WellsFargo at Goldman Sachs Conference 12.8.09

8/14/2019 WellsFargo at Goldman Sachs Conference 12.8.09

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John Stumpf, President and CEO

December 8, 2009

Goldman Sachs Financial ServicesCEO Conference


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We want to satisfy all of our customers '

financial needs, help them succeed financially, be

the premier provider of financial services in

every one of our markets, and be known as one of

America's great companies.


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As of September 30, 2009.

10%

2%

17%

14%

11%

23%4%

9%

6%

4%

Balanced LoanPortfolio

Balanced Spread andFee Income

Diversified FeeGeneration

Consumer Loans 56%

Commercial Loans 40%

Foreign Loans 4%

Net Interest Income 52%

Non-interest Income 48%

4%Loan Fees

2%Operating Leases

Trust & Investment Fees 23%

Mortgage Servicing 17%

Service Charges 14%

Mortgage Orig./Sales Activities 11%

Card Fees 9%

Trading 6%

Insurance 4%

Other Non-interest income 10%

Balanced business model

4%

40%

56%

48%52%


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Leading market presence in diverse businesses

Rankings based on most recently available updates.

Credit

Supplier of credit to U.S.economy in last year

#2

Agricultural lender#1

Small business lender#1

Mortgage

Servicer#2

Originator#1

Deposits

Transaction accounts asa % of total depositsamong large banks

#1

U.S. banking deposits#2

Securities/ Inv. Banking

Loan syndications#2

Commercial real estatebrokerage

#1

Mutual funds amongU.S. banks

#2

Retail brokerage#2

Insurance

Rural crop insurance#1

Bank-owned insurancebrokerage

#1

Payments

Leader in globalremittance

Foreign exchange sales#2

Debit card issuer#2


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Wells Fargo retail banking stores 3,312

Wachovia retail banking stores 3,341

Wells Fargo Advisors stores 1,372

As of 9/30/2009.

Leading distribution system in financial services

Serving 70+ million customers, 1 in 3 U.S. households


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9.29.8

10.8

3.3

4.45.1

1Q09 2Q09 3Q09

Pre-tax pre-provision profit (PTPP)Net charge-offs

Pre-tax pre-provision profitPTPP more than doublequarterly net charge-offs

( $ i n b i l l i ons )

PTPP is total revenue less noninterest expense. Management believes PTPP is a useful measure because it enables investors and others to assess theCompanys ability to generate capital to cover credit losses through a credit cycle. Provision expense for 1Q09, 2Q09 and 3Q09 was $4.6 billion, $5.1 billion,and $6.1 billion respectively.

1.01xBank of America

1.07xCitigroup

2.06xU.S. Bancorp

2.07xJPMorgan Chase

2.11xWells Fargo

2.57xPNC

3Q09PTPP to Net Charge-offs


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Credit losses closer to peak

1.57%Wachovia

1.96%Legacy Wells Fargo

Commercial

1.87%Wachovia

4.50%Legacy Wells Fargo

Consumer

Annualized

Q3 Loss Rate

Legacy Wells Fargo loss rates betterthan most large bank peers

Wachovia loss rates below Wells

Fargo, reflecting benefit of purchaseaccounting

Consumer portfolio

- 90 days+ declined in 3Q

- Credit card only 3% of portfolio oftotal loan portfolio

Commercial portfolio

- Still migrating weaker

- Consistently strong underwriting at

legacy Wells Fargo- Wachovia portfolio written down at

12/31/08

> 37% write-down on $19 billion high-risk CRE portfolio


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Reserve coverage

1.95%

2.51%2.71%

2.86%3.07%

3Q08 4Q08 1Q09 2Q09 3Q09

Allowance for credit losses asa percentage of total loans (1)

(1) 3Q08 results exclude Wachovia, while 4Q08 includes Wachovias allowanceand period-end loan balances on 12/31/2008.

