EX-12.(B) 4 d404366dex12b.htm COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends

EXHIBIT 12(b)

WELLS FARGO & COMPANY AND SUBSIDIARIES

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS

 

     Quarter ended
September 30,
     Nine months ended
September 30,
 

($ in millions)

   2012      2011      2012      2011  

Earnings including interest on deposits (1):

           

Income before income tax expense

   $ 7,510         6,140         21,250         17,599   

Less: Net income from noncontrolling interests

     93         87         264         266   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income tax expense and after noncontrolling interests

     7,417         6,053         20,986         17,333   

Fixed charges

     1,349         1,724         4,208         5,435   
  

 

 

    

 

 

    

 

 

    

 

 

 
     8,766         7,777         25,194         22,768   
  

 

 

    

 

 

    

 

 

    

 

 

 

Preferred dividend requirement

     331         322         1,011         921   

Tax factor (based on effective tax rate)

     1.50         1.49         1.52         1.47   
  

 

 

    

 

 

    

 

 

    

 

 

 

Preferred dividends (2)

   $ 331         322         1,011         921   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fixed charges (1):

           

Interest expense

     1,263         1,636         3,947         5,163   

Estimated interest component of net rental expense

     86         88         261         272   
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,349         1,724         4,208         5,435   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fixed charges and preferred dividends

     1,680         2,046         5,219         6,356   
  

 

 

    

 

 

    

 

 

    

 

 

 

Ratio of earnings to fixed charges and preferred dividends (3)

     5.22         3.80         4.83         3.58   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings excluding interest on deposits:

           

Income before income tax expense and after noncontrolling interests

   $ 7,417         6,053         20,986         17,333   

Fixed charges

     921         1,165         2,880         3,667   
  

 

 

    

 

 

    

 

 

    

 

 

 
     8,338         7,218         23,866         21,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Preferred dividends (2)

     331         322         1,011         921   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fixed charges:

           

Interest expense

     1,263         1,636         3,947         5,163   

Less: Interest on deposits

     428         559         1,328         1,768   

Estimated interest component of net rental expense

     86         88         261         272   
  

 

 

    

 

 

    

 

 

    

 

 

 
     921         1,165         2,880         3,667   
  

 

 

    

 

 

    

 

 

    

 

 

 

Fixed charges and preferred dividends

   $ 1,252         1,487         3,891         4,588   
  

 

 

    

 

 

    

 

 

    

 

 

 

Ratio of earnings to fixed charges and preferred dividends (3)

     6.66         4.85         6.13         4.58   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) As defined in Item 503(d) of Regulation S-K.
(2) The preferred dividends, including accretion, were increased to amounts representing the pretax earnings that would be required to cover such dividend and accretion 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.