Wells Fargo & Company

How Do We Picture the 
Next Stage of Success?

Wells Fargo & Company Annual Report 2005

3 To Our Owners

Wells Fargo & Company

Reputation

For 20 years, Wells Fargo has achieved
double-digit growth in almost every
economic environment. Chairman/CEO
Dick Kovacevich explains how our 
team did it.

11 How Do We Picture the 
Next Stage of Success?
We believe—and many industry 
observers agree—that we have the
strongest management team in all
of financial services. Here’s how they 
picture success for their customers,
their businesses and their teams.

24 Picturing the Next Stage of Success 

for Our Communities
We’re one of corporate America’s top 
10 givers—but it’s the time, talent 
and creativity of our team member
volunteers that really sets us apart.

31 Board of Directors, Senior Management

33 Financial Review

58 Controls, Procedures

60 Financial Statements

112 Report of Independent Registered 

Public Accounting Firm

116 Stockholder Information

Which Measures Really Matter? 
2005 Update (inside back cover)

Barron’s
World’s most admired financial 

services company

Business Ethics
Ranked top 10 corporate citizen

BusinessWeek
Among corporate America’s top 10 

corporate givers

Fortune
“Most Admired Megabank”
52nd in revenue among all U.S.
companies in all industries

World’s 29th most profitable company

Mergent, Inc.
“Dividend Achiever”*

Moody’s Investors Service
Only U.S. bank rated “Aaa,”

highest possible credit rating

Watchfire GomezPro
#1 internet bank

Wells Fargo & Company (NYSE: WFC) 
is a diversified financial services company
providing banking, insurance, investments,
mortgage loans and consumer finance. Our
corporate headquarters is in San Francisco,
but we’re decentralized so all Wells Fargo
“convenience points”—including stores,
regional commercial banking centers,
ATMs, Wells Fargo Phone BankSM centers,
internet—are headquarters for satisfying 
all our customers’ financial needs and 
helping them succeed financially.

“Aaa”

Wells Fargo Bank, N.A. is the only U.S. bank to
receive the highest possible credit rating from
Moody’s Investors Service.

Assets: $482 billion (5th among U.S. peers)

Market value of stock: $105 billion 
(4th among U.S. peers)

Fortune 500: Profit, 17th; Market Cap, 18th

Team members: 153,500 
(one of U.S.’s 40 largest private employers)

Customers: 23+ million

Stores: 6,250

* Publicly traded companies that increased dividends for last 
10+ consecutive years; Wells Fargo has increased dividends 
for 18 consecutive years, 23 increases since 1988.

Our Earnings Diversity

Community Banking  . . . . . . . . . . . . . 34% 

Home Mortgage/Home Equity  . . . 20%

Investments & Insurance  . . . . . . . . . 15%

Specialized Lending . . . . . . . . . . . . . . 15% 

Wholesale Banking/
Commercial Real Estate  . . . 9%

Consumer Finance  . . . . . . . . 7%

Earnings based on historical averages and near future year expectations

Our Market Leadership

#1, 2 or 3 in deposit market share in 15 of 

#1 agricultural lender

our 23 banking states; #4 nationally (6/30/05)

#1 retail mortgage originator;
#2 mortgage servicer

#1 financial services provider to 
middle-market businesses in 
our banking states

#2 in mortgages to low-to-moderate income 

#2 debit card issuer

home buyers

#1 home equity lender

#1 small business lender

#2 bank auto lender

#3 ATM network

One of U.S.’s leading commercial 

#1 small business lender in low-to-moderate

real estate lenders

income neighborhoods

#1 insurance broker owned by bank

holding company (world’s 5th largest
insurance brokerage)

One of North America’s premier 
consumer finance companies

Banking, insurance, investments,
mortgage loans, and consumer finance—
we span North America and beyond.

How Do We Picture the Next Stage of Success?

Our vision—as it has been for 20 years—is to satisfy all our customers’financial needs and
help them succeed financially. A vision by itself, however, is not enough.You must have a
plan to achieve that vision and a time-tested business model that can perform successfully
in any economic cycle.You have to execute against that plan efficiently and effectively.
In fact, it’s all about execution. To be successful, you need leaders who can establish,
share and communicate that vision, motivate others to embrace, believe in and follow 
that vision, and execute in a superior fashion each day, every day, one customer at a time.

(l to r): Karen Johnson-Norman, Commercial Real Estate
Group, Washington, DC; Christian Chan, Wells Fargo Funds,
San Francisco, California; Edgar Ramirez, Payment Operations,
Irving,Texas; Dick Kovacevich, Chairman and CEO;
Amy McSpadden, Wells Fargo Financial, Alpharetta, Georgia

2

To Our Owners,

This year’s outstanding results prove it once again.We have
the most talented, professional, caring, committed, ethical,
“customer first”team in all of financial services. Guided by 
our vision, values, our time-tested business model, our
diversity of businesses and our conservative risk management
—all in place for 20 years—our team once again produced
outstanding, industry-leading results.That included double-
digit growth in revenue and earnings per share—which we
achieved not just this year, but also for the past 20, 15, 10 and
five years. Over all these periods, our total stockholder return
was about double the S&P 500®. Amazing!

It’s all the more amazing because our team achieved these 
record results the past 20 years, while dealing with almost 
every economic cycle and every economic condition a financial
institution can experience. High and low interest rates. Bubbles
and recessions. All types of yield curves (steep, flat and inverted).
High and low unemployment. No one can accurately predict
how the economy will perform in 2006 or in any year but for
Wells Fargo to achieve double-digit growth we must continue to
focus on our primary strategy, consistent for 20 years, which is 
to satisfy all our customers’ financial needs, help them succeed
financially, and through cross-selling, gain wallet share and earn
100 percent of their business.

Among our 2005 achievements:

• Revenue growth of 10 percent—double-digits once again—
the most important measure of success in our industry—
outpacing our single-digit expense growth.

• Diluted earnings per share—a record $4.50, up 10 percent—
despite the $0.07 per share cost for increased bankruptcy
filings before the October change in federal bankruptcy laws.

• Net income—a record $7.7 billion, up 9 percent.

• Our stock price reached a record high close of $64.34 on

November 25, 2005.

3

Our Performance
Double-digit growth: earnings per share, revenue, loans and retail core deposits

$ in millions, except per share amounts

2005

2004

Change

$

7,671

4.50

$

7,014

4.09

9%

10

FOR THE YEAR

Net income

Diluted earnings per common share

Profitability ratios

Net income to average total assets (ROA)

Net income applicable to common stock to 

average common stockholders’ equity (ROE)

Efficiency ratio 1

Total revenue

Dividends declared per common share

Average common shares outstanding

Diluted average common shares outstanding

Average loans

Average assets

Average core deposits 2

Average retail core deposits 3

Net interest margin

AT YEAR END

Securities available for sale

Loans

Allowance for loan losses

Goodwill

Assets

Core deposits 2

Stockholders’ equity

Tier 1 capital

Total capital

Capital ratios

1.72%

1.71%

19.57

57.7

19.56

58.5

$ 32,949

$ 30,059

2.00

1,686.3

1,705.5

$296,106

445,790

242,754

201,867

1.86

1,692.2

1,713.4

$269,570

410,579

223,359

183,716

4.86%

4.89%

$ 41,834

310,837

3,871

10,787

481,741

253,341

40,660

31,724

44,687

$ 33,717

287,586

3,762

10,681

427,849

229,703

37,866

29,060

41,706

1

—

(1)

10

8

—

—

10

9

9

10

(1)

24

8

3

1

13

10

7

9

7

(5)

(2)

(4)

(1)

8

5

Stockholders’ equity to assets

8.44%

8.85%

Risk-based capital

Tier 1 capital

Total capital

Tier 1 leverage

Book value per common share

Team members (active, full-time equivalent)

8.26

11.64

6.99

8.41

12.07

7.08

$

24.25

$

22.36

153,500

145,500

1 The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).
2 Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates and market rate and other savings.
3 Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits.

4

Our primary strategy, consistent for 20 years,
is to satisfy all our customers’ financial needs,
help them succeed financially, and through
cross-selling earn 100 percent of their business.

• At year-end, the total value of our stock was $105 billion—

• We funded $366 billion in mortgages—our second highest

again making us one of the nation’s 20 most valuable companies.

• Return on equity, 19.57 percent; return on assets, 1.72 percent.

• Our credit quality remained excellent. Nonperforming loans

were at or near historic lows.

• Fortune ranked Wells Fargo “Most Admired Megabank”;

Barron’s ranked us the world’s most admired financial services
company and we continue to be the only U.S. bank with the
highest possible credit rating, “Aaa.”

• Community Banking achieved record profit of $5.53 billion,

up 13 percent with revenue increasing nine percent.

• In consumer banking, we sold almost 16 million products 

(or “solutions”)—checking, savings, debit cards, loans, etc.—
to our customers, up 15 percent.

• Our loans to small businesses, primarily less than $100,000,
grew 18 percent. For the third consecutive year, we were the
nation’s #1 small business lender in total dollars. In the past
10 years, we’ve loaned more than $26 billion to small
businesses owned by African-Americans, Asian-Americans,
Latinos and women, exceeding our publicly-stated goals.

• For the seventh consecutive year, our cross-sell reached record
highs—4.8 products per retail banking household, 5.7 products
per Wholesale Banking customer. Our average middle-market,
commercial banking customer now has almost 7.0 products
with us—up from almost five just two years ago. In fact, more
than one of every five of our commercial banking offices
nationwide averaged eight products per customer.

• For the seventh consecutive year, Wholesale Banking achieved
record net income of $1.73 billion—with double-digit loan
growth this year across its businesses.

• Our Wholesale Banking business now is truly coast-to-coast,
with more than 600 offices nationwide. Across the Eastern
U.S., we have 175 offices for commercial banking, commercial
real estate, corporate banking, asset-based lending and
equipment finance. We’re attracting new commercial
customers in markets such as Atlanta, Boston, Cleveland,
Hartford (Conn.), Indianapolis, New York and Tampa.

annual total ever—and continued to be the nation’s #1 retail
mortgage originator. Our owned mortgage servicing portfolio,
the nation’s second largest, rose 23 percent to $989 billion. The
housing market remained strong because new home construction
continued to lag the pace of new household formation.

• Our National Home Equity Group’s loans were $72 billion at
year-end with continued very strong credit quality—ranking
us the nation’s #1 home equity lender for the fourth consec-
utive year.

• Wells Fargo Financial—our consumer finance business—

grew average receivables 25 percent.

• Watchfire GomezPro ranked Wells Fargo internet banking 
#1 among all U.S. banks. Global Finance magazine named
wellsfargo.com best in the U.S. in six categories including 
“best corporate/institutional internet bank.” Information
technology magazine CIO named Wells Fargo one of its 
100 Bold winners for our innovative Commercial Electronic
Office® (CEO®) portal, now used by almost three-fourths of
our commercial customers for everything from loan payments
to foreign exchange.

Top 10 Consumer Internet Banks 

1. Wells Fargo
2. Citibank
3. Bank of America
4. E*Trade Bank
5. Huntington

Source: Watchfire GomezPro, 3Q05

6. First National Bank of Omaha
7. HSBC
8. U.S. Bank
9. Chase

10. Wachovia

• To be the financial services company of choice for remittance
customers, we expanded that service beyond Mexico, India
and the Philippines into El Salvador and Guatemala. The
number of accounts we opened for Mexican Nationals using
the Matricula Consular card as a form of identification
surpassed 600,000. We were the first financial institution 
in the nation to promote the use of this card as a form of

5

Double-Digit Annual Compound
Growth – for 20 Years

Years
5
10
15
20

EPS
Revenue
14% 10%
11
12
14

13
12
12

5%

Total Stockholder Return
Wells Fargo S&P 500®
0.5%
9
11
12

17
21
21

identification to help these customers move from the risky,
cash economy to secure, reliable financial services.

• In Los Angeles and Orange counties, we launched a pilot

program to offer mortgage loans to employed, taxpaying cus-
tomers who have an individual taxpayer identification number
(ITIN) issued by the IRS but do not have a Social Security
number.1 If successful, we hope to roll this mortgage product
out across all 23 of our community banking states.

• We increased the Company’s quarterly dividend more than 

8 percent to 52 cents a share, the 18th consecutive year we’ve
increased our dividend, our 23rd dividend increase since 1988.
We’re the nation’s 13th largest dividend payer and one of less
than 3 percent of more than 10,000 North American-listed,
dividend-paying common stocks classified as a “Dividend
Achiever”—a publicly-traded company that has increased its
dividends for the last 10 or more consecutive years.2 If you
had invested $10,000 in 1986 in our predecessor company,
Norwest Corporation, it would have been worth $435,000 
at year-end 2005 with dividends reinvested.

• Our total managed and administered assets rose 6 percent 

to $880 billion. The new Wells Fargo Advantage FundsSM—
the result of the merger of Wells Fargo Funds® and Strong
Funds®—is the nation’s 18th-largest mutual fund company,
managing $108 billion in assets, with 120 funds spanning
almost all asset classes and investment styles.

