states, all 10 Canadian provinces, Caribbean, ..... our small business customers to build online stores, sell online, ac
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III
To Our Owners It's our single biggest challenge. It's our single biggest revenue opportunity. What is it?
Wells Fargo & Company (NYSE:WFC) is a diversified financial services companyproviding banking, insurance, investments, mortgage and consumer finance from
9 "They Just Did It." Great service happens when our people take personal ownership for customer problems. Here are the stories of 16 Wells Fargo team members who "just did it." 20 Serving our Communities Our commitment to outstanding service is more than just good business - it makes our communities better places to live and work, too. 26 The Businesses of Wells Fargo Banking,lnsurance,lnvestments, Mortgage, Consumer Finance ... and a whole lot more. We're one of the USA's most diversified financial services companies. Here's how it all fits.
about 5,400 stores, the industry's leading Internet site (wellsfargo.com) and other distribution channels across North America. Our corporate headquarters is in San Francisco but we're decentralized so that every local Wells Fargo store is a headquarters for satisfying all our customers'financial needs and helping them succeed financially. Assets: $272 billion Rank in size among U.S. peers: 4th Market value of stock: $95.2 billion Rank by market cap among U.S. peers: 2nd Total Team members: 117,000
30 Board of Directors, Corporate Officers 31 Senior Officers
Major Lines of Business
32 Service: State-by-State 33 Financial Review 52 Financial Statements 97 Independent Auditors' Report
o
Community Banking
42%
Investment/Insurance
15%
Specialized Lending
12%
Wholesale Banking
10%
Commercial Real Estate
o G
Home Mortgage/ Home Equity
11%
Consumer Finance
6%
4%
Based on historical averages and near future year expectations
Wells Fargo Community Banking USA's most extensive banking franchise. Serves 11 million households in 23 states from Ohio to Alaska.
Wells Fargo Home Mortgage USA's largest originator and servicer. Serves 4 million customers.
Wells Fargo Wholesale Banking Indudes U.S. Corporate and Commercial Banking, Capital Markets, Commercial Real Estate Lending. Serves 59,000 customers nationwide.
Wells Fargo Financial One of USA's leading consumer finance companies. 4.5 million customers in 47 states, all 10 Canadian provinces, Caribbean, Latin America, Guam and Saipan.
To Our Owners What's the IINext Stage lf for Wells Fargo? What's our company's single biggest challenge and our si gl biggest revenue opportunity? The answer is simple. It's the quality of our customer service. If we-as one team -cans
.IZ
this opportunity, I believe we can consistently
inc ease revenue ten percent or more and profits would we make forward-looking statements about our company's financlal condition, results of operations, plans, objectives and we use the words "believe,""expect,""anticipate:"estimate,""may,""can;"will" or similar expressions, we are making forward-looking statements.
FORWA R D- LOO KI N G STATE M ENTS In this report future performance and business. When
These forward-looking statements Involve Inherent risks and uncertainties. A number of factors -
grow even faster. We then will achieve our vision: satisfy all
many of which are beyond our control - could cause actual results to differ from those
In our forward-looking statements.These factors include:' changes In political, business and economic conditions, Including changes In interest rates' competition, including competition from Insurance companies and securities firms' fiscal and monetary policies' customers choosing not to use banks for transactions • legislation. including the Gramm-Leach-Bliley Act·
our customers' financial needs, help them succeed financially,
the Integration of the former Norwest and the former Wells Fargo' future mergers and acquisitions' the Integration of merged and acquired companies. We discuss in more detail on pagl'S 36·39 thesl' and other factors that could cause actual results to differ from those In our forward-looking statements.There are other factors not described in this report that could cause actual results to differ.
2001 Wells Fargo & Company. All rights reserved.
and be known as one of America/s great companies.
First, let's look back to see how far we've come. Our team has made outstanding progress since
• Excluding First Security, we achieved eight consecutive quarters of record net income, earnings per sha re, return on assets and return on equity.
of all 1/7,000 of our team members. Considering all we've
• Our price to earnings ratio at year-en I 2000 was almost twice that of our peer group-and our stock price rose
the merger of equals between Norwest and Wells Fargo more than two years ago.
