-----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, GAs1Dg/Cs41mLJGYSbKWwGvkgZORCilUp/+++0j4xtOQCJY6rIVO7DNcxFD2dNFR OczUjU6Z/AZlr18yWAa9iA== 0001047469-97-001314.txt : 19971022 0001047469-97-001314.hdr.sgml : 19971022 ACCESSION NUMBER: 0001047469-97-001314 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971021 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971021 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: SEC FILE NUMBER: 001-06214 FILM NUMBER: 97698690 BUSINESS ADDRESS: STREET 1: 420 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94163 BUSINESS PHONE: 8004114932 MAIL ADDRESS: STREET 1: 343 SANSOME ST 3RD FL STREET 2: WELLS FARGO BANK CITY: SAN FRANCISCO STATE: CA ZIP: 94163 8-K 1 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): October 21, 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: 1-800-411-4932 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 September 30, 1997. Final financial statements with additional analyses will be filed as part of the Company's Form 10-Q in November 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 September 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 October 21, 1997. WELLS FARGO & COMPANY By: FRANK A. MOESLEIN ------------------------------------------ Frank A. Moeslein Executive Vice President and Controller EX-27 2 EXHIBIT 27
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 8-K DATED OCTOBER 21, 1997 FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1,000,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 7,823 0 188 0 10,737 0 0 65,104 1,823 97,655 70,922 4,726 2,819 6,164 0 275 434 12,211 97,655 4,570 573 39 5,197 1,280 1,710 3,487 420 6 3,450 1,613 857 0 0 857 9.38 0.00 6.00 565 0 9 0 2,018 816 201 1,823 0 0 0
EX-99 3 EXHIBIT 99 Cindy Koehn 415/396-3099 Investor Relations FOR IMMEDIATE RELEASE - --------------------- Tues., Oct. 21, 1997 WELLS FARGO REPORTS HIGHER PER SHARE EARNINGS IN THIRD QUARTER PER SHARE EARNINGS OF $3.26 VS. $3.23 A YEAR AGO CASH EARNINGS PER SHARE OF $4.57 VS. $4.52 A YEAR AGO SAN FRANCISCO -- Wells Fargo & Co. (NYSE:WFC) today reported net income of $290 million for the third quarter of 1997, compared with $321 million for the third quarter of 1996. Per share earnings for the quarter were $3.26, compared with $3.23 in the third quarter of 1996. Return on average assets (ROA) was 1.18 percent and return on average common equity (ROE) was 8.94 percent in the third quarter of 1997. In the year-ago period, ROA was 1.18 percent and ROE was 8.64 percent. Cash earnings for the third quarter of 1997 were $4.57 per share, compared with $4.52 for the third quarter of 1996, an increase of 1 percent. Cash ROA was 1.81 percent and cash ROE was 35.44 percent for the third quarter of 1997, compared with 1.77 percent and 31.91 percent, respectively, for the third quarter of 1996. Cash earnings are earnings before the amortization of goodwill and nonqualifying core deposit intangible. "We are encouraged by the business trends we have seen this quarter and the upturn in loan volumes that occurred at the end of the quarter," said Paul Hazen, Chairman. "Both loans and checking deposits bottomed out in August, and grew in September." He pointed out that during the quarter, the bank completed the sale of 83 branches and their deposits of $1.0 billion, which contributed to the reduction in total deposits reported for the quarter. Net interest income on a taxable-equivalent basis was $1.132 billion in the third quarter of 1997, compared with $1.299 billion a year ago, a decrease of 13 percent. The decrease was primarily due to a decline in earning assets. The Company's net interest margin for the quarter was 5.94 percent, compared with 6.15 percent a year ago. Noninterest income for the third quarter of 1997 was $677 million, compared with $643 million in the same period a year ago, an increase of 5 percent. Noninterest expense for the third quarter of 1997 was $1.087 billion versus $1.305 billion a year ago. The major portion of this decrease resulted from cost savings achieved subsequent to the merger with First Interstate. -more- 2/WF 3Q earnings The loan loss provision was $175 million in the third quarter of 