Barclays Capital 2013 Global

Financial Services Conference

Tim Sloan
Chief Financial Officer
2013 Wells Fargo Bank, N.A. All rights reserved.
September 9, 2013
1
Wells Fargo vision
We want to satisfy
all or cstomers!
financial nee"s an"
help them sccee"
financially#$
Wells Fargo
Vision
2
Other %istribtion Channels
&T's 12,29(
Online ban)in*
cstomers
+3,
22#- ''
'obile cstomers
+3,
10#- ''
Serving consumers and businesses in more communities tan
any oter !"S" Ban#
Store %istribtion
.etail ban)in* (,1-/
Wells Far*o &"0isors 1,3(9
Wholesale -13
'ort*a*e -(1
Sales Force
2latform ban)ers
+1,
32,230
Financial a"0isors
+2,
1/,2(1
4ome 'ort*a*e
consltants
11,111
As of June 30, 2013.
(1) Active, full-time equivalent.
(2) Series 7 brokers.
(3) e!ional bankin! online an" mobile customers, base" on #0-"a$ active accounts.
-05 '' cstomers
9,011 stores
Wells Fargo Retail Banking stores
Wells Fargo Advisors offices
Wells Fargo Home Mortgage stores
3
63 Fll7ser0ice retail bro)era*e +base" on F&s,
+1,
63 Wealth mana*ement pro0i"er +base" on &8',
+9,
Deposits
61 Small bsiness len"er
+3,
61 &to len"er
+/,
Other
Consumer
Lending
61 Commercial real estate ori*inator
+(,
61 'i""le mar)et commercial len"er
+-,
Commercial
Wealth
Management/
Brokerage
62 in 8#S#
+1,
62 %ebit car" isser
+2,
Residential
Mortgage
61 'ort*a*e ori*inator
+3,
61 'ort*a*e ser0icin* portfolio
+3,
(1) %&'( "ata, June 2012. (2) )ilson e*ort, A*ril 2013. (3) 'nsi"e +ort!a!e %inance, 2,13. (-) ..S. in "ollars *er (A "ata, 2011. (/) Auto(ount, Jul$ 2012 0 June
2013. (1) 2ase" on 2011 ..S. commercial real estate ori!inations, +2A (ommercial eal 3state4+ultifamil$ %inance %irms, 12431412. (7) S5are of lea" bankin!
relations5i*s, 6)S 2012 (ommercial 2ankin! +omentum +onitor. (ontinental ..S. (e7clu"es A849'). (:) 'nternal an" *eer re*orts, 2,13. (#) 2ase" on A.+ of
accounts ; </ million, 2arron=s, June 2012.
$eading position in #ey products
3
73#009
72#009
0#009
2#009
3#009
(#009
1#009
10#009
Slope of the Yield Curve Unemployment Rate Real GDP Growth
0
2
3
(
1
10
12
13
1(
11
20
Balanced business model as led to consistent earnings gro%t
in various economic environments
Wells Fargo Net Income
(< in billions)
>ear to "ate (>6&) t5rou!5 June 30, 2013.
(1) 10-$ear 6reasur$ less t5e 3-mont5 6reasur$.
(2) Acquire" ?ac5ovia on &ecember 31, 200:. %ull $ear 200: net income @as im*acte" b$ an <:.1 billion (*re-ta7) cre"it reserve buil", inclu"in! a <3.# billion
