SAN FRANCISCO - Wells Fargo & Company (NYSE: WFC) reported diluted earnings per common share of $0.60 for third quarter 2010 compared with $0.55 for second quarter 2010 and $0.56 for third quarter 2009. Net income was $3.34 billion in third quarter 2010 compared with $3.06 billion in second quarter 2010 and $3.24 billion in third quarter 2009. For the nine months ended September 30, 2010, net income was $8.95 billion, or $1.60 per common share, compared with $9.45 billion, or $1.69 per common share, a year ago.

"Record earnings in the third quarter reflect the success of the Wachovia merger and the benefits of Wells Fargo's steady commitment to our core business of helping customers succeed financially," said Chairman and CEO John Stumpf. "We have already completed integration of many systems and lines of business, and converted banking stores in the first Eastern markets - Alabama, Tennessee and Mississippi - to Wells Fargo in September, with virtually no customer or systems issues. The foundation is solidly in place to continue conversions in the East this year and throughout 2011. While we are focused on the remaining work ahead, our results have shown that this landmark merger is a big success in terms of cost savings, revenue synergies and the quality of the integration. Throughout the conversion process, the team has kept systems and service top notch for customers.

"With respect to recent industry-wide foreclosure issues, there are several important facts to know about Wells Fargo. Foreclosure is always a last resort, and we work hard to find other solutions through multiple discussions with customers over many months before proceeding to foreclosure. We are confident that our practices, procedures and documentation for both foreclosures and mortgage securitizations are sound and accurate. For these reasons, we did not, and have no plans to, initiate a moratorium on foreclosures.

"As the regulatory environment becomes more certain and as we continue to assess the impact of regulatory reform and new capital requirements, we remain convinced that Wells Fargo will continue to be a leader in financial strength and performance in the years ahead. We continue to deepen relationships and add new customers, as evidenced by increases in loan commitments in several loan portfolios and growth in checking accounts. Our team is focused on doing the right thing for our customers and doing everything in our power to further the economic recovery."

Financial Performance

"In the third quarter, we earned $3.34 billion in net income, our highest quarterly profit ever," said Chief Financial Officer Howard Atkins. "Earnings and growth were broad based, with all business segments contributing to our record net income. Deposit growth continued to be strong, especially in average checking and savings deposits, which increased 9 percent from a year ago and 9 percent (annualized) linked quarter. The Company supplied $176 billion in credit to consumers and businesses, up from both the prior quarter and a year ago, reflecting strong mortgage origination activity and increased commercial lending activity. A substantial amount of the decline in loans outstanding was in previously disclosed nonstrategic, liquidating portfolios. We saw signs of increased lending activity in several portfolios, with higher loan balances linked quarter in asset-backed finance, auto dealer services, capital finance, private student lending, SBA lending, specialized lending, wealth management consumer, and wholesale commercial banking and commercial real estate. Credit losses continued to trend down, with net chargeoffs declining 9 percent linked quarter, and down $1.3 billion, or 24 percent, from the peak in fourth quarter 2009.

"The merger with Wachovia is already proving to be a big success. Wells Fargo has earned cumulative profits of $21.2 billion since January 2009. The merger of these two companies has met or exceeded our expectations in terms of lower credit losses, more abundant revenue synergies and integration savings. Through strong internal capital generation, our capital ratios have increased rapidly and are well above pre-Wachovia levels, with Tier 1 common reaching 8.0 percent and Tier 1 capital increasing to 10.9 percent. While Basel III regulations are still not final, we expect to be above a 7 percent Tier 1 common ratio under the proposed rules, as we currently understand them, within the next few quarters."

Revenue
Revenue was $20.9 billion compared with $21.4 billion in second quarter 2010 and $22.5 billion in third quarter 2009. The $520 million decline in total revenue linked quarter was due to three factors totaling $985 million: net debt and equity security gains (down $301 million from second quarter), PCI loanresolution income (down $304 million from second quarter) and the impact from changes to Regulation E and related overdraft policy changes (approximately $380 million pre tax). All other business operations generated combined revenue growth of approximately $465 million. Businesses with double-digit annualized revenue growth linked quarter included asset-backed finance, asset management, auto dealer services, brokerage, commercial banking, commercial mortgage servicing, commercial real estate, debit card, mortgage banking, private student lending, real estate investment banking (Eastdil Secured) and retirement services.

