EX-99.1 2 d658780dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

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   Mary Eshet    Jim Rowe   
   704-383-7777    415-396-8216   

 

Tuesday, January 14, 2014

WELLS FARGO REPORTS RECORD FULL YEAR AND QUARTERLY NET INCOME

2013 Net Income of $21.9 Billion, Up 16% from 2012; EPS of $3.89

Q4 Net Income of $5.6 Billion, Up 10% YoY; EPS of $1.00

 

  Continued strong financial results:

 

  o Full year 2013:

 

  ¡ Net income of $21.9 billion, up 16 percent from 2012

 

  ¡ Diluted earnings per share (EPS) of $3.89, up 16 percent

 

  ¡ Revenue of $83.8 billion, compared with $86.1 billion

 

  ¡ Return on average assets (ROA) of 1.51 percent, up 10 basis points

 

  ¡ Return on equity (ROE) of 13.87 percent, up 92 basis points

 

  ¡ Returned $11.4 billion to shareholders through dividends and share repurchases

 

  o Fourth quarter 2013:

 

  ¡ Net income of $5.6 billion, up 10 percent from fourth quarter 2012

 

  ¡ Diluted earnings per share of $1.00, up 10 percent

 

  ¡ Revenue of $20.7 billion, compared with $21.9 billion

 

  ¡ Noninterest expense of $12.1 billion, down $811 million

 

  ¡ Efficiency ratio of 58.5 percent, improved by 30 basis points

 

  ¡ ROA of 1.47 percent, up 1 basis point

 

  ¡ ROE of 13.81 percent, up 46 basis points

 

  Fourth quarter 2013 results included:

 

  o Strong loan and deposit growth:

 

  ¡ Total loans of $825.8 billion, up $26.2 billion from fourth quarter 2012

 

  ¡ Core loan portfolio up $39.9 billion1

 

  ¡ Total average core checking and savings deposits up $50.7 billion

 

  o Continued improvement in credit quality:

 

  ¡ Net charge-offs of $963 million, down $1.1 billion from fourth quarter 2012

 

  o Net charge-off rate of 0.47 percent (annualized), compared with 1.05 percent

 

  ¡ Nonperforming assets down $4.9 billion

 

  ¡ $600 million reserve release2 due to continued strong credit performance and improved economic conditions

 

 

1 See table on page 5 for more information on core and non-strategic/liquidating loan portfolios.

2 Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.


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  o Strengthened capital levels:

 

  ¡ Tier 1 common equity3 ratio under Basel I of 10.82 percent at December 31, 2013

 

  ¡ Common Equity Tier 1 ratio under Basel III, using the advanced approach, of 9.78 percent4

 

  ¡ Period end common stock share count declined 16.6 million from third quarter 2013 reflecting 30.0 million of purchases in the quarter

 

  ¡ Purchased an additional estimated 11.3 million shares through a forward repurchase transaction expected to settle in first quarter 2014

Selected Financial Information

 

 

 
           Quarter ended                  
  

 

 

       
     Dec. 31,     Sept. 30,        Dec. 31,        Year ended Dec. 31,    
          

 

 

 
     2013     2013        2012        2013        2012    

 

 

Earnings

             

Diluted earnings per common share

   $ 1.00          0.99           0.91           3.89           3.36     

Wells Fargo net income (in billions)

     5.61          5.58           5.09           21.88           18.90     

Return on assets (ROA)

     1.47       1.53           1.46           1.51           1.41     

Return on equity (ROE)

     13.81          14.07           13.35           13.87           12.95     

Asset Quality

             

Net charge-offs (annualized) as a % of avg. total loans

     0.47          0.48           1.05           0.56           1.17     

Allowance for credit losses as a % of total loans

     1.81          1.93           2.19           1.81           2.19     

Allowance for credit losses as a % of annualized net charge-offs

     392          405           211           332           193     

Other

             

Revenue (in billions)

   $ 20.7          20.5           21.9           83.8           86.1     

Efficiency ratio

     58.5       59.1           58.8           58.3           58.5     

Average loans (in billions)

   $ 816.7          804.8           787.2           805.0           775.2     

Average core deposits (in billions)

     965.8          940.3           928.8           942.1           893.9     

Net interest margin

     3.26       3.38           3.56           3.39           3.76     

 

 

SAN FRANCISCO – Wells Fargo & Company (NYSE:WFC) reported diluted earnings per common share of $3.89 for 2013, up 16 percent from $3.36 in 2012. Full year net income was $21.9 billion, compared with $18.9 billion in 2012. For fourth quarter 2013, net income was $5.6 billion, or $1.00 per share, compared with $5.1 billion, or $0.91 per share, for fourth quarter 2012.

“Wells Fargo had another outstanding year in 2013, including strong growth in loans and deposits, and double-digit growth in earnings,” said Chairman and CEO John Stumpf. “In the five years since our merger with Wachovia, we have grown our businesses, invested in our franchise’s future and contributed to the U.S. economy’s recovery. Our 264,000 team members made it possible through their strong commitment to our consumer, small business and commercial customers, and the communities they serve around the world. Strong earnings power and capital levels, and an improving economic outlook are major reasons why we look ahead to 2014 with optimism.”

Chief Financial Officer Tim Sloan said, “The fourth quarter of 2013 was very strong for Wells Fargo, with record earnings, solid growth in loans, deposits and capital, and strong credit quality. We also grew both net

 

 

 

3 See tables on page 38 for more information on Tier 1 common equity.

4 Estimated based on management’s interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act.


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interest income and noninterest income during the quarter, despite a challenging rate environment and the expected decline in mortgage originations. Wells Fargo’s diversified model was again able to produce solid results for our shareholders.”

Revenue

Revenue in the fourth quarter was $20.7 billion, compared with $21.9 billion from a year ago. On a linked-quarter basis, revenue grew $187 million driven by increases in both net interest income and noninterest income. Revenue growth from the prior quarter was broad-based, with several businesses generating year-over-year double-digit growth, including retail brokerage, commercial real estate, credit card, insurance and asset-backed finance.

Net Interest Income

Net interest income in fourth quarter 2013 increased $55 million from the third quarter to $10.8 billion due to a larger securities portfolio, higher interest income on trading assets, lower deposit costs, and organic growth in commercial and consumer loans. These benefits were partially offset by lower interest income from mortgages held for sale. Income from variable sources, such as purchased credit-impaired (PCI) loan resolutions and loan fees included in interest income, was essentially flat on a linked quarter basis.

The Company’s net interest margin declined 12 basis points from the prior quarter to 3.26 percent resulting from two primary factors. First, actions taken in response to increased regulatory liquidity expectations – raising long-term debt and term deposits – increased cash and short-term investments. Although these actions had little impact on net interest income, they were dilutive to net interest margin, resulting in approximately 6 basis points of decline in the fourth quarter. Second, customer-driven deposit growth was very strong, which contributed to further growth in cash and short-term investments. While customer deposit growth was modestly accretive to net interest income, it diluted net interest margin an additional 6 basis points.

The net impact of balance sheet repricing and growth in the fourth quarter was neutral compared with third quarter as the benefits of securities purchases, lower deposit costs, and reduced debt yields offset the decline in mortgages held for sale income.

Noninterest Income

Noninterest income in the fourth quarter was $9.9 billion, down from $11.3 billion from a year ago, primarily due to lower mortgage banking revenue. On a linked-quarter basis, noninterest income grew $132 million driven by increases of $182 million in trust and investment fees and $72 million in market sensitive revenue.5 These increases were partially offset by a decline of $38 million in mortgage banking revenue as $205 million in higher servicing income was more than offset by lower production revenue.

 

 

5 Consists of net gains from trading activities, net gains (losses) on debt securities and net gains from equity investments.


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The increase in trust and investment fees was broad-based, reflecting higher assets under management in the Asset Management Group and in our Retail Brokerage business, in each case driven by strong market performance and higher net flows. In addition, increased investment banking revenues from our Wholesale Banking customers contributed to the higher level of trust and investment fees.

Mortgage banking noninterest income was $1.6 billion, down $38 million from third quarter 2013. During the fourth quarter, residential mortgage originations were $50 billion, down from $80 billion in third quarter 2013 while the gain on sale margin strengthened to 1.77 percent in the fourth quarter, compared with 1.42 percent in the third quarter. The Company provided $26 million for mortgage loan repurchase losses, compared with $28 million in third quarter 2013. As previously announced on December 30, 2013, the Company reached an agreement with the Federal National Mortgage Association (Fannie Mae), which was fully covered through previously established mortgage repurchase accruals, that resolved substantially all repurchase liabilities related to loans sold to Fannie Mae that were originated prior to January 1, 2009. Net mortgage servicing rights (MSRs) results were $266 million, compared with $26 million in third quarter 2013.

The Company had net unrealized securities gains of $3.9 billion at December 31, 2013, down from $5.8 billion at September 30, 2013, primarily driven by an increase in interest rates in the quarter.

Noninterest Expense

Noninterest expense of $12.1 billion decreased $811 million, or 6 percent, from fourth quarter 2012. On a linked-quarter basis, noninterest expense declined $17 million, as seasonally-higher costs for equipment (including software licenses) and outside professional services (including project spend on business investments and compliance and regulatory-related initiatives) were more than offset by lower salaries and mortgage-related incentive compensation. The efficiency ratio was 58.5 percent in fourth quarter 2013, compared with 59.1 percent in third quarter 2013. The Company expects to operate within its targeted efficiency ratio range of 55 to 59 percent in first quarter 2014.

