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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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For the fiscal year ended December 31, 2005
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Commission File Number 001-2979 |
WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)
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Delaware
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No. 41-0449260 |
(State of incorporation)
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(I.R.S. Employer
Identification No.) |
420 Montgomery Street, San Francisco, California 94104
(Address of principal executive offices) (Zip code)
Registrants telephone number, including area code: 1-866-878-5865
Securities registered pursuant to Section 12(b) of the Act:
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Name of Each Exchange |
Title of Each Class |
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on Which Registered |
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Common Stock, par value $1-2/3
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New York Stock Exchange |
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Chicago Stock Exchange |
Notes Linked to the S&P 500 Index® due January 4, 2008
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American Stock Exchange |
Notes Linked to the Nasdaq -100 Index® due January 4, 2008
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American Stock Exchange |
Basket Linked Notes due October 9, 2008
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American Stock Exchange |
Basket Linked Notes due April 15, 2009
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American Stock Exchange |
Callable Notes Linked to the S&P 500 Index® due August 25, 2009
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American Stock Exchange |
Notes Linked to the Dow Jones Industrial AverageSM due May 5, 2010
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American Stock Exchange |
No securities are registered pursuant to Section 12(g) of the Act.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
Yes ü No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.
Yes No ü
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2)
has been subject to such filing requirements for the past 90 days.
Yes ü No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the
Act).
Yes No ü
At June 30, 2005, the aggregate market value of common stock held by non-affiliates was
approximately $102,556 million, based on a closing price of $61.58. At February 28, 2006,
1,675,891,369 shares of common stock were outstanding.
Documents Incorporated by Reference
Portions of the Companys 2005 Annual Report to Stockholders are incorporated by reference into
Parts I, II and IV of this Form 10-K, and portions of the Companys definitive Proxy Statement for
its 2006 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form
10-K. The cross-reference index on the following page identifies by page numbers the portions of
each document that are incorporated by reference into this Form 10-K. Only those portions
identified in the cross-reference index are incorporated into this Form 10-K.
TABLE OF CONTENTS
FORM 10-K CROSS-REFERENCE INDEX
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Page(s) |
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Form |
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Annual |
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Proxy |
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10-K |
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Report (1) |
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Statement (2) |
PART I |
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Item 1. |
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Business |
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Description of Business |
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2-11, 31 |
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33-113 |
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Statistical Disclosure: |
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Distribution of Assets, Liabilities and
Stockholders Equity; Interest Rates
and Interest Differential |
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22 |
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41-43 |
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Investment Portfolio |
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46, 64-65, 71-72 |
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Loan Portfolio |
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23-25 |
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46, 49-50, 65, 73-76 |
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Summary of Credit Loss Experience |
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26 |
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38-39, 49-51, 66, 74-75 |
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Deposits |
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46, 80 |
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Return on Equity and Assets |
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36 |
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Short-Term Borrowings |
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80 |
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Derivatives |
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68, 107-109 |
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Item 1A. |
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Risk Factors |
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12-21 |
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Item 1B. |
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Unresolved Staff Comments (3) |
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Item 2. |
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Properties |
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27 |
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77 |
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Item 3. |
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Legal Proceedings |
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104 |
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Item 4. |
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Submission of Matters to a Vote of
Security Holders (3) |
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PART II |
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Item 5. |
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Market for Registrants Common Equity,
Related Stockholder Matters and Issuer
Purchases of Equity Securities |
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6, 28 |
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60, 62, 70, 113 |
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Item 6. |
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Selected Financial Data |
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37 |
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Item 7. |
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Managements Discussion and Analysis of Financial
Condition and Results of Operations |
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34-57 |
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Item 7A. |
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Quantitative and Qualitative Disclosures
About Market Risk |
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52-54 |
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Item 8. |
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Financial Statements and Supplementary Data |
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60-113 |
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Item 9. |
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Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure (3) |
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Item 9A. |
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Controls and Procedures |
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58-59 |
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Item 9B. |
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Other Information (3) |
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PART III |
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Item 10. |
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Directors and Executive Officers of the Registrant |
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29-31 |
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9, 16-21 |
Item 11. |
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Executive Compensation |
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21-41 |
Item 12. |
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Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters |
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7-9, 42-44 |
Item 13. |
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Certain Relationships and Related Transactions |
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20-23, 40-41 |
Item 14. |
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Principal Accountant Fees and Services |
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45-46(4) |
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PART IV |
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Item 15. |
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Exhibits, Financial Statement Schedules |
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32-39 |
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60-113 |
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SIGNATURES |
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40 |
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(1) |
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The information required to be submitted in response to these items is incorporated by
reference to the identified portions of the Companys 2005 Annual Report to Stockholders.
Pages 33 through 113 of the 2005 Annual Report to Stockholders have been filed as Exhibit 13
to this Form 10-K. |
(2) |
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The information required to be submitted in response to these items is incorporated by
reference to the identified portions of the Companys definitive Proxy Statement for the 2006
Annual Meeting of Stockholders to be held on April 25, 2006, to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A. |
(3) |
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Not applicable. |
(4) |
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Not including information under Audit and Examination Committee Report. |
1
General
Wells Fargo & Company is a diversified financial services company organized under the laws of
Delaware and registered as a bank holding company and financial holding company under the Bank
Holding Company Act of 1956, as amended (BHC Act). Based on assets of $482 billion at December 31,
2005, we were the fifth largest bank holding company in the United States. When we refer to the
Company, we, our and us in this report, we mean Wells Fargo & Company and Subsidiaries
(consolidated). When we refer to the Parent, we mean Wells Fargo & Company.
The Company engages in banking and a variety of related financial services businesses. Retail,
commercial and corporate banking services are provided through banking stores in Alaska, Arizona,
California, Colorado, Idaho, Illinois, Indiana, Iowa, Michigan, Minnesota, Montana, Nebraska,
Nevada, New Mexico, North Dakota, Ohio, Oregon, South Dakota, Texas, Utah, Washington, Wisconsin
and Wyoming. Other financial services are provided by subsidiaries engaged in various businesses,
principally: wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural
finance, commercial finance, securities brokerage and investment banking, insurance agency and
brokerage services, computer and data processing services, trust services, investment advisory
services, mortgage-backed securities servicing and venture capital investment.
In February 2004, the Company completed the consolidation of 19 of its national bank charters into
a single national bank charter, Wells Fargo Bank, National Association (Wells Fargo Bank). At
December 31, 2005, Wells Fargo Bank was the Parents principal subsidiary with $407 billion in
total assets, or 84% of the Companys assets. Wells Fargo Bank is rated Aaa by Moodys Investors
Service and is the only U.S. bank to have the highest possible credit rating assigned by Moodys.
With the acquisition of certain assets of Strong Financial Corporation at the end of 2004, the
Company became one of the top 20 U.S. mutual fund companies, managing $108 billion in mutual funds.
Total assets managed or administered (including retail brokerage) by the Company were $880 billion
at December 31, 2005.
The Company has three operating segments for management reporting purposes: Community Banking,
Wholesale Banking and Wells Fargo Financial. The 2005 Annual Report to Stockholders includes
financial information and descriptions of these operating segments.
The Company had 153,500 active, full-time equivalent team members at December 31, 2005.
2
History and Growth
The Company is the product of the merger involving Norwest Corporation and the former Wells Fargo &
Company, completed on November 2, 1998 (the WFC Merger). On completion of the WFC Merger, Norwest
Corporation changed its name to Wells Fargo & Company.
Norwest Corporation was organized in 1929 under the laws of the State of Delaware. Prior to the WFC
Merger, it provided banking services to customers in 16 states and additional financial services
through subsidiaries engaged in a variety of businesses including mortgage banking and consumer
finance.
The former Wells Fargo & Companys principal subsidiary, Wells Fargo Bank, N.A., was the successor
to the banking portion of the business founded by Henry Wells and William G. Fargo in 1852. That
business later operated the westernmost leg of the Pony Express and ran stagecoach lines in the
western part of the United States. The California banking business was separated from the express
business in 1905, merged in 1960 with American Trust Company, another of the oldest banks in the
Western United States, and became Wells Fargo Bank, N.A., a national banking association, in 1968.
In April 1996, the former Wells Fargo & Company acquired First Interstate Bancorp, a $55 billion
bank holding company in a transaction valued at $11 billion. In October 2000, the Company acquired
First Security Corporation, a $23 billion bank holding company in a transaction valued at $3
billion.
The Company expands its business, in part, by acquiring banking institutions and other companies
engaged in activities that are financial in nature. The Company continues to explore opportunities
to acquire banking institutions and other financial services companies, and discussions are
continually being carried on related to such possible acquisitions. The Company cannot predict
whether, or on what terms, such discussions will result in further acquisitions. As a matter of
policy, the Company generally does not comment on such discussions or possible acquisitions until a
definitive acquisition agreement has been signed.
Competition
The financial services industry is highly competitive. The Companys subsidiaries compete with
financial services providers, such as banks, savings and loan associations, credit unions, finance
companies, mortgage banking companies, insurance companies, and money market and mutual fund
companies. They also face increased competition from nonbank institutions such as brokerage houses
and insurance companies, as well as from financial services subsidiaries of commercial and
manufacturing companies. Many of these competitors enjoy fewer regulatory constraints and some may
have lower cost structures.
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Securities firms and insurance companies that elect to become financial holding companies may
acquire banks and other financial institutions. Combinations of this type could significantly
change the competitive environment in which the Company conducts business. The financial services
industry is also likely to become more competitive as further technological advances enable more
companies to provide financial services. These technological advances may diminish the importance
of depository institutions and other financial intermediaries in the transfer of funds between
parties.
The following discussion, together with Notes 3 (Cash, Loan and Dividend Restrictions) and 25
(Regulatory and Agency Capital Requirements) to Financial Statements included in the 2005 Annual
Report to Stockholders, sets forth the material elements of the regulatory framework applicable to
bank holding companies and their subsidiaries and provides certain information specific to us. This
regulatory framework is intended to protect depositors, federal deposit insurance funds, consumers
and the banking system as a whole, and not to protect security holders. To the extent that the
information describes statutory and regulatory provisions, it is qualified in its entirety by
reference to those provisions. Further, such statutes, regulations and policies are continually
under review by Congress and state legislatures, and federal and state regulatory agencies. A
change in statutes, regulations or regulatory policies applicable to us, including changes in
interpretation or implementation thereof, could have a material effect on the Companys business.
Laws and regulations could restrict our ability to diversify into other areas of financial
services, acquire depository institutions, and pay dividends on our capital stock. The Company may
also be required to provide financial support to one or more of its subsidiary banks, maintain
capital balances in excess of those desired by management, and pay higher deposit insurance
premiums as a result of a general deterioration in the financial condition of depository
institutions.
General
Parent Bank Holding Company. As a bank holding company, the Parent is subject to regulation under
the BHC Act and to inspection, examination and supervision by the Board of Governors of the Federal
Reserve System (Federal Reserve Board or FRB).
Subsidiary Banks. The Companys subsidiary national banks are subject to regulation and
examination primarily by the Office of the Comptroller of the Currency (OCC) and secondarily by the
Federal Deposit Insurance Corporation (FDIC) and the FRB. The Companys state-chartered banks are
subject to primary federal regulation and examination by the FDIC and, in addition, are regulated
and examined by their respective state banking departments.
Nonbank Subsidiaries. Many of the Companys nonbank subsidiaries are also subject to regulation by
the FRB and other applicable federal and state agencies. The Companys brokerage
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subsidiaries are regulated by the Securities and Exchange Commission (SEC), the National
Association of Securities Dealers, Inc. and state securities regulators. The Companys insurance
subsidiaries are subject to regulation by applicable state insurance regulatory agencies. The
Companys other nonbank subsidiaries may be subject to the laws and regulations of the federal
government and/or the various states in which they conduct business.