Net Interest Income
Net interest income was $11.1 billion compared with $11.4 billion in second quarter 2010 and $11.7 billion in third quarter 2009. The net interest margin was 4.25 percent compared with 4.38 percent in second quarter 2010 and 4.36 percent in third quarter 2009. "The 13 basis point decline in the margin was largely driven by lower PCI resolution income and the continued run-off of non-strategic assets, which tend to have higher yields but also higher charge-offs than loans in our ongoing strategic portfolios," said Atkins.

Noninterest Income
Noninterest income was $9.8 billion compared with $9.9 billion in second quarter and $10.8 billion a year ago. On a linked-quarter basis, growth in mortgage banking noninterest income (up $488 million on a 25 percent increase in mortgage originations) and trading revenue (up $361 million, driven by a less volatile trading environment than second quarter) was offset by reductions in deposit service charges (down $285 million, with an approximate $380 million impact from changes to Regulation E and related overdraft policy changes, offset by checking account growth), a $301 million reduction in net debt and equity security gains from second quarter, and a $147 million reduction in insurance fee revenue (due to seasonality and largely offset by reduction in related insurance sales expense).

Mortgage banking saw the second highest quarter ever in mortgage applications - $194 billion, up from $143 billion in second quarter. At quarter end, the mortgage application pipeline was $101 billion, up $33 billion from June 30, 2010, suggesting strong originations in fourth quarter. Third quarter originations were $101 billion, up 25 percent from second quarter. Mortgage servicing income declined $702 million from second quarter, given greater reliance on the Company's "natural business hedge" in the strong origination, low-rate environment relative to the level of MSR economic hedges, and lower hedge carry income. Net hedge results reflected a $1.1 billion decline in the fair value of MSRs due to the decline in mortgage rates offset by a $1.2 billion increase in the value of the hedge including carry income.

The ratio of MSRs as a percent of loans serviced for others was 72 basis points - one of the lowest in the Company's history - and the average note rate on the servicing portfolio was 5.46 percent, compared with an average 4.32 percent published rate in the Freddie Mac Primary Mortgage Market Survey at quarterend. During the quarter, the Company provided $370 million for mortgage loan repurchase losses compared with $382 million in second quarter (included in revenue from mortgage loan origination/sales activities).

The lower provision this quarter reflected a decline in demands from agencies on the 2006-2008 vintages and lower total outstanding demands as the Company continues to work with investors to resolve the outstanding demand pipeline.  At September 30, 2010, the Company had a net unrealized gain of $9.4 billion in the securities availablefor- sale portfolio, compared with $8.6 billion at the end of second quarter.

Noninterest Expense
Noninterest expense was $12.3 billion, down $493 million, or 15 percent (annualized), from second quarter 2010 largely due to a reduction in Wells Fargo Financial restructuring expenses and lower litigation accruals. Foreclosed asset expense was up $33 million linked quarter and $123 million year over year. "We continue to invest for long-term growth, including adding sales personnel and distribution, while at the same time reducing all other costs," said Atkins. "Our current expense base is elevated by integration and workout costs, which should decline over time. In addition, we are looking at other ways to reduce cost by simplifying and streamlining our activities and processes throughout the Company." The efficiency ratio was 58.7 percent compared with 59.6 percent in second quarter 2010 and 52.0 percent in third quarter 2009.