Loans

Total loans were $825.8 billion at December 31, 2013, up $13.5 billion from September 30, 2013, driven by growth in all categories except for junior lien mortgages – a portfolio the Company has intentionally been reducing. Core loan growth was $16.7 billion, as non-strategic/liquidating portfolios declined $3.3 billion in the quarter. Total average loans were $816.7 billion, up $11.9 billion from the prior quarter, driven by commercial and industrial, 1-4 family first mortgages and the full quarter benefit of portfolio acquisitions in the third quarter (CRE and foreign).


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    December 31, 2013      September 30, 2013   
 

 

 

   

 

 

 
(in millions)   Core        Liquidating (1)        Total      Core        Liquidating (1)        Total   

 

 

Commercial

    $   378,743           2,013           380,756         369,703           2,342           372,045    

Consumer

    366,190           78,853           445,043         358,484           81,796           440,280    

 

 

Total loans

    $   744,933           80,866           825,799         728,187           84,138           812,325    

 

 

Change from prior quarter:

    $ 16,746           (3,272        13,474         13,777           (3,426        10,351    

 

 

 

(1) See table on page 35 for additional information on non-strategic/liquidating loan portfolios. Management believes that the above information provides useful disclosure regarding the Company’s ongoing loan portfolios.

Deposits

Total average deposits for fourth quarter 2013 were $1.1 trillion, up 9 percent from a year ago and up 13 percent (annualized) from third quarter 2013, driven by strong commercial and consumer growth. The average deposit cost for fourth quarter 2013 improved to 11 basis points, compared with 12 basis points in the prior quarter and 16 basis points a year ago. Average core deposits were $965.8 billion, up 4 percent from a year ago and up 11 percent (annualized) from third quarter 2013. Average core checking and savings deposits were $922.8 billion, up 6 percent from a year ago and up 13 percent (annualized) from third quarter 2013. Average mortgage escrow deposits decreased to $28.2 billion, compared with $42.2 billion a year ago and $34.7 billion in third quarter 2013.

Capital

Capital continued to strengthen in the fourth quarter, with Tier 1 common equity of $123.5 billion under Basel I, or 10.82 percent of risk-weighted assets, compared with 10.12 percent in fourth quarter 2012 and 10.60 percent in third quarter 2013. The Common Equity Tier 1 ratio under Basel III, using the advanced approach, was 9.78 percent.6 In fourth quarter 2013, the Company purchased 30.0 million shares of its common stock and an additional estimated 11.3 million shares through a forward repurchase transaction expected to settle in first quarter 2014. The Company also paid a quarterly common stock dividend of $0.30 per share, up from $0.22 a year ago.

 

 

 
     Dec. 31,        Sept. 30,         Dec. 31,     
(as a percent of total risk-weighted assets)    2013        2013         2012     

 

 

Ratios under Basel I (1):

       

Tier 1 common equity (2)

     10.82        10.60         10.12   

Tier 1 capital

     12.33           12.11         11.75   

Tier 1 leverage

     9.60           9.76         9.47   

 

 

 

(1) December 31, 2013, ratios are preliminary.
(2) See table on page 38 for more information on Tier 1 common equity.

Credit Quality

“Credit performance continued to be strong in the fourth quarter and we were pleased with the quality of the loans we originated. Losses remained at historical lows and non-performing assets decreased

 

 

 

6 Estimated based on management’s interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act.


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significantly,” said Chief Risk Officer Mike Loughlin. “Credit losses were $963 million in fourth quarter 2013, compared with $2.1 billion in fourth quarter 2012, a 54 percent year-over-year improvement. The quarterly loss rate was 0.47 percent with commercial losses of only 0.06 percent and consumer losses of 0.82 percent. The consumer loss levels continued to benefit from the improvement in the residential real estate market and the economy. Nonperforming assets declined by $1.1 billion, or 21 percent (annualized) from last quarter. We released $600 million from the allowance for credit losses in the fourth quarter, reflecting improvements in credit performance. Given these favorable conditions, we continue to expect future reserve releases absent a significant deterioration in the economic environment.”

Net Loan Charge-offs

Net loan charge-offs improved to $963 million in fourth quarter 2013, or 0.47 percent of average loans, compared with $975 million in third quarter 2013, or 0.48 percent of average loans.

Net Loan Charge-Offs

 

 

 
    

Quarter ended  

 
  

 

 

 
     Dec. 31, 2013     Sept. 30, 2013     June 30, 2013    

 

 
 ($ in millions)   

  Net  
loan  
charge-  

offs  

    

As a  

% of  
average  
loans (1)  

   

  Net  
loan  
charge-  

offs  

    

As a  

% of  
average  
loans (1)  

   

Net loan  
charge-  

offs  

    

As a  

% of  
average  
loans (1)  

 

 

 

 Commercial:

               

 Commercial and industrial

     $ 107           0.22       $ 58           0.12       $ 77           0.17  

 Real estate mortgage

     (41)           (0.15)          (20)           (0.08)          (5)           (0.02)     

 Real estate construction

     (13)           (0.32)          (17)           (0.41)          (45)           (1.10)     

 Lease financing

     -           -          -           -          18           0.57     

 Foreign

     -           -          (2)           (0.02)          (1)           (0.01)     

 

      

 

 

      

 

 

    

 Total commercial

     53           0.06          19           0.02          44           0.05     

 

      

 

 

      

 

 

    

 Consumer:

               

 Real estate 1-4 family first mortgage

     195           0.30          242           0.38          328           0.52     

 Real estate 1-4 family junior lien mortgage

     226           1.34          275           1.58          359           2.02     

 Credit card

     220           3.38          207           3.28          234           3.90     

 Automobile

     108           0.85          78           0.63          42           0.35     

 Other revolving credit and installment

     161           1.50          154           1.46          145           1.38     

 

      

 

 

      

 

 

    

 Total consumer

     910           0.82          956           0.86          1,108           1.01     

 

      

 

 

      

 

 

    

 Total

     $   963           0.47       $   975           0.48       $   1,152           0.58  

 

      

 

 

      

 

 

    
               

 

 

 

(1) Quarterly net charge-offs as a percentage of average loans are annualized. See explanation on page 32 of the accounting for purchased credit-impaired (PCI) loans and the impact on selected financial ratios.

Nonperforming Assets

Nonperforming assets decreased by $1.1 billion from the prior quarter to $19.6 billion. Nonaccrual loans decreased $1.2 billion from the prior quarter to $15.7 billion. Foreclosed assets were $3.9 billion, up from $3.8 billion in third quarter 2013, reflecting an increase in foreclosed assets insured by the Federal Housing Administration (FHA) or guaranteed by the Veterans Administration (VA). This increase was primarily driven by enhancements to loan modification programs, slowing foreclosures in prior quarters.


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Nonperforming Assets (Nonaccrual Loans and Foreclosed Assets)

 

 

 
     Dec. 31, 2013     Sept. 30, 2013     June 30, 2013  

 

 
            As a              As a              As a    
            % of              % of              % of    
     Total        total       Total        total       Total        total    
 ($ in millions)    balances        loans       balances        loans       balances        loans    

 

 

 Commercial:

               

 Commercial and industrial

     $ 738           0.37       $   809           0.42       $   1,022           0.54  

 Real estate mortgage

     2,252           2.10          2,496           2.36          2,708           2.59     

 Real estate construction

     416           2.48          517           3.15          665           4.04     

 Lease financing

     29           0.24          17           0.15          20           0.17     

 Foreign

     40           0.08          47           0.10          40           0.10     

 

      

 

 

      

 

 

    

 Total commercial

     3,475           0.91          3,886           1.04          4,455           1.23     

 

      

 

 

      

 

 

    

 Consumer:

               

 Real estate 1-4 family first mortgage

     9,799           3.79          10,450           4.10          10,705           4.23     

 Real estate 1-4 family junior lien mortgage

     2,188           3.32          2,333           3.45          2,522           3.60     

 Automobile

     173           0.34          188           0.38          200           0.41     

 Other revolving credit and installment

     33           0.08          36           0.08          33           0.08     

 

      

 

 

      

 

 

    

 Total consumer

     12,193           2.74          13,007           2.95          13,460           3.07     

 

      

 

 

      

 

 

    

 Total nonaccrual loans

     15,668           1.90          16,893           2.08          17,915           2.23     

 

      

 

 

      

 

 

    

 Foreclosed assets:

               

 Government insured/guaranteed

     2,093             1,781             1,026        

 Non-government insured/guaranteed

     1,844             2,021             2,114        

 

      

 

 

      

 

 

    

 Total foreclosed assets

     3,937             3,802             3,140        

 

      

 

 

      

 

 

    

 Total nonperforming assets

     $   19,605           2.37       $   20,695           2.55       $   21,055           2.63  

 

      

 

 

      

 

 

    

 Change from prior quarter:

               

 Total nonaccrual loans

     $   (1,225)             $ (1,022)             $ (1,611)        

 Total nonperforming assets

     (1,090)             (360)             (1,821)        
               

 

 

Loans 90 Days or More Past Due and Still Accruing

Loans 90 days or more past due and still accruing (excluding government insured/guaranteed) totaled $1.0 billion at December 31, 2013, compared with $1.1 billion at September 30, 2013. Loans 90 days or more past due and still accruing with repayments insured by the Federal Housing Administration (FHA) or predominantly guaranteed by the Department of Veterans Affairs (VA) for mortgages and the U.S. Department of Education for student loans under the Federal Family Education Loan Program were $22.2 billion at December 31, 2013, up from $21.1 billion at September 30, 2013.