Parent Bank Holding Company Activities
Financial in Nature Requirement. As a bank holding company that has elected to become a
financial holding company pursuant to the BHC Act, the Company may affiliate with securities firms
and insurance companies and engage in other activities that are financial in nature or incidental
or complementary to activities that are financial in nature. Financial in nature activities
include securities underwriting, dealing and market making, sponsoring mutual funds and investment
companies, insurance underwriting and agency, merchant banking, and activities that the FRB, in
consultation with the Secretary of the U.S. Treasury, determines from time to time to be financial
in nature or incidental to such financial activity or is complementary to a financial activity and
does not pose a safety and soundness risk.
FRB approval is not required for the Company to acquire a company (other than a bank holding
company, bank or savings association) engaged in activities that are financial in nature or
incidental to activities that are financial in nature, as determined by the FRB. Prior FRB approval
is required before the Company may acquire the beneficial ownership or control of more than 5% of
the voting shares or substantially all of the assets of a bank holding company, bank or savings
association.
Because the Company is a financial holding company, if any of our subsidiary banks receives a
rating under the Community Reinvestment Act of 1977, as amended (CRA), of less than satisfactory,
the Company will be prohibited, until the rating is raised to satisfactory or better, from engaging
in new activities or acquiring companies other than bank holding companies, banks or savings
associations, except that the Company could engage in new activities, or acquire companies engaged
in activities that are closely related to banking under the BHC Act. In addition, if the FRB finds
that any of our subsidiary banks is not well capitalized or well managed, the Company would be
required to enter into an agreement with the FRB to comply with all applicable capital and
management requirements and which may contain additional limitations or conditions. Until
corrected, the Company would not be able to engage in any new activity or acquire companies engaged
in activities that are not closely related to banking under the BHC Act without prior FRB approval.
If the Company fails to correct any such condition within a prescribed period, the FRB could order
the Company to divest of its banking subsidiaries or, in the alternative, to cease engaging in
activities other than those closely related to banking under the BHC Act.
The Company became a financial holding company effective March 13, 2000. It continues to maintain
its status as a bank holding company for purposes of other FRB regulations.
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Interstate Banking. Under the Riegle-Neal Interstate Banking and Branching Act (Riegle-Neal Act),
a bank holding company may acquire banks in states other than its home state, subject to any state
requirement that the bank has been organized and operating for a minimum period of time, not to
exceed five years, and the requirement that the bank holding company not control, prior to or
following the proposed acquisition, more than 10% of the total amount of deposits of insured
depository institutions nationwide or, unless the acquisition is the bank holding companys initial
entry into the state, more than 30% of such deposits in the state (or such lesser or greater amount
set by the state).
The Riegle-Neal Act also authorizes banks to merge across state lines, thereby creating interstate
branches. Banks are also permitted to acquire and to establish new branches in other states where
authorized under the laws of those states.
Regulatory Approval. In determining whether to approve a proposed bank acquisition, federal bank
regulators will consider, among other factors, the effect of the acquisition on competition,
financial condition, and future prospects including current and projected capital ratios and
levels, the competence, experience, and integrity of management and record of compliance with laws
and regulations, the convenience and needs of the communities to be served, including the acquiring
institutions record of compliance under the CRA, and the effectiveness of the acquiring
institution in combating money laundering activities.
Dividend Restrictions
The Parent is a legal entity separate and distinct from its subsidiary banks and other
subsidiaries. A significant source of funds to pay dividends on its common and preferred stock and
principal and interest on its debt is dividends from its subsidiaries. Various federal and state
statutory provisions and regulations limit the amount of dividends the Parents subsidiary banks
and certain other subsidiaries may pay without regulatory approval. For information about the
restrictions applicable to the Parents subsidiary banks, see Note 3 (Cash, Loan and Dividend
Restrictions) to Financial Statements included in the 2005 Annual Report to Stockholders.
Federal bank regulatory agencies have the authority to prohibit the Parents subsidiary banks from
engaging in unsafe or unsound practices in conducting their businesses. The payment of dividends,
depending on the financial condition of the bank in question, could be deemed an unsafe or unsound
practice. The ability of the Parents subsidiary banks to pay dividends in the future is currently,
and could be further, influenced by bank regulatory policies and capital guidelines.
Holding Company Structure
Transfer of Funds from Subsidiary Banks. The Parents subsidiary banks are subject to restrictions
under federal law that limit the transfer of funds or other items of value from such subsidiaries
to the Parent and its nonbank subsidiaries (including affiliates) in so-called covered
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transactions. In general, covered transactions include loans and other extensions of credit,
investments and asset purchases, as well as certain other transactions involving the transfer of
value from a subsidiary bank to an affiliate or for the benefit of an affiliate. Unless an
exemption applies, covered transactions by a subsidiary bank with a single affiliate are limited to
10% of the subsidiary banks capital and surplus and, with respect to all covered transactions with
affiliates in the aggregate, to 20% of the subsidiary banks capital and surplus. Also, loans and
extensions of credit to affiliates generally are required to be secured in specified amounts. A
banks transactions with its nonbank affiliates are also generally required to be on arms length
terms.
Source of Strength. The FRB has a policy that a bank holding company is expected to act as a
source of financial and managerial strength to each of its subsidiary banks and, under appropriate
circumstances, to commit resources to support each such subsidiary bank. This support may be
required at times when the bank holding company may not have the resources to provide the support.
The OCC may order the assessment of the Parent if the capital of one of its national bank
subsidiaries were to become impaired. If the Parent failed to pay the assessment within three
months, the OCC could order the sale of the Parents stock in the national bank to cover the
deficiency.
Capital loans by the Parent to any of its subsidiary banks are subordinate in right of payment to
deposits and certain other indebtedness of the subsidiary bank. In addition, in the event of the
Parents bankruptcy, any commitment by the Parent to a federal bank regulatory agency to maintain
the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
Depositor Preference. The Federal Deposit Insurance Act (FDI Act) provides that, in the event of
the liquidation or other resolution of an insured depository institution, the claims of
depositors of the institution (including the claims of the FDIC as subrogee of insured depositors)
and certain claims for administrative expenses of the FDIC as a receiver will have priority over
other general unsecured claims against the institution. If an insured depository institution fails,
insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of
unsecured, nondeposit creditors, including the Parent, with respect to any extensions of credit
they have made to such insured depository institution.
Liability of Commonly Controlled Institutions. All of the Parents banks are insured by the FDIC.
FDIC-insured depository institutions can be held liable for any loss incurred, or reasonably
expected to be incurred, by the FDIC due to the default of an FDIC-insured depository institution
controlled by the same bank holding company, and for any assistance provided by the FDIC to an
FDIC-insured depository institution that is in danger of default and that is controlled by the same
bank holding company. Default means generally the appointment of a conservator or receiver. In
danger of default means generally the existence of certain conditions indicating that a default is
likely to occur in the absence of regulatory assistance.
7
Capital Requirements
The Company is subject to regulatory capital requirements and guidelines imposed by the FRB, which
are substantially similar to the capital requirements and guidelines imposed by the FRB, the OCC
and the FDIC on depository institutions within their jurisdictions. For information about these
capital requirements and guidelines, see Note 25 (Regulatory and Agency Capital Requirements) to
Financial Statements included in the 2005 Annual Report to Stockholders.
The FRB may set higher capital requirements for holding companies whose circumstances warrant it.
For example, holding companies experiencing internal growth or making acquisitions are expected to
maintain strong capital positions substantially above the minimum supervisory levels, without
significant reliance on intangible assets. Also, the FRB considers a tangible Tier 1 leverage
ratio (deducting all intangibles) and other indications of capital strength in evaluating
proposals for expansion or engaging in new activities.
FRB, FDIC and OCC rules also require the Company to incorporate market and interest rate risk
components into its regulatory capital computations. Under the market risk requirements, capital is
allocated to support the amount of market risk related to a financial institutions ongoing trading
activities.
The Basel Committee on Banking Supervision continues to evaluate certain aspects of the proposed
New Basel Capital Accord (Basel II). Basel II incorporates three pillars that address (a) capital
adequacy, (b) supervisory review, which relates to the computation of capital and internal
assessment processes, and (c) market discipline, through increased disclosure requirements.
Embodied within these pillars are aspects of risk strategy, measurement and management that relate
to credit risk, market risk, and operational risk. Certain proposed approaches by the Basel
Committee in Basel II may be considered complex.
Federal banking agencies expect that their revised proposal for U.S. implementation of Basel II
will be available in mid-2006. Under the revised timeline, the first opportunity for an institution
to conduct a parallel run of Basel II with existing Basel I capital requirement calculations would
be January 2008.
From time to time, the FRB and the Federal Financial Institutions Examination Council (FFIEC)
propose changes and amendments to, and issue interpretations of, risk-based capital guidelines and
related reporting instructions. Such proposals or interpretations could, if implemented in the
future, affect the Companys reported capital ratios and net risk-adjusted assets.
As an additional means to identify problems in the financial management of depository institutions,
the FDI Act requires federal bank regulatory agencies to establish certain non-capital safety and
soundness standards for institutions for which they are the primary federal regulator. The
standards relate generally to operations and management, asset quality, interest rate exposure
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and executive compensation. The agencies are authorized to take action against institutions that
fail to meet such standards.
The FDI Act requires federal bank regulatory agencies to take prompt corrective action with
respect to FDIC-insured depository institutions that do not meet minimum capital requirements. A
depository institutions treatment for purposes of the prompt corrective action provisions will
depend upon how its capital levels compare to various capital measures and certain other factors,
as established by regulation.
Deposit Insurance Assessments
Through the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF), the FDIC
insures the deposits of the Companys depository institution subsidiaries up to prescribed limits
for each depositor. The amount of FDIC assessments paid by a BIF and SAIF member institution is
based on its relative risk of default as measured by regulatory capital ratios and other factors.
Specifically, the assessment rate is based on the institutions capitalization risk category and
supervisory subgroup category. An institutions capitalization risk category is based on the FDICs
determination of whether the institution is well capitalized, adequately capitalized or less than
adequately capitalized. An institutions supervisory subgroup category is based on the FDICs
assessment of the financial condition of the institution and the probability that FDIC intervention
or other corrective action will be required.
The BIF and SAIF assessment rate currently ranges from zero to 27 cents per $100 of domestic
deposits. The BIF and SAIF assessment rate for the Companys depository institutions currently is
zero. The FDIC may increase or decrease the assessment rate schedule on a semi-annual basis. An
increase in the assessment rate could have a material adverse effect on the Companys earnings,
depending on the amount of the increase. The FDIC is authorized to terminate a depository
institutions deposit insurance upon a finding by the FDIC that the institutions financial
condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices
or has violated any applicable rule, regulation, order or condition enacted or imposed by the
institutions regulatory agency. The termination of deposit insurance for one or more of the
Companys subsidiary depository institutions could have a material adverse effect on the Companys
earnings, depending on the collective size of the particular institutions involved.
All FDIC-insured depository institutions must pay an annual assessment to provide funds for the
payment of interest on bonds issued by the Financing Corporation, a federal corporation chartered
under the authority of the Federal Housing Finance Board. The bonds (commonly referred to as FICO
bonds) were issued to capitalize the Federal Savings and Loan Insurance Corporation. FDIC-insured
depository institutions paid approximately 1.4 cents per $100 of BIF-assessable deposits in 2005.
The FDIC established the FICO assessment rate effective for the first quarter of 2006 at
approximately 1.3 cents annually per $100 of assessable deposits.
9
In December 2005, Congress passed legislation that contained a deposit insurance reform provision.
The Federal Deposit Insurance Reform Act of 2005 will merge BIF and SAIF into a new Deposit
Insurance Fund (DIF). The legislation also authorized the FDIC to revise the current risk-based
assessment system described above. Because the FDIC has not yet proposed these revisions, the
Company cannot predict the effect they may have on the Companys business, results of operations or
financial condition.
