Wells Fargo Dec 2011

8/3/2019 Wells Fargo Dec 2011

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Goldman Sachs U.S. FinancialServices Conference

John Stumpf

C airman an C ie Executive O icer

December 6, 2011


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Wells Fargo vision

We want to satisfy all our customers

financially, be the premier provider

our markets, and be known as one

.

1


3/21

Wells Fargo serves consumers and businesses in morecommunities than any other U.S. Bank

70+ MM customers

9,124 stores

Retail banking stores 6,265

Wells Fargo Advisors

offices

1,383

Wholesale offices 758

Mortgage stores 718

Sales Force

Platform bankers (1) 30,800

Financial advisors (2) 15,188

Home Mortgage 10,000Wells Fargo Retail Banking stores

Other Distribution Channels

ATMs 12,231

consu tantsWells Fargo Advisors officesWells Fargo Home Mortgage stores

2

customers (3).

Mobile customers (3) 6.7 MM

As of September 30, 2011.

(1) Active, full-time equivalent.(2) Series 7 brokers.(3) Combined active customers.


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Fulfilling our responsibility to our communities

Helping homeowners

- $237 billion of residential mortgage originations YTD

- Participated in more than 600 home preservation workshops since the beginning of 2009

- 716,000 active trial or completed mortgage modifications since the beginning of 2009

- Over $4 billion in principal forgiven in Pick-a-Pay portfolio

Lending to businesses

- #1 Middle market commercial lender (1)

- #1 Small business lender for 9 consecutive years (2)

- $10 billion in new loan commitments to small business customers YTD

Supporting communities

- Employ 1 in every 500 working Americans

- Over 900,000 volunteer hours by team members YTD

- Nations #1 United Way Campaign in 2011

3

Year-to-date (YTD) through September 30, 2011.(1) Lead bank market share, Greenwich Associates 2010 Middle Market Survey.(2) U.S. in dollars per CRA data, 2010.


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Breadth of product/business lines

Deposits #2 in U.S. (1)

Residential mortgage#1 Mortgage originator (2)

#2 Mortgage servicing portfolio (2)

Lending

#1 Commercial real estate originator (4)

#1 Used car lender, #2 auto lender overall (5)

#1 Middle market commercial lender (6)

#2 Education finance lender (private) (7)

Investment banking

#3 Loan syndication bookrunner (8)

Top 10 underwriter of equity capital markets (9)

Top 10 underwriter of domestic high grade and non-investment grade

loans and bonds(10)

#2 in Stock-picking (Research) (11)

Insurance #1 Bank-owned insurance brokerage (12)

Wealth Management/ Brokerage

#2 Bank-owned mutual fund family (13)

#2 Annuity distributor (based on sales) (14)

#3 Full-service retail brokera e based on FAs (15)

#4 Wealth management provider (based on AUM) (16)

Card Services#2 Debit card issuer (17)

#1 U.S. bank managed remittance network overseas (18)

4

(1) FDIC data, June 2011 (2) Inside Mortgage Finance, August 2011. (3) U.S. in dollars per CRA data, 2010. (4) Based on volume and dollars in the U.S. MortgageBankers Association, October 2011. (5) AutoCount, September 2010 August 2011. (6) Lead bank market share, Greenwich Associates 2010 Middle Market Survey.(7) Individual company reports, 2010. (8) Number of transactions, Thomson Reuters, YTD through September 2011. (9) Securities Data Company, YTD throughSeptember 2011. (10) Bloomberg, YTD through September 2011. (11) Among all eligible Wall Street firms, Financial Times/Starmine 2011 annual survey. (12)Business Insurance Magazine, July 2011. (13) Strategic Insight, 9/30/11. (14) SunLife Distributer Roundtable Survey, April 2011. (15) Internal and peer reports,3Q11. (16) Based on AUM of accounts > $5 million, Barrons, September 2011. (17) Nilson Report, April 2011. (18) Inter-American Dialogue, 6/18/10.


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Diversified business model

Balanced Spread andFee Income

Diversified FeeGeneration

12%9%

Diversified LoanPortfolio

5%

46%

54%

11%9%

5%

55%40%

20%

11%

12%

Service Charges 12%

Noninterest Income 46%

Net I nterest I ncome 54%

Commercial Loans 40%

Consumer Loans 55%

Foreign Loans 5%

Trust, Investment & I RA fees 11%

Commissions & all other fees 20%

Card Fees 11%

Other Banking Fees 12%

Mortgage Servicing, net 11%

Mortgage Orig./ Sales, net 9%

5

Insurance 5%

Other NoninterestIncome (1 ) 9%

All data is for 3Q11.(1) Other noninterest income includes net gains (losses) on debt securities available for sale, net gains from equityinvestments, net gains (losses) from trading activities, operating leases and all other noninterest income.


