Q4 Net Income of $3.4 billion; Q4 Revenue of $21.5 billion

SAN FRANCISCO--(BUSINESS WIRE)-- Wells Fargo & Company (NYSE:WFC):

Continued strong financial results in fourth quarter 2010:

• Record net income of $3.4 billion, up 21 percent from prior year
• Diluted earnings per common share of $0.61
• Revenue of $21.5 billion, up 12 percent (annualized) from prior quarter
• Net interest margin of 4.16 percent, return on assets of 1.09 percent (annualized), and return on equity of 10.95 percent (annualized)

Diverse sources of franchise growth in fourth quarter 2010:

• All business segments contributed to earnings; Wholesale Banking up 11 percent from prior quarter
• Double-digit revenue growth across multiple businesses
• Loan growth in major loan categories – commercial and industrial, commercial real estate mortgage and real estate 1-4 mortgages; total loans up $3.6 billion, or 2 percent (annualized), from September 30, 2010; non-strategic/liquidating loans down $6.0 billion, all other loans up $9.6 billion from September 30, 2010
• Average checking and savings deposit growth accelerated to 17 percent (annualized) from prior quarter
• Supplied $210 billion in credit to consumers and businesses during the quarter, up $34.5 billion, or 20 percent, from prior quarter; highest quarterly volume of credit extended since merger

Continued and significant improvement in credit quality:

• Net loan charge-offs declined to $3.8 billion, down $256 million from prior quarter and 29 percent below fourth quarter 2009 peak
• Nonperforming assets declined to $32.4 billion and nonperforming loans declined to $26.2 billion, down $2.1 billion from prior quarter
• Most leading credit quality metrics stable to improving
• Reserve release¹ of $850 million (pre tax) reflected improved portfolio performance; expect future reductions in the allowance absent significant deterioration in the economy
• Allowance for credit losses of $23.5 billion = 6 times quarterly charge-offs
• Remaining purchased credit-impaired (PCI) nonaccretable of $13.4 billion = 29.5% of remaining unpaid principal balance

¹ Reserve release represents the amount by which net charge-offs exceed the provision for credit losses.

Completed 2^nd year of Wachovia integration; merger on track and exceeding original expectations:

• Completed conversion of retail banking stores in Georgia and finished the replacement of Wachovia ATM network with Envelope-Free^SM webATM machines
• Remaining Eastern banking markets will convert by year end 2011
• Converted brokerage platform the weekend of January 15^th

Capital ratios continued to increase, driven by $13 billion (12 percent) internal capital generation since December 31, 2009:

• Company’s estimated Tier 1 common ratio under Basel III capital proposals was 6.9 percent at December 31, 2010²

Industry leader in loan modifications for homeowners:

• As of December 31, 2010, more than 620,000 active trial or completed loan modifications had been initiated since beginning of 2009; of this total, 530,000 were through Wells Fargo’s own programs, with the remaining 90,000 under the federal government’s Home Affordable Modification Program (HAMP)

Full Year 2010:

• Record net income of $12.4 billion
• Revenue of $85.2 billion
• Diluted earnings per common share of $2.21
• Net interest margin of 4.26 percent, return on assets of 1.01 percent, and return on equity of 10.33 percent

² Pro forma calculations based on reported Tier 1 common equity, as adjusted to reflect management’s interpretation of current Basel III capital proposals. These pro forma calculations and management’s estimates are subject to change depending on final promulgation of Basel III capital rulemaking and interpretations thereof by regulatory authorities. Please see page 44 of the Fourth Quarter 2010 Quarterly Supplement for additional information.

Wells Fargo & Company (NYSE:WFC) reported record net income of $12.4 billion, or $2.21 per diluted common share, for 2010, up from $12.3 billion, or $1.75 per share, for 2009. Fourth quarter 2010 net income was a record $3.4 billion, or $0.61 per common share, compared with $3.3 billion, or $0.60 per common share, for third quarter 2010 and $2.8 billion, or $0.08 per common share, for fourth quarter 2009. Earnings per share for fourth quarter 2009 were reduced by $0.47 for the combined dividends and deemed dividend upon redemption and full repayment of TARP preferred stock.