Fiscal and Monetary Policies
The Companys business and earnings are affected significantly by the fiscal and monetary policies
of the federal government and its agencies. The Company is particularly affected by the policies of
the FRB, which regulates the supply of money and credit in the United States. Among the instruments
of monetary policy available to the FRB are (a) conducting open market operations in United States
government securities, (b) changing the discount rates of borrowings of depository institutions,
(c) imposing or changing reserve requirements against depository institutions deposits, and (d)
imposing or changing reserve requirements against certain borrowings by banks and their affiliates.
These methods are used in varying degrees and combinations to directly affect the availability of
bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. The
policies of the FRB may have a material effect on the Companys business, results of operations and
financial condition.
Privacy Provisions of the Gramm-Leach-Bliley Act
Federal banking regulators, as required under the Gramm-Leach-Bliley Act (the GLB Act), have
adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic
information about consumers to nonaffiliated third parties. The rules require disclosure of privacy
policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain
personal information to nonaffiliated third parties. The privacy provisions of the GLB Act affect
how consumer information is transmitted through diversified financial services companies and
conveyed to outside vendors.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) implemented a broad range of corporate governance
and accounting measures to increase corporate responsibility, to provide for enhanced penalties for
accounting and auditing improprieties at publicly traded companies, and to protect investors by
improving the accuracy and reliability of disclosures under federal securities laws. The Company is
subject to Sarbanes-Oxley because it is required to file periodic reports with the SEC under the
Securities and Exchange Act of 1934. Among other things, Sarbanes-Oxley and/or its implementing
regulations have established new membership requirements and additional responsibilities for our
audit committee, imposed restrictions on the relationship between the Company and its outside
auditors (including restrictions on the types of non-audit services our auditors may provide to
us), imposed additional responsibilities for our
10
external financial statements on our chief executive officer and chief financial officer, expanded
the disclosure requirements for our corporate insiders, required our management to evaluate the
Companys disclosure controls and procedures and its internal control over financial reporting, and
required our auditors to issue a report on our internal control over financial reporting. The New
York Stock Exchange has imposed a number of new corporate governance requirements as well.
Patriot Act
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Patriot Act) is intended to strengthen the ability of U.S. law
enforcement agencies and intelligence communities to work together to combat terrorism on a variety
of fronts. The Patriot Act has significant implications for depository institutions, brokers,
dealers and other businesses involved in the transfer of money. The Patriot Act requires the
Company to implement new or revised policies and procedures relating to anti-money laundering,
compliance, suspicious activities, and currency transaction reporting and due diligence on
customers. The Patriot Act also requires federal bank regulators to evaluate the effectiveness of
an applicant in combating money laundering in determining whether to approve a proposed bank
acquisition.
Future Legislation
Various legislation, including proposals to change substantially the financial institution
regulatory system, is from time to time introduced in Congress. This legislation may change banking
statutes and the operating environment of the Company in substantial and unpredictable ways. If
enacted, this legislation could increase or decrease the cost of doing business, limit or expand
permissible activities or affect the competitive balance among banks, savings associations, credit
unions, and other financial institutions. The Company cannot predict whether any of this potential
legislation will be enacted and, if enacted, the effect that it, or any implementing regulations,
would have on the Companys business, results of operations or financial condition.
11
An investment in the Company has risk. We discuss below and elsewhere in this report and in other
documents we file with the SEC various risk factors that could cause our financial results and
condition to vary significantly from period to period. We refer you to the Regulation and
Supervision section of this report for more information about legislative and regulatory risks and
to the Financial Review section and Financial Statements and related Notes on pages 33 through 113
of our 2005 Annual Report to Stockholders, filed as Exhibit 13 to this report, and incorporated by
reference, for more information about credit, interest rate and market risks. Any factor described
below or elsewhere in this report or in our 2005 Annual Report to Stockholders could, by itself or
together with one or more other factors, have a material adverse effect on our financial results
and condition and on the value of an investment in Wells Fargo. Refer to our quarterly reports on
Form 10-Q filed with the SEC for material changes from the risk factors described below.
In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that one or
more of these same factors, as well as other factors described in this report and in our 2005
Annual Report to Stockholders, could cause us to fall short of expectations for our future
financial and business performance that we express in forward-looking statements in this report and
other reports we file with the SEC and in other communications. We make forward-looking statements
when we use words such as believe, expect, anticipate, estimate, will, may, can and
similar expressions. Do not unduly rely on forward-looking statements, as actual results may differ
significantly from expectations. Forward-looking statements speak only as of the date made, and we
do not undertake to update them to reflect changes or events that occur after that date.
For example, in our 2005 Annual Report to Stockholders, we make forward-looking statements about:
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the expected impact of expensing stock options on our 2006 earnings per share; |
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the expected impact of pending and proposed accounting standards, including FASB Staff
Position No. 13-a relating to leveraged lease transactions; |
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future credit losses and nonperforming assets, including changes in the amount of
nonaccrual loans due to portfolio growth, portfolio seasoning and other factors; |
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future short-term and long-term interest rate levels and their impact on our net
interest margin, net income, liquidity and capital; |
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anticipated capital expenditures in 2006; |
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expectations for unfunded credit and equity investment commitments; |
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the expected impact of pending and threatened legal actions on our results of
operations and stockholders equity; |
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the anticipated use of proceeds from the issuance of securities; |
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the amount and timing of future contributions to the Cash Balance Plan; |
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the recovery of our investment in variable interest entities; |
12
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future reclassification to earnings of deferred net gains on derivatives; |
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expected completion dates of pending business combinations and other acquisitions; and |
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the amount of contingent consideration payable in connection with certain acquisitions. |
Our ability to grow revenue and earnings will suffer if we are unable to cross-sell more products
to customers.
Selling more products to our customers or cross-selling is the essence of our business
model and key to our ability to grow revenue and earnings. Many of our competitors also focus on
cross-selling, especially in retail banking and mortgage lending. This can put pressure on us to
sell our products at lower prices, reducing our net interest income and revenue from our fee-based
products. It could also affect our ability to keep existing customers. New technologies could
require us to spend more to modify or adapt our products to attract and retain customers.
Increasing our cross-sell ratio or the average number of products sold to existing customers
may become more challenging, and we might not attain our goal of selling an average of eight
products to each customer.
An economic slowdown could reduce demand for our products and services and lead to lower revenue
and lower earnings.
We earn revenue from interest and fees we charge on the loans and other products and services we
sell. When the economy slows, the demand for those products and services can fall, reducing our
interest and fee income and our earnings. An economic downturn can also hurt the ability of our
borrowers to repay their loans, causing us to incur more credit losses than we estimated. Several
factors could cause the economy to slow down or even recede, including higher energy costs, higher
interest rates, reduced consumer or corporate spending, natural disasters such as hurricane
Katrina, terrorist activities, military conflicts, and the normal cyclical nature of the economy.
Changes in stock market prices could reduce fee income from our brokerage and asset management
businesses.
We earn fee income from managing assets for others and providing brokerage services. Because
investment management fees are often based on the value of assets under management, a fall in the
market prices of those assets could reduce our fee income. Changes in stock market prices could
affect the trading activity of investors, reducing commissions and other fees we earn from our
brokerage business.
For more information, refer to Risk Management Asset/Liability and Market Risk Management
Market Risk-Equity Markets in the Financial Review section of our 2005 Annual Report to
Stockholders.
13
Changes in interest rates could reduce our net interest income and earnings.
Our net interest income is the interest we earn on loans, debt securities and other assets we hold
minus the interest we pay on our deposits, long-term and short-term debt and other liabilities. Net
interest income reflects both our net interest margin the difference between the yield we earn
on our assets and the interest rate we pay for deposits and our other sources of funding and the
amount of earning assets we hold. As a result, changes in either our net interest margin or the
amount of earning assets we hold could affect our net interest income and our earnings.
Changes in interest rates up or down could adversely affect our net interest margin. Although
the yield we earn on our assets and our funding costs tend to move in the same direction in
response to changes in interest rates, one can rise or fall faster than the other, causing our net
interest margin to expand or contract. Our liabilities tend to be shorter in duration than our
assets, so they may adjust faster in response to changes in interest rates. As a result, when
interest rates rise, our funding costs may rise faster than the yield we earn on our assets,
causing our net interest margin to contract until the yield catches up.
Changes in the slope of the yield curve or the spread between short-term and long-term
interest rates could also reduce our net interest margin. Normally, the yield curve is upward
sloping, meaning short-term rates are lower than long-term rates. Because our liabilities tend to
be shorter in duration than our assets, when the yield curve flattens or even inverts, we could
experience pressure on our net interest margin as our cost of funds increases relative to the yield
we can earn on our assets.
We assess our interest rate risk by estimating the effect on our earnings under various scenarios
that differ based on assumptions about the direction, magnitude and speed of interest rate changes
and the slope of the yield curve. We hedge some of that interest rate risk with interest rate
derivatives. We also rely on the natural hedge that our loan originations and servicing rights
can provide.
We do not hedge all of our interest rate risk. There is always the risk that changes in interest
rates could reduce our net interest income and our earnings in material amounts, especially if
actual conditions turn out to be materially different than what we assumed. For example, if
interest rates rise or fall faster than we assumed or the slope of the yield curve changes, we may
incur significant losses on debt securities we hold as investments. To reduce our interest rate
risk, we may rebalance our investment and loan portfolios, refinance our debt and take other
strategic actions. We may incur losses or expenses when we take such actions.
For more information, refer to Risk Management Asset/Liability and Market Risk Management
Interest Rate Risk in the Financial Review section of our 2005 Annual Report to Stockholders.
14
Changes in interest rates could also reduce the value of our mortgage servicing rights and
earnings.
We have a sizeable portfolio of mortgage servicing rights. A mortgage servicing right (MSR) is the
right to service a mortgage loan collect principal, interest, escrow amounts, etc. for a fee.
We acquire MSRs when we originate mortgage loans and keep the servicing rights after we sell or
securitize the loans or when we purchase the servicing rights to mortgage loans originated by other
lenders. We carry MSRs at the lower of cost or fair value. Fair value is the present value of
estimated future net servicing income, calculated based on a number of variables, including
assumptions about the likelihood of prepayment by borrowers.
Changes in interest rates can affect prepayment assumptions and thus fair value. When interest
rates fall, borrowers are more likely to prepay their mortgage loans by refinancing them at a lower
rate. As the likelihood of prepayment increases, the fair value of our MSRs can decrease. Each
quarter we evaluate our MSRs for impairment based on the difference between carrying amount and
fair value at quarter end. If temporary impairment exists, we establish a valuation allowance
through a charge to earnings for the amount the carrying amount exceeds fair value. We also
evaluate our MSRs for other-than-temporary impairment. If we determine that permanent impairment
exists, we will recognize a direct write-down of the carrying value of the MSRs.
For more information, refer to Critical Accounting Policies Valuation of Mortgage Servicing
Rights and Risk Management Asset/Liability and Market Risk Management Mortgage Banking
Interest Rate Risk in the Financial Review section of our 2005 Annual Report to Stockholders.
Higher credit losses could require us to increase our allowance for credit losses through a charge
to earnings.
When we loan money or commit to loan money we incur credit risk, or the risk of losses if our
borrowers do not repay their loans. We reserve for credit losses by establishing an allowance
through a charge to earnings. The amount of this allowance is based on our assessment of credit
losses inherent in our loan portfolio (including unfunded credit commitments). The process for
determining the amount of the allowance is critical to our financial results and condition. It
requires difficult, subjective and complex judgments about the future, including forecasts of
economic conditions that might impair the ability of our borrowers to repay their loans.
We might underestimate the credit losses inherent in our loan portfolio and have credit losses in
excess of the amount reserved. We might increase the allowance because of changing economic
conditions. For example, in a rising interest rate environment, borrowers with adjustable rate
loans could see their payments increase. In the absence of offsetting factors such as increased
economic activity and higher wages, this could reduce their ability to repay their loans, resulting
15
in our increasing the allowance. We might also increase the allowance because of unexpected events,
as we did in third quarter 2005 for hurricane Katrina.