(*re-ta7) *rovision to conform bot5 ?ells %ar!o=s an" ?ac5ovia=s cre"it reserve *ractices.
+1,
Wachovia
merger
(2)
Slope o the !ield Cur"e#
$nemplo%ment Rate and Real
&D' &ro(th
/
)*+,-
)*+--
)*+.*
)*+./
)*+.0
)*+0*
)*+01
)*+02
)*+0-
)*+31
)*+33
)*+4/
)*+41
)*+43
1:10 2:10 3:10 3:10 1:11 2:11 3:11 3:11 1:12 2:12 3:12 3:12 1:13 2:13
2&13 'esults
Diluted 5arnings 'er Common Share
.ecor" earnin*s of ;/#/ billion, p 199 year7o0er7year +<o<, an" -9 lin)e" =arter +>:,
13
th
consecti0e =arter of ?2S *rowth
.O& @ 1#//9, p 13 bps <o< an" p ( bps >:
.O? @ 13#029, p 11( bps <o< an" p 33 bps >:
(
),+.
)-+-
2:12 2:13
(ear)over)year results
're6ta7 're6pro"ision 'roit
(< in billions)
Net Income
(< in billions, e7ce*t 3AS)
%ilte" earnin*s per common share
'eriod6end Loans
(< in billions)
Return on 8ssets
Return on 59uit%
'eriod6end Core Deposits
(< in billions)
)*+31
)*+43
/1+3.:
/,+*1:
2:12 2:13
/+,/:
/+--:
2:12 2:13
)3+4
)4+/
2:12 2:13
(-2#1
-13#3
103#1
1-#(
)00-+1
)3*1+*
2:12 2:13
Core loans Aon7strate*icBli=i"atin* loans
)331+/
)4,/+1
2:12 2:13
-
Balanced Spread and
Fee Income
Di"ersiied Fee &eneration
Deposit Ser"ice Charges /1:
Card Fees 3:
;otal Mortgage Banking 1.:
Insurance -:
Net &ains rom ;rading 2:
All "ata is for 2,13.
(1) Bt5er noninterest income inclu"es net losses on "ebt securities available for sale, net !ains from equit$
investments, lease income, life insurance investment income an" all ot5er noninterest income.
Strong revenue diversification
;otal ;rust < In"estment Fees 22:
;otal Other Fees /*: Other Noninterest Income
=/>
2:
Cro)era*e a"0isory,
commissions an" other
'ort*a*e Ori*#B
Sales, net
'ort*a*e Ser0icin*, net
Trst an" in0estment
mana*ement
Dn0estment ban)in*
Char*es an" fees on loans
/:'erchant processin*
/:Cash networ)
?/:C.? bro)era*e commissions
/:>etters of cre"it
Car" fees
%eposit ser0ice char*es
Other noninterest income
+1,
Aet *ains from tra"in*
Dnsrance
-*:
-*:
Net Interest
Income
Noninterest
Income
&ll other fees
/1:
1*:
3:
-:
3:
,:
1:
,:
11:
-:
2:
2:
1
2+*:
1+.:
1+,:
1+,:
1+1:
/+4:
WFC 8SC E2' 2AC C&C C
Fee income outperformance vs" peers
SourceC S)D.
Fee Income/8"erage 8ssets
(2,13)
Fee Income/8"erage 8ssets
(10 >ear Av!., 2003-2012)
2+1:
2+1:
2+*:
1+.:
1+1:
/+4:
WFC 2AC 8SC E2' C&C C
9
/+0*:
/+--:
/+,4:
/+*4:
*+34:
*+0,:
$SB WFC 'NC @'M C B8C
Strong 2&13 returns
/.+/:
/,+*:
/1+,:
