-----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, HR7YkUU8FFNKsVKFovr59psJrB4os8b2J8th03x90cF0GaV/N5lBqrsVDryGtgCp RX9WLLERkdsBu6cO5lxyPQ== 0001047469-98-001509.txt : 19980121 0001047469-98-001509.hdr.sgml : 19980121 ACCESSION NUMBER: 0001047469-98-001509 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980120 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980120 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: 98509321 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 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): January 20, 1998 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 December 31, 1997. Final financial statements with additional analyses will be filed as part of the Company's Form 10-K in March 1998. 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 December 31, 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 January 20, 1998. WELLS FARGO & COMPANY By: /s/ FRANK A. MOESLEIN --------------------------------------- Frank A. Moeslein Executive Vice President and Controller EX-27 2 EXHIBIT 27 FDS
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 8-K DATED JANUARY 20, 1998 FOR THE PERIOD ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1,000,000 YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 8,169 0 82 0 9,888 0 0 65,734 1,828 97,456 72,199 3,825 2,578 5,867 0 275 431 12,183 97,456 6,094 732 60 6,904 1,703 2,290 4,614 615 20 4,549 2,154 1,155 0 0 1,155 12.77 12.64 5.99 528 0 9 0 2,018 (1,078) 273 1,828 0 0 0
EX-99 3 EXHIBIT 99 [LETTERHEAD] EXHIBIT 99 Cindy Koehn 415/396-3099 Investor Relations FOR IMMEDIATE RELEASE Tues., January 20, 1998 WELLS FARGO REPORTS FOURTH QUARTER EARNINGS INCREASE FOURTH QUARTER PER SHARE EARNINGS INCREASE TO $3.40 VS. $1.12 A YEAR AGO SAN FRANCISCO -- Wells Fargo & Co. (NYSE:WFC) today reported net income of $298 million for the fourth quarter of 1997, compared with $123 million for the fourth quarter of 1996. Per share earnings for the quarter were $3.40, compared with $1.12 in the fourth quarter of 1996. Earnings for the full year of 1997 were $1.155 billion, or $12.77 per share, compared with $1.071 billion, or $12.21 per share, for the full year 1996. Return on average assets (ROA) was 1.23 percent and return on average common equity (ROE) was 9.29 percent for the fourth quarter 1997, compared with ROA of .45 percent and ROE of 2.99 percent for the fourth quarter of 1996. ROA was 1.16 percent and ROE was 8.79 percent for the full year 1997, and 1.15 percent and 8.83 percent, respectively, for 1996. Cash earnings for the fourth quarter of 1997 were $4.71 per share, compared with $2.41 for the fourth quarter of 1996, an increase of 95 percent. Cash ROA was 1.85 percent and cash ROE was 36.15 percent for the fourth quarter of 1997, compared with .97 percent and 16.99 percent, respectively, for the fourth quarter of 1996. Cash earnings are earnings before the amortization of goodwill and nonqualifying core deposit intangible. "The focus and discipline our employees demonstrated throughout the year has yielded encouraging results in the fourth quarter," said Chairman Paul Hazen. "Since September, loan volume has increased, deposits are up and we've seen modest revenue growth. We're well positioned for growth in 1998." Net interest income on a taxable-equivalent basis was $1.130 billion in the fourth quarter of 1997, down from $1.253 billion a year ago. The decrease was primarily due to a decline in earning assets. For the full year 1997, net interest income on a taxable-equivalent -more- 2/WF Earnings basis was $4.627 billion, compared with $4.532 billion for the full year 1996. The Company's net interest margin for the fourth quarter of 1997 was 5.94 percent, compared with 6.14 percent in the same quarter of 1996. The net interest margin for the full year of 1997 was 5.99 percent, compared with 6.11 percent for 1996. Noninterest income (NII) in the fourth quarter of 1997 was $708 million, up 26 percent from $564 million in the same quarter of 1996. The increase was primarily due to a fourth quarter 1996 accrual of $103 million for the expected loss on the disposition of branches, primarily