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $15.0 billion at December 31, 2013, down from $15.6 billion at September 30, 2013. The allowance coverage to total loans was 1.81 percent, compared with 1.93 percent in third quarter 2013. The allowance covered 3.9 times annualized fourth quarter net charge-offs, compared with 4.0 times in the prior quarter. The allowance coverage to nonaccrual loans was 96 percent at December 31, 2013 compared with 93 percent at September 30, 2013. “We believe the allowance was appropriate for losses inherent in the loan portfolio at December 31, 2013,” said Loughlin.


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Business Segment Performance

Wells Fargo defines its operating segments by product type and customer segment. Segment net income for each of the three business segments was:

 

 

 
                   Quarter ended    
  

 

 

 
       Dec. 31,      Sept. 30,      Dec. 31,    
(in millions)    2013      2013      2012    

 

 

Community Banking

     $   3,222         3,341         2,869     

Wholesale Banking

     2,111         1,973         2,032     

Wealth, Brokerage and Retirement

     491         450         351     

 

 

More financial information about the business segments is on pages 39 and 40.

Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including checking and savings accounts, credit and debit cards, and auto, student, and small business lending. Community Banking also offers investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C. through its Regional Banking and Wells Fargo Home Lending business units.

Selected Financial Information

 

 
                   Quarter ended    
  

 

 

 
       Dec. 31,      Sept. 30,      Dec. 31,    
(in millions)    2013      2013      2012    

 

 

Total revenue

     $   12,254         12,244         13,782     

Provision for credit losses

     490         240         1,757     

Noninterest expense

     7,073         7,060         8,033     

Segment net income

     3,222         3,341         2,869     
(in billions)                     

Average loans

     502.5         497.7         493.1     

Average assets

     883.6         836.6         794.2     

Average core deposits

     620.2         618.2         608.9     

 

 

Community Banking reported net income of $3.2 billion, down $119 million, or 4 percent, from third quarter 2013. Revenue of $12.3 billion increased $10 million, or 0.1 percent, from the prior quarter primarily due to higher gains on equity investments. The provision for credit losses increased $250 million from the prior quarter as the $26 million improvement in net charge-offs was more than offset by a lower reserve release.

Net income was up $353 million, or 12 percent, from fourth quarter 2012. Revenue decreased $1.5 billion, or 11 percent, from a year ago due to lower mortgage banking revenue, partially offset by higher net interest income, trust and investment fees, and revenue from debit and credit card volumes. Noninterest expense declined $960 million, or 12 percent, from a year ago largely due to costs in 2012 associated with the OCC’s Independent Foreclosure Review settlement, and a $250 million contribution to the Wells Fargo Foundation. The provision for credit losses decreased $1.3 billion from a year ago driven by a $953 million decline in net charge-offs and a $314 million increase in the reserve release.


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Regional Banking

 

  Retail banking

 

  o Retail Bank household cross-sell ratio of 6.16 products per household, up from 6.05 year-over-year7

 

  o Primary consumer checking customers8 up a net 4.7 percent year-over-year7

 

  o Customers rated their experience with Wells Fargo stores at an all-time high based on fourth quarter survey results

 

  Small Business/Business Banking

 

  o Primary business checking customers8 up a net 4.7 percent year-over-year7

 

  o $18.9 billion in new loan commitments to small business customers (primarily with annual revenues less than $20 million) in 2013, up 18 percent from 2012

 

  o For fifth consecutive year, Wells Fargo was nation’s #1 SBA 7(a) small business lender in dollars, and for first three months of new federal fiscal year was #1 lender in dollars and units9

 

  Online and Mobile Banking

 

  o 22.9 million active online customers, up 7 percent year-over-year7

 

  o 11.9 million active mobile customers, up 27 percent year-over-year7

Consumer Lending Group

 

  Home Lending

 

  o Originations of $50 billion, compared with $80 billion in prior quarter

 

  o Applications of $65 billion, compared with $87 billion in prior quarter

 

  o Application pipeline of $25 billion at quarter end, compared with $35 billion at September 30, 2013

 

  o Residential mortgage servicing portfolio of $1.8 trillion; ratio of MSRs to related loans serviced for others was 88 basis points, compared with 82 basis points in prior quarter

 

  o Average note rate on the servicing portfolio was 4.52 percent, compared with 4.54 percent in prior quarter

 

  Consumer Credit

 

  o Credit card penetration in retail banking households rose to 37.0 percent7, up from 33.1 percent in prior year

 

  o Auto originations of $6.8 billion, down 2 percent from prior quarter and up 26 percent from prior year

 

 

7 Data as of November 2013, comparisons with November 2012.

8 Customers who actively use their checking account with transactions such as debit card purchases, online bill payments, and direct deposit.

9 U.S. SBA data, federal fiscal year 2009-2013 (year ending September) and partial fiscal year 2014.


- 10 -

 

Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $20 million. Products and business segments include Middle Market Commercial Banking, Government and Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Wells Fargo Securities, Principal Investments, Asset Backed Finance, and Asset Management.

Selected Financial Information

 

 

 
           Quarter ended    
  

 

 

 
(in millions)      Dec. 31,
2013
    Sept. 30,
2013
    Dec. 31,  
2012  
 

 

 

Total revenue

   $ 5,972        5,871        5,993   

Provision (reversal of provision) for credit losses

     (125     (144     60   

Noninterest expense

     3,020        3,084        3,007   

Segment net income

     2,111        1,973        2,032   
(in billions)                   

Average loans

     298.0        290.4        279.2   

Average assets

     512.3        500.7        489.7   

Average core deposits

     258.5        235.3        240.7   

 

 

Wholesale Banking reported net income of $2.1 billion, up $138 million, or 7 percent, from third quarter 2013. Revenue of $6.0 billion increased $101 million, or 2 percent, from the prior quarter on strong growth across many areas including asset management, commercial real estate, corporate banking and investment banking as well as seasonally higher crop insurance revenue. Noninterest expense decreased $64 million, or 2 percent, from third quarter 2013, benefiting from lower FDIC expense, partially offset by higher variable personnel expense.

Net income was up $79 million, or 4 percent, from fourth quarter 2012. Revenue decreased $21 million, or 0.4 percent, from fourth quarter 2012 as business growth and strong loan and deposit growth was more than offset by lower sales and trading, equity funds gains and other income. Noninterest expense increased $13 million from a year ago due to higher personnel expenses and support costs. The provision for credit losses decreased $185 million from a year ago due to a $152 million reduction in credit losses and $33 million of additional reserve release. The fourth quarter 2013 provision included an $83 million reserve release, compared with a $50 million release a year ago.

 

  Seven percent average loan growth in fourth quarter 2013 compared with fourth quarter 2012. The growth came from nearly all portfolios, including asset-backed finance, commercial real estate, and international

 

  Investment banking full year 2013 revenue from Wholesale Banking customers increased 22 percent from full year 2012

 

  Investment banking full year 2013 market share of 5.6 percent up from 5.0 percent for full year 2012

 

  Cross-sell of 7.1 products per relationship up from 7.0 in prior quarter

 

  Full year 2013 treasury management revenue up 8 percent from full year 2012

 

  Fourth quarter assets under management up $12 billion from prior quarter to $487 billion, reflecting net client inflows and increased market valuation


- 11 -

 

Wealth, Brokerage and Retirement provides a full range of financial advisory services to clients using a planning approach to meet each client’s needs. Wealth Management provides affluent and high net worth clients with a complete range of wealth management solutions, including financial planning, private banking, credit, investment management and fiduciary services. Abbot Downing, a Wells Fargo business, provides comprehensive wealth management services to ultra high net worth families and individuals as well as endowments and foundations. Brokerage serves customers’ advisory, brokerage and financial needs as part of one of the largest  full-service brokerage firms in the United States. Retirement is a national leader in providing institutional retirement and trust services (including 401(k) and pension plan record keeping) for businesses, retail retirement solutions for individuals, and reinsurance services  for the life insurance industry.

Selected Financial Information

 

 

 
     Quarter ended    
  

 

 

 
(in millions)    Dec. 31,
2013
    Sept. 30,
2013
    Dec. 31,  
2012  
 

 

 

Total revenue

   $ 3,438        3,307        3,094     

Provision (reversal of provision) for credit losses

     (11     (38     15     

Noninterest expense

     2,655        2,619        2,513     

Segment net income

     491        450        351     
(in billions)                   

Average loans

     48.4        46.7        43.3     

Average assets

     185.3        180.8        171.7     

Average core deposits

     153.9        150.6        143.4     

 

 

Wealth, Brokerage and Retirement reported net income of $491 million, up $41 million, or 9 percent, from third quarter 2013. Revenue of $3.4 billion increased $131 million, or 4 percent, from the prior quarter primarily driven by higher asset-based fees, as well as increases in net interest income and brokerage transaction revenue. Noninterest expense was up 1 percent over the prior quarter as increased broker commissions and other incentives, as well as higher non-personnel expenses, were mostly offset by lower FDIC expense. The provision for credit losses increased $27 million from third quarter 2013 due to reduced reserve releases. The provision in fourth and third quarters 2013 included $11 million and $38 million of reserve releases, respectively.

Net income was up $140 million, or 40 percent, from fourth quarter 2012. Revenue increased $344 million, or 11 percent, from a year ago primarily driven by strong growth in asset-based fees, as well as higher net interest income and higher gains on deferred compensation plan investments (offset in compensation expense). Noninterest expense increased $142 million, or 6 percent, from a year ago due to higher broker commissions, increased non-personnel expenses and an increase in deferred compensation plan expense (offset in trading income), partially offset by lower FDIC expense. The provision for credit losses decreased $26 million from a year ago; the provision in fourth quarter 2012 included an $8 million reserve release.