(2) Excludes purchased credit-impaired Wachovia loans of $58.8 billion in4Q08, $58.2 billion in 1Q09, $55.2 billion in 2Q09, and $54.3 billion in3Q09, and allowance associated with purchased credit-impaired loans of$49 million in 2Q09 and $233 million in 3Q09.

Allowance for credit losses = $24.5billion

- 3.26% of total loans, excluding PCIWachovia loans

- 118% of nonaccrual loans- 1.21x annualized 3Q09 net

charge-offs

Additional $26.9 billion nonaccretabledifference for PCI portfolio life-of-loanlosses

Reserve build

- $11 billion since start of credit crisis

- $3 billion in 2009

- $1 billion in third quarter 2009

- Need for future reserve build dependson:

> When losses peak

> Subsequent projected rate of decline inloss rate

> Commercial loan quality migration vs.consumer loss reduction

> Loan balances

2.91% (2)

2.69% (2)

3.06% (2) 3.26%(2)

PCI = purchased credit-impaired loans (formerly SOP 03-3)


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Purchased credit-impaired (PCI) loan portfolio

Eliminated virtually all of Wachovia nonaccrual loans ($20.1 billion) at 12/31/08through purchase accounting write-downs

Impaired Pick-a-Pay loans have performed better than original expectations attime of merger

Other PCI loans tracking with original expectations at time of merger

Total

Commercial, CRE and

Foreign

Other Consumer

Pick-a-Pay

I m p a i r ed L oa n s

$26.9 billion$14.0 b illion$40.9 billion

2.21.94.1

$18.2$8.3$26.5

6.63.810.4

1 2 / 3 1 / 0 8 ( a s r e fi ne d)Purchase Accoun t ing L i fe

o fLoan Loss Mark

Ba lance a t Sep t em ber 30 , 2009

Net Use o f Nonaccre t ab le Di f ference YTD

Sep t em ber 30 , 2009 ( 1 )

(1) Losses in purchased credit-impaired (PCI) loans are absorbed by the noanaccretable difference established in purchase accounting life-of-loan marks, net of loansresolved by payment in full or loans resolved by sales to third parties. These losses are not recorded as net charge-offs until such difference is fully utilized.


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Pick-a-Pay portfolioLoan Outstandings (1)

(in billions)

$95.3

$87.8

4Q083Q092Q08

(1) Carrying value, which does not reflect the allowance for loan losses, includespurchase accounting adjustments, which, for non-impaired loans, areadjustments to mark the loans to a market yield at date of merger less anysubsequent charge-offs, and for impaired loans, are the nonaccretabledifference and the accretable yield.

(2) For modifications we completed earlier this year, our redefault rates after 6months have been less than half the 41 percent redefault rates for industrymodifications with comparable amount of seasoning.

Significant reduction in portfolio

- Written down by $26.5 billion at close

- Continued to reduce portfolio in 2009through modifications, runoff, and

charge-offs

Expect life of loan losses lower than attime of merger

- Completed nearly 20,000 full-termmodifications in 3Q and 43,500 year-to-

date- 22% of PCI portfolio already modified

> Re-underwritten and income verified

> Eliminated negative amortization feature

> Redefault rates less than half the 41%

redefault rate for the industry (2)

Characteristics of unimpaired portfolio- Average FICO = 692

- Average loan size = $227,000

- Average age = 5.5 years

- % in California = 49%

- 36% have an updated CLTV


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Portfolio diversified bothgeographically and by product type

32% owner occupied

Legacy Wells Fargo- Strong, consistent underwriting over

many years

- Primarily focused on cash flows

- Relationship business

- Early problem avoidance

> Additional equity> Early restructuring

Wachovia- $7 billion write-down on $19 billion

highest risk CRE portfolio at mergerclosing

- 1.28% 3Q09 loss rate on Wachoviawholesale banking CRE unimpairedportfolio of $31.1 billion

Office

Real Estate -other

Retail

Apartments

ShoppingCenter

1-4 familystructure

1-4 family land

Other

Hotel/Motel23%

12%

15%

10%

10%

8%

7%

5%

4%

3%3%

Industrial

Land(excluding1-4 family)

