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Investment Profile

Fourth Quarter 2013

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

December 31, 2013

  • $1.5 trillion in assets, 4th largest in United States
  • $1.4 trillion in retail brokerage client assets, 3rd largest U.S. retail brokerage firm

Summary fourth quarter 2013 results

Net income $5.6 billion
Diluted EPS $1.00
Total revenue $20.7 billion
Pre-tax pre-provision profit $8.6 billion
Net interest margin 3.26%
Return on assets 1.47%
Return on equity 13.81%
Allowance for loan losses $14.5 billion

Financial Results

Record full year and quarterly net income; Strong loan and deposit growth Show Details
  • Record full year 2013 Wells Fargo net income of $21.9 billion, up 16% from 2012
  • Diluted earnings per share (EPS) of $3.89 for 2013, up 16% from 2012
  • Record fourth quarter 2013 Wells Fargo net income of $5.6 billion, up 10% from fourth quarter 2012
  • Record diluted earnings per share of $1.00 for fourth quarter 2013, up 10% from fourth quarter 2012
  • Revenue of $20.7 billion for fourth quarter 2013, down $1.3 billion from fourth quarter 2012 and up $187 million from third quarter 2013
  • Noninterest expense of $12.1 billion for fourth quarter 2013, down $811 million from fourth quarter 2012 and down $17 million from third quarter 2013
  • Total loans of $825.8 billion for fourth quarter 2013, up $26.2 billion from fourth quarter 2012
  • Total average core checking and savings deposits for the fourth quarter 2013 up $50.7 billion from fourth quarter 2012
Continued improvement in credit quality Show Details
  • Net charge-offs, or loan losses, of $963 million for fourth quarter 2013, down $12 million linked quarter, or 0.47% (annualized) of fourth quarter 2013 average loans
  • Nonperforming assets of $19.6 billion for fourth quarter 2013, down $1.1 billion linked quarter
  • Provision for credit losses was $600 million lower than net loan charge-offs
Strengthened capital levelsShow Details
  • Estimated Tier 1 common equity ratio under Basel I of 10.82%, compared to 10.60% in the prior quarter
  • Estimated Common Equity Tier 1 ratio under Basel III, using advanced approach, of 9.78%
  • Period end common stock share count declined 16.6 million from third quarter 2013 reflecting 30.0 million of purchases in the quarter
  • Purchased an additional estimated 11.3 million shares of common stock through a forward repurchase transaction expected to settle in first quarter 2014

Business Updates

Strong provider of credit to the U.S. economyShow Details
  • Continued commitment to helping our consumers and businesses grow, including $50 billion in originations of residential first mortgage loans, with an unclosed pipeline of $25 billion at the end of the fourth quarter 2013. Continued to serve our customers who are experiencing financial difficulties; since the beginning of 2009, we have helped homeowners with more than 897,000 active trial or completed mortgage modifications, and provided nearly 9.0 million new low-rate loans to customers for home purchases or refinancing.
Nationwide, diversified financial services companyShow Details
  • #1 total stores (more than 9,000 stores)
  • #1 banking stores (6,175 Wells Fargo stores in 39 states and Washington, D.C.)
  • #3 retail brokerage provider (more than 15,000 Financial Advisors nationwide)
  • A leading mortgage lending presence with approximately 2,500 locations including standalone mortgage stores and other business-partner sites
  • A leading internet bank (22.9 million active online customers)1
  • A leading contact center channel (500 million customer contacts annually)
  • 11.9 million active mobile customers1
  • #3 ATM network (12,000 ATMs)
All data as of December 31, 2013, unless otherwise noted
This Investment Profile contains forward-looking statements about our future financial performance. For information that could cause actual results to differ materially from expectations, please review the Forward-Looking Statements discussion on pages 13-14 of the fourth quarter earnings release (PDF*).
Quarter ended  12/31/2013  9/30/2013  12/31/2012
($ in millions, except per share amounts)      
Earnings and per share data   
Net income $5,610 5,578 5,090
Net income applicable to common stock  5,339 5,317 4,857
Total revenue  20,665 20,478 21,948
Pre-tax pre-provision profit (PTPP)1  8,580 8,376 9,052
Diluted earnings per common share 1.00 0.99 0.91
Dividends declared per common share 0.30 0.30 0.22
Key performance measures   
Profitability ratios (annualized)      
Return on assets (ROA)  1.47%1.53 1.46
Return on equity (ROE)  13.81 14.07 13.35
Net interest margin  3.26 3.38 3.56
Efficiency ratio2  58.5 59.1 58.8
Period-end balances   
Investment Securities$264,353 259,399  235,199
Loans  825,799 812,325 799,574
Allowance for loan losses  14,502 15,159 17,060
Assets  1,527,015 1,488,055 1,422,968
Core deposits3  980,063 947,805 945,749
Stockholders’ equity  170,142 167,165 157,554
Total equity  171,008 168,813 158,911
Asset quality ratios   
Nonperforming assets/Total loans  2.37%2.55 3.07
Allowance/Total loans  1.76 1.87 2.13
Allowance/Nonaccrual loans  93 90 83
Net charge-offs/Average total loans (annualized)  0.47 0.48 1.05
Capital ratios   
Risk-based capital       
Tier 1 capital4  12.33%12.11 11.75
Total capital4  15.44 15.09 14.63
Tier 1 leverage4  9.60 9.76 9.47
Tier 1 common equity4  10.82%10.60 10.12
Net income (loss) by operating segment5   
Community Banking $ 3,222  3,341 2,869
Wholesale Banking  2,111 1,973 2,032
Wealth Brokerage and Retirement Services  491 450 351
Other6  (214) (186)  (162)
Common stock price   
High $ 44.64 44.79 36.34
Low  40.07 40.79 31.25
Period end  45.40 41.32 34.18
1 Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company's ability to generate capital to cover credit losses through a credit cycle.
2 The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
3 Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).
4 Capital ratios at 12/31/2013 were preliminary upon release of the third quarter earnings report. Additional information regarding Tier 1 common equity is included on page 38 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Form 10-K.
5 The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment.
6 Includes elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing services and products for wealth management customers provided in Community Banking.
For complete information on fourth quarter 2013 earnings, please visit the investor relations section of our website at www.wellsfargo.com/invest_relations/investor_relations. This document contains forward-looking statements about our future financial performance. For information that could cause actual results to differ materially from expectations, please review the Forward-Looking Statements discussion on pages 13-14 of the fourth quarter earnings release.
Three charts depict Wells Fargo's balance of earnings from "spread" or interest income and from "fee" or noninterest income; a loan portfolio balanced between consumer and commercial loans; and diversified sources of fee income.
 