Retail Brokerage

 

  Client assets of $1.4 trillion, up 12 percent from prior year

 

  Managed account assets increased $71 billion, or 23 percent, from prior year driven by strong market performance and net flows

 

  Strong deposit growth, with average balances up 9 percent from prior year

 

  Average loan balances increased 24 percent from prior year


- 12 -

 

Wealth Management

 

  Client assets of $218 billion, up 7 percent from prior year

 

  Average loan balances up 9 percent from prior year

Retirement

 

  IRA assets of $341 billion, up 15 percent from prior year

 

  Institutional Retirement plan assets of $298 billion, up 12 percent from prior year

WBR cross-sell ratio of 10.42 products per household, up from 10.27 a year ago

Conference Call

The Company will host a live conference call on Tuesday, January 14, at 7 a.m. PDT (10 a.m. EDT). To access the call, please dial 866-872-5161 (U.S. and Canada) or 706-643-1962 (International). No password is required. The call is also available online at wellsfargo.com/invest_relations/earnings and http://us.meeting-stream.com/wellsfargobankna_011414.

A replay of the conference call will be available beginning at approximately noon PST (3 p.m. EST) on January 14 through Tuesday, January 21. Please dial 855-859-2056 (U.S. and Canada) or 404-537-3406 (International) and enter Conference ID #99204348. The replay will also be available online at wellsfargo.com/invest_relations/earnings.


- 13 -

 

Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forward-looking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “target,” “projects,” “outlook,” “forecast,” “will,” “may,” “could,” “should,” “can” and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and allowance releases; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital levels and our estimated common equity tier 1 ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets and return on equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company’s plans, objectives and strategies.

Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

 

    current and future economic and market conditions, including the effects of declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, the sovereign debt crisis and economic difficulties in Europe, and the overall slowdown in global economic growth;

 

    our capital and liquidity requirements (including under regulatory capital standards, such as the Basel III capital standards) and our ability to generate capital internally or raise capital on favorable terms;

 

    financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses, including the Dodd-Frank Act and other legislation and regulation relating to bank products and services;

 

    the extent of our success in our loan modification efforts, as well as the effects of regulatory requirements or guidance regarding loan modifications;

 

    the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties, and the credit quality of or losses on such repurchased mortgage loans;

 

    negative effects relating to our mortgage servicing and foreclosure practices, including our obligations under the settlement with the Department of Justice and other federal and state government entities, as well as changes in industry standards or practices, regulatory or judicial requirements, penalties or fines, increased servicing and other costs or obligations, including loan modification requirements, or delays or moratoriums on foreclosures;

 

    our ability to realize our efficiency ratio target as part of our expense management initiatives, including as a result of business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our businesses and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters;


- 14 -

 

    the effect of the current low interest rate environment or changes in interest rates on our net interest income, net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale;

 

    a recurrence of significant turbulence or disruption in the capital or financial markets, which could result in, among other things, reduced investor demand for mortgage loans, a reduction in the availability of funding or increased funding costs, and declines in asset values and/or recognition of other-than-temporary impairment on securities held in our available-for-sale portfolio;

 

    the effect of a fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses;

 

    reputational damage from negative publicity, protests, fines, penalties and other negative consequences from regulatory violations and legal actions;

 

    a failure in or breach of our operational or security systems or infrastructure, or those of our third party vendors or other service providers, including as a result of cyber attacks;

 

    the effect of changes in the level of checking or savings account deposits on our funding costs and net interest margin;

 

    fiscal and monetary policies of the Federal Reserve Board; and

 

    the other risk factors and uncertainties described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012.

In addition to the above factors, we also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements (including under Basel capital standards), common stock issuance requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions.

For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including the discussion under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission and available on its website at www.sec.gov.

Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.


- 15 -

 

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.5 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, and the Internet (wellsfargo.com), and has offices in more than 35 countries to support the bank’s customers who conduct business in the global economy. With more than 270,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 25 on Fortune’s 2013 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.

# # #


16

 

Wells Fargo & Company and Subsidiaries

QUARTERLY FINANCIAL DATA

TABLE OF CONTENTS

 

 

           Pages  

Summary Information

  

Summary Financial Data

     17-18   

Income

  

Consolidated Statement of Income

     19   

Consolidated Statement of Comprehensive Income

     20   

Condensed Consolidated Statement of Changes in Total Equity

     20   

Five Quarter Consolidated Statement of Income

     21   

Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis)

     22-23   

Five Quarter Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis)

     24   

Noninterest Income and Noninterest Expense

     25-26   

Balance Sheet

  

Consolidated Balance Sheet

     27-28   

Investment Securities

     29   

Loans

  

Loans

     29   

Nonperforming Assets

     30   

Loans 90 Days or More Past Due and Still Accruing

     31   

Purchased Credit-Impaired Loans

     32-34   

Pick-A-Pay Portfolio

     35   

Non-Strategic and Liquidating Loan Portfolios

     35   

Changes in Allowance for Credit Losses

     36-37   

Equity

  

Tier 1 Common Equity

     38   

Operating Segments

  

Operating Segment Results

     39-40   

Other

  

Mortgage Servicing and other related data

     41-43   

 

 


17

 

Wells Fargo & Company and Subsidiaries

SUMMARY FINANCIAL DATA

 

 
     Quarter ended     

% Change

Dec. 31, 2013 from

     Year ended         
  

 

 

    

 

 

    

 

 

    
($ in millions, except per
share amounts)
  

Dec. 31,

2013

    Sept. 30,
2013
     Dec. 31,
2012
     Sept. 30,
2013
    Dec. 31,
2012
    

Dec. 31,

2013

     Dec. 31,
2012
    

%

Change

 

 

 

For the Period

                     

Wells Fargo net income

   $ 5,610        5,578         5,090             10       $ 21,878         18,897         16 

Wells Fargo net income applicable to common stock

     5,369        5,317         4,857               11         20,889         17,999         16   

Diluted earnings per common share

     1.00        0.99         0.91               10         3.89         3.36         16   

Profitability ratios (annualized):

                     

Wells Fargo net income to average assets (ROA)

     1.47      1.53         1.46         (4)               1.51         1.41          

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)

     13.81        14.07         13.35         (2)               13.87         12.95          

Efficiency ratio (1)

     58.5        59.1         58.8         (1)        (1)         58.3         58.5          

Total revenue

   $ 20,665        20,478         21,948               (6)       $ 83,780         86,086         (3)   

Pre-tax pre-provision profit (PTPP) (2)

     8,580        8,376         9,052               (5)         34,938         35,688         (2)   

Dividends declared per common share

     0.30        0.30         0.22               36         1.15         0.88         31   

Average common shares outstanding

     5,270.3        5,295.3         5,272.4                      5,287.3         5,287.6          

Diluted average common shares outstanding

     5,358.6        5,381.7         5,338.7                      5,371.2         5,351.5          

Average loans

   $ 816,669        804,779         787,210                    $ 804,992         775,224          

Average assets

     1,509,117        1,449,610         1,387,056                      1,448,305         1,341,635          

Average core deposits (3)

     965,828        940,279         928,824                      942,120         893,937          

Average retail core deposits (4)

     679,355        670,335         646,145                      669,657         629,320          

Net interest margin

     3.26      3.38         3.56         (4)        (8)         3.39         3.76         (10)   

At Period End

                     

Investment securities

   $ 264,353        259,399         235,199               12       $ 264,353         235,199         12   

Loans

     825,799        812,325         799,574                      825,799         799,574          

Allowance for loan losses

     14,502        15,159         17,060         (4)        (15)         14,502         17,060         (15)   

Goodwill

     25,637        25,637         25,637                      25,637         25,637          

Assets

     1,527,015        1,488,055         1,422,968                      1,527,015         1,422,968          

Core deposits (3)

     980,063        947,805         945,749                      980,063         945,749          

Wells Fargo stockholders’ equity

     170,142        167,165         157,554                      170,142         157,554          

Total equity

     171,008        168,813         158,911                      171,008         158,911          

Capital ratios:

                     

Total equity to assets

     11.20      11.34         11.17         (1)               11.20         11.17          

Risk-based capital (5):

                     

Tier 1 capital

     12.33        12.11         11.75                      12.33         11.75          

Total capital

     15.44        15.09         14.63                      15.44         14.63          

Tier 1 leverage (5)

     9.60        9.76         9.47         (2)               9.60         9.47          

Tier 1 common equity (5)(6)

     10.82        10.60         10.12                      10.82         10.12          

Common shares outstanding

     5,257.2        5,273.7         5,266.3                      5,257.2         5,266.3          

Book value per common share

   $ 29.48        28.98         27.64                    $ 29.48         27.64          

Common stock price:

                     

High

     45.64        44.79         36.34               26         45.64         36.60         25   

Low

     40.07        40.79         31.25         (2)        28         34.43         27.94         23   

Period end

     45.40        41.32         34.18         10        33         45.40         34.18         33   

Team members (active, full-time equivalent)

     264,900        270,600         269,200         (2)        (2)         264,900         269,200         (2)   

 

 

 

(1) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
(2) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
(3) Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).
(4) Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits.
(5) The December 31, 2013, ratios are preliminary.
(6) See the “Five Quarter Tier 1 Common Equity Under Basel I” table for additional information.