1997, compared with $35 million in the third quarter of 1996. The $140 million increase from a year ago contributed substantially to the decline in the Company's net income. Since the third quarter of 1996, the Company has been increasing its loan loss provision by $30 to $40 million every quarter. In the second quarter of 1997, the Company made a $140 million provision. The Company expects that the provision will increase to approximately $205 to $215 million in the fourth quarter of 1997, when it is anticipated that the provision will approximate net charge-offs. Net charge-offs in the third quarter of 1997 totaled $202 million, or 1.25 percent of average loans (annualized). The largest category of net charge-offs was credit card loans ($112 million). For the third quarter of 1996, net charge-offs totaled $171 million, or .98 percent of average loans (annualized). The largest category of net charge-offs in that period was also credit card loans ($95 million). At September 30, 1997, the allowance for loan losses of $1.823 billion equaled 2.80 percent of total loans, compared with 2.82 percent at June 30, 1997 and 3.09 percent at September 30, 1996. Total nonaccrual and restructured loans were $574 million at September 30, 1997, compared with $612 million at June 30, 1997 and $728 million at September 30, 1996. Foreclosed assets were $196 million at September 30, 1997, compared with $194 million at June 30, 1997 and $227 million at September 30, 1996. At September 30, 1997, the Company's preliminary risk-based capital ratios were 11.45 percent for total risk-based capital and 7.50 percent for Tier 1 risk-based capital, exceeding the minimum regulatory guidelines of 8 percent and 4 percent, respectively. At June 30, 1997, these risk-based capital ratios were 11.45 percent and 7.49 percent, respectively. At September 30, 1996, the Company's total risk-based capital ratio was 11.05 percent and the Tier 1 risk-based capital ratio was 7.04 percent. The leverage ratio at September 30, 1997 was 6.75 percent, compared with 6.67 percent at June 30, 1997 and 6.12 percent at September 30, 1996. The ratio of common equity to total assets was 12.95 percent at September 30, 1997, 12.81 percent at June 30, 1997 and 12.71 percent at September 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 - 3 - Wells Earnings Wells Fargo & Company and Subsidiaries SUMMARY FINANCIAL DATA -- NEWS RELEASE - --------------------------------------------------------------------------------
% Change Quarter ended Sept. 30, 1997 from Nine months ended ----------------------------- ------------------- ------------------ SEPT. 30, June 30, Sept. 30, June 30, Sept. 30, SEPT. 30, Sept. 30, % (in millions) 1997 1997 1996 1997 1996 1997 1996 Change - ----------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Net income $ 290 $ 228 $ 321 27% (10)% $ 857 $ 948 (10)% Net income applicable to common stock 285 222 302 28 (6) 836 901 (7) Per common share Net income $ 3.26 $ 2.49 $ 3.23 31 1 $ 9.38 $ 11.42 (18) Dividends declared 1.30 1.30 1.30 -- -- 3.90 3.90 -- Average common shares outstanding 87.5 89.0 93.7 (2) (7) 89.1 78.8 13 Profitability ratios (annualized) Net income to average total assets (ROA) 1.18% .92% 1.18% 28 -- 1.14% 1.43% (20) Net income applicable to common stock to average common stockholders' equity (ROE) 8.94 6.88 8.64 30 3 8.62 11.36 (24) Efficiency ratio (1) 60.2% 68.2% 67.3% (12) (11) 62.9% 64.2% (2) Average loans $ 63,865 $ 64,618 $ 69,274 (1) (8) $ 64,653 $ 58,384 11 Average assets 97,032 99,739 108,378 (3) (10) 100,703 88,719 14 Average core deposits 70,744 73,524 82,378 (4) (14) 73,937 67,572 9 Net interest margin 5.94% 5.93% 6.15% -- (3) 6.00% 6.11% (2) NET INCOME AND RATIOS EXCLUDING GOODWILL AND NONQUALIFYING CORE DEPOSIT INTANGIBLE AMORTIZATION AND BALANCES ("CASH" OR "TANGIBLE") (2) Net income applicable to common stock $ 400 $ 338 $ 424 18 (6) $ 1,181 $ 1,154 2 Net income per common share 4.57 3.79 4.52 21 1 13.25 14.64 (9) ROA 1.81% 1.51% 1.77% 20 2 1.74% 1.94% (10) ROE 35.44 29.27 31.91 21 11 33.83 32.70 3 Efficiency ratio 52.6 60.6 59.6 (13) (12) 55.4 57.8 (4) AT PERIOD END Investment securities $ 10,737 $ 11,530 $ 13,433 (7) (20) $ 10,737 $ 13,433 (20) Loans 65,104 65,689 69,233 (1) (6) 65,104 69,233 (6) Allowance for loan losses 1,823 1,850 2,137 (1) (15) 1,823 2,137 (15) Goodwill 7,149 7,231 7,407 (1) (3) 7,149 7,407 (3) Assets 97,655 100,180 109,176 (3) (11) 97,655 109,176 (11) Core deposits 70,580 73,545 83,308 (4) (15) 70,580 83,308 (15) Common stockholders' equity 12,645 12,831 13,884 (1) (9) 12,645 13,884 (9) Stockholders' equity 12,920 13,106 14,923 (1) (13) 12,920 14,923 (13) Capital ratios Common stockholders' equity to assets 12.95% 12.81% 12.71% 1 2 12.95% 12.71% 2 Stockholders' equity to assets 13.23 13.08 13.66 1 (3) 13.23 13.66 (3) Risk-based capital (3) Tier 1 capital 7.50 7.49 7.04 -- 7 7.50 7.04 7 Total capital 11.45 11.45 11.05 -- 4 11.45 11.05 4 Leverage (3) 6.75 6.67 6.12 1 10 6.75 6.12 10 Book value per common share $ 145.72 $ 145.68 $ 149.44 -- (2) $ 145.72 $ 149.44 (2) Staff (active, full-time equivalent) 32,663 33,216 38,859 (2) (16) 32,663 38,859 (16) COMMON STOCK PRICE High $ 279.88 $ 287.88 $ 264.00 (3) 6 $ 319.25 $ 264.50 21 Low 250.13 246.00 220.13 2 14 246.00 203.13 21 Period end 275.00 269.50 260.00 2 6 275.00 260.00 6 - -----------------------------------------------------------------------------------------------------------------------------------
(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 $34 million and $1,000 million, respectively, for the quarter ended September 30, 1997 and $100 million and $1,043 million, respectively, for the nine months ended September 30, 1997. Goodwill amortization and average balance (which are not tax effected) were $81 million and $7,190 million, respectively, for the quarter ended September 30, 1997 and $245 million and $7,255 million, respectively, for the nine months ended September 30, 1997. (3) The September 30, 1997 ratios are preliminary. - 4 - Wells Fargo & Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME - --------------------------------------------------------------------------------
Quarter Nine months ended Sept. 30, % ended Sept. 30, % --------------------- -------------------- (in millions) 1997 1996 Change 1997 1996 Change ------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Federal funds sold and securities purchased (1) under resale agreements $ 3 $ 11 (73)% $ 15 $ 21 (29)% (2) Investment securities 175 215 (19) 573 568 1 (3) Loans 1,513 1,612 (6) 4,570 4,106 11 (4) Other 16 9 78 39 16 144 ------ ------ ------ ------ (5) Total interest income 1,707 1,847 (8) 5,197 4,711 10 ------ ------ ------ ------ INTEREST EXPENSE (6) Deposits 430 446 (4) 1,280 1,140 12 Federal funds purchased and securities sold (7) under repurchase agreements 44 15 193 109 72 51 (8) Commercial paper and other short-term borrowings 5 3 67 12 11 9 (9) Senior and subordinated debt 75 88 (15) 234 217 8 Guaranteed preferred beneficial interests in (10) Company's subordinated debentures 25 -- -- 75 -- -- ------ ------ ------ ------ (11) Total interest expense 579 552 5 1,710 1,440 19 ------ ------ ------ ------ (12) NET INTEREST INCOME 1,128 1,295 (13) 3,487 3,271 7 (13) Provision for loan losses 175 35 400 420 35 -- ------ ------ ------ ------ Net interest income after (14) provision for loan losses 953 1,260 (24) 3,067 3,236 (5) ------ ------ ------ ------ NONINTEREST INCOME (15) Service charges on deposit accounts 214 254 (16) 649 634 2 (16) Fees and commissions 246 205 20 694 534 30 (17) Trust and investment services income 117 104 13 338 267 27 (18) Investment securities gains (losses) (1) -- -- 6 2 200 (19) Other 101 80 26 309 199 55 ------ ------ ------ ------ (20) Total noninterest income 677 643 5 1,996 1,636 22 ------ ------ ------ ------ NONINTEREST EXPENSE (21) Salaries 308 378 (19) 964 960 -- (22) Incentive compensation 54 53 2 143 146 (2) (23) Employee benefits 80 105 (24) 256 261 (2) (24) Equipment 97 103 (6) 289 269 7 (25) Net occupancy 96 96 -- 292 257 14 (26) Goodwill 81 81 -- 245 170 44 (27) Core deposit intangible 64 78 (18) 193 170 14 (28) Operating losses 40 31 29 262 72 264 (29) Other 267 380 (30) 806 844 (5) ------ ------ ------ ------ (30) Total noninterest expense 1,087 1,305 (17) 3,450 3,149 10 ------ ------ ------ ------ INCOME BEFORE INCOME TAX (31) EXPENSE 543 598 (9) 1,613 1,723 (6) (32) Income tax expense 253 277 (9) 756 775 (2) ------ ------ ------ ------ (33) NET INCOME $ 290 $ 321 (10)% $ 857 $ 948 (10)% ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------ ----- NET INCOME APPLICABLE TO (34) COMMON STOCK $ 285 $ 302 (6)% $ 836 $ 901 (7)% ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------ ----- PER COMMON SHARE (35) Net income $ 3.26 $ 3.23 1 % $ 9.38 $11.42 (18)% ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------ ----- (36) Dividends declared $ 1.30 $ 1.30 -- % $ 3.90 $ 3.90 -- % ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------ ----- (37) Average common shares outstanding 87.5 93.7 (7)% 89.1 78.8 13 % ------ ------ ----- ------ ------ ----- ------ ------ ----- ------ ------ ----- ------------------------------------------------------------------------------------------------------------------------
- 5 - Wells Fargo & Company and Subsidiaries CONSOLIDATED BALANCE SHEET - ------------------------------------------------------------------------------
% Change Sept. 30, 1997 from ----------------------- SEPT. 30, Dec. 31, Sept. 30, Dec. 31, Sept. 30, (in millions) 1997 1996 1996 1996 1996 ---------------------------------------------------------------------------------------------------------------------------- ASSETS (1) Cash and due from banks $ 7,823 $ 11,736 $ 11,622 (33)% (33)% Federal funds sold and securities (2) purchased under resale agreements 188 187 284 1 (34) (3) Investment securities at fair value 10,737 13,505 13,433 (20) (20) (4) Loans 65,104 67,389 69,233 (3) (6) (5) Allowance for loan losses 1,823 2,018 2,137 (10) (15) ------- -------- -------- (6) Net loans 63,281 65,371 67,096 (3) (6) ------- -------- -------- (7) Due from customers on acceptances 104 197 356 (47) (71) (8) Accrued interest receivable 537 665 590 (19) (9) (9) Premises and equipment, net 2,173 2,406 2,380 (10) (9) (10) Core deposit intangible 1,771 2,038 2,130 (13) (17) (11) Goodwill 7,149 7,322 7,407 (2) (3) (12) Other assets 3,892 5,461 3,878 (29) -- ------- -------- -------- (13) Total assets $97,655 $108,888 $109,176 (10)% (11)% ------- -------- -------- --- --- ------- -------- -------- --- --- LIABILITIES (14) Noninterest-bearing deposits $23,005 $ 29,073 $ 29,512 (21)% (22)% (15) Interest-bearing deposits 47,917 52,748 54,225 (9) (12) ------- -------- -------- (16) Total deposits 70,922 81,821 83,737 (13) (15) Federal funds purchased and securities (17) sold under repurchase agreements 4,268 2,029 1,033 110 313 (18) Commercial paper and other short-term borrowings 458 401 350 14 31 (19) Acceptances outstanding 104 197 356 (47) (71) (20) Accrued interest payable 245 171 215 43 14 (21) Other liabilities 2,574 3,947 3,151 (35) (18) (22) Senior debt 2,280 2,120 2,470 8 (8) (23) Subordinated debt 2,585 2,940 2,941 (12) (12) Guaranteed preferred beneficial interests in (24) Company's subordinated debentures 1,299 1,150 -- 13 -- STOCKHOLDERS' EQUITY (25) Preferred stock 275 600 1,039 (54) (74) Common stock - $5 par value, authorized 150,000,000 shares; issued and outstanding 86,780,522 shares, (26) 91,474,425 shares and 92,875,661 shares 434 457 464 (5) (6) (27) Additional paid-in capital 8,925 10,287 10,674 (13) (16) (28) Retained earnings 3,235 2,749 2,766 18 17 (29) Cumulative foreign currency translation adjustments -- (4) (4) (100) (100) (30) Investment securities valuation allowance 51 23 (16) 122 -- ------- -------- -------- (31) Total stockholders' equity 12,920 14,112 14,923 (8) (13) ------- -------- -------- (32) Total liabilities and stockholders' equity $97,655 $108,888 $109,176 (10)% (11)% ------- -------- -------- -- -- ------- -------- -------- -- -- ----------------------------------------------------------------------------------------------------------------------------
- 6 - Wells Fargo & Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - --------------------------------------------------------------------------------
