Sanford C. Bernstein Conference May 29, 2008 John Stumpf President and CEO
Forward-Looking Statements This presentation may include forward-looking statements about Wells Fargo. Broadly speaking, forward-looking statements include projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure, credit quality or other financial items descriptions of plans or objectives of management for future operations, products or services, including pending acquisitions forecasts of future economic performance and descriptions of assumptions underlying or relating to any of the foregoing. Forward-looking statements discuss matters that are not facts, and often include the word believe, expect, anticipate, intend, plan, estimate, project, target, will, can, would, should, could or may. You should 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 to update them to reflect changes that occur after the date they are made. There are a number of factors that could cause results to differ significantly from our expectations, including further deterioration in the credit quality of our home equity, real estate, auto or other loan portfolios, or in the value of the collateral securing those loans, due to higher interest rates, increased unemployment, declining home or auto values, further or continued disruptions in the credit markets, or other economic factors. Our periodic reports filed with the SEC including our annual report on Form 10-K for the year ended December 31, 2007 and our quarterly report on Form 10-Q for the period ended March 31, 2008 describe additional factors. This presentation reflects our historical financial performance, and should not be considered as an indication or projection of future results. 2
Wells Fargo Key Messages Largely avoided many industry issues (although not immune to housing, economy) Strong balance sheet Franchise is growing and gaining share 3
Wells Fargo A Unique Diversified Financial Services Company 4
Earnings Diversity Consumer Finance 6% Wholesale Banking/Commercial Real Estate 9% Community Banking 34% 80+ Businesses Not just a bank Specialized Lending 17% Home Mortgage & Home Equity 17% Investments & Insurance 17% Earnings based on normalized historical averages and near future year expectations. 5
First Quarter 2008 Highlights Record! Net Income Revenue EPS Avg. Core Deposits Avg. Loans Noninterest Expense $2.0 billion $10.6 billion, up 12% $0.60 Up 9% Up 19% Down 1% Growth rates are Q1 2007 to Q1 2008 6
Strong Operating Margins Positive Operating Leverage Net Interest Margin: 4.69%, up 7 bps from Q4 07 ROA: 1.40% ROE: 16.9% 7
Our Vision Satisfy all our customers financial needs and help them succeed financially 8
Strong Sales Growth Record! Record! Record! Record! Record! Record! Retail Banking cross-sell Small Business cross-sell Wholesale Banking cross-sell Middle Market cross-sell Core sales/banker per day* Retail Banking core product sales 5.6 3.6 6.2 7.7 5.64 5.82 million *Core sales per platform banker FTE per day. 9
Cross-Sell Success Consumer 2001 3.8 Q1 08 5.6 Small Business 2.5* 3.6 Wholesale Banking 4.6 6.2 Middle Market 5.7* 7.7 * As of 2003 10
Record Sales in Q1 2008 Core product sales Wells Fargo Packages Consumer up 17% up 32% Small Business up 9% up 24% Net new checking accts up 4.9% up 2.8% Growth rates are Q1 2007 to Q1 2008 11
Deposit Mix vs. Peers Checking/savings accounts as % of total core deposits Q1 08 Wells Fargo 87% Peer Average 64% Source: Company earnings release and SNL Peers: BAC, BBT, COF, C, FITB, JPM, NCC, PNC, RF, STI, USB, WB, WM 12
Greater Customer Penetration Mortgage customers that buy WFC banking products = 21% Retail customers with WFC credit card = 38% Consumer checking account customers with WFC debit card = 91% Consumer checking account customers banking online = 66% New business checking account customers with a small business package = 47% Nearly 1mm online small business customers, up 18% from year-end Wholesale/commercial customers using CEO portal for online banking services = 70% As of March 31, 2008 13
Increasing Market Share WFC share among largest U.S. banks* Core deposits = 10.7%, up from 10.1% Total loans = 9.2%, up from 9.0% C&I loans = 10.2%, flat from prior year Fee income = 10.0%, up from 8.4% Mortgage origination share = 13.7%, up from 10.3%** Wells Fargo Advantage Funds now 3 rd largest mutual fund family among U.S. banks *Largest U.S. banks include: BAC, BBT, COF, C, FITB, JPM, NCC, PNC, RF, STI, USB, WB, WM, WFC; FY07 vs. FY06 **Source: Inside Mortgage Finance, FY07 vs. FY06 14
Credit Provisioning Provision for Credit Losses $ in billions Reserve Build $1.4 $0.5 $0.4 $0.4 $0.6 $0.7 $0.7 $0.7 $0.9 $1.2 $1.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2008 15
Largely Not Impacted by Industry Issues Negative amortizing mortgages Subprime securities Direct exposure to hedge funds Large covenant-lite LBOs CDOs CLOs SIVs 16
Disciplined Credit Management Benefit to customers Strong underwriting Expert judgment Risk-based pricing Active account management Early problem resolution 17
Wells Fargo Financial: Debt Consolidation Portfolio $25B debt consolidation loans originated through U.S. retail stores 96% first lien No interest-only, option ARMs or negative amortizing loans in portfolio Brokers, correspondents, or national advertising campaigns not used Full documentation and require income verification Underwritten to fully-indexed rate 56 bps in annualized losses, $34 million in Q1 08 As of March 31, 2008 18