Thanks to our 117,000 talented team members, Wells Fargo
pa~t
two
ye:H~-conversions,acquisition,
revenue and profit growth, increased market share, retaining eliminated due to the merger -we feel very good that there has been no broad deteriorarion in our customer service. We're at lea r as good as Ollr compct'itors. W/e consider that
tively.
• In California, home to one of every nine Americans,
quite an accomplishment. The question now is-can a company rh;lt wants to
grew 16 percent. We now touch two of every five of the
he great get there with average customer service? The answer
state's resident.
is no. We're great in many areas-financial performance,
• Wholesale Banking-serving commercial real estate and
product innovation sales success, returns to stockholders
achieved something never before accomplished in banking
corporate customers-grew its loan volume 15 percent.
history. We successfully merged and combined the systems
Sales calls, proposals and new relationships were up over
the one area in which we continue to be ahout average
25 percent.
compared with our peers. We're not alone. National surveys
of two large banks while delivering record cash earnings per share of $2.91, excluding First Security results for the
• Our mortgage company had its tenth
consecutiv~ year of
first nine months of 2000. That was 14 percent higher than
record earnings and regained its # I industry ranking in
last year. On a similar basis, we also had record revenue
both loan originations and loan servicing.
growth of more than 10 percent and increased market share. 1 believe ours was the largest and most complex systems conversion in banking history. In 2000 alone, we had 63 separate conversions, more than one a weekend. These conversions connected what now is America's most extensive
• Home equity loans grew over 20 percent company-wide and momhly originations via the lmernet increased four-fold. • Our consumer flnance business grew receivables by
and social responsibility. Cusromer service, however, is
show continued declines in customer satisfaction in many industries. Customer expectations, on the other hand, are rising. \'\fhen cusromers do get great service, it becomes the standard for what they e 'pect all the timc, Every customer wants special treatment all thc time. They deserve it. They're the customer. Service quality not only affects our customers, it
$2 billion, a 20 percent increase.
• am Internet site, wellsfargo.com-our fastest growing
affects our bottom line and your investment in Wells Fargo.
banking franchise-23 Midwestern and Western states
d istriburion cha nnel-surpassed 2.6 mill ion customers.
We cannot provide average service and expect to achieve
spanning more than 3,000 miles across five time zones from
That's two and a half times larger than two years ago.
superior financial performance. A lost customer is lost
Van Wert, Ohio, to Bethel, Alaska. The conversions affected
We're still adding 100,000 new customers a month, more
revenue. Once we lose customers, it's almo t impossible
more than 14 million banking customers, 2,900 banking
than two a minute. We have more daily, individual visitors
to get them back. Cood news travels fa~r. /)ad news travels
stores and 6,500 ATMs. The result is we now present
a month than Fidelity, American Express, Citibank, Bani
faster. Every customel' who gets poor service from a
ourselves as one hrand to our customers. They can save
of America or Schwab.
company ('ells lots of ot'her peopll:. IL costs us five times
more time and money than ever before and benefit frOI11 the convenience of one of North America's largest and most diversified financial services companies.
• Our Private Client Services businesses-investment'
Amazin,:l Progress What's amazing is this: • Our team completed these conversions six months ahead of schedule. • Each of these conversions was d'fficult and required thousands of our people to work many weekends and
as much to adel new customers as it Joes to keep those
management and brokerage-increased revenue about
we already have. Every two percent of customers we keep
20 percent. Since the merger, our brokerage sales team has
is equal to cutting costs ten percent'.
grown 80 percent and their productivity has
Nlost customers who leave a financial services company do so not because of inconvenience or complaints about
risen 41 percent.
products or fees. The)' leave hecause they feel no one cares. We've made
They leave because a series of evems or a combination of
outstanding progress. By itself, however, it cannot connect
circumstances makes them believe something is wrong with
us to the "Next Stage" of our company, ensure continued
the company's process for fixing their prohlem, They might
extra hours. They pulled together. They persevered. They
double digit revenue increases, and achieve our vision. As
leave, even though they're treated with courtesy, bec:llIse the
put the customer first. They connected. What a team!
our industry continues to grow and consolidate, we believe
problem doesn't get flxed or doesn't get fixed fast enough.
