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Wells Fargo & Company Annual Report 2005
How Do We Picture the
Next Stage of Success?

Table of contents

  • Page 1
    How Do We Picture the Next Stage of Success? Wells Fargo & Company Annual Report 2005

  • Page 2
    ... * Publicly traded companies that increased dividends for last 10+ consecutive years; Wells Fargo has increased dividends for 18 consecutive years, 23 increases since 1988. Our Earnings Diversity Community Banking ...34% Home Mortgage/Home Equity ...20% Investments & Insurance ...15% Specialized...

  • Page 3
    How Do We Picture the Next Stage of Success? Our vision-as it has been for 20 years-is to satisfy all our customers'financial needs and help them succeed financially. A vision by itself, however, is not enough.You must have a plan to achieve that vision and a time-tested business model that can ...

  • Page 4
    (l to r): Karen Johnson-Norman, Commercial Real Estate Group, Washington, DC; Christian Chan, Wells Fargo Funds, San Francisco, California; Edgar Ramirez, Payment Operations, Irving,Texas; Dick Kovacevich, Chairman and CEO; Amy McSpadden, Wells Fargo Financial, Alpharetta, Georgia 2

  • Page 5
    To Our Owners, This year's outstanding results prove it once again.We have the most talented, professional, caring, committed, ethical, "customer first"team in all of financial services. Guided by our vision, values, our time-tested business model, our diversity of businesses and our conservative ...

  • Page 6
    ... for sale Loans Allowance for loan losses Goodwill Assets Core deposits 2 Stockholders' equity Tier 1 capital Total capital Capital ratios Stockholders' equity to assets Risk-based capital Tier 1 capital Total capital Tier 1 leverage Book value per common share Team members (active, full-time...

  • Page 7
    ...highest possible credit rating, "Aaa." • Community Banking achieved record profit of $5.53 billion, up 13 percent with revenue increasing nine percent. • In consumer banking, we sold almost 16 million products (or "solutions")-checking, savings, debit cards, loans, etc.- to our customers, up 15...

  • Page 8
    ... company, Norwest Corporation, it would have been worth $435,000 at year-end 2005 with dividends reinvested. • Our total managed and administered assets rose 6 percent to $880 billion. The new Wells Fargo Advantage FundsSM - the result of the merger of Wells Fargo Funds® and Strong Funds...

  • Page 9
    ...rewards, discounts, competitive money market rates, bonus interest rates on linked savings accounts and CDs, no monthly service fees on linked accounts, a Wells Fargo Visa® Credit Card with waived fee for the Retention Rewards® program, no annual fees on select line of credit accounts, free checks...

  • Page 10
    ... how to build high-performing teams.They all own the customer experience-together." • Des Moines, Iowa Later in 2006 Wells Fargo Financial is scheduled to complete a 360,000 square foot, nine-story building for 1,500 team members, connected via skyway to its downtown headquarters; • Minneapolis...

  • Page 11
    ... of its day, this law encouraged the free ï¬,ow of capital and labor across state lines in an increasingly mobile society. It created the federal Office of the Comptroller of the Currency and gave it exclusive powers to examine national banks such as today's Wells Fargo Bank, N.A. States could...

  • Page 12
    ... seem to account for risk. Credit quality can't get much better. The yield curve-the difference between short-term and long-term interest rates-is likely to be ï¬,at, even inverted. Banking competitors are, once again, relaxing loan terms while not fully pricing for this risk. However, Wells Fargo...

  • Page 13
    ... teams intend to partner to grow market share and earn all of their customers' business.As you can see on the following pages, they're unanimous on one key point-people as a competitive advantage. (l to r): Howard Atkins, Senior EVP, Chief Financial Officer; Dave Hoyt, Senior EVP, Wholesale Banking...

  • Page 14
    ... we know, so they can learn how to save time and money. If we think like a customer and focus our team on serving customers, then everyone benefits." (l to r): Patti Hoversen,Technology Information Group, Minneapolis, Minnesota; Lori LoCascio, Wells Fargo Phone Bank, Lubbock,Texas; John Stumpf 12

  • Page 15
    ... new Desktop DepositSM service lets customers make deposits electronically from their own office, no more hauling paper to our banking stores." Team members: 15,000 Customers: 78,000 Locations: 600 Products per customer: 5.7 (l to r): Dave Hoyt; Patti Rosenthal, Wholesale Services, San Francisco...