Wells Fargo Financial: Auto Portfolio Avg. Balances, $ in Billions 70% FICO above 620 $22.8 $22.5 $23.5 $24.5 $25.8 $27.8 $29.7 $30.6 $30.7 $30.7 $30.5 $29.8 $28.6 Delinquencies down 4% y-o-y, down 25% from Q4 07 Reduced risk tighter underwriting, pricing, collection practices and new management team Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 2008 As of March 31, 2008 19
Home Equity Portfolio Outstanding balances Q1 2008 loss rate (annualized) CLTV*>90% Wells Fargo retail originated Liquidating Portfolio $11.5B 5.58% 63% <1% Core Portfolio $72.1B 1.56% 30% 98% National Home Equity Group Portfolio as of March 31, 2008 * Combined loan to value ratio greater than 90% based on updated home values, where available, as as of 12/31/07 20
Home Equity: Actions Taken Bubble policy established in 2005 Stopped acquiring business in highest risk indirect channels beginning in Q3 07 Reduced maximum CLTVs in all channels Tightened underwriting standards dynamically in weakening markets Continue MSA-specific focus New management team in place 21
Home Mortgage: Actions Taken Originate for sale model Exited nonprime correspondent channel in Q2 07 Exited nonprime wholesale channel in Q3 07 Increased pricing for non-conforming mortgage loans in Q3 07 Adjusted maximum LTVs in Q4 07 Further adjusted maximum LTVs, increased minimum credit scores and adjusted risk-based pricing in Q1 08 22
Home Mortgage Origination Mix $500 $450 $400 $350 $300 $250 $200 In Billions Alt-A Non-Prime Prime $150 $100 $50 $0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 23
Mortgage Servicing In Billions CAGR = 22% $1,016 $1,385 $1,551 Over 90% prime customers Foreclosure rate 1.02% at March 31, 2008 $570 $731 $832 Working closely with HOPE NOW alliance and other organizations to keep people in their homes 2002 2003 2004 2005 2006 2007 24
Commercial Loan Portfolio Largely middle-market relationship lending Diversified by product type and geography Seasoned management team Net credit losses of 70 bps annualized on entire $157B C&I portfolio Majority of losses from $11.7B Business Direct portfolio, unsecured small loans/lines with average balance <$20k 25
Allowance for Credit Losses $6B allowance for credit losses at March 31, 2008 Allowance is 1.56% of total loans Adequacy determined by analyzing losses inherent in the loan portfolio at quarter end Reserve build: $500mm in Q1 08 $1.4B in Q4 07 26
Pre-Tax Pre-Provision Profit Q1 08 Quarterly Record up 30% $5.1B $3.5B $3.5B $3.9B $4.0B $3.9B $4.2B $4.2B $4.3B Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Revenue less noninterest expense 27
Franchise Growth Peer Performance Pre-tax Pre-Provision Profit 30% 19% 14% 5% WFC BBT USB WM JPM RF BAC WB C -5% -11% -14% -34% -134% Revenue less noninterest expense Percentage change from Q1 07 to Q1 08 28
Peer Performance Revenue Growth Operating Leverage Avg. Earning Asset Growth Avg. Core Deposit Growth WFC 12% 13% 21% 9% Peer Average -2% -5% 6% 4% Peers: BAC, BBT, COF, C, FITB, JPM, NCC, PNC, RF, STI, USB, WB, WM Change from Q1 07 to Q1 08 29
Strong Operating Margins Net Interest Margin WFC 4.69% Peer Median 3.09% Return on Assets 1.40% 0.66% Return on Equity 16.9% 6.8% For first quarter 2008 Peers: BAC, BBT, COF, C, FITB, JPM, NCC, PNC, RF, STI, USB, WB, WM 30
ROE vs. Peers Averages Q1 08 1 Yr 3 Yr 5 Yr Wells Fargo 17% 17% 19% 19% Wachovia -3% 9% 12% 13% Citi -16% 3% 15% 16% Bank of America 3% 11% 15% 16% JPMorgan Chase 8% 13% 11% 11% Peer Average* 4% 9% 13% 15% *Includes BAC, BBT, C, COF, JPM, NCC, RF, STI, USB, WB, WFC, WM As of March 31, 2008 31
Capital Wells Fargo 3/31/08 Top 13 Peer Avg.* 3/31/08 Tier 1 Leverage 7.0% 5.7% Tier 1 Capital 7.9% 7.8% Total Capital 11.0% 11.9% *Peers: BBT, BAC, C, COF, FITB, JPM, NCC, PNC, RF, STI, USB, WB,WM Source: Company earnings releases and SNL 32
Strong Asset Growth and High Capital Year-over-Year Earning Asset Growth Tier I Capital + Allowance as a % of Earning Assets Wells Fargo 21% 9.1% JP Morgan Chase 15% 8.4% Wachovia 11% 7.9% Bank of America Citi Peer Average 14% 10% 6% 7.2% 6.1% 7.6% As of March 31, 2008 33
Disciplined Acquisition Approach Focus In-footprint, fill-in bank deals Distribution, not product Skills, not scale Manageable integration Financial criteria IRR 15%+ Accretive within 3 years Conservative assumptions 34
Recent Acquisitions Placer Sierra Bancshares Greater Bay Bancorp United Bancorporation Wyoming* Citi customers in NV and CA** CIT Construction Insurance Flatiron Credit Company $2.7 B in assets $7.4 B in assets $1.7 B in assets $500 mm in deposits $2.4 B in assets 7 brokerage businesses Insurance premium finance company *Pending, agreement announced January 15, 2008. **Pending, agreement announced April 15, 2008. Customers in six Northern Nevada and two California Sierra Foothill communities. 35
Strengthening the Franchise Wells Fargo continues to enhance the core elements of our franchise Expand distribution and customer touch-points Acquire new customers and deepen relationships Strengthen product offerings Enhance team member productivity and engagement Maintain solid capital and liquidity Through all cycles, our vision, focus, team and execution has led to industry out-performance 36
Conservative Financial Structure Wells Fargo Bank N.A. only bank in the U.S. rated Triple A by both Moody s and S&P 37
People As A Competitive Advantage 38
The next stage.