related to premises. For the full year 1997, NII was $2.704 billion, compared with $2.200 billion in 1996. Noninterest expense (NIE) in the fourth quarter of 1997 was $1.098 billion, a decrease of 26 percent from $1.488 billion in the fourth quarter of 1996. A significant portion of the decrease was related to reduced salaries, incentive compensation and employee benefits due to staff reductions after the merger with First Interstate Bancorp. NIE totaled $4.549 billion in 1997, compared with $4.637 billion in 1996. The loan loss provision was $195 million for the fourth quarter of 1997 and $615 million for the year, compared with $70 million and $105 million, respectively, for the same periods in 1996. Net charge-offs totaled $190 million, or 1.17 percent of average loans (annualized), in the fourth quarter of 1997, and $805 million, or 1.25 percent of average loans, for the full year. Net charge-offs totaled $178 million, or 1.04 percent of average loans (annualized), for the fourth quarter of 1996, and $640 million, or 1.05 percent of average loans, for the full year. The largest category of net charge-offs was credit card loans for all periods presented. At December 31, 1997, the allowance for loan losses of $1.828 billion equaled 2.78 percent of total loans, compared with 2.80 percent at September 30, 1997 and 3.00 percent at December 31, 1996. Total nonaccrual and restructured loans were $537 million at December 31, 1997, compared with $574 million at September 30, 1997 and $724 million at December 31, 1996. Foreclosed assets were $158 million at December 31, 1997, compared with $196 million at September 30, 1997 and $219 million at December 31, 1996. At December 31, 1997, the Company's preliminary risk-based capital ratios were 11.50 percent for total risk-based capital and 7.60 percent for Tier 1 risk-based capital, exceeding the minimum regulatory guidelines of 8 percent and 4 percent, respectively. At September 30, 1997, these risk-based capital ratios were 11.47 percent and 7.53 percent, respectively. At December 31, 1996, the Company's total risk-based capital ratio was -more- 3/WF Earnings 11.70 percent and the Tier 1 risk-based capital ratio was 7.68 percent. The leverage ratio at December 31, 1997 was 6.95 percent, compared with 6.76 percent at September 30, 1997 and 6.65 percent at December 31, 1996. The ratio of common equity to total assets at December 31, 1997 was 12.94 percent, compared with 12.95 percent at September 30, 1997 and 12.41 percent at December 31, 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. ### Founded in 1852, Wells Fargo & Company has operations in Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah and Washington. 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 Dec. 31, from Year ended ---------------------------------- -------------------- ------------------ DEC. 31, Sept. 30, Dec. 31, Sept. 30, Dec. 31, DEC. 31, Dec. 31, % (in millions) 1997 1997 1996 1997 1996 1997 1996 Change - -------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Net income $ 298 $ 290 $ 123 3% 142% $ 1,155 $ 1,071 8% Net income applicable to common stock 294 285 103 3 185 1,130 1,004 13 Earnings per common share $ 3.40 $ 3.26 $ 1.12 4 204 $ 12.77 $ 12.21 5 Earnings per common share - assuming dilution 3.36 3.23 1.11 4 203 12.64 12.05 5 Dividends declared per common share 1.30 1.30 1.30 -- -- 5.20 5.20 -- Average common shares outstanding 86.5 87.5 92.2 (1) (6) 88.4 82.2 8 Average common shares outstanding - assuming dilution 87.3 88.4 93.3 (1) (6) 89.4 83.3 7 Profitability ratios (annualized) Net income to average total assets (ROA) 1.23% 1.18% .45% 4 173 1.16% 1.15% 1 Net income applicable to common stock to average common stockholders' equity (ROE) 9.29 8.94 2.99 4 211 8.79 8.83 -- Efficiency ratio (1) 59.9% 60.2% 82.0% -- (27) 62.2% 69.0% (10) Average loans $64,545 $63,865 $ 67,097 1 (4) $64,625 $ 60,574 7 Average assets 96,170 97,032 107,308 (1) (10) 99,560 93,392 7 Average core deposits 70,198 70,744 80,776 (1) (13) 72,996 70,890 3 Net interest margin 5.94% 5.94% 6.14% -- (3) 5.99% 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 $ 407 $ 400 $ 222 2 83 $ 1,588 $ 1,376 15 Earnings per common share 4.71 4.57 2.41 3 95 17.96 16.74 7 Earnings per common share - assuming dilution 4.66 4.52 2.38 3 96 17.77 16.52 8 ROA 1.85% 1.81% .97% 2 91 1.77% 1.66% 7 ROE 36.15 35.44 16.99 2 113 34.39 28.46 21 Efficiency ratio 52.5 52.6 74.0 -- (29) 54.6 62.2 (12) AT PERIOD END Investment securities $ 9,888 $10,737 $ 13,505 (8) (27) $ 9,888 $ 13,505 (27) Loans 65,734 65,104 67,389 1 (2) 65,734 67,389 (2) Allowance for loan losses 1,828 1,823 2,018 -- (9) 1,828 2,018 (9) Goodwill 7,031 7,149 7,322 (2) (4) 7,031 7,322 (4) Assets 97,456 97,655 108,888 -- (10) 97,456 108,888 (10) Core deposits 71,397 70,580 81,581 1 (12) 71,397 81,581 (12) Common stockholders' equity 12,614 12,645 13,512 -- (7) 12,614 13,512 (7) Stockholders' equity 12,889 12,920 14,112 -- (9) 12,889 14,112 (9) Capital ratios Common stockholders' equity to assets 12.94% 12.95% 12.41% -- 4 12.94% 12.41% 4 Stockholders' equity to assets 13.22 13.23 12.96 -- 2 13.22 12.96 2 Risk-based capital (3) Tier 1 capital 7.60 7.53 7.68 1 (1) 7.60 7.68 (1) Total capital 11.50 11.47 11.70 -- (2) 11.50 11.70 (2) Leverage (3) 6.95 6.76 6.65 3 5 6.95 6.65 5 Book value per common share $146.41 $145.72 $ 147.72 -- (1) $146.41 $ 147.72 (1) Staff (active, full-time equivalent) 33,100 32,663 36,902 1 (10) 33,100 36,902 (10) COMMON STOCK PRICE High $339.44 $279.88 $ 289.88 21 17 $339.44 $ 289.88 17 Low 275.75 250.13 250.25 10 10 246.00 203.13 21 Period end 339.44 275.00 269.75 23 26 339.44 269.75 26 - --------------------------------------------------------------------------------------------------------------------------------
(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 $32 million and $967 million, respectively, for the quarter ended December 31, 1997 and $132 million and $1,023 million, respectively, for the year ended December 31, 1997. Goodwill amortization and average balance (which are not tax effected) were $81 million and $7,108 million, respectively, for the quarter ended December 31, 1997 and $326 million and $7,218 million, respectively, for the year ended December 31, 1997. (3) The December 31, 1997 ratios are preliminary. - 5 - Wells Fargo & Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME
- --------------------------------------------------------------------------------------------------------------------------------- Quarter Year ended December 31, % ended December 31, % ------------------ ------------------ (in millions) 1997 1996 Change 1997 1996 Change - --------------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Federal funds sold and securities purchased (1) under resale agreements $ 3 $ 8 (63)% $ 18 $ 29 (38)% (2) Investment securities 159 211 (25) 732 779 (6) (3) Loans 1,524 1,582 (4) 6,094 5,688 7 (4) Other 20 11 82 60 27 122 ------ ------ ------ ------ (5) Total interest income 1,706 1,812 (6) 6,904 6,523 6 ------ ------ ------ ------ INTEREST EXPENSE (6) Deposits 423 446 (5) 1,703 1,586 7 Federal funds purchased and securities sold (7) under repurchase agreements 45 20 125 154 92 67 (8) Commercial paper and other short-term borrowings 5 4 25 17 16 6 (9) Senior and subordinated debt 81 86 (6) 315 302 4 Guaranteed preferred beneficial interests in (10) Company's subordinated debentures 25 6 317 101 6 -- ------ ------ ------ ------ (11) Total interest expense 579 562 3 2,290 2,002 14 ------ ------ ------ ------ (12) NET INTEREST INCOME 1,127 1,250 (10) 4,614 4,521 2 (13) Provision for loan losses 195 70 179 615 105 486 ------ ------ ------ ------ Net interest income after (14) provision for loan losses 932 1,180 (21) 3,999 4,416 (9) ------ ------ ------ ------ NONINTEREST INCOME (15) Fees and commissions 252 207 22 946 740 28 (16) Service charges on deposit accounts 212 233 (9) 861 868 (1) (17) Trust and investment services income 113 110 3 450 377 19 (18) Investment securities gains 14 8 75 20 10 100 (19) Other 117 6 -- 427 205 108 ------ ------ ------ ------ (20) Total noninterest income 708 564 26 2,704 2,200 23 ------ ------ ------ ------ NONINTEREST EXPENSE (21) Salaries 305 397 (23) 1,269 1,357 (6) (22) Incentive compensation 52 80 (35) 195 227 (14) (23) Employee benefits 75 112 (33) 332 373 (11) (24) Equipment 96 129 (26) 385 399 (4) (25) Net occupancy 95 109 (13) 388 366 6 (26) Goodwill 81 80 1 326 250 30 (27) Core deposit intangible 62 73 (15) 255 243 5 (28) Operating losses 58 73 (21) 320 145 121 (29) Other 274 435 (37) 1,079 1,277 (16) ------ ------ ------ ------ (30) Total noninterest expense 1,098 1,488 (26) 4,549 4,637 (2) ------ ------ ------ ------ INCOME BEFORE INCOME TAX (31) EXPENSE 542 256 112 2,154 1,979 9 (32) Income tax expense 244 133 83 999 908 10 ------ ------ ------ ------ (33) NET INCOME $ 298 $ 123 142 % $1,155 $1,071 8 % ------ ------ ---- ------ ------ --- ------ ------ ---- ------ ------ --- NET INCOME APPLICABLE TO (34) COMMON STOCK $ 294 $ 103 185 % $1,130 $1,004 13 % ------ ------ ---- ------ ------ --- ------ ------ ---- ------ ------ --- (35) EARNINGS PER COMMON SHARE $ 3.40 $ 1.12 204 % $12.77 $12.21 5 % ------ ------ ---- ------ ------ --- ------ ------ ---- ------ ------ --- EARNINGS PER COMMON SHARE - (36) ASSUMING DILUTION $ 3.36 $ 1.11 203 % $12.64 $12.05 5 % ------ ------ ---- ------ ------ --- ------ ------ ---- ------ ------ --- DIVIDENDS DECLARED (37) PER COMMON SHARE $ 1.30 $ 1.30 -- % $ 5.20 $ 5.20 -- % ------ ------ ---- ------ ------ --- ------ ------ ---- ------ ------ --- (38) Average common shares outstanding 86.5 92.2 (6)% 88.4 82.2 8 % ------ ------ ---- ------ ------ --- ------ ------ ---- ------ ------ --- Average common shares outstanding - (39) assuming dilution 87.3 93.3 (6)% 89.4 83.3 7 % ------ ------ ---- ------ ------ --- ------ ------ ---- ------ ------ --- - ---------------------------------------------------------------------------------------------------------------------------------
- 6 - Wells Fargo & Company and Subsidiaries CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------------------------- December 31, % ------------------------ (in millions) 1997 1996 Change - -------------------------------------------------------------------------------------------------- ASSETS (1) Cash and due from banks $ 8,169 $ 11,736 (30)% Federal funds sold and securities (2) purchased under resale agreements 82 187 (56) (3) Investment securities at fair value 9,888 13,505 (27) (4) Loans 65,734 67,389 (2) (5) Allowance for loan losses 1,828 2,018 (9) -------- -------- (6) Net loans 63,906 65,371 (2) -------- -------- (7) Due from customers on acceptances 98 197 (50) (8) Accrued interest receivable 507 665 (24) (9) Premises and equipment, net 2,117 2,406 (12) (10) Core deposit intangible 1,709 2,038 (16) (11) Goodwill 7,031 7,322 (4) (12) Other assets 3,949 5,461 (28) -------- -------- (13) Total assets $97,456 $108,888 (10)% -------- -------- ----- -------- -------- ----- LIABILITIES (14) Noninterest-bearing deposits $23,953 $ 29,073 (18)% (15) Interest-bearing deposits 48,246 52,748 (9) -------- -------- (16) Total deposits 72,199 81,821 (12) Federal funds purchased and securities (17) sold under repurchase agreements 3,576 2,029 76 (18) Commercial paper and other short-term borrowings 249 401 (38) (19) Acceptances outstanding 98 197 (50) (20) Accrued interest payable 175 171 2 (21) Other liabilities 2,403 3,947 (39) (22) Senior debt 1,983 2,120 (6) (23) Subordinated debt 2,585 2,940 (12) Guaranteed preferred beneficial interests in (24) Company's subordinated debentures 1,299 1,150 13 STOCKHOLDERS' EQUITY (25) Preferred stock 275 600 (54) Common stock - $5 par value, authorized 150,000,000 shares; issued and outstanding 86,152,779 shares (26) and 91,474,425 shares 431 457 (6) (27) Additional paid-in capital 8,712 10,287 (15) (28) Retained earnings 3,416 2,749 24 (29) Cumulative foreign currency translation adjustments -- (4) (100) (30) Investment securities valuation allowance 55 23 139 -------- -------- (31) Total stockholders' equity 12,889 14,112 (9) -------- -------- (32) Total liabilities and stockholders' equity $97,456 $108,888 (10)% -------- -------- ----- -------- -------- ----- - --------------------------------------------------------------------------------------------------