//+0:
3+.:
.+-:
$SB WFC @'M 'NC C B8C
Return on 59uit% Return on 8ssets
2,13 results. SourceC S)D.
10
Strong capital
/*+*3:
4+41:
/*+/1:
/*+24:
/*+0/:
2:12 3:12 3:12 1:13 2:13
Capital contine" to *row in 2:13
Tier 1 common e=ity ratio n"er Casel D
of 10#-19 increase" 32 bps >:
Tier 1 common e=ity ratio n"er Casel DDD is
estimate" to be 1#(29 at (B30B13
+1,
7 OCD ne*ati0ely impacte" the ratio by 23 bps
in 2:13
2rchase" 2(#- million common shares in 2:13
an" entere" into a ;/00 million forwar"
reprchase transaction, which settle" in 3:13
Dncrease" =arterly common stoc) "i0i"en" to
;0#30 per share in 2:13
See A**en"i7 *a!es 2--2/ for a""itional information re!ar"in! 6ier 1 common equit$ ratios.
(1) 3stimate" base" on mana!ement=s inter*retation of final rules a"o*te" Jul$ 2, 2013, b$ t5e %e"eral eserve 2oar" establis5in! a ne@ com*re5ensive ca*ital
frame@ork for ..S. bankin! or!aniEations t5at @oul" im*lement t5e 2asel ''' ca*ital frame@ork an" certain *rovisions of t5e &o""-%rank Act.
;ier / Common 59uit% Ratio
$nder Basel I
11
*e economy and interest rates continue
to be in a state of transition
Long rates ha"e risen sharpl%
7 107year treasry
+1,
p 31 bps from Ene 21
th
an" 91 bps from one year a*o
Industr% mortgage applications continue to slo(
7 'C& refinance application in"eF
+2,
"own (39 since pea)in* the wee) of 'ay 3
r"
Lending o"erall continues to Ae modest
7 .ecent 471 shows that len"in* contines at a slow pace
Bome prices ha"e continued to impro"e contriAuting to strong credit
perormance trends
7 Case7Shiller
+3,
"ata shows home 0ales were p 129 year o0er year
(1) SourceC ..S. &e*artment of 6reasur$, as of #4-42013.
(2) SourceC +ort!a!e 2ankers Association efi 'n"e7, as of :42/42013.
(3) SourceC (ase-S5iller 20-(it$ (om*osite, June 2013 vs. June 2012.
12
Current environment+ net interest income and ,-.
)//+/
)/*+3
1:10 2:10 3:10 3:10 1:11 2:11 3:11 3:11 1:12 2:12 3:12 3:12 1:13 2:13
Aet Dnterest 'ar*in +AD',
2:13 net interest income p 29 lin)e" =arter +>:, "ri0en by secrities prchases, lower fn"in*
costs, hi*her 0ariable income, loan *rowth, as well as the benefit from an eFtra "ay in the =arter
Secrities prchases ha0e contine" in 3:13, bt eFpect contine" pressre on the AD'
Focs remains on *rowin* net interest income o0er time
Dri"ers o NIM Compression
1:10 AD' 3#2-9
Golatile Dtems 0#029
%eposit Hrowth +0#(39,
Core AD' .epricin*
I Hrowth
+0#199,
