Wells Fargo 2006 Annual Report Download - page 5

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Long-Term Results
Although 2006 was another very successful year, it certainly
wasn’t the first. As shown in the chart above, we’ve been
achieving annual, double-digit increases in revenue, earnings per
share, and total stockholder return over the past 20, 15, 10 and
five years. The past 20 years our annual compound growth rate
in earnings per share was 14 percent; our annual compound rate
in revenue 12 percent. Our total annual compound stockholder
return of 14 percent the past five years was more than double
the S&P 500 —and at 15 percent almost double for the past
10 years. We far outpaced the S&P 500 the past 15 and 20 years
with total annual compound shareholder returns of 18 percent
and 21 percent, respectively—periods with almost every
economic cycle and economic condition a financial institution
can experience.
Full Horsepower
This outstanding short- and long-term performance was
driven by the full horsepower of our more than 80 businesses—
diversified across virtually all of financial services. Among
their achievements:
• Community Banking—record profit of $5.5 billion. Our retail
banking team had record core product “solutions” (sales) of
18.7 million, up 17 percent. Sales in our banking stores have
grown at an average compound rate of 14 percent the last
five years. Our measures of how effectively we welcome our
customers in our stores, how quickly our teller lines move,
and how loyal our customers are to us all improved by
double digits.
• For the eighth consecutive year, our cross-sell reached record
highs—5.2 products per retail banking household (up from
3.2 in 1998), and 6.0 per Wholesale Banking customer. One
of every five of our customers buys eight or more products
from Wells Fargo.
• For the fourth consecutive year we’re the United States’
No. 1 lender to small businesses (loans less than $100,000)
and No. 1 lender to small businesses in low-to-moderate
income neighborhoods. Nationwide, our small business loans
grew 30 percent. Products (“solutions”) sold to our business
banking customers in our stores were up 26 percent. Net
business checking accounts rose 4.3 percent. Our average
business banking customer now has 3.3 products with us
(3.0 last year).
• For the 14th consecutive year we were the nation’s No. 1
retail mortgage originator. We’re very disciplined in home
mortgage lending—we don’t make option adjustable-rate
mortgages or negative amortizing mortgages. Our owned
home mortgage servicing (administering the monthly
payments of your home loan) reached $1.37 trillion, the
largest in our industry—up 38 percent—and mortgage
originations were up 9 percent to $398 billion.
• Our National Home Equity Group portfolio rose to
$79 billion, up 10 percent.
• Wholesale Banking, for the eighth consecutive year, achieved
record net income, $2.1 billion, up 17 percent—with
strong double-digit growth in revenue and loans across its
businesses. We acquired commercial real estate investment
advisor Secured Capital Corp. (Los Angeles), multifamily
real estate financier Reilly Mortgage (Virginia), investment
banker Barrington Associates (Los Angeles), accounts receivable
purchasers Commerce Funding (Virginia), Evergreen Funding
(Texas), and insurance agencies in California, Indiana and
West Virginia.
• Wells Fargo Financial—our consumer finance business—
earned a record $865 million and grew average receivables
secured by real estate, by 25 percent and auto finance
receivables by 29 percent.
One Team. Pulling Together. For Customers.
Despite our superior financial performance and the outstanding
efforts of our great team, we have a lot of work to do—especially
in the quality of our customer service. We’ve said in previous
annual reports that “Customer service…is the one area in
which we continue to be only about average compared with our
peers.” We’ve made significant progress, but we still have more
to do. We survey hundreds of thousands of our retail banking
customers a year— served through all our channels—to find
out what they think of the quality of our service. Our customer
loyalty scores rose 32 percent the last two years. Customer
perceptions of how long they have to wait in our teller lines
and how satisfied they are with how we welcome them have
improved 44 percent in that time. This year, Wells Fargo Home
Mortgage was ranked among the top five in its industry for
Double-Digit Annual Compound
Growth—for 20 Years
WFC Total S&P 500
Years EPS Revenue Return Total Return
5 21% 11% 14% 6%
10 13 10 15 8
15 18 12 18 11
20 14 12 21 12