Nine months ended Sept. 30, -------------------------- (in millions) 1997 1996 - ---------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $14,112 $ 4,055 Net income 857 948 Common stock issued to First Interstate stockholders -- 11,297 Common stock issued under employee benefit and dividend reinvestment plans 67 88 Preferred stock issued to First Interstate stockholders -- 360 Preferred stock redeemed (325) 197 Common stock repurchased (1,452) (1,735) Preferred stock dividends (21) (47) Common stock dividends (350) (309) Change in foreign currency translation adjustments 4 -- Change in investment securities valuation allowance 28 (42) Fair value adjustment related to First Interstate stock options -- 111 ------- ------- BALANCE, END OF PERIOD $12,920 $14,923 ------- ------- ------- ------- - ---------------------------------------------------------------------------------------------------- LOANS - ---------------------------------------------------------------------------------------------------- SEPT. 30, Dec. 31, Sept. 30, (in millions) 1997 1996 1996 - ---------------------------------------------------------------------------------------------------- Commercial $19,512 $19,515 $20,064 Real estate 1-4 family first mortgage 9,311 10,425 10,754 Other real estate mortgage 11,614 11,860 12,462 Real estate construction 2,351 2,303 2,331 Consumer: Real estate 1-4 family junior lien mortgage 5,931 6,278 6,406 Credit card 5,020 5,462 5,292 Other revolving credit and monthly payment 7,513 8,374 8,846 ------- ------- ------- Total consumer 18,464 20,114 20,544 Lease financing 3,754 3,003 2,891 Foreign 98 169 187 ------- ------- ------- Total loans $65,104 $67,389 $69,233 ------- ------- ------- ------- ------- ------- - ----------------------------------------------------------------------------------------------------
- 7 - Wells Fargo & Company and Subsidiaries CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
- ------------------------------------------------------------------------------------------------------------------------ Quarter ended Nine months ended -------------------------------------- ----------------------- SEPT. 30, June 30, Sept. 30, SEPT. 30, Sept. 30, (in millions) 1997 1997 1996 1997 1996 - ------------------------------------------------------------------------------------------------------------------------ BALANCE, BEGINNING OF PERIOD $1,850 $1,922 $2,273 $2,018 $1,794 Allowance of First Interstate -- -- -- -- 770 Provision for loan losses 175 140 35 420 35 Loan charge-offs: Commercial (69) (60) (30) (198) (91) Real estate 1-4 family first mortgage (5) (5) (4) (15) (13) Other real estate mortgage (2) (2) (13) (13) (29) Real estate construction -- (2) (5) (3) (9) Consumer: Real estate 1-4 family junior lien mortgage (6) (6) (7) (18) (24) Credit card (124) (133) (105) (372) (292) Other revolving credit and monthly payment (55) (57) (52) (168) (124) ------ ------ ------ ------ ------ Total consumer (185) (196) (164) (558) (440) Lease financing (10) (10) (7) (29) (21) ------ ------ ------ ------ ------ Total loan charge-offs (271) (275) (223) (816) (603) ------ ------ ------ ------ ------ Loan recoveries: Commercial 21 20 16 53 30 Real estate 1-4 family first mortgage 1 1 1 3 6 Other real estate mortgage 13 8 9 42 32 Real estate construction 1 -- 2 3 6 Consumer: Real estate 1-4 family junior lien mortgage 2 1 2 6 7 Credit card 12 11 10 34 26 Other revolving credit and monthly payment 17 19 10 51 28 ------ ------ ------ ------ ------ Total consumer 31 31 22 91 61 Lease financing 2 3 2 9 6 ------ ------ ------ ------ ------ Total loan recoveries 69 63 52 201 141 ------ ------ ------ ------ ------ Total net loan charge-offs (202) (212) (171) (615) (462) ------ ------ ------ ------ ------ BALANCE, END OF PERIOD $1,823 $1,850 $2,137 $1,823 $2,137 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total net loan charge-offs as a percentage of average loans (annualized) 1.25% 1.32% .98% 1.27% 1.05% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Allowance as a percentage of total loans 2.80% 2.82% 3.09% 2.80% 3.09% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ - ------------------------------------------------------------------------------------------------------------------------
- 8 - Wells Fargo & Company and Subsidiaries NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