1C/2 NIM 2+,.:
Aet Dnterest Dncome
(< in billions)
,+23:
,+*/:
2+4/:
2+,.:
13
Current environment+ noninterest income
Aoninterest income relati0ely stable >: an" p
39 <o<
%eposit ser0ice char*es p 39 >: on seasonality
an" accont *rowth
Trst an" in0estment fees p 99 >: on stron*
in0estment ban)in* an" hi*her retail bro)era*e
asset7base" fees
Car" fees p 109 >: reflectin* cre"it car" an"
"ebit car" accont *rowth an" stron*er 2OS
0olmes an" transactions
'ort*a*e ban)in* stable as hi*her net ser0icin*
income was lar*ely offset by lower *ain on sale
re0ene
7 'ort*a*e *ain on sale mar*in an"
ori*inations are eFpecte" to "ecline
/*#1-1
/*#--/
//#2*-
/*#0.*
/*#.13
2:12 3:12 3:12 1:13 2:13
Noninterest Income
(< in millions)
13
Current environment+ mortgage gain on sale margins
and originations
Hain on sale mar*ins reflect mar)et "eman" an" in"stry capacity
0
20
30
(0
10
100
120
130
1(0
1:10 2:10 3:10 3:10 1:11 2:11 3:11 3:11 1:12 2:12 3:12 3:12 1:13 2:13
Hain on Sale 'ar*in 'ort*a*e Ori*ination Golme
(< in billions)
1#919
1#3/9
2#339 2#339
1#(-9
1#/39
1#339
1#909
2#3(9
2#209
2#219
2#/(9
2#/(9
2#219
1/
,#***
.#***
3#***
/*#***
/1#***
/,#***
/.#***
/3#***
1*#***
/C/* 1C/* 2C/* ,C/* /C// 1C// 2C// ,C// /C/1 1C/1 2C/1 ,C/1 /C/2 1C/2
Fulillment F;5s
We ha0e effecti0ely mana*e" retail capacity across recent rate cycles
Current environment+ mortgage e/pense management
.
Months
6
Reduced
-#***
F;5S
4
Months
6
8dded
-#4**
F;5S
1/
Months
6
8dded
/*#***
F;5S
2C/2 6
8nnounced
Reduction
o D2#***
F;5s
1(
Current environment+ economic recovery driving
continued credit improvement
1B1B2013
'e"ian Sale 2rice 37' 'o0in* &0*#
F4F& +OF4?O, 2rchase Only Dn"eF
SI2 Case7Shiller Composite 10
1B1B2012
SourcesC
(1) ..S. &e*t. of (ommerce, %9%A F (orelo!ic.
(2) %e"eral eserve.
71/9
7109
7/9
09
/9
109
1/9
209
2/9
309
3/9
309
3/9
03 0/ 0( 0- 01 09 10 11 12 13
4osehol" %ebt
+2,
<ear7o0er7<ear 2ercent Chan*e
'ort*a*eJ :2 K 73#19
St"ent >oansJ :2 K 1#19
Cre"it Car"J :2 K 70#(9
7329
7239
71(9
719
09
19
1(9
239
71(9
719
09
19
1(9
4ome 2rices
+1,
<ear7o0er7<ear 2ercenta*e Chan*e
1-
0#/99
0#--9
3#319
3#/29
2#319
1#(19
1#3/9
1#239
0#(39
0#929
2#019
1#119
0#//9
0#219
0#109
0#0/9
0#009
0#/09
1#009
1#/09
2#009
2#/09
3#009
3#/09
3#009
Commercial R5 N'L and Net Loss Rates =:>
A2> Aet >oss
1**.
1**0
1**3
1**4
1*/*
1*//
0 2 3 ( 1 10 12 13 1( 11 20 22 23 2( 21 30 32 33 3( 31 30 32 33 3( 31
;
>
o
s
s

