-----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, O2goohlYhohsWzaZpvLLCw+YyZSfcpus+ycai/eMv5ZcXJ/skyybmm2tfilFX33g zGDY4LzIflL5J1whNVaksw== 0001047469-98-027854.txt : 19980723 0001047469-98-027854.hdr.sgml : 19980723 ACCESSION NUMBER: 0001047469-98-027854 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980721 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980721 SROS: NYSE SROS: PCX 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: 98668929 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): July 21, 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 June 30, 1998. Final financial statements with additional analyses will be filed as part of the Company's Form 10-Q in August 1998. Item 7: FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 27 Financial Data Schedules 99 Copy of the Press Release announcing Wells Fargo & Company's financial results for the quarter ended June 30, 1998. 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 21, 1998. 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 JULY 21, 1998 FOR THE PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1,000,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 7,130 0 590 0 8,449 0 0 64,320 1,835 93,200 70,450 1,549 2,449 5,714 0 275 425 12,250 93,200 3,027 275 59 3,361 811 1,082 2,279 350 23 2,189 1,200 652 0 0 652 7.52 7.45 6.12 517 0 0 0 1,828 481 138 1,835 0 0 0 AMOUNT REPRESENTS BASIC EARNINGS PER COMMON SHARE PURSUANT TO FAS 128.
EX-99 3 EXHIBIT 99 Exhibit 99 Cindy Koehn 415/396-3099 Investor Relations FOR IMMEDIATE RELEASE Tues., July 21, 1998 WELLS FARGO REPORTS INCREASE IN SECOND QUARTER EARNINGS EARNINGS PER SHARE OF $3.91 VS. $3.62 IN FIRST QUARTER 1998 CASH EARNINGS PER SHARE OF $5.21 VS. $4.92 IN FIRST QUARTER 1998 SAN FRANCISCO -- Wells Fargo & Co. (NYSE:WFC) today reported earnings per share for the quarter of $3.91, compared with $3.62 for the first quarter of 1998 and $2.49 for the second quarter of 1997. Return on average assets (ROA) was 1.45 percent and return on average common equity (ROE) was 10.66 percent for the quarter, compared with 1.34 percent and 10.07 percent, respectively, for the first quarter of 1998. In the year-ago period, ROA was .92 percent and ROE was 6.88 percent. Cash earnings per share were $5.21 for the second quarter of 1998, compared with $4.92 for the first quarter of 1998 and $3.79 for the second quarter of 1997. Cash ROA was 2.11 percent and cash ROE was 37.78 percent for the second quarter of 1998, compared with 1.98 percent and 37.46 percent, respectively, for the first quarter of 1998. In the year-ago period, cash ROA was 1.51 percent and cash ROE was 29.27 percent. Cash earnings are earnings before the amortization of goodwill and nonqualifying core deposit intangible. "The company continues to see solid growth in our core businesses resulting in strong revenue momentum. The areas of Small Business and Middle Market Lending, Auto Leasing, and Capital Markets have been especially strong," said Chairman Paul Hazen. "This sustained growth enables us to enter the merger with Norwest with confidence and optimism." Net income was $337 million for the second quarter of 1998, compared with $315 million for the first quarter of 1998 and $228 million for the second quarter of 1997. Net interest income on a taxable-equivalent basis was $1.154 billion in the second quarter of 1998, compared with $1.130 billion in the first quarter of 1998 and $1.150 billion in the second quarter of 1997. The Company's net interest margin for the second quarter of 1998 was 6.22 percent, compared with 6.01 percent in the first quarter of 1998 and 5.93 percent in the second quarter of 1997. The increase from a year ago was primarily due to interest received on previously charged off loans and reduced levels of low-yielding securities. -more- 2/WF Earnings Noninterest income (NII) in the second quarter of 1998 was $735 million, compared with $726 million in the first quarter of 1998 and $679 million in the second quarter of 1997. The increase from a year ago was primarily due to a $58 million gain on the sale of the mortgage servicing business and higher fee income, largely offset by increased losses on dispositions of premises and equipment and a $33 million write-down of auto lease residuals. Noninterest expense (NIE) in the second quarter of 1998 was $1.097 billion, compared