- 7 - Wells Fargo & Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------ Year ended December 31, ---------------------- (in millions) 1997 1996 - ------------------------------------------------------------------------------------------ BALANCE, BEGINNING OF YEAR $14,112 $ 4,055 Net income 1,155 1,071 Preferred stock issued to First Interstate stockholders -- 360 Preferred stock issued, net of issuance costs -- 197 Common stock issued to First Interstate stockholders -- 11,297 Common stock issued under employee benefit and dividend reinvestment plans 88 117 Preferred stock redeemed (325) (439) Common stock repurchased (1,689) (2,158) Preferred stock dividends (25) (67) Common stock dividends (463) (429) Change in foreign currency translation adjustments 4 -- Change in investment securities valuation allowance 32 (3) Fair value adjustment related to First Interstate stock options -- 111 ------- ------- BALANCE, END OF YEAR $12,889 $14,112 ------- ------- ------- ------- - ------------------------------------------------------------------------------------------ LOANS - ------------------------------------------------------------------------------------------ December 31, ---------------------- (in millions) 1997 1996 - ------------------------------------------------------------------------------------------ Commercial $20,144 $19,515 Real estate 1-4 family first mortgage 8,869 10,425 Other real estate mortgage 12,186 11,860 Real estate construction 2,320 2,303 Consumer: Real estate 1-4 family junior lien mortgage 5,865 6,278 Credit card 5,039 5,462 Other revolving credit and monthly payment 7,185 8,374 ------- ------- Total consumer 18,089 20,114 Lease financing 4,047 3,003 Foreign 79 169 ------- ------- Total loans $65,734 $67,389 ------- ------- ------- ------- - ------------------------------------------------------------------------------------------
- 8 -
Wells Fargo & Company and Subsidiaries CHANGES IN THE ALLOWANCE FOR LOAN LOSSES - -------------------------------------------------------------------------------------------------------------- Quarter ended Year ended -------------------------------- ------------------ DEC. 31, Sept. 30, Dec. 31, DEC. 31, Dec. 31, (in millions) 1997 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $1,823 $1,850 $2,137 $2,018 $1,794 Allowance of First Interstate -- -- -- -- 770 Sale of former First Interstate banks -- -- (11) -- (11) Provision for loan losses 195 175 70 615 105 Loan charge-offs: Commercial (71) (69) (49) (269) (140) Real estate 1-4 family first mortgage (4) (5) (6) (19) (18) Other real estate mortgage (5) (2) (11) (18) (40) Real estate construction -- -- (3) (3) (13) Consumer: Real estate 1-4 family junior lien mortgage (5) (6) (5) (23) (28) Credit card (114) (124) (112) (486) (404) Other revolving credit and monthly payment (51) (55) (62) (219) (186) ------ ------ ------ ------ ------ Total consumer (170) (185) (179) (728) (618) Lease financing (12) (10) (9) (41) (31) ------ ------ ------ ------ ------ Total loan charge-offs (262) (271) (257) (1,078) (860) ------ ------ ------ ------ ------ Loan recoveries: Commercial 17 21 24 70 54 Real estate 1-4 family first mortgage 1 1 2 4 8 Other real estate mortgage 11 13 14 53 47 Real estate construction 8 1 5 11 11 Consumer: Real estate 1-4 family junior lien mortgage 2 2 2 8 9 Credit card 14 12 11 48 36 Other revolving credit and monthly payment 16 17 19 67 47 ------ ------ ------ ------ ------ Total consumer 32 31 32 123 92 Lease financing 3 2 2 12 8 ------ ------ ------ ------ ------ Total loan recoveries 72 69 79 273 220 ------ ------ ------ ------ ------ Total net loan charge-offs (190) (202) (178) (805) (640) ------ ------ ------ ------ ------ BALANCE, END OF PERIOD $1,828 $1,823 $2,018 $1,828 $2,018 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total net loan charge-offs as a percentage of average loans (annualized) 1.17% 1.25% 1.04% 1.25% 1.05% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Allowance as a percentage of total loans 2.78% 2.80% 3.00% 2.78% 3.00% ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ - --------------------------------------------------------------------------------------------------------------