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Balanced business model has led to consistent earnings growthin various economic environments over the past 10 years

12

14

Wells Fargo Net Income($ in billions)

(1)

Slope of the Yield Curve,Unemployment Rate and Real

GDP Grow th

6

8

10

4%

6%

8%

0

2

4

-

-2%

0%

2%

Wachovia

merger

(2)

SlopeoftheYieldCurve UnemploymentRate RealGDPGrowth

6

(1) 10-year Treasury less the 3-month Treasury.(2) Acquired Wachovia on December 31, 2008. Full year 2008 net income was reduced by an $8.1 billion (pre-tax) credit reserve build, including a $3.9 billion

(pre-tax) provision to conform both Wells Fargos and Wachovias credit reserve practices.(3) YTD through September 30, 2011.


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Wells Fargo operates with less operational, balance sheet andmarket risk than our large peers

Credit exposures

Charge-off ratio (1 ), 3Q11Percent

Trading

Trading assets, 3Q11$ Billions

Derivatives exposures

Notional derivatives/ Tier 1 capital3Q11Multiple (x)

1.4

1.4

2.1

2.8C

BACJPM

C

BACJPM

WFC

C 408x

BAC 475xJPM 521x

WFC 35x58

462

176

321

(2)

Cross-border risk

Foreign loans/ Total loans, 3Q11Percent

Liquidity

Total deposits/ Total liabilities,3Q11

Market risk

VAR, 1-day 99% (3 ), 3Q11$ Millions

BAC

JPM

WFC

ercen

BAC

JPM

WFC

BAC

JPM

WFC5

13

9

77

52

52

30

53

164

CC C48 224

7

Source: SNL and company reports.(1) Does not include charge-offs absorbed by the nonaccretable difference for purchased credit-impaired loans.(2) Wells Fargos charge-off rate in part reflects reduced risk in the legacy Wachovia portfolio due to PCI accounting performed for the highest risk Wachovia loans.(3) JPM at 95% confidence interval.


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Record earnings in 3Q11

Record earnings of $4.1 billion, up 3%linked quarter (LQ) and 21% year-over-year (YoY)

$0.72 earnings per share, up 3% LQ

Wells Fargo Net Income($ in millions)

3,7593,948

4,055

and 20% YoY

ROA up 17 bps and ROE up 96 bps YoY

Pre-tax pre-provision profit (1) of $8.0billion, up $40 million LQ

3,339

3,414

11.98% 11.92%11.86%

Noninterest expense declined $798million or 6% LQ

Continued improvement in creditualit

1.09% 1.09%

1.23%1.27% 1.26%

10.90% 10.95%

3Q10 4Q10 1Q11 2Q11 3Q11

Return on Equity (ROE)

Return on Assets (ROA)

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(1) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes PTPP is a useful financial measure because it enablesinvestors and others to assess the Companys ability to generate capital to cover credit losses through a credit cycle.


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Year-over-year growth in core value drivers

139.7116.5

814.5

895.4

Loans($ in billions)

Deposits($ in billions)

753.7 760.1

614.0643.6

-

liquidating

portfolio

Core loans

3Q10 3Q113Q10 3Q11

Securities AFS Tier 1 Common Equityin billions

176.9

207.2

77.6

91.9

8.01%.

9

3Q10 3Q11

Period end balances.

The non-strategic/liquidating portfolio is composed of the Pick-a-Pay, liquidating home equity, legacy WFF indirect auto, legacy WFF debt consolidation, EducationFinance government guaranteed and Commercial, legacy Wachovia Commercial Real Estate and other PCI loan portfolios.See Appendix page 19 for additional information on Tier 1 common equity.

3Q10 3Q11

Tier 1 Common Equity Ratio


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One Wells FargoRetail Banking stores

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One Wells Fargo

Average Core Deposits($ in billions)

11.8

Net Income($ in billions)

67.6

836.8

769.2

Other Core

Deposits

Core

Checking345.0

Avera e Loans

.

2008 2011 YTD

303.8

41.2

4Q08 3Q11

and Savings

Tier 1 Ca ital

754.5

($ in billions)

86.4

110.7

($ in billions)

413.9

12

4Q08 3Q11 4Q08 3Q11


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One Wells FargoContinued opportunity to cross sell in the retail bank

14-16

Retail Bank Household Cross-sell (1)

7.43

5.395.91

6.28

Wells Fargo East Combined Wells

Fargo

Wells Fargo West Wells Fargo Top

Region

Avg. U.S.

Financial Services

Consumer

13

(1) Number of products per household as of 3Q11.