All data as of December 31, 2013
1 Other noninterest income includes net losses on debt securities available for sale, net gains from equity investments, lease income, life insurance investment income and all other noninterest income. This Investment Profile contains forward-looking statements about our future financial performance. For information that could cause actual results to differ materially from expectations, please review the Forward-Looking Statements discussion on pages 13-14 of the fourth quarter earnings release (PDF*).
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The sum of net interest income, noninterest income (includes fee income), net of noninterest expense, the provision for credit losses, income tax expense, and income or loss from noncontrolling interests.
 
 
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Diluted EPS

 
Diluted earnings per share (EPS) includes the effects of common stock equivalents (stock options, restricted share rights, convertible debentures, and warrants) that are dilutive.
 
 
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Pre-tax pre-provision profit

 
Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle.
 
 
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Tier 1 common equity

 
Tier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. Data is preliminary upon release of earnings. Table on page 40 of the fourth quarter earnings release (PDF*) has more information on Tier 1 common equity.
 
 
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Pre-tax pre-provision (PTPP)

 
Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company's ability to generate capital to cover credit losses through a credit cycle.
 
 
Close

Efficiency ratio

 
The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
 
 
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Core deposits

 
Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, certain market rate and other savings, and certain foreign deposits (Eurodollar sweep balances).
 
 
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Tier 1 capital

 
Capital ratios at 12/31/2012 were preliminary upon release of the fourth quarter earnings report. Additional information regarding Tier 1 common equity is included on page 40 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Annual Report on Form 10-K.
 
 
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Total capital

 
Capital ratios at 12/31/2012 were preliminary upon release of the fourth quarter earnings report. Additional information regarding Tier 1 common equity is included on page 40 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Annual Report on Form 10-K.
 
 
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Tier 1 leverage

 
Capital ratios at 12/31/2012 were preliminary upon release of the fourth quarter earnings report. Additional information regarding Tier 1 common equity is included on page 40 of the Fourth Quarter earnings release. Finalized data will be reported in Wells Fargo's Annual Report on Form 10-K.
 
 
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Other

 
Includes Wachovia integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing wealth management customers serviced and products sold in the stores.
 
 
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Total revenue

 
The sum of net interest income and noninterest income.
 
 
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Non-strategic/liquidating portfolios

 
Non-strategic/liquidating portfolios include Pick-a-Pay, liquidating home equity, legacy Wells Fargo Financial indirect auto and debt consolidation, education finance government loans and other purchased credit-impaired loans. See table on page 6of the fourth quarter 2012 earnings release for more information.
 
 
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Return on equity

 
Net income applicable to common stock as a percentage of average common stockholders’ equity.
 
 
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Return on assets

 
Net income as a percentage of average total assets.
 
 
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Net interest margin

 
The average yield on earning assets minus the average interest rate paid for deposits and other sources of funding.
 
 
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Allowance for loan losses

 
The allowance for loan losses represents management’s estimate of loan losses inherent in the loan portfolio at the balance sheet date (excluding loans carried at fair value.)
 
 
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Operating Segment

 
The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment. In first quarter 2012, we modified internal funds transfer rates and the allocation of funding. Prior periods have been revised to reflect these changes.
 
 
 
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