• We announced a 10-point commitment to integrate

environmental responsibility into our business practices. 
This includes a pledge to provide more than $1 billion in the
next five years, in lending, investments and other financial
commitments to environmentally-beneficial business oppor-
tunities including sustainable forestry, renewable energy,
water-resource management, waste management, “green
home” construction and development, and energy efficiency.

1 Qualified individuals must have been customers of Wells Fargo Bank for six months, paid U.S. taxes 

for two years, must be able to prove two years of California residence.

2 Mergent, Inc.

6

Impressive results, indeed. We’re very proud of them. But, believe
it or not, we can do even better. In recent annual reports, we told
you that we’ve not been growing our business banking and
investment businesses at a rate consistent with their potential. 
I’m pleased to report we’re making significant progress.

Business Banking
Just two years ago, our average Business Banking customer—
businesses with annual revenue up to $20 million—had only
about 2.7 products with us—dead last in cross-sell among all 
our businesses. Also, less than one of every four of our Business
Banking customers did their personal banking with Wells Fargo.
Less than one of every 10 gave us their investment business. 
Two years ago we said that by 2008 we wanted to double rev-
enue and cross-sell and dramatically increase our market share
for both deposits and loans from our small business customers.
I’m pleased to report that our Business Banking cross-sell grew
11 percent for the year. Our Business Banking team surpassed 
an average of 3.0 products (or “solutions”) per customer. 
The number of business customers actively using online banking
grew 24 percent. Our Business Banking deposits—which grew
10 percent in 2004—rose another 9 percent in 2005. During
those same years our loans and lines of credit—primarily less
than $100,000, sold to our small business customers through 
our banking stores, online, direct mail, teleconsulting and 
in-bound calls—rose 17 percent and 18 percent, respectively.
Our business customers are buying their financial products
from someone. Since we believe we can offer them a superior
value, there’s no reason we shouldn’t earn all their financial
services business—business, personal and investments. In 2004
Wells Fargo was #1 for the third year in a row in loans under
$100,000 to small businesses, with 15 percent market share
nationally. We also were the #1 lender to small businesses in 
low-to-moderate income neighborhoods, with almost 16 percent
market share, nationwide.

Wells Fargo has achieved double-digit,
annual compound growth in revenue and
earnings per share, with total stockholder
return about double the S&P 500 for the
past five, 10, 15 and 20 years.

Top 10 U.S. Full-Service Online Brokers
1. Smith Barney
2. Wells Fargo
3. UBS
4. Wachovia
5. Merrill Lynch

6. Piper Jaffray
7. DB Alex Brown
8. A.G. Edwards
9. McDonald Investments

10. Edward Jones

Source: Watchfire GomezPro 10/31/05

Private Client Services
Our private banking and investment business—Private Client
Services—also is growing. It ended 2005 with double-digit
revenue growth in the fourth quarter. We built the foundation for
this growth by integrating all banking, investment and insurance
services to serve all of our clients’ wealth management needs.
We’ve significantly increased the number of investment
professionals serving clients. We now have more than 700 private
bankers in our banking stores and wealth management offices, 
up 150 percent the past two years—and 2,500 licensed bankers
and financial consultants, up more than 85 percent in three years.
In 2005, we were the first in our industry to announce low- and
no-cost online stock and mutual fund trades to benefit our most
loyal customers. Watchfire GomezPro ranked us the nation’s
second best, full-service on-line brokerage.

As a result, we’re earning more of our clients’ business. Our
loans to Private Banking customers grew 15 to 20 percent each 
of the last five years. The last two years, deposits rose 38 percent,
and brokerage assets 14 percent. More than one million of our
customers now have a Wells Fargo Portfolio Management
Account®, or PMA® account—which combines all a customer’s
relationships with Wells Fargo, including checking, savings,
mortgage, personal loans, trust and brokerage. This relationship
product offers rewards, discounts, competitive money market
rates, bonus interest rates on linked savings accounts and CDs,
no monthly service fees on linked accounts, a Wells Fargo Visa®
Credit Card with waived fee for the Retention Rewards® program,
no annual fees on select line of credit accounts, free checks, and 

commission discounts with a linked WellsTrade® account. In 
just five months, balances across all our deposit and brokerage
accounts increased over $4 billion.

Our Investment Management and Trust businesses are growing,
too. In addition to more basic wealth planning services—such as
trust and estate services — we’ve added alternative asset classes
and we’re offering “best of class” outside money managers for
our high net worth clients. They, in turn, have given us more 
of their business. As a result, we’ve achieved five consecutive
quarters of record sales, a 40 percent increase in revenue year
over year from wealth planning and insurance.

Good progress but, here again, we can and must do better,
faster. Our market share of our customers’ investment business
should be two to three times higher than it is. There’s no reason
why we can’t attract many more new customers. More of our
Private Banking and Personal Trust customers should want to give
us their investment management and brokerage business. We also
should be satisfying more of the investment needs of our small
business customers and the executives of our middle-market, real
estate, and large corporate customers. We should be their first
choice for personal investment and banking business.

Preparing for more growth
We continue to invest in new stores and operation centers to 
help satisfy all our customers’ financial needs. During 2005, 
we opened 92 banking stores, remodeled another 485 banking
stores to improve customer service, and opened 47 mortgage
stores, 20 consumer finance stores, seven regional commercial
banking offices and two commercial real estate offices. We also
completed four major operations facilities (and are about to
complete a fifth):

• West Des Moines, Iowa Our mortgage and consumer credit

group opened a 281,000 square foot center for about 1,500
team members. Two more buildings are scheduled to open 
in mid-2006 and in 2007—for a total of almost one million
square feet—on a 160-acre campus, large enough to accom-
modate even more expansion.

7

“At Wells Fargo, we’re fortunate to have what 
I believe—and many industry observers
agree—is the best team of senior leaders in
the entire financial services and banking
industry.They lead with integrity.They know
how to build high-performing teams.They 
all own the customer experience—together.”

• Des Moines, Iowa Later in 2006 Wells Fargo Financial is
scheduled to complete a 360,000 square foot, nine-story
building for 1,500 team members, connected via skyway 
to its downtown headquarters;

• Minneapolis, Minnesota A $175 million conversion and

expansion of the former Honeywell Campus near downtown
Minneapolis. It consolidates a dozen Twin Cities area
mortgage operations centers and is expected to accommodate
about 4,600 team members by year-end 2006;

• Shoreview, Minnesota A new 160,000 square foot data 

center in a northern Twin Cities suburb;

• Chandler, Arizona A new operations, technology and 

call center campus near Phoenix has two, 200,000 square
foot, four-story buildings, now home to about 2,100 team 
members in operations and technology. This site is large
enough to accommodate four more buildings totaling 
800,000 square feet.

The quality of our leadership
Our vision—as it has been for 20 years—is to satisfy all our
customers’ financial needs and help them succeed financially. 
A vision by itself, however, is not enough. You must have a plan
to achieve that vision and a time-tested business model that can
perform successfully in any economic cycle. You have to execute
against that plan efficiently and effectively. In fact, it’s all about
execution. To be successful, you need leaders who can establish,
share and communicate the vision, motivate others to embrace,
believe in and follow that vision, and execute in a superior
fashion each day, every day, one customer at a time.

At Wells Fargo, we’re fortunate to have what I believe—
and many industry observers agree—is the best team of senior
leaders in the entire financial services and banking industry.
They’re the CEOs of our diverse businesses—spanning virtually
every segment of our industry. They’re responsible. They’re
accountable. They and their teams have produced outstanding
results you’ve come to expect from Wells Fargo year after year
after year. They partner together unselfishly. Each and every one
is a great coach. They realize, as every great coach does, that

8

success is not about their own self-interest. It’s about what’s 
best for their teams, their customers and their partners in other
Wells Fargo businesses. They give their teams the tools, training
and resources they need to achieve our goal of industry-leading,
double-digit growth in revenue, profit and earnings per share.
They help create our vision and values. They help us achieve our
vision every day with every customer. They cause our success to
happen. They drive our business results. They influence, direct
and inspire their teams. They make sure our 153,000 team
members understand, support and live that vision and those
values. They’re role models for leadership. They lead with
integrity. When they make a mistake, they accept responsibility
and learn from it. They’re big picture thinkers with a broad
perspective—company-wide and industry-wide. They’re open 
to new ideas, know how to learn and they learn from each other
and share best practices. They’re mentors for emerging, diverse
management talent across the company. They’re collaborators.
They know how to build high-performing teams. They and their
teams have fun together. They thrive on change. They care about
their people. They value diversity. They all own the customer
experience—together.

They’re not just good leaders, they’re great leaders. What’s 
the difference? A good leader inspires a team to have confidence
in her or him. A great leader inspires a team to have confidence 
in themselves. They teach and coach others to lead. Most of all,
they believe in our most important value: people as a competitive
advantage. They make every business decision with that value 
in mind. They know that somewhere on their teams is the answer
to every problem, challenge and opportunity. Their job is to 
find the people on their teams who have the answers, regardless
of rank or stripes, and help translate those answers into action.
The people with the answers most often are those closest 
to our customers.

How do we picture the next stage of success?
Therefore, in our report to you this year, we want you to get to
know this great team of senior business leaders better. We want
you to fully appreciate, as I do, their outstanding talent, skill,
experience, integrity, ethics, innovation, insight and caring—

and how they picture success for their businesses in the coming
years. Beginning on page 11, our leaders describe their vision 
of success for their businesses, how they and their talented teams
intend to partner to grow market share and wallet share, and
earn all of our customers’ business. I’m very fortunate to be
playing with the best team in financial services. I’m very proud 
to share their stories with you in this report.

The National Bank Act—the law of the land
Mobility is a way of life for most of our more than 23 million
customers. They commute, do business, relocate, travel and
vacation, often coast to coast. Many have a second home in
different states. They buy goods and services globally. When it
comes to commerce, state boundaries are meaningless for them.
They assume that anywhere they go in the United States (or the
world) they can access their money, make financial transactions
and get information about their accounts through their national
bank governed by uniform, consistent federal oversight. Thanks
to this national oversight, they can receive credit decisions almost
instantly, a mortgage in just a few days.

They take this national freedom of financial access for

granted. But it’s not a birthright. It’s the result of a series of laws
and court decisions going back almost a century and a half. 
The most important of those laws, by far, is the National Bank
Act of 1864. This visionary law—enacted just 12 years after our
company was founded—brought economic order out of a costly,
chaotic patchwork of state laws. It created uniform national
standards for safety and soundness governing an association of
national banks with national charters. When the telegraph was
the internet of its day, this law encouraged the free flow of capital
and labor across state lines in an increasingly mobile society. It
created the federal Office of the Comptroller of the Currency 
and gave it exclusive powers to examine national banks such as
today’s Wells Fargo Bank, N.A. States could still regulate state
banks. The federal government would regulate national banks.
Unfortunately, the last few years several states have tried to
turn back the clock and challenge the authority of the Comptroller
to set uniform federal law for national banking and to supervise,
exclusively, national banks and their operating subsidiaries.

One Nation. One Economy.
Consistent National Standards.

Here are just six recent rulings that each upheld the principle that
the National Bank Act preempts state attempts to regulate national
banks—whether a state does this by restricting their banking
activities or through regulatory supervision:

January 2006 The U.S. Supreme Court, in an 8-0 ruling, holds that relevant
federal banking laws do not deny national banks the right to have cases
heard in federal court merely because the bank does business in a partic-
ular state. Justice Ruth Bader Ginsburg wrote in the ruling that a lower court
ruling was wrong because national banks would be “singularly disfavored”
in their access to federal courts.

October 2005 Federal District Court rules in favor of a financial services
trade association. It blocks the New York Attorney General’s Office from
demanding information from national banks and investigating their lending
practices.The Court rules that the National Bank Act preempts state
investigations of this type over a national bank such as Wells Fargo Bank, N.A.,
leaving such oversight to national regulators such as the Office of the
Comptroller of the Currency and the Federal Reserve Board.

August 2005 Federal Ninth Circuit Court of Appeals rules in favor of 
Wells Fargo. It holds that the National Bank Act preempts state licensing
requirements and state supervisory authority over national bank subsidiaries.
The California Department of Corporations had tried to exercise authority
over Wells Fargo Home Mortgage, Inc., part of Wells Fargo Bank, N.A.

July 2005 A Federal Circuit Court of Appeals holds that the National Bank
Act preempts state regulation of a national bank’s operating subsidiary.
The case arose when a national bank and its mortgage subsidiary sued 
the State of Connecticut to avoid having to obtain a state license and
follow certain state laws.

February 2003 Federal Fifth Circuit Court of Appeals rules in favor of 
Wells Fargo and other national banks. It holds that the National Bank Act
preempts state laws that ban certain check-cashing fees to non-customers.

October 2002 Federal Ninth Circuit Court of Appeals rules in favor of 
Wells Fargo and other national banks. It holds that the National Bank Act
preempts local ordinances that try to stop national banks from charging
non-customers a convenience fee for using their ATMs. San Francisco 
and Santa Monica had ordinances to prohibit these fees.