18

 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER SUMMARY FINANCIAL DATA

 

 
     Quarter ended  
  

 

 

 
($ in millions, except per share amounts)   

Dec. 31,

2013

    Sept. 30,
2013
     June 30,
2013
     Mar. 31,
2013
     Dec. 31,
2012
 

For the Quarter

             

Wells Fargo net income

   $ 5,610        5,578         5,519         5,171         5,090   

Wells Fargo net income applicable to common stock

     5,369        5,317         5,272         4,931         4,857   

Diluted earnings per common share

     1.00        0.99         0.98         0.92         0.91   

Profitability ratios (annualized):

             

Wells Fargo net income to average assets (ROA)

     1.47       1.53         1.55         1.49         1.46   

Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE)

     13.81        14.07         14.02         13.59         13.35   

Efficiency ratio (1)

     58.5        59.1         57.3         58.3         58.8   

Total revenue

   $ 20,665        20,478         21,378         21,259         21,948   

Pre-tax pre-provision profit (PTPP) (2)

     8,580        8,376         9,123         8,859         9,052   

Dividends declared per common share

     0.30        0.30         0.30         0.25         0.22   

Average common shares outstanding

     5,270.3        5,295.3         5,304.7         5,279.0         5,272.4   

Diluted average common shares outstanding

     5,358.6        5,381.7         5,384.6         5,353.5         5,338.7   

Average loans

   $ 816,669        804,779         800,241         798,074         787,210   

Average assets

     1,509,117        1,449,610         1,429,005         1,404,334         1,387,056   

Average core deposits (3)

     965,828        940,279         936,090         925,866         928,824   

Average retail core deposits (4)

     679,355        670,335         666,043         662,913         646,145   

Net interest margin

     3.26       3.38         3.46         3.48         3.56   

At Quarter End

             

Investment securities

   $ 264,353        259,399         249,439         248,160         235,199   

Loans

     825,799        812,325         801,974         799,966         799,574   

Allowance for loan losses

     14,502        15,159         16,144         16,711         17,060   

Goodwill

     25,637        25,637         25,637         25,637         25,637   

Assets

     1,527,015        1,488,055         1,440,563         1,436,634         1,422,968   

Core deposits (3)

     980,063        947,805         941,158         939,934         945,749   

Wells Fargo stockholders’ equity

     170,142        167,165         162,421         162,086         157,554   

Total equity

     171,008        168,813         163,777         163,395         158,911   

Capital ratios:

             

Total equity to assets

     11.20       11.34         11.37         11.37         11.17   

Risk-based capital (5):

             

Tier 1 capital

     12.33        12.11         12.12         11.80         11.75   

Total capital

     15.44        15.09         15.03         14.76         14.63   

Tier 1 leverage (5)

     9.60        9.76         9.63         9.53         9.47   

Tier 1 common equity (5)(6)

     10.82        10.60         10.71         10.39         10.12   

Common shares outstanding

     5,257.2        5,273.7         5,302.2         5,288.8         5,266.3   

Book value per common share

   $ 29.48        28.98         28.26         28.27         27.64   

Common stock price:

             

High

     45.64        44.79         41.74         38.20         36.34   

Low

     40.07        40.79         36.19         34.43         31.25   

Period end

     45.40        41.32         41.27         36.99         34.18   

Team members (active, full-time equivalent)

     264,900        270,600         274,300         274,300         269,200   

 

 

 

(1) The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
(2) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
(3) Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).
(4) Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits.
(5) The December 31, 2013, ratios are preliminary.
(6) See the “Five Quarter Tier 1 Common Equity under Basel I” table for additional information.


19

 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF INCOME

 

 
     Quarter ended Dec. 31,      %             Year ended Dec. 31,      %  
  

 

 

      

 

 

    
(in millions, except per share amounts)    2013      2012      Change     2013      2012      Change  

 

 

Interest income

                

Trading assets

   $ 378        339         12    $ 1,376        1,358        

Investment securities

     2,119        1,897         12        8,116        8,098         -     

Mortgages held for sale

     221        413         (46)        1,290        1,825         (29)   

Loans held for sale

     3                      13        41         (68)   

Loans

     8,907        9,027         (1)        35,571        36,482         (2)   

Other interest income

     208        178         17        723        587         23   

 

      

 

 

    

Total interest income

     11,836        11,857                47,089        48,391         (3

 

      

 

 

    

Interest expense

                

Deposits

     297        399         (26)        1,337        1,727         (23)   

Short-term borrowings

     14        24         (42)        60        79         (24)   

Long-term debt

     635        735         (14)        2,585        3,110         (17)   

Other interest expense

     87        56         55        307        245         25   

 

      

 

 

    

Total interest expense

     1,033        1,214         (15)        4,289        5,161         (17)   

 

      

 

 

    

Net interest income

     10,803        10,643               42,800        43,230         (1)   

Provision for credit losses

     363        1,831         (80)        2,309        7,217         (68)   

 

      

 

 

    

Net interest income after provision for credit losses

     10,440        8,812         18        40,491        36,013         12   

 

      

 

 

    

Noninterest income

                

Service charges on deposit accounts

     1,283        1,250               5,023        4,683          

Trust and investment fees

     3,458        3,199               13,430        11,890         13   

Card fees

     827        736         12        3,191        2,838         12   

Other fees

     1,119        1,193         (6)        4,340        4,519         (4)   

Mortgage banking

     1,570        3,068         (49)        8,774        11,638         (25)   

Insurance

     453        395         15        1,814        1,850         (2)   

Net gains from trading activities

     325        275         18        1,623        1,707         (5)   

Net losses on debt securities

     (14)         (63)          (78)        (29)         (128)          (77)   

Net gains from equity investments

     654        715         (9)        1,472        1,485         (1)   

Lease income

     148        170         (13)        663        567         17   

Other

     39        367         (89)        679        1,807         (62)   

 

      

 

 

    

Total noninterest income

     9,862        11,305         (13)        40,980        42,856         (4)   

 

      

 

 

    

Noninterest expense

                

Salaries

     3,811        3,735               15,152        14,689          

Commission and incentive compensation

     2,347        2,365         (1)        9,951        9,504          

Employee benefits

     1,160        891         30        5,033        4,611          

Equipment

     567        542               1,984        2,068         (4)   

Net occupancy

     732        728               2,895        2,857          

Core deposit and other intangibles

     375        418         (10)        1,504        1,674         (10)   

FDIC and other deposit assessments

     196        307         (36)        961        1,356         (29)   

Other

     2,897        3,910         (26)        11,362        13,639         (17)   

 

      

 

 

    

Total noninterest expense

     12,085        12,896         (6)        48,842        50,398         (3)    

 

      

 

 

    

Income before income tax expense

     8,217        7,221         14        32,629        28,471         15   

Income tax expense

     2,504        1,924         30        10,405        9,103         14   

 

      

 

 

    

Net income before noncontrolling interests

     5,713        5,297               22,224        19,368         15   

Less: Net income from noncontrolling interests

     103        207         (50)        346        471         (27)   

 

      

 

 

    

Wells Fargo net income

   $ 5,610        5,090         10      $ 21,878        18,897         16   

 

      

 

 

    

Less: Preferred stock dividends and other

     241        233               989        898         10   

 

      

 

 

    

Wells Fargo net income applicable to common stock

   $ 5,369        4,857         11      $ 20,889        17,999         16   

 

      

 

 

    

Per share information

                

Earnings per common share

   $ 1.02        0.92         11      $ 3.95        3.40         16   

Diluted earnings per common share

     1.00        0.91         10        3.89        3.36         16   

Dividends declared per common share

     0.30        0.22         36        1.15        0.88         31   

Average common shares outstanding

     5,270.3        5,272.4               5,287.3        5,287.6           

Diluted average common shares outstanding

     5,358.6        5,338.7               5,371.2        5,351.5           

 

 


20

 

Wells Fargo & Company and Subsidiaries

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 
     Quarter ended Dec. 31,      %     Year ended Dec. 31,      %  
  

 

 

      

 

 

    
(in millions)    2013       2012      Change     2013      2012       Change  

 

 

Wells Fargo net income

   $ 5,610         5,090        10   $ 21,878        18,897         16  % 

 

      

 

 

    

Other comprehensive income (loss), before tax:

                

Investment securities:

                

Net unrealized gains (losses) arising during the period

     (1,739)         (454)         283        (7,661)         5,143         NM   

Reclassification of net (gains) losses to net income

     (88)         19         NM        (285)         (271)          

Derivatives and hedging activities:

                

Net unrealized gains (losses) arising during the period

     (22)         (11)         100        (32)         52         NM   

Reclassification of net gains on cash flow hedges to net income

     (71)         (93)         (24)        (296)         (388)         (24)   

Defined benefit plans adjustments:

                

Net actuarial gains (losses) arising during the period

     458         (757)         NM        1,533        (775)         NM   

Amortization of net actuarial loss, settlements and other costs to net income

     55         33         67        276        144         92   

Foreign currency translation adjustments:

                

Net unrealized losses arising during the period

     (17)         (5)         240        (44)         (6)         633   

Reclassification of net gains to net income

                         (12)         (10)         20   

 

      

 

 

    

Other comprehensive income (loss), before tax

     (1,424)         (1,268)         12        (6,521)         3,889         NM   

Income tax (expense) benefit related to other comprehensive income

     522         481               2,524        (1,442)         NM   

 

      

 

 

    

Other comprehensive income (loss), net of tax

     (902)         (787)         15        (3,997)         2,447         NM   

Less: Other comprehensive income (loss) from noncontrolling interests

            (2)         NM        267               NM   

 

      

 

 

    

Wells Fargo other comprehensive income (loss), net of tax

     (903)         (785)         15        (4,264)         2,443         NM   

 

      

 

 

    

Wells Fargo comprehensive income

     4,707         4,305               17,614        21,340          (17)   

Comprehensive income from noncontrolling interests

     104         205         (49)        613        475         29   

 

      

 

 

    

Total comprehensive income

     $     4,811         4,510               $      18,227        21,815          (16)   

 

 

NM - Not meaningful

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY

 

     Year ended Dec. 31,  
  

 

 

 
(in millions)    2013       2012   

 

 

Balance, beginning of period

   $ 158,911         141,687   

Cumulative effect of fair value election for certain residential mortgage servicing rights

             

 

 

Balance, beginning of period - adjusted

     158,911         141,689   

Wells Fargo net income

     21,878         18,897   

Wells Fargo other comprehensive income (loss), net of tax

     (4,264)         2,443   

Common stock issued

     2,733         2,488   

Common stock repurchased (1)

     (5,356)         (3,918)   

Preferred stock released by ESOP

     1,006         888   

Preferred stock issued

     3,145         1,377   

Common stock warrants repurchased

            (1)   

Common stock dividends

     (6,086)         (4,658)   

Preferred stock dividends and other

     (989)         (898)   

Noncontrolling interests and other, net

     30         604   

 

 

Balance, end of period

   $     171,008         158,911   

 

 

 

(1) For the year ended December 31, 2013, includes $500 million related to a private forward repurchase transaction entered into in fourth quarter 2013 that is expected to settle in first quarter 2014 for an estimated 11.3 million shares of common stock. For the year ended December 31, 2012, includes $200 million related to a private forward repurchase transaction entered into in fourth quarter 2012 that settled in first quarter 2013 for 6 million shares of common stock.


