Wells Fargo Reports Record Quarterly Revenue, EPS, Net Income

Wells Fargo & Company (NYSE:WFC): Record diluted earnings per share of $0.66, up 10 percent from prior year’s $0.60, up 13 percent (annualized) from fourth quarter 2006 Record net income of $2.24 billion, up 11 percent from prior year’s $2.02 billion, up 12 percent (annualized) from fourth quarter 2006 Record revenue up 10 percent from prior year Average loans up 12 percent (annualized) from prior quarter, up 3 percent from prior year; up 13 percent from prior year excluding real estate 1-4 family first mortgages Average core deposits(a) up 10 percent from prior year, up 9 percent (annualized) from prior quarter Net interest margin of 4.95 percent, up 10 basis points from prior year, up 2 basis points from prior quarter Quarter ended --------------------------------------- Mar. 31, Dec. 31, Mar. 31, 2007 2006 2006 -------- -------- -------- Earnings Diluted earnings per share $ 0.66 $ 0.64 $ 0.60 Net income (in billions) 2.24 2.18 2.02 Asset Quality Net charge-offs as % of avg. total loans 0.90% 0.92% 0.56% Nonperforming assets as % of total loans 0.82 0.76 0.60 Other Revenue (in billions) $ 9.44 $ 9.41 $ 8.56 Average loans (in billions) 321.4 312.2 311.1 Average core deposits(a) (in billions) 290.6 283.8 257.5 Net interest margin 4.95% 4.93% 4.85% (a) See Footnote 2 to Summary Financial Data. Wells Fargo & Company (NYSE:WFC) reported record diluted earnings per common share of $0.66 for first quarter 2007, up 10 percent from $0.60 in first quarter 2006. Net income was a record $2.24 billion, up 11 percent from $2.02 billion in first quarter 2006. "Once again, our talented team delivered outstanding, industry-leading results with solid double-digit growth in revenue, net income and earnings per share,” said Chairman and CEO Dick Kovacevich. "We achieved this broad-based, record breaking performance despite a downturn in some housing markets and a flat to inverted yield curve because our team members, guided by our vision and values, are relentlessly focused on satisfying all our customers’ financial needs and helping them succeed financially. By collaborating together effectively as ‘One Wells Fargo,’ they’re also, instinctively and naturally, putting what’s best for the customer first and thus making it easier and adding greater value for our customers to do more business with us. As a result of our outstanding financial performance and conservative risk management, Wells Fargo Bank, N.A. is now the only U.S. bank, and one of only two worldwide, to have the highest credit rating from both Moody’s Investors Service and Standard & Poor’s Ratings Services.” Financial Performance Diluted earnings per share were a record $0.66, up 10 percent from $0.60 earned in first quarter 2006 and up 13 percent (annualized) from $0.64 in fourth quarter 2006. "We are very pleased to report, once again, solid, double-digit growth and record results,” said Chief Financial Officer Howard Atkins. "In the last five years, Wells Fargo has grown earnings per share at a double-digit pace in 17 of the past 20 quarters. The results in first quarter 2007 were notable for the balance across our broadly diverse business segments, for continued improvement in operating margins, and for a modest decline in net credit losses from fourth quarter levels. In terms of business performance, growth was once again well balanced between consumer and commercial with most of our 80 plus businesses producing double-digit earnings or revenue growth in the quarter. In terms of operating margins, net interest margin improved to 4.95 percent, up 10 basis points from a year ago; return on assets, which includes credit costs, improved to 1.89 percent, up 17 basis points from a year ago; operating leverage was positive with revenue growth of 10 percent exceeding 9 percent expense growth; and return on equity remained strong at 19.7 percent, among the best in the industry. Earnings growth and operating margins were solid and improved in first quarter, despite an increase in nonperforming assets and credit charge-offs from a year ago, reflecting in large part our ongoing discipline in managing our businesses and balance sheet for industry-leading risk-adjusted returns.” Revenue Revenue of $9.4 billion was another record, up $886 million, or 10 percent, from a year ago. "Community Banking and Wholesale Banking revenue growth was 12 percent and 15 percent, respectively, reflecting the strength and balance of our business model,” said Atkins. Businesses with double-digit, or near double-digit, year-over-year revenue growth included commercial banking, asset-based lending, asset management, international/trade finance, capital markets, real estate brokerage, business direct, wealth management, card services, home equity lending, personal credit management, corporate trust and home mortgage. Year-over-year revenue growth was driven by growth in net interest income and particularly strong increases in fee income across products and services, reflecting continued growth in cross-sell. "Given the deterioration in the nonprime mortgage market during the first quarter, we took a number of actions that reduced revenue by approximately $90 million (pre tax), including reducing the carrying value of all nonprime loans in our mortgage warehouse and providing for additional estimated early payment default losses on securitized mortgages. In addition, given the decline in mortgage rates during the quarter, revenue was reduced by $34 million (pre tax) reflecting the decline in the value of mortgage servicing rights net of hedging,” said Atkins. Loans Average loans increased $10.3 billion, or 3 percent, to $321.4 billion from a year ago. Excluding real estate 1-4 family first mortgages – the loan category affected by the sales of adjustable rate mortgages (ARMs) last year – total average loans grew by $30.2 billion, or 13 percent, from first quarter 2006. On a linked-quarter basis, average total loans grew $9.3 billion, or 12 percent (annualized). Since the ARM sales were completed prior to fourth quarter 2006, the 12 percent (annualized) linked-quarter loan growth was not impacted by any ARM sales. Average commercial and commercial real estate loans increased $12.3 billion, or 11 percent, from first quarter 2006 and increased $3.5 billion, or 12 percent (annualized), from fourth quarter 2006, marking the 10th consecutive quarter of double-digit, year-over-year commercial loan growth. Middle market lending, specialized financial services, commercial real estate, small business lending (Business Direct) and asset-based lending all had double-digit loan growth from first quarter 2006. Average consumer loans decreased $2.8 billion from first quarter 2006 due to the previous sales of ARMs. Excluding real estate 1-4 family first mortgages, average consumer loans increased $17.1 billion, or 14 percent, from a year ago. Average real estate 1-4 family junior lien mortgages, credit card, and other revolving credit and installment loans grew at double-digit rates from a year ago. On a linked-quarter basis, average consumer loans grew 12 percent (annualized). Deposits Average core deposits increased $33.1 billion, or 13 percent, to $290.6 billion year over year and increased 10 percent (annualized) on a linked-quarter basis. Core deposits now include certain funds that were previously swept into non-deposit products. Including only the growth in these funds from the date of conversion to deposits, average core deposits grew 10 percent year over year and 9 percent (annualized) on a linked-quarter basis. Average mortgage escrow deposits were $20.6 billion, up $5.1 billion from first quarter 2006 and up $0.4 billion on a linked-quarter basis. Average retail core deposits grew $9.9 billion, or 5 percent, from first quarter 2006 and increased $3.7 billion, or 7 percent (annualized), on a linked-quarter basis. Average net new consumer checking accounts grew 5.2 percent from first quarter 2006. Net Interest Income Net interest income increased 3 percent from first quarter 2006 driven by a one percent increase in average earnings assets and a 10 basis point increase in the net interest margin. The completion of the sales of ARMs and lower-yielding investment securities last year reduced the earning asset growth rate year over year, but also helped boost net interest margin. Net interest margin continued to benefit from growth in core deposits. On a linked-quarter basis, net interest income was down $40 million, or 3 percent (annualized), largely due to two fewer days in the quarter, and a decline in the mortgage loan warehouse. On a linked-quarter basis, net interest margin increased two basis points to 4.95 percent. Noninterest Income Noninterest income increased $746 million, or 20 percent, from first quarter 2006. "Growth in fee income was strong across the board, reflecting our ongoing