Wells Fargo 2013 Annual Report Download - page 32

This Annual Report, including the Financial Review and the Financial Statements and related Notes, contains forward-looking
statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and our
assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results may differ
materially from our forward-looking statements due to several factors. Factors that could cause our actual results to differ materially
from our forward-looking statements are described in this Report, including in the “Forward-Looking Statements” and “Risk Factors”
sections, and in the “Regulation and Supervision” section of our Annual Report on Form 10-K for the year ended December 31, 2013
(2013 Form 10-K).
When we refer to “Wells Fargo,” “the Company,” “we,” “our” or “us” in this Report, we mean Wells Fargo & Company and Subsidiaries
(consolidated). When we refer to the “Parent,” we mean Wells Fargo & Company. When we refer to “legacy Wells Fargo,” we mean
Wells Fargo excluding Wachovia Corporation (Wachovia). See the Glossary of Acronyms at the end of this Report for terms used
throughout this Report.
Financial Review
Overview
Wells Fargo & Company is a nationwide, diversified,
community-based financial services company with $1.5 trillion
in assets. Founded in 1852 and headquartered in San Francisco,
we provide banking, insurance, investments, mortgage, and
consumer and commercial finance through more than
9,000 locations, 12,000 ATMs and the Internet
(wellsfargo.com), and we have offices in 36 countries to support
our customers who conduct business in the global economy.
With more than 264,000 active, full-time equivalent team
members, we serve one in three households in the United States
and rank No. 25 on Fortune’s 2013 rankings of America’s largest
corporations. We ranked fourth in assets and first in the market
value of our common stock among all U.S. banks at
December 31, 2013.
Our vision is to satisfy all our customers’ financial needs,
help them succeed financially, be recognized as the premier
financial services company in our markets and be one of
America’s great companies. Our primary strategy to achieve this
vision is to increase the number of our products our customers
utilize and to offer them all of the financial products that fulfill
their needs. Our cross-sell strategy, diversified business model
and the breadth of our geographic reach facilitate growth in both
strong and weak economic cycles. We can grow by expanding the
number of products our current customers have with us, gain
new customers in our extended markets, and increase market
share in many businesses.
Financial Performance
We produced another outstanding year of financial results in
2013 and ended the year as America’s most profitable bank. We
continued to demonstrate the benefit of our diversified business
model by generating record earnings, growing loans and
deposits, achieving significant improvement in credit quality and
rewarding our shareholders by increasing our dividend and
buying back more shares. Wells Fargo net income was
$21.9 billion in 2013, an increase of 16% compared with 2012,
with record diluted earnings per share (EPS) of $3.89, also up
16% from the prior year. We achieved 16 consecutive quarters of
EPS growth and 11 consecutive quarters of record EPS. The
drivers of our earnings growth during 2013 reflected the
changing economic and interest rate environment. Home
affordability remained str0ng, despite an increase in interest
rates and home prices. As interest rates rose during 2013,
mortgage refinance volume declined compared with 2012.
However, over the same period we had double-digit fee growth
in brokerage, investment banking, cards and mortgage servicing.
The economy maintained its pace of moderate growth with gains
in consumer spending, business investment and employment.
Noteworthy items included:
x our loans increased $26.2 billion, up 3% even with the
planned runoff in our non-strategic/liquidating portfolios,
and our core loan portfolio grew by $39.9 billion, up 6%;
x our deposit franchise continued to generate strong deposit
growth, with total deposits up $76.3 billion, or 8%;
x our credit performance continued to be strong with total net
charge-offs down $4.5 billion, or 50%, from a year ago;
x we resolved many outstanding issues including the
Independent Foreclosure Review as well as repurchase
demands and mortgage-backed securities matters, primarily
involving pre-2009 mortgage loan originations, with
government-sponsored entities;
x we continued to focus on meeting our customers’ financial
needs and achieved record cross-sell across the Company;
x our return on assets (ROA) increased by 10 basis points to
1.51%, and return on equity (ROE) increased by 92 basis
points to 13.87%;
x we continued to generate strong capital growth as our
estimated Common Equity Tier I ratio under Basel III
increased to 9.78%, above our internal target of 9%; and
x our common stock price increased 33% and we returned
$11.4 billion in capital to our shareholders through an
increased common stock dividend and additional share
repurchases (up 33% from 2012).
Balance Sheet and Liquidity
Our balance sheet grew 7% in 2013 to $1.5 trillion, funded
largely by strong deposit growth. These deposits have diluted our
net interest margin (down to 3.39% in 2013 compared with
3.76% in 2012), but provide an opportunity to generate business
through cross-selling efforts in the future. We also have been
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