Loans
Total loans were $753.7 billion at September 30, 2010 compared with $766.3 billion at June 30, 2010 and $800.0 billion at September 30, 2009, reflecting a continuation of more subdued loan demand. The decline in loans from the prior quarter was partially due to the $6.2 billion reduction in nonstrategic/liquidating loan portfolios. "We saw linked-quarter loan growth in asset-backed finance, auto dealer services, capital finance, private student lending, specialized lending, SBA lending, wealth management consumer and wholesale commercial banking and commercial real estate," said Atkins. "While other consumer portfolios declined, the reduction was at a slower pace, including in the credit card, personal credit management and Wells Fargo Home Mortgage portfolios. Origination activity increased in wholesale and commercial real estate portfolios."

Deposits
Average total core deposits were $772.0 billion, up 5 percent (annualized) from $761.8 billion in second quarter 2010 and up 2 percent from $759.3 billion in third quarter 2009. Consumer checking accounts grew a net 7.3 percent from third quarter 2009. Average mortgage escrow deposits were $30.2 billion, compared with $25.7 billion in second quarter 2010. Average consumer checking and savings deposits increased 9 percent from a year ago to $686.9 billion. Total core deposits were up $23.9 billion from a year ago despite the $37.6 billion year over year decline in CDs, including approximately $21 billion of higher-cost Wachovia CDs that matured. Checking and savings deposits represented 89 percent of total core deposits. The average deposit cost was 35 basis points.

Capital
Strong internal capital generation drove capital ratios higher in the third quarter. As a percentage of total risk-weighted assets, Tier 1 capital increased to 10.9 percent, total capital to 14.9 percent and Tier 1 common equity to 8.0 percent at September 30, 2010, up from 10.6 percent, 14.7 percent and 5.2 percent, respectively, at September 30, 2009. The Tier 1 leverage ratio was 9.0 percent at September 30, 2010, flat compared with September 30, 2009.

Credit Quality
"Loan losses declined for the third consecutive quarter," said Mike Loughlin, Chief Risk Officer. "Quarterly net charge-offs of $4.1 billion were down $394 million, or 9 percent, from second quarter and down $1.3 billion from the peak in fourth quarter 2009. Losses were down or relatively flat in the vast majority of loan portfolios, with losses in commercial loans (down 26 percent), commercial real estate mortgage loans (down 39 percent), credit cards (down 13 percent), and real estate 1-4 family junior lien mortgages (down 8 percent) showing encouraging declines. The improvement in credit quality was also evident in the purchased credit-impaired (PCI) portfolio, which consists of loans acquired through the Wachovia merger that were deemed to have probable loss and therefore written down at acquisition. Overall, the PCI portfolio continued to perform in line with or better than originally expected.

"Nonperforming loans increased moderately, with a majority of the increase in the commercial loan portfolio. Nonperforming consumer loans were stable to improved. We expect nonperforming assets to remain elevated as we manage through the economic cycle. The provision for loan losses was $650 million less than net charge-offs, reflecting improved portfolio performance. Absent significant deterioration in the economy, we currently expect future reductions in the allowance for loan losses."

Credit Losses
Third quarter net charge-offs were $4.1 billion, or 2.14 percent (annualized) of average loans, down from second quarter net charge-offs of $4.5 billion (2.33 percent). Third quarter losses were down $1 billion, or 20 percent, from third quarter 2009 (as shown on page 37 of the financial tables). Total net credit losses included $1 billion of commercial and commercial real estate losses (1.42 percent), down $288 million from second quarter, and $3.0 billion of consumer losses (2.72 percent), down $103 million from second quarter.

Nonperforming Assets
Nonperforming assets increased as expected, ending the quarter at $34.6 billion. Growth in nonaccrual loans continued to be slight, up 2 percent from second quarter, to $28.3 billion. The growth in third quarter nonaccruals occurred primarily in commercial loans, while nonaccruals in consumer and consumer real estate loan portfolios were essentially flat or down.

Commercial and commercial real estate nonperforming loans were up approximately $400 million from the second quarter. "We continue to manage the portfolio aggressively and assist our borrowers as they navigate through this challenging credit environment," said Loughlin. "We place loans on nonaccrual when appropriate, continue to monitor these credits closely and take appropriate action as necessary. Measurable loss on nonaccrual loans has already been taken and we believe adequate collateral and reserves are in place to mitigate further loss events."