• In the midst of these conversions, we announced and
there's one key measure of performance that will separate the I ~o, now is as good a
began integrating 41 acquisitions with banking assets
winners from also-rans and have a major effect' on our market
of $40 billion (including the $23 billion First Security
share and stock price. New products and technology are not
time as any to face the facts anel put a stake in the ground.
Corporation and the $3 billion National Bancorp of
enough. They can be copied quickly. Efficiency is important
Our service is average to slighl'ly above average, We want
Alaska, Inc.). That's almost half the size of either the
but you cannot cost-Cllt your way to growth. Acquisitions
it to be great. We want ro give service t'hat is 110 percent.
former Norwest or the former Wells Fargo two )rears ago.
help us enter new markets and increase market share but
• We not on Iy earned more business from current customers
2 TO OUR OWNERS
achieved the
two thirds of our team members whose positions were
38 percent in 2000. • Loans and revenue across our 23-state Community Banking franchise grew 13 percent and 9 percent respec-
product sales grew 22 percent, loans and revenue each Dick Kovacevich, Presiden r & CEO
We believe it's this. Tbe quality of 0111' customer selVice. That is determined by the attitude, the caring, the commitment
We've known for many years that we're not' really in the
bigger is not always better. Cross-sell-earning all our
money business. Nloney is a cOl1lmodity. We're in the service
but gained market share and new customers. That's almost
customers' business-is absolutely critical but more sales
business. Service is not a commodity. It's the value added.
unheard of in the lLlidst of a major merger in any industry.
do not always creare satisfied customers. What's left? WELLS FARGO & COMPANY 3
Our Performance % Change
to someone else. The bigger a company is the more that happens. Bigger, however, is not always better. In fact, the bigger we become, the mailer we have to be. The bigger we are, the more important that each of our team members accepts individual responsibility and
... > .... cS S •...... ~
accountability. Customers can get lost in big companies. They don't always know the right person to turn to for help. Quite often they can be passed from one person, phone number, recorded message, voice mail or mouse click to another. Taking personal responsibility for the
Our Product is Service. We're not really in the money business. Money is a commodity. We're
customer is essential because every team member is Wells Fargo to that customer. That means we must become much
($ in millions, except per share amounts)
1999
2000/1999
AS REPORTED FOR THE YEAR
Net income
$
Net income applicable to common stock Earnings per common share
$
Diluted earnings per common share
-%
4,026
4,012
4,009
3,977
2.36
2.32
2
2.33
2.29
2
.90
.785
15
Average common shares outstanding
1,699.5
1,714.0
(1)
Diluted average common shares outstanding
1,718.4
1,735.4
(1)
Dividends declared per common share
Profitability ratios
better at giving our people authority to solve a customer's
Net income to average total assets (ROA)
problem-on the spot. If that means on occasion that a
Net income applicable to common stock to average
team member-trying to do the right thing for a customer-
2000
l.7B%
1.61%
(10)
16.31
17.55
(7)
$ 19,708
18,091
9
common stockholders' equity (ROE)
doesn't follow procedures exactly, so be it. Our most
Total revenue
in the service business. Time
important policy is "doing it right for the customer:'
Efficiency ratio Average loans
$145,577
$123,638
18
is money. Advice is money.
company-and in everyone of our businesses- for
Average assets
250,188
225,099
11
elevating service quality to the same level of importance
Average core deposits
145,793
139,310
5
Third, we're creating a consistent process across our
as sales. This includes having a common understanding
Net interest margin
Ollr product is service. The talent of our people sells
across the company-and in everyone of our businesses-
AT YEAR END
products. The quality of our service keeps customers coming
of what we mean by outstanding customer service. We do
Securities available for sale
back for more. We intend to distinguish ourselves from our
this as advocates for our customers-external and internal
Loans
-by putting them at the center of everything we do:
competitors in two important ways. First, we want to be advocates for our customers. We want to put them at the center of everything we do. We want to give them such outstanding service that they will give us all their business, honor us with repeat purchases and rave about us to their families, friends and business associates. Second, we want to understand tbeir needs so well and give them such sound
Empathizing-hI kl10w this can be upsetting."