  • Page 16
    ...It's how well we manage interest-rate risk, credit risk, operations risk and compliance risk that makes the difference." Team members: 52,000 Customers: 12.3 million Stores: 2,388 (l to r): Mark Oman; Phil Hall, Home and Consumer Finance, Des Moines, Iowa; Michael Levine, Wells Fargo Home Mortgage...

  • Page 17
    ... in the industry." Team members: 1,200 Finance, Corporate Development, Investor Relations, Treasury, Corporate Properties, Investment Portfolio, Controllers (l to r): Howard Atkins; Nancy Lee, Investor Relations, San Francisco, California; Cindy Garcia, Corporate Properties, Phoenix, Arizona 15

  • Page 18
    ... percent of our customers' business by partnering with other teams, such as Home Mortgage, Private Client Services and Wells Fargo Financial. Our customers are at the center of everything we do. Our team is our competitive advantage." Team members: 51,000 Households: 10.3 million Stores: 3,120 (92...

  • Page 19
    ... and a mortgage, insurance is a core Wells Fargo product: when customers buy it from us they're more likely to buy more products from us.That's why we're a full-service provider of insurance solutions through our insurance agencies, banking stores, phone, mail and internet. We're the world's fifth...

  • Page 20
    ... and 150 locations nationwide. Our team members do everything from making loans and leases to investing in securities and providing capital markets advice.Our customers range from tribal governments and local school districts to real estate developers and Fortune 1000 companies. Our picture of...

  • Page 21
    ... mutual fund company (l to r): Mike Niedermeyer; Tom Hooley, Institutional Trust, Minneapolis, Minnesota; James Alexander, Institutional Brokerage and Sales, Chicago, Illinois Team members: 1,100 Customers: 1,200 Among top U.S. asset-based lenders (l to r): Peter Schwab; Eileen Quinn, Wells Fargo...

  • Page 22
    ... and construction loans-to help our customers build communities that provide people with housing, offices, factories, warehouses, schools, stores, shopping, recreation, lodging and jobs." Team members: 5,000 Customers: 2,300 Includes Foreign Exchange,Treasury Management,Wells Fargo HSBC Trade Bank...

  • Page 23
    ... and from the heart." Team members: 28,000 Customers: 5.7 million #1 U.S. retail mortgage originator #2 U.S. mortgage servicer (l to r): Christiaan Lidstrom, Wells Fargo Home Mortgage, Des Moines, Iowa; Cara Heiden; Patrick Carey, Wells Fargo Home Mortgage, Fort Mill, South Carolina; Mike Heid 21

  • Page 24
    ..., mortgage stores,Wells Fargo Financial, wellsfargo.com, direct mail, telesales, Wells Fargo Phone Bank centers, brokers and correspondents. We listen to and educate customers.We guide them to the home equity and personal credit solutions that help them succeed financially with smart management of...

  • Page 25
    ... partners.We succeed when, during our time as owners, the investors and our management partners create an even better company." Invests in management buyouts, recapitalizations, and growth financing for middle-market companies; one of oldest private equity firms in U.S. Early stage investments...

  • Page 26
    ...line because the two are related. A report on our achievements in corporate citizenship for 2005 is available at www.wellsfargo.com/about/csr. St. Paul, Minnesota Once a polluted industrial site, these 200 acres now are home to indigenous plants and animals. Duane Ostlund, Business Banking Manager...

  • Page 27
    ..., new homes, retailers and jobs. Wells Fargo team members Duane Ostlund (opposite page) and Judy Chapman serve on the Phalen Corridor Steering Committee. Thanks to their leadership, hundreds of hours volunteered by more than 30 other team members, and thousands of dollars in corporate contributions...

  • Page 28
    ... Habitat for Humanity to help make the dream of homeownership a reality for low-income families.The Foundation, through grants and the volunteerism of Wells Fargo team members, has helped build or renovate more than 1,900 homes. Oklahoma City, Oklahoma As the nation's #1 retail mortgage originator...