Hurricane Katrina has affected our loan portfolios by damaging properties pledged as collateral and
by impairing the ability of certain borrowers to repay their loans. The ultimate impact of the
hurricane on us is difficult to predict and will be affected by a number of factors, including the
extent of damage to the collateral, the extent to which damaged collateral is not covered by
insurance, the extent to which unemployment and other economic conditions caused by the hurricane
adversely affect the ability of borrowers to repay their loans, and the cost to us of collection
and foreclosure moratoriums, loan forbearances and other accommodations granted to borrowers and
other customers. The impact of the hurricane on us may be greater than anticipated.
For more information, refer to Critical Accounting Policies Allowance for Credit Losses and
Risk Management Credit Risk Management Process in the Financial Review section of our 2005
Annual Report to Stockholders.
Our mortgage banking revenue can be volatile from quarter to quarter.
We earn revenue from fees we receive for originating mortgage loans and for servicing mortgage
loans. When rates rise, the demand for mortgage loans tends to fall, reducing the revenue we
receive from loan originations. At the same time, revenue from our MSRs can increase, either
through recovery of a previously established valuation allowance or a reduction in the periodic
amortization expense. When rates fall, mortgage originations tend to increase and the value of our
MSRs tends to decline, also with some offsetting revenue effect. Even though they can act as a
natural hedge, the hedge is not perfect, either in amount or timing. For example, the negative
effect on revenue from an increase in the MSRs valuation allowance is immediate, but any offsetting
revenue benefit from more originations and the MSRs relating to the new loans would accrue over
time.
From time to time we may use derivatives and other instruments to hedge our mortgage banking
interest rate risk. We generally do not hedge all of our risk, and the fact that we attempt to
hedge any of the risk does not mean we will be successful. Hedging is a complex process, requiring
sophisticated models and constant monitoring, and is not a perfect science. We may use hedging
instruments tied to U.S. Treasury rates or LIBOR that may not perfectly correlate with the value or
income being hedged. We could incur losses from our hedging activities. There may be periods where
we elect not to use derivatives and other instruments to hedge mortgage banking interest rate risk.
For more information, refer to Risk Management Asset/Liability and Market Risk Management
Mortgage Banking Interest Rate Risk in the Financial Review section of our 2005 Annual Report to
Stockholders.
16
Our venture capital business can also be volatile from quarter to quarter.
Earnings from our venture capital investments can be volatile and hard to predict and can have a
significant effect on our earnings from period to period. When and if we recognize gains can
depend on a number of factors, including general economic conditions, the prospects of the
companies in which we invest, when these companies go public, the size of our position relative to
the public float, and whether we are subject to any resale restrictions. Our venture capital
investments could result in significant losses.
We assess our private and public equity portfolio at least quarterly for other-than-temporary
impairment based on a number of factors, including the then current market value of each investment
compared to its carrying value. Our venture capital investments tend to be in technology,
telecommunications and other volatile industries, so the value of our public and private equity
portfolios can fluctuate widely. If we determine there is other-than-temporary impairment for an
investment, we will write-down the carrying value of the investment, resulting in a charge to
earnings. The amount of this charge could be significant, especially if under accounting rules we
were required previously to write-up the value because of higher market prices.
For more information, refer to Risk Management Asset/Liability and Market Risk Management
Market Risk-Equity Markets in the Financial Review section of our 2005 Annual Report to
Stockholders.
We rely on dividends from our subsidiaries for revenue, and federal and state law can limit those
dividends.
Wells Fargo & Company, the parent holding company, is a separate and distinct legal entity from its
subsidiaries. It receives a significant portion of its revenue from dividends from its
subsidiaries. We use these dividends to pay dividends on our common and preferred stock and
interest and principal on our debt. Federal and state laws limit the amount of dividends that our
bank and some of our nonbank subsidiaries may pay to us. Also, our right to participate in a
distribution of assets upon a subsidiarys liquidation or reorganization is subject to the prior
claims of the subsidiarys creditors.
For more information, refer to Regulation and Supervision Dividend Restrictions and
Holding Company Structure in this report and to Notes 3 (Cash, Loan and Dividend Restrictions) and
25 (Regulatory and Agency Capital Requirements) to Financial Statements in our 2005 Annual Report
to Stockholders.
17
Changes in our accounting policies or in accounting standards could materially affect how we report
our financial results and condition.
Our
accounting policies are fundamental to understanding our financial results and condition. Some of these policies require use of estimates and assumptions that may affect the value of our
assets or liabilities and financial results. Three of our accounting policies are critical because
they require management to make difficult, subjective and complex judgments about matters that are
inherently uncertain and because it is likely that materially different amounts would be reported
under different conditions or using different assumptions. For a description of these three
policies, refer to Critical Accounting Policies in the Financial Review section of our 2005
Annual Report to Stockholders.
From time to time the Financial Accounting Standards Board (FASB) and the SEC change the financial
accounting and reporting standards that govern the preparation of our external financial
statements. These changes are beyond our control, can be hard to predict and could materially
impact how we report our financial results and condition. We could be required to apply a new or
revised standard retroactively, resulting in our restating prior period financial statements in
material amounts.
Acquisitions could reduce our stock price upon announcement and reduce our earnings if we overpay
or have difficulty integrating them.
We regularly explore opportunities to acquire companies in the financial services industry. We
cannot predict the frequency, size or timing of our acquisitions, and we typically do not comment
publicly on a possible acquisition until we have signed a definitive agreement. When we do announce
an acquisition, our stock price may fall depending on the size of the acquisition and the purchase
price. It is also possible that an acquisition could dilute earnings per share.
We must generally receive federal regulatory approval before we can acquire a bank or bank holding
company. In deciding whether to approve a proposed bank acquisition, federal bank regulators will
consider, among other factors, the effect of the acquisition on competition, financial condition,
and future prospects including current and projected capital ratios and levels, the competence,
experience, and integrity of management and record of compliance with laws and regulations, the
convenience and needs of the communities to be served, including the acquiring institutions record
of compliance under the Community Reinvestment Act, and the effectiveness of the acquiring
institution in combating money laundering. Also, we cannot be certain when or if, or on what terms
and conditions, any required regulatory approvals will be granted. We might be required to sell
banks, branches and/or business units as a condition to receiving regulatory approval.
Difficulty in integrating an acquired company may cause us not to realize expected revenue
increases, cost savings, increases in geographic or product presence, and other projected benefits
from the acquisition. The integration could result in higher than expected deposit attrition (run-
18
off), loss of key employees, disruption of our business or the business of the acquired company, or
otherwise harm our ability to retain customers and employees or achieve the anticipated benefits of
the acquisition. Time and resources spent on integration may also impair our ability to grow our
existing businesses. Also, the negative effect of any divestitures required by regulatory
authorities in acquisitions or business combinations may be greater than expected.
Federal and state regulations can restrict our business, and non-compliance could result in
penalties, litigation and damage to our reputation.
Our parent company, our subsidiary banks and many of our nonbank subsidiaries are heavily regulated
at the federal and/or state levels. This regulation is to protect depositors, federal deposit
insurance funds, consumers and the banking system as a whole, not our stockholders. Federal and
state regulations can significantly restrict our businesses, and we could be fined or otherwise
penalized if we are found to be out of compliance.
Recent high-profile corporate scandals and other events have resulted in additional regulations.
For example, Sarbanes-Oxley limits the types of non-audit services our outside auditors may provide
to us in order to preserve the independence of our auditors from us. If our auditors were found not
to be independent of us under SEC rules, we could be required to engage new auditors and file new
financial statements and audit reports with the SEC. We could be out of compliance with SEC rules
until new financial statements and audit reports were filed, limiting our ability to raise capital
and resulting in other adverse consequences.
Sarbanes-Oxley also requires our management to evaluate the Companys disclosure controls and
procedures and its internal control over financial reporting and requires our auditors to issue a
report on our internal control over financial reporting. We are required to disclose, in our annual
report on Form 10-K filed with the SEC, the existence of any material weaknesses in our internal
control. We cannot assure that we will not find one or more material weaknesses as of the end of
any given year, nor can we predict the effect on our stock price of disclosure of a material
weakness.
The Patriot Act, which was enacted in the wake of the September 2001 terrorist attacks, requires us
to implement new or revised policies and procedures relating to anti-money laundering, compliance,
suspicious activities, and currency transaction reporting and due diligence on customers. The
Patriot Act also requires federal bank regulators to evaluate the effectiveness of an applicant in
combating money laundering in determining whether to approve a proposed bank acquisition.
A number of states have recently challenged the position of the OCC as the sole regulator of
national banks. If these challenges are successful or if Congress acts to give greater effect to
state regulation, the impact on us could be significant, not only because of the potential
additional restrictions on our businesses but also from having to comply with potentially 50
different sets of regulations.
19
From time to time Congress considers legislation that could significantly change our regulatory
environment, potentially increasing our cost of doing business, limiting the activities we may
pursue or affecting the competitive balance among banks, savings associations, credit unions, and
other financial institutions. As an example, our business model depends on sharing information
among the family of Wells Fargo businesses to better satisfy our customers needs. Laws that
restrict the ability of our companies to share information about customers could limit our ability
to cross-sell products and services, reducing our revenue and earnings.
For more information, refer to Regulation and Supervision in this report and to Report of
Independent Registered Public Accounting Firm in our 2005 Annual Report to Stockholders.
Negative publicity could damage our reputation.
Reputation risk, or the risk to our earnings and capital from negative public opinion, is inherent
in our business. Negative public opinion could adversely affect our ability to keep and attract
customers and expose us to adverse legal and regulatory consequences. Negative public opinion could
result from our actual or alleged conduct in any number of activities, including lending practices,
corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or
inadequate protection of customer information, and from actions taken by government regulators and
community organizations in response to that conduct. Because we conduct most of our businesses
under the Wells Fargo brand, negative public opinion about one business could affect our other
businesses.
Our bank customers could take their money out of the bank and put it in alternative investments,
causing us to lose a lower cost source of funding.
Checking and savings account balances and other forms of customer deposits can decrease when
customers perceive alternative investments, such as the stock market, as providing a better
risk/return tradeoff. When customers move money out of bank deposits and into other investments, we
can lose a relatively low cost source of funds, increasing our funding costs and reducing our net
interest income.
We depend on the accuracy and completeness of information about customers and counterparties.
In deciding whether to extend credit or enter into other transactions, we rely on the accuracy and
completeness of information about our customers, including financial statements and other financial
information and reports of independent auditors. For example, in deciding whether to extend credit,
we may assume that a customers audited financial statements conform with U.S. generally accepted
accounting principles (GAAP) and present fairly, in all material respects, the financial condition,
results of operations and cash flows of the customer. We also may rely on the
20
audit report covering those financial statements. If that information is incorrect or incomplete,
we may incur credit losses or other charges to earnings.
We rely on others to help us with our operations.
We rely on outside vendors to provide key components of our business operations such as internet
connections and network access. Disruptions in communication services provided by a vendor or any
failure of a vendor to handle current or higher volumes of use could hurt our ability to deliver
products and services to our customers and otherwise to conduct our business. Financial or
operational difficulties of an outside vendor could also hurt our operations if those difficulties
interfere with the vendors ability to serve us.
Federal Reserve Board policies can significantly impact business and economic conditions and our
financial results and condition.
The Federal Reserve Board (FRB) regulates the supply of money and credit in the United States. Its
policies determine in large part our cost of funds for lending and investing and the return we earn
on those loans and investments, both of which affect our net interest margin. They also can
materially affect the value of financial instruments we hold, such as debt securities and MSRs. Its
policies also can affect our borrowers, potentially increasing the risk that they may fail to repay
their loans. Changes in FRB policies are beyond our control and can be hard to predict.
Our stock price can be volatile due to other factors.