“In 2010 Wells Fargo saw solid growth in a variety of businesses, with record net income for the full year as well as the fourth quarter,” said Chairman and CEO John Stumpf. “As the U.S. economy showed continued signs of improvement, our diversified model continued to perform for our stakeholders, as demonstrated by growth in loans and deposits, solid capital levels and improving credit quality.

“Wells Fargo was once again ranked No. 1 in the American Customer Satisfaction Index (ACSI), an independent survey of consumer satisfaction of the largest banks in the U.S., for 2010. Our internal metrics indicate greater customer retention and deepening customer relationships. Of course, our engaged team members are one of the main reasons for these customer satisfaction results.

“As we look to the future, it is within the larger context of the ‘new normal’ for the industry, U.S. economy, our customers and our Company that we focus on long-term growth. We’re beginning our third year of the Wachovia integration, which we expect to complete by the end of 2011. We are very pleased with our progress to date and, since the merger in December 2008, Wells Fargo has earned $24.6 billion – a real testament to the power of this combined franchise. A sincere thank you to our 281,000 team members for their continued work in making Wells Fargo one of America’s great companies.”

Financial Performance

“Wells Fargo has earned strong and consistent profits in each of the eight quarters since the 2008 merger with Wachovia – $24.6 billion in profit in two years, including a record $3.4 billion in profit in the fourth quarter,” said Chief Financial Officer Howard Atkins. “Our results in the fourth quarter were driven by broad-based revenue growth – up 12 percent (annualized) from the prior quarter in total, including revenue growth in roughly two-thirds of our businesses. In addition, we experienced a significant improvement in credit quality, with a $2.1 billion decline in nonperforming loans, along with the fourth consecutive quarter of lower charge-offs, down 29 percent from the fourth quarter 2009 peak. The Wachovia merger is already proving to be a financial success, with substantially all of the expected expense savings already realized and growing revenue synergies reflective of market share gains in many businesses including deposits, mortgage, auto dealer services and investment banking. Our capital is substantially stronger than it has ever been – with Tier 1 common equity reaching 8.4 percent as of December 31, 2010, under Basel I and an estimated 6.9 percent under Basel III capital proposals. Capital continued to grow, reflecting a 1.1 percent return on assets and 3 percent rate of internal capital generation in the fourth quarter.”

Revenue

Revenue of $21.5 billion increased 12 percent (annualized) from third quarter 2010. Revenue growth was broad-based, with a wide variety of businesses again generating double-digit (annualized) linked-quarter revenue growth, including asset management, auto dealer services, brokerage, capital finance, commercial banking, commercial mortgage originations, commercial real estate, debit card, equipment finance, global remittance, insurance, international, investment banking, mortgage banking, real estate brokerage, shareowner services, SBA lending and wealth management. Over 60 percent of the Company’s total revenue in the quarter was earned in businesses that produced double-digit revenue growth.

Net Interest Income

Net interest income was $11.06 billion, compared with $11.10 billion in third quarter 2010. PCI loan resolution interest income declined to $78 million in fourth quarter from $153 million in third quarter, accounting for 3 basis points of the 9 basis point decline in the net interest margin, with the remainder of the margin decline largely attributable to the first linked-quarter growth in average earning assets since fourth quarter 2009 – up nearly $18 billion from third quarter.

Noninterest Income

Noninterest income was $10.4 billion, up $655 million, or 27 percent (annualized), from third quarter. On a linked-quarter basis, declines in deposit service charges (down $97 million from third quarter largely due to Regulation E impact offset by core deposit growth of 3 percent) and operating leases (down $143 million) were more than offset by growth in mortgage banking noninterest income (up $258 million, primarily driven by higher net gains on origination/sales), trust and investment fees (up $394 million, or 15 percent, on higher volumes and market gains), insurance (up $167 million on stronger crop underwriting results), and trading gains (up $62 million, or 13 percent).

