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-W ELL 5 FAR G 0 & C: 0 M PAN Y, AND 5US5IDIARIE5 HIGHLIGHTS CORPORATE PROFILE (in millions) % Change 1996/ 1995/ 1996 1995 1994 1995 1994 Wells Fargo Bank, N.A. is the primary subsidiary FOR THE YEAR ofWells Fargo & Company, founded in 1852. Net income $ 1,071 $ 1,032 $ 841 4% 23 % The Company's familiar trademark, the Concord Net income applicable to common stock 1,004 990 798 1 24 Per common share stagecoach, is both a memento of its historic role Net income $ 12.21 $ 20.37 $ 14.78 (40) 38 in developing the West's premier stage line and Dividends declared 5.20 4.60 4.00 13 15 an enduring symbol of reliability - the pride in TABLE OF CONTENTS Average common shares outstanding 82.2 48.6 53.9 69 (0) "coming through" for its customers that has been a Wells Fargo hallmark for 145 years. Profi tabil ity ratios 1 HIGHLIGHTS Net income to average total assets (ROA) 1.15% 2.03% 1.62% (43) 25 Wells Fargo operates one of the largest and Net income applicable to common stock to 2 LETTER TO SHAREHOLDERS busiest consumer banking businesses in the average common stockholders' equity (ROE) 8.83 29.70 22.41 (70) 33 FINANCIAL REVIEW United States, serving as banker to more than 6 Overview Efficiency ratio 69.0% 55.3% 56.6% 25 (2) 10 million households in the 10 Western states:" 8 Merger with First Interstate Bancorp Average loans $ 60,574 $34,508 $34,039 76 1 9 Line of Business Results The bank provides a retail network of more than (2) Earnings Performance Average assets 93,392 50,767 51,849 84 1,900 staffed service outlets, 4,300 round-the- l2 Net Interest Income Average core leposits 70,890 36,624 39,592 94 (7) clock Wells Fargo Express™ ATMs, a 24-hour 12 Noninterest Income Net intere t margin 6.11% 5.80% 5.55% 5 5 telephone banking service, and a popular online 16 Noninterest Expense Net Income and Ratios Excluding banking service. 16 Income Taxes 17 Earnings/Ratio Excluding Goodwill Goodwill and Nonqualifying Core Deposit The Company also provides a full range of and Nonqualifying COl Intangible Amortization and Balances Balance Sheet Analysis ("Cash" or "Tangible") banking services to small business, commercial, 17 Investment Securities Net income applicable to common stock $ 1,376 $ 1,025 $ 833 34 23 agribusiness and real estate customers. A joint (table on page 47) Net income per common share 16.74 21.08 15.45 (21) 36 venture, Wells Fargo HSBC Trade Bank, N.A., is 19 Loan Portf lio ROA 1.66% 2.12% 1.71% (22) 24 a nationally chartered, FDIC-insured bank that is (table on page 49) ROE 28.46 34.92 26.88 (18) 30 21 Nonaccrual and Restructured solely devoted to international trade finance for Efficiency ratio 62.2 54.5 55.7 14 (2) Loans and Other Assets middle-market businesses. Wells Fargo is also one 24 Allowance for Loan Losses AT YEAR END of tL1e nation's leading managers and administra- (table on page 50) lnve~tment securities $ 13,505 $ 8,920 $11,608 51 (23) tors of mutual fund and trust assets. In addition 26 Deposits 26 Certain Fair Value Information Loans 67,389 35,582 36,347 89 (2) to managing more than $19 billion in mutual 26 Capital Adequacy/Ratios Allowance for loan losses 2,018 1,794 2,082 12 04) funds, the bank maintains personal and institu- (table on page 69) Goodwill 7,322 382 416 (8) (6) tional trust assets of approximately $300 billion. 27 Asset/Liability Management Assets 108,888 50,316 53,374 116 31 Derivative Financial Instruments Core depo its 81,581 37,858 38,508 115 (2) *Arizona, California. Colorado, Idaho, Nevada. New Mexico, 32 Liquidity Management Common stockholders' equity 13,512 3,566 3,422 279 4 Oregon, Texas, Utah and Washington 34 Compari on of 1995 Versus 1994 Stockholder' equity 14,112 4,055 3,911 248 4 36 Additional Information Tier 1 capital 6,565 3,635 3,562 81 2 FINANCIAL STATEMENTS Total capital (Tiers 1 and 2) 10,000 5,141 5,157 95 37 Consolidated Statement of Income Capital ratios 38 Consolidated Balance Sheet ON THE COVER Common stockholders' equity to assets 12.41% 7.09% 6.41% 75 11 39 Consolidated Statement of Changes in Stockholders' equity to assets 12.96 8.06 7.33 61 10 Stockholders' Equity This year's Annual Report cover displays a portion ofan Risk-based capital 40 Consolidated Statement of Cash Flows authentic 1907 Wells Fargo map from the Company's Tier I capital 7.68 8.81 9.09 (13 ) (3) 41 Notes to Financial Statements historical archives. It oudines Wells Fargo's nationwide (index on inside back cover) Total capital 11.70 12.46 13.16 (6) (5) express routes by railroad and steamship, the dominant Leverage 6.65 7.46 6.89 (11) 8 75 INDEPENDENT AUDITORS' REPORT methods oftransportation around the tum of the century. 