  • Page 29
    ... about careers in banking visit a Wells Fargo store in Colorado Springs, Colorado to see a typical day in the banking world up close. More importantly, they learn about teamwork and how math, problem solving and communication skills are used each day on the job. Wells Fargo has partnered with Junior...

  • Page 30
    ... their interests and time.They use it to find projects and recruit colleagues for beach clean ups, Habitat for Humanity house builds, fun runs, and tutoring projects, and to record their volunteer hours or board membership activities. Team members in Portland, Oregon use VolunteerWellsFargo! to...

  • Page 31
    ... a Wells Fargo account. • We increased the daily spending limit for our ATM and Check Card customers in affected areas of those states. • Our affected small business customers could get emergency increases in their credit lines, bridge loans, term loans, credit protection, deferred loan payments...

  • Page 32
    ... donations and provide disaster relief services. Seattle,Washington - Two years of board participation and $25,000 in financial support. Wells Fargo donated a 9,000 square foot former banking store to Domestic Abuse Women's Network for its office space.Team member Jennifer Politakis serves as...

  • Page 33
    ... Banking * Senior Executive Vice Presidents Howard I. Atkins, Chief Financial Officer * David A. Hoyt, Wholesale Banking * Mark C. Oman, Home and Consumer Finance * * "Executive officers" according to Securities and Exchange Commission rules Kevin McCabe, Chief Auditor Avid Modjtabai, Human...

  • Page 34
    ..., San Francisco Metro Richard Strutz, Alaska Robert D.Worth, California Business Banking Patrick G.Yalung, Washington State Kim M.Young, Orange County Gerrit van Huisstede, Arizona, Nevada, New Mexico Kirk V. Clausen, Nevada Gregory A. Winegardner, New Mexico Private Client Services/ Internet...

  • Page 35
    ... Risk Mortgage Banking Interest Rate Risk Market Risk - Trading Activities Market Risk - Equity Markets Liquidity and Funding Capital Management Comparison of 2004 with 2003 Controls and Procedures 58 58 58 59 Disclosure Controls and Procedures Internal Control over Financial Reporting Management...

  • Page 36
    ... and commercial business line achieving double-digit profit growth, including regional banking, private client services, corporate trust, business direct, asset-based lending, student lending, consumer credit, commercial real estate and international trade services. Both net interest income and...

  • Page 37
    ... type. We manage the interest rate and market risks inherent in our asset and liability balances within prudent ranges, while ensuring adequate liquidity and funding. Our stockholder value has increased over time due to customer satisfaction, strong financial results, investment in our businesses...

  • Page 38
    ... to assets Risk-based capital (2) Tier 1 capital Total capital Tier 1 leverage (2) Average balances: Stockholders' equity to assets PER COMMON SHARE DATA Dividend payout (3) Book value Market price (4) High Low Year end 1.72% 19.57 19.59 57.7 1.71% 19.56 19.57 58.5 1.64% 19.36 19.34 60.6 8.44...

  • Page 39
    ... common share Dividends declared per common share BALANCE SHEET (at year end) Securities available for sale Loans Allowance for loan losses Goodwill Assets Core deposits (2) Long-term debt Guaranteed preferred beneficial interests in Company's subordinated debentures (3) Stockholders' equity $ 18...

  • Page 40
    ... of mortgage servicing rights and pension accounting. Management has reviewed and approved these critical accounting policies and has discussed these policies with the Audit and Examination Committee. The remaining allocated allowance is for commercial loans, commercial real estate loans and lease...

  • Page 41
    ...). Conversely, as interest rates increase, the value of the MSRs increases, while fees from origination volume tend to decline. Servicing income - net of amortization, provision for impairment and net derivative gains and losses - is recorded in mortgage banking noninterest income. We use a dynamic...

  • Page 42
    ... of return, holding the discount rate and other actuarial assumptions constant, pension expense would decrease/increase by approximately $50 million. DISCOUNT RATE Pension expense is directly related to the number of employees covered by the plans, and other factors including salary, age and years...

  • Page 43
    ... which includes ARMs - increased from 5.19% on an average balance of $89.4 billion in second quarter 2004 to 6.75% on an average balance of $76.2 billion in fourth quarter 2005. At year-end 2005, yields on new ARMs being held for investment within real estate 1-4 family mortgage loans were more than...