9

Fortunately for our customers, every single one of these misguided
attempts has failed. When states and local governments announce
these lawsuits, they often attract significant media coverage. 
But when they’re adjudicated in the courts—which have
consistently ruled in favor of national banks on these issues—
the stories are buried or not reported at all.

2006: The Economy
This coming year will be challenging for the banking industry.
Asset yields do not seem to account for risk. Credit quality 
can’t get much better. The yield curve—the difference between
short-term and long-term interest rates—is likely to be flat, even
inverted. Banking competitors are, once again, relaxing loan
terms while not fully pricing for this risk. However, Wells Fargo’s
business model, now in place for nearly 20 years, focuses on
selling more products to existing customers and, therefore,
gaining both market share and wallet share. Perhaps that’s why
Wells Fargo produced consistent double-digit increases in both
revenue and earnings per share over the past 20, 15, 10 and 
five years, which included almost every economic condition 
a financial institution can face, not unlike those that may exist 
in 2006.

The Next Stage
Once again, we thank our 153,000 talented team members 
for their outstanding accomplishments and record results not 
just for this year but for the past 20 years. We thank our
customers for entrusting us with more of their business and for
returning to us for their next financial services product. We thank
our communities—thousands of them across North America—
that we partner with to make them better places to live and
work. And we thank you, our owners, for your confidence in
Wells Fargo as we begin our 155th year (March 1852).

A special thank you
Two members of our Board will retire this April after a total of
three decades of service to our company. 

Dr. Reatha Clark King, retired president
and board chair of the General Mills
Foundation, Minneapolis, Minnesota,
joined the Board 20 years ago when the
former Norwest Corporation had assets 
of just over $21 billion. Most recently she
served on the audit and examination, and
the finance committees.

Gus Blanchard, chairman of ADC
Telecommunications, Inc., Eden Prairie,
Minnesota, joined our Board 10 years 
ago, when we had assets of just over
$80 billion. Most recently, he served on 
the audit and examination, credit, and
governance and nominating committees. 

Their wise counsel and thoughtful guidance has helped our
company achieve remarkable growth during their tenures while
we built a reputation as one of the world’s most admired financial
services companies. Thank you, Reatha and Gus!

The “Next Stage” of success is just down the road—for our team
members, our customers, our communities and our stockholders.
It’s going to be a great ride!

Richard M. Kovacevich, Chairman and CEO

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How Do We Picture the 
Next Stage of Success?
Each of our senior leaders has a vision for the
future success of their businesses—how they
and their talented teams intend to partner to
grow market share and earn all of their customers’
business.As you can see on the following pages,
they’re unanimous on one key point—people 
as a competitive advantage.

(l to r): Howard Atkins, Senior EVP, Chief
Financial Officer; Dave Hoyt, Senior EVP,
Wholesale Banking; John Stumpf, President
and Chief Operating Officer; Mark Oman,
Senior EVP, Home and Consumer Finance

1 1

John Stumpf, President and Chief Operating Officer 
Years in financial services: 30

Star of Our Team: The Team!

“The way our team partners together, cares about each other, cares
about customers and solves their financial needs is rare in any
company.‘Culture’ makes it happen. It’s instinctive. It’s knowing the
right thing to do without having to be told. Financial services is very
complex. Our company has more than 80 businesses, so winning 
all our customers’ business is a team sport.The star of our team…
is the team!

We’re a circle not a hierarchy. At the center of the circle—our
customers. Alongside them—our customer-contact team members.
Farther out in the circle are our managers. At the outside of the circle
are senior managers like me. All of us partner together to do the
best job we can for our customers.

(l to r): Patti Hoversen,Technology
Information Group, Minneapolis,
Minnesota; Lori LoCascio, Wells Fargo
Phone Bank, Lubbock,Texas;
John Stumpf

If we grow the top line—revenue—the bottom line takes care 
of itself.We’re not just expanding our franchise, we’re expanding our
thinking.We’re not just adding new stores, we’re adding more team
members to serve and sell our customers and offer them the best
solutions. Our success is the result of habits and focused execution,
not random acts. Our people are our competitive advantage. Our
product is service. Our value-added is advice. Our customers come
to us because of what we know, so they can learn how to save time
and money. If we think like a customer and focus our team on
serving customers, then everyone benefits.”

1 2

Dave Hoyt, Senior EVP, Wholesale Banking 
Years in financial services: 28

Knowing How to Serve and Sell

“Our picture of success begins with talented people. Our customers
think of them first when they think of Wells Fargo. Diverse, seasoned
leaders who make decisions locally, close to the customer. Our
relationship managers make sure we completely understand the
customer’s needs before we offer any products to satisfy their
financial needs.The scope of our group is amazing—55 national
businesses, coast to coast, revenue the equal of a Fortune 350
company, as impressive an array of products and services as you’ll
find anywhere.

Team members: 15,000
Customers: 78,000
Locations: 600
Products per customer: 5.7

(l to r): Dave Hoyt; Patti Rosenthal,
Wholesale Services, San Francisco,
California; Ray Orquiola, Wholesale
University, San Francisco, California

We know how to serve and sell—we lead the company in
products per customer. For example, we deliver credit products
many different ways—a straight commercial loan, an asset-based
loan, a commercial mortgage loan, a franchisee loan, a loan for
equipment-finance or equipment-leasing, or a private placement 
or a syndicated credit. Almost three of every four of our customers
now use our internet portal—Commercial Electronic Office—to 
run their business more efficiently. It continues to be the best in 
the industry. Customers sign on just once to access more than 
40 products. Our new Desktop DepositSM service lets customers 
make deposits electronically from their own office, no more 
hauling paper to our banking stores.“

1 3

Mark Oman, Senior EVP, Home and Consumer Finance 
Years in financial services: 26

Turning Vision into Reality

“Our team serves virtually all the credit needs of individual
customers—mortgage loans, home equity loans, personal credit,
and consumer finance. So, success for us is satisfying all these needs
smoothly for our customers whether it’s through our stores, on the
phone or via the internet.We span all 50 states, Canada and parts of
the Caribbean, and we’re #1 nationally in many products, but our
market share is still relatively small.That gives us lots of opportunity
for future growth.

A mortgage is the largest, most complex financial transaction

most of our customers ever make. It’s also a core product—
customers value it so much they’re more likely to give us even 
more of their financial services business—not just home equity
loans and banking products but their investments and insurance.

Team members: 52,000
Customers: 12.3 million
Stores: 2,388

(l to r): Mark Oman; Phil Hall,
Home and Consumer Finance,
Des Moines, Iowa; Michael Levine,
Wells Fargo Home Mortgage,
Minneapolis, Minnesota

We’ve proven this works: cross-sell among our mortgage customers
has grown about 30 percent a year for the last several years. Our
mortgage business is the Company’s second largest source of
checking accounts and new credit card customers. Our group
accounts for almost two of every three of Wells Fargo’s new
customers.We’ll be even more successful when we can earn 
more business from our consumer finance customers.

We service the mortgage and home equity loans of more than
five million households.That’s a monthly relationship that positions
us to be there when they need their next financial product.We also
have to be best at managing risk.We can’t avoid all risk and still
make a profit. It’s how well we manage interest-rate risk, credit risk,
operations risk and compliance risk that makes the difference.”

1 4

Howard Atkins, Senior EVP, Chief Financial Officer 
Years in financial services: 31

Consistency

“Our financial success begins with our time-tested business model.
More than 80 businesses.We cover virtually every facet of financial
services.This diversity gives us 80 different ways to grow, helps us
manage the risk of unforeseen changes in the economy or financial
markets, and helps us earn more business from our customers
wherever they are in their financial life cycle. Success for us also
means excelling at managing risk in asset quality, interest rates,
accounting and operations, and capital.

Our credit ratings are very high. Our approach to risk has always

been very disciplined.We don’t take unacceptable risks even if 
some competitors are willing to do so.We’re consistent—with our
customers and with Wall Street. As good as our business model and
track record is, however, our strong and consistent financial results
cannot happen without…great people! I believe we have the best
in the industry.”

Team members: 1,200
Finance, Corporate Development,
Investor Relations, Treasury,
Corporate Properties, Investment
Portfolio, Controllers

(l to r): Howard Atkins; Nancy Lee,
Investor Relations, San Francisco,
California; Cindy Garcia, Corporate
Properties, Phoenix, Arizona

1 5

Carrie Tolstedt, Regional Banking
Years in financial services: 20

Clyde Ostler, Private Client Services (PCS), Internet Services 
Years in financial services: 35

Energized, Diverse, Caring

Great Service Every Time

“Our success begins with our great team.When our diverse and
caring team is doing what they do best, they connect with our
customers to create a special relationship that lasts a lifetime. Our
engaged team is the link between our vision and the customer
experience. Supported by talented leaders in our local markets,
our team responds quickly to their customers, on the spot, doing
what’s right for them.They know their stores, their customers and
communities better than anyone.

We develop tools centrally to support our team—training,

measurement, marketing, reporting, products and systems.We want
to earn 100 percent of our customers’ business by partnering with
other teams, such as Home Mortgage, Private Client Services and
Wells Fargo Financial. Our customers are at the center of everything
we do. Our team is our competitive advantage.”

“Our picture of success for Private Client Services is very simple—
exceptional service for each client every time.We start with the
client’s aspirations, goals, and the legacy they want to leave for future
generations. Our value-added is our financial advice.

Our team of professionals should understand our clients’financial
needs so well—and deliver such great service—that they will want
to bring all their business to Wells Fargo. Partnering with our banking
store teams, we provide investment and insurance services by
putting our customers’ needs first, and giving them great, individual
service and advice that distinguishes us from our competitors.
We’re rated America’s best internet bank, but we measure
internet success by what our customers tell us—and they tell us
they appreciate the convenience and benefits of wellsfargo.com 
by giving us more of their business.”

Team members: 51,000
Households: 10.3 million
Stores: 3,120 (92 opened in ’05)
Products per customer: 4.8

(l to r): Carrie Tolstedt; Joey Davis,
Regional Banking, Omaha,
Nebraska; Laurie Doretti, Regional
Banking, Scottsdale, Arizona

Team members: 8,000
PCS clients: 820,000
Active online consumers: 7.1 million
#1 consumer internet bank

(l to r): Katie Kellen, PCS,
Denver, Colorado; Clyde Ostler;
Lisa Robinson, Internet Services,
San Francisco, California

1 6

Mike James, Diversified Products 
Years in financial services: 33

Trusted Advisors

“We’re a diverse group of businesses that share one vision 
for success—to help our team members and customers 
achieve their goals.

For team members, this means knowing how their work
connects to the Wells Fargo vision, knowing they have the tools,
work environment and partnering spirit to go as far as their talent
and skill can take them. For customers, it means helping them
achieve financial success.

Having the right products and services is important, but 
to satisfy all our customers’ financial needs we have to build
relationships with them, as trusted advisors, so they’ll want to 
give us all their business.”

Pete Wissinger, Insurance
Years in financial services: 30

Insurance: Core Product

“To succeed as an insurance provider we must be consistently
superior in helping customers identify their specific risks,
understand their insurance choices, select cost-effective protection,
and be comfortable with their choice. Success in all of these helps
them, and us, be financially successful.

Like checking, investments and a mortgage, insurance is a core
Wells Fargo product: when customers buy it from us they’re more
likely to buy more products from us.That’s why we’re a full-service
provider of insurance solutions through our insurance agencies,
banking stores, phone, mail and internet.

We’re the world’s fifth largest insurance brokerage company,

and America’s largest crop insurance provider—but we have
unlimited potential for growth and more success. Only four percent 
of our banking customers buy their insurance through us!”

Team members: 5,000
#1 U.S. small business lender
#2 U.S. debit card issuer
Student loan customers: 1 million

(l to r): Ciony Catangui, Education
Finance Services, Sioux Falls,
South Dakota; Danny Ayala, Global
Remittances,Concord,California;
Mike James

Team members: 2,000
Customers: 300,000
World’s 5th largest insurance broker
#1 U.S. crop insurer
#1 bank-owned insurance agency

(l to r): Pete Wissinger; John Tebbs,
Rural Community Insurance Services,
Winchester, Kentucky; Paul Gauro,
Wells Fargo Insurance, Minneapolis,
Minnesota

1 7

Iris Chan, Commercial Banking
Years in financial services: 30

Tim Sloan, Specialized Financial Services 
Years in financial services: 21

Growing with Customers

Ringing the Bell

“Our business is all about relationships.If we earn our customers’trust
then they’ll rely on us as their financial institution and we can earn all
their business.We offer valued advice to deepen every relationship, to
help every customer be financially successful. Relationship managers
are key in building successful partnerships. Our talented team of
bankers is trained and equipped with extensive product knowledge.

We know our customers well.We listen and respond by

customizing specific solutions tailored to each customer’s financial
needs.We anticipate challenges and design solutions they may not
have even thought about.The more they value our relationship, the
more resources we can provide them—credit for their operations,
a term loan for capital expenditures or acquisitions, investment
alternatives, insurance solutions, or treasury management.When 
our customers succeed, we succeed.”