Our stock price can fluctuate widely in response to a variety of factors, in addition to those
described above, including:
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general business and economic conditions; |
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recommendations by securities analysts; |
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new technology used, or services offered, by our competitors; |
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operating and stock price performance of other companies that investors deem comparable
to us;
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news reports relating to trends, concerns and other issues in the financial services
industry; |
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changes in government regulations; |
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natural disasters, such as the recent Gulf State hurricanes; and |
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geopolitical conditions such as acts or threats of terrorism or military conflicts. |
21
The following table allocates the changes in net interest income on a taxable-equivalent basis to
changes in either average balances or average rates for both interest-earning assets and
interest-bearing liabilities. Because of the numerous simultaneous volume and rate changes during
any period, it is not possible to precisely allocate such changes between volume and rate. For this
table, changes that are not solely due to either volume or rate are allocated to these categories
in proportion to the percentage changes in average volume and average rate.
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Year ended December 31 |
, |
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2005 over 2004 |
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2004 over 2003 |
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(in millions) |
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Volume |
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Rate |
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Total |
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Volume |
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Rate |
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Total |
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Increase (decrease) in interest income: |
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|
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Federal funds sold, securities purchased under resale
agreements and other short-term investments |
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$ |
22 |
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$ |
78 |
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$ |
100 |
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|
$ |
1 |
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|
$ |
14 |
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|
$ |
15 |
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Trading assets |
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|
3 |
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|
42 |
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|
45 |
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(22 |
) |
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|
11 |
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|
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(11 |
) |
Debt securities available for sale: |
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|
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|
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|
|
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Securities of U.S. Treasury and federal agencies |
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|
(6 |
) |
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(2 |
) |
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|
(8 |
) |
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(5 |
) |
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(7 |
) |
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|
(12 |
) |
Securities of U.S. states and political subdivisions |
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|
(9 |
) |
|
|
8 |
|
|
|
(1 |
) |
|
|
87 |
|
|
|
(16 |
) |
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|
71 |
|
Mortgage-backed securities: |
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|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
Federal agencies |
|
|
(84 |
) |
|
|
(2 |
) |
|
|
(86 |
) |
|
|
224 |
|
|
|
(252 |
) |
|
|
(28 |
) |
Private collateralized mortgage obligations |
|
|
86 |
|
|
|
17 |
|
|
|
103 |
|
|
|
85 |
|
|
|
(25 |
) |
|
|
60 |
|
Other debt securities |
|
|
45 |
|
|
|
(15 |
) |
|
|
30 |
|
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
Mortgages held for sale |
|
|
378 |
|
|
|
98 |
|
|
|
476 |
|
|
|
(1,422 |
) |
|
|
23 |
|
|
|
(1,399 |
) |
Loans held for sale |
|
|
(240 |
) |
|
|
94 |
|
|
|
(146 |
) |
|
|
37 |
|
|
|
4 |
|
|
|
41 |
|
Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
570 |
|
|
|
533 |
|
|
|
1,103 |
|
|
|
123 |
|
|
|
(151 |
) |
|
|
(28 |
) |
Other real estate mortgage |
|
|
21 |
|
|
|
280 |
|
|
|
301 |
|
|
|
153 |
|
|
|
(23 |
) |
|
|
130 |
|
Real estate construction |
|
|
142 |
|
|
|
135 |
|
|
|
277 |
|
|
|
41 |
|
|
|
16 |
|
|
|
57 |
|
Lease financing |
|
|
10 |
|
|
|
(17 |
) |
|
|
(7 |
) |
|
|
39 |
|
|
|
|
|
|
|
39 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate 1-4 family first mortgage |
|
|
(555 |
) |
|
|
799 |
|
|
|
244 |
|
|
|
1,714 |
|
|
|
(57 |
) |
|
|
1,657 |
|
Real estate 1-4 family junior lien mortgage |
|
|
658 |
|
|
|
721 |
|
|
|
1,379 |
|
|
|
677 |
|
|
|
(213 |
) |
|
|
464 |
|
Credit card |
|
|
218 |
|
|
|
49 |
|
|
|
267 |
|
|
|
146 |
|
|
|
(20 |
) |
|
|
126 |
|
Other revolving credit and installment |
|
|
844 |
|
|
|
(72 |
) |
|
|
772 |
|
|
|
333 |
|
|
|
(24 |
) |
|
|
309 |
|
Foreign |
|
|
212 |
|
|
|
(63 |
) |
|
|
149 |
|
|
|
157 |
|
|
|
(66 |
) |
|
|
91 |
|
Other |
|
|
(5 |
) |
|
|
8 |
|
|
|
3 |
|
|
|
4 |
|
|
|
(13 |
) |
|
|
(9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase (decrease) in interest income |
|
|
2,310 |
|
|
|
2,691 |
|
|
|
5,001 |
|
|
|
2,370 |
|
|
|
(801 |
) |
|
|
1,569 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking |
|
|
3 |
|
|
|
35 |
|
|
|
38 |
|
|
|
1 |
|
|
|
5 |
|
|
|
6 |
|
Market rate and other savings |
|
|
52 |
|
|
|
984 |
|
|
|
1,036 |
|
|
|
101 |
|
|
|
32 |
|
|
|
133 |
|
Savings certificates |
|
|
96 |
|
|
|
135 |
|
|
|
231 |
|
|
|
(50 |
) |
|
|
(54 |
) |
|
|
(104 |
) |
Other time deposits |
|
|
(32 |
) |
|
|
515 |
|
|
|
483 |
|
|
|
58 |
|
|
|
64 |
|
|
|
122 |
|
Deposits in foreign offices |
|
|
45 |
|
|
|
188 |
|
|
|
233 |
|
|
|
36 |
|
|
|
21 |
|
|
|
57 |
|
Short-term borrowings |
|
|
(30 |
) |
|
|
421 |
|
|
|
391 |
|
|
|
(44 |
) |
|
|
75 |
|
|
|
31 |
|
Long-term debt (1) |
|
|
305 |
|
|
|
924 |
|
|
|
1,229 |
|
|
|
283 |
|
|
|
(122 |
) |
|
|
161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total increase in interest expense |
|
|
439 |
|
|
|
3,202 |
|
|
|
3,641 |
|
|
|
385 |
|
|
|
21 |
|
|
|
406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net interest income
on a taxable-equivalent basis |
|
$ |
1,871 |
|
|
$ |
(511 |
) |
|
$ |
1,360 |
|
|
$ |
1,985 |
|
|
$ |
(822 |
) |
|
$ |
1,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes guaranteed preferred beneficial interests in Companys subordinated debentures,
which were reflected in long-term debt at December 31, 2003, upon adoption of FIN 46 (revised
December 2003), Consolidation of Variable Interest Entities (FIN 46R). |
22
Loan concentrations may exist when there are borrowers engaged in similar activities or types of
loans extended to a diverse group of borrowers that could cause those borrowers or portfolios to be
similarly impacted by economic or other conditions.
Our real estate 1-4 family mortgage loans to borrowers in the state of California represented
approximately 14% of total loans at December 31, 2005, compared with 18%, at the end of 2004. These
loans are mostly within the larger metropolitan areas in California, with no single area consisting
of more than 3% of our total loans. Changes in real estate values and underlying economic
conditions for these areas are monitored continuously within the credit risk management process.
Some of our real estate 1-4 family mortgage loans, including first mortgage and home equity
products, include an interest-only feature as part of the loan terms. At December 31, 2005, such
loans were approximately 26% of total loans, compared with 28% at the end of 2004. Substantially
all of these loans are considered to be prime or near prime. We do not offer option adjustable-rate
mortgage products, nor do we offer variable-rate mortgage products with fixed payment amounts,
commonly referred to within the financial services industry as negative amortizing mortgage loans.
REAL ESTATE 1-4 FAMILY MORTGAGE LOANS BY STATE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2005 |
|
|
|
|
|
|
|
|
|
|
|
Total real |
|
|
|
|
|
|
Real estate 1-4 |
|
|
Real estate 1-4 |
|
|
estate 1-4 |
|
|
|
|
|
|
family first |
|
|
family junior |
|
|
family |
|
|
% of total |
|
(in millions) |
|
mortgage |
|
|
lien mortgage |
|
|
mortgage |
|
|
loans |
|
|
|
|
|
|
$22,479 |
|
|
|
$22,112 |
|
|
|
$ 44,591 |
|
|
|
14 |
% |
Minnesota |
|
|
3,188 |
|
|
|
3,754 |
|
|
|
6,942 |
|
|
|
2 |
|
Florida |
|
|
3,818 |
|
|
|
2,099 |
|
|
|
5,917 |
|
|
|
2 |
|
Colorado |
|
|
2,821 |
|
|
|
2,579 |
|
|
|
5,400 |
|
|
|
2 |
|
Arizona |
|
|
2,722 |
|
|
|
2,462 |
|
|
|
5,184 |
|
|
|
2 |
|
Texas |
|
|
3,488 |
|
|
|
1,366 |
|
|
|
4,854 |
|
|
|
2 |
|
Washington |
|
|
2,317 |
|
|
|
2,225 |
|
|
|
4,542 |
|
|
|
1 |
|
New York |
|
|
2,339 |
|
|
|
1,574 |
|
|
|
3,913 |
|
|
|
1 |
|
Virginia |
|
|
2,173 |
|
|
|
1,597 |
|
|
|
3,770 |
|
|
|
1 |
|
New Jersey |
|
|
1,907 |
|
|
|
1,521 |
|
|
|
3,428 |
|
|
|
1 |
|
Other |
|
|
30,516 |
|
|
|
17,854 |
|
|
|
48,370 |
(1) |
|
|
16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
$77,768 |
|
|
|
$59,143 |
|
|
|
$136,911 |
|
|
|
44 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consists of 40 states; no state had loans in excess of $3,299 million, and includes $3,277
million in Government National Mortgage Association early pool buyouts. |
23
For purposes of portfolio risk management, we aggregate commercial loans and lease financing
according to market segmentation and standard industry codes. These groupings contain a diverse mix
of customer relationships throughout our target markets. Loan types and product offerings are
carefully underwritten and monitored. Credit policies consider industry risks where appropriate for
credit risk management.
COMMERCIAL LOANS AND LEASE FINANCING BY INDUSTRY
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2005 |
|
|
|
Commercial loans |
|
|
% of total |
|
(in millions) |
|
and lease financing |
|
|
loans |
|
|
|
|
|
|
$ 7,925 |
|
|
|
2 |
% |
Property investment and services |
|
|
5,567 |
(1) |
|
|
2 |
|
Agricultural production |
|
|
5,194 |
|
|
|
2 |
|
Automotive |
|
|
3,326 |
|
|
|
1 |
|
Financial institutions |
|
|
3,197 |
|
|
|
1 |
|
Food and beverage |
|
|
2,896 |
|
|
|
1 |
|
Oil and gas |
|
|
2,505 |
|
|
|
1 |
|
Industrial equipment |
|
|
2,373 |
|
|
|
1 |
|
Retailers |
|
|
2,352 |
|
|
|
1 |
|
Healthcare |
|
|
1,856 |
|
|
|
1 |
|
Other |
|
|
29,761 |
(2) |
|
|
9 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
$66,952 |
|
|
|
22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes loans to builders, developers and operators, trusts and title companies. |
(2) |
|
No other single category had loans in excess of $1,733 million. |
24
Other real estate and real estate construction loans are diversified in terms of both the
state where the property is located and by the type of property securing the loans. The composition
of these portfolios was stable throughout 2005 and the distribution is consistent with our target
markets and focus on customer relationships. Approximately 20% of other real estate and
construction loans are loans to owner-occupants where more than 50% of the property is used in the
conduct of their business. The largest group of loans in any one state is 5% of total loans and the
largest group of loans secured by one type of property is 3% of total loans.