76 QUARTERLY FINANCIAL DATA Book value per common share $ 147.72 $ 75.93 $ 66.77 95 14 From 1852 to 1918, Wells Fargo also used Concord stagecoaches to carry gold, silver and other shipment~ over 78 DIRECTORY Common stockholders 42,277 27,885 27,904 52 thousands ofmiles ofstage lines across the West, and in the SHAREHOLDER INFORMATION Staff (active, full-time e lui valent) 36,902 19,249 19,192 92 1860s owned the largest stagecoach operation in the world: (inside back cover) Retail outlets the Great Overland Mail, running from California to INDEX OF SPECIAL TOPICS Traditional branches 1,274 535 572 138 (6) Nebraska, and northward into Idaho and Montana. (inside back cover) Supermarket branches 298 94 39 217 141 Banking centers 375 345 23 9 ~-- LETTER TO SHAREHOLDERS 1a" yea, at thi' time, om I"", into focused strategic partnerships; companies for information on entire customer base by year end. to you was very short because we continued restructuring our the merger. There were several important were in the midst of planning the California branch network; By April 1, we had finalized reasons behind our decision to move integration of Wells Fargo and added supermarket locations; and many important decisions. We with such speed. Primary among First Interstate Bancorp. We said continued to promote our key had organized the First Interstate them was to control expenses by we'd report back to you at year business initiatives. franchise along Wells Fargo business quickly reducing the multiple-state end 1996, and, as promised, this We sold First Interstate banks lines, determined the final senior infrastructure of Flrst Interstate letter chronicles the events of the in three of the 13 states soon management structure, and and its costs, and by eliminating past year. after the merger became official announced plans to close approxi business unit and staff redundancies Wells Fargo won its bid to Alaska, Montana and Wyoming mately 350 of the combined between the two companies. Equally acquire First Interstate Bancorp where our market share was very bank's California branches by important, we knew from prior in January 1996, and on April 1, small and opportunities to expand the end of September. mergers that it was critical to keep we completed the acquisition were limited. All three sales closed We also announced our plans the period of uncertainty and PAUL. HAZEN - CHAIRMAN WILLIAM ZUENDT - PRESIDENT for $11.3 billion in stock. With in the fourth quarter. Additionally, to reduce the combined staff of turbulence for customers and this merger, Wells Fargo not only to satisfy a regulatory requirement 45,800 by 7,200 by year-end employees as short as possible. Our acquired customers, staff and for the completion of the merger, through attrition and severance. intent was to get quickly past the offices throughout the West - we divested 61 branches in By December 31, the numbers disruptions we knew were inevitable, we returned to our 19th century California in September. were somewhat higher, with a total and begin to build relationships with framework. For example, agreement between the two com roots, when the company operated How the merger came together, staff reduction of 8,900. More our new customers. Unfortunately, Commercial Banking managers panies outlines shared responsibility its banking and express businesses what we believe we gained with First Interstate employees than we the disruptions lasted longer than faced the question of how best to and revenue, with full involvement in this same territory. the speed of our integration and anticipated were able to decline we anticipated. Nevertheless, we serve new lockbox customers. Wells by both parties in product devel By the end of 1996, we were a at what cost, are the topics of this our job offer under the terms of held to our timelines, believing Fargo had previously created a opment and strategic planning. very different-looking company year's letter. the severance program put in place that there was no value gained in strategic alliance for its lockbox The independence our staff than we had been at the begilU1ing by First Interstate during the take trying to maintain the status quo operations in 1992. We realized had in operating their businesses of the year. Our assets had more EARLY DECISIONS over attempt in late 1995. longer than necessary. significant benefits for customers allowed them to accomplish all. than doubled, from $50.3 billion One of the biggest and most In preparing for the conversion, and shareholders by aligning it unprecedented number of tasks in January to $108.9 billion in Our early decision in January to critical decisions we made at this every business unit in the company with a company that had better and address logistical problems December; we operated our retail stick predominantly with Wells early date involved the plan for developed its own integration plan.