Credit Suisse Financial Services Forum Tim Sloan Chief Financial Officer February 12, 2014
Wells Fargo vision Wells Fargo Vision We want to satisfy all our customers financial needs and help them succeed financially.
Serving consumers and businesses in more communities than any other U.S. Bank 70+ MM customers 9,004 locations Store Distribution Retail banking 6,175 Wells Fargo Advisors 1,375 Wholesale 767 Mortgage 687 Sales Force Platform bankers (1) 32,500 Financial advisors (2) 15,280 Wells Fargo Retail Banking Wells Fargo Advisors Wells Fargo Home Mortgage Home Mortgage consultants 9,256 Other Distribution Channels ATMs 12,647 As of December 31, 2013. (1) Active, full-time equivalent. (2) Series 7 brokers. (3) Regional banking online and mobile customers, based on 90-day active accounts, as of November 2013. Online banking customers (3) Mobile customers (3) 22.9 MM 11.9 MM 2
Leading position in key products Wholesale #1 Commercial real estate originator (1) #1 Middle market commercial lender (2) Consumer and Small Business Lending #1 Small business lender (3) #1 Auto lender (4) Residential Mortgage #1 Mortgage originator (5) #1 Mortgage servicing portfolio (5) Deposits #2 in U.S. (6) #2 Debit card issuer (7) Wealth Management/ Brokerage #3 Full-service retail brokerage (based on FAs) (8) #4 Wealth management provider (based on AUM) (9) (1) MBA Commercial Real Estate/Multifamily Finance Firms Annual Origination Volumes, year ending December 31, 2012. (2) Share of lead banking relationships, TNS 2012 Commercial Banking Momentum Monitor. Continental U.S. (excludes AK/HI). (3) U.S. in dollars per CRA data, 2012. (4) AutoCount, December 2012 November 2013. (5) Inside Mortgage Finance, 4Q13. (6) FDIC data, June 2013. (7) Nilson Report, April 2013. (8) Internal and peer reports, 4Q13. (9) Based on AUM of accounts > $5 million, Barron s, June 2013. 3
Balanced business model has led to consistent earnings growth in various economic environments Wells Fargo Net Income ($ in billions) $15.9 $18.9 $21.9 $12.3 $12.4 Slope of the Yield Curve (1) Unemployment Rate Real GDP Growth 2009 3.09% 9.3% -3.5% (1) 2010 3.09% 9.6% 2.5% 2011 2.73% 8.9% 1.8% 2012 1.72% 8.1% 2.8% 2013 2.29% 7.0% 3.2% (2) (2) (1) 10-year Treasury less the 3-month Treasury. (2) As of 4Q13. 4
Strong results in the five years since the downturn $782.8 Loans ($ in billions) $825.8 Return on Assets (ROA) 0.97% 1.51% Tier I Common Equity Basel I (1) ($ in billions) $123.5 $65.5 2009 2013 2009 2013 2009 2013 Core Deposits ($ in billions) $980.1 Return on Equity (ROE) 13.87% Total Payout (2) ($ in billions) $11.4 $780.7 9.88% $2.4 2009 2013 2009 2013 Balances are period end. (1) See slide 25 for additional information on Tier 1 common equity. (2) Total payout means common stock dividends and repurchases. 2009 2013 5
Strong revenue diversification is key Balanced Spread and Fee Income Diversified Fee Generation Other noninterest income (1) Deposit service charges Net gains from trading 8% 13% 3% Insurance 5% 52% Net Interest Income 48% Noninterest Income Mortgage Orig./ Sales, net Mortgage Servicing, net 9% 7% 22% Brokerage advisory, commissions and other 2% All other fees 1% Letters of credit 1% CRE brokerage commissions 1% Cash network 2% Merchant processing 9% Trust and investment 4% management 8% 5% Investment banking Card fees Charges and fees on loans Deposit Service Charges 13% Total Trust & Investment Fees 36% Card Fees 8% Total Mortgage Banking 16% Insurance 5% Net Gains from Trading 3% Total Other Fees 11% Other Noninterest Income (1) 8% All data is for 4Q13. (1) Other noninterest income includes net losses on debt securities, net gains from equity investments, lease income, life insurance investment income and all other noninterest income. 6