COMMERCIAL REAL ESTATE LOANS BY STATE AND PROPERTY TYPE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2005 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
Other real estate |
|
|
Real estate |
|
|
commercial |
|
|
% of total |
|
(in millions) |
|
mortgage |
|
|
construction |
|
|
real estate |
|
|
loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$11,033 |
|
|
|
$ 4,018 |
|
|
|
$15,051 |
|
|
|
5 |
% |
Texas |
|
|
2,764 |
|
|
|
1,033 |
|
|
|
3,797 |
|
|
|
1 |
|
Arizona |
|
|
1,501 |
|
|
|
1,024 |
|
|
|
2,525 |
|
|
|
1 |
|
Washington |
|
|
1,524 |
|
|
|
515 |
|
|
|
2,039 |
|
|
|
1 |
|
Colorado |
|
|
1,370 |
|
|
|
669 |
|
|
|
2,039 |
|
|
|
1 |
|
Minnesota |
|
|
1,262 |
|
|
|
486 |
|
|
|
1,748 |
|
|
|
.5 |
|
Oregon |
|
|
735 |
|
|
|
307 |
|
|
|
1,042 |
|
|
|
.3 |
|
Florida |
|
|
307 |
|
|
|
660 |
|
|
|
967 |
|
|
|
.3 |
|
Nevada |
|
|
615 |
|
|
|
335 |
|
|
|
950 |
|
|
|
.3 |
|
Utah |
|
|
578 |
|
|
|
340 |
|
|
|
918 |
|
|
|
.2 |
|
Other |
|
|
6,856 |
|
|
|
4,019 |
|
|
|
10,875 |
(1) |
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
$28,545 |
|
|
|
$13,406 |
|
|
|
$41,951 |
(2) |
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 7,573 |
|
|
|
$ 844 |
|
|
|
$ 8,417 |
|
|
|
3 |
% |
Retail buildings |
|
|
4,396 |
|
|
|
1,261 |
|
|
|
5,657 |
|
|
|
2 |
|
Industrial |
|
|
4,774 |
|
|
|
625 |
|
|
|
5,399 |
|
|
|
2 |
|
Apartments |
|
|
2,761 |
|
|
|
995 |
|
|
|
3,756 |
|
|
|
1 |
|
Land |
|
|
92 |
|
|
|
3,213 |
|
|
|
3,305 |
|
|
|
1 |
|
1-4 family structures |
|
|
120 |
|
|
|
3,065 |
|
|
|
3,185 |
|
|
|
1 |
|
Hotels/motels |
|
|
1,777 |
|
|
|
263 |
|
|
|
2,040 |
|
|
|
1 |
|
1-4 family land |
|
|
|
|
|
|
1,640 |
|
|
|
1,640 |
|
|
|
.5 |
|
Agriculture |
|
|
1,445 |
|
|
|
46 |
|
|
|
1,491 |
|
|
|
.5 |
|
Institutional |
|
|
866 |
|
|
|
196 |
|
|
|
1,062 |
|
|
|
.3 |
|
Other |
|
|
4,741 |
|
|
|
1,258 |
|
|
|
5,999 |
|
|
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
$28,545 |
|
|
|
$13,406 |
|
|
|
$41,951 |
(2) |
|
|
14 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consists of 40 states; no state had loans in excess of $770 million.
|
(2) |
|
Includes owner-occupied real estate and construction loans of $9,308 million. |
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31 |
, |
(in millions) |
|
|
|
|
|
2005 |
|
|
|
|
|
|
2004 |
|
|
|
|
|
|
2003 |
|
|
|
|
|
|
2002 |
|
|
|
|
|
|
2001 |
|
|
|
|
|
|
|
|
|
Loan |
|
|
|
|
|
|
Loan |
|
|
|
|
|
|
Loan |
|
|
|
|
|
|
Loan |
|
|
|
|
|
|
Loan |
|
|
|
|
|
|
|
catgry |
|
|
|
|
|
|
catgry |
|
|
|
|
|
|
catgry |
|
|
|
|
|
|
catgry |
|
|
|
|
|
|
catgry |
|
|
|
|
|
|
|
as % |
|
|
|
|
|
|
as % |
|
|
|
|
|
|
as % |
|
|
|
|
|
|
as % |
|
|
|
|
|
|
as % |
|
|
|
|
|
|
|
of total |
|
|
|
|
|
|
of total |
|
|
|
|
|
|
of total |
|
|
|
|
|
|
of total |
|
|
|
|
|
|
of total |
|
|
|
|
|
|
|
loans |
|
|
|
|
|
|
loans |
|
|
|
|
|
|
loans |
|
|
|
|
|
|
loans |
|
|
|
|
|
|
loans |
|
Commercial and commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
$926 |
|
|
|
20 |
% |
|
|
$940 |
|
|
|
19 |
% |
|
|
$917 |
|
|
|
19 |
% |
|
|
$865 |
|
|
|
24 |
% |
|
|
$882 |
|
|
|
28 |
% |
Other real estate mortgage |
|
|
253 |
|
|
|
9 |
|
|
|
298 |
|
|
|
11 |
|
|
|
444 |
|
|
|
11 |
|
|
|
307 |
|
|
|
13 |
|
|
|
276 |
|
|
|
15 |
|
Real estate construction |
|
|
115 |
|
|
|
4 |
|
|
|
46 |
|
|
|
3 |
|
|
|
63 |
|
|
|
3 |
|
|
|
53 |
|
|
|
4 |
|
|
|
86 |
|
|
|
5 |
|
Lease financing |
|
|
51 |
|
|
|
2 |
|
|
|
30 |
|
|
|
2 |
|
|
|
40 |
|
|
|
2 |
|
|
|
75 |
|
|
|
2 |
|
|
|
111 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial and commercial
real estate |
|
|
1,345 |
|
|
|
35 |
|
|
|
1,314 |
|
|
|
35 |
|
|
|
1,464 |
|
|
|
35 |
|
|
|
1,300 |
|
|
|
43 |
|
|
|
1,355 |
|
|
|
50 |
|
Consumer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate 1-4 family first mortgage |
|
|
229 |
|
|
|
25 |
|
|
|
150 |
|
|
|
31 |
|
|
|
176 |
|
|
|
33 |
|
|
|
104 |
|
|
|
23 |
|
|
|
76 |
|
|
|
18 |
|
Real estate 1-4 family junior
lien mortgage |
|
|
118 |
|
|
|
19 |
|
|
|
104 |
|
|
|
18 |
|
|
|
92 |
|
|
|
15 |
|
|
|
62 |
|
|
|
15 |
|
|
|
43 |
|
|
|
13 |
|
Credit card |
|
|
508 |
|
|
|
4 |
|
|
|
466 |
|
|
|
4 |
|
|
|
443 |
|
|
|
3 |
|
|
|
386 |
|
|
|
4 |
|
|
|
394 |
|
|
|
4 |
|
Other revolving credit and installment |
|
|
1,060 |
|
|
|
15 |
|
|
|
889 |
|
|
|
11 |
|
|
|
802 |
|
|
|
13 |
|
|
|
597 |
|
|
|
14 |
|
|
|
604 |
|
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consumer |
|
|
1,915 |
|
|
|
63 |
|
|
|
1,609 |
|
|
|
64 |
|
|
|
1,513 |
|
|
|
64 |
|
|
|
1,149 |
|
|
|
56 |
|
|
|
1,117 |
|
|
|
49 |
|
Foreign |
|
|
149 |
|
|
|
2 |
|
|
|
139 |
|
|
|
1 |
|
|
|
95 |
|
|
|
1 |
|
|
|
86 |
|
|
|
1 |
|
|
|
116 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total allocated |
|
|
3,409 |
|
|
|
100 |
% |
|
|
3,062 |
|
|
|
100 |
% |
|
|
3,072 |
|
|
|
100 |
% |
|
|
2,535 |
|
|
|
100 |
% |
|
|
2,588 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated component of allowance (1) |
|
|
648 |
|
|
|
|
|
|
|
888 |
|
|
|
|
|
|
|
819 |
|
|
|
|
|
|
|
1,284 |
|
|
|
|
|
|
|
1,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
$4,057 |
|
|
|
|
|
|
|
$3,950 |
|
|
|
|
|
|
|
$3,891 |
|
|
|
|
|
|
|
$3,819 |
|
|
|
|
|
|
|
$3,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This amount and any unabsorbed portion of the allocated allowance are also available for any
of the above listed loan categories. |
See Critical Accounting Policies Allowance for Credit Losses and Risk Management
Credit Risk Management Process Allowance for Credit Losses in the Financial Review section
and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements included in the 2005
Annual Report to Stockholders for a description of the process used by the Company to determine the
adequacy and the components (allocated and unallocated) of the allowance for credit losses.
26
The Company owns its corporate headquarters building in San Francisco, California. The Company also
owns administrative facilities in Anchorage, Alaska; Chandler, Phoenix, and Tempe, Arizona; San
Francisco, California; Minneapolis and Shoreview, Minnesota; Billings, Montana; Albuquerque, New
Mexico; Portland, Oregon; Sioux Falls, South Dakota; and Salt Lake City, Utah. In addition, the
Company leases office space for various administrative departments in major locations in Arizona,
California, Colorado, Minnesota, Oregon, Texas, and Utah.
As of December 31, 2005, the Company provided banking, insurance, investments, mortgage banking and
consumer finance through more than 6,200 stores under various types of ownership and leasehold
agreements. The Company owns the Wells Fargo Home Mortgage (Home Mortgage) headquarters in Des
Moines, Iowa and operations/servicing centers in Springfield, Illinois; Des Moines, Iowa; and
Minneapolis, Minnesota. The Company leases administrative space for Home Mortgage in Tempe,
Arizona; Riverside and San Bernardino, California; Des Moines, Iowa; Frederick, Maryland;
Minneapolis, Minnesota; St. Louis, Missouri; Fort Mill, South Carolina; and all mortgage production
offices nationwide. The Company owns the Wells Fargo Financial, Inc. (WFFI) headquarters and two
administrative buildings in Des Moines, Iowa, and an operations center in Sioux Falls, South
Dakota. The Company leases administrative space for WFFI in Des Moines, Iowa; Minneapolis,
Minnesota; Mississauga, Ontario; Philadelphia, Pennsylvania; San Juan, Puerto Rico; Aberdeen, South
Dakota; and all store locations.
The Company is also a joint venture partner in an office building in downtown Minneapolis,
Minnesota.
For further information with respect to premises and equipment and commitments under noncancelable
leases for premises and equipment, refer to Note 7 (Premises, Equipment, Lease Commitments and
Other Assets) to Financial Statements included in the 2005 Annual Report to Stockholders.
27
The Companys common stock is traded on the New York Stock Exchange and the Chicago Stock Exchange.
At January 31, 2006, there were 92,112 holders of record of the Companys common stock.