While nonaccrual loans are not free of loss content, the loss exposure remaining in these balances is expected to be significantly mitigated by four factors. First, 99 percent of consumer nonaccrual loans and 96 percent of commercial nonaccruals are secured. Second, losses have already been recognized on 40 percent of the consumer nonaccruals and commercial nonaccruals have been written down by $2.9 billion. Residential nonaccrual loans are generally written down to net realizable value at 180 days past due. Third, as of September 30, 2010, 58 percent of commercial nonaccrual loans were current on interest. Fourth, the inherent risk of loss in all nonaccruals is adequately covered by the allowance for loan losses.

Foreclosed assets were $6.1 billion at September 30, 2010, up $1.1 billion from second quarter of which $509 million was due to transfers from PCI portfolios, and $148 million from an increase in fully insured GNMA loans. Non-GNMA foreclosed assets increased as more distressed loans reached the final stage of the resolution process. Over 44 percent of the increase came from the commercial PCI and Pick-a-Pay portfolios as the impaired loans in these segments reach final dispositions. "Given the current levels of nonaccruing loans, we would expect a higher than normal inflow into foreclosed assets over the near term as we resolve these loans," said Loughlin. "The outflow should continue to increase as we liquidate theassets over time. While total foreclosed assets increased, the majority of the projected loss content in  these assets has already been accounted for, or are government insured, and should have limited additional impact to expected loss levels."

Loans 90 Days or More Past Due and Still Accruing
Loans 90 days or more past due and still accruing also improved in the quarter, totaling $18.8 billion at September 30, 2010, compared with $19.4 billion at June 30, 2010. For the same periods, the totals included $14.5 billion and $14.4 billion, respectively, in advances pursuant to the Company's servicing agreement to GNMA mortgage pools and similar loans whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Commercial and commercial real estate loans 90 days or more past due and still accruing improved significantly, down $648 million, or 39 percent, from the prior quarter.

Allowance for Credit Losses
The allowance for credit losses, including the reserve for unfunded commitments, totaled $24.4 billion at September 30, 2010, down from $25.1 billion at June 30, 2010. The allowance coverage to total loans was 3.23 percent, essentially flat compared with 3.27 percent at June 30, 2010. The allowance covered 1.5 times annualized third quarter net charge-offs compared with 1.4 times in the prior quarter. The allowance coverage to nonaccrual loans was 86 percent at September 30, 2010, compared with 90 percent at June 30, 2010. "We believe the allowance was adequate for losses inherent in the loan portfolio at September 30, 2010, and continues to reflect prudent acknowledgement of uncertainty in the economic environment," said Loughlin.

Additional detail on credit quality and trends is included in the quarterly supplement, available on the Investor Relations page at www.wellsfargo.com/invest_relations/investor_relations/

Business Segment Performance: Wells Fargo defines its operating segments by product type and customer segment.

Community Banking offers a complete line of diversified financial products and services for consumers and small businesses including investment, insurance and trust services in 39 states and D.C., and mortgage and home equity loans in all 50 states and D.C.

Community Banking reported net income of $2 billion, up $236 million, or 13 percent, from second quarter 2010. Revenue decreased $140 million, or 1 percent, driven primarily by lower deposit service charges due to changes to Regulation E and the planned reduction in certain liquidating loan portfolios, mitigated by an increase in mortgage banking income, as higher originations/sales activities more than offset lower servicing income (decline in mortgage rates). Noninterest expense decreased $355 million, or 5 percent, driven primarily by lower litigation expense as well as severance costs associated with the restructuring of Wells Fargo Financial in the prior quarter. Average loans of $527 billion decreased 2 percent and average core deposits of $536 billion grew 0.4 percent. The provision for credit losses decreased $192 million primarily due to lower net charge-offs.