.
a
t
e

9
'onths on Coo)
Residential R5 Loss Rates A% Eintage
200( 200- 2001 2009 2010 2011
Current environment+ positive credit trends
Ne(er Eintages
0#009
0#/09
1#009
1#/09
2#009
2#/09
3#009
720#09
71/#09
710#09
7/#09
0#09
/#09
10#09
1/#09
20#09
R
e
s
i
d
e
n
t
i
a
l

R
5

L
o
s
s

R
a
t
e

=
&
r
e
%
>
!
/
!

B
o
m
e

'
r
i
c
e

I
n
d
e
7

C
h
a
n
g
e

=
B
l
u
e
>
!o! Bome 'rice Inde7 Change "s+ Resi R5
Loss :
Consumer Non6R5 Loss Rates =:>
Cre"it Car" &to St"ent Other Consmer
9A' sourceC (orelo!ic.
11
3#2(
3#39
/#11
/#31
/#33
3#39
3#10
3#13
3#21
2#13
2#(1 2#(3
2#30
2#20
2#3(
2#01
1#32
1#1/
1#30
0#-0
1#00
0#/0
1:09 2:09 3:09 3:09 1:10 2:10 3:10 3:10 1:11 2:11 3:11 3:11 1:12 2:12 3:12 3:12 1:13 2:13
Aet Char*e7offs Cre"it .eser0e Cil"
Current environment+ provision e/pense at its lo%est level
since 3&00
'ro"ision 57pense
(< in billions)
2ro0ision eFpense of ;(/2 million at its lowest le0el since 3:0(
Aet char*e7offs of ;1#2 billion, or /1 bps, impro0e" 199, or 13 bps, >:
.eser0e release
+1,
of ;/00 million in 2:13 0s# ;200 million in 1:13
?Fpect ftre reser0e releases, absent si*nificant "eterioration in the economic en0ironment
(1) Arovision e7*ense minus net c5ar!e-offs, e7ce*t 3,12 @5ic5 inclu"e" </17 million in net c5ar!e-offs full$ covere" b$ loan loss reserves..
+0#/0,
+0#(/,
+0#1/,
.eser0e .elease
2+44
2+,-
1+44
-+22
-+4/
1+1/
+1#0,
/+3,
+1#0,
/+3/
+0#1,
1+*,
+0#(,
.+//
-+*4
,+-.
+0#3,
+0#3,
+0#2,
+0#2/,
+0#2,
/+-4
/+32
/+11
1+**
/+3*
+0#/0,
*+.-
+1,
19
>oan 2ortfolio
&c=isitions
;3#1 billion of forei*n loans +8L Commercial .eal
?state an" CID financin*, close" 3:13
;1#( billion of 8#S# C.? from DAH sche"le"
to close in 2413
Csiness 2artnership
Cre"it Car" issin* partnership with &merican
?Fpress annonce"
Fll scale pro"ct lanch by mi"72013
3&13 momentum
20
*argets
Tar*ets "epen" on the o0erall economic, interest rate an" e0ol0in* re*latory
en0ironment an" assme contine" annal re0ene an" earnin*s *rowth
o0er time
;arget
?fficiency .atio // 7 /99
.O& 1#309 7 1#(09
.O? 129 7 1/9
Total 2ayot .atio
+1,
M/09 7 (/9
(1) 6otal *a$out means common stock "ivi"en"s an" re*urc5ases. &ivi"en"s an" s5are re*urc5ases are subGect to ?ells %ar!o boar" an" re!ulator$ a**rovals, an"
ot5er consi"erations.
21
Well positioned for te future
Demonstrated perormance o"er Aoth the short and long term
7 13 consecti0e =arters of ?2S *rowth
7 Stron* retrns 0erss peers
7 >ower ris) profile than lar*e peers
Managing through the current en"ironment
7 .e7siNin* the mort*a*e bsiness to match "eman"
7 Dn0estin* opportnistically in secrities
7 Continin* to *row non7mort*a*e fee income, as we "i" in many of or )ey bsinesses in 2:13
7 Continin* to bil" a hi*h =ality loan portfolio an" benefittin* from crrent cre"it tren"s
Well positioned or the uture
7 >ea"in* mar)et share in cornerstone pro"cts
7 Croa" pro"ct set an" stron* "istribtion capabilities
7 %i0ersifie" re0ene sorces
7 ?fficient operations with a""itional opportnities for impro0ement
7 >ar*e, low cost "eposit base
7 Stron* capital
7 Focse" on retrnin* more to sharehol"ers
7 Stron* capital also *i0es the ability to contine to ma)e ac=isitions
23
1ppendi/
23
*ier 1 common e2uity under Basel -
314
Wells Fargo & Company and Subsidiaries
FIVE QUARTER TIER 1 COMMON EQUITY UNDER BASEL I
(1)
June 30, Mar. 31, Dec. 31, Sept. 30 June 30,
($ in billions) 2013 2013 2012 2012 2012
Total equity 163.8 $ 163.4 158.9 156.1 149.4
Noncontrolling interests (1.4) (1.3) (1.3) (1.4) (1.3)
Total Wells Fargo stockholders' equity 162.4 $ 162.1 157.6 154.7 148.1
Adjustments:
Preferred equity (12.6) (12.6) (12.0) (11.3) (10.6)
Goodwill and intangible assets (other than MSRs) (32.2) (32.5) (32.9) (33.4) (33.5)