- ------------------------------------------------------------------------------------------ SEPT. 30, Dec. 31, Sept. 30, (in millions) 1997 1996 1996 - ------------------------------------------------------------------------------------------ Nonaccrual loans: Commercial $172 $223 $216 Real estate 1-4 family first mortgage 100 99 77 Other real estate mortgage 258 349 370 Real estate construction 18 25 28 Consumer: Real estate 1-4 family junior lien mortgage 16 15 21 Other revolving credit and monthly payment 1 1 2 Lease financing -- 2 3 ---- ---- ---- Total nonaccrual loans 565 714 717 Restructured loans 9 10 11 ---- ---- ---- Nonaccrual and restructured loans 574 724 728 As a percentage of total loans .9% 1.1% 1.1% Foreclosed assets 196 219 227 Real estate investments (1) 4 4 6 ---- ---- ---- Total nonaccrual and restructured loans and other assets $774 $947 $961 ---- ---- ---- ---- ---- ---- - ------------------------------------------------------------------------------------------
(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 $170 million, $154 million and $128 million at September 30, 1997, December 31, 1996 and September 30, 1996, respectively. - 9 - Wells Fargo & Company and Subsidiaries NONINTEREST INCOME
Quarter Nine months ended Sept. 30, % ended Sept. 30, % ----------------- -------------- (in millions) 1997 1996 Change 1997 1996 Change - -------------------------------------------------------------------------------------------------------------------------- Service charges on deposit accounts $214 $254 (16)% $ 649 $ 634 2% Fees and commissions: Credit card membership and other credit card fees 62 30 107 162 83 95 Shared ATM network fees 43 28 54 125 67 87 Charges and fees on loans 37 32 16 100 81 23 Debit and credit card merchant fees 25 33 (24) 72 85 (15) Mutual fund and annuity sales fees 18 17 6 51 44 16 All other 61 65 (6) 184 174 6 ---- ---- ------ ------ Total fees and commissions 246 205 20 694 534 30 Trust and investment services income: Asset management and custody fees 64 59 8 186 154 21 Mutual fund management fees 47 34 38 131 89 47 All other 6 11 (45) 21 24 (13) ---- ---- ------ ------ Total trust and investment services income 117 104 13 338 267 27 Investment securities gains (losses) (1) -- -- 6 2 200 Income from equity investments accounted for by the: Cost method 18 37 (51) 109 92 18 Equity method 11 3 267 42 13 223 Check printing charges 17 15 13 53 39 36 Gains on sales of loans 28 6 367 41 11 273 Gains (losses) from dispositions of operations (1) (1) -- 7 5 40 Losses on dispositions of premises and equipment (10) (8) 25 (45) (25) 80 All other 38 28 36 102 64 59 ---- ---- ------ ---- Total $677 $643 5% $1,996 $1,636 22% ---- ---- -- ------ ------ --- ---- ---- -- ------ ------ --- - -------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE - -------------------------------------------------------------------------------------------------------------------------- Quarter Nine months ended Sept. 30, % ended Sept. 30, % ----------------- ---------------- (in millions) 1997 1996 Change 1997 1996 Change - -------------------------------------------------------------------------------------------------------------------------- Salaries $ 308 $ 378 (19)% $ 964 $ 960 --% Incentive compensation 54 53 2 143 146 (2) Employee benefits 80 105 (24) 256 261 (2) Equipment 97 103 (6) 289 269 7 Net occupancy 96 96 -- 292 257 14 Goodwill 81 81 -- 245 170 44 Core deposit intangible: Nonqualifying (1) 56 69 (19) 169 142 19 Qualifying 8 9 (11) 24 28 (14) Operating losses 40 31 29 262 72 264 Contract services 56 88 (36) 172 196 (12) Telecommunications 35 42 (17) 108 85 27 Security 22 16 38 66 38 74 Postage 19 27 (30) 64 68 (6) Outside professional services 20 32 (38) 56 76 (26) Stationery and supplies 19 18 6 56 49 14 Advertising and promotion 19 32 (41) 53 66 (20) Travel and entertainment 15 23 (35) 44 48 (8) Check printing 12 11 9 42 27 56 Outside data processing 11 17 (35) 37 36 3 Foreclosed assets 1 2 (50) (2) 5 -- All other 38 72 (47) 110 150 (27) ------ ------ ------ ------ Total $1,087 $1,305 (17)% $3,450 $3,149 10% ------ ------ --- ------ ------ -- ------ ------ --- ------ ------ -- - --------------------------------------------------------------------------------------------------------------------------