Mortgage banking noninterest income was $2.8 billion, up 10 percent from third quarter 2010 on $128 billion of originations compared with $101 billion of originations in third quarter. Mortgage banking noninterest income in fourth quarter included a $464 million provision for mortgage loan repurchase losses compared with $370 million in third quarter (included in net gains from mortgage loan origination/sales activities) and a $143 million mortgage servicing rights (MSR) value reduction due to higher estimated future servicing and foreclosure costs (reduction in net servicing income). Net MSR results were $(143) million, inclusive of the $143 million MSR adjustment. The ratio of MSRs as a percent of loans serviced for others was 86 basis points and the average note rate on the servicing portfolio was 5.39 percent, compared with an average 4.86 percent published rate in the Freddie Mac Primary Mortgage Market Survey at quarter-end. The unclosed pipeline at December 31, 2010, was $73 billion compared with $101 billion at September 30, 2010.

The Company had net unrealized securities gains of $8.3 billion at December 31, 2010. Net realized equity gains of $317 million were largely offset by $268 million of realized bond losses, reflecting the Company’s decision to sell its lowest-yielding bonds, which were repositioned at the higher long-term interest rates prevailing late in the quarter.

Noninterest Expense

Noninterest expense was $13.3 billion, up from $12.3 billion in third quarter 2010. Fourth quarter expenses included $534 million of merger integration costs (up $58 million from third quarter) and a $400 million charitable contribution to the Wells Fargo Foundation, covering three years of estimated funding for the foundation. Fourth quarter also included approximately $200 million of seasonally higher year-end expenses, including higher advertising, equipment, software and travel costs. The quarter included approximately $200 million of incremental mortgage volume-related costs, which will likely decline if mortgage production declines. Finally, there were continued elevated loan resolution costs, including an additional $86 million of foreclosed asset expense, largely due to additional workout costs and sales. The Company’s efficiency ratio was 62.1 percent compared with 58.7 percent in third quarter 2010 and 56.5 percent in fourth quarter 2009.

Loans

At December 31, 2010, total loans were $757.3 billion, up from $753.7 billion at September 30, 2010. “We’ve seen signs of increased lending activity for several quarters and, during the fourth quarter, loans grew $3.6 billion. We had linked-quarter loan growth in many portfolios, including asset-backed finance, auto, brokerage lines of credit, capital finance, commercial banking, commercial real estate, equipment finance, government banking, international, mortgage, private student lending and SBA lending,” said Atkins. “We also continued to run-off the non-strategic/liquidating loan portfolios (legacy Wells Fargo Financial indirect auto, liquidating home equity, legacy Wells Fargo Financial debt consolidation, Pick-a-Pay mortgage, and other PCI), which declined $6.0 billion in the quarter.”

Deposits

Average core deposits were $794.8 billion, up 12 percent (annualized) from $772.0 billion in third quarter 2010. Consumer checking accounts grew a net 7.5 percent from December 31, 2009. Average checking and savings deposits increased 8 percent from a year ago to $715.7 billion. Average mortgage escrow deposits were $36.0 billion compared with $30.2 billion in third quarter 2010. “We continued to attract high-quality core deposits in the form of checking and savings accounts, which we view as the cornerstone of the banking relationship with our consumer and business customers,” said Atkins. Average checking and savings deposits were 90 percent of average core deposits, up from 86 percent a year ago. The average deposit cost for fourth quarter 2010 was 31 basis points.

Capital

Capital ratios increased in the fourth quarter, driven by internal capital generation of $3.5 billion. As a percentage of total risk-weighted assets, Tier 1 capital increased to 11.3 percent, total capital to 15.1 percent and Tier 1 common equity to 8.4 percent at December 31, 2010, up from 10.9 percent, 14.9 percent and 8.0 percent, respectively, at September 30, 2010. The Tier 1 leverage ratio was 9.2 percent at December 31, 2010, up from 9.0 percent at September 30, 2010. Under Basel III capital proposals, the Company’s estimated Tier 1 common ratio was 6.9 percent at December 31, 2010.

Credit Quality

“We saw meaningful improvement in credit quality in the fourth quarter, with virtually every metric showing positive movement,” said Mike Loughlin, Chief Risk Officer. “Net charge-offs peaked a year ago and continued to decline in the fourth quarter. We’ve now experienced a decline in nonperforming assets as well, driven by a $2.1 billion reduction in nonperforming loans. Thirty days past due loans declined 5 percent in consumer portfolios, and delinquency data across the majority of portfolios improved even with the typical seasonal headwinds. The significant decline in loans 90 days past due and still accruing is another indicator of a positive shift in credit quality. Additionally, the improvement was evident in the PCI portfolio, which consists of loans acquired through the Wachovia merger that were deemed to have probable loss and therefore written down at acquisition. The PCI portfolio continued to perform better than originally expected. Reflecting the improved overall portfolio performance, the provision for credit losses was $850 million less than net charge-offs. Absent significant deterioration in the economy, we expect future reductions in the allowance for credit losses.”