success in cross-selling products and services to both consumer and commercial relationships,” said Atkins. Deposit service fees rose 10 percent reflecting solid growth in deposit balances and accounts; trust and investment fees rose 10 percent reflecting increases in equity/bond markets from a year ago and success in building new wealth management relationships; debit and credit card fees rose 22 percent reflecting deeper penetration rates and increased activity; insurance fees rose 10 percent reflecting higher sales; and mortgage banking fee income increased due to an increase in originations and a 41 percent increase in gross servicing income, including the $140 billion servicing portfolio acquired last year. Capital markets activities were generally strong in the quarter, although at $97 million, equity gains were $88 million below 2006 average quarterly gains of $185 million. In line with its asset/liability management process, the Company sold $4 billion of its lowest-yielding bonds in the quarter at a gain of $29 million. At March 31, 2007, the net unrealized gain on securities available for sale was $948 million. Noninterest Expense Noninterest expense was up $452 million, or 9 percent, from first quarter 2006. In the last 12 months, the Company opened 104 retail banking stores and added 7,600 team members (full-time equivalents). On a linked-quarter basis, noninterest expense increased $115 million, or 9 percent (annualized). Expenses in first quarter 2007 included $50 million of stock option expense, $29 million of seasonal FICA expenses and $16 million of acquisition-related integration costs. Income Taxes On January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48). Implementation of FIN 48 did not result in a cumulative effect adjustment to retained earnings. At January 1, 2007, the total amount of unrecognized tax benefits was $3.1 billion, of which $1.4 billion related to tax benefits that, if recognized, would not impact the annual effective tax rate. During the quarter, $119 million of net tax benefits were recorded, primarily reflecting the resolution of certain outstanding Federal income tax matters. Credit Quality "First quarter 2007 credit results were in line with our expectations,” said Chief Credit Officer Mike Loughlin. First quarter 2007 net credit losses were $715 million (0.90 percent of average loans, annualized), down from $726 million (0.92 percent) in fourth quarter 2006, and up from $433 million (0.56 percent) in first quarter 2006, which was positively impacted by historically low personal bankruptcies after the fourth quarter 2005 bankruptcy spike caused by the then impending change in the bankruptcy law. "We are pleased that auto related losses, while still at historically elevated levels, have stabilized, and our intensive management efforts, in both collections and underwriting, resulted in lower first quarter loss rates compared with third and fourth quarter 2006,” said Loughlin. "Total 30 day or greater auto delinquency balances have declined about 25 percent from peak December 2006 levels due to seasonality and improved collections. Losses remained at predicted levels in our consumer unsecured and small business portfolios, and we continued to experience historically low losses in our commercial portfolios. "We are experiencing higher losses in our home equity portfolio relative to the historically low and unsustainable levels experienced in 2006. We see particular stress in certain regional markets and in loans acquired from correspondents. We have tightened our underwriting standards and are focusing additional collections resources on targeted portfolio segments. We expect higher but manageable losses throughout 2007 in the home equity portfolio. "With the well-publicized disruption in the nonprime residential real estate market, let me highlight a few important facts about Wells Fargo’s nonprime mortgages. The vast majority of nonprime mortgages originated at Wells Fargo Home Mortgage are sold to the secondary market. Most nonprime loans held on our balance sheet were offered through Wells Fargo Financial. Most of these loans were debt consolidation refinances to help the customer improve their financial situation. We conduct a tangible benefits test for each loan, and we do not offer negative amortization products. Approximately half these loans are fixed rate and we underwrite all loans to the customer’s ability to afford current and projected payments based on a fully indexed rate. All of these loans at Wells Fargo Financial were originated by team members; none were from third party brokers or correspondents. "We conservatively underwrite Wells Fargo Financial real estate secured loans. Income is verified for all borrowers; there are no reduced documentation or stated income programs. Borrowers must have what we call minimum ‘residual’ income or cash flow after all debt service to qualify for these loans. While we are confident our portfolio will continue to perform better than the industry, we purchased private mortgage insurance on higher loan-to-value loans to mitigate our risk. Our total residential real estate portfolio is geographically diverse and we believe the portfolio has a minimal amount of adjustable mortgage rate reset risk in the next 12 months.” Total nonperforming assets were $2.67 billion (0.82 percent of loans) at March 31, 2007 compared with $2.42 billion (0.76 percent) at December 31, 2006 and $1.85 billion (0.60 percent) one year ago, including, respectively, $381 million, $322 million, and $227 million of Government National Mortgage Association (GNMA) repurchased loans, fully insured or guaranteed. "Commercial nonperforming assets continued to be at historically low levels, and our loan impairment analysis indicates only modest loss potential,” said Loughlin. "We are constantly monitoring residential mortgage and auto nonperforming levels and have active programs to determine the best strategy to hold and workout or sell these assets.” The total of loans 90 days or more past due and still accruing was $4.81 billion, $5.07 billion and $3.41 billion at March 31, 2007, December 31, 2006, and March 31, 2006, respectively. For the same periods, the total included $3.68 billion, $3.91 billion and $2.68 billion, respectively, in advances pursuant to our servicing agreements to GNMA mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Loans 90 Days or More Past Due and Still Accruing (Excluding Insured/Guaranteed GNMA Balances) Mar. 31, Dec. 31, Mar. 31, (in millions) 2007 2006 2006 -------- -------- -------- Commercial and commercial real estate: Commercial $ 29 $ 15 $ 17 Other real estate mortgage 4 3 4 Real estate construction 5 3 13 -------- -------- -------- Total commercial and commercial real estate 38 21 34 Consumer: Real estate 1-4 family first mortgage 159 154 92 Real estate 1-4 family junior lien mortgage 64 63 47 Credit card 272 262 158 Other revolving credit and installment 560 616 364 -------- -------- -------- Total consumer 1,055 1,095 661 Foreign 36 44 37 -------- -------- -------- Total $ 1,129 $ 1,160 $ 732 ======== ======== ======== Business Segment Performance Wells Fargo has three lines of business for management reporting: Community Banking, Wholesale Banking and Wells Fargo Financial. Net income for each of the three business segments was: First Quarter % --------------------- (in millions) 2007 2006 Change ------- ------- ------ Community Banking $1,532 $1,210 27% Wholesale Banking 598 528 13 Wells Fargo Financial 114 280 (59) "As ‘One Wells Fargo,’ our team continues to focus on working together to satisfy all of our customers’ financial needs,” said President and COO John Stumpf. "Yet again this quarter we saw the tremendous power of our diversified business model as our Company produced strong, broad-based results. Our customers are deepening their relationships with us, adding products and services, as illustrated by a new record in consumer cross-sell this quarter. At the same time, we continued to see significant improvement in customer loyalty and satisfaction measures.” More financial information about the business segments can be found in table entitled FIVE QUARTER OPERATING SEGMENT RESULTS. Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including investment, insurance and trust services primarily in 23 midwestern and western states, and mortgage and home equity loans in all 50 states. Selected Financial Information First Quarter % -------------------- (in millions) 2007 2006 Change ------- ------- ------ Total revenue $ 6,071 $ 5,399 12% Provision for credit losses 306 189 62 Noninterest expense 3,640 3,387 7 Net income 1,532 1,210 27 Average loans (in billions) 180.8 190.4 (5) Average assets (in billions) 307.0 314.8 (2) -- Wealth Management Group Highlights -- Revenue up 12 percent from prior year -- Brokerage assets under administration up 17 percent from prior year -- Brokerage revenue up 25 percent from prior year -- Private bankers up 13 percent from prior year to 800 at March 31, 2007 -- Internet Highlights -- Active online consumers of 9.0 million, up 18 percent from prior year, reaching 63 percent of consumer checking accounts -- Bill payment and presentment customers of 5.1 million, up 38 percent from prior year -- 880,000 active online small business customers, up 24 percent from prior year Community Banking reported net income of $1.53 billion, up 27 percent from first quarter 2006 due primarily to growth in retail banking and home mortgage net income. Net interest income declined $32 million, or 1 percent, compared with first quarter 2006, due to a decline in earning assets that resulted from sales of ARMs at the end of first quarter 2006. The decline related to ARM sales was partially offset by an improvement in net interest margin of 21 basis points to 5.03 percent in first quarter 2007, despite pressures from the flat-to-inverted yield curve. Noninterest income increased $704 million, or 33 percent, compared with first quarter 2006. The growth was due primarily to higher fee income related to mortgage and consumer loans, cards, brokerage and deposit service charges. Noninterest expense increased $253 million, or 7 percent, primarily due to growth in personnel expenses, while the provision for credit losses increased $117 million, or 62 percent, primarily due to higher losses in credit card and equity lending. Regional Banking Highlights -- Core product solutions (sales) of 4.96 million, up 13 percent from prior year on a comparable basis -- Record retail bank household cross-sell of 5.3 products per retail bank household -- Sales of Wells Fargo Packages® (a checking account and at least three other products) up 29 percent from prior year -- Net consumer checking accounts up 5.2 percent from prior year -- Store-based customer loyalty scores continued to improve, up 12 percent from prior year -- Business Banking -- Store-based business solutions up 19 percent from prior year on a comparable basis -- Loans to small businesses (loans primarily less than $100,000 on our Business Direct platform) grew 19 percent from prior year -- Net business checking accounts up 4.5 percent from prior year -- Business Banking household cross-sell at 3.4, up from 3.0 in prior year "Our highly-engaged, talented and hard-working team members continued to make progress on delivering a great experience for our customers,” said Carrie Tolstedt, group EVP, Community Banking. "We had another strong quarter, with 4.96 million core product solutions provided to customers, up 13 percent from prior year on a comparable basis. Our retail bank household cross-sell rose to a record high of 5.3, and 65 percent of new checking account customers purchased Wells Fargo Packages. We’ve conducted more than 1.6 million store-based customer surveys since January 2004, and we continue to perform 50,000 surveys per month. For customers transacting at the teller line, welcoming and wait time survey scores were up 20 percent and customer loyalty scores improved 12 percent from same period last year. During first quarter, we also opened 18 banking stores, added 57 new webATM® machines and converted 151 ATMs in Central California to Envelope-FreeSM webATM machines to better serve our customers.” Home Mortgage and Home Equity Highlights Mortgage originations of $68 billion, up 3 percent from prior year Mortgage applications of $113 billion, up 19 percent from prior year Mortgage application pipeline of $57 billion, up 19 percent from prior quarter Record owned mortgage servicing portfolio of $1.40 trillion, up 34 percent from prior year and up 9 percent (annualized) from prior quarter National Home Equity Group portfolio of $79 billion "Our culture of conservative underwriting of nonprime credit and a very strong commitment to fair and responsible lending to customers across the credit spectrum has served us well in these turbulent times in the mortgage industry,” said Mark Oman, senior EVP, Home and Consumer Finance Group. "Wells Fargo’s responsible lending principles, with a focus on the consumer’s ability to repay, and setting loan terms and features that are appropriate to the consumer’s circumstances have resulted in significantly better credit performance than the majority of the competitors in the industry. However, given the current uncertainties in the housing and capital markets, Home Mortgage has further tightened its underwriting guidelines. Loans underwritten prior to these guideline changes were either sold or marked to market during the quarter and have been fully reflected in first quarter results. Nonprime applications of $7.4 billion were down 15 percent on a linked-quarter basis, reflecting the underwriting changes made during the quarter. "With prime mortgage rates in the 6.00-6.25 percent range, the issues confronting the nonprime segment did not dampen demand for prime mortgages. In fact, total first quarter 2007 application volume of $113 billion was up 26 percent on a linked-quarter basis. Prime applications of $105.1 billion were up 29 percent on a linked-quarter basis.” Wholesale Banking serves customers coast to coast, including middle market banking, corporate banking, commercial real estate, treasury management, asset-based lending, insurance brokerage, foreign exchange, trade services, specialized lending, equipment finance, capital markets activities and institutional investments. Selected Financial Information First Quarter % ------------------- (in millions) 2007 2006 Change ------- ------- ------ Total revenue $ 2,046 $ 1,776 15% Provision (reversal of provision) for credit losses 13 (2) -- Noninterest expense 1,137 992 15 Net income 598 528 13 Average loans (in billions) 77.9 67.6 15 Average assets (in billions) 101.0 95.9 5 Eastdil Secured represented Blackstone Group in its purchase of Equity Office Properties Trust Electronic collection transactions surpassed paper collection transactions for the first time in February Desktop Deposit® service named Computerworld magazine’s "Best in Class for 2007” "The Wholesale Banking team achieved strong results across a broad spectrum of business lines,” said Dave Hoyt, senior EVP, Wholesale Banking Group. "We continue to deliver a wide range of products and services to our customers through robust sales and distribution teams. "After integrating recent acquisitions with our existing funds business, half of our mutual funds were in Lipper’s top two quintiles for performance over the three year period ending February 28, 2007. We’re making strong gains in the asset management business, with 11 percent growth in assets under management year over year and now have the third-largest bank-owned portfolio of mutual funds. "Our customers continue to transition from paper to electronic financial services; their electronic collections surpassed paper collections for the first time in February. Active users of our Commercial Electronic Office® portal were up nearly 30 percent from the same period last year. Checks processed electronically through our internet-based industry-leading remote Desktop Deposit service during the quarter totaled $38 billion. With Wells Fargo, business customers of every size and type can successfully and affordably share in the benefits of the paper-to-electronic evolution.” Wholesale Banking reported net income of $598 million in first quarter 2007, up 13 percent from a year ago. Revenue increased 15 percent, driven by strong loan and deposit growth and higher fee income. Average loans reached $78 billion, up 15 percent from first quarter 2006, with double digit increases across nearly all wholesale lending businesses. Average deposits grew $25 billion, all in interest-bearing balances, reflecting a mix of organic growth and the conversions in 2006 of customer sweep accounts from off-balance sheet money market funds into Wells Fargo deposits. Noninterest income increased $169 million due to higher trust and investment income, insurance revenue, commercial real estate brokerage fees and capital markets activity. Noninterest expense increased $145 million mainly from higher personnel-related costs including team member additions and higher incentive payments, along with higher expenses from our acquisitions, expenses related to higher sales volumes and investments in new offices, businesses and systems. On a linked-quarter basis, Wholesale Banking net income rose $90 million, or 18 percent, driven by capital markets activity and seasonality in our insurance businesses. Wells Fargo Financial offers consumer loans primarily through real estate-secured debt consolidation products, automobile financing, consumer and private-label credit cards and commercial services to consumers and businesses throughout the United States, Canada, Puerto Rico and the