EX-12.(B) 5 f27602exv12wxby.htm EXHIBIT 12.(B) exv12wxby
 

EXHIBIT 12(b)
WELLS FARGO & COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDENDS
 
  
    Year ended December 31,  
(in millions)   2006     2005     2004     2003     2002  
   
 
                                        
Earnings, including interest on deposits (1):
                                        
Income before income tax expense and effect of change in accounting principle
   $ 12,745     $ 11,548     $ 10,769     $ 9,477     $ 8,854  
Fixed charges
     12,498       7,656       4,017       3,606       4,155  
 
                              
 
   $ 25,243     $ 19,204     $ 14,786     $ 13,083     $ 13,009  
 
                              
 
                                        
Preferred dividend requirement
   $ —     $ —     $ —     $ 3     $ 4  
Ratio of income before income tax expense and effect of change in accounting principle to net income before effect of change in accounting principle
     1.50       1.51       1.54       1.53       1.55  
 
                              
 
                                        
Preferred dividends (2)
   $ —     $ —     $ —     $ 5     $ 6  
 
                              
Fixed charges (1):
                                        
Interest expense
     12,288       7,458       3,817       3,411       3,977  
Estimated interest component of net rental expense
     210       198       200       195       178  
 
                              
 
     12,498       7,656       4,017       3,606       4,155  
 
                              
Fixed charges and preferred dividends
   $ 12,498     $ 7,656     $ 4,017     $ 3,611     $ 4,161  
 
                              
 
                                        
Ratio of earnings to fixed charges and preferred dividends (3)
     2.02       2.51       3.68       3.62       3.13  
 
                              
 
                                        
Earnings excluding interest on deposits:
                                        
Income before income tax expense and effect of change in accounting principle
   $ 12,745     $ 11,548     $ 10,769     $ 9,477     $ 8,854  
Fixed charges
     5,324       3,808       2,190       1,993       2,236  
 
                              
 
   $ 18,069     $ 15,356     $ 12,959     $ 11,470     $ 11,090  
 
                              
 
                                        
Preferred dividends (2)
   $ —     $ —     $ —     $ 5     $ 6  
 
                              
Fixed charges:
                                        
Interest expense
     12,288       7,458       3,817       3,411       3,977  
Less interest on deposits
     7,174       3,848       1,827       1,613       1,919  
Estimated interest component of net rental expense
     210       198       200       195       178  
 
                              
 
     5,324       3,808       2,190       1,993       2,236  
 
                              
Fixed charges and preferred dividends
   $ 5,324     $ 3,808     $ 2,190     $ 1,998     $ 2,242  
 
                              
 
                                        
Ratio of earnings to fixed charges and preferred dividends (3)
     3.39       4.03       5.92       5.74       4.95  
 
                              
 
 
(1)   As defined in Item 503(d) of Regulation S-K.
 
(2)   The preferred dividends were increased to amounts representing the pretax earnings that would be required to cover such dividend requirements.
 
(3)   These computations are included herein in compliance with Securities and Exchange Commission regulations. However, management believes that fixed charge ratios are not meaningful measures for the business of the Company because of two factors. First, even if there was no change in net income, the ratios would decline with an increase in the proportion of income which is tax-exempt or, conversely, they would increase with a decrease in the proportion of income which is tax-exempt. Second, even if there was no change in net income, the ratios would decline if interest income and interest expense increase by the same amount due to an increase in the level of interest rates or, conversely, they would increase if interest income and interest expense decrease by the same amount due to a decrease in the level of interest rates.