“We’re a diverse, complex group—22 businesses and 150 locations
nationwide. Our team members do everything from making loans
and leases to investing in securities and providing capital markets
advice.Our customers range from tribal governments and local school
districts to real estate developers and Fortune 1000 companies.

Our picture of success: understand our customers’ businesses
better than anyone else and offer them great ideas and sophisticated
solutions so they can be more successful.We ring the bell when we
help create value for them.”

Team members: 1,100
Customers: 8,200
#1 financial services provider 
to middle-market companies in
western U.S.

(l to r): Richard Gan, Commercial
Banking, Austin,Texas; Iris Chan;
Gary Dyshaw, Commercial Banking,
St. Paul, Minnesota

Team members: 1,800
Customers: 33,000
Assets: $30 billion

(l to r): Alex Idichandy, Corporate
Banking, Atlanta, Georgia;
Kristine Netjes, Media Finance,
Minneapolis, Minnesota;
Tim Sloan

1 8

Mike Niedermeyer, Asset Management 
Years in financial services: 22

Results

Peter Schwab, Asset-Based Lending
Years in financial services: 30

Staying Flexible

“Success happens when we deliver terrific results for our clients 
and help them meet their investment goals.When we do that, they
entrust us with even more of their money.The more high quality
investment choices we offer—such as more funds that carry 4-star
or 5-star ratings from Morningstar and those top-ranked by Lipper
—the more successful we are.

“In our group, definitions of success are as varied as the wide 
range of business customers we serve.They look to us to give 
them alternatives to cash flow loans that help them achieve their
objectives, and the financial flexibility they need to move from 
one phase to the next in the life cycle of their business.

Success for us is providing this flexibility but balancing the

For us, great service is a given.Successful investment management

is the result of our talented team delivering superior performance.”

common sense of a lender with the innovative spirit of an
entrepreneur.”

Team members: 3,300
Customers: 32,000
Assets managed: $219 billion
17th largest U.S. mutual fund
company

(l to r): Mike Niedermeyer;
Tom Hooley, Institutional Trust,
Minneapolis, Minnesota; James
Alexander, Institutional Brokerage
and Sales, Chicago, Illinois

Team members: 1,100
Customers: 1,200
Among top U.S. asset-based lenders

(l to r): Peter Schwab; Eileen 
Quinn, Wells Fargo Foothill, Boston,
Massachusetts; Paz Hernandez,
Wells Fargo Foothill, Los Angeles,
California

1 9

Dave Zuercher, International, Correspondent Banking, Insurance 
Years in financial services: 36

Larry Chapman, Real Estate 
Years in financial services: 32

Making the Complex Simple

People First

“Success means helping our domestic customers succeed wherever
they do business in the world—to grow their earnings, seize global
opportunities, and be their one-stop shop through our internet
portal, Commercial Electronic Office.

We can open bank accounts for them in 66 countries, facilitate

trade in 80 countries, and help reduce currency risk, payment
processing risk, regulatory risk, and cultural risk.We succeed when 
We Make the Complex Simple®!”

“For our team—even before real estate and credit—people come
first.That’s what creates success for our customers, our communities,
Wells Fargo and our stockholders.

We work with our partners across Wells Fargo to develop creative

financial solutions—such as flexible acquisition, re-hab and
construction loans—to help our customers build communities that
provide people with housing, offices, factories, warehouses, schools,
stores, shopping, recreation, lodging and jobs.”

Team members: 5,000
Customers: 2,300
Includes Foreign Exchange,Treasury
Management,Wells Fargo HSBC Trade Bank

(l to r): Lillie Axelrod, Acordia,
Atlanta,Georgia; Dave Zuercher;
Sara Wardell-Smith,
International Group,
San Francisco, California

Team members: 360
Customers: 485
One of U.S.’s leading lenders 
to developers and investors

(l to r): Larry Chapman;
Debora Welsh, Real Estate, Atlanta,
Georgia; Juan Carlos Wallace,
Real Estate, San Francisco, California

2 0

Cara Heiden and Mike Heid, Mortgage 
Years in financial services: 25 and 26

Home and Heart

“Our mission is homeownership. Our team members believe
passionately in that mission.They live it every day.They believe and
know that homeownership provides a rich, stable foundation upon
which to achieve personal and financial success. It’s the primary
source of financial net worth for most American households.They
know that working together, we can help people reach their
personal and financial goals—through homeownership.

We’re privileged to work in a business that helps people build
wealth and provide a safe, secure environment for their families.
Businesses measure success with numbers and so do we—but our
most important measure is how we feel every time we know we’ve
helped someone achieve the dream of homeownership.That’s how
we picture success. It comes from the home and from the heart.”

Team members: 28,000
Customers: 5.7 million
#1 U.S. retail mortgage originator 
#2 U.S. mortgage servicer

(l to r): Christiaan Lidstrom, Wells Fargo
Home Mortgage, Des Moines, Iowa;
Cara Heiden; Patrick Carey, Wells Fargo
Home Mortgage, Fort Mill, South
Carolina; Mike Heid

2 1

Tom Shippee, Wells Fargo Financial 
Years in financial services: 32

Doreen Woo Ho, Consumer Credit, Corporate Trust 
Years in financial services: 32

Serving and Selling

Right Solutions

“Our business model has changed profoundly the last few years.So has
our picture of success.We’ve moved from offering small, unsecured
loans to larger, secured loans, auto loans and first mortgage products
—and we’ve expanded credit card offerings to our best customers.

To be more efficient and give our customers faster service, we’ve

freed up our store team members to spend most of their time
serving and selling to customers—we now score all our loans
electronically and collect all payments centrally. Our goal: common
where possible, custom where it counts.

These fundamental changes in our business model have driven
unprecedented growth for Wells Fargo Financial—19 percent annual
compound growth in receivables for the last six years—but they’ve
also reduced our cost per loan which helps us lower interest rates
for customers.”

“Our success starts with attracting, keeping and growing the 
best team of professionals in financial services.We’ve built a high-
performing business model based on many partnerships.This allows
us to deliver our products and services through our banking stores,
mortgage stores,Wells Fargo Financial, wellsfargo.com, direct mail,
telesales, Wells Fargo Phone Bank centers, brokers and correspondents.

We listen to and educate customers.We guide them to the 
home equity and personal credit solutions that help them succeed
financially with smart management of their home asset and
personal credit. Our innovative products and solutions sustain our
lead in market share and earning more business from loyal
customers helps grow it.”

Team members: 21,000
Customers: 6.7 million
Stores: 1,307
One of North America’s premier
consumer finance companies

(l to r): Stephanie D’Itri, Wells Fargo
Financial Canada Corporation,
Mississauga, Ontario; Susan Hack,
Auto Finance, Chester,
Pennsylvania; Tom Shippee

Team members: 6,000
Households: 2.4 million
#1 home equity lender, personal
credit provider in U.S.

(l to r): Doreen Woo Ho; Jody Bhagat,
Consumer Credit, San Francisco,
California; Tracy Schaefbauer,
Home and Consumer Finance,
Minneapolis, Minnesota

2 2

Promod Haque, Norwest Venture Partners 
Years in financial services: 15

John Lindahl, Norwest Equity Partners 
Years in financial services: 39

Dedicated Partners

Resourceful, Approachable

“We’ve partnered with entrepreneurs for 45 years to build great
technology businesses.We pride ourselves on doing whatever 
it takes to help them build leading companies—facilitating
customer and partner relationships for these companies, helping
entrepreneurs evolve their business strategies, or working with
CEOs to drive their recruiting processes. If our portfolio companies
are successful, then we’re successful.What characterizes this
success? Extreme dedication to these entrepreneurs. Deep
operating experience. High integrity. And, a strong network of
domestic and international relationships.”

“Our success is built on strong partnerships. Strong partnerships 
with our portfolio companies. Strong partnerships with experienced
management teams to acquire leading middle-market companies.
To these relationships our investment professionals bring significant
resources to help management grow their business—including
adequate capital to grow organically and by acquisition.We can
supplement the company’s management team, provide operating
expertise, and, when we exit the investment, guidance to maximize
shareholder value. Our success, built on our 45-year history, requires
skill, ability and integrity — the skill to recognize great companies,
the ability to offer valuable expertise, the integrity to be resourceful,
resilient and reliable partners.We succeed when, during our time as
owners, the investors and our management partners create an even
better company.”

Early stage investments in information
technology including semiconductor
and components, systems, software,
services and consumer/internet
technologies.

Invests in management buyouts,
recapitalizations, and growth financing
for middle-market companies; one of
oldest private equity firms in U.S.

2 3

Picturing the Next Stage of Success
for Our Communities
Our picture of success for our communities begins with our team
members.They know their cities, towns and neighborhoods
better than anyone else because they live and work there—so
they’re the major voice in deciding how Wells Fargo responds to
the distinct needs of their own community.We want them to care
as much about their community’s quality of life as they do about
their business’s bottom-line because the two are related. A report
on our achievements in corporate citizenship for 2005 is available
at www.wellsfargo.com/about/csr.

St. Paul, Minnesota
Once a polluted industrial site,
these 200 acres now are home to
indigenous plants and animals.

Duane Ostlund,
Business Banking Manager

2 4

Cleaning Up Polluted Land

Eleven years ago, the Phalen Corridor was an environmental mess—
11 contaminated industrial sites covering 200 acres in a distressed
community on the east side of St. Paul, Minnesota.Wells Fargo and
60 other public and private organizations came together to restore
Phalen Corridor.The result: today it’s a thriving neighborhood with
parks, wetlands, new homes, retailers and jobs.

Wells Fargo team members Duane Ostlund (opposite page) and

Judy Chapman serve on the Phalen Corridor Steering Committee.
Thanks to their leadership, hundreds of hours volunteered by more
than 30 other team members, and thousands of dollars in corporate
contributions, the Phalen Corridor is now a revitalized community
with 19 new businesses, 2,100 new jobs and 1,100 new homes.

“This is a great example of tremendous results that can be achieved
through a public, private and community partnership,” said Ostlund.

As part of the extensive environmental cleanup,Wells Fargo
helped restore Ames Lake wetlands, once filled-in with asphalt and
used as a parking lot.Today Ames Lake is a habitat for hundreds of
indigenous plants and animals.

Other examples of Wells Fargo’s commitment to the environ-

ment include:

• A 10-point commitment to more effectively integrate

environmental responsibility into our business practices.

• A $1 billion lending, investment and other financial commitment

target for environmentally-beneficial businesses.

• Reducing in paper, energy and water consumption through

services such as online statements and e-bills.

• Promoting environmental responsibility for team members
through an awareness campaign called “everyday actions.”

2 5

Since 1993, the Wells Fargo Housing
Foundation has teamed up with 
hundreds of local housing non-profits
such as Rebuilding Together and Habitat
for Humanity to help make the dream of
homeownership a reality for low-income
families.The Foundation, through grants 
and the volunteerism of Wells Fargo team
members, has helped build or renovate 
more than 1,900 homes.

Who Do You Turn to When the Roof Leaks?

The dream of living in a clean, warm, safe home can be a challenge
for homeowners who are low-income, elderly or who have
disabilities.Who do they turn to if the roof leaks or a handrail
breaks? Over the past nine years, thanks in part to Wells Fargo’s
partnership with Rebuilding Together, many seniors and families are
now living independently and comfortably in their own homes.
Wells Fargo has contributed over $650,000 and hundreds of team
member volunteer hours to Rebuilding Together in 27 cities.

Last April, a platoon of more than 20 Wells Fargo team members

in Oklahoma City, Oklahoma, descended upon 10 houses on
National Rebuilding Day for a hands-on renovation project.They
helped install windows, fix porches, paint, and add grab-bars and
railings.“Everyone deserves to live in their own home,”said
Wells Fargo team member Shelley Pruitt, board member for the
local chapter of Rebuilding Together.“We’re fortunate to help
improve the quality of life for residents in our community.”

Oklahoma City, Oklahoma
As the nation’s #1 retail mortgage
originator, we work with non-profits
to help build and renovate homes
for low-income families.

(l to r): Wells Fargo Home
Mortgage team members
Chris Hunter, John Snodgrass and
Shelley Pruitt with homeowner
Clara Myers (second from left)

2 6

Engaging Parents in Education

The Economics of Life

Fifth grader Lucia (below), who attends Willard Intermediate School in
Santa Ana, California, probably wouldn’t be reading the American
classic “Tom Sawyer”if it weren’t for Wells Fargo team member
Gabriela Cachua, Regional Banking, Orange County, California.
She’s just one of the eight volunteer mentors who visited the school
every week for a 10-week Reading Club.

Two years ago,Wells Fargo connected with the Santa Ana
Foundation to help out with Avanzando Familias Program, which
engages parents in their child’s education to improve student
academic performance.Mentors also teach students and their parents
about budgeting, the importance of saving, bank accounts, and credit
through Wells Fargo’s financial literacy curriculum, Hands on Banking®.
More than 5,000 team members have been trained to teach the
Hands on Banking curriculum, available in both English and Spanish,
in schools and community groups (handsonbanking.com).