- 9 - Wells Fargo & Company and Subsidiaries NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS - -------------------------------------------------------------------------------- December 31, ---------------- (in millions) 1997 1996 - -------------------------------------------------------------------------------- Nonaccrual loans: Commercial $155 $223 Real estate 1-4 family first mortgage 104 99 Other real estate mortgage 228 349 Real estate construction 23 25 Consumer: Real estate 1-4 family junior lien mortgage 17 15 Other revolving credit and monthly payment 1 1 Lease financing -- 2 ---- ---- Total nonaccrual loans 528 714 Restructured loans 9 10 ---- ---- Nonaccrual and restructured loans 537 724 As a percentage of total loans .8% 1.1% Foreclosed assets 158 219 Real estate investments (1) 4 4 ---- ---- Total nonaccrual and restructured loans and other assets $699 $947 ---- ---- ---- ---- - -------------------------------------------------------------------------------- (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 $172 million and $154 million at December 31, 1997 and 1996, respectively. - 10 - Wells Fargo & Company and Subsidiaries NONINTEREST INCOME
- ---------------------------------------------------------------------------------------------------------------------------------- Quarter Year ended December 31, % ended December 31, % ----------------- ----------------- (in millions) 1997 1996 Change 1997 1996 Change - ------------------------------------------------------------------------------------------------------------------------------- Fees and commissions: Credit card membership and other credit card fees $ 65 $ 33 97 % $ 227 $ 116 96 % Shared ATM network fees 43 35 23 168 102 65 Charges and fees on loans 39 30 30 139 112 24 Debit and credit card merchant fees 26 27 (4) 98 112 (13) Mutual fund and annuity sales fees 18 18 -- 69 61 13 All other 61 64 (5) 245 237 3 ---- ---- ------ ------ Total fees and commissions 252 207 22 946 740 28 Service charges on deposit accounts 212 233 (9) 861 868 (1) Trust and investment services income: Asset management and custody fees 63 60 5 249 214 16 Mutual fund management fees 44 40 10 175 129 36 All other 6 10 (40) 26 34 (24) ---- ---- ------ ------ Total trust and investment services income 113 110 3 450 377 19 Investment securities gains 14 8 75 20 10 100 Income from equity investments accounted for by the: Cost method 49 45 9 157 137 15 Equity method 15 11 36 57 24 138 Check printing charges 18 22 (18) 70 61 15 Gains on sales of loans 11 11 -- 52 22 136 Gains (losses) from dispositions of operations 8 (100) -- 15 (95) -- Losses on dispositions of premises and equipment (17) (21) (19) (63) (46) 37 All other 33 38 (13) 139 102 36 ---- ---- ------ ------ Total $708 $564 26 % $2,704 $2,200 23 % ---- ---- --- ------ ------ --- ---- ---- --- ------ ------ --- - ------------------------------------------------------------------------------------------------------------------------------- NONINTEREST EXPENSE - ------------------------------------------------------------------------------------------------------------------------------- Quarter Year ended December 31, % ended December 31, % ----------------- ----------------- (in millions) 1997 1996 Change 1997 1996 Change - ------------------------------------------------------------------------------------------------------------------------------- Salaries $ 305 $ 397 (23)% $1,269 $1,357 (6)% Incentive compensation 52 80 (35) 195 227 (14) Employee benefits 75 112 (33) 332 373 (11) Equipment 96 129 (26) 385 399 (4) Net occupancy 95 109 (13) 388 366 6 Goodwill 81 80 1 326 250 30 Core deposit intangible: Nonqualifying (1) 54 64 (16) 223 206 8 Qualifying 8 9 (11) 32 37 (14) Operating losses 58 73 (21) 320 145 121 Contract services 64 100 (36) 236 295 (20) Telecommunications 35 55 (36) 143 140 2 Security 22 18 22 87 56 55 Postage 19 28 (32) 83 96 (14) Outside professional services 23 36 (36) 79 112 (29) Advertising and promotion 21 50 (58) 74 116 (36) Stationery and supplies 14 27 (48) 69 76 (9) Travel and entertainment 17 29 (41) 62 78 (21) Check printing 12 17 (29) 55 43 28 Outside data processing 12 19 (37) 49 55 (11) Foreclosed assets (30) 3 -- (33) 7 -- All other 65 53 23 175 203 (14) ------ ------ ------ ------ Total $1,098 $1,488 (26)% $4,549 $4,637 (2)% ------ ------ --- ------ ------ --- ------ ------ --- ------ ------ --- - -------------------------------------------------------------------------------------------------------------------------------
