-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NNldYAPPezF4U7TT/Ab5LFKi13FLx67vLs431/Ft5G8RVgAc3QsHy8iESkUuLN+J jXf5foj4+B3TqdmazjF/2Q== 0000912057-97-024296.txt : 19970716 0000912057-97-024296.hdr.sgml : 19970716 ACCESSION NUMBER: 0000912057-97-024296 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970715 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970715 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLS FARGO & CO CENTRAL INDEX KEY: 0000105598 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [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: 97641066 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 15, 1997 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 hereto as Exhibit 99 is a Press Release announcing Wells Fargo & Company's financial results for the quarter ended June 30, 1997. Final financial statements with additional analyses will be filed as part of the Company's Form 10-Q in August 1997. Item 7: FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 27 Financial Data Schedule 99 Copy of the Press Release announcing Wells Fargo & Company's financial results for the quarter ended June 30, 1997. 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 15, 1997. WELLS FARGO & COMPANY By: /s/ Frank A. Moeslein --------------------------------------- Frank A. Moeslein Executive Vice President and Controller EX-27 2 EXHIBIT 27 - FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 8-K DATED JULY 15, 1997 FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1,000,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 8,037 0 224 0 11,530 0 0 65,689 1,850 100,180 73,748 4,445 3,065 5,719 0 275 440 12,391 100,180 3,057 398 24 3,490 851 1,131 2,359 245 7 2,363 1,070 568 0 0 568 6.12 0 6.03 602 0 10 0 2,018 545 132 1,850 0 0 0
EX-99 3 EXHIBIT 99 Exhibit 99 Cindy Koehn 415/396-3099 Investor Relations FOR IMMEDIATE RELEASE Tues., July 15, 1997 WELLS FARGO REPORTS SECOND QUARTER EARNINGS Per Share Earnings of $2.49 vs. $3.61 a year ago Wells Fargo & Co. (NYSE:WFC) today reported net income of $228 million for the second quarter of 1997, compared with $363 million for the second quarter of 1996, a decrease of 37 percent. Per share earnings for the quarter were $2.49, compared with $3.61 in the second quarter of 1996, a decrease of 31 percent. Return on average assets (ROA) was .92 percent and return on average common equity (ROE) was 6.88 percent in the second quarter of 1997. In the year-ago period, ROA was 1.35 percent and ROE was 9.77 percent. Cash earnings for the second quarter of 1997 were $3.79 per share compared with $4.89 for the second quarter of 1996. Cash ROA was 1.51 percent and cash ROE was 29.27 percent for the second quarter of 1997, compared with 1.96 percent and 33.43 percent, respectively, for the second quarter of 1996. Cash earnings are earnings before the amortization of goodwill and nonqualifying core deposit intangible. "The earnings we reported this morning are clearly a disappointment for shareholders, employees and the senior management of this Company," said Paul Hazen, chairman. "We have encountered difficulties in the past that slowed our progress for awhile. With the help of our dedicated employees, we are confident we will work through our current issues and establish momentum in the second half of 1997." Net interest income on a taxable-equivalent basis was $1,150 million in the second quarter of 1997, compared with $1,304 million a year ago, a decrease of 12 percent. The decrease was predominantly due to a decline in earning assets. The Company's net interest margin for the quarter was 5.93 percent, compared with 6.03 percent a year ago. -more- 2/WF Earnings Noninterest income (NII) for the second quarter of 1997 was $679 million, compared with $639 million in the same period a year ago, an increase of 6 percent. Noninterest expense (NIE) for the second quarter of 1997 was $1,246 million, and during the second quarter of 1996 was $1,277 million. This decrease resulted from cost savings achieved subsequent to the merger with First Interstate, substantially offset by an increase in operating losses that resulted from the resolution of various operational and back-office issues related to the First Interstate integration, including clearing accounts with other banks. The operations