholders. The Company announced no date for completing the program and will purchase shares from time to time, subject to market conditions. The 10% authorization will be in addition to the 1,557,405 shares already bought by Wells Fargo in the first half of 1994, net of 123,304 shares issued under the Company's employee benefit and dividend reinvestment plans. The Company has bought in the past, and will continue to buy, shares to offset stock issued or expected to be issued under these plans. These repurchases will not be counted as part of the 10% authorized for repurchase. The Board of Directors also declared a regular quarterly dividend on common stock of $1.00 per share. The dividend will be payable August 19, 1994, to shareholders of record at the close of business on July 29, 1994. FOR IMMEDIATE RELEASE Tues., July 19, 1994 REICHARDT TO RETIRE FROM WELLS FARGO, HAZEN WILL BE NAMED CHAIRMAN/CEO, ZUENDT PRESIDENT Carl E. Reichardt, 63, chairman and chief executive officer of Wells Fargo & Company, today announced that he will retire from the Company as of Dec. 31, 1994. He will remain on the board of directors. As of Jan. 1, 1995, Paul Hazen, 52, will become chairman and chief executive officer. William Zuendt, 47, will become the new president and chief operating officer, and will join the Board of Directors at that time. Reichardt's retirement brings to an end a 24-year career at Wells Fargo, and a 12-year term as chairman and CEO. During his tenure, which began Jan. 1, 1983, Wells Fargo emerged as one of the most profitable and efficient major banks in the country, known for its expense control and marketing innovations in consumer products and services. The Company also developed a reputation as a training ground for top-performing managers sought after for senior management positions at other major banks. While chairman and CEO, Reichardt has delivered - to date - a 1,781 percent total return to investors, compared with an increase in the Standard & Poor's 500 index of 385 percent, and a stock price that increased from $13.44 per share when he took over to $158.75 per share as of July 18, 1994. -more- "I've done what I set out to do in 1983, and it's been a remarkable experience," said Reichardt. "But, having turned 63 this month and with management in place, I'm ready to pass the reins to the next generation. I look forward to a long and active retirement. "Paul has been my partner in banking for the last 27 years, and I'm confident that his intelligence, determination and talent as a manager will carry this company forward into the next century," said Reichardt. "Together, Paul and Bill bring a broad range of abilities to their new roles, and as a shareholder, I am certain they and the rest of the Wells Fargo team will be among the best in banking," he said. Other shareholders commented positively on the succession. Warren Buffett, whose company, Berkshire Hathaway Inc., owns 12.6 percent of the Company's stock, said, "When I decided to invest in Wells Fargo, I did so because of the Reichardt-Hazen partnership and the senior management team behind them. I'm more than comfortable with the new leadership. Carl and Paul have created a culture in which the company is managed for shareholders. I know this management emphasis will continue under the new team." Walter Annenberg, the philanthropist and former ambassador to the Court of St. James, who holds 7.9 percent of Wells Fargo's stock, said, "My family and I believe in Wells Fargo. Carl has been the publicly visible leader of the company, but Paul and the rest of senior management have wielded tremendous influence on the direction the bank has gone over the last decade. Their vision and their energy should keep the stagecoach rolling." ### -----END PRIVACY-ENHANCED MESSAGE-----