  • Page 44
    ...card Other revolving credit and installment Total consumer Foreign Total loans (5) Other Total earning assets FUNDING SOURCES Deposits: Interest-bearing checking Market rate and other savings Savings certificates Other time deposits Deposits in foreign offices Total interest-bearing deposits Short...

  • Page 45
    ... balances were reï¬,ected in long-term debt. See Note 12 (Long-Term Debt) to Financial Statements for more information. (7) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for all years presented...

  • Page 46
    ...investment accounts from Strong Financial Corporation (Strong Financial). When the Wells Fargo Funds® and certain Strong Financial funds merged in April 2005, we renamed our mutual fund family the Wells Fargo Advantage FundsSM. Generally, trust, investment and IRA fees are based on the market value...

  • Page 47
    ... to increased mortgage production and continued investments in new stores and additional sales-related team members. Noninterest expense in 2005 included a $117 million expense to adjust the estimated lives for certain depreciable assets, primarily building improvements, $62 million of airline lease...

  • Page 48
    ... estate loans increased $12.0 billion, or 13%, in 2005 compared with a year ago. Average mortgages held for sale increased $6.7 billion, or 21%, to $39.0 billion in Noninterest-bearing Interest-bearing checking Market rate and other savings Savings certificates Core deposits Other time deposits...

  • Page 49
    ... (Loans and Allowance for Credit Losses) and Note 24 (Guarantees) to Financial Statements. In our venture capital and capital markets businesses, we commit to fund equity investments directly to investment funds and to specific private companies. The timing of future cash requirements to fund these...

  • Page 50
    ... to be reported under FAS 57 for the years ended December 31, 2005, 2004 and 2003. (1) Represents interest-bearing and noninterest-bearing checking, market rate and other savings accounts. (2) Includes capital leases of $14 million. (3) Represents agreements to purchase goods or services. 48

  • Page 51
    ... corporate data integrity standards to ensure accurate and complete credit performance reporting. We strive to identify problem loans early and have dedicated, specialized collection and work-out units. The Chief Credit Officer, who reports directly to the Chief Executive Officer, provides company...

  • Page 52
    ...or principal and still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1-4 family first mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual. The total of loans 90 days or more past due and still accruing...

  • Page 53
    ... conforming Wells Fargo Financial to FFIEC charge-off rules. A portion of these bankruptcy charge-offs represent an acceleration of charge-offs that would have likely occurred in 2006. The increase in consumer bankruptcies primarily impacted our credit card, unsecured consumer loans and lines, auto...

  • Page 54
    ... rates paid on checking and savings deposit accounts by an amount that is less than the general decline in market interest rates); • short-term and long-term market interest rates may change by different amounts (for example, the shape of the yield curve may affect new loan yields and funding...

  • Page 55
    ... these derivative loan commitments are recognized at fair value on the consolidated balance sheet with changes in their fair values recorded as part of income from mortgage banking operations. Consistent with EITF 02-3, Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes...

  • Page 56
    ... offset the changes in fair value of the derivative loan commitments. MARKET RISK - TRADING ACTIVITIES From a market risk perspective, our net income is exposed to changes in interest rates, credit spreads, foreign exchange rates, equity and commodity prices and their implied volatilities. The...

  • Page 57
    ...ratings of the Company and Wells Fargo Bank, N.A. as of December 31, 2005. Table 12: Credit Ratings Wells Fargo & Company Wells Fargo Bank, N.A. Senior Subordinated Commercial Long-term Short-term debt debt paper deposits borrowings Moody's Standard & Poor's Fitch, Inc. Dominion Bond Rating Service...

  • Page 58
    ... arrangement, WFFI pledged auto loans as security for the borrowing. WELLS FARGO FINANCIAL. Capital Management We have an active program for managing stockholder capital. We use capital to fund organic growth, acquire banks and other financial services companies, pay dividends and repurchase our...

  • Page 59
    ... 2004, compared with $12.4 billion in 2003, an increase of 4%, driven by growth across our business, with particular strength in trust, investment and IRA fees, card fees, loan fees and gains on equity investments. Mortgage banking noninterest income was $1,860 million in 2004, compared with $2,512...