and back office issues are past problems, not new ones. Operating losses for the second quarter of 1997 totaled $180 million, compared to first quarter 1997 losses of $42 million. One example of the issues resolved is the incorrect posting of some of the Company's customer deposits, which occurred several months ago. A customer made a deposit and found that the deposited amount had not been added to his or her account. The Company immediately gave the customer credit and sent the discrepancy to be researched, in an attempt to recover from the account to which the deposit was incorrectly added. "This research has been slow and difficult, and in many cases we have been unable to locate the account to which the deposit was incorrectly posted and recover the money," explained Hazen. "As a result, the Company has written off the amount of the deposit credit to the original customer." The loan loss provision was $140 million in the second quarter of 1997. There was no loan loss provision in the second quarter of 1996. Net charge-offs in the second quarter of 1997 totaled $212 million, or 1.32 percent of average loans (annualized). The largest category of net charge-offs was credit card loans ($122 million). For the second quarter of 1996, net charge-offs totaled $178 million, or 1.01 percent of average loans (annualized). The largest category of net charge-offs in that period was also credit card loans ($90 million). At June 30, 1997, the allowance for loan losses of $1,850 million equaled 2.82 percent of total loans, compared with 2.94 percent at March 31, 1997 and 3.22 percent at June 30, 1996. Total nonaccrual and restructured loans were $612 million at June 30, 1997, compared with $655 million at March 31, 1997 and $742 million at June 30, 1996. Foreclosed assets were $194 million at June 30, 1997, compared with $207 million at March 31, 1997 and $238 million at June 30, 1996. -more- 3/WF Earnings At June 30, 1997, the Company's preliminary risk-based capital ratios were 11.40 percent for total risk-based capital and 7.45 percent for Tier 1 risk- based capital, exceeding the minimum regulatory guidelines of 8 percent and 4 percent, respectively. At March 31, 1997, these risk-based capital ratios were 12.05 percent and 7.80 percent, respectively. At June 30, 1996, the Company's total risk-based capital ratio was 11.18 percent and the Tier 1 risk-based capital ratio was 7.40 percent. The leverage ratio at June 30, 1997 was 6.65 percent, compared with 6.61 percent at March 31, 1997 and 6.37 percent at June 30, 1996. The ratio of common equity to total assets was 12.81 percent at June 30, 1997, 12.93 percent at March 31, 1997 and 13.07 percent at June 30, 1996. ________________ The following appears in accordance with the Securities Litigation Reform Act: This press release includes forward-looking statements that involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, inflation, government regulations, the progress of integrating First Interstate and economic conditions and competition in the geographic and business areas in which the Company conducts its operations. ### VISIT WELLS FARGO ON THE WORLD WIDE WEB AT HTTP://WWW.WELLSFARGO.COM ### - 4 - Wells Earnings Wells Fargo & Company and Subsidiaries
SUMMARY FINANCIAL DATA - NEWS RELEASE - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- % Change Quarter ended June 30, 1997 from Six months ended ---------------------------- ------------------ ------------------ JUNE 30, Mar. 31, June 30, Mar. 31, June 30, JUNE 30, June 30, % (in millions) 1997 1997 1996 1997 1996 1997 1996 Change - ----------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Net income $ 228 $ 339 $ 363 (33)% (37)% $ 568 $ 627 (9)% Net income applicable to common stock 222 329 344 (33) (35) 551 598 (8) Per common share Net income $ 2.49 $ 3.62 $ 3.61 (31) (31) $ 6.12 $ 8.39 (27) Dividends declared 1.30 1.30 1.30 -- -- 2.60 2.60 -- Average common shares outstanding 89.0 90.8 95.6 (2) (7) 89.9 71.3 26 Profitability ratios (annualized) Net income to average total assets (ROA) .92% 1.31% 1.35% (30) (32) 1.12% 1.60% (30) Net income applicable to common stock to average common stockholders' equity (ROE) 6.88 10.02 9.77 (31) (30) 8.46 13.52 (37) Efficiency ratio (1) 68.2% 60.3% 65.8% 13 4 64.2% 62.1% 3 Average loans $ 64,618 $ 65,493 $ 70,734 (1) (9) $ 65,053 $ 52,880 23 Average assets 99,739 105,430 108,430 (5) (8) 102,569 78,782 30 Average core deposits 73,524 77,622 83,356 (5) (12) 75,562 60,087 26 Net interest margin 5.93% 6.14% 6.03% (3) (2) 6.03% 6.08% (1) NET INCOME AND RATIOS EXCLUDING GOODWILL AND NONQUALIFYING CORE DEPOSIT INTANGIBLE AMORTIZATION AND BALANCES ("CASH" OR "TANGIBLE") (2) Net income applicable to common stock $ 338 $ 443 $ 468 (24) (28) $ 781 $ 730 7 Net income per common share 3.79 4.88 4.89 (22) (22) 8.69 10.24 (15) ROA 1.51% 1.90% 1.96% (21) (23) 1.71% 2.05% (17) ROE 29.27 36.67 33.43 (20) (12) 33.06 33.18 -- Efficiency ratio 60.6 52.9 58.0 15 4 56.7 56.7 -- AT PERIOD END Investment securities $ 11,530 $ 12,634 $ 13,692 (9) (16) $ 11,530 $ 13,692 (16) Loans 65,689 65,436 70,541 -- (7) 65,689 70,541 (7) Allowance for loan losses 1,850 1,922 2,273 (4) (19) 1,850 2,273 (19) Goodwill 7,231 7,312 7,479 (1) (3) 7,231 7,479 (3) Assets 100,180 101,863 108,586 (2) (8) 100,180 108,586 (8) Core deposits 73,545 76,156 83,331 (3) (12) 73,545 83,331 (12) Common stockholders' equity 12,831 13,170 14,191 (3) (10) 12,831 14,191 (10) Stockholders' equity 13,106 13,595 15,030 (4) (13) 13,106 15,030 (13) Capital ratios Common stockholders' equity to assets 12.81% 12.93% 13.07% (1) (2) 12.81% 13.07% (2) Stockholders' equity to assets 13.08 13.35 13.84 (2) (5) 13.08 13.84 (5) Risk-based capital (3) Tier 1 capital 7.45 7.80 7.40 (4) 1 7.45 7.40 1 Total capital 11.40 12.05 11.18 (5) 2 11.40 11.18 2 Leverage (3) 6.65 6.61 6.37 1 4 6.65 6.37 4 Book value per common share $ 145.68 $ 146.37 $ 149.52 -- (3) $ 145.68 $ 149.52 (3) Staff (active, full-time equivalent) 33,216 34,486 41,548 (4) (20) 33,216 41,548 (20) COMMON STOCK PRICE High $ 287.88 $ 319.25 $ 264.50 (10) 9 $ 319.25 $ 264.50 21 Low 246.00 271.00 232.13 (9) 6 246.00 203.13 21 Period end 269.50 284.13 239.13 (5) 13 269.50 239.13 13 - -----------------------------------------------------------------------------------------------------------------------------------
(1) The efficiency ratio is defined as noninterest expense divided by the total of net interest income and noninterest income. (2) Nonqualifying core deposit intangible (CDI) amortization and average balance excluded from these calculations are, with the exception of the efficiency ratio, net of applicable taxes. The after-tax amounts for the amortization and average balance of nonqualifying CDI were $35 million and $1,034 million, respectively, for the quarter ended June 30, 1997 and $66 million and $1,064 million, respectively, for the six months ended June 30, 1997. Goodwill amortization and average balance (which are not tax effected) were $81 million and $7,271 million, respectively, for the quarter ended June 30, 1997 and $164 million and $7,288 million, respectively, for the six months ended June 30, 1997. (3) The June 30, 1997 ratios are preliminary. - 5 -
Wells Fargo & Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME ------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- Quarter Six months ended June 30, ended June 30, ---------------- % ---------------- % (in millions) 1997 1996 Change 1997 1996 Change ------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Federal funds sold and securities purchased (1) under resale agreements $ 6 $ 8 (25)% $ 11 $ 10 10 % (2) Investment securities 190 225 (16) 398 353 13 (3) Loans 1,507 1,618 (7) 3,057 2,494 23 (4) Other 13 7 86 24 7 243 ------ ------ ------ ------ (5) Total interest income 1,716 1,858 (8) 3,490 2,864 22 ------ ------ ------ ------ INTEREST EXPENSE (6) Deposits 429 454 (6) 851 695 22 Federal funds purchased and securities sold (7) under repurchase agreements 34 21 62 65 57 14 (8) Commercial paper and other short-term borrowings 3 3 -- 6 8 (25) (9) Senior and subordinated debt 78 80 (3) 159 128 24 Guaranteed preferred beneficial interests in (10) Company's subordinated debentures 25 -- -- 50 -- -- ------ ------ ------ ------ (11) Total interest expense 569 558 2 1,131 888 27 ------ ------ ------ ------ (12) NET INTEREST INCOME 1,147 1,300 (12) 2,359 1,976 19 (13) Provision for loan losses 140 -- -- 245 -- -- ------ ------ ------ ------ Net interest income after (14) provision for loan losses 1,007 1,300 (23) 2,114 1,976 7 ------ ------ ------ ------ NONINTEREST INCOME (15) Service charges on deposit