with $1.092 billion in the first quarter of 1998 and $1.246 billion in the second quarter of 1997. The decrease from a year ago was mostly due to a decrease in operating losses. The loan loss provision was $170 million for the second quarter of 1998, compared with $180 million for the first quarter of 1998 and $140 million for the second quarter of 1997. Net charge-offs in the second quarter of 1998 totaled $165 million, or 1.02 percent of average loans (annualized). In the first quarter of 1998, net charge-offs totaled $178 million, or 1.11 percent of average loans (annualized). In the second quarter of 1997, net charge-offs totaled $212 million, or 1.32 percent of average loans (annualized). The largest category of net charge-offs was credit card loans for all periods presented. At June 30, 1998, the allowance for loan losses of $1.835 billion equaled 2.85 percent of total loans, compared with 2.84 percent at March 31, 1998 and 2.82 percent at June 30, 1997. Total nonaccrual and restructured loans were $517 million at June 30, 1998, compared with $512 million at March 31, 1998 and $612 million at June 30, 1997. Foreclosed assets were $127 million at June 30, 1998, compared with $155 million at March 31, 1998 and $194 million at June 30, 1997. At June 30, 1998, the Company's preliminary risk-based capital ratios were 11.95 percent for total risk-based capital and 8.10 percent for Tier 1 risk-based capital, exceeding the minimum regulatory guidelines of 8 percent and 4 percent, respectively. The preliminary leverage ratio at June 30, 1998 was 7.55 percent. The ratio of common equity to total assets at June 30, 1998 was 13.60 percent. ________________ 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, customer disintermediation, technology changes (including the Year 2000 issue) 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 \ - 3 - Wells Earnings Wels Fargo & Company and Subsidiaries SUMMARY FINANCIAL DATA -- NEWS RELEASE
- ---------------------------------------------------------------------------------------------------------------------------------- % Change Quarter ended June 30, 1998 from -------------------------------------- ----------------------- June 30, Mar. 31, June 30, Mar. 31, June 30, (in millions) 1998 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------------------------------------------------- FOR THE PERIOD Net income $ 337 $ 315 $ 228 7% 48% Net income applicable to common stock 333 311 222 7 50 Earnings per common share $ 3.91 $ 3.62 $ 2.49 8 57 Diluted earnings per common share 3.87 3.58 2.47 8 57 Dividends declared per common share 1.30 1.30 1.30 -- -- Average common shares outstanding 85.2 85.8 89.0 (1) (4) Diluted average common shares outstanding 86.1 86.6 89.9 (1) (4) Profitability ratios (annualized) Net income to average total assets (ROA) 1.45% 1.34% .92% 8 58 Net income applicable to common stock to average common stockholders' equity (ROE) 10.66 10.07 6.88 6 55 Efficiency ratio (1) 58.2% 58.9% 68.2% (1) (15) Average loans $64,397 $65,067 $64,618 (1) -- Average assets 93,148 95,258 99,739 (2) (7) Average core deposits 69,807 69,858 73,524 -- (5) Net interest margin 6.22% 6.01% 5.93% 3 5 NET INCOME AND RATIOS EXCLUDING GOODWILL AND NONQUALIFYING CORE DEPOSIT INTANGIBLE AMORTIZATION AND BALANCES ("CASH" OR "TANGIBLE") (2) Net income applicable to common stock $ 444 $ 423 $ 338 5 31 Earnings per common share 5.21 4.92 3.79 6 37 Diluted earnings per common share 5.15 4.88 3.75 6 37 ROA 2.11% 1.98% 1.51% 7 40 ROE 37.78 37.46 29.27 1 29 Efficiency ratio 51.2 51.7 60.6 (1) (16) AT PERIOD END Investment securities $ 8,449 $ 8,676 $11,530 (3) (27) Loans 64,320 64,504 65,689 -- (2) Allowance for loan losses 1,835 1,830 1,850 -- (1) Goodwill 6,837 6,943 7,231 (2) (5) Assets 93,200 94,820 100,180 (2) (7) Core deposits 70,209 72,041 73,545 (3) (5) Common stockholders' equity 12,675 12,528 12,831 1 (1) Stockholders' equity 12,950 12,803 13,106 1 (1) Capital ratios Common stockholders' equity to assets 13.60% 13.21% 12.81% 3 6 Stockholders' equity to assets 13.90 13.50 13.08 3 6 Risk-based capital (3) Tier 1 capital 8.10 7.76 7.49 4 8 Total capital 11.95 11.58 11.45 3 4 Leverage (3) 7.55 7.04 6.67 7 13 Book value per common share $148.96 $146.90 $145.68 1 2 Staff (active, full-time equivalent) 31,620 32,414 33,216 (2) (5) COMMON STOCK PRICE High $387.25 $337.88 $287.88 15 35 Low 329.13 295.00 246.00 12 34 Period end 369.00 331.25 269.50 11 37 Six months ended ----------------------- June 30, June 30, % 1998 1997 Change - --------------------------------------------------------------------------------------------------- FOR THE PERIOD Net income $ 652 $ 568 15% Net income applicable to common stock 643 551 17 Earnings per common share $ 7.52 $ 6.12 23 Diluted earnings per common share 7.45 6.06 23 Dividends declared per common share 2.60 2.60 -- Average common shares outstanding 85.5 89.9 (5) Diluted average common shares outstanding 86.4 90.9 (5) Profitability ratios (annualized) Net income to average total assets (ROA) 1.40% 1.12% 25 Net income applicable to common stock to average common stockholders' equity (ROE) 10.37 8.46 23 Efficiency ratio (1) 58.5% 64.2% (9) Average loans $64,730 $ 65,053 -- Average assets 94,197 102,569 (8) Average core deposits 69,833 75,562 (8) Net interest margin 6.12% 6.03% 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 $ 866 $ 781 11 Earnings per common share 10.13 8.69 17 Diluted earnings per common share 10.03 8.59 17 ROA 2.04% 1.71% 19 ROE 37.62 33.06 14 Efficiency ratio 51.5 56.7 (9) AT PERIOD END Investment securities $ 8,449 $ 11,530 (27) Loans 64,320 65,689 (2) Allowance for loan losses 1,835 1,850 (1) Goodwill 6,837 7,231 (5) Assets 93,200 100,180 (7) Core deposits 70,209 73,545 (5) Common stockholders' equity 12,675 12,831 (1) Stockholders' equity 12,950 13,106 (1) Capital ratios Common stockholders' equity to assets 13.60% 12.81% 6 Stockholders' equity to assets 13.90 13.08 6 Risk-based capital (3) Tier 1 capital 8.10 7.49 8 Total capital 11.95 11.45 4 Leverage (3) 7.55 6.67 13 Book value per common share $148.96 $ 145.68 2 Staff (active, full-time equivalent) 31,620 33,216 (5) COMMON STOCK PRICE High $387.25 $ 319.25 21 Low 295.00 246.00 20 Period end 369.00 269.50 37 - ---------------------------------------------------------------------------------------------------
(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 $30 million and $913 million, respectively, for the quarter ended June 30, 1998 and $61 million and $928 million, respectively, for the six months ended June 30, 1998. Goodwill amortization and average balance (which are not tax effected) were $81 million and $6,902 million, respectively, for the quarter ended June 30, 1998 and $162 million and $6,946 million, respectively, for the six months ended June 30, 1998. (3) The June 30, 1998 ratios are preliminary. - 4 - Wells Fargo & Company and Subsidiaries CONSOLIDATED STATEMENT OF INCOME
- ------------------------------------------------------------------------------------------------------------------------------- Quarter Six months ended June 30, % ended June 30, % ------------------- ------------------- (in millions) 1998 1997 Change 1998 1997 Change - ------------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME (1) Federal funds sold and securities purchased under resale agreements $ 10 $ 6 67 % $ 16 $ 11 45 % (2) Investment securities 130 190 (32) 275 398 (31) (3) Loans 1,515 1,507 1 3,027 3,057 (1) (4) Other 21 13 62 43 24 79 ----- ----- ----- ----- (5) Total interest income 1,676 1,716 (2) 3,361 3,490 (4) ----- ----- ----- ----- INTEREST EXPENSE (6) Deposits 403 429 (6) 811 851 (5) (7) Federal funds purchased and securities sold under repurchase agreements 20 34 (41) 61 65 (6) (8) Commercial paper and other short-term borrowings 4 3 33 11 6 83 (9) Senior and subordinated debt 73 78 (6) 148 159 (7) (10) Guaranteed preferred beneficial interests in Company's subordinated debentures 25 25 -- 51 50 2 ----- ----- ----- ----- (11) Total interest expense 525 569 (8) 1,082 1,131 (4) ----- ----- ----- ----- (12) NET INTEREST INCOME 1,151 1,147 -- 2,279 2,359 (3) ----- ----- ----- ----- (13) Provision for loan losses 170 140 21 350 245 43 ----- ----- ----- ----- (14) Net interest income after provision for loan losses 981 1,007 (3) 1,929 2,114 (9) ----- ----- ----- ----- NONINTEREST INCOME (15) Fees and commissions 272 234 16 527 448 18 (16) Service charges on deposit accounts 222 214 4 430 434 (1) (17) Trust and investment services income 114 112 2 228 221 3 (18) Investment securities gains 18 3 500 23 7 229 (19) Other 109 116 (6) 252 209 21 ----- ----- ----- ----- (20) Total noninterest income 735 679 8 1,460 1,319 11 ----- ----- ----- ----- NONINTEREST EXPENSE (21) Salaries 303 316 (4) 608 656 (7) (22) Incentive compensation 61 49 24 114 89 28 (23) Employee benefits 80 81 (1) 171 176 (3) (24) Equipment 100 98 2 197 192 3 (25) Net occupancy 98 95 3 199 196 2 (26) Goodwill 81 81 -- 162 164 (1) (27) Core deposit intangible 57 67 (15) 117 129 (9) (28) Operating losses 25 180 (86) 56 222 (75) (29) Other 292 279 5 565 539 5 ----- ----- ----- ----- (30) Total noninterest expense 1,097 1,246 (12) 2,189 2,363 (7) ----- ----- ----- ----- (31) INCOME BEFORE INCOME TAX (32) EXPENSE 619 440 41 1,200 1,070 12 (33) Income tax expense 282 212 33 548 502 9 ----- ----- ----- ----- (34) NET INCOME $ 337 $ 228 48 % $ 652 $ 568 15 % ----- ----- --- ----- ----- --- ----- ----- --- ----- ----- --- (35) NET INCOME APPLICABLE TO COMMON STOCK $ 333 $ 222 50 % $ 643 $ 551 17 % ----- ----- --- ----- ----- --- ----- ----- --- ----- ----- --- (37) EARNINGS PER COMMON SHARE $ 3.91 $ 2.49 57 % $ 7.52 $ 6.12 23 % ----- ----- --- ----- ----- --- ----- ----- --- ----- ----- --- (38) DILUTED EARNINGS PER COMMON SHARE $ 3.87 $ 2.47 57 % $ 7.45 $ 6.06 23 % ----- ----- --- ----- ----- --- ----- ----- --- ----- ----- --- (39) DIVIDENDS DECLARED PER COMMON SHARE $ 1.30 $ 1.30 -- % $ 2.60 $ 2.60 -- % ----- ----- --- ----- ----- --- ----- ----- --- ----- ----- --- (40) Average common shares outstanding 85.2 89.0 (4)% 85.5 89.9 (5)% ----- ----- --- ----- ----- --- ----- ----- --- ----- ----- --- (41) Diluted average common shares outstanding 86.1 89.9 (4)% 86.4 90.9 (5)% ----- ----- --- ----- ----- --- ----- ----- --- ----- ----- --- - -------------------------------------------------------------------------------------------------------------------------------
- 5 - Wells Fargo & Company and Subsidiaries CONSOLIDATED BALANCE SHEET
- ---------------------------------------------------------------------------------------------------------------------------------- % Change June 30, 1998 from ----------------------- June 30, Dec. 31, June 30, Dec. 31, June 30, (in millions) 1998 1997 1997 1997 1997 - ---------------------------------------------------------------------------------------------------------------------------------- ASSETS (1) Cash and due from banks $ 7,130 $ 8,169 $ 8,037 (13)% (11)% (2) Federal funds sold and securities purchased under resale agreements 590 82 224 620 163 (3) Investment securities at fair value 8,449 9,888 11,530 (15) (27) (4) Loans 64,320 65,734 65,689 (2) (2) (5) Allowance for loan losses 1,835 1,828 1,850 -- (1) ------ ------ ------ (6) Net loans 62,485 63,906 63,839 (2) (2) ------ ------ ------ (7) Due from customers on acceptances 88 98 97 (10) (9) (8) Accrued interest receivable 466 507 519 (8) (10) (9) Premises and equipment, net 2,017 2,117 2,262 (5) (11) (10) Core deposit intangible 1,592 1,709 1,835 (7) (13) (11) Goodwill 6,837 7,031 7,231 (3) (5) (12) Other assets 3,546 3,949 4,606 (10) (23) ------ ------ ------ (13) Total assets $93,200 $97,456 $100,180 (4) (7)% ------ ------ ------ --- --- ------ ------ ------ --- --- LIABILITIES (14) Noninterest-bearing deposits $23,411 $23,953 $ 24,284 (2)% (4)% (15) Interest-bearing deposits 47,039 48,246 49,464 (3) (5) ------ ------ ------ (16) Total deposits 70,450 72,199 73,748 (2) (4) (17) Federal funds purchased and securities sold under repurchase agreements 1,262 3,576 4,237 (65) (70) (18) Commercial paper and other short-term borrowings 287 249 208 15 38 (19) Acceptances outstanding 88 98 97 (10) (9) (20) Accrued interest payable 193 175 196 10 (2) (21) Other liabilities 2,256 2,403 2,869 (6) (21) (22) Senior debt 1,684 1,983 1,734 (15) (3) (23) Subordinated debt 2,731 2,585 2,686 6 2 (24) Guaranteed preferred beneficial interests in Company's subordinated debentures 1,299 1,299 1,299 -- -- STOCKHOLDERS' EQUITY (25) Preferred stock 275 275 275 -- -- (26) Common stock - $5 par value, authorized 150,000,000 shares; issued and outstanding 85,091,451 shares, 86,152,779 shares and 88,078,690 shares 425 431 440 (1) (3) (27) Additional paid-in capital 8,347 8,712 9,305 (4) (10) (28) Retained earnings 3,837 3,416 3,064 12 25 (29) Cumulative other comprehensive income 66 55 22 20 200 ------ ------ ------ (30) Total stockholders' equity 12,950 12,889 13,106 -- (1) ------ ------ ------ (31) Total liabilities and stockholders' equity $93,200 $97,456 $100,180 (4)% (7)% ------ ------ ------- --- --- ------ ------ ------- --- --- - ---------------------------------------------------------------------------------------------------------------------------------