“It is never too early, or too late, to learn—whether it’s about

enjoying a new book, or the basics of banking,”said Cachua.

“Stay in school and you’ll be more successful on the job.” That’s been
the message to eighth grade students for the past several years
during Junior Achievement’s Job Shadow Day. Students interested
in learning more about careers in banking visit a Wells Fargo store in
Colorado Springs, Colorado to see a typical day in the banking world
up close. More importantly, they learn about teamwork and how
math, problem solving and communication skills are used each day
on the job.

Wells Fargo has partnered with Junior Achievement for more

than 11 years and is one of the top three largest providers of
volunteers to Junior Achievement in the nation. In 2005, over 1,500
team members volunteered in 1,630 classrooms nationwide to
teach financial literacy, leadership skills, and life lessons such as 
self confidence and the importance of staying in school. First 
grader Sierra (below),Whittier Elementary School, participated in
Junior Achievement workshops with Wells Fargo team member
Doug Brewer last year.

Santa Ana, California
Seeking to increase student academic
performance by encouraging 
parents to be active participants 
in their child's education.

Wells Fargo team member and
mentor Gabriela Cachua 
and student

Colorado Springs, Colorado
Educating and inspiring young
people to become learners 
and leaders.

2 7

VolunteerWellsFargo!

Why spend time helping others? Just ask any of the several
thousand team members at Wells Fargo who volunteer in their
communities.They’ll say that every smile, hug and “thank you”
they receive makes it more than worthwhile. Every day, hundreds 
of team members across the country give their time, talent and
resources to improve the quality of life in their communities.
In 2005,Wells Fargo created a company-wide process 

to better manage and measure the company’s volunteer efforts.
VolunteerWellsFargo! is an internet-based tool that helps connect
team members with volunteer activities that match their interests
and time.They use it to find projects and recruit colleagues for
beach clean ups, Habitat for Humanity house builds, fun runs, and
tutoring projects, and to record their volunteer hours or board
membership activities.

Team members in Portland, Oregon use VolunteerWellsFargo!
to organize groups of volunteers to prepare and serve hot meals to
90 homeless individuals at Transition Projects Inc., a non-profit that

Portland, Oregon
Helping satisfy the basic needs of
the homeless as they transition 
to housing.

provides shelter and helps the homeless get back on their feet.
Team members (below, from left) Kellie Pearse, Mary Hills,
Denise Sandefur, Robin Thomas, Fe Dolor, Charlie Jones,
Michelle Trofitter and Karen Schmidt are among over 30 team
members who take turns volunteering every month to plan,
provide, prepare and serve meals at the shelter.

So far, over 20 percent of our team members have logged 
onto the VolunteerWellsFargo! website and over nine percent 
have recorded their hours.“This new tool will give us a better
understanding of how we make our communities even better
places to live and work,”said Tim Schreck, community support
manager.“It will also show us for the first time the incredible
quantity and quality of all our volunteer efforts, which we believe
are just as important if not more important than the $95 million 
our company contributed to non-profits this year.We can now 
track our progress toward becoming one of the top contributors 
in team member volunteerism in all of corporate America.”

2 8

3
9

5
9

2
8

3
8

6
6
$

03

02

01
Wells Fargo Contributions – 2005
(millions, cash basis)

04

05

Hurricane Katrina:
The “Next Stage”

Hurricane Katrina caused unprecedented devastation in the 
Gulf States. Our response to help our affected customers also 
was unprecedented:

• We allowed them to defer mortgage payments for an initial 

90 days, through November 2005.

• We then extended that mortgage deferral period another 

90 days, through February 2006.

• During those deferral periods, we suspended all late fees,
negative credit reports and collection calls for them.

• Using dedicated toll-free phone numbers, we helped 

affected customers with personal financial counseling to
determine the most reasonable payment solution after 
the deferral period ended.

Corporate America’s 10 Largest Givers–2004
(dollars in millions)

Johnson & Johnson

1. Wal-Mart Stores
2.
3. Altria Group
4. Citigroup
5. Ford Motor
6. Bank of America
7. Target
8. Exxon Mobil
9. Wells Fargo
10. Wachovia

Source: BusinessWeek 11/28/05

$188.0
121.8
113.4
111.3
109.8
108.0
107.8
106.5
93.0
81.7

Wells Fargo Receives Highest Possible
Rating for Community Reinvestment 

Wells Fargo Bank, N.A. received an “Outstanding”rating—the highest
rating possible, earned by less than one of every five national banks
—in its most recent Community Reinvestment Act examination by
the Office of the Comptroller of the Currency (OCC).The Bank met 
or exceeded community needs in areas such as affordable housing,
financial education and small business lending. For Wells Fargo,
community reinvestment is not just about meeting the requirements
of a law, it’s about helping our communities grow and prosper. It’s
just good business.We’d do it even if there was no CRA!

Here are just some of the more than 
15,000 non-profits we supported in 2005:

• Residents of Alabama, Louisiana and Mississippi could make 

Arts

free withdrawals from any Wells Fargo ATM, nationwide through
year-end 2005, whether or not they had a Wells Fargo account.

• We increased the daily spending limit for our ATM and Check

Card customers in affected areas of those states.

• Our affected small business customers could get emergency
increases in their credit lines, bridge loans, term loans, credit
protection, deferred loan payments and fee waivers.

• We deferred credit card payments for affected customers

through year-end 2005, waived over-limit, late, or non-sufficient
funds fees, and suspended collection calls and negative 
credit bureau reporting.

• Our Company and team members contributed a total 

of $1.5 million to the American Red Cross and United Way
Hurricane Katrina Relief Funds.

Santa Rosa, California – $3.75 million in financial support over 
10 years. Wells Fargo provided a grant to the Luther Burbank Center
for the Arts to help renovate and operate the 140,000 square foot
art and performance venue. Greg Morgan, community banking
president, serves on the board.

Des Moines, Iowa – $1.2 million in financial support and 56 prints 
by American artists to the Des Moines Art Center.The project 
is one reason Wells Fargo was recognized as one of the “Ten Best
Companies Supporting the Arts in America”by the New York-based
Business Committee for the Arts.

Billings, Montana – 33 years as lead sponsor of Symphony in the
Park, a free cultural event for the community showcasing the Billings
Symphony and other local musicians. Last year 55 team members
helped staff the event.

Lincoln, Nebraska – For the second year in a row, Wells Fargo
sponsored Celebrate Lincoln, an outdoor cultural event featuring
live music, dancing, arts and crafts, and food from around the globe.
Over 40 Wells Fargo team members volunteered at the event.

2 9

Community Development

Environment

Anchorage, Alaska – $100,000 grant for affordable housing
through the Wells Fargo Housing Foundation’s seventh annual
Focus Communities Initiative.Wells Fargo team members raised 
an additional $1,400 for Cook Inlet Housing Authority.

Oakland, California – $6 million investment in the East Bay Asian
Local Development Corporation for Preservation Park, a renovated
Victorian-style business park that provides affordable office space 
to non-profits facing eviction.

Pueblo, Colorado – 35 home improvement projects. Wells Fargo
partnered with NeighborWorks, a non-profit that provides affordable
housing, education and down payment assistance.Team member
Brad Ahl led a group of co-workers to help paint the trims and
garages of 35 homes during their annual Operation Paintbrush event.

Mission, South Dakota – $125,000 to help families of the Rosebud
Sioux Tribe.Wells Fargo team members are working with Habitat for
Humanity to build five homes on the Rosebud Indian Reservation.
Team member Samantha Keller used the company’s new online
tool, VolunteerWellsFargo!, to recruit over 75 volunteers.

Austin,Texas – $20,000 so far to help 10 families buy first homes.
Wells Fargo supports the Austin Area Urban League’s new down
payment assistance program. Low-income individuals who complete
a free, monthly workshop receive $2,000 in down payment assistance.

Brigham City, Utah – $17,500 grant and eight new homes. Wells Fargo
provided a grant to the Neighborhood Nonprofit Housing Agency
for affordable housing.Wells Fargo team members volunteered
every Saturday for seven weeks to help build homes.

Richmond,Virginia – 700 African American adults attended a free
workshop on practical approaches to financial management,
including homeownership and saving for retirement.This was one
of 23 wealth-building seminars held around the country in 2005.

Education

Phoenix, Arizona – Every week, two dozen Wells Fargo team members
visit students at Lowell Elementary School as part of the Big Brothers
and Big Sisters “Lunch Buddy”mentoring program.Team members
also raised $15,000 to renovate the school’s playground.

Fort Wayne, Indiana – For the tenth year in a row, Wells Fargo
sponsored the YMCA Celebration of Youth event. Every year eight
students receive a $700 college scholarship from Wells Fargo in
honor of their community involvement activities.

Las Vegas, Nevada – $50,000 to teachers in 17 schools. Wells Fargo’s
“Grant a Wish for Your School”program awarded up to $3,000 each
to teachers across the state for special classroom projects focused
on financial literacy, math, technology and careers.

Chester, Pennsylvania – 720 backpacks and $5,000 grant. Team
members from Wells Fargo Auto Finance partnered with the Junior
League to kick off the school year in style.Team members visited
Columbus Elementary School and gave each student a backpack
filled with school supplies.

Milwaukee,Wisconsin – A decade of support. Wells Fargo worked
with the Greater Milwaukee Committee and other business leaders
to create the School Partnership Program.The program helps
prepare young people for their future by teaching them healthy
financial habits and other life-skills. During the past 10 years, over
100 team members have volunteered.

3 0

San Francisco, California – Energy consumption reduced by 
20 percent at Wells Fargo’s buildings throughout California since
2001.Wells Fargo modernized the energy management technology
at its headquarters building and earned the Energy Star Award 
from the Environmental Protection Agency for being among the 
top 10 percent of the nation’s most energy-efficient buildings.

Santa Ana, California – For the second year, Wells Fargo participated
in the California Coastal Commission’s Coastal Cleanup Day.Thirty-
two team members helped clean up two miles of coastline, picking
up over 50 bags of trash and debris.

Beaverton, Oregon – 15,000+ red wiggler worms are helping 
reduce and recycle waste at Wells Fargo’s William Barnhart Center
(operations and customer service).The “worm ranch”residents 
eat up to 20 pounds of fruits, vegetables, coffee grounds and 
other leftovers every day from the cafeteria, and their castings are
recycled for fertilizer.

Human Services

Los Angeles, California – $20,000 grant and seven school makeovers.
240 Wells Fargo team members helped celebrate Mayor Villaraigosa’s
100th day in office by lending a hand during a “Day of Service.”
Volunteers helped seven local schools get a much-needed face lift
by planting flowers, cleaning up graffiti and painting classrooms.

Boise, Idaho – 114 computers for K-12 students thanks in part to a
donation from Wells Fargo to Computers for Kids, a non-profit that
upgrades computers for children in need. Fourteen Wells Fargo
team members volunteered to deliver the computers.

Minneapolis, Minnesota – $50,000 to help the developmentally
disabled become more independent. Team member Gary Johnson
won the Wells Fargo Volunteer Service Award on behalf of Reach 
for Resources, where he volunteers and serves on the board. He is
one of 164 team members awarded $321,000 in grants in 2005 
for their designated non-profits.

McKinney,Texas – 2,000 hurricane evacuees sheltered. When 
Jack Haye of Wholesale Banking learned that his community 
would be providing shelter to Hurricane Katrina evacuees, he
stepped up to the plate. Haye managed a shelter and helped
coordinate hundreds of volunteers to collect and distribute
donations and provide disaster relief services.

Seattle,Washington – Two years of board participation and $25,000
in financial support. Wells Fargo donated a 9,000 square foot former
banking store to Domestic Abuse Women’s Network for its office
space.Team member Jennifer Politakis serves as a board member.

Casper,Wyoming – $33,500 raised for United Way. Wells Fargo regional
president Michael Matthews rallied team members to donate funds
during the annual Community Support Campaign. Each donation
earned them a two-foot section of duct tape which was later used
to tape community bank president, Tom Kugler, to a wall.

Newfoundland, Canada – 1 new laptop. When Wells Fargo Financial
Canada team member Valerie Clarke heard about a bedridden
young man with Crohn’s disease whose computer broke down,
she teamed up with Lion’s Club to give him a new laptop.