accounts 214 258 (17) 434 380 14 (16) Fees and commissions 234 211 11 448 329 36 (17) Trust and investment services income 112 104 8 221 164 35 (18) Investment securities gains 3 3 -- 7 2 250 (19) Other 116 63 84 209 118 77 ------ ------ ------ ------ (20) Total noninterest income 679 639 6 1,319 993 33 ------ ------ ------ ------ NONINTEREST EXPENSE (21) Salaries 316 400 (21) 656 581 13 (22) Incentive compensation 49 61 (20) 89 93 (4) (23) Employee benefits 81 102 (21) 176 157 12 (24) Equipment 98 111 (12) 192 167 15 (25) Net occupancy 95 108 (12) 196 161 22 (26) Goodwill 81 81 -- 164 89 84 (27) Core deposit intangible 67 82 (18) 129 91 42 (28) Operating losses 180 27 567 222 42 429 (29) Other 279 305 (9) 539 463 16 ------ ------ ------ ------ (30) Total noninterest expense 1,246 1,277 (2) 2,363 1,844 28 ------ ------ ------ ------ INCOME BEFORE INCOME TAX (31) EXPENSE 440 662 (34) 1,070 1,125 (5) (32) Income tax expense 212 299 (29) 502 498 1 ------ ------ ------ ------ (33) NET INCOME $ 228 $ 363 (37)% $ 568 $ 627 (9)% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ NET INCOME APPLICABLE TO (34) COMMON STOCK $ 222 $ 344 (35)% $ 551 $ 598 (8)% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ PER COMMON SHARE (35) Net income $ 2.49 $ 3.61 (31)% $ 6.12 $ 8.39 (27)% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ (36) Dividends declared $ 1.30 $ 1.30 -- % $ 2.60 $ 2.60 -- % ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ (37) Average common shares outstanding 89.0 95.6 (7)% 89.9 71.3 26 % ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------
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Wells Fargo & Company and Subsidiaries CONSOLIDATED BALANCE SHEET ----------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------- % Change June 30, 1997 from ------------------ June 30, Dec. 31, June 30, Dec. 31, June 30, (in millions) 1997 1996 1996 1996 1996 ----------------------------------------------------------------------------------------------------------------- ASSETS (1) Cash and due from banks $ 8,037 $ 11,736 $ 8,882 (32)% (10)% Federal funds sold and securities (2) purchased under resale agreements 224 187 1,344 20 (83) (3) Investment securities at fair value 11,530 13,505 13,692 (15) (16) (4) Loans 65,689 67,389 70,541 (3) (7) (5) Allowance for loan losses 1,850 2,018 2,273 (8) (19) ------- ------- ------- (6) Net loans 63,839 65,371 68,268 (2) (6) ------- ------- ------- (7) Due from customers on acceptances 97 197 210 (51) (54) (8) Accrued interest receivable 519 665 591 (22) (12) (9) Premises and equipment, net 2,262 2,406 2,400 (6) (6) (10) Core deposit intangible 1,835 2,038 2,208 (10) (17) (11) Goodwill 7,231 7,322 7,479 (1) (3) (12) Other assets 4,606 5,461 3,512 (16) 31 ------- ------- ------- (13) Total assets $100,180 $108,888 $108,586 (8)% (8)% ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- LIABILITIES (14) Noninterest-bearing deposits $ 24,284 $ 29,073 $ 27,535 (16)% (12)% (15) Interest-bearing deposits 49,464 52,748 56,333 (6) (12) ------- ------- ------- (16) Total deposits 73,748 81,821 83,868 (10) (12) Federal funds purchased and securities (17) sold under repurchase agreements 4,237 2,029 944 109 349 (18) Commercial paper and other short-term borrowings 208 401 262 (48) (21) (19) Acceptances outstanding 97 197 210 (51) (54) (20) Accrued interest payable 196 171 177 15 11 (21) Other liabilities 2,869 3,947 2,865 (27) -- (22) Senior debt 1,734 2,120 2,586 (18) (33) (23) Subordinated debt 2,686 2,940 2,644 (9) 2 Guaranteed preferred beneficial interests in (24) Company's subordinated debentures 1,299 1,150 -- 13 -- STOCKHOLDERS' EQUITY (25) Preferred stock 275 600 839 (54) (67) Common stock - $5 par value, authorized 150,000,000 shares; issued and outstanding 88,078,690 shares, (26) 91,474,425 shares and 94,912,532 shares 440 457 475 (4) (7) (27) Additional paid-in capital 9,305 10,287 11,207 (10) (17) (28) Retained earnings 3,064 2,749 2,586 11 18 (29) Cumulative foreign currency translation adjustments -- (4) (4) (100) (100) (30) Investment securities valuation allowance 22 23 (73) (4) -- ------- ------- ------- (31) Total stockholders' equity 13,106 14,112 15,030 (7) (13) ------- ------- ------- (32) Total liabilities and stockholders' equity $100,180 $108,888 $108,586 (8)% (8)% ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ----------------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------