Continued strong results in 2013 Net Income Up 16% Diluted EPS Up 16% Avg. Core Deposits Up 5% Core Loans (1) Up 6% Charge-offs Down 50% ROA Up 10 bps ROE Up 92 bps Tier 1 Common Equity Ratio Under Basel I (2) Up 70 bps Year-over-year comparisons. (1) Core loans excludes non-strategic/liquidating loan portfolio, which is comprised of the Pick-a-Pay, liquidating home equity, legacy WFF indirect auto, legacy WFF debt consolidation, Education Finance-government guaranteed and legacy Wachovia Commercial, Commercial Real Estate and other PCI loan portfolios. See table on page 35 of Wells Fargo s news release dated January 14, 2014 for additional information on the non-strategic/liquidating loan portfolios. Management believes the core loans information provides useful disclosure regarding the ongoing loan portfolios. (2) See slide 25 for additional information on Tier 1 common equity ratio. 4Q13 capital ratios are preliminary estimates. 7
4Q13 Results Wells Fargo Net Income ($ in millions) Wells Fargo Diluted Earnings Per Common Share 5,090 5,171 5,519 5,578 5,610 $0.91 $0.92 $0.98 $0.99 $1.00 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 Record earnings of $5.6 billion, up 1% linked quarter (LQ) and 10% year-over-year (YoY) Earnings per share of $1.00, up 1% LQ and 10% YoY Solid returns: - ROA = 1.47%, up 1 bps YoY - ROE = 13.81%, up 46 bps YoY Capital levels remained strong - Common Equity Tier 1 ratio of 9.78% under Basel III (advanced approach) (1) (1) Estimated based on management s interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. See pages 25-26 for additional information regarding common equity ratios under Basel I and Basel III. 8
4Q13 Results versus peers Linked Quarter Loan Growth (1) Linked Quarter Deposit Growth (1) 1.7% 1.7% 1.6% 1.4% 1.3% 3.6% 2.2% 1.3% WFC USB C PNC JPM BAC 0.8% 0.5% 0.2% -0.7% WFC PNC C BAC JPM USB Linked Quarter Change in PTPP (2)(3) ROA 2.4% 2.0% 1.62% 1.47% WFC PNC C USB BAC 1.34% -3.9% -5.2% 0.87% 0.64% 0.57% Source: SNL (1) Period-end balances. (2) Pre-tax, pre-provision profit. (3) JPM excluded since not comparable. -18.6% USB WFC PNC JPM BAC C 9
Broad-based, year-over-year loan growth Period-end loans up $26.2 billion, or 3% year-over-year ($ in billions) 50.0 45.0 40.0 35.0 30.0 25.0 20.0 4Q12 Foreign 4Q13 Trade finance growth and 3Q13 U.K. CRE acquisition 198.0 196.0 194.0 192.0 190.0 188.0 186.0 184.0 182.0 Commercial and Industrial 4Q12 4Q13 Growth in Asset Backed Finance, Government Banking and Corporate Banking 260.0 258.0 256.0 254.0 252.0 250.0 248.0 246.0 244.0 Real Estate 1-4 family first mortgage 4Q12 4Q13 Included nonconforming mortgage growth and conforming mortgage retention Automobile Credit Card 27.5 52.0 51.0 27.0 50.0 26.5 49.0 26.0 48.0 25.5 47.0 25.0 46.0 45.0 24.5 44.0 24.0 43.0 23.5 4Q12 4Q13 4Q12 4Q13 Continued strong originations New account growth up 29% 10
Large, low cost deposit base Percent of Funding from Deposits 72 71 69 53 53 52 USB WFC PNC BAC JPM C Average Cost of Deposits 0.51 0.11 0.11 0.15 0.15 0.20 WFC BAC PNC JPM USB C Data as of 4Q13. Source: SNL. 11
Net interest income Net Interest Income (TE) (1) ($ in millions) 10,841 10,675 10,946 10,949 3.56% 3.48% 3.46% 3.38% 11,022 3.26% Net interest income (TE) (1) up $73 million LQ as higher securities balances, higher interest income on trading assets and loan growth were partially offset by a decline in mortgages held for sale NIM of 3.26% down 12 bps from 3Q13 on: - Customer-driven deposit growth = (6) bps - Liquidity related activity = (6) bps - Variable income = 0 bps - Balance sheet repricing, growth and mix = 0 bps Focus is on growing net interest income over time 4Q12 1Q13 2Q13 3Q13 4Q13 Net Interest Margin (NIM) Net Interest Margin vs. Peers (2) 3.40% 3.38% 3.26% 2.88% 2.56% 2.22% USB PNC WFC C BAC JPM (1) Tax-equivalent net interest income is based on the federal statutory rate of 35% for the periods presented. Net interest income was $10,643 million, $10,499 million, $10,750 million, $10,748 million and $10,803 million for 4Q12, 1Q13, 2Q13, 3Q13 and 4Q13, respectively. (2) As of 4Q13. Source: Company reports. 12