Board of Directors

J.A. Blanchard III 1, 2, 4
Chairman
ADC Telecommunications
Eden Prairie, Minnesota
(Communications equipment,
services)

Lloyd H. Dean 1, 3
President, CEO
Catholic Healthcare West
San Francisco, California
(Health care)

Susan E. Engel 2, 3, 5
Chairwoman, CEO
Lenox Group Inc.
Eden Prairie, Minnesota
(Specialty retailer)

Enrique Hernandez, Jr. 1, 3
Chairman, CEO
Inter-Con Security Systems, Inc.
Pasadena, California
(Security services)

Robert L. Joss 2, 3
Philip H. Knight 
Professor and Dean
Stanford U. Graduate 
School of Business
Palo Alto, California
(Higher education)

Reatha Clark King 1, 3
Retired President, Board Chair
General Mills Foundation
Minneapolis, Minnesota
(Corporate foundation)

Donald B. Rice 4, 5
Chairman, President, CEO
Agensys, Inc.
Santa Monica, California
(Biotechnology)

Richard M. Kovacevich
Chairman, CEO
Wells Fargo & Company
San Francisco, California

Richard D. McCormick 3
Chairman Emeritus
US WEST, Inc.
Denver, Colorado
(Communications)

Cynthia H. Milligan 1, 4
Dean
College of Business
Administration
University of Nebraska –
Lincoln
(Higher education)

Philip J. Quigley 1, 2, 4
Retired Chairman,
President, CEO
Pacific Telesis Group
San Francisco, California
(Telecommunications)

Judith M. Runstad 1, 3
Of Counsel
Foster Pepper & 
Shefelman PLLC
Seattle, Washington
(Law firm)

Stephen W. Sanger 3, 5
Chairman, CEO
General Mills, Inc.
Minneapolis, Minnesota
(Packaged foods)

Susan G. Swenson 1, 2, 4
Former COO
T-Mobile USA, Inc.
Bellevue, Washington
(Wireless communications)

Michael W. Wright 2, 4, 5
Retired Chairman, CEO
SUPERVALU INC.
Eden Prairie, Minnesota
(Food distribution, retailing)

Standing Committees: 1. Audit and Examination; 2. Credit; 3. Finance; 4. Governance and Nominating; 5. Human Resources

Executive Officers and Corporate Staff

Richard M. Kovacevich, Chairman, CEO *

Paul R. Ackerman, Treasurer

David J. Munio, Chief Credit Officer *

John G. Stumpf, President, COO *

Senior Executive Vice Presidents

Howard I. Atkins, Chief Financial Officer *

David A. Hoyt, Wholesale Banking *

Mark C. Oman, Home and Consumer Finance *

* “Executive officers” according to Securities 

and Exchange Commission rules

Patricia R. Callahan, Compliance and 
Risk Management *

Bruce E. Helsel, Corporate Development

Lawrence P. Haeg, Corporate Communications

Ellen Haude, Investment Portfolio

Laurel A. Holschuh, Corporate Secretary

Richard D. Levy, Controller *

Kevin McCabe, Chief Auditor

Avid Modjtabai, Human Resources *

Michael J. Loughlin, Deputy Chief Credit Officer

Victor K. Nichols, Technology

Eric D. Shand, Chief Loan Examiner

Diana L. Starcher, Customer Service, Sales, Operations

Robert S. Strickland, Investor Relations

James M. Strother, General Counsel,
Government Relations *

Carrie L.Tolstedt, Regional Banking *

3 1

Senior Business Officers

COMMUNITY BANKING

Regional Banking

Carrie L.Tolstedt

Regional Presidents

James O. Prunty, Great Lakes and Plains

Debra J. Paterson, Metro Minnesota

Norbert D. Harrington, Greater Minnesota

J. Lanier Little, Illinois, Michigan, Wisconsin

Carl A. Miller, Jr., Indiana, Ohio

Daniel P. Murphy, South Dakota

Peter J. Fullerton, North Dakota

Paul W.“Chip” Carlisle, Texas

George W. Cone, Heart of Texas

John T. Gavin, Dallas-Fort Worth

Glenn V. Godkin, Houston

Don C. Kendrick, Central Texas

Kenneth A.Telg, West Texas

Private Client Services/
Internet Services

Clyde W. Ostler

Jay Welker, Private Client Services

Regional Managing Directors

Anne D. Copeland, Northern California,

Central California, Nevada

Joe W. DeFur, Los Angeles Metro

James Cimino, Southern California,

Orange County, Arizona

Jeffrey Grubb, Washington, Oregon,

Idaho, Alaska

David J. Kasper, Colorado, Utah,

Montana, Wyoming

Russell A. Labrasca, Texas, New Mexico

David J. Pittman, Illinois, Iowa, Nebraska

Timothy N.Traudt, Minnesota,

North Dakota, South Dakota, Wisconsin,
Indiana, Ohio, Michigan

Tracey B. Warson, San Francisco Bay Area

Thomas W. Honig, Colorado, Montana,

Lance P. Fox, Credit Administration

Utah, Wyoming

Joy N. Ott, Montana

Robert A. Hatch, Utah

Matthew J. Lynett, Metro Denver

Donald R. Sall, Greater Colorado

Michael J. Matthews, Wyoming

H. Lynn Horak, Iowa, Nebraska

Kirk L. Kellner, Nebraska

J. Scott Johnson, Iowa

Laura A. Schulte, Western Banking

Michael F. Billeci, Greater San Francisco 

Bay Area

Nathan E. Christian, Southern California,

Border Banking

William J. Dewhurst, Central California

Felix S. Fernandez, Northern California

Shelley Freeman, Los Angeles Metro

Alan V. Johnson, Oregon

J. Pat McMurray, Idaho

Lisa J. Stevens, San Francisco Metro

Richard Strutz, Alaska

Robert D.Worth, California Business Banking

Patrick G.Yalung, Washington State

Kim M.Young, Orange County

Gerrit van Huisstede, Arizona, Nevada,

New Mexico

Kirk V. Clausen, Nevada

Gregory A. Winegardner, New Mexico

Mergers and Acquisitions

Jon R. Campbell

Business Banking Support Group

Timothy J. Coughlon

Marketing

Sylvia L. Reynolds

Diversified Products

Michael R. James

Marc L. Bernstein, Business Direct Lending

Louis M. Cosso, Auto Finance

Jerry E. Gray, SBA Lending

Michael T. Borchert, Payroll Services

Rebecca Macieira-Kaufmann,
Small Business Segment

Kevin A. Rhein, Wells Fargo Card Services

Daniel I. Ayala, Global Remittance Services

Edward M. Kadletz, Debit Card

Debra B. Rossi, Payment Solutions

Jon A. Veenis, Education Finance Services

HOME AND CONSUMER FINANCE

Mark C. Oman

Wells Fargo Home Mortgage

Michael J. Heid, Division President, Capital

Markets, Finance, Administration

Cara K. Heiden, Division President, National
Consumer Lending, Institutional Lending

Susan A. Davis, Centralized Retail/

Retail Administration

Michael Lepore, Institutional Lending

Consumer Credit

Doreen Woo Ho, President

Brian J. Bartlett, Corporate Trust

John W. Barton, Regional Banking/Personal

Credit Management

Scott Gable, Personal Credit Management

Meheriar M. Hasan, Direct to Consumer

Kathleen L. Vaughan, Equity Direct,

Institutional Lending

3 2

Wells Fargo Financial, Inc.

International and Insurance Services

Thomas P. Shippee, CEO, President

David J. Zuercher

Greg M. Janasko, Commercial Business

Peter J. Wissinger, President, CEO, Acordia, Inc.

David R. Kvamme, Consumer Business

Michael E. Connealy, Rural Community 

Gary D. Lorenz, Auto Business

Jaime Marti, Latin American Auto

Insurance Services

Neal Aton, Wells Fargo Insurance

Oriol Segarra, Latin American Consumer 

Ronald A. Caton, Global Correspondent Banking

and U.S. Hispanic

WHOLESALE BANKING

David A. Hoyt

Commercial Banking

Iris S. Chan

John C. Adams, Northern California

JoAnn N. Bertges, Western

Robert A. Chereck, Texas

Albert F. (Rick) Ehrke, Southern California

Mark D. Howell, Intermountain/Southwest

Paul D. Kalsbeek, Southeast

Richard J. Kerbis, Northeast

Peter P. Connolly, Foreign Exchange/
International Financial Services

Sanjiv S. Sanghvi, Wells Fargo HSBC Trade Bank

Asset-Based Lending

John F. Nickoll

Peter E. Schwab, Wells Fargo Foothill

Henry K. Jordan, Wells Fargo Foothill

Thomas Pizzo, Wells Fargo Century

Martin J. McKinley, Wells Fargo Business Credit

Jeffrey T. Nikora, Alternative Investment

Management

Eastdil Secured, LLC

Benjamin V. Lambert, Chairman

Edmund O. Lelo, Greater Los Angeles

Roy H. March, CEO

Perry G. Pelos, Midwest

John V. Rindlaub, Pacific Northwest

D. Michael Van Konynenburg, President

W. Jay Borzi, Managing Director

Asset Management

Michael J. Niedermeyer

Robert W. Bissell, Wells Capital Management

James W. Paulsen, Wells Capital 

Management

John S. McCune, Institutional Brokerage

Laurie B. Nordquist, Institutional Trust 

Karla M. Rabusch, Wells Fargo Funds

Wholesale Services

Stephen M. Ellis

Norwest Equity Partners

John E. Lindahl, Managing Partner

Norwest Venture Partners

Promod Haque, Managing Partner

Credit Administration

Thomas J. Davis, Real Estate

David J. Weber, Commercial/Corporate

Specialized Financial Services

Timothy J. Sloan

J. Edward Blakey, Commercial Mortgage 

David B. Marks, Corporate Banking,

Shareowner Services

John P. Hullar, Wells Fargo Securities

Jay Kornmayer, Gaming

Mark L. Myers, Real Estate Merchant Banking,

Homebuilder Finance

J. Michael Johnson, Financial Sponsors,

Leveraged, Media and Mezzanine Finance,
Distribution

John M. McQueen, Wells Fargo Equipment

Finance

John R. Shrewsberry, Securities Investment 

Real Estate

A. Larry Chapman

Charles H. Fedalen, Jr., Southern

California/Southwest

Shirley O. Griffin, Real Estate Portfolio Services

Christopher J. Jordan, Mid-Atlantic/

New England

Robin W. Michel, Northern California/Northwest

James H. Muir, Eastern/Midwest

Stephen P. Prinz, Central/Texas

Financial Review

34 Overview

38 Critical Accounting Policies

Earnings Performance

41
41 Net Interest Income
44 Noninterest Income
45 Noninterest Expense
45
Income Tax Expense
45 Operating Segment Results

46
46

Balance Sheet Analysis
Securities Available for Sale 
(table on page 71)
Loan Portfolio (table on page 73)

46
46 Deposits

47 Off-Balance Sheet Arrangements and

Aggregate Contractual Obligations

47 Off-Balance Sheet Arrangements,

Variable Interest Entities, Guarantees 
and Other Commitments

48 Contractual Obligations
48

Transactions with Related Parties

Risk Management

49
49 Credit Risk Management Process
49 Nonaccrual Loans and Other Assets
Loans 90 Days or More Past Due 
50
and Still Accruing
Allowance for Credit Losses 
(table on page 75)

51

52 Asset/Liability and 

Market Risk Management

Interest Rate Risk

52
52 Mortgage Banking Interest Rate Risk
54 Market Risk – Trading Activities
54 Market Risk – Equity Markets
Liquidity and Funding
54

56 Capital Management

57 Comparison of 2004 with 2003

Controls and Procedures

58 Disclosure Controls and Procedures

58

Internal Control over Financial Reporting

58 Management’s Report on Internal Control

over Financial Reporting 

59

Report of Independent Registered Public
Accounting Firm

Financial Statements

60 Consolidated Statement of Income

61 Consolidated Balance Sheet

62 Consolidated Statement of 

Changes in Stockholders’ Equity 
and Comprehensive Income

63 Consolidated Statement of Cash Flows

64 Notes to Financial Statements

112 Report of Independent Registered

Public Accounting Firm

113 Quarterly Financial Data

115 Glossary

33

This  Annual  Report,  including  the  Financial  Review  and  the  Financial  Statements  and  related  Notes,  has  forward-looking
statements, which may include forecasts of our financial results and condition, expectations for our operations and business, and
our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might
differ significantly from our forecasts and expectations due to several factors. Some of these factors are described in the Financial
Review  and  in  the  Financial  Statements  and  related  Notes.  For  a  discussion  of  other  factors,  refer  to  the  “Risk  Factors”  and
“Regulation and Supervision” sections of our Annual Report on Form 10-K for the year ended December 31, 2005, filed with
the Securities and Exchange Commission (SEC) and available on the SEC’s website at www.sec.gov.

Financial Review

Overview

Wells Fargo & Company is a $482 billion diversified financial
services company providing banking, insurance, investments,
mortgage banking and consumer finance through banking
stores, the internet and other distribution channels to con-
sumers, businesses and institutions in all 50 states of the 
U.S. and in other countries. We ranked fifth in assets and
fourth in market value of our common stock among U.S.
bank holding companies at December 31, 2005. When we
refer to “the Company,” “we,” “our” and “us” in this
Report, we mean Wells Fargo & Company and Subsidiaries
(consolidated). When we refer to “the Parent,” we mean
Wells Fargo & Company.