Credit Losses

Fourth quarter net charge-offs were $3.8 billion, or 2.02 percent (annualized) of average loans, down $256 million from third quarter net charge-offs of $4.1 billion (2.14 percent). Virtually all major loan categories experienced lower charge-offs in the quarter, including commercial and industrial, commercial real estate construction, residential real estate and all other consumer. The small increase in commercial real estate mortgage losses was related to write-downs based on regular appraisal updates. Total net credit losses included $954 million of commercial losses (1.19 percent), down $111 million from third quarter, and $2.9 billion of consumer losses (2.63 percent), down $145 million from third quarter, as shown in the following table.

Nonperforming Assets

Nonperforming assets declined for the first time since the merger with Wachovia, ending the quarter at $32.4 billion, down 6 percent from $34.6 billion in the third quarter. Nonaccrual loans declined to $26.2 billion from $28.3 billion for the third quarter, with reductions in commercial and industrial, commercial real estate construction and each of the consumer categories: 1-4 family first mortgage, 1-4 family junior lien mortgage, and other revolving credit and installment.

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 95 percent of commercial nonaccruals are secured. Second, losses have already been recognized on 41 percent of the consumer nonaccruals and commercial nonaccruals have been written down by $2.6 billion. Residential nonaccrual loans are generally written down to net realizable value at 180 days past due. Third, as of December 31, 2010, 57 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 $6.0 billion at December 31, 2010, down $118 million from third quarter. The $6.0 billion of foreclosed assets includes $2.0 billion from the PCI portfolios and $1.5 billion from fully insured GNMA loans. The quarterly reduction reflects a balance between inflows and outflows during the period. 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. “However, as the majority of the loss content in these assets has already been accounted for, or the assets are government insured, there should be 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 $18.5 billion at December 31, 2010, compared with $18.8 billion at September 30, 2010. For the same dates, the totals included $14.7 billion and $14.5 billion, respectively, in loans whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. “Excluding these insured loan balances, 90 days past due and accruing balances were down 12 percent from the prior quarter,” said Loughlin. “Leading the decrease, commercial loans 90 days or more past due and still accruing improved significantly, down $417 million, or 40 percent, from last quarter – additional evidence of improving credit performance trends.”

Allowance for Credit Losses

The allowance for credit losses, including the allowance for unfunded commitments, totaled $23.5 billion at December 31, 2010, down from $24.4 billion at September 30, 2010. The allowance coverage to total loans was 3.10 percent compared with 3.23 percent at September 30, 2010. The allowance covered 1.54 times annualized fourth quarter net charge-offs compared with 1.50 times in the prior quarter. The allowance coverage to nonaccrual loans was 89 percent at December 31, 2010, compared with 86 percent at September 30, 2010. “We believe the allowance was adequate for losses inherent in the loan portfolio at December 31, 2010, and continues to reflect prudent acknowledgement of uncertainty in the economic environment,” said Loughlin.

Additional detail on credit quality 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. Segment net income for each of the three business segments was:

In fourth quarter 2010, we realigned certain lending businesses into Wholesale Banking from Community Banking to reflect our previously announced restructuring of Wells Fargo Financial. Prior periods have been revised to reflect this change. More financial information about the business segments is in the OPERATING SEGMENT RESULTS table and the FIVE QUARTER OPERATING SEGMENT RESULTS table.

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. through its Regional Banking and Wells Fargo Home Mortgage business units.