Community Banking reported net income of $2 billion, down $734 million, or 27 percent from prior year. Revenue decreased 13 percent year over year largely due to lower mortgage banking income, lower deposit service charges due to changes to Regulation E, and the planned reduction in certain liquidating loan portfolios. Noninterest expense increased $322 million, or 5 percent, from prior year due primarily to higher litigation expense. The provision for credit losses decreased $1.5 billion from third quarter 2009 on lower net charge-offs across consumer portfolios and improved credit quality metrics.

Regional Banking Highlights

• Strong growth in checking accounts (combined Regional Banking)

- Consumer checking accounts up a net 7.3 percent from prior year

- Business checking accounts up a net 5.0 percent from prior year

- Consumer checking accounts up a net 8.3 percent in California, 11.2 percent in New Jersey and

9.0 percent in Florida

• Solutions growth in third quarter

- Legacy Wells Fargo footprint including converted Wachovia:

o Core product solutions (sales) of 7.81 million, up 14 percent from prior year

o Core sales per platform banker FTE (active, full-time equivalent) of 5.99 per day, up from 5.88 in prior year

o Sales of Wells Fargo Packages® (a checking account and at least three other products) up 16 percent from prior year, purchased by 81 percent of new checking account customers

- Eastern footprint including converted Wachovia:

o Platform banker FTEs grew by more than 1,250, or 14 percent, in the first nine months of 2010, with planned additions throughout the remainder of 2010

• Continued retail bank household cross-sell growth

- Legacy Wells Fargo: record retail bank household cross-sell of Wells Fargo products of 6.08 products per household

- Wachovia: retail bank household cross-sell of Wachovia products continued to grow to 4.91 products per household

• Customer experience (combined Regional Banking)

- More than 195,000 customers were contacted about their experience in Wells Fargo stores and over 51,000 customers spoke about their experience in the contact centers

- Nearly 8 out of 10 customers were "extremely satisfied," the highest rating, with their recent call or visit with Wells Fargo

• Continued focus on distribution

- Converted 193 Wachovia banking stores in Texas and Kansas in July 2010 and 170 in Alabama, Mississippi and Tennessee in late September 2010

- Opened 13 banking stores in third quarter for retail network total of 6,335 stores

- Converted 941 ATMs to Envelope-FreeSM webATM machines in third quarter

• Small Business/Business Banking

- Store-based business solutions up 25 percent from prior year (legacy Wells Fargo footprint including converted Wachovia)

- Sales of Wells Fargo Business Services Packages (business checking account and at least three other business products) up 41 percent from prior year, purchased by 64 percent of new business checking account customers (legacy Wells Fargo footprint including converted Wachovia)

- Business Banking household cross-sell of 3.97 products per household (legacy Wells Fargo footprint, including Wells Fargo and Wachovia customers)

- Extended $10.5 billion in new small business loans through September 2010, including $3.9 billion in third quarter. Though demand for small business loans continued to be soft, saw improvement with new loan volume increasing 17 percent from third quarter of 2009.

- America's #1 small business lender (in both loans under $100,000 and under $1,000,000) and #1 lender to small businesses in low-and moderate-income areas, according to 2009 Community Reinvestment Act (CRA) data

- #1 national SBA 7a lender in dollar volume for 2010 fiscal year

• Online and mobile banking

- 17.9 million combined active online customers

- 4.1 million combined active mobile customers

- Ranked Best Consumer Internet Bank and Best Corporate/Institutional Internet Bank in the U.S. (Global Finance, August 2010)

- Mobile banking services earned a Gold ranking in the Javelin Strategy & Research "2010 Mobile Banking Scorecard" (August 2010)

Wells Fargo Home Mortgage (Home Mortgage)

• Home Mortgage applications of $194 billion, up from $143 billion in prior quarter
• Home Mortgage application pipeline of $101 billion at September 30, 2010, up from $68 billion at

June 30, 2010

• Home Mortgage originations of $101 billion, up from $81 billion in prior quarter
• Owned residential mortgage servicing portfolio of $1.8 trillion at September 30, 2010
• 2.3 million homeowners benefitted from home payment relief through modifications and refinances

(January 2009 through August 31, 2010)

Wholesale Banking provides financial solutions to businesses across the United States with annual sales generally in excess of $10 million and financial institutions globally. Products include middle market banking, corporate banking, commercial real estate, treasury management, asset-based lending, insurance brokerage, foreign exchange, correspondent banking, trade services, specialized lending, equipment finance, corporate trust, investment banking, capital markets and asset management.