  • Page 60
    ... officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2005. Internal Control over Financial Reporting Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process...

  • Page 61
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2005 and 2004, and the related consolidated statements of income, changes in stockholders' equity and comprehensive income, and cash ï¬,ows for each of the years in the...

  • Page 62
    ... NONINTEREST INCOME Service charges on deposit accounts Trust and investment fees Card fees Other fees Mortgage banking Operating leases Insurance Net gains (losses) on debt securities available for sale Net gains from equity investments Other Total noninterest income NONINTEREST EXPENSE Salaries...

  • Page 63
    Wells Fargo & Company and Subsidiaries Consolidated Balance Sheet (in millions, except shares) 2005 December 31, 2004 ASSETS Cash and due from banks Federal funds sold, securities purchased under resale agreements and other short-term investments Trading assets Securities available for sale ...

  • Page 64
    Wells Fargo & Company and Subsidiaries Consolidated Statement of Changes in Stockholders' Equity and Comprehensive Income (in millions, except shares) Number of common shares 1,685,906,507 Preferred stock Common stock Additional paid-in capital $ 9,498 Retained earnings Cumulative other ...

  • Page 65
    ... sales of foreclosed assets Net increase in federal funds sold, securities purchased under resale agreements and other short-term investments Net increase in mortgage servicing rights Other, net Net cash used by investing activities Cash ï¬,ows from financing activities: Net increase in deposits...

  • Page 66
    Notes to Financial Statements Note 1: Summary of Significant Accounting Policies Wells Fargo & Company is a diversified financial services company. We provide banking, insurance, investments, mortgage banking and consumer finance through banking stores, the internet and other distribution ...

  • Page 67
    ... the lease terms. Loan commitment fees are generally deferred and amortized into noninterest income on a straight-line basis over the commitment period. From time to time, we pledge loans, primarily 1-4 family mortgage loans, to secure borrowings from the Federal Home Loan Bank. NONACCRUAL LOANS We...

  • Page 68
    ...rate increases. We recognize a direct write-down when we determine that the recoverability of a recorded valuation allowance is remote. A direct write-down permanently reduces the carrying value of the MSRs, while a valuation allowance (temporary impairment) can be reversed. Transfers and Servicing...

  • Page 69
    ... (as defined in FAS 87) in net periodic pension calculations over the next five years. We use a discount rate to determine the present value of our future benefit obligations. The discount rate reï¬,ects the rates available at the measurement date on long-term high-quality fixed-income debt...

  • Page 70
    ... earnings per common share by dividing net income (after deducting dividends on preferred stock) by the average number of common shares outstanding during the year, plus the effect of common stock equivalents (for example, stock options, restricted share rights and convertible debentures) that are...

  • Page 71
    ... until a definitive agreement has been signed. Effective December 31, 2004, we completed the acquisition of $29 billion in assets under management, consisting of $24 billion in mutual fund assets and $5 billion in institutional investment accounts, from Strong Financial Corporation. Other business...

  • Page 72
    ... subject to various federal and state regulatory limitations. Dividends that may be paid by a national bank without the express approval of the Office of the Comptroller of the Currency (OCC) are limited to that bank's retained net profits for the preceding two calendar years plus retained net pro...

  • Page 73
    ... Fair value December 31, 2005 Securities of U.S. Treasury and federal agencies Securities of U.S. states and political subdivisions Mortgage-backed securities: Federal agencies Private collateralized mortgage obligations Total mortgage-backed securities Other Total debt securities Marketable equity...

  • Page 74
    ...one year Amount Yield Securities of U.S. Treasury and federal agencies Securities of U.S. states and political subdivisions Mortgage-backed securities: Federal agencies Private collateralized mortgage obligations Total mortgage-backed securities Other Total debt securities at fair value (1) $ 839...

  • Page 75
    ... variable-rate mortgage products with fixed payment amounts, commonly referred to within the financial services industry as negative amortizing mortgage loans. December 31, 2001 Commercial and commercial real estate: Commercial Other real estate mortgage Real estate construction Lease financing...