(1) Amortization of core deposit intangible acquired after February 1992 that is subtracted from stockholders' equity in computing regulatory capital for bank holding companies. - 10 - Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
---------------------------------------------------------------------------------------------------------------------------- Quarter ended September 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 $ 229 5.63% $ 3 $ 800 5.44% $ 11 Investment securities at fair value (2): (2) U.S. Treasury securities 2,634 6.00 40 2,678 5.92 40 Securities of U.S. government agencies (3) and corporations 5,303 6.42 85 7,473 6.32 119 (4) Private collateralized mortgage obligations 2,737 6.68 46 2,920 6.49 48 (5) Other securities 330 6.41 4 489 6.49 8 -------- -------- -------- -------- (6) Total investment securities at fair value 11,004 6.38 175 13,560 6.28 215 Loans: (7) Commercial 18,283 9.11 419 18,848 8.92 422 (8) Real estate 1-4 family first mortgage 9,543 7.52 180 11,514 7.32 211 (9) Other real estate mortgage 11,421 9.35 269 12,614 9.15 290 (10) Real estate construction 2,304 10.90 63 2,345 10.97 65 Consumer: (11) Real estate 1-4 family junior lien mortgage 5,946 9.35 140 6,716 9.17 154 (12) Credit card 5,073 14.66 186 5,295 14.84 196 (13) Other revolving credit and monthly payment 7,638 9.26 178 9,011 9.44 214 -------- -------- -------- -------- (14) Total consumer 18,657 10.75 504 21,022 10.71 564 (15) Lease financing 3,533 8.99 79 2,791 8.75 61 (16) Foreign 124 6.88 2 140 8.25 3 -------- -------- -------- -------- (17) Total loans 63,865 9.45 1,516 69,274 9.30 1,616 (18) Other 883 7.18 16 550 6.25 9 -------- -------- -------- -------- Total earning assets $ 75,981 8.97 1,710 $ 84,184 8.76 1,851 -------- -------- -------- -------- -------- -------- FUNDING SOURCES Deposits: (19) Interest-bearing checking $ 1,736 1.45 6 $ 6,022 1.31 20 (20) Market rate and other savings 31,098 2.64 207 32,918 2.64 218 (21) Savings certificates 15,602 5.17 203 16,496 4.74 197 (22) Other time deposits 253 4.83 3 381 6.89 7 (23) Deposits in foreign offices 731 5.48 10 293 5.08 4 -------- -------- -------- -------- (24) Total interest-bearing deposits 49,420 3.45 429 56,110 3.15 446 Federal funds purchased and securities sold (25) under repurchase agreements 3,211 5.48 44 1,217 5.01 15 (26) Commercial paper and other short-term borrowings 343 5.82 5 361 3.37 3 (27) Senior debt 1,770 6.47 29 2,607 6.05 40 (28) Subordinated debt 2,604 7.12 46 2,816 6.92 48 Guaranteed preferred beneficial interests in Company's (29) subordinated debentures 1,299 7.81 25 -- -- -- -------- -------- -------- -------- (30) Total interest-bearing liabilities 58,647 3.92 578 63,111 3.48 552 (31) Portion of noninterest-bearing funding sources 17,334 -- -- 21,073 -- -- -------- -------- -------- -------- (32) Total funding sources $ 75,981 3.03 578 $ 84,184 2.61 552 -------- -------- -------- -------- -------- -------- NET INTEREST MARGIN AND NET INTEREST INCOME ON (33) A TAXABLE-EQUIVALENT BASIS (3) 5.94% $ 1,132 6.15% $ 1,299 -------- -------- -------- -------- -------- -------- -------- -------- NONINTEREST-EARNING ASSETS (34) Cash and due from banks $ 7,299 $ 9,877 (35) Goodwill 7,190 7,439 (36) Other 6,562 6,878 -------- -------- Total noninterest-earning assets $ 21,051 $ 24,194 -------- -------- -------- -------- NONINTEREST-BEARING FUNDING SOURCES (37) Deposits $ 22,308 $ 26,942 (38) Other liabilities 3,135 3,551 (39) Preferred stockholders' equity 275 854 (40) Common stockholders' equity 12,667 13,920 Noninterest-bearing funding sources used to (41) fund earning assets (17,334) (21,073) -------- -------- (42) Net noninterest-bearing funding sources $ 21,051 $ 24,194 -------- -------- -------- -------- (43) TOTAL ASSETS $ 97,032 $108,378 -------- -------- -------- -------- -----------------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.50% and 8.25% for the quarters ended September 30, 1997 and 1996, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.73% and 5.59% 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 $10,931 million and $13,651 million for the quarters ended September 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 the quarters ended September 30, 1997 and 1996. - 11 - Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