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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- Six months ended June 30, ------------------------- (in millions) 1997 1996 - ----------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $14,112 $ 4,055 Net income 568 627 Common stock issued to First Interstate stockholders -- 11,299 Common stock issued under employee benefit and dividend reinvestment plans 45 55 Preferred stock issued to First Interstate stockholders -- 360 Preferred stock redeemed (325) -- Common stock repurchased (1,044) (1,163) Preferred stock dividends (17) (29) Common stock dividends (236) (186) Change in foreign currency translation adjustments 4 -- Change in investment securities valuation allowance (1) (99) Fair value adjustment related to First Interstate stock options -- 111 ------- ------- BALANCE, END OF PERIOD $13,106 $15,030 ------- ------- ------- ------- - ----------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------
LOANS - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- JUNE 30, December 31, June 30, (in millions) 1997 1996 1996 - ----------------------------------------------------------------------------------------------- Commercial $19,464 $19,515 $19,575 Real estate 1-4 family first mortgage 9,757 10,425 11,811 Other real estate mortgage 11,747 11,860 12,920 Real estate construction 2,378 2,303 2,401 Consumer: Real estate 1-4 family junior lien mortgage 6,008 6,278 6,736 Credit card 5,090 5,462 5,276 Other revolving credit and monthly payment 7,749 8,374 9,075 ------- ------- ------- Total consumer 18,847 20,114 21,087 Lease financing 3,373 3,003 2,689 Foreign 123 169 58 ------- ------- ------- Total loans $65,689 $67,389 $70,541 ------- ------- ------- ------- ------- ------- - ----------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------
- 8 - 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) 1997 1997 1996 1997 1996 - ---------------------------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $1,922 $2,018 $1,681 $2,018 $1,794 Allowance of First Interstate -- -- 770 -- 770 Provision for loan losses 140 105 -- 245 -- Loan charge-offs: Commercial (60) (69) (48) (129) (61) Real estate 1-4 family first mortgage (5) (5) (5) (10) (9) Other real estate mortgage (2) (8) (13) (10) (16) Real estate construction (2) (1) (4) (3) (5) Consumer: Real estate 1-4 family junior lien mortgage (6) (6) (13) (12) (17) Credit card (133) (115) (101) (248) (187) Other revolving credit and monthly payment (57) (56) (51) (113) (71) ------ ------ ------ ------ ------ Total consumer (196) (177) (165) (373) (275) Lease financing (10) (10) (8) (20) (14) ------ ------ ------ ------ ------ Total loan charge-offs (275) (270) (243) (545) (380) ------ ------ ------ ------ ------ Loan recoveries: Commercial 20 13 8 33 13 Real estate 1-4 family first mortgage 1 1 2 2 5 Other real estate mortgage 8 22 19 30 23 Real estate construction -- 1 4 1 5 Consumer: Real estate 1-4 family junior lien mortgage 1 2 4 3 5 Credit card 11 11 11 22 16 Other revolving credit and monthly payment 19 16 15 35 18 ------ ------ ------ ------ ------ Total consumer 31 29 30 60 39 Lease financing 3 3 2 6 4 ------ ------ ------ ------ ------ Total loan recoveries 63 69 65 132 89 ------ ------ ------ ------ ------ Total net loan charge-offs (212) (201) (178) (413) (291) ------ ------ ------ ------ ------ BALANCE, END OF PERIOD $1,850 $1,922 $2,273 $1,850 $2,273 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total net loan charge-offs as a percentage of average loans (annualized) 1.32% 1.23% 1.01% 1.28% 1.10% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Allowance as a percentage of total loans 2.82% 2.94% 3.22% 2.82% 3.22% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ - ---------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------
- 9 - Wells Fargo & Company and Subsidiaries
NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- JUNE 30, December 31, June 30, (in millions) 1997 1996 1996 - ---------------------------------------------------------------------------------------------------- Nonaccrual loans: Commercial $179 $223 $208 Real estate 1-4 family first mortgage 102 99 87 Other real estate mortgage 283 349 363 Real estate construction 19 25 47 Consumer: Real estate 1-4 family junior lien mortgage 17 15 22 Other revolving credit and monthly payment 2 1 1 Lease financing -- 2 3 ---- ---- ---- Total nonaccrual loans 602 714 731 Restructured loans 10 10 11 ---- ---- ---- Nonaccrual and restructured loans 612 724 742 As a percentage of total loans .9% 1.1% 1.1% Foreclosed assets 194 219 238 Real estate investments (1) 5 4 7 ---- ---- ---- Total nonaccrual and restructured loans and other assets $811 $947 $987 ---- ---- ---- ---- ---- ---- - ---------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------
(1) 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 $158 million, $154 million and $124 million at June 30, 1997, December 31, 1996 and June 30, 1996, respectively. - 10 - Wells Fargo & Company and Subsidiaries
NONINTEREST INCOME - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- Quarter Six months ended June 30, ended June 30, ----------------- % ---------------- % (in millions) 1997 1996 Change 1997 1996 Change - ----------------------------------------------------------------------------------------------------------------------------------- Service charges on deposit accounts $214 $258 (17)% $ 434 $380 14% Fees and commissions: Credit card membership and other credit card fees 55 26 112 100 53 89 Debit and credit card merchant fees 24 37 (35) 46 52 (12) Charges and fees on loans 33 32 3 64 50 28 Shared ATM network fees 43 27 59 82 39 110 Mutual fund and annuity sales fees 16 18 (11) 32 27 19 All other 63 71 (11) 124 108 15 ---- ---- ------ ---- Total fees and commissions 234 211 11 448 329 36 Trust and investment services income: Asset management and custody fees 61 60 2 122 95 28 Mutual fund management fees 45 34 32 84 55 53 All other 6 10 (40) 15 14 7 ---- ---- ------ ---- Total trust and investment services income 112 104 8 221 164 35 Investment securities gains 3 3 -- 7 2 250 Income from equity investments accounted for by the: Cost method 40 20 100 91 55 65 Equity method 15 8 88 30 10 200 Check printing charges 18 15 20 36 24 50 Gains on sales of loans 7 1 600 13 5 160 Gains from dispositions of operations 1 1 -- 8 5 60 Losses on dispositions of premises and equipment (6) (5) 20 (36) (17) 112 All other 41 23 78 67 36 86 ---- ---- ------ ---- Total $679 $639 6% $1,319 $993 33% ---- ---- ---- ------ ---- ---- ---- ---- ---- ------ ---- ---- - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Quarter Six months ended June 30, ended June 30, ------------------ % ------------------ % (in millions) 1997 1996 Change 1997 1996 Change - ---------------------------------------------------------------------------------------------------------------------------------- Salaries $ 316 $ 400 (21)% $ 656 $ 581 13% Incentive compensation 49 61 (20) 89 93 (4) Employee benefits 81 102 (21) 176 157 12 Equipment 98 111 (12) 192 167 15 Net occupancy 95 108 (12) 196 161 22 Goodwill 81 81 -- 164 89 84 Core deposit intangible: Nonqualifying (1) 59 72 (18) 113 72 57 Qualifying 8 10 (20) 16 19 (16) Operating losses 180 27 567 222 42 429 Contract services 59 66 (11) 115 108 6 Telecommunications 36 28 29 73 44 66 Postage 22 26 (15) 45 41 10 Security 22 17 29 44 23 91 Outside professional services 21 31 (32) 36 44 (18) Stationery and supplies 16 21 (24) 36 31 16 Advertising and promotion 21 21 -- 34 34 -- Check printing 14 10 40 30 16 88 Travel and entertainment 15 16 (6) 29 26 12 Outside data processing 13 15 (13) 26 18 44 Foreclosed assets 5 1 400 (4) 3 -- All other 35 53 (34) 75 75 -- ------ ------ ------ ------ ------ ----- Total $1,246 $1,277 (2)% $2,363 $1,844 28% ------ ------ ------ ------ ------ ----- ------ ------ ------ ------ ------ ----- - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------