We had another exceptional year in 2005, with record
diluted earnings per share of $4.50, record net income of
$7.7 billion and solid market share growth across our more
than 80 businesses. Our earnings growth from a year ago was
broad based, with nearly every consumer and commercial
business line achieving double-digit profit growth, including
regional banking, private client services, corporate trust,
business direct, asset-based lending, student lending, consumer
credit, commercial real estate and international trade services.
Both net interest income and noninterest income for 2005
grew solidly from last year and virtually all of our fee-based
products had double-digit revenue growth. We took significant
actions to reposition our balance sheet in 2005 designed to
improve yields on earning assets, including the sale of $48 billion
of our lowest-yielding adjustable rate mortgages (ARMs),
resulting in $119 million of sales-related losses, and the 
sale of $17 billion of debt securities, including low-yielding
fixed-income securities, resulting in $120 million of losses.

Our growth in earnings per share was driven by revenue

growth, operating leverage (revenue growth in excess of
expense growth) and credit quality, which remained solid
despite the following credit-related events:

• $171 million of net charge-offs from incremental 
consumer bankruptcy filings nationwide due to a 
change in bankruptcy law in October 2005; 

• $163 million first quarter 2005 initial implementation 
of conforming to more stringent Federal Financial
Institutions Examination Council (FFIEC) charge-off
rules at Wells Fargo Financial; and

• $100 million provision for credit losses for our 
assessment of the effect of Hurricane Katrina. 

34

Our primary sources of earnings are driven by lending

and deposit taking activities, which generate net interest
income, and providing financial services that generate fee
income.

Revenue grew 10% from 2004. In addition to double-digit
growth in earnings per share, we also had double-digit growth
in average loans. We have been achieving these results not just
for one year, but for the past five, 10, 15 and 20 years. Our
total shareholder return the past five years was 10 times that
of the S&P 500®, and almost double the S&P 500 including
the past 10, 15 and 20 years. These periods included almost
every economic cycle and economic condition a financial
institution can experience, including high and low interest
rates, high and low unemployment, bubbles and recessions
and all types of yield curves – steep, flat and inverted. For us
to achieve double-digit growth through different economic
cycles, our primary strategy, consistent for 20 years, is to 
satisfy all our customers’ financial needs, help them succeed
financially and, through cross-selling, gain market share, 
wallet share and earn 100% of their business.

We have stated in the past that to consistently grow 
over the long term, successful companies must invest in their
core businesses and in maintaining strong balance sheets. 
We continued to make investments in 2005 by opening 92
banking stores, seven commercial banking offices, 47 mortgage
stores and 20 consumer finance stores. We continued to 
be #1 nationally in retail mortgage originations, home 
equity lending, small business lending, agricultural lending, 
consumer internet banking, and providing financial services
to middle-market companies in the western U.S.

LONG-TERM PERFORMANCE – TOTAL COMPOUND ANNUAL 
STOCKHOLDER RETURN (Including reinvestment of dividends)

21

21

11

12

17

9

5%

.5

5 years
(percent)

10
Wells Fargo Common Stock

15

20
S&P 500

25

20

15

10

5

0

-5

Our solid financial performance enables us to be one 
of the top givers to non-profits among all U.S. companies.
We continued to have the only “Aaa” rated bank in the 
U.S., the highest possible credit rating issued by Moody’s
Investors Service. 

Our vision is to satisfy all the financial needs of our 
customers, help them succeed financially, be recognized as
the premier financial services company in our markets and
be one of America’s great companies. Our primary strategy
to achieve this vision is to increase the number of products
our customers buy from us and to give them all the financial
products that fulfill their needs. Our cross-sell strategy and
diversified business model facilitate growth in strong and
weak economic cycles, as we can grow by expanding the
number of products our current customers have with us. At
year-end 2005, our average cross-sell set new records for the
Company – our average retail banking household now has 
4.8 products with us, up from 4.6 a year ago and our average
Wholesale Banking customer now has a record 5.7 products.
Our goal is eight products per customer, which is currently
half of our estimate of potential demand. 

Our core products grew this year: 
• Average loans grew by 10%;
• Average retail core deposits grew by 10% 
(average core deposits grew by 9%); and

• Assets managed and administered were up 11%.

We believe it is important to maintain a well controlled

environment as we continue to grow our businesses. We
manage our credit risk by maintaining prudent credit policies
for underwriting with effective procedures for monitoring and
review. We have a well diversified loan portfolio, measured
by industry, geography and product type. We manage the
interest rate and market risks inherent in our asset and liability
balances within prudent ranges, while ensuring adequate 
liquidity and funding. Our stockholder value has increased
over time due to customer satisfaction, strong financial results,
investment in our businesses and the prudent way we attempt
to manage our business risks. 

Our financial results included the following:

Net income in 2005 increased 9% to $7.7 billion from
$7.0 billion in 2004. Diluted earnings per common share
increased 10% to $4.50 in 2005 from $4.09 in 2004. Return
on average total assets was 1.72% and return on average
common equity was 19.57% in 2005, and 1.71% and
19.56%, respectively, in 2004.

Net interest income on a taxable-equivalent basis was
$18.6 billion in 2005, compared with $17.3 billion a year
ago, reflecting solid loan growth (other than ARMs) and a
relatively flat net interest margin. Average earning assets
grew 8% from a year ago, or 15% excluding 1-4 family first
mortgages. Our net interest margin was 4.86% for 2005,
compared with 4.89% in 2004. Given the prospect of higher
short-term interest rates and a flatter yield curve, beginning in
second quarter 2004, as part of our asset/liability management

strategy, we sold the lowest-yielding ARMs on our balance
sheet, replacing some of these loans with higher-yielding ARMs.
At the end of 2005, new ARMs being held for investment
within real estate 1-4 family mortgage loans had yields 
more than 1% higher than the average yield on the ARMs
sold since second quarter 2004.

Noninterest income increased 12% to $14.4 billion in
2005 from $12.9 billion in 2004. Double-digit growth in
noninterest income was driven by growth across our busi-
nesses, with particular strength in trust, investment and IRA
fees, card fees, loan fees, mortgage banking income and
gains on equity investments. 

Revenue, the sum of net interest income and noninterest

income, increased 10% to a record $32.9 billion in 2005
from $30.1 billion in 2004 despite balance sheet reposition-
ing actions, including losses from the sales of low-yielding
ARMs and debt securities. For the year, Wells Fargo Home
Mortgage (Home Mortgage) revenue increased $455 million,
or 10%, from $4.4 billion in 2004 to $4.9 billion in 2005.
Operating leverage improved during 2005 with revenue
growing 10% and noninterest expense up only 8%.

Noninterest expense was $19.0 billion in 2005, up 8%

from $17.6 billion in 2004, primarily due to increased 
mortgage production and continued investments in new
stores and additional sales-related team members. Noninterest
expense also included a $117 million expense to adjust the
estimated lives for certain depreciable assets, primarily building
improvements, $62 million of airline lease write-downs, 
$56 million of integration expense and $25 million for the
adoption of FIN 47. We began expensing stock options, 
as required, on January 1, 2006. Taking into account our
February 2006 option grant, we anticipate that total stock
option expense will reduce earnings by approximately 
$.06 per share for 2006.

During 2005, net charge-offs were $2.28 billion, or .77%
of average total loans, compared with $1.67 billion, or .62%,
during 2004. Credit losses for 2005 included $171 million of
incremental fourth quarter bankruptcy losses and increased
losses of $163 million for first quarter 2005 initial 
implementation of conforming to more stringent FFIEC
charge-off timing rules at Wells Fargo Financial. The provision
for credit losses was $2.38 billion in 2005, up $666 million
from $1.72 billion in 2004. The 2005 provision for credit
losses also included $100 million for estimated credit losses
related to Hurricane Katrina. The allowance for credit losses,
which consists of the allowance for loan losses and the
reserve for unfunded credit commitments, was $4.06 billion,
or 1.31% of total loans, at December 31, 2005, compared
with $3.95 billion, or 1.37%, at December 31, 2004.

At December 31, 2005, total nonaccrual loans were 

$1.34 billion, or .43% of total loans, down from $1.36 billion,
or .47%, at December 31, 2004. Foreclosed assets were
$191 million at December 31, 2005, compared with 
$212 million at December 31, 2004.

35

1.72% 1.71% 1.64%

On March 30, 2005, the FASB issued Interpretation No. 47,

The ratio of stockholders’ equity to total assets was
8.44% at December 31, 2005, compared with 8.85% at
December 31, 2004. Our total risk-based capital (RBC)
ratio at December 31, 2005, was 11.64% and our Tier 1
RBC ratio was 8.26%, exceeding the minimum regulatory
guidelines of 8% and 4%, respectively, for bank holding
companies. Our RBC ratios at December 31, 2004, were
12.07% and 8.41%, respectively. Our Tier 1 leverage ratios
were 6.99% and 7.08% at December 31, 2005 and 2004,
respectively, exceeding the minimum regulatory guideline of
3% for bank holding companies.

Table 1: Ratios and Per Common Share Data

Year ended December 31 ,
2003
2004
2005

PROFITABILITY RATIOS
Net income to average total assets (ROA)
Net income applicable to common stock to 

average common stockholders’ equity (ROE)

Net income to average stockholders’ equity
EFFICIENCY RATIO (1)

CAPITAL RATIOS
At year end:

Stockholders’ equity to assets
Risk-based capital (2)

Tier 1 capital
Total capital
Tier 1 leverage (2)
Average balances:

19.57
19.59

57.7

19.56
19.57

19.36
19.34

58.5

60.6

8.44

8.85

8.89

8.26
11.64
6.99

8.41
12.07
7.08

8.42
12.21
6.93

Stockholders’ equity to assets

8.78

8.73

8.49

PER COMMON SHARE DATA
Dividend payout (3)
Book value
Market price (4)
High
Low
Year end

44.0
$24.25

44.8
$22.36

40.7
$20.31

$64.70
57.62
62.83

$64.04
54.32
62.15

$59.18
43.27
58.89

(1) The efficiency ratio is noninterest expense divided by total revenue (net interest

income and noninterest income).

(2) See Note 25 (Regulatory and Agency Capital Requirements) to Financial

Statements for additional information.

(3) Dividends declared per common share as a percentage of earnings per 

common share.

(4) Based on daily prices reported on the New York Stock Exchange Composite

Transaction Reporting System.

Current Accounting Developments
On December 16, 2004, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting
Standards No. 123 (revised 2004), Share-Based Payment
(FAS 123R), which replaced FAS 123, Accounting for Stock-
Based Compensation, and superceded Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to
Employees. We adopted FAS 123R on January 1, 2006,
using the “modified prospective” transition method. The
scope of FAS 123R includes a wide range of stock-based
compensation arrangements including stock options, restricted

36

stock plans, performance-based awards, stock appreciation
rights, and employee stock purchase plans. FAS 123R requires
that we measure the cost of employee services received in
exchange for an award of equity instruments based on the
fair value of the award on the grant date. That cost must be
recognized in the income statement over the vesting period
of the award. Under the “modified prospective” transition
method, awards that are granted, modified or settled begin-
ning at the date of adoption will be measured and accounted
for in accordance with FAS 123R. In addition, expense must
be recognized in the income statement for unvested awards
that were granted prior to the date of adoption. The expense
will be based on the fair value determined at the grant date.
Taking into account our February 2006 option grant, we
anticipate that total stock option expense will reduce 2006
earnings by approximately $.06 per share.

Accounting for Conditional Asset Retirement Obligations –
An Interpretation of FASB Statement No. 143 (FIN 47). FIN
47 was issued to address diverse accounting practices that
developed with respect to the timing of liability recognition
for legal obligations associated with the retirement of tangible
long-lived assets, such as building and leasehold improvements,
when the timing and/or method of settlement of the obligations
are conditional on a future event. FIN 47 requires companies
to recognize a liability for the fair value of a conditional asset
retirement obligation when incurred if the liability’s fair value
can be reasonably estimated. We adopted FIN 47 in 2005
and recorded a $25 million charge to noninterest expense.
We continuously monitor emerging accounting issues,
including proposed standards issued by the FASB, for any
impact on our financial statements. We are currently aware
of a proposed FASB Staff Position (FSP) related to the
accounting for leveraged lease transactions for which there
have been cash flow estimate changes based on when income
tax benefits are recognized. Certain leveraged lease transac-
tions have been challenged by the Internal Revenue Service
(IRS). While we have not made investments in a broad class
of transactions that the IRS commonly refers to as “Lease-In,
Lease-Out” (LILO) transactions, we have previously invested
in certain leveraged lease transactions that the IRS labels as
“Sale-In, Lease-Out” (SILO) transactions. We have paid the
IRS the income tax associated with our SILO transactions.
However, we are continuing to vigorously defend our initial
filing position as to the timing of the tax benefits associated
with these transactions. If the draft FSP had been effective at
December 31, 2005, we would have been required to record
a pre-tax charge of approximately $125 million as a cumula-
tive effect of change in accounting principle. However, subse-
quent deliberations by the FASB could significantly change
the draft FSP, which, in turn, could affect our estimate and
the method of adoption. We will continue to monitor the
FASB’s deliberations regarding this proposal.