Noninterest income Noninterest Income ($ in millions) 11,305 2,818 9,862 861 8,487 9,001 4Q12 Mortgage production revenue 4Q13 Noninterest income excluding mortgage production revenue Noninterest income excluding mortgage production revenue up 6% YoY - Deposit service charges up 3% - Trust and investment fees up 8% - Card fees up 12% - Mortgage servicing fees up nearly 3x 1Q14 mortgage originations are expected to decline from 4Q13, while gain on sale margin is expected to remain in the range reported in second half of 2013 13
Trust and investment fees 2013 Noninterest Income Total Trust and Investment Fees ($ in millions) 21% Brokerage advisory, commissions and other $10,934 $11,304 $11,890 $13,430 67% 8% 4% Trust and investment management Investment banking 2010 2011 2012 2013 Total Trust & Investment Fees 33% All Other Noninterest Income 67% 14
Trust and investment fee components Brokerage advisory, commissions and other fees up 31% YoY - Retail brokerage managed account assets up 23% YoY reflecting strong net flows and market performance Investment Banking up 36% YoY - 2013 Investment Banking fees from Commercial and Corporate Banking customers up 16% YoY - 2013 U.S. investment banking market share (1) of 5.6% up from 5.0% in 2012 Retail Brokerage Managed Account Assets ($ in billions) Investment Banking Fees from Commercial and Corporate Banking customers +16% +30% 375 +11% 304 4Q12 4Q13 2010 2011 2012 2013 (1) Source: Dealogic U.S. investment banking fee market share. 15
Card fees Retail Bank Credit Card Penetration (1) (% of total Households) +11.1% Total Credit Card Balances ($ in millions) +5.6% Total Debit and Credit Card Fees ($ in millions) +6.7% 33.1% 37.0% 22,836 26,870 24,640 736 827 27.0% 680 4Q11 4Q12 4Q13 4Q11 4Q12 4Q13 4Q11 4Q12 4Q13 Percentages are compound annual growth rates (CAGR). (1) Household penetration defined as the percentage of retail banking deposit households that have a credit card with Wells Fargo. 16
Asset productivity vs. peers Revenue/Average Assets Fee Income/Average Assets 5.4% 5.4% 5.1% 2.6% 2.4% 2.3% 2.0% 2.0% 4.0% 3.8% 3.8% 1.2% WFC USB PNC BAC C JPM WFC USB PNC BAC JPM C 4Q13 results. Source: SNL. 17
Noninterest expense Noninterest Expense ($ in millions) 12,896 6,991 5,905 12,085 7,318 4,767 4Q13 Noninterest expense down $811 million YoY - Personnel expense (1) up 5% YoY - Noninterest expense excluding personnel down 19% YoY, driven by lower operating losses Efficiency ratio (2) of 58.5%, down from 59.1% in 3Q13 and 58.8% in 4Q12 4Q12 4Q13 Personnel expense (1) Noninterest expense excluding Personnel expense Efficiency Ratio vs. Peers (2)(3) 80.5% 55.5% 67.3% 68.5% 62.5% 58.5% USB WFC PNC JPM C BAC (1) Personnel expense includes salaries, commission and incentive compensation and employee benefits expense. (2) Efficiency ratio defined as noninterest expense divided by total revenue (net interest income plus noninterest income). Noninterest expense and our efficiency ratio may be affected by a variety of factors, including business and economic cyclicality, seasonality, changes in our business composition and operating environment, growth in our business and/or acquisitions, and unexpected expenses relating to, among other things, litigation and regulatory matters. (3) 4Q13 results. Source: SNL. 18
Credit quality trends continued to improve $5.4 2.71% Net Charge-offs (1) ($ in billions, and rate as a % of average loans) $3.8 2.02% $2.6 1.36% $2.1 1.05% $1.0 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 0.47% Provision expense of $363 million in 4Q13 up $288 million from 3Q13 Reserve release (2) of $600 million vs. $900 million in 3Q13 Given current favorable conditions, we continue to expect future reserve releases, absent significant deterioration in the economy (1) Wells Fargo s net charge-offs in part reflect reduced risk in the legacy Wachovia portfolio due to PCI accounting used for the highest risk Wachovia loans. (2) Provision expense minus net charge-offs. 19