Applicable deferred assets 3.0 3.1 3.2 3.3 3.5
MSRs over specified limitations (0.8) (0.8) (0.7) (0.7) (0.7)
Cumulative other comprehensive income (1.8) (5.1) (5.6) (6.4) (4.6)
Other (0.5) (0.6) (0.6) (0.4) (0.5)
Tier 1 common equity (A) 117.5 $ 113.6 109.0 105.8 101.7
Total risk-weighted assets
(2)
(B) 1,097.4 $ 1,094.3 1,077.1 1,067.1 1,008.6
Tier 1 common equity to total risk-weighted assets
(2)
(A)/(B) 10.71 % 10.39 10.12 9.92 10.08
(1)
(2)
Tier 1 common equity is a non-generally accepted accounting principle (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.
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. Effective September 30, 2012, the Company refined its determination of the risk
weighting of certain unused lending commitments that provide for the ability to issue standby letters of credit and commitments to issue standby letters
of credit under syndication arrangements where the Company has an obligation to issue in a lead agent or similar capacity beyond its contractual
participation level.
2/
*ier 1 common e2uity under Basel --- 35stimated4
314
Wells Fargo & Company and Subsidiaries
TIER 1 COMMON EQUITY UNDER BASEL III (ESTIMATED)
(1) (2)
June 30,
($ in billions) 2013
Tier 1 common equity under Basel I 117.5 $
Adjustments from Basel I to Basel III
(3)(5)
:
Cumulative other comprehensive income related to AFS securities and
defined benefit pension plans 1.6 $
1.0
2.6
Threshold deductions, as defined under Basel III
(4) (5)
-
Tier 1 common equity anticipated under Basel III (C) 120.1 $
Total risk-weighted assets anticipated under Basel III
(6)
(D) 1,393.4 $
Tier 1 common equity to total risk-weighted assets anticipated under Basel III (C)/(D) 8.62 %
(1)
(2)
(3)
(4)
(5)
(6)
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.
The estimate of risk-weighted assets (RWA) reflects managements interpretation of RWA determined under Basel III capital rules adopted by the
Federal Reserve Board that incorporates different classifications of assets, with certain risk weights based on a borrowers credit rating or Wells Fargos
own models, along with adjustments to address a combination of credit/counterparty, operational and market risks, and other Basel III elements.
Other
Total adjustments from Basel I to Basel III
Tier 1 common equity is a non-generally accepted accounting principle (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.
The Basel III Tier 1 common equity and risk-weighted assets are estimated based on managements interpretation of the Basel III capital rules adopted
July 2, 2013, by the Federal Reserve Board. 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.
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 Tier 1 common equity under Basel III.
Threshold deductions, as defined under Basel III, include individual and aggregate limitations, as a percentage of Tier 1 common equity, 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.
2(
For%ard)loo#ing statements and additional information
For(ard6looking statementsF
65is "ocument contains Hfor@ar"-lookin! statementsI @it5in t5e meanin! of t5e Arivate Securities Diti!ation eform Act of 1##/. 'n a""ition,
@e ma$ make for@ar"-lookin! statements in our ot5er "ocuments file" or furnis5e" @it5 t5e S3(, an" our mana!ement ma$ make for@ar"-
lookin! statements orall$ to anal$sts, investors, re*resentatives of t5e me"ia an" ot5ers. %or@ar"-lookin! statements can be i"entifie" b$
@or"s suc5 as Hantici*ates,I Hinten"s,I H*lans,I Hseeks,I Hbelieves,I Hestimates,I He7*ects,I Htar!et,I H*roGects,I Houtlook,I Hforecast,I H@ill,I