- 6 - Wells Fargo & Company and Subsidiaries CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------- Six months ended June 30, ------------------------ (in millions) 1998 1997 - ---------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $12,889 $14,112 Net income 652 568 Other comprehensive income (loss), net of tax: Change in foreign currency translation adjustments -- 4 Change in investment securities valuation allowance 11 (1) Common stock issued under employee benefit and dividend reinvestment plans 53 45 Preferred stock redeemed -- (325) Common stock repurchased (424) (1,044) Preferred stock dividends (9) (17) Common stock dividends (222) (236) ------- ------- BALANCE, END OF PERIOD $12,950 $13,106 ------- ------- ------- ------- - ----------------------------------------------------------------------------------------------------
LOANS
- ---------------------------------------------------------------------------------------------------- JUNE 30, December 31, June 30, (in millions) 1998 1997 1997 - ---------------------------------------------------------------------------------------------------- Commercial $21,268 $20,144 $19,464 Real estate 1-4 family first mortgage 7,863 8,869 9,757 Other real estate mortgage 11,452 12,186 11,747 Real estate construction 2,499 2,320 2,378 Consumer: Real estate 1-4 family junior lien mortgage 5,413 5,865 6,008 Credit card 4,472 5,039 5,090 Other revolving credit and monthly payment 6,757 7,185 7,749 ------- ------- ------- Total consumer 16,642 18,089 18,847 Lease financing 4,458 4,047 3,373 Foreign 138 79 123 ------- ------- ------- Total loans $64,320 $65,734 $65,689 ------- ------- ------- ------- ------- ------- - ----------------------------------------------------------------------------------------------------
- 7 - Wells Fargo & Company and Subsidiaries CHANGES IN THE ALLOWANCE FOR LOAN LOSSES
- --------------------------------------------------------------------------------------------------------------------------------- Quarter ended Six months ended -------------------------------------- ---------------------- JUNE 30, March 31, June 30, JUNE 30, June 30, (in millions) 1998 1998 1997 1998 1997 - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF PERIOD $1,830 $1,828 $1,922 $1,828 $2,018 Provision for loan losses 170 180 140 350 245 Loan charge-offs: Commercial (46) (49) (60) (95) (129) Real estate 1-4 family first mortgage (4) (4) (5) (8) (10) Other real estate mortgage (10) -- (2) (11) (10) Real estate construction (2) (1) (2) (2) (3) Consumer: Real estate 1-4 family junior lien mortgage (2) (3) (6) (6) (12) Credit card (117) (118) (133) (235) (248) Other revolving credit and monthly payment (48) (55) (57) (102) (113) ------ ------ ------ ------ ------ Total consumer (167) (176) (196) (343) (373) Lease financing (11) (11) (10) (22) (20) ------ ------ ------ ------ ------ Total loan charge-offs (240) (241) (275) (481) (545) ------ ------ ------ ------ ------ Loan recoveries: Commercial 13 19 20 32 33 Real estate 1-4 family first mortgage 1 3 1 4 2 Other real estate mortgage 28 9 8 36 30 Real estate construction 1 -- -- 1 1 Consumer: Real estate 1-4 family junior lien mortgage 1 2 1 3 3 Credit card 12 11 11 23 22 Other revolving credit and monthly payment 17 16 19 33 35 ------ ------ ------ ------ ------ Total consumer 30 29 31 59 60 Lease financing 2 3 3 6 6 ------ ------ ------ ------ ------ Total loan recoveries 75 63 63 138 132 ------ ------ ------ ------ ------ Total net loan charge-offs (165) (178) (212) (343) (413) ------ ------ ------ ------ ------ BALANCE, END OF PERIOD $1,835 $1,830 $1,850 $1,835 $1,850 ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Total net loan charge-offs as a percentage of average loans (annualized) 1.02 % 1.11 % 1.32 % 1.07 % 1.28 % ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Allowance as a percentage of total loans 2.85 % 2.84 % 2.82 % 2.85 % 2.82 % ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ - ---------------------------------------------------------------------------------------------------------------------------------
- 8 - Wells Fargo & Company and Subsidiaries NONACCRUAL AND RESTRUCTURED LOANS AND OTHER ASSETS