21

 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER CONSOLIDATED STATEMENT OF INCOME

 

 
     Quarter ended  
  

 

 

 
     Dec. 31,      Sept. 30,      June 30,      Mar. 31,      Dec. 31,  
(in millions, except per share amounts)    2013       2013       2013       2013       2012   

 

 

Interest income

              

Trading assets

   $ 378         331         340         327         339   

Investment securities

     2,119         2,038         2,034         1,925         1,897   

Mortgages held for sale

     221         320         378         371         413   

Loans held for sale

                                  

Loans

     8,907         8,901         8,902         8,861         9,027   

Other interest income

     208         183         169         163         178   

 

 

Total interest income

     11,836         11,776         11,827         11,650         11,857   

 

 

Interest expense

              

Deposits

     297         318         353         369         399   

Short-term borrowings

     14                17         20         24   

Long-term debt

     635         621         632         697         735   

Other interest expense

     87         80         75         65         56   

 

 

Total interest expense

     1,033         1,028         1,077         1,151         1,214   

 

 

Net interest income

     10,803         10,748         10,750         10,499         10,643   

Provision for credit losses

     363         75         652         1,219         1,831   

 

 

Net interest income after provision for credit losses

     10,440         10,673         10,098         9,280         8,812   

 

 

Noninterest income

              

Service charges on deposit accounts

     1,283         1,278         1,248         1,214         1,250   

Trust and investment fees

     3,458         3,276         3,494         3,202         3,199   

Card fees

     827         813         813         738         736   

Other fees

     1,119         1,098         1,089         1,034         1,193   

Mortgage banking

     1,570         1,608         2,802         2,794         3,068   

Insurance

     453         413         485         463         395   

Net gains from trading activities

     325         397         331         570         275   

Net gains (losses) on debt securities

     (14)          (6)          (54)          45         (63)    

Net gains from equity investments

     654         502         203         113         715   

Lease income

     148         160         225         130         170   

Other

     39         191         (8)          457         367   

 

 

Total noninterest income

     9,862         9,730         10,628         10,760         11,305   

 

 

Noninterest expense

              

Salaries

     3,811         3,910         3,768         3,663         3,735   

Commission and incentive compensation

     2,347         2,401         2,626         2,577         2,365   

Employee benefits

     1,160         1,172         1,118         1,583         891   

Equipment

     567         471         418         528         542   

Net occupancy

     732         728         716         719         728   

Core deposit and other intangibles

     375         375         377         377         418   

FDIC and other deposit assessments

     196         214         259         292         307   

Other

     2,897         2,831         2,973         2,661         3,910   

 

 

Total noninterest expense

     12,085         12,102         12,255         12,400         12,896   

 

 

Income before income tax expense

     8,217         8,301         8,471         7,640         7,221   

Income tax expense

     2,504         2,618         2,863         2,420         1,924   

 

 

Net income before noncontrolling interests

     5,713         5,683         5,608         5,220         5,297   

Less: Net income from noncontrolling interests

     103         105         89         49         207   

 

 

Wells Fargo net income

   $ 5,610         5,578         5,519         5,171         5,090   

 

 

Less: Preferred stock dividends and other

     241         261         247         240         233   

 

 

Wells Fargo net income applicable to common stock

   $ 5,369         5,317         5,272         4,931         4,857   

 

 

Per share information

              

Earnings per common share

   $ 1.02         1.00         1.00         0.93         0.92   

Diluted earnings per common share

     1.00         0.99         0.98         0.92         0.91   

Dividends declared per common share

     0.30         0.30         0.30         0.25         0.22   

Average common shares outstanding

     5,270.3         5,295.3         5,304.7         5,279.0         5,272.4   

Diluted average common shares outstanding

             5,358.6         5,381.7         5,384.6         5,353.5         5,338.7   

 

 


22

 

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)

 

 
     Quarter ended December 31,  
  

 

 

 
                         2013                               2012  
  

 

 

       

 

 

 
(in millions)    Average
balance
   

Yields/

rates

             Interest
income/
expense
           Average
balance
   

Yields/

rates

            

Interest
income/

expense

 

Earning assets

                        

Federal funds sold, securities purchased under resale agreements and other short-term investments

   $ 205,276       0.28         %         $ 148           117,047       0.41         %         $ 121  

Trading assets

     45,379       3.40           386           42,005       3.28           345  

Investment securities (3):

                        

Available-for-sale securities:

                        

Securities of U.S. Treasury and federal agencies

     6,611       1.67           27           5,281       1.64           22  

Securities of U.S. states and political subdivisions

     42,025       4.38           460           36,391       4.64           422  

Mortgage-backed securities:

                        

Federal agencies

     117,910       2.94           866           90,898       2.71           617  

Residential and commercial

     29,233       6.35           464           32,669       6.53           533  

Total mortgage-backed securities

     147,143       3.62           1,330           123,567       3.72           1,150  

Other debt and equity securities

     55,325       3.43           478           50,025       3.91           490  

Total available-for-sale securities

     251,104       3.65           2,295           215,264       3.87           2,084  

Held-to-maturity securities (4)

     2,845       3.09           22           -         -             -    

Mortgages held for sale (5)

     21,396       4.13           221           47,241       3.50           413  

Loans held for sale (5)

     138       8.21           3           135       9.03           3  

Loans:

                        

Commercial:

                        

Commercial and industrial

     193,211       3.48           1,696           179,493       3.85           1,736  

Real estate mortgage

     105,795       3.85           1,026           105,107       4.02           1,061  

Real estate construction

     16,579       4.79           200           17,502       4.97           218  

Lease financing

     11,744       5.70           167           12,461       6.43           201  

Foreign

     46,682       2.23           262           39,665       2.32           231  

Total commercial

     374,011       3.56           3,351           354,228       3.87           3,447  

Consumer:

                        

Real estate 1-4 family first mortgage

     257,253       4.15           2,673           244,634       4.39           2,686  

Real estate 1-4 family junior lien mortgage

     66,774       4.29           721           76,908       4.28           826  

Credit card

     25,854       12.23           797           23,839       12.43           745  

Automobile

     50,213       6.70           849           45,957       7.34           848  

Other revolving credit and installment

     42,564       4.94           529           41,644       4.63           485  

Total consumer

     442,658       5.01           5,569           432,982       5.15           5,590  

Total loans (5)

     816,669       4.35           8,920           787,210       4.58           9,037  

Other

     4,728       5.22           61           4,280       5.21           56  

Total earning assets

   $ 1,347,535       3.56         %         $ 12,056           1,213,182       3.96         %         $ 12,059  

Funding sources

                        

Deposits:

                        

Interest-bearing checking

   $ 35,171       0.07         %         $ 6           30,858       0.06         %         $ 5  

Market rate and other savings

     568,750       0.08           110           518,593       0.10           135  

Savings certificates

     43,067       0.94           102           56,743       1.27           181  

Other time deposits

     39,700       0.48           47           13,612       1.51           51  

Deposits in foreign offices

     86,333       0.15           32           69,398       0.15           27  

Total interest-bearing deposits

     773,021       0.15           297           689,204       0.23           399  

Short-term borrowings

     52,286       0.12           15           52,820       0.21           28  

Long-term debt

     153,470       1.65           635           127,505       2.30           735  

Other liabilities

     12,822       2.70           87           9,975       2.27           56  

Total interest-bearing liabilities

     991,599       0.42           1,034           879,504       0.55           1,218  

Portion of noninterest-bearing funding sources

     355,936       -             -             333,678       -             -    

Total funding sources

   $ 1,347,535       0.30           1,034           1,213,182       0.40           1,218  

Net interest margin and net interest income on a taxable-equivalent basis (6)

       3.26         %         $ 11,022             3.56         %         $ 10,841  

Noninterest-earning assets

                        

Cash and due from banks

   $ 15,998                   16,361          

Goodwill

     25,637                   25,637          

Other

     119,947                   131,876          

Total noninterest-earning assets

   $ 161,582                   173,874          

Noninterest-bearing funding sources

                        

Deposits

   $ 287,379                   286,924          

Other liabilities

     60,489                   63,025          

Total equity

     169,650                   157,603          

Noninterest-bearing funding sources used to fund earning assets

     (355,936                 (333,678        

Net noninterest-bearing funding sources

   $ 161,582                   173,874          

Total assets

   $ 1,509,117                   1,387,056          

 

 

 

(1) Our average prime rate was 3.25% for the quarters ended December 31, 2013 and 2012. The average three-month London Interbank Offered Rate (LIBOR) was 0.24% and 0.32% for the same quarters, respectively.
(2) Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(3) Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.
(4) Includes $6.3 billion of federal agency mortgage-backed securities purchased during the fourth quarter of 2013 and $6.0 billion of auto asset-backed securities that were transferred near the end of 2013 from the available-for-sale portfolio.
(5) Nonaccrual loans and related income are included in their respective loan categories.
(6) Includes taxable-equivalent adjustments of $219 million and $198 million for the quarters ended December 31, 2013 and 2012, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented.


