Wells Fargo 2012 Annual Report Download - page 5

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Our focus on customers and serving them well drove
another year of record results in2012 for WellsFargo and
our stakeholders.
2012: Continued financial success
We delivered net income of $18.9billion in2012, up
19percent from 2011. This fourth consecutive year of
record profit reflected the time-tested virtues of our
diversified business model and our focus on growing
revenue and managing costs and risks— no matter how
dicult the operating environment. We grew our core
loans and deposits, despite an uneven economic recovery,
and grew revenue in a low interest rate environment that
pressured our margins. Each of our primary business
segments grew its full-year segment net income year
over year: Community Banking by 15percent, Wholesale
Banking by 11percent, and Wealth, Brokerage and
Retirement by 4percent.
In2012, WellsFargo led in areas central to our
customers’ lives and our economy’s vitality— small
business lending, home mortgage lending, auto lending,
and private student lending. We provided a safe and
sound place for our customers to hold and manage their
financial assets, and served our customers eciently
and conveniently through the nation’s most extensive
network of banking stores, more than 12,000 ATMs, our
24-hour-a-day WellsFargo Customer ConnectionSM, and
our industry-leading online and mobile presence.
Just as important, we accomplished this with a cross-
sell strategy that continues to distinguish WellsFargo
as a leader in building customer relationships. It’s as
simple as this: The better we know our customers, the
more opportunities we have to provide them with the
products and services they need. In2012, that mindset
produced records in the average number of WellsFargo
products per customer. At the end of the fourth quarter,
the average Retail Bank household had more than
six products, our average Wholesale Bank customer
had nearly seven products, and our average Wealth,
Brokerage and Retirement customer had 10products!
Another measure of our success: deposit and
loan growth. Since completing our 2008 merger with
Wachovia Corp., WellsFargo has grown deposits by more
than $221billion and core loans by $31billion. Frankly,
there’s no better proof of customer confidence in today’s
WellsFargo and our unique opportunity to grow.
In2012, we continued to produce value for our
shareholders. Our return on assets was 1.41percent, our
return on equity was 12.95percent, and our full-year
earnings-per-share growth was 19percent. In2012, we
also returned more capital to our shareholders, as we
increased our regular quarterly dividend by 83percent
to 22cents per share and purchased 119million shares
of the company’s common stock. On Jan.22, 2013, we
raised our regular quarterly dividend again, an increase
of 14percent to 25cents per share. WellsFargo finished
the year with an industry-leading market capitalization
of $180billion (ourstock price multiplied by the number
ofshares outstanding).
WellsFargo’s full-year income was equally balanced
between net interest income and noninterest income,
a balance that has come to typify a core benefit of our
business model that makes growth an attainable goal in
a variety of interest rate environments. Indeed, in2012,
WellsFargo’s net interest income grew by $467million,
or 1percent, to $43.2billion. This was achieved despite
low interest rates that put pressure on our margins,
aswe delivered more products and services to customers
acrossour huge deposit base.
Meanwhile, we reduced credit losses to $9.0billion,
down $2.3billion, or 20percent, from $11.3billion in2011.
Our capital position also improved. WellsFargo
finished 2012 with Tier1 common equity1 of $109.1billion,
up 15percent from $95.1billion a year ago, resulting in a
Tier1 common equity ratio of 10.12percent under BaselI.
Helping an economy in transition
In conversation after conversation last year— across
kitchen tables, as well as conference room tables— we
heard of signs of a strengthening U.S. economy. Still, we
also observed the worries and uncertainty that influenced
consumer and business behaviors in many areas of the
country and the economy. Yes, low interest rates oered
acompelling opportunity to get household balance sheets
in order. And there were bright spots, such as energy,
that reminded us of the advantages our U.S. economy
still holds. But overall, our customers remained cautious
given the economy’s tepid growth and headlines about
Washington gridlock, budget pressures, and higher taxes.
So, while we remain optimistic for continued economic
expansion in2013, we do so guardedly, based on what we
experienced in2012.
1Please see the “Financial Review – Capital Management” section in this Report
formoreinformation.