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One Wells FargoWholesale Banking opportunities

Origination / Acquisitions

- Average loans up $10.3 billion, or 4%, LQ on new and existing customer activity

- Purchased asset portfolios with favorable risk-reward characteristics

-

- Opportunity to increase revenue in the Eastern U.S. by implementing legacy Wells Fargo model- Foreign exchange revenue with wholesale customers increased 25% from 2010 YTD

Investment Banking Capital Markets

- Investing in our talent base: more team members since the merger, with strategic hires in key sectors

- Investment banking revenue from corporate and commercial customers up 27% YTD as we leverageproduct set, distribution channels and strong customer base

International ca abilities

- Deepen cross-sell through our Global Financial Institutions (GFI) business

- Build out global banking to U.S. commercial and corporate customers

Treasury Management

- Leading treasury management franchise with competitive technology advantages Named Best Corporate/Institutional Internet Bank in the U.S. (1)

Customers are already heavy technology users and this continues to increase

14

YTD through September 30, 2011.(1) Source: Global Finance magazine, August 2011.


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Well positioned for growth

Wachovia merger integration nearing successful completion

- Regional banking store conversions complete

- Over 45 million banking customers on a single platform

- Revenue synergies across the franchise

Deposit strength

- Lowest cost of deposits among large peers

- Largest percentage of funding from deposits among large peers

- Commercial loans up $9.1 billion, or 3%, from 2Q11

- Residential mortgage pipeline up $33 billion, or 65%, from 2Q11

Benefiting from selective acquisitions

- --

- Loan portfolio purchases in 3Q11 and 4Q11 to date include:

Purchased $1.1 billion of commercial loans from Bank of Ireland in 3Q11 and under contract to buy a$3.3 billion portfolio (face value) of US-based commercial loans from the Irish Bank ResolutionCorporation

Strong balance sheet and capital position- Over $100 billion of cash and short term investments

- Estimated 7.41% Tier 1 common equity ratio under Basel III requirements at 9/30/11 (1)

- In 3Q11 purchased 22 million common shares and paid for an additional 6.3 million shares through a

16

forward repurchase transaction that settled in 4Q11

.(1) Pro forma calculation based on Tier 1 common equity, as adjusted to reflect managements interpretation of current Basel III capital proposals. This pro forma

calculation is subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory authorities. See slide 20for additional information.


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Appendix

17


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Tier 1 common equity under Basel III (Estimated) (1)

Q uart e r e nde d

Wells Fargo & Company and Subsidiaries

TIER 1 CO MMON EQ UITY UNDER BASEL III (ESTIMATED) (1)

S e p t. 3 0 ,

2011

$ 9 1.9

3 .7

($ in billio ns )

Tier 1 co mm o n equity under Ba s el I

Adjus tments fro m B as el I to Ba s el III:

Cumulative other comprehensive income (2)

(1.5)

Other 0 .2

(C) 9 4 . 3

(D) $ 1,2 7 2 .2

Thresho ld de ductio ns defined unde r Bas el III (2) (3)

Tier 1 co mm o n equ ity anticipated unde r Bas el III

To tal ris k-weighted a s s ets anticipated under Ba s el III(4)

-

(C)/(D) 7 . 4 1 %

(1) Tier 1 co mmon equity is a non-g enerally accept ed acco unting p rinciple (GAAP) financial measure that is used b y investo rs, analyst s and

bank regulatory agencies to assess the capital position of financial services companies. Management reviews Tier 1 common equity

along with ot her meas ures o f cap ital as p art o f its financial analyses and has included this non-GAAP financial information, and t he

corresp onding reconciliation t o to tal equity, because o f current interest in such information o n the part of market part icipants.

anticipated un der B as el III

(3 )

(4) Under current Bas el pro po sals, risk-weighted as sets incorp orate d ifferent class ifications of ass ets , with certain risk weights b ased o n a

bo rrower's cred it rating or Wells Farg o's own risk mod els, along with adjust ments to add ress a co mbination of credit/ counterparty,

op eratio nal and market risks, and ot her Basel III elements. The amount o f risk-weight ed as set s anticipat ed under B asel III is preliminary

o a y n n eres r a es can ave a s g n can mp ac o n e va ua o n o c umu a ve o er co mp re ens ve nco me an s an

therefore, impact adjustments under Basel III in future reporting periods.

Threshold d educt ions under B asel III include individual and ag gre gat e limitat ions, as a perc entag e of Tier 1 common equity (as d efined

under Basel III), with respect to MSRs, deferred tax assets and investments in unconsolidated financial companies.

20

and subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory

authorities.

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Wells Fargo Dec 2011