The following table shows Company repurchases of its common stock for each calendar month in the quarter ended December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total number of |
|
|
|
|
|
|
|
|
|
|
Weighted- |
|
|
shares repurchased |
|
|
Maximum number of |
|
|
|
Total number |
|
|
average |
|
|
as part of publicly |
|
|
shares that may yet |
|
Calendar |
|
of shares |
|
|
price paid |
|
|
announced |
|
|
be repurchased under |
|
month |
|
repurchased |
(1) |
|
per share |
|
|
authorizations |
(1) |
|
the authorizations |
(2) |
|
|
|
8,077,376 |
|
|
$ |
58.56 |
|
|
|
8,077,376 |
|
|
|
15,724,288 |
|
|
|
|
4,189,478 |
|
|
|
61.51 |
|
|
|
4,189,478 |
|
|
|
36,534,810 |
|
|
|
|
1,348,421 |
|
|
|
63.26 |
|
|
|
1,348,421 |
|
|
|
35,186,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
13,615,275 |
|
|
|
|
|
|
|
13,615,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All shares were repurchased under the authorization covering up to 25 million shares of
common stock approved by the Board of Directors and publicly announced by the Company on July
26, 2005. Unless modified or revoked by the Board, the authorization does not expire. |
(2) |
|
On November 15, 2005, the Board authorized the repurchase of an additional 25 million shares
of common stock. The Company publicly announced this authorization on the same day. |
28
|
|
|
|
|
|
|
|
|
|
|
|
|
Years with |
Name and |
|
|
|
|
|
Company or |
Company Position |
|
Positions Held During the Past Five Years |
|
Age |
|
Predecessors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard I. Atkins
Senior Executive Vice President and Chief Financial Officer |
|
Senior Executive Vice President and Chief Financial Officer (August 2005 to
Present); Executive Vice President and Chief Financial Officer (August 2001 to August 2005); Executive Vice President
and Chief Financial Officer of New York Life Insurance Company (April 1996 to July 2001) |
|
55 |
|
4 |
|
|
|
|
|
|
|
Patricia R. Callahan
Executive Vice President (Compliance and Risk Management) |
|
Executive Vice President (Compliance and Risk Management) (June 2005 to Present);
Executive Vice President (Human Resources) (November 1998 to June 2005) |
|
52 |
|
28 |
|
|
|
|
|
|
|
David A. Hoyt
Senior Executive Vice President (Wholesale Banking) |
|
Senior Executive Vice President (August 2005 to Present); Group Executive Vice
President (Wholesale Banking) (November 1998 to August 2005) |
|
50 |
|
24 |
|
|
|
|
|
|
|
Richard M. Kovacevich
Chairman and Chief Executive Officer |
|
Chairman and Chief Executive Officer (August 2005 to Present); Chairman,
President and Chief Executive Officer (April 2001 to August 2005); President and Chief Executive Officer (November
1998 to April 2001) |
|
62 |
|
20 |
|
|
|
|
|
|
|
Richard D. Levy
Senior Vice President and Controller (Principal Accounting Officer)
|
|
Senior Vice President and Controller (September 2002 to Present); Senior Vice
President and Controller of New York Life Insurance Company (September 1997 to August 2002) |
|
48 |
|
3 |
|
|
|
|
|
|
|
Avid Modjtabai
Executive Vice President (Human Resources) |
|
Executive Vice President (Human Resources) (June 2005 to Present);
Executive Vice President (Internet Services) of Wells Fargo Bank, N.A. (March 2001 to June 2005); Senior Vice
President (Consumer Internet Services) (July 1999 to March 2001) |
|
44 |
|
12 |
|
|
|
|
|
|
|
David J. Munio
Executive Vice President (Chief Credit Officer) |
|
Executive Vice President (Chief Credit
Officer) (November 2001 to Present); Executive Vice President and Deputy
Chief Credit Officer of Wells Fargo Bank, N.A. (September 1999 to November 2001) |
|
61 |
|
32 |
29
|
|
|
|
|
|
|
|
|
|
|
|
|
Years with |
Name and |
|
|
|
|
|
Company or |
Company Position |
|
Positions Held During the Past Five Years |
|
Age |
|
Predecessors |
|
|
|
|
|
|
|
Mark C. Oman
Senior Executive Vice President (Home and Consumer Finance) |
|
Senior Executive Vice President (August 2005 to Present); Group Executive Vice
President (Home and Consumer Finance) (September 2002 to August 2005); Group Executive Vice President (Mortgage and Home Equity) (November 1998 to August 2002); Chairman of Wells Fargo Home Mortgage, Inc. (formerly known as
Norwest Mortgage, Inc.) (February 1997 until the merger with Wells Fargo Bank, N.A. in May 2004), Chief Executive
Officer (August 1989 to January 2001) |
|
51 |
|
26 |
|
|
|
|
|
|
|
James M. Strother
Executive Vice President and General Counsel (Law and Government Relations) |
|
Executive Vice President and General Counsel (January 2004 to Present);
Deputy General Counsel (June 2001 to December 2003); General Counsel of Wells Fargo Home Mortgage, Inc. (formerly
known as Norwest Mortgage, Inc.) (March 1998 to June 2001) |
|
54 |
|
19 |
|
|
|
|
|
|
|
John G. Stumpf
President and Chief Operating Officer (Community Banking) |
|
President and Chief Operating Officer (August 2005 to Present); Group
Executive Vice President (Community Banking) (July 2002 to August 2005); Group Executive Vice President (Western
Banking) (May 2000 to June 2002); Group Executive Vice President (Southwestern Banking) (November 1998 to May 2000) |
|
52 |
|
24 |
|
|
|
|
|
|
|
Carrie L. Tolstedt
Group Executive Vice President (Regional Banking) |
|
Group Executive Vice President (Regional Banking) (July 2002 to Present); Group
Executive Vice President (California and Border Banking) (January 2001 to June 2002); Regional President of Wells Fargo
Bank, N.A. (Central California Banking) (December 1998 to January 2001) |
|
46 |
|
16 |
There is no family relationship between any of the Companys executive officers or directors. All
executive officers serve at the pleasure of the Board of Directors.
30
The Audit and Examination Committee is a standing audit committee of the Board of Directors
established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The
Committee has eight members: J.A. Blanchard III, Lloyd H. Dean, Enrique Hernandez, Jr., Reatha
Clark King, Cynthia H. Milligan, Philip J. Quigley, Judith M. Runstad and Susan G. Swenson. Each
member is independent, as independence for audit committee members is defined by New York Stock
Exchange rules. The Board of Directors has determined, in its business judgment, that each member
of the Committee is financially literate, as required by New York Stock Exchange rules, and that
J.A. Blanchard III, Lloyd H. Dean, Enrique Hernandez, Jr., Cynthia H. Milligan, Philip J. Quigley
and Susan G. Swenson each qualifies as an audit committee financial expert as defined by
Securities and Exchange Commission regulations.
As soon as reasonably practicable after they are electronically filed with or furnished to the SEC,
the Companys annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, and amendments to those reports, are available free at www.wellsfargo.com (select About Wells
Fargo, then Investor Relations More, then SEC Filings). They are also available free on the
SECs website at www.sec.gov.
The Companys Code of Ethics and Business Conduct for team members (including executive officers),
Director Code of Ethics, the Companys corporate governance guidelines, and the charters for the
Audit and Examination, Governance and Nominating, Human Resources, Credit, and Finance Committees
are available at www.wellsfargo.com (select About Wells Fargo, then Corporate Governance). This
information is also available in print to any stockholder upon written request to the Office of the
Secretary, Wells Fargo & Company, MAC N9305-173, Wells Fargo Center, Sixth and Marquette,
Minneapolis, Minnesota 55479.
31
(1) |
|
The consolidated financial statements and related notes, the report of independent registered
public accounting firm, and supplementary data that appear on pages 33 through 113 of the 2005
Annual Report to Stockholders are incorporated herein by reference. |
|
(2) |
|
Financial Statement Schedules: |
|
|
|
All schedules are omitted, because they are either not applicable or the required information
is shown in the consolidated financial statements or the notes thereto. |
|
(3) |
|
Exhibits: |
|
|
|
The Companys SEC file number is 001-2979. On and before November 2, 1998, the Company filed
documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company
filed documents under SEC file number 001-6214. |
|
|
|
Stockholders may obtain a copy of any of the following exhibits, upon payment of a reasonable
fee, by writing to Wells Fargo & Company, Office of the Secretary, Wells Fargo Center,
N9305-173, Sixth and Marquette, Minneapolis, Minnesota 55479. |
32
|
|
|
Exhibit |
|
|
number |
|
Description |
|
|
|
3(a)
|
|
Restated Certificate of Incorporation, incorporated by reference to
Exhibit 3(b) to the Companys Current Report on Form 8-K dated June 28,
1993. Certificates of Amendment of Certificate of Incorporation,
incorporated by reference to Exhibit 3 to the Companys Current Report
on Form 8-K dated July 3, 1995 (authorizing preference stock), Exhibits
3(b) and 3(c) to the Companys Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 (changing the Companys name and
increasing authorized common and preferred stock, respectively) and
Exhibit 3(b) to the Companys Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001 (increasing authorized common stock) |
|
|
|
(b)
|
|
Certificate of Change of Location of Registered Office and Change of
Registered Agent, incorporated by reference to Exhibit 3(b) to the
Companys Quarterly Report on Form 10-Q for the quarter ended June 30,
1999 |
|
|
|
(c)
|
|
Certificate Eliminating the Certificate of Designations for the
Companys Cumulative Convertible Preferred Stock, Series B,
incorporated by reference to Exhibit 3(a) to the Companys Current
Report on Form 8-K filed November 1, 1995 |
|
|
|
(d)
|
|
Certificate Eliminating the Certificate of Designations for the
Companys 10.24% Cumulative Preferred Stock, incorporated by reference
to Exhibit 3 to the Companys Current Report on Form 8-K filed February
20, 1996 |
|
|
|
(e)
|
|
Certificate of Designations for the Companys 1996 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3 to
the Companys Current Report on Form 8-K filed March 13, 1996 |
|
|
|
(f)
|
|
Certificate of Designations for the Companys 1997 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3 to
the Companys Current Report on Form 8-K filed April 21, 1997 |
|
|
|
(g)
|
|
Certificate of Designations for the Companys 1998 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3 to
the Companys Current Report on Form 8-K filed April 20, 1998 |
|
|
|
(h)
|
|
Certificate Eliminating the Certificate of Designations for the
Companys Series A Junior Participating Preferred Stock, incorporated
by reference to Exhibit 3(a) to the Companys Current Report on Form
8-K filed April 21, 1999 |
|
|
|
(i)
|
|
Certificate of Designations for the Companys 1999 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3(b)
to the Companys Current Report on Form 8-K filed April 21, 1999 |
33
|
|
|
3(j)
|
|
Certificate of Designations for the Companys 2000 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3(o)
to the Companys Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000 |
|
|
|
(k)
|
|
Certificate of Designations for the Companys 2001 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3 to
the Companys Current Report on Form 8-K filed April 17, 2001 |
|
|
|
(l)
|
|
Certificate of Designations for the Companys 2002 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3 to
the Companys Current Report on Form 8-K filed April 16, 2002 |
|
|
|
(m)
|
|
Certificate of Designations for the Companys 2003 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3.1
to the Companys Current Report on Form 8-K filed April 15, 2003 |
|
|
|
(n)
|
|
Certificate of Designations for the Companys 2004 ESOP Cumulative
Convertible Preferred Stock, incorporated by reference to Exhibit 3(o)
to the Companys Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004 |
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(o)
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Certificate of Designations for the Companys 2005 ESOP Cumulative |
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Convertible Preferred Stock, incorporated by reference to Exhibit 3(a)
to the Companys Current Report on Form 8-K filed March 18, 2005 |
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(p)
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By-Laws, incorporated by reference to Exhibit 3 to the Companys
Current Report on Form 8-K filed January 30, 2006 |
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4(a)
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See Exhibits 3(a) through 3(p) |
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(b)
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The Company agrees to furnish upon request to the Commission a copy of
each instrument defining the rights of holders of senior and
subordinated debt of the Company |
34
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10*(a)
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Long-Term Incentive Compensation Plan, incorporated by reference to
Exhibit 10 to the Companys Current Report on Form 8-K filed May 2,
2005. Amendment to Long-Term Incentive Compensation Plan, incorporated
by reference to Exhibit 10(a) to the Companys Quarterly Report on Form
10-Q for the quarter ended September 30, 2005. Forms of Award Term
Sheet for grants of restricted share rights, incorporated by reference
to Exhibit 10(a) to the Companys Annual Report on Form 10-K for the
year ended December 31, 1999. Forms of Non-Qualified Stock Option
Agreement for executive officers: for grants on and after February 28,
2006, incorporated by reference to Exhibit 10(a) to the Companys
Current Report on Form 8-K filed March 6, 2006; for grants on August 1,
2005, incorporated by reference to Exhibit 10 to the Companys Current
Report on Form 8-K filed August 1, 2005; for grants in 2004 and on
February 22, 2005, incorporated by reference to Exhibit 10(a) to the
Companys Annual Report on Form 10-K for the year ended December 31,
2004; for grants after November 2, 1998 through 2003, incorporated by
reference to Exhibit 10(a) to the Companys Annual Report on Form 10-K
for the year ended December 31, 1998; and for grants on or before
November 2, 1998, incorporated by reference to Exhibit 10(a) to the
Companys Annual Report on Form 10-K for the year ended December 31,
1997 |
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*(b)
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Long-Term Incentive Plan, incorporated by reference to Exhibit A to the
former Wells Fargos Proxy Statement filed March 14, 1994 |
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*(c)
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Wells Fargo Bonus Plan, incorporated by reference to Exhibit 10(c) to
the Companys Annual Report on Form 10-K for the year ended December
31, 2003 |
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*(d)