$125 billion Commercial Real Estate Portfolio excluding PCI loans of $10.2 billion.As of September 30, 2009

Commercial real estate loan portfolio


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0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Wells Fargo Citi Bank of America Chase Industry - Large

Servicer ($7.4Trillion)

Foreclosure Rate

Delinquency Rate

Mortgage servicing portfolio

Delinquency and foreclosures September 30, 2009

Source: Inside Mortgage Finance

8.33%

12.34%

16.14%

13.82%

9.65%


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7.8%

8.3%

9.8%10.6%

4Q08 1Q09 2Q09 3Q09

Strengthened capital position Wells Fargo stockholders equity of $122 billion, up $23 billion since year-end

2008 and up $50 billion since pre-Wachovia position at 9/30/08, excluding theU.S. Treasurys $25 billion Capital Purchase Program investment

Generated a total of $20 billion during 2Q09 and 3Q09 toward the $13.7 billionSCAP capital buffer requirement through strong internal capital generation as wellas 2Q09 capital raise

Tier 1 Capital

+280bps

See Appendix slide 17 for additional information regarding Tier 1 Common Equity.

Tier 1 Common Equity

+205bps

3.1% 3.1%

4.5%

5.2%

4Q08 1Q09 2Q09 3Q09


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Wachovia merger update Integration on plan, on schedule and under budget

Estimated merger costs reduced to approximately $5.5 billion

Reconfirmed $5 billion of expected annual run-rate cost savings bycompletion of the integration in 2011

Completed merger events:

- Re-branding of Wachovia brokerage, capital markets, mortgage andinsurance businesses

- Conversion of Colorado community bank

Upcoming merger events:

- Arizona, Illinois and Nevada conversions scheduled for first quarter 2010

- California and Texas scheduled for later in 2010

- Wachovia store integration in non-overlap states planned through 2011 Cross-sell revenues already being realized


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Wells Fargo: Well positioned for sustainable growth Diversified business model

Powerful distribution channels

Superior sales execution and customer service

Disciplined cost control

Current projections show credit losses peaking in 2010 absent furthereconomic deterioration

Merger integration on track and under budget with significantrevenue synergies present

Robust internal capital generation potential


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Appendix: Tier 1 common equity reconciliationTIER 1 COMMON EQUITY (1)

Quarter ended

Sept. 30, June 30, Dec. 31,(in billions) 2009 2009 2008

Total equity 128.9$ 121.4 102.3Less: Noncontrolling interests (6.8) (6.8) (3.2)

Total Wells Fargo stockholders' equity 122.1 114.6 99.1

Less: Preferred equity (31.1) (31.0) (30.8)Goodwill and intangible assets (other than MSRs) (37.5) (38.7) (38.1)Applicable deferred assets 5.3 5.5 5.6Deferred tax asset limitation - (2.0) (6.0)

MSRs over specified limitations (1.5) (1.6) (1.5)Cumulative other comprehensive income (4.0) 0.6 6.9Other (0.3) (0.3) (0.8)

Tier 1 common equity (A) 53.0$ 47.1 34.4

Total risk-weighted assets (2) (B) 1,023.8$ 1,047.7 1,101.3

Tier 1 common equity to total risk-weighted assets (A)/(B) 5.18 % 4.49 3.13

(1)

(2)

Tier 1 common equity is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies, including the Federal

Reserve in the Supervisory Capital Assessment Program, to assess the capital position of financial services companies. Tier 1 common equity includes

total Wells Fargo stockholders' equity, less preferred equity, goodwill and intangible assets (excluding MSRs), net of related deferred taxes, adjusted

for specified Tier 1 regulatory capital limitations covering deferred taxes, MSRs, and cumulative other comprehensive income. Management reviews

Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information,

and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants.

Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items

are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate

dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the

risk categories are aggregated for determining total risk-weighted assets.

WellsFargo at Goldman Sachs Conference 12.8.09

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