(1) Amortization of core deposit intangible acquired after February 1992 that is 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 December 31, ------------------------------------------------------- 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 $ 222 5.62% $ 3 $ 570 5.88% $ 8 Investment securities at fair value (2): (2) U.S. Treasury securities 2,602 6.02 39 2,624 6.06 40 Securities of U.S. government agencies (3) and corporations 4,653 6.47 75 7,017 6.41 112 (4) Private collateralized mortgage obligations 2,481 6.71 42 3,105 6.67 52 (5) Other securities 315 5.83 4 440 6.83 7 ------ ------ -------- ------ (6) Total investment securities at fair value 10,051 6.39 160 13,186 6.42 211 Loans: (7) Commercial 19,141 9.09 438 18,897 8.93 424 (8) Real estate 1-4 family first mortgage 9,098 7.56 172 10,535 7.42 196 (9) Other real estate mortgage 11,889 9.35 280 12,039 9.54 288 (10) Real estate construction 2,343 9.79 58 2,311 10.52 61 Consumer: (11) Real estate 1-4 family junior lien mortgage 5,876 9.56 141 6,348 9.45 151 (12) Credit card 4,961 14.66 182 5,335 14.65 195 (13) Other revolving credit and monthly payment 7,267 9.21 169 8,522 9.47 203 ------ ------ -------- ------ (14) Total consumer 18,104 10.81 492 20,205 10.83 549 (15) Lease financing 3,896 8.81 86 2,936 8.71 64 (16) Foreign 74 7.15 1 174 7.80 3 ------ ------ -------- ------ (17) Total loans 64,545 9.41 1,527 67,097 9.42 1,585 (18) Other 1,094 7.16 19 709 6.15 11 ------ ------ -------- ------ Total earning assets $75,912 8.97 1,709 $ 81,562 8.88 1,815 ------ ------ -------- ------ ------ -------- FUNDING SOURCES Deposits: (19) Interest-bearing checking $ 1,672 1.46 6 $ 3,000 1.28 10 (20) Market rate and other savings 30,452 2.68 206 34,012 2.66 227 (21) Savings certificates 15,461 5.21 203 15,785 5.07 201 (22) Other time deposits 247 4.75 3 331 6.79 5 (23) Deposits in foreign offices 394 5.33 5 227 4.85 3 ------ ------ -------- ------ (24) Total interest-bearing deposits 48,226 3.48 423 53,355 3.33 446 Federal funds purchased and securities sold (25) under repurchase agreements 3,234 5.47 45 1,493 5.29 20 (26) Commercial paper and other short-term borrowings 354 5.78 5 416 3.66 4 (27) Senior debt 2,210 6.26 35 2,240 6.19 35 (28) Subordinated debt 2,585 7.14 46 2,941 6.90 51 Guaranteed preferred beneficial interests in Company's (29) subordinated debentures 1,298 7.81 25 326 7.86 6 ------ ------ -------- ------ (30) Total interest-bearing liabilities 57,907 3.97 579 60,771 3.68 562 (31) Portion of noninterest-bearing funding sources 18,005 -- -- 20,791 -- -- ------ ------ -------- ------ (32) Total funding sources $75,912 3.03 579 $81,562 2.74 562 ------ ------ -------- ------ ------ -------- NET INTEREST MARGIN AND NET INTEREST INCOME ON (33) A TAXABLE-EQUIVALENT BASIS (3) 5.94% $ 1,130 6.14% $1,253 ---- -------- ---- ------ ---- -------- ---- ------ NONINTEREST-EARNING ASSETS (34) Cash and due from banks $ 7,208 $ 10,539 (35) Goodwill 7,108 7,362 (36) Other 5,942 7,845 -------- ------- Total noninterest-earning assets $ 20,258 $ 25,746 -------- ------- -------- ------- NONINTEREST-BEARING FUNDING SOURCES (37) Deposits $ 22,613 $ 27,979 (38) Other liabilities 2,832 3,917 (39) Preferred stockholders' equity 275 934 (40) Common stockholders' equity 12,543 13,707 Noninterest-bearing funding sources used to (41) fund earning assets (18,005) (20,791) -------- -------- (42) Net noninterest-bearing funding sources $ 20,258 $ 25,746 -------- -------- -------- -------- (43) TOTAL ASSETS $ 96,170 $107,308 -------- -------- -------- -------- ------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.50% and 8.25% for the quarters ended December 31, 1997 and 1996, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.84% and 5.53% 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 $9,964 million and $13,145 million for the quarters ended December 31, 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 December 31, 1997 and 1996. - 12 - Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