  • Page 76
    ... models to capture recent behavioral characteristics of the portfolios, as well as changes in our loss mitigation or marketing strategies. The remaining allocated allowance is for commercial loans, commercial real estate loans and lease financing. We initially estimate this portion of the allocated...

  • Page 77
    ... credit losses Loan charge-offs: Commercial and commercial real estate: Commercial Other real estate mortgage Real estate construction Lease financing Total commercial and commercial real estate Consumer: Real estate 1-4 family first mortgage Real estate 1-4 family junior lien mortgage Credit card...

  • Page 78
    ...in advances pursuant to our servicing agreements to the Government National Mortgage Association mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veteran Affairs. The recorded investment in impaired loans and the methodology used to...

  • Page 79
    ... bank stock, were accounted for at cost. Income related to nonmarketable equity investments was: (in millions) Year ended December 31, 2005 2004 2003 Year ended December 31, 2006 2007 2008 2009 2010 Thereafter Total minimum lease payments Executory costs Amounts representing interest Present value...

  • Page 80
    ... servicing portfolio, mortgage interest rates and market conditions. We based the projections of amortization expense for core deposit intangibles shown above on existing asset balances at December 31, 2005. Future amortization expense may vary based on additional core deposit intangibles acquired...

  • Page 81
    ... as allocated to our operating segments for goodwill impairment analysis were: (in millions) Community Banking Wholesale Banking Wells Fargo Financial Consolidated Company December 31, 2003 Goodwill from business combinations Foreign currency translation adjustments December 31, 2004 Reduction in...

  • Page 82
    ... Total Year ended December 31, Average daily balance Commercial paper and other short-term borrowings Federal funds purchased and securities sold under agreements to repurchase Total Maximum month-end balance Commercial paper and other short-term borrowings (1) Federal funds purchased and securities...

  • Page 83
    ... Fixed-Rate Notes (1)(5) Total junior subordinated debt - Parent Total long-term debt - Parent Wells Fargo Bank, N.A. and its subsidiaries (WFB, N.A.) Senior Fixed-Rate Notes (1) Floating-Rate Notes Floating-Rate Federal Home Loan Bank (FHLB) Advances (6) FHLB Notes and Advances Equity-Linked Notes...

  • Page 84
    ... and short-term borrowing arrangements, we are subject to various financial and operational covenants. Some of the agreements under which debt has been issued have provisions that may limit the merger or sale of certain subsidiary banks and the issuance of capital stock or convertible securities by...

  • Page 85
    ... redeemed. We have the option to redeem the ESOP Preferred Stock at any time, in whole or in part, at a redemption price per share equal to the higher of (a) $1,000 per share plus accrued and unpaid dividends or (b) the fair market value, as defined in the Certificates of Designation for the ESOP...

  • Page 86
    ... deferral plans. Dividend Reinvestment and Common Stock Purchase Plans Participants in our dividend reinvestment and common stock direct purchase plans may purchase shares of our common stock at fair market value by reinvesting dividends and/or making optional cash payments, under the plan's terms...

  • Page 87
    ...estimated using a BlackScholes option-pricing model and the weighted-average assumptions used. 2005 Per share fair value of options granted: Director Plans Long-Term Incentive Plans Expected life (years) Expected volatility Risk-free interest rate Expected annual dividend yield 2004 2003 $6.27 7.50...

  • Page 88
    ....35 46.50 50.50 EMPLOYEE STOCK OWNERSHIP PLAN Under the Wells Fargo & Company 401(k) Plan (the 401(k) Plan), a defined contribution ESOP, the 401(k) Plan may borrow money to purchase our common or preferred stock. Since 1994, we have loaned money to the 401(k) Plan to purchase shares of our ESOP...

  • Page 89
    ...). Under the Cash Balance Plan, eligible employees' Cash Balance Plan accounts are allocated a compensation credit based on a percentage of their certified compensation. The compensation credit percentage is based on age and years of credited service. In addition, investment credits are allocated...

  • Page 90
    ...benefit obligations of the pension plans and their funded status. We target the Cash Balance Plan's asset allocation for a target mix range of 40-70% equities, 20-50% fixed income, and approximately 10% in real estate, venture capital, private equity and other investments. The target ranges employ...