Capital 10.12% Tier 1 Common Equity Ratio Under Basel I 10.39% 10.71% 10.60% 10.82% Capital continued to strengthen in 4Q13 Tier 1 common equity ratio under Basel I of 10.82% increased 22 bps LQ Common Equity Tier 1 ratio under Basel III, using the advanced approach, of 9.78% at 12/31/13 (1) Period-end common shares outstanding down 16.6 million LQ - Purchased 30.0 million common shares in 4Q13 - Entered into a $500 million forward repurchase transaction which is expected to settle in 1Q14 for an estimated 11.3 million shares 4Q12 1Q13 2Q13 3Q13 4Q13 See pages 25-26 for additional information regarding common equity ratios under Basel I and Basel III. 4Q13 capital ratios are preliminary estimates. (1) Estimated based on management s interpretation of final rules adopted July 2, 2013, by the Federal Reserve Board establishing a new comprehensive capital framework for U.S. banking organizations that would implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. 20
Targets Efficiency Ratio 55-59% ROA 1.30% - 1.60% ROE 12% - 15% Total Payout Ratio (1) ~50% - 65% Targets depend on the overall economic, interest rate and evolving regulatory environment and assume continued annual revenue and earnings growth over time (1) Total payout means common stock dividends and repurchases. Dividends and share repurchases are subject to Wells Fargo board and regulatory approvals, and other considerations. 21
Performance relative to targets Efficiency Ratio ROA 60.1% 1.47% 58.5% 1.31% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 ROE Total Payout Ratio 13.81% 48% 55% 12.14% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 2012 2013 Represents target ranges referenced on page 21. 22
Well positioned for the future Demonstrated performance over both the short and long term - 16 consecutive quarters of EPS growth - Strong returns versus peers - Lower risk profile than large peers Experienced management team - CEO s direct reports have an average tenure with Wells Fargo of 28 years Managing through the current environment - Investing opportunistically in securities - Continuing to grow non-mortgage fee income - Re-sizing the mortgage business to match demand - Continuing to build a high quality loan portfolio and benefitting from current credit trends Well positioned for the future - Leading market share in cornerstone products - Broad product set and strong distribution capabilities - Diversified revenue sources - Efficient operations with additional opportunities for improvement - Large, low cost deposit base - Strong capital Focused on returning more to shareholders Strong capital also gives the ability to continue to make acquisitions 23
Tier 1 common equity under Basel I Wells Fargo & Company and Subsidiaries FIVE QUARTER RISK-BASED CAPITAL COMPONENTS UNDER BASEL I Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, (in billions) 2013 2013 2013 2013 2012 Total equity $ 171.0 168.8 163.8 163.4 158.9 Noncontrolling interests (0.9) (1.6) (1.4) (1.3) (1.3) Total Wells Fargo stockholders' equity 170.1 167.2 162.4 162.1 157.6 Adjustments: Preferred stock (15.2) (14.3) (12.6) (12.6) (12.0) Cumulative other comprehensive income (1.4) (2.2) (1.8) (5.1) (5.6) Goodwill and other intangible assets (1) (29.6) (29.8) (30.0) (30.2) (30.4) Investment in certain subsidiaries and other (0.4) (0.6) (0.5) (0.6) (0.6) Tier 1 common equity (2) (A) 123.5 120.3 117.5 113.6 109.0 Preferred stock 15.2 14.3 12.6 12.6 12.0 Qualifying hybrid securities and noncontrolling interests 2.0 2.9 2.9 2.9 5.6 Total Tier 1 capital 140.7 137.5 133.0 129.1 126.6 Long-term debt and other instruments qualifying as Tier 2 20.5 18.9 18.0 18.4 17.2 Qualifying allowance for credit losses 14.3 14.3 13.8 13.8 13.6 Other 0.7 0.6 0.2 0.3 0.2 Total Tier 2 capital 35.5 33.8 32.0 32.5 31.0 Total capital (B) $ 176.2 171.3 165.0 161.6 157.6 Risk-weighted assets (3) (4): Credit risk $ 1,103.7 1,099.2 1,061.1 1,056.5 1,066.2 Market risk 37.3 35.9 36.3 37.8 10.9 Total risk-weighted assets (C) $ 1,141.0 1,135.1 1,097.4 1,094.3 1,077.1 Capital Ratios (4): Tier 1 common equity to total risk-weighted assets (A)/(C) 10.82 % 10.60 10.71 10.39 10.12 Total capital to total risk-weighted assets (B)/(C) 15.44 15.09 15.03 14.76 14.63 (1) Goodwill and other intangible assets are net of any associated deferred tax liabilities. (2) Tier 1 common equity is a non-gaap financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. 