(1) Amortization of core deposit intangibles acquired after February 1992 that are subtracted from stockholders' equity in computing regulatory capital for bank holding companies. - 11 - Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1) -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- Quarter ended June 30, -------------------------------------------------------------------- 1997 1996 ------------------------------- -------------------------------- Interest Interest Average Yields/ income/ Average Yields/ income/ (in millions) balance rates expense balance rates expense -------------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Federal funds sold and securities purchased (1) under resale agreements $ 451 5.67% $ 6 $ 588 5.36% $ 8 Investment securities at fair value (2): (2) U.S. Treasury securities 2,688 6.06 41 3,177 5.52 44 Securities of U.S. government agencies (3) and corporations 5,926 6.44 96 8,434 6.07 129 (4) Private collateralized mortgage obligations 2,939 6.64 49 2,653 6.23 42 (5) Other securities 322 6.50 4 668 6.83 10 -------- -------- -------- -------- (6) Total investment securities at fair value 11,875 6.40 190 14,932 6.01 225 Loans: (7) Commercial 18,432 9.10 418 19,460 8.75 424 (8) Real estate 1-4 family first mortgage 9,927 7.53 187 11,924 7.50 224 (9) Other real estate mortgage 11,573 9.23 266 13,006 9.32 300 (10) Real estate construction 2,262 10.03 57 2,385 10.07 60 Consumer: (11) Real estate 1-4 family junior lien mortgage 6,035 9.37 141 6,790 8.96 152 (12) Credit card 5,164 14.44 186 5,183 14.61 189 (13) Other revolving credit and monthly payment 7,835 9.35 183 9,151 9.35 213 -------- -------- -------- -------- (14) Total consumer 19,034 10.74 510 21,124 10.51 554 (15) Lease financing 3,264 8.65 71 2,599 8.76 57 (16) Foreign 126 6.43 2 236 4.72 3 -------- -------- -------- -------- (17) Total loans 64,618 9.37 1,511 70,734 9.20 1,622 (18)Other 721 6.84 13 396 6.62 7 -------- -------- -------- -------- (19) Total earning assets $ 77,665 8.87 1,720 $ 86,650 8.62 1,862 -------- -------- -------- -------- -------- -------- -------- -------- FUNDING SOURCES Deposits: (20) Interest-bearing checking $ 1,895 1.33 6 $ 7,060 1.24 22 (21) Market rate and other savings 32,519 2.60 211 32,921 2.68 220 (22) Savings certificates 15,669 5.09 199 16,779 4.84 201 (23) Other time deposits 165 4.51 2 483 5.89 7 (24) Deposits in foreign offices 833 5.45 11 303 5.17 4 -------- -------- -------- -------- (25) Total interest-bearing deposits 51,081 3.37 429 57,546 3.17 454 Federal funds purchased and securities sold (26) under repurchase agreements 2,492 5.42 34 1,667 5.08 21 (27)Commercial paper and other short-term borrowings 216 7.11 4 296 4.19 3 (28)Senior debt 1,751 6.36 28 2,289 6.07 35 (29)Subordinated debt 2,884 6.94 50 2,580 7.03 45 Guaranteed preferred beneficial interests in Company's (30) subordinated debentures 1,299 7.81 25 -- -- -- -------- -------- -------- -------- (31) Total interest-bearing liabilities 59,723 3.83 570 64,378 3.49 558 (32)Portion of noninterest-bearing funding sources 17,942 -- -- 22,272 -- -- -------- -------- -------- -------- (33) Total funding sources $ 77,665 2.94 570 $ 86,650 2.59 558 -------- -------- -------- -------- -------- -------- NET INTEREST MARGIN AND NET INTEREST INCOME ON (34) A TAXABLE-EQUIVALENT BASIS (3) 5.93% $ 1,150 6.03% $ 1,304 ---- -------- ---- ------- ---- -------- ---- ------- NONINTEREST-EARNING ASSETS (35)Cash and due from banks $ 7,654 $ 8,569 (36)Goodwill 7,271 7,238 (37)Other 7,149 5,973 -------- -------- Total noninterest-earning assets $ 22,074 $ 21,780 -------- -------- -------- -------- NONINTEREST-BEARING FUNDING SOURCES (38)Deposits $ 23,441 $ 26,596 (39)Other liabilities 3,273 2,414 (40)Preferred stockholders' equity 371 839 (41)Common stockholders' equity 12,931 14,203 Noninterest-bearing funding sources used to (42) fund earning assets (17,942) (22,272) -------- -------- (43) Net noninterest-bearing funding sources $ 22,074 $ 21,780 -------- -------- -------- -------- (44) TOTAL ASSETS $ 99,739 $108,430 -------- -------- -------- -------- -------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.50% and 8.25% for the quarters ended June 30, 1997 and 1996, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.81% and 5.52% for the same quarters, respectively. (2) Yields are based on amortized cost balances. The average amortized cost balances for investment securities at fair value totaled $11,897 million and $15,012 million for the quarters ended June 30, 1997 and 1996, respectively. (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% for all periods presented. - 12 - Wells Fargo & Company and Subsidiaries
AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1) ------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------- Six months ended June 30, -------------------------------------------------------------- 1997 1996 ----------------------------- ------------------------------ Interest Interest Average Yields/ income/ Average Yields/ income/ (in millions) balance rates expense balance rates expense ------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS Federal funds sold and securities purchased (1) under resale agreements $ 413 5.56% $ 11 $ 357 5.42% $ 10 Investment securities at fair value (2): (2) U.S. Treasury securities 2,801 6.05 84 2,266 5.52 62 Securities of U.S. government agencies (3) and corporations 6,313 6.42 203 6,712 6.02 203 (4) Private collateralized mortgage obligations 3,036 6.61 101 2,366 6.15 73 (5) Other securities 345 6.42 10 447 7.03 15 ------- ------ ------ -------- -------- ------- (6) Total investment securities at fair value 12,495 6.38 398 11,791 5.99 353 Loans: (7) Commercial 18,419 9.04 827 14,384 9.15 655 (8) Real estate 1-4 family first mortgage 10,080 7.47 376 8,162 7.52 307 (9) Other real estate mortgage 11,562 10.06 576 10,602 9.28 489 (10) Real estate construction 2,280 9.89 112 1,856 10.04 93 Consumer: (11) Real estate 1-4 family junior lien mortgage 6,102 9.34 283 5,062 8.81 222 (12) Credit card 5,247 14.25 374 4,558 15.02 343 (13) Other revolving credit and monthly payment 8,052 9.30 372 5,875 9.76 285 -------- ------ -------- ------- (14) Total consumer 19,401 10.65 1,029 15,495 10.99 850 (15) Lease financing 3,172 8.74 139 2,248 8.95 101 (16) Foreign 139 6.93 5 133 4.98 3 -------- ------ -------- ------- (17) Total loans 65,053 9.47 3,064 52,880 9.48 2,498 (18)Other 713 6.55 24 231 6.57 7 -------- ------ -------- ------- (19) Total earning assets $ 78,674 8.93 3,497 $ 65,259 8.82 2,868 -------- ------ -------- ------- -------- ------ -------- ------- FUNDING SOURCES Deposits: (20) Interest-bearing checking $ 1,904 1.24 12 $ 3,958 1.21 24 (21) Market rate and other savings 33,307 2.57 425 25,456 2.62 332 (22) Savings certificates 15,594 5.07 392 12,707 4.98 315 (23) Other time deposits 171 4.21 4 412 6.46 13 (24) Deposits in foreign offices 697 5.32 18 414 5.33 11 -------- ------ -------- ------- (25) Total interest-bearing deposits 51,673 3.32 851 42,947 3.25 695 Federal funds purchased and securities sold (26) under repurchase agreements 2,459 5.30 65 2,186 5.25 57 (27)Commercial paper and other short-term borrowings 223 6.06 6 350 4.81 8 (28)Senior debt 1,876 6.27 58 2,000 6.15 61 (29)Subordinated debt 2,911 6.93 101 1,923 6.97 67 Guaranteed preferred beneficial interests in Company's (30) subordinated debentures 1,275 7.83 50 -- -- -- -------- ------ -------- ------- (31) Total interest-bearing liabilities 60,417 3.77 1,131 49,406 3.61 888 (32)Portion of noninterest-bearing funding sources 18,257 -- -- 15,853 -- -- -------- ------ -------- ------- (33) Total funding sources $ 78,674 2.90 1,131 $ 65,259 2.74 888 -------- ------ -------- ------- -------- ------ -------- ------- NET INTEREST MARGIN AND NET INTEREST INCOME ON (34) A TAXABLE-EQUIVALENT BASIS (3) 6.03% $ 2,366 6.08% $ 1,980 ---- -------- ---- -------- ---- -------- ---- -------- NONINTEREST-EARNING ASSETS (35)Cash and due from banks $ 8,799 $ 5,721 (36)Goodwill 7,288 3,808 (37)Other 7,808 3,994 -------- -------- Total noninterest-earning assets $ 23,895 $ 13,523 -------- -------- -------- -------- NONINTEREST-BEARING FUNDING SOURCES (38)Deposits $ 24,757 $ 17,966 (39)Other liabilities 3,819 1,846 (40)Preferred stockholders' equity 459 664 (41)Common stockholders' equity 13,117 8,900 Noninterest-bearing funding sources used to (42) fund earning assets (18,257) (15,853) -------- -------- (43) Net noninterest-bearing funding sources $ 23,895 $ 13,523 -------- -------- -------- -------- (44) TOTAL ASSETS $102,569 $ 78,782 -------- -------- -------- -------- ------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.38% and 8.29% for the six months ended June 30, 1997 and 1996, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.69% and 5.46% for the same periods, respectively. (2) Yields are based on amortized cost balances. The average amortized cost balances for investment securities at fair value totaled $12,503 million and $11,814 million for the six months ended June 30, 1997 and 1996, respectively. (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% for all periods presented. -----END PRIVACY-ENHANCED MESSAGE-----