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Performance-Based Compensation Policy, incorporated by reference to
Exhibit 10(d) to the Companys Annual Report on Form 10-K for the year
ended December 31, 2004 |
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*(e)
|
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Deferred Compensation Plan, incorporated by reference to Exhibit 10(f)
to the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003. Amendment to Deferred Compensation Plan,
incorporated by reference to Exhibit 10(b) to the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005 |
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* |
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Management contract or compensatory plan or arrangement |
35
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10*(f)
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Directors Stock Compensation and Deferral Plan, incorporated by
reference to Exhibit 10(b) to the Companys Quarterly Report on Form
10-Q for the quarter ended June 30, 2003. Amendments to Directors Stock
Compensation and Deferral Plan, incorporated by reference to Exhibit
10(e) to the Companys Quarterly Report on Form 10-Q for the quarter
ended September 30, 2003, and to Exhibit 10 to the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 2004. Action to
increase amount of formula stock awards payable to non-employee
directors effective January 1, 2005, incorporated by reference to
Exhibit 10(a) to the Companys Current Report on Form 8-K filed January
31, 2005 |
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*(g)
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1990 Director Option Plan for directors of the former Wells Fargo,
incorporated by reference to Exhibit 10(c) to the former Wells Fargos
Annual Report on Form 10-K for the year ended December 31, 1997 |
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*(h)
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1987 Director Option Plan for directors of the former Wells Fargo,
incorporated by reference to Exhibit A to the former Wells Fargos
Proxy Statement filed March 10, 1995, and as further amended by the
amendment adopted September 16, 1997, incorporated by reference to
Exhibit 10 to the former Wells Fargos Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997 |
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*(i)
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|
Deferred Compensation Plan for Non-Employee Directors of the former
Norwest, incorporated by reference to Exhibit 10(c) to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
Amendment to Deferred Compensation Plan for Non-Employee Directors,
effective November 1, 2000, filed as paragraph (4) of Exhibit 10(ff) to
the Companys Annual Report on Form 10-K for the year ended December
31, 2000. Amendment to Deferred Compensation Plan for Non-Employee
Directors, incorporated by reference to Exhibit 10(a) to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 |
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*(j)
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|
Directors Stock Deferral Plan for directors of the former Norwest,
incorporated by reference to Exhibit 10(d) to the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999. Amendment
to Directors Stock Deferral Plan, effective November 1, 2000, filed as
paragraph (5) of Exhibit 10(ff) to the Companys Annual Report on Form
10-K for the year ended December 31, 2000. Amendment to Directors
Stock Deferral Plan, incorporated by reference to Exhibit 10(c) to the
Companys Quarterly Report on Form 10-Q for the quarter ended September
30, 2003 |
36
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10*(k)
|
|
Directors Formula Stock Award Plan for directors of the former
Norwest, incorporated by reference to Exhibit 10(e) to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
Amendment to Directors Formula Stock Award Plan, effective November 1,
2000, filed as paragraph (6) of Exhibit 10(ff) to the Companys Annual
Report on Form 10-K for the year ended December 31, 2000. Amendment to
Directors Formula Stock Award Plan, incorporated by reference to
Exhibit 10(b) to the Companys Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003 |
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*(l)
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|
Deferral Plan for Directors of the former Wells Fargo, incorporated by
reference to Exhibit 10(b) to the former Wells Fargos Annual Report on
Form 10-K for the year ended December 31, 1997. Amendment to Deferral
Plan, incorporated by reference to Exhibit 10(d) to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 |
|
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*(m)
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|
Supplemental 401(k) Plan, incorporated by reference to Exhibit 10(a) to
the Companys Quarterly Report on Form 10-Q for the quarter ended March
31, 2005 |
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*(n)
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|
Supplemental Cash Balance Plan, incorporated by reference to Exhibit
10(b) to the Companys Quarterly Report on Form 10-Q for the quarter
ended September 30, 2005 |
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*(o)
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|
Supplemental Long-Term Disability Plan, incorporated by reference to
Exhibit 10(f) to the Companys Annual Report on Form 10-K for the year
ended December 31, 1990. Amendment to Supplemental Long-Term Disability
Plan, incorporated by reference to Exhibit 10(g) to the Companys
Annual Report on Form 10-K for the year ended December 31, 1992 |
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*(p)
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|
Agreement between the Company and Richard M. Kovacevich dated March 18,
1991, incorporated by reference to Exhibit 19(e) to the Companys
Quarterly Report on Form 10-Q for the quarter ended March 31, 1991.
Amendment effective January 1, 1995, to the March 18, 1991 agreement
between the Company and Richard M. Kovacevich, incorporated by
reference to Exhibit 10(c) to the Companys Quarterly Report on Form
10-Q for the quarter ended March 31, 1995. Cancellation Agreement,
effective February 28, 2006, between the Company and Richard M.
Kovacevich, incorporated by reference to Exhibit 10(b) to the Companys
Current Report on Form 8-K filed March 6, 2006 |
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*(q)
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|
Agreement, dated July 11, 2001, between the Company and Howard I.
Atkins, incorporated by reference to Exhibit 10 to the Companys
Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 |
|
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*(r)
|
|
Agreement between the Company and Mark C. Oman, dated May 7, 1999,
incorporated by reference to Exhibit 10(y) to the Companys Annual
Report on Form 10-K for the year ended December 31, 1999 |
37
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10*(s)
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|
Form of severance agreement between the Company and Richard M.
Kovacevich and Mark C. Oman, incorporated by reference to Exhibit
10(ee) to the Companys Annual Report on Form 10-K for the year ended
December 31, 1998. Amendment effective January 1, 1995, to the March
11, 1991, agreement between the Company and Richard M. Kovacevich,
incorporated by reference to Exhibit 10(b) to the Companys Quarterly
Report on Form 10-Q for the quarter ended March 31, 1995. Cancellation
Agreement, effective December 21, 2005, between the Company and Richard
M. Kovacevich, incorporated by reference to Exhibit 10 to the Companys
Current Report on Form 8-K filed December 22, 2005 |
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*(t)
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|
Description of Relocation Program, incorporated by reference to Exhibit
10(y) to the Companys Annual Report on Form 10-K for the year ended
December 31, 2003 |
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*(u)
|
|
Description of Executive Financial Planning Program, incorporated by
reference to Exhibit 10(w) to the Companys Annual Report on Form 10-K
for the year ended December 31, 2004 |
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*(v)
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|
PartnerShares Stock Option Plan, incorporated by reference to Exhibit
10(x) to the Companys Annual Report on Form 10-K for the year ended
December 31, 2004. Amendment to PartnerShares Stock Option Plan,
incorporated by reference to Exhibit 10(c) to the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 2005 |
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*(w)
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|
Agreement, dated July 26, 2002, between the Company and Richard D.
Levy, including a description of his executive transfer bonus,
incorporated by reference to Exhibit 10(d) to the Companys Quarterly
Report on Form 10-Q for the quarter ended September 30, 2002 |
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(x)
|
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Non-Qualified Deferred Compensation Plan for Independent Contractors,
incorporated by reference to Exhibit 4.18 to the Companys Registration
Statement on Form S-3 filed January 4, 2002 (File No. 333-76330) |
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(y)
|
|
Description of compensation payable to non-employee directors effective
January 1, 2005, incorporated by reference to Exhibit 10(a) to the
Companys Current Report on Form 8-K filed January 31, 2005 |
38
|
|
|
12(a)
|
|
Computation of Ratios of Earnings to Fixed Charges, filed herewith. The
ratios of earnings to fixed charges, including interest on deposits,
were 2.51, 3.68, 3.63, 3.13, and 1.79 for the years ended December 31,
2005, 2004, 2003, 2002 and 2001, respectively. The ratios of earnings
to fixed charges, excluding interest on deposits, were 4.03, 5.92,
5.76, 4.96, and 2.63 for the years ended December 31, 2005, 2004, 2003,
2002 and 2001, respectively. |
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(b)
|
|
Computation of Ratios of Earnings to Fixed Charges and Preferred
Dividends, filed herewith. The ratios of earnings to fixed charges and
preferred dividends, including interest on deposits, were 2.51, 3.68,
3.62, 3.13, and 1.79 for the years ended December 31, 2005, 2004, 2003,
2002 and 2001, respectively. The ratios of earnings to fixed charges
and preferred dividends, excluding interest on deposits, were 4.03,
5.92, 5.74, 4.95, and 2.62 for the years ended December 31, 2005, 2004,
2003, 2002 and 2001, respectively. |
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13
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|
2005 Annual Report to Stockholders, pages 33 through 113, filed
herewith |
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21
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|
Subsidiaries of the Company, filed herewith |
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23
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|
Consent of Independent Registered Public Accounting Firm, filed
herewith |
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24
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Powers of Attorney, filed herewith |
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31(a)
|
|
Certification of principal executive officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, filed herewith |
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(b)
|
|
Certification of principal financial officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002, filed herewith |
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32(a)
|
|
Certification of Periodic Financial Report by Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C.
§ 1350, furnished herewith |
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(b)
|
|
Certification of Periodic Financial Report by Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C.
§ 1350, furnished herewith |
STATUS OF PRIOR DOCUMENTS
The Wells Fargo & Company Annual Report on Form 10-K for the year ended December 31, 2005, at the
time of filing with the Securities and Exchange Commission, shall modify and supersede all
documents filed prior to January 1, 2005, pursuant to Sections 13, 14 and 15(d) of the Securities
Exchange Act of 1934 (other than Exhibit 99(e) to the Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003, containing a description of the Companys common stock) for purposes of any
offers or sales of any securities after the date of such filing pursuant to any Registration
Statement or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by
reference such Annual Report on Form 10-K.
39
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on March 9, 2006.
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WELLS FARGO & COMPANY
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By: |
/s/ RICHARD M. KOVACEVICH
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Richard M. Kovacevich |
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|
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Chairman and Chief Executive Officer |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
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By: |
/s/ HOWARD I. ATKINS
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|
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Howard I. Atkins |
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|
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Senior Executive Vice President
and
Chief Financial Officer
(Principal
Financial Officer) March 9, 2006 |
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By: |
/s/ RICHARD D. LEVY
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|
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Richard D. Levy |
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Senior Vice President and
Controller
(Principal Accounting Officer) March 9, 2006 |
|
|
The Directors of Wells Fargo & Company listed below have duly executed powers of attorney
empowering Philip J. Quigley to sign this document on their behalf.
|
|
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J.A. Blanchard III
|
|
Richard D. McCormick |
Lloyd H. Dean
|
|
Cynthia H. Milligan |
Susan E. Engel
|
|
Donald B. Rice |
Enrique Hernandez, Jr.
|
|
Judith M. Runstad |
Robert L. Joss
|
|
Stephen W. Sanger |
Reatha Clark King
|
|
Susan G. Swenson |
Richard M. Kovacevich
|
|
Michael W. Wright |
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By: |
/s/ PHILIP J. QUIGLEY
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Philip J. Quigley |
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Director and Attorney-in-fact
March 9, 2006 |
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40