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. (3) 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. (4) The Company's December 31, 2013, risk-weighted assets (RWA) and capital ratios are preliminary. 25
Common Equity Tier 1 under Basel III (1) Wells Fargo & Company and Subsidiaries COMMON EQUITY TIER 1 UNDER BASEL III (1) (2) Dec. 31, (in billions) 2013 Tier 1 common equity under Basel I $ 123.5 Adjustments from Basel I to Basel III (3) (5): Cumulative other comprehensive income related to AFS securities and defined benefit pension plans 1.3 Other 1.2 Total adjustments from Basel I to Basel III 2.5 Threshold deductions, as defined under Basel III (4) (5) - Common Equity Tier 1 anticipated under Basel III (C) $ 126.0 Total risk-weighted assets anticipated under Basel III (6) (D) $ 1,288.7 Common Equity Tier 1 to total risk-weighted assets anticipated under Basel III (C)/(D) 9.78 % (1) Common Equity Tier 1 is a non-gaap financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews Common Equity Tier 1 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. (2) The Basel III Common Equity Tier 1 and RWA are estimated based on management s interpretation of the Basel III capital rules adopted July 2, 2013, by the FRB. The rules establish a new comprehensive capital framework for U.S. banking organizations that implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. (3) Adjustments from Basel I to Basel III represent reconciling adjustments, primarily certain components of cumulative other comprehensive income deducted for Basel I purposes, to derive Common Equity Tier 1 under Basel III. (4) Threshold deductions, as defined under Basel III, include individual and aggregate limitations, as a percentage of Common Equity Tier 1, with respect to MSRs (net of related deferred tax liability, which approximates the MSR book value times the applicable statutory tax rates), deferred tax assets and investments in unconsolidated financial companies. (5) Volatility in interest rates can have a significant impact on the valuation of cumulative other comprehensive income and MSRs and therefore, may impact adjustments from Basel I to Basel III, and MSRs subject to threshold deductions, as defined under Basel III, in future reporting periods. (6) The final Basel III capital rules provide for two capital frameworks: the "standardized" approach intended to replace Basel I, and the "advanced" approach applicable to certain institutions as originally defined under Basel II. Under the final rules, we will be subject to the lower of our Common Equity Tier 1 ratio calculated under the standardized approach and under the advanced approach in the assessment of our capital adequacy. Accordingly, the estimate of RWA reflects management's interpretation of RWA determined under the advanced approach because management expects RWA to be higher using the advanced approach compared with the standardized approach. Basel III capital rules adopted by the Federal Reserve Board incorporate different classification of assets, with certain risk weights based on a borrower's credit rating or Wells Fargo's own models, along with adjustments to address a combination of credit/counterparty, operational and market risks, and other Basel III elements. 26