- ------------------------------------------------------------------------------------------ JUNE 30, Dec. 31, June 30, (in millions) 1998 1997 1997 - ------------------------------------------------------------------------------------------ Nonaccrual loans: Commercial $165 $155 $179 Real estate 1-4 family first mortgage 88 104 102 Other real estate mortgage 213 228 283 Real estate construction 30 23 19 Consumer: Real estate 1-4 family junior lien mortgage 18 17 17 Other revolving credit and monthly payment 3 1 2 --- --- --- Total nonaccrual loans 517 528 602 Restructured loans -- 9 10 --- --- --- Nonaccrual and restructured loans 517 537 612 As a percentage of total loans .8% .8% .9% Foreclosed assets 127 158 194 Real estate investments (1) 3 4 5 --- --- --- Total nonaccrual and restructured loans and other assets $647 $699 $811 --- --- --- --- --- --- - ------------------------------------------------------------------------------------------
(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 $162 million, $172 million and $158 million at June 30, 1998, December 31, 1997 and June 30, 1997, respectively. - 9 - Wells Fargo & Company and Subsidiaries NONINTEREST INCOME
- ----------------------------------------------------------------------------------------------------------------------------- Quarter Six months ended June 30, ended June 30, ---------------- % ------------------ % (in millions) 1998 1997 Change 1998 1997 Change - ----------------------------------------------------------------------------------------------------------------------------- Fees and commissions: Credit card membership and other credit card fees $ 62 $ 55 13% $ 129 $ 100 29% ATM network fees 50 43 16 94 82 15 Charges and fees on loans 43 33 30 83 64 30 Debit and credit card merchant fees 25 24 4 47 46 2 Mutual fund and annuity sales fees 23 16 44 43 32 34 All other 69 63 10 131 124 6 --- --- ----- ----- Total fees and commissions 272 234 16 527 448 18 Service charges on deposit accounts 222 214 4 430 434 (1) Trust and investment services income: Asset management and custody fees 63 61 3 125 122 2 Mutual fund management fees 46 45 2 91 84 8 All other 5 6 (17) 12 15 (20) --- --- ----- ----- Total trust and investment services income 114 112 2 228 221 3 Investment securities gains 18 3 500 23 7 229 Income from equity investments accounted for by the: Cost method 34 40 (15) 83 91 (9) Equity method 16 15 7 31 30 3 Check printing charges 21 18 17 38 36 6 Gains on sales of loans 17 7 143 53 13 308 Gains from dispositions of operations 74 1 -- 71 8 788 Losses on dispositions of premises and equipment (42) (6) 600 (51) (36) 42 All other (11) 41 -- 27 67 (60) --- --- ----- ----- Total $735 $679 8% $1,460 $1,319 11% --- --- --- ----- ----- --- --- --- --- ----- ----- --- - -----------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
- ----------------------------------------------------------------------------------------------------------------------------- Quarter Six months ended June 30, ended June 30, ---------------- % ------------------ % (in millions) 1998 1997 Change 1998 1997 Change - ----------------------------------------------------------------------------------------------------------------------------- Salaries $ 303 $ 316 (4)% $ 608 $ 656 (7)% Incentive compensation 61 49 24 114 89 28 Employee benefits 80 81 (1) 171 176 (3) Equipment 100 98 2 197 192 3 Net occupancy 98 95 3 199 196 2 Goodwill 81 81 -- 162 164 (1) Core deposit intangible: Nonqualifying (1) 51 59 (14) 103 113 (9) Qualifying 6 8 (25) 14 16 (13) Operating losses 25 180 (86) 56 222 (75) Contract services 68 59 15 133 115 16 Telecommunications 33 36 (8) 64 73 (12) Security 19 22 (14) 40 44 (9) Postage 18 22 (18) 37 45 (18) Outside professional services 29 21 38 48 36 33 Advertising and promotion 33 21 57 54 34 59 Stationery and supplies 12 16 (25) 26 36 (28) Travel and entertainment 17 15 13 33 29 14 Check printing 12 14 (14) 24 30 (20) Outside data processing 17 13 31 30 26 15 Foreclosed assets (5) 5 -- (1) (4) (75) All other 39 35 11 77 75 3 ----- ----- ----- ----- Total $1,097 $1,246 (12)% $2,189 $2,363 (7)% ----- ----- --- ----- ----- ---- ----- ----- --- ----- ----- ---- - -----------------------------------------------------------------------------------------------------------------------------