Pacific Rim. Selected Financial Information First Quarter % ------------------- (in millions) 2007 2006 Change ------- ------- ------ Total revenue $ 1,324 $ 1,380 (4)% Provision for credit losses 396 246 61 Noninterest expense 749 695 8 Net income 114 280 (59) Average loans (in billions) 62.7 53.1 18 Average assets (in billions) 68.3 58.7 16 -- Average loans up 18 percent from first quarter 2006 -- Real estate-secured receivables up 20 percent to $23.6 billion -- Auto finance receivables up 23 percent to $27.6 billion "Net income decreased over the first quarter of 2006 because of the $127 million gain we realized on the sale of our consumer lending business in Puerto Rico a year ago, plus the higher provision we took for credit losses this year,” said Tom Shippee, Wells Fargo Financial president and CEO. "The higher credit losses year over year were due, in part, to lower than normal bankruptcy charge-offs and higher recoveries early in 2006. Additionally, the auto lending losses were up from a year ago, but declined on a linked-quarter basis. "Our real estate lending business remained on solid ground. Wells Fargo Financial’s real estate-secured lending portfolio performed well in a quarter when many other companies’ nonprime lending businesses suffered. We attribute our strong credit quality to our disciplined business model and underwriting at Wells Fargo Financial, where we do not offer riskier residential real estate products such as teaser rates, stated-income loans and no documentation loans. Real estate delinquencies continued to be within our expectations, well-below industry trends and showed improvement over the fourth quarter. "In terms of auto lending – our other large business – we continued to make steady progress as a result of changes we implemented in the second half of 2006 to reduce delinquencies and charge-offs. Improved processes, reduced originations – intended to improve collections capacity – and increased staffing levels in collections have all had a positive impact. These changes in the auto business resulted in decreased losses of $27 million in the first quarter and an improvement of approximately 25 percent in the auto portfolio’s 30-plus day delinquency rates.” Wells Fargo Financial reported net income of $114 million, down 59 percent from a year ago. Revenue of $1.32 billion was driven by an increase in net interest income from continued growth in the real estate and auto loan portfolios. Revenue decreased $56 million from first quarter 2006, despite growth in net interest income, because of the gain in first quarter 2006 from the sale of the Puerto Rican business. Average loans grew 18 percent to $62.7 billion. Noninterest expense was $749 million, up 8 percent from first quarter 2006, driven by normal annual increases in personnel costs, as well as the staffing level increases in collections and other investments in business processes. Recorded Message A recorded message reviewing Wells Fargo’s results and characteristics of several of the loan portfolios will be available at 5:30 a.m. Pacific Time through April 20, 2007. Dial 877-660-6853 (domestic) or 201-612-7415 (international). Enter the account number 286 and conference ID 236054#. The call is also available on the internet at www.wellsfargo.com/ir and http://www.vcall.com/IC/CEPage.asp?ID=115230. The following appears in accordance with the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking statements about the Company, including statements about credit quality and credit loss potential generally and specifically the statements that we expect higher but manageable losses in our home equity loan portfolio throughout 2007, that we believe our residential real estate loan portfolio has a minimal amount of adjustable mortgage rate reset risk in the next 12 months, and that we are confident that our Wells Fargo Financial real estate secured loan portfolio will continue to perform better than the industry generally. Do not unduly rely on forward-looking statements. They give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date. There are a number of factors that could cause results to differ significantly from our expectations, including a deterioration of the credit quality of our home equity and real estate loan portfolios due to higher interest rates, increased unemployment, a decline in home values or other economic factors. For a discussion of factors that may cause actual results to differ from expectations, refer to our Annual Report on Form 10-K for the year ended December 31, 2006, including information incorporated into the Form 10-K from our 2006 Annual Report to Stockholders, filed as Exhibit 13 to the Form 10-K. Any factor described in this news release or in any document referred to in this news release could, by itself or together with one or more other factors, adversely affect the Company’s business, earnings and/or financial condition. Wells Fargo & Company is a diversified financial services company with $486 billion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 6,000 stores and the internet (wellsfargo.com) across North America and internationally. Wells Fargo Bank, N.A. is the only bank in the U.S., and one of only two banks worldwide, to have the highest credit rating from both Moody’s Investors Service, "Aaa,” and Standard & Poor’s Ratings Services, "AAA.” Wells Fargo & Company and SubsidiariesSUMMARY FINANCIAL DATA % Change  Quarter ended Mar. 31, 2007 from ($ in millions, except per share amounts)   Mar. 31,2007   Dec. 31,2006   Mar. 31,2006   Dec. 31,2006   Mar. 31,2006   For the Quarter Net income $ 2,244  $ 2,181  $ 2,018  3% 11% Diluted earnings per common share 0.66  0.64  0.60  3  10    Profitability ratios (annualized): Net income to average total assets (ROA) 1.89% 1.79% 1.72% 6  10  Net income to average stockholders' equity (ROE) 19.65  18.99  19.89  3  (1)   Efficiency ratio (1) 58.5  57.5  59.3  2  (1)   Total revenue $ 9,441  $ 9,413  $ 8,555  --  10    Dividends declared per common share 0.28  0.28  0.26  --  8    Average common shares outstanding 3,376.0  3,379.4  3,358.3  --  1  Diluted average common shares outstanding 3,416.1  3,424.0  3,395.7  --  1    Average loans $ 321,429  $ 312,166  $ 311,132  3  3  Average assets 482,105  482,585  475,195  --  1  Average core deposits (2) 290,586  283,790  257,466  2  13  Average retail core deposits (3) 223,729  220,025  213,876  2  5    Net interest margin 4.95% 4.93% 4.85% --  2    At Quarter End Securities available for sale $ 45,443  $ 42,629  $ 51,195  7  (11) Loans 325,487  319,116  306,676  2  6  Allowance for loan losses 3,772  3,764  3,845  --  (2) Goodwill 11,275  11,275  11,050  --  2  Assets 485,901  481,996  492,428  1  (1) Core deposits (2) 296,469  288,068  263,136  3  13  Stockholders' equity 46,135  45,876  41,961  1  10    Capital ratios: Stockholders' equity to assets 9.49% 9.52% 8.52% --  11  Risk-based capital (4) Tier 1 capital 8.71  8.95  8.30  (3) 5  Total capital 12.11  12.50  11.49  (3) 5  Tier 1 leverage (4) 7.83  7.89  7.13  (1) 10    Book value per common share $ 13.77  $ 13.58  $ 12.50  1  10    Team members (active, full-time equivalent) 159,600  158,000  152,000  1  5    Common Stock Price High $ 36.64  $ 36.99  $ 32.76  (1) 12  Low 33.01  34.90  30.31  (5) 9  Period end 34.43  35.56  31.94  (3) 8      (1)The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). (2)Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). During 2006, certain customer accounts (largely Wholesale Banking) were converted to deposit balances in the form of Eurodollar sweep accounts from off-balance sheet money market funds and repurchase agreements. Included in average core deposits were converted balances of $9,888 million, $8,888 million and $1,234 million for the quarters ended March 31, 2007, December 31, 2006, and March 31, 2006, respectively. Average core deposits increased 10% from first quarter 2006 and 9% (annualized) from fourth quarter 2006, not including these converted balances. (3)Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. (4)The March 31, 2007, ratios are preliminary. Wells Fargo & Company and SubsidiariesFIVE QUARTER SUMMARY FINANCIAL DATA Quarter ended ($ in millions, except per share amounts)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   For the Quarter Net income $ 2,244  $ 2,181  $ 2,194  $ 2,089  $ 2,018  Diluted earnings per common share 0.66  0.64  0.64  0.61  0.60    Profitability ratios (annualized): Net income to average total assets (ROA) 1.89% 1.79% 1.76% 1.71% 1.72% Net income to average stockholders' equity (ROE) 19.65  18.99  20.00  19.76  19.89    Efficiency ratio (1) 58.5  57.5  56.9  58.9  59.3    Total revenue $ 9,441  $ 9,413  $ 8,934  $ 8,789  $ 8,555    Dividends declared per common share 0.28  0.28  --  0.54  0.26    Average common shares outstanding 3,376.0  3,379.4  3,371.9  3,363.8  3,358.3  Diluted