Wholesale Banking reported net income of $1.4 billion, up $851 million, or 143 percent, from third quarter 2009 and up $33 million, or 2 percent, from the prior quarter. Revenue increased $314 million, or 6 percent, from prior year as growth in commercial mortgage origination and servicing, commercial real estate, Wells Fargo Capital Finance and recoveries in the PCI portfolio more than offset declines in capital markets-related trading revenues. Revenue decreased 7 percent linked quarter related to seasonality in rural crop insurance as well as lower recoveries in the PCI portfolio. Noninterest expense increased $49 million, or 2 percent, from prior year related to higher foreclosed asset and personnel expenses. Total provision for credit losses of $270 million declined $1.1 billion, or 80 percent, from third quarter 2009.

The decrease included a $250 million reserve release in the current quarter compared with a $627 million credit reserve build a year ago.

• Average core deposits up 17 percent from prior year and up 7 percent from prior quarter
• Strong linked quarter average loan balance growth in asset-backed finance and global financial institutions portfolios

• New loan commitments in commercial real estate up 265 percent from prior year and up 44 percent from prior quarter as economy begins to recover

• Wells Fargo Shareowner ServicesSM ranked #1 in overall customer satisfaction and client loyalty in Group 5's survey of public companies

• CEO Mobile® named one of the five best mobile banking applications by Bank Technology News

Wealth, Brokerage and Retirement provides a full range of financial advisory services to clients using a comprehensive planning approach to meet each client's needs. Wealth Management provides affluent and high net worth clients with a complete range of wealth management solutions including financial planning, private banking, credit, investment management and trust. Family Wealth meets the unique needs of the ultra high net worth customers. Retail brokerage's financial advisors serve customers' advisory, brokerage and financial needs as part of one of the largest full-service brokerage firms in the U.S. Retirement provides retirement services for individual investors and is a national leader in 401(k) and pension record keeping.

Wealth, Brokerage and Retirement reported net income of $256 million, down $14 million, or 5 percent, from prior quarter, and up $145 million, or 131 percent, from prior year. Revenue was $2.9 billion, up 5 percent from the prior year, as higher asset-based revenue partially offset lower transactional revenue and securities gains in the brokerage business. Total provision for credit losses decreased $156 million from the prior year, largely reflecting a credit reserve build in the third quarter of last year. Noninterest expense was up 4 percent from the prior year due to growth in broker commissions driven by higher production levels. Average core deposits increased $4 billion, or 4 percent, from the prior year.

Retail Brokerage

• Client assets of $1.1 trillion, up 4 percent from prior year
• Managed account assets increased $33 billion, or 18 percent, from prior year driven by the market recovery and solid net flows

Wealth Management

• Strong deposit growth, with average balances up 8 percent from prior year

Retirement

• Institutional Retirement plan assets of $221 billion, up $17 billion, or 8 percent, from prior year
• IRA assets of $254 billion, up $20 billion, or 8 percent, from prior year

Conference Call
The Company will host a live conference call on Wednesday, October 20, at 6:30 a.m. PDT (9:30 a.m. EDT). To access the call, please dial 866-872-5161 (U.S. and Canada) or 706-643-1692 (international). No password is required. The call is also available online at wellsfargo.com/invest_relations/earnings and http://event.meetingstream.com/r.htm?e=240281&s=1&k=9E85E58A6C441E015358F44355F5C3CD. A replay of the conference call will also be available beginning at approximately noon PDT (3 p.m. EDT) on October 20 through Wednesday, October 27. Please dial 800-642-1687 (U.S. and Canada) or 706-645- 9291 (international) and enter Conference ID 99255853. The replay will also be available online.