Forward-looking statements and additional information Forward-looking statements: This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make forward-looking statements in our other documents filed or furnished with the SEC, and our management may make forwardlooking statements orally to analysts, investors, representatives of the media and others. Forward-looking statements can be identified by words such as anticipates, intends, plans, seeks, believes, estimates, expects, target, projects, outlook, forecast, will, may, could, should, can and similar references to future periods. In particular, forward-looking statements include, but are not limited to, statements we make about: (i) the future operating or financial performance of the Company, including our outlook for future growth; (ii) our noninterest expense and efficiency ratio; (iii) future credit quality and performance, including our expectations regarding future loan losses and allowance releases; (iv) the appropriateness of the allowance for credit losses; (v) our expectations regarding net interest income and net interest margin; (vi) loan growth or the reduction or mitigation of risk in our loan portfolios; (vii) future capital levels and our estimated Common Equity Tier 1 ratio under Basel III capital standards; (viii) the performance of our mortgage business and any related exposures; (ix) the expected outcome and impact of legal, regulatory and legislative developments, as well as our expectations regarding compliance therewith; (x) future common stock dividends, common share repurchases and other uses of capital; (xi) our targeted range for return on assets and return on equity; (xii) the outcome of contingencies, such as legal proceedings; and (xiii) the Company s plans, objectives and strategies. Forward-looking statements are not based on historical facts but instead represent our current expectations and assumptions regarding our business, the economy and other future conditions. Investors are urged to not unduly rely on forwardlooking statements as actual results could differ materially from expectations. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date. For more information about factors that could cause actual results to differ materially from expectations, refer to the Forward-Looking Statements discussion in Wells Fargo s press release announcing our fourth quarter 2013 results and in our most recent Quarterly Report on Form 10-Q, as well as to Wells Fargo s other reports filed with the Securities and Exchange Commission, including the discussion under Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2012. Purchased credit-impaired loan portfolio: Loans that were acquired from Wachovia that were considered credit impaired were written down at acquisition date in purchase accounting to an amount estimated to be collectible and the related allowance for loan losses was not carried over to Wells Fargo s allowance. In addition, such purchased credit-impaired loans are not classified as nonaccrual or nonperforming, and are not included in loans that were contractually 90+ days past due and still accruing. Any losses on such loans are charged against the nonaccretable difference established in purchase accounting and are not reported as charge-offs (until such difference is fully utilized). As a result of accounting for purchased loans with evidence of credit deterioration, certain ratios of the combined company are not comparable to a portfolio that does not include purchased credit-impaired loans. In certain cases, the purchased credit-impaired loans may affect portfolio credit ratios and trends. Management believes that the presentation of information adjusted to exclude the purchased credit-impaired loans provides useful disclosure regarding the credit quality of the non-impaired loan portfolio. Accordingly, certain of the loan balances and credit ratios in this document have been adjusted to exclude the purchased credit-impaired loans. References in this document to impaired loans mean the purchased credit-impaired loans. Please see pages 32-34 of the press release announcing our 4Q13 results for additional information regarding the purchased credit-impaired loans. 27