average common shares outstanding 3,416.1  3,424.0  3,416.0  3,404.4  3,395.7    Average loans $ 321,429  $ 312,166  $ 303,980  $ 300,388  $ 311,132  Average assets 482,105  482,585  494,679  491,456  475,195  Average core deposits (2) 290,586  283,790  269,725  264,129  257,466  Average retail core deposits (3) 223,729  220,025  214,294  214,904  213,876    Net interest margin 4.95% 4.93% 4.79% 4.76% 4.85%   At Quarter End Securities available for sale $ 45,443  $ 42,629  $ 52,635  $ 71,420  $ 51,195  Loans 325,487  319,116  307,491  300,622  306,676  Allowance for loan losses 3,772  3,764  3,799  3,851  3,845  Goodwill 11,275  11,275  11,192  11,091  11,050  Assets 485,901  481,996  483,441  499,516  492,428  Core deposits (2) 296,469  288,068  270,818  268,350  263,136  Stockholders' equity 46,135  45,876  44,862  41,894  41,961    Capital ratios: Stockholders' equity to assets 9.49% 9.52% 9.28% 8.39% 8.52% Risk-based capital (4) Tier 1 capital 8.71  8.95  8.74  8.35  8.30  Total capital 12.11  12.50  12.34  11.82  11.49  Tier 1 leverage (4) 7.83  7.89  7.41  6.99  7.13    Book value per common share $ 13.77  $ 13.58  $ 13.30  $ 12.46  $ 12.50    Team members (active, full-time equivalent) 159,600  158,000  156,400  154,300  152,000    Common Stock Price High $ 36.64  $ 36.99  $ 36.89  $ 34.86  $ 32.76  Low 33.01  34.90  33.36  31.90  30.31  Period end 34.43  35.56  36.18  33.54  31.94      (1)The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). (2)Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). During 2006, certain customer accounts (largely Wholesale Banking) were converted to deposit balances in the form of Eurodollar sweep accounts from off-balance sheet money market funds and repurchase agreements. Included in average core deposits were converted balances of $9,888 million, $8,888 million, $3,343 million, $2,771 million and $1,234 million for the quarters ended March 31, 2007, December 31, 2006, September 30, 2006, June 30, 2006, and March 31, 2006, respectively. (3)Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. (4)The March 31, 2007, ratios are preliminary. Wells Fargo & Company and SubsidiariesCONSOLIDATED STATEMENT OF INCOME Quarter ended March 31, % (in millions, except per share amounts)   2007    2006    Change   INTEREST INCOME Trading assets $ 53  $ 69  (23)% Securities available for sale 686  663  3  Mortgages held for sale 530  609  (13) Loans held for sale 15  11  36  Loans 6,764  6,110  11  Other interest income 91  70  30  Total interest income 8,139  7,532  8    INTEREST EXPENSE Deposits 1,857  1,482  25  Short-term borrowings 136  270  (50) Long-term debt 1,136  910  25  Total interest expense 3,129  2,662  18    NET INTEREST INCOME 5,010  4,870  3  Provision for credit losses 715  433  65  Net interest income after provision for credit losses 4,295  4,437  (3)   NONINTEREST INCOME Service charges on deposit accounts 685  623  10  Trust and investment fees 731  663  10  Card fees 470  384  22  Other fees 511  488  5  Mortgage banking 790  415  90  Operating leases 192  201  (4) Insurance 399  364  10  Net gains (losses) on debt securities available for sale 31  (35) --  Net gains from equity investments 97  190  (49) Other 525  392  34  Total noninterest income 4,431  3,685  20    NONINTEREST EXPENSE Salaries 1,867  1,672  12  Incentive compensation 742  668  11  Employee benefits 665  589  13  Equipment 337  335  1  Net occupancy 365  336  9  Operating leases 153  161  (5) Other 1,397  1,313  6  Total noninterest expense 5,526  5,074  9    INCOME BEFORE INCOME TAX EXPENSE 3,200  3,048  5  Income tax expense 956  1,030  (7)   NET INCOME $ 2,244  $ 2,018  11    EARNINGS PER COMMON SHARE $ 0.66  $ 0.60  10    DILUTED EARNINGS PER COMMON SHARE $ 0.66  $ 0.60  10    DIVIDENDS DECLARED PER COMMON SHARE $ 0.28  $ 0.26  8    Average common shares outstanding 3,376.0  3,358.3  1  Diluted average common shares outstanding 3,416.1  3,395.7  1    Wells Fargo & Company and SubsidiariesFIVE QUARTER CONSOLIDATED STATEMENT OF INCOME Quarter ended (in millions, except per share amounts)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   INTEREST INCOME Trading assets $ 53  $ 46  $ 45  $ 65  $ 69  Securities available for sale 686  726  1,014  875  663  Mortgages held for sale 530  627  702  808  609  Loans held for sale 15  13  12  11  11  Loans 6,764  6,701  6,555  6,245  6,110  Other interest income 91  118  71  73  70  Total interest income 8,139  8,231  8,399  8,077  7,532    INTEREST EXPENSE Deposits 1,857  1,901  1,997  1,794  1,482  Short-term borrowings 136  162  271  289  270  Long-term debt 1,136  1,118  1,084  1,010  910  Total interest expense 3,129  3,181  3,352  3,093  2,662    NET INTEREST INCOME 5,010  5,050  5,047  4,984  4,870  Provision for credit losses 715  726  613  432  433  Net interest income after provision for credit losses 4,295  4,324  4,434  4,552  4,437    NONINTEREST INCOME Service charges on deposit accounts 685  695  707  665  623  Trust and investment fees 731  735  664  675  663  Card fees 470  481  464  418  384  Other fees 511  550  509  510  488  Mortgage banking 790  677  484  735  415  Operating leases 192  190  192  200  201  Insurance 399  299  313  364  364  Net gains (losses) on debt securities available for sale 31  51  121  (156) (35) Net gains from equity investments 97  256  159  133  190  Other 525  429  274  261  392  Total noninterest income 4,431  4,363  3,887  3,805  3,685    NONINTEREST EXPENSE Salaries 1,867  1,812  1,769  1,754  1,672  Incentive compensation 742  793  710  714  668  Employee benefits 665  501  458  487  589  Equipment 337  339  294  284  335  Net occupancy 365  367  357  345  336  Operating leases 153  157  155  157  161  Other 1,397  1,442  1,338  1,435  1,313  Total noninterest expense 5,526  5,411  5,081  5,176  5,074    INCOME BEFORE INCOME TAX EXPENSE 3,200  3,276  3,240  3,181  3,048  Income tax expense 956  1,095  1,046  1,092  1,030    NET INCOME $ 2,244  $ 2,181  $ 2,194  $ 2,089  $ 2,018    EARNINGS PER COMMON SHARE $ 0.66  $ 0.65  $ 0.65  $ 0.62  $ 0.60    DILUTED EARNINGS PER COMMON SHARE $ 0.66  $ 0.64  $ 0.64  $ 0.61  $ 0.60    DIVIDENDS DECLARED PER COMMON SHARE $ 0.28  $ 0.28  $ --  $ 0.54  $ 0.26    Average common shares outstanding 3,376.0  3,379.4  3,371.9  3,363.8  3,358.3  Diluted average common shares outstanding 3,416.1  3,424.0  3,416.0  3,404.4  3,395.7    Wells Fargo & Company and SubsidiariesCONSOLIDATED BALANCE SHEET % Change  Mar. 31, 2007 from (in millions, except shares)   Mar. 31,2007   Dec. 31,2006   Mar. 31,2006   Dec. 31,2006   Mar. 31,2006   ASSETS Cash and due from banks $ 12,485  $ 15,028  $ 13,224  (17)% (6)% Federal funds sold, securities purchased under resale agreements and other short-term investments 4,668  6,078  4,954  (23) (6) Trading assets 6,525  5,607  9,930  16  (34) Securities available for sale 45,443  42,629  51,195  7  (11) Mortgages held for sale (includes $25,807 million carried at fair value at March 31, 2007) 32,286  33,097  43,521  (2) (26) Loans held for sale 829  721  629  15  32    Loans 325,487  319,116  306,676  2  6  Allowance for loan losses (3,772) (3,764) (3,845) --  (2) Net loans 321,715  315,352  302,831  2  6    Mortgage servicing rights: Measured at fair value (residential MSRs) 17,779  17,591  13,800  1  29  Amortized 400  377  142  6  182  Premises and equipment, net 4,864  4,698  4,493  4  8  Goodwill 11,275  11,275  11,050  --  2  Other assets 27,632  29,543  36,659  (6) (25)   Total assets $ 485,901  $ 481,996  $ 492,428  1  (1)   LIABILITIES Noninterest-bearing deposits $ 89,067  $ 89,119  $ 88,701  --  --  Interest-bearing deposits 222,090  221,124  219,604  --  1  Total deposits 311,157  310,243  308,305  --  1  Short-term borrowings 13,181  12,829  21,350  3  (38) Accrued expenses and other liabilities 25,101  25,903  36,312  (3) (31) Long-term debt 90,327  87,145  84,500  4  7    Total liabilities 439,766  436,120  450,467  1  (2)   STOCKHOLDERS' EQUITY Preferred stock 740  384  634  93  17  Common stock - $1-2/3 par value, authorized 6,000,000,000 shares; issued 3,472,762,050 shares   5,788  5,788  5,788  --  --  Additional paid-in capital 7,875  7,739  7,479  2  5  Retained earnings 36,439  35,277  31,750  3  15  Cumulative other comprehensive income 289  302  576  (4) (50) Treasury stock - 122,242,186 shares, 95,612,189 shares and 115,124,934 shares (4,204) (3,203) (3,587) 31  17  Unearned ESOP shares (792) (411) (679) 93  17    Total stockholders' equity 46,135  45,876  41,961  1  10    Total liabilities and stockholders' equity $ 485,901  $ 481,996  $ 492,428  1  (1)   Wells Fargo & Company and SubsidiariesFIVE QUARTER CONSOLIDATED BALANCE SHEET (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   ASSETS Cash and due from banks $ 12,485  $ 15,028  $ 12,591  $ 14,069  $ 13,224  Federal funds sold, securities purchased under resale agreements and other short-term investments 