(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 June 30, -------------------------------------------------------------------- 1998 1997 --------------------------------- ------------------------------- INTEREST Interest AVERAGE YIELDS/ INCOME/ Average Yields/ income/ (in millions) BALANCE RATES EXPENSE balance rates expense - ---------------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS (1) Federal funds sold and securities purchased under resale agreements $ 689 5.63% $ 10 $ 451 5.67% $ 6 (2) Investment securities at fair value (2): U.S. Treasury securities 2,086 6.12 32 2,688 6.06 41 (3) Securities of U.S. government agencies and corporations 3,331 6.56 54 5,926 6.44 96 (4) Private collateralized mortgage obligations 2,246 6.66 37 2,939 6.64 49 (5) Other securities 494 7.07 8 322 6.50 4 ----- ----- ------ ---- (6) Total investment securities at fair value 8,157 6.51 131 11,875 6.40 190 Loans: (7) Commercial 20,657 8.96 462 18,432 9.10 418 (8) Real estate 1-4 family first mortgage 8,123 7.45 151 9,927 7.53 187 (9) Other real estate mortgage 11,788 9.98 293 11,573 9.23 266 (10) Real estate construction 2,456 9.56 59 2,262 10.03 57 Consumer: (11) Real estate 1-4 family junior lien mortgage 5,478 9.35 128 6,035 9.37 141 (12) Credit card 4,555 15.28 174 5,164 14.44 186 (13) Other revolving credit and monthly payment 6,844 9.02 154 7,835 9.35 183 ----- ----- ------ ---- (14) Total consumer 16,877 10.82 456 19,034 10.74 510 (15) Lease financing 4,368 8.63 94 3,264 8.65 71 (16) Foreign 128 7.48 2 126 6.43 2 ------ ----- ------ ---- (17) Total loans 64,397 9.44 1,517 64,618 9.37 1,511 (18) Other 1,225 7.19 21 721 6.84 13 ------ ----- ------ ---- Total earning assets $74,468 9.05 1,679 $77,665 8.87 1,720 ------ ----- ------ ---- ------ ------ FUNDING SOURCES Deposits: (19) Interest-bearing checking $ 1,770 1.37 6 $ 1,895 1.33 6 (20) Market rate and other savings 30,393 2.67 202 32,519 2.60 211 (21) Savings certificates 14,966 5.10 190 15,669 5.09 199 (22) Other time deposits 215 4.69 3 165 4.51 2 (23) Deposits in foreign offices 136 4.95 2 833 5.45 11 ------ ----- ------ ----- (24) Total interest-bearing deposits 47,480 3.40 403 51,081 3.37 429 (25) Federal funds purchased and securities sold under repurchase agreements 1,536 5.35 20 2,492 5.42 34 (26) Commercial paper and other short-term borrowings 248 6.27 4 216 7.11 4 (27) Senior debt 1,733 6.27 27 1,751 6.36 28 (28) Subordinated debt 2,686 6.80 46 2,884 6.94 50 (29) Guaranteed preferred beneficial interests in Company's subordinated debentures 1,299 7.81 25 1,299 7.81 25 ------ ----- ------ ----- (30) Total interest-bearing liabilities 54,982 3.83 525 59,723 3.83 570 (31) Portion of noninterest-bearing funding sources 19,486 -- -- 17,942 -- -- ------ ----- ------ ----- (32) Total funding sources $74,468 2.83 525 $77,665 2.94 570 ------ ----- ------ ---- ------ ------ (33) NET INTEREST MARGIN AND NET INTEREST INCOME ON A TAXABLE-EQUIVALENT BASIS (3) 6.22% $1,154 5.93% $1,150 ---- ----- ------ ----- ---- ----- ------ ----- NONINTEREST-EARNING ASSETS (34) Cash and due from banks $ 6,453 $ 7,654 (35) Goodwill 6,902 7,271 (36) Other 5,325 7,149 ------ ------ Total noninterest-earning assets $18,680 $22,074 ------ ------ ------ ------ NONINTEREST-BEARING FUNDING SOURCES (37) Deposits $22,678 $23,441 (38) Other liabilities 2,686 3,273 (39) Preferred stockholders' equity 275 371 (40) Common stockholders' equity 12,527 12,931 (41) Noninterest-bearing funding sources used to fund earning assets (19,486) (17,942) ------ ------ (42) Net noninterest-bearing funding sources $18,680 $22,074 ------ ------ ------ ------ (43) TOTAL ASSETS $93,148 $99,739 ------ ------ ------ ------ - ---------------------------------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.50% for the quarters ended June 30, 1998 and 1997. The average three-month London Interbank Offered Rate (LIBOR) was 5.69% and 5.81% 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 $8,065 million and $11,897 million for the quarters ended June 30, 1998 and 1997, 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 June 30, 1998 and 1997. -11- Wells Fargo & Company and Subsidiaries AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)