- ---------------------------------------------------------------------------------------------------------------- Year ended December 31, -------------------------------------------------------------- 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 $ 318 5.58% $ 18 $ 522 5.55% $ 29 Investment securities at fair value (2): (2) U.S. Treasury securities 2,709 6.03 163 2,460 5.77 142 Securities of U.S. government agencies (3) and corporations 5,640 6.44 362 6,980 6.20 435 (4) Private collateralized mortgage obligations 2,821 6.65 189 2,691 6.39 174 (5) Other securities 333 6.28 19 455 6.84 28 ------- ----- ------- ----- (6) Total investment securities at fair value 11,503 6.39 733 12,586 6.18 779 Loans: (7) Commercial 18,567 9.07 1,684 16,640 9.02 1,501 (8) Real estate 1-4 family first mortgage 9,697 7.50 728 9,601 7.43 713 (9) Other real estate mortgage 11,608 9.70 1,126 11,470 9.31 1,068 (10) Real estate construction 2,302 10.12 233 2,093 10.43 218 Consumer: (11) Real estate 1-4 family junior lien mortgage 6,005 9.39 564 5,801 9.09 528 (12) Credit card 5,131 14.45 742 4,938 14.87 734 (13) Other revolving credit and monthly payment 7,750 9.27 718 7,329 9.57 701 ------- ----- ------- ----- (14) Total consumer 18,886 10.72 2,024 18,068 10.87 1,963 (15)Lease financing 3,446 8.82 304 2,557 8.82 226 (16)Foreign 119 6.95 8 145 6.62 10 ------- ----- ------- ----- (17) Total loans 64,625 9.45 6,107 60,574 9.41 5,699 (18)Other 853 6.91 59 432 6.29 27 ------- ----- ------- ----- Total earning assets $77,299 8.95 6,917 $74,114 8.81 6,534 ------- ----- ------- ----- ------- ----- ------- ----- FUNDING SOURCES Deposits: (19) Interest-bearing checking $ 1,803 1.34 24 $ 4,236 1.26 53 (20) Market rate and other savings 32,031 2.61 837 29,482 2.64 777 (21) Savings certificates 15,562 5.13 798 14,433 4.93 712 (22) Other time deposits 212 4.56 10 385 6.64 27 (23) Deposits in foreign offices 629 5.37 34 336 5.19 17 ------- ----- ------- ----- (24) Total interest-bearing deposits 50,237 3.39 1,703 48,872 3.25 1,586 Federal funds purchased and securities sold (25) under repurchase agreements 2,844 5.40 154 1,769 5.22 92 (26)Commercial paper and other short-term borrowings 287 5.90 17 369 4.13 16 (27)Senior debt 1,933 6.31 122 2,213 6.13 136 (28)Subordinated debt 2,751 7.03 193 2,403 6.93 166 Guaranteed preferred beneficial interests in Company's (29) subordinated debentures 1,287 7.82 101 82 7.82 6 ------- ----- ------- ----- (30) Total interest-bearing liabilities 59,339 3.86 2,290 55,708 3.59 2,002 (31)Portion of noninterest-bearing funding sources 17,960 -- -- 18,406 -- -- ------- ----- ------- ----- (32) Total funding sources $77,299 2.96 2,290 $74,114 2.70 2,002 ------- ----- ------- ----- ------- ------- NET INTEREST MARGIN AND NET INTEREST INCOME (33) ON A TAXABLE-EQUIVALENT BASIS (3) 5.99% $4,627 6.11% $4,532 ----- ------ ----- ------ ----- ------ ----- ------ NONINTEREST-EARNING ASSETS (34)Cash and due from banks $ 8,020 $ 7,977 (35)Goodwill 7,218 5,614 (36)Other 7,023 5,687 ------- ------- Total noninterest-earning assets $ 22,261 $ 19,278 ------- ------- ------- ------- NONINTEREST-BEARING FUNDING SOURCES (37)Deposits $ 23,600 $ 22,739 (38)Other liabilities 3,396 2,796 (39)Preferred stockholders' equity 366 779 (40)Common stockholders' equity 12,859 11,370 Noninterest-bearing funding sources used to (41) fund earning assets (17,960) (18,406) ------- ------- (42) Net noninterest-bearing funding sources $ 22,261 $ 19,278 ------- ------- ------- ------- (43)TOTAL ASSETS $ 99,560 $ 93,392 ------- ------- ------- ------- - -----------------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.44% and 8.27% for the years ended December 31, 1997 and 1996, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.74% 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 $11,467 million and $12,610 million for the years ended December 31, 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 years ended December 31, 1997 and 1996. -----END PRIVACY-ENHANCED MESSAGE-----