4,668  6,078  4,079  5,367  4,954  Trading assets 6,525  5,607  5,300  7,344  9,930  Securities available for sale 45,443  42,629  52,635  71,420  51,195  Mortgages held for sale 32,286  33,097  39,913  39,714  43,521  Loans held for sale 829  721  617  594  629    Loans 325,487  319,116  307,491  300,622  306,676  Allowance for loan losses (3,772) (3,764) (3,799) (3,851) (3,845) Net loans 321,715  315,352  303,692  296,771  302,831    Mortgage servicing rights: Measured at fair value (residential MSRs) 17,779  17,591  17,712  15,650  13,800  Amortized 400  377  328  175  142  Premises and equipment, net 4,864  4,698  4,645  4,529  4,493  Goodwill 11,275  11,275  11,192  11,091  11,050  Other assets 27,632  29,543  30,737  32,792  36,659    Total assets $ 485,901  $ 481,996  $ 483,441  $ 499,516  $ 492,428    LIABILITIES Noninterest-bearing deposits $ 89,067  $ 89,119  $ 86,849  $ 89,448  $ 88,701  Interest-bearing deposits 222,090  221,124  227,470  237,004  219,604  Total deposits 311,157  310,243  314,319  326,452  308,305  Short-term borrowings 13,181  12,829  13,800  13,619  21,350  Accrued expenses and other liabilities 25,101  25,903  26,369  33,794  36,312  Long-term debt 90,327  87,145  84,091  83,757  84,500    Total liabilities 439,766  436,120  438,579  457,622  450,467    STOCKHOLDERS' EQUITY Preferred stock 740  384  465  548  634  Common stock 5,788  5,788  5,788  5,788  5,788  Additional paid-in capital 7,875  7,739  7,667  7,562  7,479  Retained earnings 36,439  35,277  34,080  31,964  31,750  Cumulative other comprehensive income 289  302  633  155  576  Treasury stock (4,204) (3,203) (3,273) (3,537) (3,587) Unearned ESOP shares (792) (411) (498) (586) (679)   Total stockholders' equity 46,135  45,876  44,862  41,894  41,961    Total liabilities and stockholders' equity $ 485,901  $ 481,996  $ 483,441  $ 499,516  $ 492,428    Wells Fargo & Company and SubsidiariesFIVE QUARTER AVERAGE BALANCES Quarter ended (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   EARNING ASSETS Federal funds sold, securities purchased under resale agreements and other short-term investments $ 5,867  $ 7,751  $ 4,247  $ 4,855  $ 5,192  Trading assets 4,305  3,950  3,880  5,938  6,099  Debt securities available for sale: Securities of U.S. Treasury and federal agencies 753  786  912  935  866  Securities of U.S. states and political subdivisions 3,532  3,406  3,240  3,013  3,106  Mortgage-backed securities: Federal agencies 30,640  31,718  47,009  40,160  27,718  Private collateralized mortgage obligations 3,993  5,130  7,696  7,176  6,562  Total mortgage-backed securities 34,633  36,848  54,705  47,336  34,280  Other debt securities (1) 5,778  6,406  6,865  6,246  5,280  Total debt securities available for sale (1) 44,696  47,446  65,722  57,530  43,532  Mortgages held for sale (2) 32,343  37,878  42,369  51,675  39,523  Loans held for sale 794  659  622  585  651  Loans: Commercial and commercial real estate: Commercial 71,063  68,402  66,216  65,424  62,769  Other real estate mortgage 30,590  29,882  29,851  28,938  28,686  Real estate construction 15,892  15,775  15,073  14,517  13,850  Lease financing 5,503  5,500  5,385  5,429  5,436  Total commercial and commercial real estate 123,048  119,559  116,525  114,308  110,741  Consumer: Real estate 1-4 family first mortgage 54,444  50,836  50,138  55,019  74,383  Real estate 1-4 family junior lien mortgage 69,079  68,208  65,991  62,740  59,972  Credit card 14,557  13,737  12,810  11,947  11,765  Other revolving credit and installment 53,539  53,206  51,988  50,098  48,329  Total consumer 191,619  185,987  180,927  179,804  194,449  Foreign 6,762  6,620  6,528  6,276  5,942  Total loans (2) 321,429  312,166  303,980  300,388  311,132  Other 1,327  1,333  1,348  1,363  1,389  Total earning assets $ 410,761  $ 411,183  $ 422,168  $ 422,334  $ 407,518    FUNDING SOURCES Deposits: Interest-bearing checking $ 4,615  $ 4,477  $ 4,370  $ 4,288  $ 4,069  Market rate and other savings 140,934  135,673  132,906  134,182  134,228  Savings certificates 38,514  36,382  33,909  30,308  28,718  Other time deposits 9,312  19,838  36,920  38,288  33,726  Deposits in foreign offices 27,647  24,425  22,303  20,898  15,152  Total interest-bearing deposits 221,022  220,795  230,408  227,964  215,893  Short-term borrowings 11,498  13,470  21,539  24,836  26,180  Long-term debt 89,027  85,809  84,112  84,486  81,686  Total interest-bearing liabilities 321,547  320,074  336,059  337,286  323,759  Portion of noninterest-bearing funding sources 89,214  91,109  86,109  85,048  83,759  Total funding sources $ 410,761  $ 411,183  $ 422,168  $ 422,334  $ 407,518    NONINTEREST-EARNING ASSETS Cash and due from banks $ 11,862  $ 12,379  $ 12,159  $ 12,437  $ 12,897  Goodwill 11,274  11,259  11,156  11,075  10,963  Other 48,208  47,764  49,196  45,610  43,817  Total noninterest-earning assets $ 71,344  $ 71,402  $ 72,511  $ 69,122  $ 67,677    NONINTEREST-BEARING FUNDING SOURCES Deposits $ 88,769  $ 91,259  $ 89,245  $ 88,917  $ 86,997  Other liabilities 25,474  25,687  25,839  22,835  23,320  Stockholders' equity 46,315  45,565  43,536  42,418  41,119  Noninterest-bearing funding sources used to fund earning assets (89,214) (91,109) (86,109) (85,048) (83,759) Net noninterest-bearing funding sources $ 71,344  $ 71,402  $ 72,511  $ 69,122  $ 67,677    TOTAL ASSETS   $ 482,105  $ 482,585  $ 494,679  $ 491,456  $ 475,195      (1) Includes certain preferred securities. (2) Nonaccrual loans are included in their respective loan categories. Wells Fargo & Company and SubsidiariesCONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY Quarter ended March 31, (in millions)   2007    2006    Balance, beginning of period $ 45,876  $ 40,660  Cumulative effect from adoption of: FAS 156 (1) --  101  FSP 13-2 (2) (71) --  Net income 2,244  2,018  Other comprehensive income (loss), net of tax, related to: Translation adjustments 1  --  Investment securities and other interests held 18  (205) Derivative instruments and hedging activities (38) 119  Defined benefit pension plans 6  (3) Common stock issued 448  485  Common stock repurchased (1,631) (646) Preferred stock released to ESOP 128  105  Common stock dividends (948) (874) Other, net 102  201    Balance, end of period $ 46,135  $ 41,961              (1)Financial Accounting Standard No. 156, Accounting for Servicing of Financial Assets - an amendment of FASB Statement No. 140. (2)FASB Staff Position 13-2, Accounting for a Change or Projected Change in the Timing of Cash Flows Related to Income Taxes Generated by a Leveraged Lease Transaction. Wells Fargo & Company and SubsidiariesFIVE QUARTER LOANS (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Commercial and commercial real estate: Commercial $ 72,268  $ 70,404  $ 66,797  $ 66,014  $ 63,836  Other real estate mortgage 31,542  30,112  29,914  29,281  28,754  Real estate construction 15,869  15,935  15,397  14,764  14,308  Lease financing 5,494  5,614  5,443  5,301  5,402  Total commercial and commercial real estate 125,173  122,065  117,551  115,360  112,300  Consumer: Real estate 1-4 family first mortgage 55,982  53,228  49,765  50,491  66,106  Real estate 1-4 family junior lien mortgage 69,489  68,926  67,185  64,727  61,115  Credit card 14,594  14,697  13,343  12,387  11,618  Other revolving credit and installment 53,445  53,534  53,080  51,236  49,295  Total consumer 193,510  190,385  183,373  178,841  188,134  Foreign 6,804  6,666  6,567  6,421  6,242    Total loans (net of unearned income) $ 325,487  $ 319,116  $ 307,491  $ 300,622  $ 306,676        FIVE QUARTER NONACCRUAL LOANS AND OTHER ASSETS (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Nonaccrual loans: Commercial and commercial real estate: Commercial $ 350  $ 331  $ 256  $ 253  $ 256  Other real estate mortgage 114  105  116  137  163  Real estate construction 82  78  90  31  21  Lease financing 31  29  27  26  31  Total commercial and commercial real estate 577  543  489  447  471  Consumer: Real estate 1-4 family first mortgage (1) 701  688  595  585  508  Real estate 1-4 family junior lien mortgage 233  212  200  179  190  Other revolving credit and installment 195  180  167  139  188  Total consumer 1,129  1,080  962  903  886  Foreign 46  43  38  45  37  Total nonaccrual loans 1,752  1,666  1,489  1,395  1,394  As a percentage of total loans 0.54% 0.52% 0.48% 0.46% 0.45%   Foreclosed assets: GNMA loans (2) 381  322  266  238  227  Other 528  423  342  275  228  Real estate and other nonaccrual investments (3) 5  5  3  9  --    Total nonaccrual loans and other assets $ 2,666  $ 2,416  $ 2,100  $ 1,917  $ 1,849    As a percentage of total loans 0.82% 0.76% 0.68% 0.64% 0.60%     (1)Includes nonaccrual mortgages held for sale. (2)Consistent with regulatory reporting requirements, foreclosed real estate securing Government National Mortgage Association (GNMA) loans is