- --------------------------------------------------------------------------------------------------------------------------------- Six months ended June 30, ------------------------------------------------------------------- 1998 1997 ------------------------------ -------------------------------- INTEREST Interest AVERAGE YIELDS/ INCOME/ Average Yields/ income/ (in millions) BALANCE RATES EXPENSE balance rates expense - --------------------------------------------------------------------------------------------------------------------------------- EARNING ASSETS (1) Federal funds sold and securities purchased under resale agreements $ 559 5.65% $ 16 $ 413 5.56% $ 11 (2) Investment securities at fair value (2): U.S. Treasury securities 2,275 6.10 68 2,801 6.05 84 (3) Securities of U.S. government agencies and corporations 3,659 6.59 119 6,313 6.42 203 (4) Private collateralized mortgage obligations 2,213 6.68 74 3,036 6.61 101 (5) Other securities 491 7.21 17 345 6.42 10 ------- ------- -------- ------- (6) Total investment securities at fair value 8,638 6.52 278 12,495 6.38 398 Loans: (7) Commercial 20,340 9.04 913 18,419 9.04 827 (8) Real estate 1-4 family first mortgage 8,394 7.47 313 10,080 7.47 376 (9) Other real estate mortgage 11,961 9.58 569 11,562 10.06 576 (10) Real estate construction 2,398 9.61 114 2,280 9.89 112 Consumer: (11) Real estate 1-4 family junior lien mortgage 5,598 9.44 262 6,102 9.34 283 (12) Credit card 4,694 15.13 355 5,247 14.25 374 (13) Other revolving credit and monthly payment 6,961 9.08 314 8,052 9.30 372 ------- ------- -------- ------- (14) Total consumer 17,253 10.84 931 19,401 10.65 1,029 (15) Lease financing 4,267 8.67 185 3,172 8.74 139 (16) Foreign 117 7.86 5 139 6.93 5 ------- ------- -------- ------- (17) Total loans 64,730 9.41 3,030 65,053 9.47 3,064 (18) Other 1,187 7.32 43 713 6.55 24 ------- ------- -------- ------- Total earning assets $75,114 9.02 3,367 $78,674 8.93 3,497 ------- ------- -------- ------- ------- -------- FUNDING SOURCES Deposits: (19) Interest-bearing checking $ 1,748 1.42 12 $ 1,904 1.24 12 (20) Market rate and other savings 30,434 2.68 404 33,307 2.57 425 (21) Savings certificates 15,074 5.13 383 15,594 5.07 392 (22) Other time deposits 247 4.81 6 171 4.21 4 (23) Deposits in foreign offices 257 5.15 7 697 5.32 18 ------- ------- -------- ------- (24) Total interest-bearing deposits 47,760 3.43 812 51,673 3.32 851 (25) Federal funds purchased and securities sold under repurchase agreements 2,256 5.41 61 2,459 5.30 65 (26) Commercial paper and other short-term borrowings 354 6.07 10 223 6.06 6 (27) Senior debt 1,822 6.29 57 1,876 6.27 58 (28) Subordinated debt 2,632 6.95 91 2,911 6.93 101 (29) Guaranteed preferred beneficial interests in Company's subordinated debentures 1,299 7.80 51 1,275 7.83 50 ------- ------- -------- ------- (30) Total interest-bearing liabilities 56,123 3.88 1,082 60,417 3.77 1,131 (31) Portion of noninterest-bearing funding sources 18,991 -- -- 18,257 -- -- ------- ------- -------- ------- (32) Total funding sources $75,114 2.91 1,082 $78,674 2.90 1,131 ------- ------- -------- ------- ------- -------- (33) NET INTEREST MARGIN AND NET INTEREST INCOME ON A TAXABLE-EQUIVALENT BASIS (3) 6.12% $2,285 6.03% $2,366 ---- ------ ---- ------ ---- ------ ---- ------ NONINTEREST-EARNING ASSETS (34) Cash and due from banks $ 6,629 $ 8,799 (35) Goodwill 6,946 7,288 (36) Other 5,508 7,808 ------- -------- Total noninterest-earning assets $19,083 $ 23,895 ------- -------- ------- -------- NONINTEREST-BEARING FUNDING SOURCES (37) Deposits $22,577 $ 24,757 (38) Other liabilities 2,705 3,819 (39) Preferred stockholders' equity 275 459 (40) Common stockholders' equity 12,517 13,117 (41) Noninterest-bearing funding sources used to fund earning assets (18,991) (18,257) ------- -------- (42) Net noninterest-bearing funding sources $19,083 $ 23,895 ------- -------- ------- -------- (43) TOTAL ASSETS $94,197 $102,569 ------- -------- ------- -------- - --------------------------------------------------------------------------------------------------------
(1) The average prime rate of Wells Fargo Bank was 8.50% and 8.38% for the six months ended June 30, 1998 and 1997, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.68% and 5.69% 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 $8,541 million and $12,503 million for the six months ended June 30, 1998 and 1997, 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 six months ended June 30, 1998 and 1997. -----END PRIVACY-ENHANCED MESSAGE-----