60.0%
5.35%
Pl"Omising and delivering-" I'll call you back ill 10 minutes."
FOllnh, our goal is to reduce-by at least half-the
financial advice that we will help them become financially
annual rate at which we're losing customers. We lose one of
successful and they, in turn, will reward us with more of their
every five consumers every year due primarily to failures in
5.47%
133,004
Allowance for loan losses
3,719
3,344
11
Goodwill
9,303
8,046
16
272,426
241,053
13
Stockholders' equity
26,488
23,871
11
Tier 1 capital
16,096
15,010
7
Total capital
23,024
20,512
12
Capital ratios Common stockholders' equity to assets
9.63%
9.79%
(2)
Stockholders' equity to assets
9.72
9.90
(2)
8.00
(9) (5)
6.49
6.76
(4)
15.29
13.91
10
98,715
10
goals, decide the elements of our customer service programs,
Book value per common share
from across the company-has formed a SWAT team that
customer convinced the customer to give us even more of
addresses problems that need immediate fixing because
their financial services revenue. As we like to say, more sales
they're having a significant effect on our customers.
do not always result in better service but better service almost always results in more sales. In everyone of these
approaches with a problem will take personal responsibility
stories, the customer's impression of our entire company
for fixing it. It's human nature to wallt to hand off a problem
was defined by the quality of service that one team member
Since 1995, our net income has grown ot a compound annual rate of 16%, among the best in our industry.
$
108,727
ADJUSTED CASH BASIS**
Net income
do it. They just did it. Tn many cases their advocacy for the
$
Team members (active, full-time equivalent)
decided to take personal ownership of a customer's problem and wouldn't let go until it was solved. No one told them to
Second, we expect that the first team member a customer
Leverage
every day-has one thing in common. Each team member
those problems. This group-made up of senior managers
0
16 Vo
Risk-based capital
FOR THE YEAR
identify service problems, and commit resources to fix
00
Compound Annual Growth Rate (5 years)
10.93
First, we've created a Customer Experience Team to set
99
11
7.29
selected from among hundreds that occur at Wells Fargo
98
13
10.43
expect to do it.
97
23,600
Total capital
customer service across our company. Each of these stories-
96
138,247
Tier 1 capital
because your competitors can't copy it. Here' how we
95
26,221
but that doesn't make it acceptable. Cutting our annual
On pages 9-19, you'll find 12 stories of outstanding
In financial services, the name ofthe game is revenue growth- the ability ta earn more af our customers'business.
156,710
from us, about double what they have with us today.
do, however, is a competitive advantage if you get it right
0
16 Vo
Common stockholders' equity
That may not be unusual for a financial services company
ten percent.
Revenue (billions)' Compound Annual Growth Rate (S years)
00
Net Income (billions)'
our processes or in our attitude. One of every five-gone!
to achieve them. This is hard to do. Anything hard to
99
21
business. We want everyone of our consumer households
customer loss by half would, alone, increase our revenue
98
(12)
$ 43,911
and business customers to buy an average of eight products Yes, these are ambitious goals. Yes, it will take time
97
(2)
161,124
Assets
96
2
$ 38,655
Core deposits
Taking charge-''l'1I talw care of that for you."
S8.8%
95
Net income applicable to common stock Diluted earnings per common share
on ":
$
4,860
4,304
13%
4,843
4,269
2.91
2.56
13 14
2.18%
2.22%
(2)
Profitability ratios Net income to average total assets (ROA) Net income applicable to common stock to average common stockholders' equity (ROE) Total revenue
34.58
34.08
$ 19,088
$ 16,775
95
on on
N
96
on
::; ~ '""l