Community Banking reported net income of $2.0 billion, flat compared with third quarter 2010 and down $206 million, or 9 percent, from fourth quarter 2009. Revenue increased $43 million from third quarter 2010, driven primarily by an increase in mortgage banking income, as higher origination/sales activities more than made up for lower servicing income, offset by lower deposit service charges due to changes to Regulation E and the planned reduction in certain liquidating loan portfolios. Revenue decreased $2 billion, or 13 percent, from fourth quarter 2009 largely due to lower mortgage banking income, lower deposit service charges due to Regulation E and the planned reduction in certain liquidating loan portfolios. Noninterest expense increased $524 million, or 7 percent, from third quarter 2010, driven by a $400 million charitable contribution to the Wells Fargo Foundation, increases in foreclosed assets expense and seasonal software license and equipment maintenance expense, partially offset by lower litigation expense. Noninterest expense increased $207 million, or 3 percent, from a year ago primarily due to the $400 million charitable contribution offset by lower litigation expense and Wachovia merger-related cost savings. The provision for credit losses decreased $370 million from third quarter 2010 due to a $120 million decrease in net loan charge-offs and a $650 million reserve release compared with a $400 million reserve release in third quarter 2010. Provision decreased $2.2 billion from fourth quarter 2009 on lower net charge-offs across consumer, small business and credit card portfolios, and a $650 million fourth quarter 2010 reserve release compared with a reserve build of $385 million a year ago.

Regional Banking Highlights

• Strong growth in checking accounts from December 31, 2009 (combined Regional Banking)
  • Consumer checking accounts up a net 7.5 percent
  • Business checking accounts up a net 4.8 percent
  • Consumer checking accounts up a net 8.2 percent in California and 10.0 percent in Florida

• Record solutions in 2010
  • Western footprint including converted Wachovia
    • Core product solutions (sales) of 30.1 million, up 16 percent from 2009
    • Core sales per platform banker FTE (active, full-time equivalent) of 6.05 per day, up from 5.75 in 2009
    • Sales of Wells Fargo Packages^® (a checking account and three other products) up 21 percent from 2009, purchased by 81 percent of new checking account customers
  • Eastern footprint including converted Wachovia
    • Eastern core product solutions and platform banker productivity grew by double digits in 2010
    • Platform banker FTEs in the East grew by more than 1,950, or 22 percent, in 2010
    • As of the end of fourth quarter, and after only a few months on the Wells Fargo systems, over 75 percent of new checking account customers purchased Wells Fargo Packages^® in the converted southeastern states
• Retail bank household cross-sell showing growth for combined company
  • For first time since the merger, Regional Banking now reporting a Retail Bank household cross-sell ratio for total combined company of 5.70 products per household, up from 5.47 in December 2009
  • This ratio, lower than legacy Wells Fargo’s stand-alone cross-sell, reflects the opportunity to earn more of the business from our legacy Wachovia customers; the cross-sell in the West is 6.14, compared with the cross-sell ratio in the East of 5.11
• Customer experience (combined Regional Banking)
  • Surveyed over 250,000 customers about their experience with Wells Fargo stores and contact centers in fourth quarter; 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 279 Wachovia banking stores in Georgia to Wells Fargo in October 2010; total of 749 nationwide converted in 2010
  • Opened 47 banking stores in 2010 for retail network total of 6,314 stores
  • Converted 4,190 ATMs to Envelope-Free^SM webATM machines in 2010
• Small Business/Business Banking
  • Store-based business solutions up 22 percent from 2009 (Western footprint including converted Wachovia)
  • Sales of Wells Fargo Business Services Packages (business checking account and at least three other business products) up 42 percent from 2009, purchased by 65 percent of new business checking account customers (Western footprint including converted Wachovia)
  • Business Banking household cross-sell of 4.04 products per household (Western footprint including Wells Fargo and Wachovia customers)
  • Wells Fargo, America’s #1 small business lender and the largest SBA lender (in dollars), extended $14.9 billion of new lending (new lending to existing or new borrowers, and increases to existing lines of credit) to small business owners in 2010. This includes $4.6 billion of new loans during the fourth quarter, representing an 18 percent increase from fourth quarter 2009 lending.
• Online and Mobile Banking
  • 18.3 million combined active online customers
  • 4.7 million combined active Bill Pay customers
  • Global Finance ranked Wells Fargo Best Consumer Internet Bank in North America (November, 2010)

Wells Fargo Home Mortgage (Home Mortgage)

• Home Mortgage applications of $158 billion, compared with $194 billion in prior quarter
• Home Mortgage application pipeline of $73 billion at quarter end, compared with $101 billion at September 30, 2010
• Home Mortgage originations of $128 billion, up 27 percent from $101 billion in prior quarter
• Owned residential mortgage servicing portfolio of $1.8 trillion

Wholesale Banking provides financial solutions to businesses across the United States and globally with annual sales generally in excess of $20 million. Products & business units include Middle Market Commercial Banking, Government & Institutional Banking, Corporate Banking, Commercial Real Estate, Treasury Management, Wells Fargo Capital Finance, Insurance, International, Real Estate Capital Markets, Commercial Mortgage Servicing, Corporate Trust, Equipment Finance, Investment Banking & Capital Markets, Securities Investment Portfolio, Asset Backed Finance, and Asset Management.

