Wells Fargo 2013 Annual Report Download - page 46

Earnings Performance (continued)
Operating Segment Results
We are organized for management reporting purposes into three
operating segments: Community Banking; Wholesale Banking;
and Wealth, Brokerage and Retirement. These segments are
defined by product type and customer segment and their results
are based on our management accounting process, for which
there is no comprehensive, authoritative financial accounting
guidance equivalent to generally accepted accounting principles
(GAAP). Table 9 and the following discussion present our results
by operating segment. For a more complete description of our
operating segments, including additional financial information
and the underlying management accounting process, see Note
24 (Operating Segments) to Financial Statements in this Report.
Table 9: Operating Segment Results – Highlights
Year ended December 31,
(in billions)
Community
Banking
Wholesale
Banking
Wealth, Brokerage
and Retirement Other (1)
Consolidated
Company
2013
Revenue $ 50.3 24.1 13.2 (3.8) 83.8
Provision (reversal of
provision) for credit losses 2.8 (0.4) - (0.1) 2.3
Noninterest expense 28.7 12.4 10.5 (2.8) 48.8
Net income (loss) 12.7 8.1 1.7 (0.6) 21.9
Average loans $ 499.3 290.0 46.1 (30.4) 805.0
Average core deposits 620.1 237.2 150.1 (65.3) 942.1
2012
Revenue $ 53.4 24.1 12.2 (3.6) 86.1
Provision for credit losses 6.8 0.3 0.1 - 7.2
Noninterest expense 30.8 12.1 9.9 (2.4) 50.4
Net income (loss) 10.5 7.8 1.3 (0.7) 18.9
Average loans $ 487.1 273.8 42.7 (28.4) 775.2
Average core deposits 591.2 227.0 137.5 (61.8) 893.9
2011
Revenue $ 50.8 21.6 12.2 (3.7) 80.9
Provision (reversal of
provision) for credit losses 8.0 (0.1) 0.2 (0.2) 7.9
Noninterest expense 29.3 11.2 9.9 (1.0) 49.4
Net income (loss) 9.1 7.0 1.3 (1.5) 15.9
Average loans $ 496.3 249.1 43.0 (31.3) 757.1
Average core deposits 556.3 202.1 130.0 (61.7) 826.7
(1) Includes corporate items not specific to a business segment and the elimination of certain items that are included in more than one business segment, substantially all of
which represents products and services for wealth management customers provided in Community Banking stores.
Community Banking offers a complete line of diversified
financial products and services for consumers and small
businesses. These products include investment, insurance and
trust services in 39 states and D.C., and mortgage and home
equity loans in all 50 states and D.C. through its Regional
Banking and Wells Fargo Home Lending business units. Cross-
sell of our products is an important part of our strategy to
achieve our vision to satisfy all our customers’ financial needs.
Our retail bank household cross-sell was a record 6.16 products
per household in November 2013, up from 6.05 in November
2012 and 5.93 in November 2011. We believe there is more
opportunity for cross-sell as we continue to earn more business
from our customers. Our goal is eight products per household,
which is approximately one-half of our estimate of potential
demand for an average U.S. household. In November 2013, one
of every four of our retail banking households had eight or more
of our products.
Community Banking reported net income of $12.7 billion in
2013, up $2.2 billion, or 21%, from $10.5 billion in 2012, which
was up 15% from $9.1 billion in 2011. Revenue was $50.3 billion
in 2013, a decrease of $3.1 billion, or 6%, compared with
$53.4 billion in 2012, which was up 5% compared with
$50.8 billion in 2011. The decrease in 2013 was a result of lower
mortgage banking revenue, partially offset by higher trust and
investment fees, and revenue from debit, credit and merchant
card volumes. The increase in 2012 was the result of higher
mortgage banking revenue and growth in deposit service
charges, partially offset by lower debit card revenue due to
regulatory changes enacted in October 2011, and lower net
interest income. Average core deposits increased $28.9 billion in
2013, or 5%, from 2012, which increased $34.9 billion, or 6%,
from 2011. Noninterest expense declined $2.1 billion in 2013, or
7%, from 2012, which increased $1.6 billion, or 5%, from 2011.
The decrease in noninterest expense for 2013 reflected lower
FDIC and other deposit insurance assessments due to lower
FDIC assessment rates. Noninterest expense for 2012 was
elevated, compared with 2013 and 2011, due to costs associated
with settling mortgage servicing and foreclosure-related matters
including the DOJ and the IFR settlement, and a $250 million
contribution to the Wells Fargo Foundation. The provision for
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