Hma$,I Hcoul",I Hs5oul",I HcanI an" similar references to future *erio"s. %or@ar"-lookin! statements are not base" on 5istorical facts but
instea" re*resent our current e7*ectations re!ar"in! future events, circumstances or results. 'n *articular, t5ese inclu"e, but are not
limite" to, statements @e make aboutC (i) t5e future o*eratin! or financial *erformance of t5e (om*an$, inclu"in! our outlook for future
!ro@t5J (ii) our noninterest e7*ense an" efficienc$ ratioJ (iii) future cre"it qualit$ an" *erformance, inclu"in! our e7*ectations re!ar"in!
future loan losses an" allo@ance releasesJ (iv) t5e a**ro*riateness of t5e allo@ance for cre"it lossesJ (v) our e7*ectations re!ar"in! net
interest income an" net interest mar!inJ (vi) loan !ro@t5 or t5e re"uction or miti!ation of risk in our loan *ortfoliosJ (vii) future ca*ital
levels an" our estimate" 6ier 1 common equit$ ratio un"er 2asel ''' ca*ital stan"ar"sJ (viii) t5e *erformance of our mort!a!e business an"
an$ relate" e7*osuresJ (i7) t5e e7*ecte" outcome an" im*act of le!al, re!ulator$ an" le!islative "evelo*ments, as @ell as our e7*ectations
re!ar"in! com*liance t5ere@it5J (7) future common stock "ivi"en"s, common s5are re*urc5ases an" ot5er uses of ca*italJ (7i) our tar!ete"
ran!e for return on assets an" return on equit$J (7ii) t5e outcome of contin!encies, suc5 as le!al *rocee"in!sJ an" (7iii) t5e (om*an$=s
*lans, obGectives an" strate!ies. 'nvestors are ur!e" to not un"ul$ rel$ on for@ar"-lookin! statements as actual results coul" "iffer
materiall$ from e7*ectations. %or@ar"-lookin! statements s*eak onl$ as of t5e "ate ma"e, an" @e "o not un"ertake to u*"ate t5em to
reflect c5an!es or events t5at occur after t5at "ate. %or more information about factors t5at coul" cause actual results to "iffer materiall$
from e7*ectations, refer to *a!es 13-1- of ?ells %ar!o=s *ress release announcin! our secon" quarter 2013 results, as @ell as ?ells %ar!o=s
re*orts file" @it5 t5e Securities an" 37c5an!e (ommission, inclu"in! t5e "iscussion un"er Hisk %actorsI in our Annual e*ort on %orm 10-8
for t5e $ear en"e" &ecember 31, 2012.
'urchased credit6impaired loan portolioF
Doans t5at @ere acquire" from ?ac5ovia t5at @ere consi"ere" cre"it im*aire" @ere @ritten "o@n at acquisition "ate in *urc5ase accountin!
to an amount estimate" to be collectible an" t5e relate" allo@ance for loan losses @as not carrie" over to ?ells %ar!o=s allo@ance. 'n
a""ition, suc5 *urc5ase" cre"it-im*aire" loans are not classifie" as nonaccrual or non*erformin!, an" are not inclu"e" in loans t5at @ere
contractuall$ #0K "a$s *ast "ue an" still accruin!. An$ losses on suc5 loans are c5ar!e" a!ainst t5e nonaccretable "ifference establis5e" in
*urc5ase accountin! an" are not re*orte" as c5ar!e-offs (until suc5 "ifference is full$ utiliEe"). As a result of accountin! for *urc5ase" loans
@it5 evi"ence of cre"it "eterioration, certain ratios of t5e combine" com*an$ are not com*arable to a *ortfolio t5at "oes not inclu"e
*urc5ase" cre"it-im*aire" loans.
'n certain cases, t5e *urc5ase" cre"it-im*aire" loans ma$ affect *ortfolio cre"it ratios an" tren"s. +ana!ement believes t5at t5e
*resentation of information a"Guste" to e7clu"e t5e *urc5ase" cre"it-im*aire" loans *rovi"es useful "isclosure re!ar"in! t5e cre"it qualit$ of
t5e non-im*aire" loan *ortfolio. Accor"in!l$, certain of t5e loan balances an" cre"it ratios in t5is "ocument 5ave been a"Guste" to e7clu"e
t5e *urc5ase" cre"it-im*aire" loans. eferences in t5is "ocument to im*aire" loans mean t5e *urc5ase" cre"it-im*aire" loans. Alease see
*a!es 32-3- of t5e *ress release announcin! our 2,13 results for a""itional information re!ar"in! t5e *urc5ase" cre"it-im*aire" loans.