  • Page 91
    ... plan assets Pension plan assets 2005 Other benefit plan assets Equity securities Debt securities Real estate Other Total 69% 27 3 1 100% 58% 40 1 1 100% 63% 33 3 1 100% 51% 46 1 2 100% This table reconciles the funded status of the plans to the amounts included in the Consolidated Balance...

  • Page 92
    ...investment strategies. Members of the EBRC formally review the investment risk and performance of the postretirement plans on a quarterly basis. Future benefits, reï¬,ecting expected future service that we expect to pay under the pension and other benefit plans, were: (in millions) Qualified Year...

  • Page 93
    ... Tax Liabilities Core deposit intangibles Leasing Mark to market Mortgage servicing FAS 115 adjustment FAS 133 adjustment Other Total deferred ...income in prior years, future reversals of existing taxable temporary differences, and, to a lesser extent, future taxable income and tax planning strategies...

  • Page 94
    ... 2003, options to purchase 4.9 million, 3.3 million and 4.4 million shares, respectively, were outstanding but not included in the calculation of earnings per common share because the exercise price was higher than the market price, and therefore they were antidilutive. Year ended December 31, 2003...

  • Page 95
    ... (in millions) Before tax Translation adjustments Securities available for sale and other retained interests: Net unrealized gains (losses) arising during the year Reclassification of gains included in net income Net unrealized losses arising during the year Derivatives and hedging activities: Net...

  • Page 96
    ..., online/electronic products such as the Commercial Electronic Office® (CEO® ) portal, insurance brokerage services and investment banking services. Wholesale Banking manages and administers institutional investments, employee benefit trusts and mutual funds, including the Wells Fargo Advantage...

  • Page 97
    ...balances in billions) Community Banking Wholesale Banking Wells Fargo Financial Other (2) Consolidated Company 2005 Net interest income (1) Provision for credit losses Noninterest income Noninterest expense Income before income tax expense Income tax expense Net income 2004 Net interest income...

  • Page 98
    ... secondary market home mortgage loans and, from time to time, other financial assets, including student loans, commercial mortgage loans, home equity loans, auto receivables and securities. We typically retain the servicing rights and may retain other beneficial interests from these sales. Through...

  • Page 99
    ...) Total loans (1) 2005 2004 Commercial and commercial real estate: Commercial Other real estate mortgage Real estate construction Lease financing Total commercial and commercial real estate Consumer: Real estate 1-4 family first mortgage Real estate 1-4 family junior lien mortgage Credit card Other...

  • Page 100
    ... and servicing. The components of mortgage banking noninterest income were: (in millions) 2005 Year ended December 31, 2004 2003 The changes in mortgage servicing rights were: (in millions) Mortgage servicing rights: Balance, beginning of year Originations (1) Purchases (1) Amortization Write-down...

  • Page 101
    ... entities managed by WFFI that are included within other consolidating subsidiaries in the following tables. Year ended December 31, 2005 Dividends from subsidiaries: Bank Nonbank Interest income from loans Interest income from subsidiaries Other interest income Total interest income Deposits Short...

  • Page 102
    ... of Income (in millions) Parent WFFI Other consolidating subsidiaries Eliminations Consolidated Company Year ended December 31, 2004 Dividends from subsidiaries: Bank Nonbank Interest income from loans Interest income from subsidiaries Other interest income Total interest income Deposits Short-term...

  • Page 103
    ...: Subsidiary banks Nonaffiliates Securities available for sale Mortgages and loans held for sale Loans Loans to subsidiaries: Bank Nonbank Allowance for loan losses Net loans Investments in subsidiaries: Bank Nonbank Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Short-term...

  • Page 104
    ... Cash flows from investing activities: Securities available for sale: Sales proceeds Prepayments and maturities Purchases Net cash acquired from acquisitions Increase in banking subsidiaries' loan originations, net of collections Proceeds from sales (including participations) of loans by banking...

  • Page 105
    ...Year ended December 31, 2004 Cash flows from operating activities: Net cash provided by operating activities Cash flows from investing activities: Securities available for sale: Sales proceeds Prepayments and maturities Purchases Net cash paid for acquisitions Increase in banking subsidiaries' loan...