23

 

Wells Fargo & Company and Subsidiaries

AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2)

 

 
     Year ended December 31,  
  

 

 

 
                         2013                               2012  
  

 

 

       

 

 

 
(in millions)    Average
balance
   

Yields/

rates

            

Interest

income/

expense

          

Average

balance

   

Yields/

rates

            

Interest

income/

expense

 

Earning assets

                        

Federal funds sold, securities purchased under resale agreements and other short-term investments

   $ 154,902       0.32               $ 489           84,081       0.45               $ 378  

Trading assets

     44,745       3.14           1,406           41,950       3.29           1,380  

Investment securities (3):

                        

Available-for-sale securities:

                        

Securities of U.S. Treasury and federal agencies

     6,750       1.66           112           3,604       1.31           47  

Securities of U.S. states and political subdivisions

     39,922       4.38           1,748           34,875       4.48           1,561  

Mortgage-backed securities:

                        

Federal agencies

     107,148       2.83           3,031           92,887       3.12           2,893  

Residential and commercial

     30,717       6.47           1,988           33,545       6.75           2,264  

Total mortgage-backed securities

     137,865       3.64           5,019           126,432       4.08           5,157  

Other debt and equity securities

     55,002       3.53           1,940           49,245       4.04           1,992  

Total available-for-sale securities

     239,539       3.68           8,819           214,156       4.09           8,757  

Held-to-maturity securities (4)

     717       3.06           22           -         -             -    

Mortgages held for sale (5)

     35,273       3.66           1,290           48,955       3.73           1,825  

Loans held for sale (5)

     163       7.95           13           661       6.22           41  

Loans:

                        

Commercial:

                        

Commercial and industrial

     188,092       3.62           6,807           173,913       4.01           6,981  

Real estate mortgage

     105,475       3.93           4,147           105,437       4.18           4,411  

Real estate construction

     16,445       4.77           784           17,963       4.98           894  

Lease financing

     12,048       6.13           738           12,771       7.22           921  

Foreign

     43,447       2.18           946           39,852       2.47           984  

Total commercial

     365,507       3.67           13,422           349,936       4.06           14,191  

Consumer:

                        

Real estate 1-4 family first mortgage

     254,000       4.22           10,716           234,619       4.55           10,671  

Real estate 1-4 family junior lien mortgage

     70,227       4.29           3,013           80,840       4.28           3,457  

Credit card

     24,747       12.46           3,083           22,772       12.67           2,885  

Automobile

     48,476       6.94           3,365           44,986       7.54           3,390  

Other revolving credit and installment

     42,035       4.80           2,019           42,071       4.57           1,923  

Total consumer

     439,485       5.05           22,196           425,288       5.25           22,326  

Total loans (5)

     804,992       4.42           35,618           775,224       4.71           36,517  

Other

     4,354       5.39           235           4,438       4.70           209  

Total earning assets

   $ 1,284,685       3.73               $ 47,892           1,169,465       4.20               $ 49,107  

Funding sources

                        

Deposits:

                        

Interest-bearing checking

   $ 35,570       0.06               $ 22           30,564       0.06               $ 19  

Market rate and other savings

     550,394       0.08           450           505,310       0.12           592  

Savings certificates

     49,510       1.13           559           59,484       1.31           782  

Other time deposits

     28,090       0.69           194           13,363       1.68           225  

Deposits in foreign offices

     76,894       0.15           112           67,920       0.16           109  

Total interest-bearing deposits

     740,458       0.18           1,337           676,641       0.26           1,727  

Short-term borrowings

     54,716       0.13           71           51,196       0.18           94  

Long-term debt

     134,937       1.92           2,585           127,547       2.44           3,110  

Other liabilities

     12,471       2.46           307           10,032       2.44           245  

Total interest-bearing liabilities

     942,582       0.46           4,300           865,416       0.60           5,176  

Portion of noninterest-bearing funding sources

     342,103       -             -             304,049       -             -    

Total funding sources

   $ 1,284,685       0.34           4,300           1,169,465       0.44           5,176  

Net interest margin and net interest income on a taxable-equivalent basis (6)

       3.39               $ 43,592             3.76               $ 43,931  

Noninterest-earning assets

                        

Cash and due from banks

   $ 16,272                   16,303          

Goodwill

     25,637                   25,417          

Other

     121,711                   130,450          

Total noninterest-earning assets

   $ 163,620                   172,170          

Noninterest-bearing funding sources

                        

Deposits

   $ 280,229                   263,863          

Other liabilities

     60,500                   61,214          

Total equity

     164,994                   151,142          

Noninterest-bearing funding sources used to fund earning assets

     (342,103                 (304,049        

Net noninterest-bearing funding sources

   $ 163,620                   172,170          

Total assets

   $ 1,448,305                   1,341,635          

 

 

 

(1) Our average prime rate was 3.25% for the year ended December 31, 2013 and 2012. The average three-month London Interbank Offered Rate (LIBOR) was 0.27% and 0.43% for the same periods, respectively.
(2) Yield/rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(3) The average balance amounts represent amortized cost for the periods presented.
(4) Includes $6.3 billion of federal agency mortgage-backed securities purchased during the fourth quarter of 2013 and $6.0 billion of auto asset-backed securities that were transferred near the end of 2013 from the available-for-sale portfolio.
(5) Nonaccrual loans and related income are included in their respective loan categories.
(6) Includes taxable-equivalent adjustments of $792 million and $701 million for the year ended December 31, 2013 and 2012, respectively, primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented.


 

24

Wells Fargo & Company and Subsidiaries

FIVE QUARTER AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)

 

 

    Quarter ended        
 

 

 

   
     Dec. 31, 2013                  

Sept. 30,

2013

                  June 30, 2013            Mar. 31, 2013                   Dec. 31, 2012        
($ in billions)  

Average

balance

    Yields/
rates
                 

Average

balance

   

Yields/

rates

                 

Average

balance

    Yields/
rates
                 

Average

balance

   

Yields/

rates

                 

Average

balance

   

Yields/

rates

        

Earning assets

                                     

Federal funds sold, securities purchased under resale agreements and other short-term investments

  $ 205.3       0.28        %       $          155.9       0.31        %       $          136.5       0.33        %       $          121.0       0.36        %       $          117.1       0.41        %   

Trading assets

    45.4       3.40           44.8       3.02           46.6       2.98           42.1       3.17           42.0       3.28    

Investment securities (2):

                                     

Available-for-sale securities:

                                     

Securities of U.S. Treasury and federal agencies

    6.6       1.67           6.6       1.69           6.7       1.73           7.1       1.56           5.3       1.64    

Securities of U.S. states and political subdivisions

    42.0       4.38           40.8       4.35           39.3       4.42           37.6       4.38           36.4       4.64    

Mortgage-backed securities:

                                     

Federal agencies

    117.9       2.94           113.0       2.83           102.0       2.79           95.4       2.74           90.9       2.71    

Residential and commercial

    29.2       6.35           30.2       6.56           31.3       6.50           32.1       6.46           32.7       6.53    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total mortgage-backed securities

    147.1       3.62           143.2       3.62           133.3       3.66           127.5       3.68           123.6       3.72    

Other debt and equity securities

    55.4       3.43           55.4       3.27           55.5       3.84           53.7       3.58           50.0       3.91    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total available-for-sale securities

    251.1       3.65           246.0       3.61           234.8       3.77           225.9       3.70           215.3       3.87    

Held-to-maturity securities

    2.8       3.09           -        -           -       -           -       -           -       -    

Mortgages held for sale

    21.4       4.13           33.2       3.86           43.4       3.48           43.3       3.42           47.2       3.50    

Loans held for sale

    0.1       8.21           0.2       7.25           0.2       7.85           0.1       8.83           0.1       9.03    

Loans:

                                     

Commercial:

                                     

Commercial and industrial

    193.2       3.48           188.4       3.58           186.1       3.69           184.5       3.73           179.5       3.85    

Real estate mortgage

    105.8       3.85           104.6       4.12           105.3       3.92           106.2       3.84           105.1       4.02    

Real estate construction

    16.6       4.79           16.2       4.43           16.4       5.02           16.6       4.84           17.5       4.97    

Lease financing

    11.7       5.70           11.7       5.29           12.3       6.66           12.4       6.78           12.4       6.43    

Foreign

    46.7       2.23           44.9       2.09           42.3       2.23           39.9       2.16           39.7       2.32    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total commercial

    374.0       3.56           365.8       3.64           362.4       3.75           359.6       3.74           354.2       3.87    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Consumer:

                                     

Real estate 1-4 family first mortgage

    257.2       4.15           254.1       4.20           252.6       4.23           252.0       4.29           244.6       4.39    

Real estate 1-4 family junior lien mortgage

    66.8       4.29           68.8       4.30           71.4       4.29           74.1       4.28           76.9       4.28    

Credit card

    25.9       12.23           25.0       12.45           24.0       12.55           24.1       12.62           23.9       12.43    