classified as nonperforming. These assets are fully collectible because the corresponding GNMA loans are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. (3)Includes real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if these assets were recorded as loans. Wells Fargo & Company and SubsidiariesFIVE QUARTER CHANGES IN THE ALLOWANCE FOR CREDIT LOSSES Quarter ended (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Balance, beginning of quarter $ 3,964  $ 3,978  $ 4,035  $ 4,025  $ 4,057    Provision for credit losses 715  726  613  432  433    Loan charge-offs: Commercial and commercial real estate: Commercial (126) (139) (103) (93) (79) Other real estate mortgage (1) (2) (1) (1) (1) Real estate construction --  (1) (1) --  --  Lease financing (7) (8) (6) (7) (9) Total commercial and commercial real estate (134) (150) (111) (101) (89) Consumer: Real estate 1-4 family first mortgage (24) (22) (30) (22) (29) Real estate 1-4 family junior lien mortgage (83) (56) (36) (28) (34) Credit card (183) (154) (133) (113) (105) Other revolving credit and installment (474) (513) (501) (349) (322) Total consumer (764) (745) (700) (512) (490) Foreign (62) (59) (74) (74) (74) Total loan charge-offs (960) (954) (885) (687) (653)   Loan recoveries: Commercial and commercial real estate: Commercial 24  27  26  31  27  Other real estate mortgage 2  5  8  5  1  Real estate construction 1  1  --  1  1  Lease financing 5  5  4  6  6  Total commercial and commercial real estate 32  38  38  43  35  Consumer: Real estate 1-4 family first mortgage 6  6  8  9  3  Real estate 1-4 family junior lien mortgage 9  9  9  10  8  Credit card 31  24  23  25  24  Other revolving credit and installment 149  136  124  148  129  Total consumer 195  175  164  192  164  Foreign 18  15  20  20  21  Total loan recoveries 245  228  222  255  220  Net loan charge-offs (715) (726) (663) (432) (433)   Other 1  (14) (7) 10  (32)   Balance, end of quarter $ 3,965  $ 3,964  $ 3,978  $ 4,035  $ 4,025    Components: Allowance for loan losses $ 3,772  $ 3,764  $ 3,799  $ 3,851  $ 3,845  Reserve for unfunded credit commitments 193  200  179  184  180  Allowance for credit losses $ 3,965  $ 3,964  $ 3,978  $ 4,035  $ 4,025    Net loan charge-offs (annualized) as a percentage of average total loans 0.90% 0.92% 0.86% 0.58% 0.56%   Allowance for loan losses as a percentage of: Total loans 1.16% 1.18% 1.24% 1.28% 1.25% Nonaccrual loans 215  226  255  276  276  Nonaccrual loans and other assets 141  156  181  201  208    Allowance for credit losses as a percentage of: Total loans 1.22% 1.24% 1.29% 1.34% 1.31% Nonaccrual loans 226  238  267  289  289  Nonaccrual loans and other assets 149  164  189  210  218    Wells Fargo & Company and SubsidiariesNONINTEREST INCOME Quarter ended March 31, % (in millions)   2007    2006    Change   Service charges on deposit accounts $ 685  $ 623  10%   Trust and investment fees: Trust, investment and IRA fees 537  491  9  Commissions and all other fees 194  172  13  Total trust and investment fees 731  663  10    Card fees 470  384  22    Other fees: Cash network fees 45  44  2  Charges and fees on loans 238  242  (2) All other 228  202  13  Total other fees 511  488  5    Mortgage banking: Servicing income, net 216  81  167  Net gains on mortgage loan origination/sales activities 495  273  81  All other 79  61  30  Total mortgage banking 790  415  90    Operating leases 192  201  (4) Insurance 399  364  10  Trading assets 265  134  98  Net gains (losses) on debt securities available for sale 31  (35) --  Net gains from equity investments 97  190  (49) All other 260  258  1    Total $ 4,431  $ 3,685  20        NONINTEREST EXPENSE Quarter ended March 31, % (in millions)   2007    2006    Change   Salaries $ 1,867  $ 1,672  12% Incentive compensation 742  668  11  Employee benefits 665  589  13  Equipment 337  335  1  Net occupancy 365  336  9  Operating leases 153  161  (5) Outside professional services 192  193  (1) Contract services 118  132  (11) Travel and entertainment 109  130  (16) Advertising and promotion 91  106  (14) Outside data processing 111  104  7  Postage 87  81  7  Telecommunications 81  70  16  Insurance 128  76  68  Stationery and supplies 53  51  4  Operating losses 87  62  40  Security 43  43  -  Core deposit intangibles 26  29  (10) All other 271  236  15    Total $ 5,526  $ 5,074  9                Wells Fargo & Company and SubsidiariesFIVE QUARTER NONINTEREST INCOME Quarter ended (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Service charges on deposit accounts $ 685  $ 695  $ 707  $ 665  $ 623    Trust and investment fees: Trust, investment and IRA fees 537  525  508  509  491  Commissions and all other fees 194  210  156  166  172  Total trust and investment fees 731  735  664  675  663    Card fees 470  481  464  418  384    Other fees: Cash network fees 45  44  48  48  44  Charges and fees on loans 238  241  244  249  242  All other 228  265  217  213  202  Total other fees 511  550  509  510  488    Mortgage banking: Servicing income, net 216  314  188  310  81  Net gains on mortgage loan origination/sales activities 495  305  179  359  273  All other 79  58  117  66  61  Total mortgage banking 790  677  484  735  415    Operating leases 192  190  192  200  201  Insurance 399  299  313  364  364  Trading assets 265  213  106  91  134  Net gains (losses) on debt securities available for sale 31  51  121  (156) (35) Net gains from equity investments 97  256  159  133  190  All other 260  216  168  170  258    Total $ 4,431  $ 4,363  $ 3,887  $ 3,805  $ 3,685                            FIVE QUARTER NONINTEREST EXPENSE Quarter ended (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Salaries $ 1,867  $ 1,812  $ 1,769  $ 1,754  $ 1,672  Incentive compensation 742  793  710  714  668  Employee benefits 665  501  458  487  589  Equipment 337  339  294  284  335  Net occupancy 365  367  357  345  336  Operating leases 153  157  155  157  161  Outside professional services 192  273  240  236  193  Contract services 118  165  143  139  132  Travel and entertainment 109  141  132  139  130  Advertising and promotion 91  102  123  125  106  Outside data processing 111  113  111  109  104  Postage 87  77  75  79  81  Telecommunications 81  66  70  73  70  Insurance 128  39  43  99  76  Stationery and supplies 53  60  57  55  51  Operating losses 87  40  33  45  62  Security 43  49  43  44  43  Core deposit intangibles 26  27  28  28  29  All other 271  290  240  264  236    Total $ 5,526  $ 5,411  $ 5,081  $ 5,176  $ 5,074    Wells Fargo & Company and SubsidiariesAVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1)(2) Quarter ended March 31, 2007  2006  (in millions)   Averagebalance   Yields/rates   Interestincome/expense   Averagebalance   Yields/rates   Interestincome/expense   EARNING ASSETS Federal funds sold, securities purchased under resale agreements and other short-term investments $ 5,867  5.15% $ 75  $ 5,192  4.21% $ 54  Trading assets 4,305  5.53  59  6,099  4.61  69  Debt securities available for sale (3): Securities of U.S. Treasury and federal agencies 753  4.31  8  866  4.30  9  Securities of U.S. states and political subdivisions 3,532  7.39  63  3,106  8.13  60  Mortgage-backed securities: Federal agencies 30,640  6.19  467  27,718  5.92  406  Private collater-alized mortgage obligations 3,993  6.33  62  6,562  6.46  104  Total mortgage-backed securities 34,633  6.21  529  34,280  6.02  510  Other debt securities (4) 5,778  7.44  106  5,280  7.86  104  Total debt securities available for sale (4) 44,696  6.43  706  43,532  6.36  683  Mortgages held for sale (5) 32,343  6.55  530  39,523  6.16  609  Loans held for sale 794  7.82  15  651  6.93  11  Loans: Commercial and commercial real estate: Commercial 71,063  8.30  1,455  62,769  7.71  1,195  Other real estate mortgage 30,590  7.41  560  28,686  7.01  497  Real estate construction 15,892  8.01  314  13,850  7.59  259  Lease financing 5,503  5.74  79  5,436  5.80  79  Total commercial and commercial real estate 123,048  7.93  2,408  110,741  7.42  2,030  Consumer: Real estate 1-4 family first mortgage 54,444  7.33  995  74,383  6.82  1,259  Real estate 1-4 family junior lien mortgage 69,079  8.17  1,393  59,972  7.65  1,131  Credit card 14,557  13.55  493  11,765  13.23  389  Other revolving credit and installment 53,539  9.75  1,287  48,329  9.39  1,120  Total consumer 191,619  8.78  4,168  194,449  8.10  3,899  Foreign 6,762  11.54  192  5,942  12.57  185  Total loans (5) 321,429  8.51  6,768  311,132  7.95  6,114  Other 1,327  5.12  16  1,389  4.62  16  Total earning assets $ 410,761  8.04  8,169  $ 407,518  7.50  7,556    FUNDING SOURCES Deposits: Interest-bearing checking $ 4,615  3.25  37  $ 4,069  2.23  22  Market rate and other savings 140,934  2.77  963  134,228  2.08  687  Savings certificates 38,514  4.43  421  28,718  3.45  245  Other time deposits 9,312  5.13  118  