  • Page 106
    ...Year ended December 31, 2003 Cash flows from operating activities: Net cash provided by operating activities Cash flows from investing activities: Securities available for sale: Sales proceeds Prepayments and maturities Purchases Net cash paid for acquisitions Increase in banking subsidiaries' loan...

  • Page 107
    ... liability under these agreements is not determinable. We write options, ï¬,oors and caps. Options are exercisable based on favorable market conditions. Periodic settlements occur on ï¬,oors and caps based on market conditions. The fair value of the written options liability in our balance sheet was...

  • Page 108
    ... taxes, on securities available for sale). Tier 2 capital includes preferred stock not qualifying as Tier 1 capital, subordinated debt, the allowance for credit losses and net unrealized gains on marketable equity securities, subject to limitations by the guidelines. Tier 2 capital is limited to the...

  • Page 109
    ... of shareholders' equity, as specified by various agencies, including the United States Department of Housing and Urban Development, Government National Mortgage Association, Federal Home Loan Mortgage Corporation and Federal National Mortgage Association. At December 31, 2005, Wells Fargo Bank...

  • Page 110
    ... of one year for hedges converting ï¬,oating-rate loans to fixed rates, 10 years for hedges of ï¬,oating-rate senior debt and one year for hedges of forecasted sales of mortgage loans. The following table provides derivative gains and losses related to fair value and cash ï¬,ow hedges resulting...

  • Page 111
    ... and caps purchased Floors and caps written Options purchased Options written Forwards Equity contracts: Options purchased Options written Forwards Foreign exchange contracts: Swaps Forwards CUSTOMER ACCOMMODATIONS AND TRADING Interest rate contracts: Swaps Futures Floors and caps purchased Floors...

  • Page 112
    ... value of loans held for sale is based on what secondary markets are currently offering for portfolios with similar characteristics. LOANS Financial Assets SHORT-TERM FINANCIAL ASSETS Short-term financial assets include cash and due from banks, federal funds sold and securities purchased under...

  • Page 113
    ... discounted using rates currently offered for new notes with similar remaining maturities. (in millions) Carrying amount 2005 Estimated fair value Carrying amount FINANCIAL ASSETS Mortgages held for sale Loans held for sale Loans, net Nonmarketable equity investments FINANCIAL LIABILITIES Deposits...

  • Page 114
    ... Registered Public Accounting Firm The Board of Directors and Stockholders Wells Fargo & Company: We have audited the accompanying consolidated balance sheet of Wells Fargo & Company and Subsidiaries ("the Company") as of December 31, 2005 and 2004, and the related consolidated statements of income...

  • Page 115
    ... NONINTEREST INCOME Service charges on deposit accounts Trust and investment fees Card fees Other fees Mortgage banking Operating leases Insurance Net gains (losses) on debt securities available for sale Net gains from equity investments Other Total noninterest income NONINTEREST EXPENSE Salaries...

  • Page 116
    ...card Other revolving credit and installment Total consumer Foreign Total loans (5) Other Total earning assets FUNDING SOURCES Deposits: Interest-bearing checking Market rate and other savings Savings certificates Other time deposits Deposits in foreign offices Total interest-bearing deposits Short...

  • Page 117
    ...parent company accounts for the subsidiary's operations only to the extent that the subsidiary declares dividends. Generally used if investment ownership is less than 20%. Derivatives: Financial contracts whose value is derived from publicly traded securities, interest rates, currency exchange rates...

  • Page 118
    ... cash payments or automatic monthly deductions from a bank account.You can also have your dividends reinvested automatically. It's a convenient, economical way to increase your Wells Fargo investment. Call 1-877-840-0492 for an enrollment kit including a plan prospectus. Form 10-K We will send...

  • Page 119
    ... Solutions (Sales) Per Banker* Per Day * platform full-time equivalent (FTE) team member Products Per Banking Household Commercial/Corporate Products Per Banking Customer Retail Banking Households with Credit Cards Retail Checking Households with Debit Cards Managing Risk The higher a company...

  • Page 120
    ... todas las necesidades financieras de nuestros clientes y ayudarlos a tener éxito en el área financiera. NOTRE VISION: Satisfaire tous les besoins financiers de nos clients et les aider à atteindre le succès financier. Wells Fargo & Company 420 Montgomery Street San Francisco, California...