Wholesale Banking reported net income of $1.6 billion, up $615 million, or 60 percent, from fourth quarter 2009 and up $168 million, or 11 percent, from third quarter 2010. Revenue increased $440 million, or 8 percent, from fourth quarter 2009 driven by strong growth in net interest income, as margins improved due to solid deposit gains and substantial gains in loan portfolio yields from fourth quarter 2009, as well as solid growth in noninterest income, driven by investment banking and capital markets, commercial mortgage origination and servicing, corporate banking fees, and strong Eastdil Secured results from private market real estate deal activity. Revenue increased $434 million, or 8 percent, from third quarter 2010 as strong investment banking and capital markets, commercial mortgage origination and rural crop insurance results and the impact of higher loan portfolio balances more than offset lower recoveries in the PCI portfolio. Noninterest expense increased $261 million, or 10 percent, from fourth quarter 2009 related to higher personnel expenses tied to revenue growth and litigation expense. Total provision for credit losses of $195 million declined $769 million, or 80 percent, from fourth quarter 2009. The decrease included a $454 million improvement in credit losses from fourth quarter 2009 and a $200 million reserve release compared with a $115 million credit reserve build in fourth quarter 2009. Nonperforming assets declined roughly $1.1 billion from third quarter 2010.

• Revenue up 8 percent from fourth quarter 2009
• Loan growth in many portfolios, including asset-backed finance, capital finance, commercial banking, commercial real estate, equipment finance, government banking and international, from third quarter 2010
• Continued strong deposit growth, with average core deposits up 14 percent from fourth quarter 2009
• Named Best Corporate/Institutional Internet bank in North America by Global Finance (November, 2010)
• Processed $1 trillion in deposits by commercial banking customers using Desktop Deposit^® service
• Wells Fargo Shareowner Services^SM is industry’s highest rated transfer agency for client satisfaction based on study by GROUP FIVE
• CEO Mobile^® named one of the five best applications by Bank Technology News (October, 2010)

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 $197 million, down $59 million from third quarter 2010 and up $213 million from fourth quarter 2009, which included the previously disclosed auction rate securities settlement. Revenue was $3.0 billion, up 15 percent from fourth quarter 2009, as higher asset-based revenues, brokerage transactional revenue and net interest income were partially offset by lower securities gains and other fees in the brokerage business. Total provision for credit losses increased $20 million from fourth quarter 2009. Noninterest expense was up 2 percent from fourth quarter 2009 due to growth in broker commissions primarily driven by higher production levels. Average core deposits decreased $3 billion, or 2 percent, from fourth quarter 2009.

Retail Brokerage

• Client assets of $1.2 trillion, up 6 percent from fourth quarter 2009
• Managed account assets increased $38 billion, or 20 percent, from fourth quarter 2009 driven by strong market gains and solid net flows

Wealth Management

• Investment management and trust asset-based revenue up 6 percent from fourth quarter 2009

Retirement

• Institutional retirement plan assets of $231 billion, up $14 billion, or 6 percent, from fourth quarter 2009
• IRA assets of $266 billion up $24 billion, or 10 percent, from fourth quarter 2009

Conference Call

The Company will host a live conference call on Wednesday, January 19, at 6:30 a.m. PST (9:30 a.m. EST). To access the call, please dial 866-872-5161 (U.S. and Canada) or 706-643-1962 (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=263478&s=1&k=F1D152CEE9CE3D0916C517D8308EEABD