--------------------------------------------------------------------------------------------------------------------------- Nine months ended September 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 $ 351 5.58% $ 15 $ 505 5.43% $ 21 Investment securities at fair value (2): (2) U.S. Treasury securities 2,745 6.03 124 2,405 5.67 102 Securities of U.S. government agencies (3) and corporations 5,972 6.43 287 6,968 6.13 322 (4) Private collateralized mortgage obligations 2,935 6.63 147 2,552 6.28 122 (5) Other securities 340 6.42 15 460 6.84 22 -------- ------ -------- ------ (6) Total investment securities at fair value 11,992 6.39 573 12,385 6.09 568 Loans: (7) Commercial 18,373 9.07 1,246 15,883 9.05 1,077 (8) Real estate 1-4 family first mortgage 9,899 7.49 555 9,287 7.43 518 (9) Other real estate mortgage 11,514 9.82 846 11,277 9.23 778 (10) Real estate construction 2,288 10.23 175 2,020 10.40 157 Consumer: (11) Real estate 1-4 family junior lien mortgage 6,049 9.34 423 5,617 8.95 377 (12) Credit card 5,188 14.39 560 4,805 14.95 539 (13) Other revolving credit and monthly payment 7,913 9.29 550 6,929 9.62 499 -------- ------ -------- ------ (14) Total consumer 19,150 10.69 1,533 17,351 10.88 1,415 (15) Lease financing 3,295 8.83 218 2,430 8.87 162 (16) Foreign 134 6.91 7 136 6.11 6 -------- ------ -------- ------ (17) Total loans 64,653 9.46 4,580 58,384 9.40 4,113 (18) Other 770 6.79 39 339 6.39 16 -------- ------ -------- ------ Total earning assets $ 77,766 8.94 5,207 $ 71,613 8.79 4,718 -------- ------ -------- ------ -------- ------ -------- ------ FUNDING SOURCES Deposits: (19) Interest-bearing checking $1,847 1.30 18 $4,651 1.26 44 (20) Market rate and other savings 32,562 2.59 632 27,962 2.63 550 (21) Savings certificates 15,596 5.10 595 13,979 4.88 511 (22) Other time deposits 201 4.47 7 402 6.59 20 (23) Deposits in foreign offices 708 5.38 28 373 5.26 15 -------- ------ -------- ------ (24) Total interest-bearing deposits 50,914 3.36 1,280 47,367 3.21 1,140 Federal funds purchased and securities sold (25) under repurchase agreements 2,712 5.37 109 1,861 5.20 72 (26) Commercial paper and other short-term borrowings 264 5.96 12 354 4.32 11 (27) Senior debt 1,840 6.33 87 2,204 6.11 101 (28) Subordinated debt 2,808 6.99 147 2,222 6.94 116 Guaranteed preferred beneficial interests in Company's (29) subordinated debentures 1,283 7.82 75 -- -- -- -------- ------ -------- ------ (30) Total interest-bearing liabilities 59,821 3.82 1,710 54,008 3.56 1,440 (31) Portion of noninterest-bearing funding sources 17,945 -- -- 17,605 -- -- -------- ------ -------- ------ (32) Total funding sources $ 77,766 2.94 1,710 $ 71,613 2.68 1,440 -------- ------ -------- ------ -------- ------ -------- ------ NET INTEREST MARGIN AND NET INTEREST INCOME ON (33) A TAXABLE-EQUIVALENT BASIS (3) 6.00% $3,497 6.11% $3,278 -------- ------ -------- ------ -------- ------ -------- ------ NONINTEREST-EARNING ASSETS (34) Cash and due from banks $ 8,293 $ 7,116 (35) Goodwill 7,255 5,027 (36) Other 7,389 4,963 -------- -------- Total noninterest-earning assets $ 22,937 $ 17,106 -------- -------- -------- -------- NONINTEREST-BEARING FUNDING SOURCES (38) Deposits $ 23,932 $ 20,980 (39) Other liabilities 3,588 2,418 (40) Preferred stockholders' equity 397 728 Common stockholders' equity 12,965 10,585 (41) Noninterest-bearing funding sources used to (42) fund earning assets (17,945) (17,605) -------- -------- (43) Net noninterest-bearing funding sources $ 22,937 $ 17,106 -------- -------- -------- -------- (44) TOTAL ASSETS $100,703 $ 88,719 -------- -------- -------- -------- -------------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.42% and 8.28% for the nine months ended September 30, 1997 and 1996, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.71% and 5.51% 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 $11,973 million and $12,431 million for the nine months ended September 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 the nine months ended September 30, 1997 and 1996. -----END PRIVACY-ENHANCED MESSAGE-----