33,726  4.48  373  Deposits in foreign offices 27,647  4.67  318  15,152  4.16  155  Total interest-bearing deposits 221,022  3.41  1,857  215,893  2.78  1,482  Short-term borrowings 11,498  4.78  136  26,180  4.17  270  Long-term debt 89,027  5.15  1,138  81,686  4.49  910  Total interest-bearing liabilities 321,547  3.94  3,131  323,759  3.33  2,662  Portion of noninterest-bearing funding sources 89,214  --  --  83,759  --  --  Total funding sources $ 410,761  3.09  3,131  $ 407,518  2.65  2,662  Net interest margin and net interest income on a taxable-equivalent basis(6) 4.95% $ 5,038  4.85% $ 4,894    NONINTEREST-EARNING ASSETS Cash and due from banks $ 11,862  $ 12,897  Goodwill 11,274  10,963  Other 48,208  43,817  Total noninterest-earning assets $ 71,344  $ 67,677    NONINTEREST-BEARING FUNDING SOURCES Deposits $ 88,769  $ 86,997  Other liabilities 25,474  23,320  Stockholders' equity 46,315  41,119  Noninterest-bearing funding sources used to fund earning assets (89,214) (83,759) Net noninterest-bearing funding sources $ 71,344  $ 67,677    TOTAL ASSETS $ 482,105  $ 475,195                              (1)Our average prime rate was 8.25% and 7.43% for the quarters ended March 31, 2007 and 2006, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 5.36% and 4.76% for the same quarters, respectively. (2)Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. (3)Yields are based on amortized cost balances computed on a settlement date basis. (4)Includes certain preferred securities. (5)Nonaccrual loans and related income are included in their respective loan categories. (6)Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented. Wells Fargo & Company and SubsidiariesFIVE QUARTER OPERATING SEGMENT RESULTS (1) Quarter ended (income/expense in millions, average balances in billions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   COMMUNITY BANKING Net interest income $ 3,224  $ 3,248  $ 3,292  $ 3,321  $ 3,256  Provision for credit losses 306  275  236  187  189  Noninterest income 2,847  2,882  2,492  2,398  2,143  Noninterest expense 3,640  3,558  3,392  3,485  3,387  Income before income tax expense 2,125  2,297  2,156  2,047  1,823  Income tax expense 593  785  683  711  613  Net income $ 1,532  $ 1,512  $ 1,473  $ 1,336  $ 1,210    Average loans $ 180.8  $ 175.7  $ 172.5  $ 173.9  $ 190.4  Average assets 307.0  311.9  326.7  327.2  314.8  Average core deposits 243.9  239.8  233.1  232.0  229.0    WHOLESALE BANKING Net interest income $ 781  $ 787  $ 751  $ 706  $ 680  Provision (reversal of provision) for credit losses 13  25  --  (7) (2) Noninterest income 1,265  1,096  1,033  1,085  1,096  Noninterest expense 1,137  1,105  999  1,018  992  Income before income tax expense 896  753  785  780  786  Income tax expense 298  245  258  257  258  Net income $ 598  $ 508  $ 527  $ 523  $ 528    Average loans $ 77.9  $ 75.0  $ 72.3  $ 70.4  $ 67.6  Average assets 101.0  97.9  97.5  97.2  95.9  Average core deposits 46.7  44.0  36.5  32.0  28.4    WELLS FARGO FINANCIAL Net interest income $ 1,005  $ 1,015  $ 1,004  $ 957  $ 934  Provision for credit losses 396  426  377  252  246  Noninterest income 319  385  362  322  446  Noninterest expense 749  748  690  673  695  Income before income tax expense 179  226  299  354  439  Income tax expense 65  65  105  124  159  Net income $ 114  $ 161  $ 194  $ 230  $ 280    Average loans $ 62.7  $ 61.5  $ 59.2  $ 56.1  $ 53.1  Average assets 68.3  67.0  64.7  61.3  58.7  Average core deposits --  --  0.1  0.1  0.1    CONSOLIDATED COMPANY Net interest income $ 5,010  $ 5,050  $ 5,047  $ 4,984  $ 4,870  Provision for credit losses 715  726  613  432  433  Noninterest income 4,431  4,363  3,887  3,805  3,685  Noninterest expense 5,526  5,411  5,081  5,176  5,074  Income before income tax expense 3,200  3,276  3,240  3,181  3,048  Income tax expense 956  1,095  1,046  1,092  1,030  Net income $ 2,244  $ 2,181  $ 2,194  $ 2,089  $ 2,018    Average loans $ 321.4  $ 312.2  $ 304.0  $ 300.4  $ 311.1  Average assets (2) 482.1  482.6  494.7  491.5  475.2  Average core deposits 290.6  283.8  269.7  264.1  257.5                          (1)The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with other similar information for other financial services companies. We define our operating segments by product type and customer segment. If the management structure and/or the allocation process changes, allocations, transfers and assignments may change. (2)The Consolidated Company includes unallocated goodwill held at the enterprise level of $5.8 billion for all periods presented. Wells Fargo & Company and SubsidiariesFIVE QUARTER CONSOLIDATED MORTGAGE SERVICING                           Quarter ended (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Residential MSRs measured using the fair value method: Fair value, beginning of quarter $ 17,591  $ 17,712  $ 15,650  $ 13,800  $ 12,547  Purchases 159  222  2,907  511  219  Servicing from securitizations or asset transfers 828  843  965  1,310  989  Sales --  (469) --  --  --    Changes in fair value: Due to changes in valuation model inputs or assumptions (1) (11) 66  (1,147) 550  522  Other changes in fair value (2) (788) (783) (663) (521) (477)   Fair value, end of quarter $ 17,779  $ 17,591  $ 17,712  $ 15,650  $ 13,800                          (1)Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. (2)Represents changes due to collection/realization of expected cash flows over time.                       Quarter ended (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Amortized MSRs: Balance, beginning of quarter $ 377  $ 328  $ 175  $ 142  $ 122  Purchases 29  53  161  39  25  Servicing from securitizations or asset transfers 10  9  2  --  --  Amortization (16) (13) (10) (6) (5) Balance, end of quarter (1) $ 400  $ 377  $ 328  $ 175  $ 142    Fair value of amortized MSRs: Beginning of quarter $ 457  $ 440  $ 252  $ 205  $ 146  End of quarter 484  457  440  252  205                          (1)There was no valuation allowance for the periods presented. Wells Fargo & Company and SubsidiariesFIVE QUARTER CONSOLIDATED MORTGAGE SERVICING (CONTINUED) Quarter ended (in millions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Servicing income, net: Servicing fees (1) $ 1,054  $ 1,011  $ 947  $ 820  $ 747  Changes in fair value of residential MSRs: Due to changes in valuation model inputs or assumptions (2) (11) 66  (1,147) 550  522  Other changes in fair value (3) (788) (783) (663) (521) (477) Amortization (16) (13) (10) (6) (5) Net derivative gains (losses) from economic hedges (4) (23) 33  1,061  (533) (706) Total servicing income, net $ 216  $ 314  $ 188  $ 310  $ 81    Market-related valuation changes to MSRs, net of hedge results (2) + (4) $ (34) $ 99  $ (86) $ 17  $ (184)                         (1)Includes contractually specified servicing fees, late charges and other ancillary revenues. (2)Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. (3)Represents changes due to collection/realization of expected cash flows over time. (4)Represents results from free-standing derivatives (economic hedges) used to hedge the risk of changes in fair value of MSRs.   (in billions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Managed servicing portfolio: Loans serviced for others (1) $ 1,309  $ 1,280  $ 1,235  $ 1,020  $ 931  Owned loans serviced (2) 88  86  90  90  110  Total owned servicing 1,397  1,366  1,325  1,110  1,041  Sub-servicing 26  19  20  23  25  Total managed servicing portfolio $ 1,423  $ 1,385  $ 1,345  $ 1,133  $ 1,066    Ratio of MSRs to related loans serviced for others 1.39% 1.41% 1.46% 1.55% 1.50%   Weighted-average note rate (owned servicing only) 5.93% 5.92% 5.86% 5.80% 5.75%     (1)Consists of 1-4 family first mortgage and commercial mortgage loans. (2)Consists of mortgages held for sale and 1-4 family first mortgage loans. Wells Fargo & Company and SubsidiariesSELECTED FIVE QUARTER RESIDENTIAL MORTGAGE PRODUCTION DATA Quarter ended (in billions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Application Data: Wells Fargo Home Mortgage first mortgage quarterly applications $ 113  $ 90  $ 95  $ 108  $ 95  Refinances as a percentage of applications 46% 50% 41% 34% 39% Wells Fargo Home Mortgage first mortgage unclosed pipeline, at quarter end $ 57  $ 48  $ 55  $ 63  $ 59                                                  Quarter ended (in billions)   Mar. 31,2007   Dec. 31,2006   Sept. 30,2006   June 30,2006   Mar. 31,2006   Residential Real Estate Originations: (1) Quarter: Wells Fargo Home Mortgage first mortgage loans: Retail $ 26  $ 29  $ 29  $ 33  $ 26  Correspondent/Wholesale 31  29  36  35  28  Home equity loans and lines 8  9  10  11  9  Wells Fargo Financial 3  3  2  2  3  Total $ 68  $ 70  $ 77  $ 81  $ 66    Year-to-date $ 68  $ 294  $ 224  $ 147  $ 66      (1)Consists of residential real estate originations from all Wells Fargo channels.