A replay of the conference call will be available beginning at approximately noon PST (3 p.m. EST) on January 19 through Wednesday, January 26. Please dial 800-642-1687 (U.S. and Canada) or 706-645-9291 (international) and enter Conference ID #48998396. The replay will also be available online at wellsfargo.com/invest_relations/earnings and http://event.meetingstream.com/r.htm?e=263478&s=1&k=F1D152CEE9CE3D0916C517D8308EEABD

Cautionary Statement about Forward-Looking Information

In accordance with the Private Securities Litigation Reform Act of 1995, we caution you that this news release contains forward-looking statements about our future financial performance and business. We make forward-looking statements when we use words such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “may,” “can,” “will,” “outlook,” “project,” “appears” or similar expressions. Forward-looking statements in this news release include, among others, statements about: (i) future credit quality and expected or estimated future loan losses in our loan portfolios; the level and loss content of nonperforming assets and nonaccrual loans, as well as the level of inflows and outflows into nonperforming assets; and the adequacy of the allowance for loan losses, including our current expectation of future reductions in the allowance for loan losses; (ii) reduction or mitigation of risk in our loan portfolios; (iii) our estimates regarding our Tier 1 common ratio as of December 31, 2010 under proposed Basel III capital regulations; and (iv) the amount and timing of expected integration activities, expenses and cost savings relating to the Wachovia merger and expected synergies and benefits of the merger, as well as other expectations regarding future expenses, including mortgage volume-related costs.

Do not unduly rely on forward-looking 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. Several factors could cause actual results to differ materially from expectations including: current and future economic and market conditions, including the effects of further declines in housing prices and high unemployment rates; our capital requirements (including under regulatory capital standards as determined and interpreted by applicable regulatory authorities such as the proposed Basel III capital regulations) and our ability to generate capital internally or raise capital on favorable terms; financial services reform and other current, pending or future legislation or regulation that could have a negative effect on our revenue and businesses (including the Dodd-Frank Wall Street Reform and Consumer Protection Act); the extent of success in our loan modification efforts, including the effects of regulatory requirements, or changes in regulatory requirements, relating to loan modifications; the amount of mortgage loan repurchase demands that we receive and our ability to satisfy any such demands without having to repurchase loans related thereto or otherwise indemnify or reimburse third parties; negative effects relating to mortgage foreclosures, including changes in our procedures or practices and/or industry standards or practices, regulatory or judicial requirements, penalties or fines, increased costs, or delays or moratoriums on foreclosures; our ability to successfully and timely integrate the Wachovia merger and realize the expected cost savings and other benefits, including delays or disruptions in system conversions and higher severance costs; our ability to realize efficiency initiatives to lower expenses when and in the amount expected; recognition of other-than-temporary impairment on securities held in our available-for-sale portfolio; the effect of changes in interest rates on our net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale; hedging gains or losses; disruptions in the capital markets and reduced investor demand for mortgage loans; our ability to sell more products to our customers; the effect of the economic recession on the demand for our products and services; the effect of fluctuations in stock market prices on fee income from our brokerage, asset and wealth management businesses; our election to provide support to our mutual funds for structured credit products they may hold; changes in the value of our venture capital investments; changes in our accounting policies or in accounting standards or in how accounting standards are to be applied; changes in our credit ratings and changes in the credit ratings of our customers or counterparties; mergers and acquisitions; federal and state regulations; reputational damage from negative publicity, fines, penalties and other negative consequences from regulatory violations; the loss of checking and saving account deposits to other investments such as the stock market; and fiscal and monetary policies of the Federal Reserve Board. There is no assurance that our allowance for credit losses will be adequate to cover future credit losses, especially if credit markets, housing prices, and unemployment do not improve. Increases in loan charge-offs or in the allowance for credit losses and related provision expense could materially adversely affect our financial results and condition. For more information about factors that could cause actual results to differ materially from our expectations, refer to our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010, and September 30, 2010, including the discussions under “Risk Factors” in each of those reports, as filed with the SEC and available on the SEC’s website at www.sec.gov. Any factor described above or in our SEC reports could, by itself or together with one or more other factors, adversely affect our financial results and condition.

About Wells Fargo

Wells Fargo & Company (NYSE:WFC) is a nationwide, diversified, community-based financial services company with $1.3 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (wellsfargo.com and wachovia.com), and other distribution channels across North America and internationally. With approximately 281,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked No. 19 on Fortune’s 2009 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.