Automobile

    50.2       6.70           49.1       6.85           47.9       7.05           46.6       7.20           46.0       7.34    

Other revolving credit and installment

    42.6       4.94           42.0       4.83           41.9       4.74           41.7       4.70           41.6       4.63    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total consumer

    442.7       5.01           439.0       5.04           437.8       5.05           438.5       5.10           433.0       5.15    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total loans

    816.7       4.35           804.8       4.41           800.2       4.46           798.1       4.49           787.2       4.58    

Other

    4.7       5.22           4.3       5.62           4.2       5.55           4.3       5.19           4.3       5.21    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total earning assets

  $     1,347.5       3.56        %       $          1,289.2       3.70        %       $          1,265.9       3.80        %       $          1,234.8       3.86        %       $          1,213.2       3.96        %   

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Funding sources

                                     

Deposits:

                                     

Interest-bearing checking

  $ 35.2       0.07        %       $          34.5       0.06        %       $          40.4       0.06        %       $          32.2       0.06        %       $          30.9       0.06        %   

Market rate and other savings

    568.7       0.08           553.1       0.08           541.8       0.08           537.5       0.09           518.6       0.10    

Savings certificates

    43.1       0.94           47.3       1.08           52.6       1.23           55.2       1.22           56.7       1.27    

Other time deposits

    39.7       0.48           30.4       0.62           26.0       0.76           15.9       1.25           13.6       1.51    

Deposits in foreign offices

    86.3       0.15           81.1       0.15           68.9       0.15           71.1       0.14           69.4       0.15    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total interest-bearing deposits

    773.0       0.15           746.4       0.17           729.7       0.19           711.9       0.21           689.2       0.23    

Short-term borrowings

    52.3       0.12           53.4       0.08           57.8       0.14           55.4       0.17           52.8       0.21    

Long-term debt

    153.5       1.65           133.4       1.86           125.5       2.02           127.1       2.20           127.5       2.30    

Other liabilities

    12.8       2.70           12.1       2.64           13.3       2.25           11.6       2.24           10.0       2.27    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total interest-bearing liabilities

    991.6       0.42           945.3       0.43           926.3       0.47           906.0       0.51           879.5       0.55    

Portion of noninterest-bearing funding sources

    355.9       -           343.9       -           339.6       -           328.8       -           333.7       -    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total funding sources

  $ 1,347.5       0.30        $          1,289.2       0.32        $          1,265.9       0.34        $          1,234.8       0.38        $          1,213.2       0.40    

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

   

Net interest margin on a taxable-equivalent basis

      3.26        %            3.38        %            3.46        %            3.48        %            3.56        %   
 

 

 

         

 

 

         

 

 

         

 

 

         

 

 

   

Noninterest-earning assets

                                     

Cash and due from banks

  $ 16.0             16.4             16.2             16.5             16.4      

Goodwill

    25.6             25.6             25.6             25.6             25.6      

Other

    120.0             118.4             121.3             127.4             131.9      

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total noninterest-earnings assets

  $ 161.6             160.4             163.1             169.5             173.9      

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Noninterest-bearing funding sources

                                     

Deposits

  $ 287.4             279.2             280.0             274.2             286.9      

Other liabilities

    60.5             60.0             58.0             63.7             63.1      

Total equity

    169.6             165.1             164.7             160.4             157.6      

Noninterest-bearing funding sources used to fund earning assets

    (355.9           (343.9           (339.6           (328.8           (333.7    

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Net noninterest-bearing funding sources

  $ 161.6             160.4             163.1             169.5             173.9      

 

         

 

 

         

 

 

         

 

 

         

 

 

     

Total assets

  $ 1,509.1             1,449.6             1,429.0             1,404.3             1,387.1      

 

         

 

 

         

 

 

         

 

 

         

 

 

     

 

 

 

(1) Our average prime rate was 3.25% for quarters ended December 31, September 30, June 30 and March 31, 2013, and December 31, 2012. The average three-month London Interbank Offered Rate (LIBOR) was 0.24%, 0.26%, 0.28%, 0.29% and 0.32% for the same quarters, respectively.
(2) Yields and rates are based on interest income/expense amounts for the period, annualized based on the accrual basis for the respective accounts. The average balance amounts represent amortized cost for the periods presented.


25

 

Wells Fargo & Company and Subsidiaries

NONINTEREST INCOME

 

 
     Quarter ended Dec. 31      %     Year ended Dec. 31,      %  
  

 

 

      

 

 

    
(in millions)    2013       2012       Change      2013       2012       Change   

 

 

Service charges on deposit accounts

   $ 1,283         1,250           $ 5,023         4,683        

Trust and investment fees:

                

Brokerage advisory, commissions and other fees (1)

     2,150         1,962         10        8,395         6,386         31   

Trust and investment management (1)

     850         797               3,289         4,218         (22)   

Investment banking

     458         440               1,746         1,286         36   

 

      

 

 

    

Total trust and investment fees

     3,458         3,199               13,430         11,890         13   

 

      

 

 

    

Card fees

     827         736         12        3,191         2,838         12   

Other fees:

                

Charges and fees on loans

     379         448         (15)        1,540         1,746         (12)   

Merchant processing fees

     172         151         14        669         583         15   

Cash network fees

     122         112               493         470          

Commercial real estate brokerage commissions

     129         119               338         307         10   

Letters of credit fees

     99         107         (7)        410         441         (7)   

All other fees

     218         256         (15)        890         972         (8)   

 

      

 

 

    

Total other fees

     1,119         1,193         (6)        4,340         4,519         (4)   

 

      

 

 

    

Mortgage banking:

                

Servicing income, net

     709         250         184        1,920         1,378         39   

Net gains on mortgage loan origination/sales activities

     861         2,818         (69)        6,854         10,260         (33)   

 

      

 

 

    

Total mortgage banking

     1,570         3,068         (49)        8,774         11,638         (25)   

 

      

 

 

    

Insurance

     453         395         15        1,814         1,850         (2)   

Net gains from trading activities

     325         275         18        1,623         1,707         (5)   

Net losses on debt securities

     (14)         (63)         (78)        (29)         (128)         (77)   

Net gains from equity investments

     654         715         (9)        1,472         1,485         (1)   

Lease income

     148         170         (13)        663         567         17   

Life insurance investment income

     125         276         (55)        566         757         (25)   

All other

     (86)         91         NM        113         1,050         (89)   

 

      

 

 

    

Total

   $     9,862         11,305         (13)      $     40,980         42,856         (4)   

 

 

 

NM - Not meaningful

(1) Prior year periods have been revised to reflect all fund distribution fees as brokerage related income.

 

NONINTEREST EXPENSE

  

    

  

 

 
     Quarter ended Dec. 31,      %     Year ended Dec. 31,      %  
  

 

 

      

 

 

    
(in millions)    2013       2012       Change      2013       2012       Change   

 

 

Salaries

   $ 3,811         3,735           $ 15,152         14,689        

Commission and incentive compensation

     2,347         2,365         (1)        9,951         9,504          

Employee benefits

     1,160         891         30        5,033         4,611          

Equipment

     567         542               1,984         2,068         (4)   

Net occupancy

     732         728               2,895         2,857          

Core deposit and other intangibles

     375         418         (10)        1,504         1,674         (10)   

FDIC and other deposit assessments

     196         307         (36)        961         1,356         (29)   

Outside professional services

     754         744               2,519         2,729         (8)   

Outside data processing

     264         227         16        983         910          

Contract services

     261         235         11        935         1,011         (8)   

Travel and entertainment

     234         211         11        885         839          

Operating losses

     181         953         (81)        821         2,235         (63)   

Postage, stationery and supplies

     189         192         (2)        756         799         (5)   

Advertising and promotion

     165         142         16        610         578          

Foreclosed assets

     103         221         (53)        605         1,061         (43)   

Telecommunications

     118         122         (3)        482         500         (4)   

Insurance

     59         62         (5)        437         453         (4)   

Operating leases

     51         27         89        204         109         87   

All other

     518         774         (33)        2,125         2,415         (12)   

 

      

 

 

    

Total

   $     12,085         12,896         (6)      $     48,842         50,398         (3)   

 

 


26

 

Wells Fargo & Company and Subsidiaries

FIVE QUARTER NONINTEREST INCOME

 

 
     Quarter ended  
  

 

 

 
(in millions)   

Dec. 31,

2013 

    

Sept. 30,

2013 

    

June 30,

2013 

    

Mar. 31,

2013 

    

Dec. 31,

2012 

 

 

 

Service charges on deposit accounts

   $ 1,283         1,278         1,248         1,214         1,250   

Trust and investment fees:

              

Brokerage advisory, commissions and other fees (1)

     2,150         2,068         2,127         2,050         1,962   

Trust and investment management (1)

     850         811         829         799         797   

Investment banking

     458         397         538         353         440   

 

 

Total trust and investment fees

     3,458         3,276         3,494         3,202         3,199   

 

 

Card fees

     827         813         813         738         736   

Other fees:

              

Charges and fees on loans

     379         390         387         384         448   

Merchant processing fees

     172         169         174         154         151   

Cash network fees

     122         129         125         117         112   

Commercial real estate brokerage commissions

     129         91         73         45         119   

Letters of credit fees

     99         100         102         109         107   

All other fees

     218         219         228         225         256   

 

 

Total other fees

     1,119         1,098         1,089         1,034         1,193   

 

 

Mortgage banking:

              

Servicing income, net

     709         504         393         314         250   

Net gains on mortgage loan origination/sales activities

     861         1,104         2,409         2,480         2,818   

 

 

Total mortgage banking

     1,570         1,608         2,802         2,794         3,068