On August 11, 2005, the FASB issued for public 
comment an Exposure Draft that would amend FAS 140,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities. This Exposure Draft,
Accounting for Servicing of Financial Assets – An Amendment
of FASB Statement No. 140, would require that all separately
recognized servicing rights be initially measured at fair value,
if practicable. For each class of separately recognized servicing
assets and liabilities, this proposed standard would permit an
entity to choose from two subsequent measurement methods.
Specifically, an entity could amortize servicing assets and

liabilities in proportion to and over the period of estimated
net servicing income or servicing loss (effectively the existing
requirement in FAS 140) or an entity could report servicing
assets or liabilities at fair value at each reporting date with
any changes reported currently in operations. We expect this
guidance to be finalized and issued in early 2006. Based on
the guidance in the current Exposure Draft, it is likely that
we will adopt the fair value alternative upon issuance of 
the standard. We will continue to monitor this emerging
guidance in order to finalize our decision and determine 
the impact on our financial statements.

Table 2: Six-Year Summary of Selected Financial Data

(in millions, except
per share amounts)

INCOME STATEMENT
Net interest income
Noninterest income
Revenue
Provision for credit losses
Noninterest expense

Before effect of change in 
accounting principle (1)

Net income
Earnings per common share
Diluted earnings 

per common share

After effect of change in 
accounting principle

Net income
Earnings per common share
Diluted earnings 

per common share
Dividends declared
per common share

BALANCE SHEET
(at year end)
Securities available for sale
Loans
Allowance for loan losses
Goodwill
Assets
Core deposits (2)
Long-term debt
Guaranteed preferred beneficial

interests in Company’s
subordinated debentures (3)
Stockholders’ equity

2005

2004

2003

2002

2001

2000

% Change
2005/
2004

Five-year
compound
growth rate

$ 18,504
14,445
32,949
2,383
19,018

$ 17,150
12,909
30,059
1,717
17,573

$ 16,007
12,382
28,389
1,722
17,190

$ 14,482
10,767
25,249
1,684
14,711

$ 11,976
     9,005
20,981
1,727
13,794

$ 10,339
   10,360
20,699
1,284
12,889

$

7,671
4.55

$

7,014
4.15

$ 6,202
3.69

$

5,710
3.35

$

3,411
1.99

$

4,012
2.35

4.50

4.09

3.65

3.32

1.97

2.32

$

7,671
4.55

$

7,014
4.15

$

6,202
3.69

$

5,434
3.19

$

3,411
1.99

$

4,012
2.35

4.50

2.00

4.09

1.86

3.65

1.50

3.16

1.10

1.97

1.00

2.32

.90

$ 41,834
310,837
3,871
10,787
481,741
253,341
79,668

$  33,717
287,586
3,762
10,681
427,849
229,703
73,580

$ 32,953
253,073
3,891
10,371
387,798
211,271
63,642

$ 27,947
192,478
3,819
9,753
349,197
198,234
47,320

$ 40,308
167,096
3,717
9,527
307,506
182,295
36,095

$ 38,655
155,451
3,681
9,303
272,382
156,710
32,046

—
40,660

—
37,866

—
34,469

2,885
30,319

2,435
27,175

935
26,461

8%

12
10
39
8

9
10

10

9
10

10

8

24
8
3
1
13
10
8

—
7

12%
7
10
13
8

14
14

14

14
14

14

17

2
15
1
3
12
10
20

—
9

(1) Change in accounting principle is for a transitional goodwill impairment charge recorded in 2002 upon adoption of FAS 142, Goodwill and Other Intangible Assets.
(2) Core deposits consist of noninterest-bearing deposits, interest-bearing checking, savings certificates and market rate and other savings.
(3) At December 31, 2003, upon adoption of FIN 46 (revised December 2003), Consolidation of Variable Interest Entities (FIN 46R), these balances were reflected in long-term

debt. See Note 12 (Long-Term Debt) to Financial Statements for more information.

37

Critical Accounting Policies

Our significant accounting policies (see Note 1 (Summary of
Significant Accounting Policies) to Financial Statements) are
fundamental to understanding our results of operations and
financial condition, because some accounting policies require
that we use estimates and assumptions that may affect the
value of our assets or liabilities and financial results. Three
of these policies are critical because they require management
to make difficult, subjective and complex judgments about
matters that are inherently uncertain and because it is likely
that materially different amounts would be reported under
different conditions or using different assumptions. These
policies govern the allowance for credit losses, the valuation
of mortgage servicing rights and pension accounting.
Management has reviewed and approved these critical
accounting policies and has discussed these policies with 
the Audit and Examination Committee.

Allowance for Credit Losses
The allowance for credit losses, which consists of the
allowance for loan losses and the reserve for unfunded credit
commitments, is management’s estimate of credit losses 
inherent in the loan portfolio at the balance sheet date. We
have an established process, using several analytical tools and
benchmarks, to calculate a range of possible outcomes and
determine the adequacy of the allowance. No single statistic
or measurement determines the adequacy of the allowance.
Loan recoveries and the provision for credit losses increase
the allowance, while loan charge-offs decrease the allowance.

PROCESS TO DETERMINE THE ADEQUACY OF THE ALLOWANCE 
FOR CREDIT LOSSES 
While we allocate a portion of the allowance to specific loan
categories (the allocated allowance), the entire allowance
(both allocated and unallocated) is used to absorb credit
losses inherent in the total loan portfolio. 

Approximately two-thirds of the allocated allowance is
determined at a pooled level for consumer loans and some
segments of commercial small business loans. We use 
forecasting models to measure the losses inherent in these
portfolios. We frequently validate and update these models to
capture recent behavioral characteristics of the portfolios, as
well as changes in our loss mitigation or marketing strategies.

The remaining allocated allowance is for commercial
loans, commercial real estate loans and lease financing. We
initially estimate this portion of the allocated allowance by
applying historical loss factors statistically derived from
tracking loss content associated with actual portfolio move-
ments over a specified period of time, using a standardized
loan grading process. Based on this process, we assign loss
factors to each pool of graded loans and a loan equivalent
amount for unfunded loan commitments and letters of credit.
These estimates are then adjusted or supplemented where
necessary from additional analysis of long term average loss
experience, external loss data, or other risks identified from
current conditions and trends in selected portfolios. Also, we
individually review nonperforming loans over $3 million for
impairment based on cash flows or collateral. We include
impairment on these nonperforming loans in the allocated
allowance unless it has already been recognized as a loss.

The allocated allowance is supplemented by the unallo-
cated allowance to adjust for imprecision and to incorporate
the range of probable outcomes inherent in estimates used
for the allocated allowance. The unallocated allowance is 
the result of our judgment of risks inherent in the portfolio,
economic uncertainties, historical loss experience and other
subjective factors, including industry trends, not reflected in
the allocated allowance. 

The ratios of the allocated allowance and the unallocated
allowance to the total allowance may change from period to
period. The total allowance reflects management’s estimate
of credit losses inherent in the loan portfolio at the balance
sheet date.

The allowance for credit losses, and the resulting provision,

is based on judgments and assumptions, including:

• general economic conditions;
• loan portfolio composition;
• loan loss experience;
• management’s evaluation of the credit risk relating to

pools of loans and individual borrowers;

• sensitivity analysis and expected loss models; and
• observations from our internal auditors, internal loan

review staff or banking regulators.

To estimate the possible range of allowance required at

December 31, 2005, and the related change in provision
expense, we assumed the following scenarios of a reasonably
possible deterioration or improvement in loan credit quality.

38

Assumptions for deterioration in loan credit quality were:

• for retail loans, a 12 basis point increase in estimated

loss rates from actual 2005 loss levels, moving closer to
longer term average loss rates; and

• for wholesale loans, a 30 basis point increase in esti-
mated loss rates, moving closer to historical averages.

Assumptions for improvement in loan credit quality were:

• for retail loans, an 8 basis point decrease in estimated
loss rates from actual 2005 loss levels, adjusting for
incremental consumer bankruptcy losses; and

• for wholesale loans, no change from the essentially zero

2005 net loss performance.

Under the assumptions for deterioration in loan credit
quality, another $550 million in expected losses could occur
and under the assumptions for improvement, a $170 million
reduction in expected losses could occur. 

Changes in the estimate of the allowance for credit 
losses can materially affect net income. The example above 
is only one of a number of reasonably possible scenarios.
Determining the allowance for credit losses requires us to
make forecasts that are highly uncertain and require a high
degree of judgment. 

Valuation of Mortgage Servicing Rights
We recognize as assets the rights to service mortgage loans
for others, or mortgage servicing rights (MSRs), whether we
purchase the servicing rights, or keep them after the sale or
securitization of loans we originate. Purchased MSRs are
capitalized at cost. Originated MSRs are recorded based on
the relative fair value of the retained servicing right and the
mortgage loan on the date the mortgage loan is sold. Both
purchased and originated MSRs are carried at the lower of
(1) the capitalized amount, net of accumulated amortization
and hedge accounting adjustments, or (2) fair value. If MSRs
are designated as a hedged item in a fair value hedge, the
MSRs’ carrying value is adjusted for changes in fair value
resulting from the application of hedge accounting. The 
carrying value of these MSRs is subject to a fair value test
under FAS 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. 

MSRs are amortized in proportion to and over the period
of estimated net servicing income. We analyze the amortization
of MSRs monthly and adjust amortization to reflect changes
in prepayment speeds, discount rates and other factors that
affect estimated net servicing income.

We determine the fair value of MSRs using a valuation
model that calculates the present value of estimated future
net servicing income. The model incorporates assumptions
that market participants use in estimating future net servicing
income, including estimates of prepayment speeds, discount
rate, cost to service, escrow account earnings, contractual
servicing fee income, ancillary income and late fees. The 
valuation of MSRs is discussed further in this section and in

Note 1 (Summary of Significant Accounting Policies), Note 20
(Securitizations and Variable Interest Entities) and Note 21
(Mortgage Banking Activities) to Financial Statements. 

At the end of each quarter, we evaluate MSRs for possible

impairment based on the difference between the carrying
amount and current estimated fair value. To evaluate and
measure impairment, we stratify the portfolio based on 
certain risk characteristics, including loan type and note rate.
If temporary impairment exists, we establish a valuation
allowance through a charge to income for those risk 
stratifications with an excess of amortized cost over the 
current fair value. If we later determine that all or part of
the temporary impairment no longer exists for a particular
risk stratification, we may reduce the valuation allowance
through an increase to income. 

Under our policy, we also evaluate other-than-temporary
impairment of MSRs by considering both historical and pro-
jected trends in interest rates, pay-off activity and whether
the impairment could be recovered through interest rate
increases. We recognize a direct write-down if we determine
that the recoverability of a recorded valuation allowance 
is remote. A direct write-down permanently reduces the 
carrying value of the MSRs, while a valuation allowance
(temporary impairment) can be reversed. 

To reduce the sensitivity of earnings to interest rate and
market value fluctuations, we hedge the change in value of
MSRs primarily with derivative contracts. Reductions or
increases in the value of the MSRs are generally offset by
gains or losses in the value of the derivatives. We immediately
recognize a gain or loss for the amount of change in the
value of MSRs that is not offset by the change in value of
the hedge instrument (i.e., hedge ineffectiveness). We may
choose not to fully hedge MSRs partly because origination
volume tends to act as a “natural hedge” (for example, as
interest rates decline, servicing values decrease and fees from
origination volume increase). Conversely, as interest rates
increase, the value of the MSRs increases, while fees from
origination volume tend to decline.

Servicing income — net of amortization, provision for
impairment and net derivative gains and losses — is recorded
in mortgage banking noninterest income. 

We use a dynamic and sophisticated model to estimate 
the value of our MSRs. Mortgage loan prepayment speed—a
key assumption in the model — is the annual rate at which
borrowers are forecasted to repay their mortgage loan 
principal. The discount rate — another key assumption in 
the model — is the required rate of return the market would
expect for an asset with similar risk. To determine the discount
rate, we consider the risk premium for uncertainties from
servicing operations (e.g., possible changes in future servicing
costs, ancillary income and earnings on escrow accounts). Both
assumptions can and generally will change quarterly and
annual valuations as market conditions and interest rates
change. Senior management reviews all assumptions quarterly. 

39

Our key economic assumptions and the sensitivity of the
current fair value of MSRs to an immediate adverse change
in those assumptions are shown in Note 20 (Securitizations
and Variable Interest Entities) to Financial Statements.

In recent years, there have been significant market-driven

fluctuations in loan prepayment speeds and the discount
rate. These fluctuations can be rapid and may be significant
in the future. Therefore, estimating prepayment speeds within
a range that market participants would use in determining the
fair value of MSRs requires significant management judgment. 

Pension Accounting
We use four key variables to calculate our annual pension
cost; size and characteristics of the employee population,
actuarial assumptions, expected long-term rate of return on
plan assets, and discount rate. We describe below the effect
of each of these variables on our pension expense.

SIZE AND CHARACTERISTICS OF THE EMPLOYEE POPULATION
Pension expense is directly related to the number of employ-
ees covered by the plans, and other factors including salary,
age and years of employment. 

ACTUARIAL ASSUMPTIONS
To estimate the projected benefit obligation, actuarial
assumptions are required about factors such as the rates of
mortality, turnover, retirement, disability and compensation
increases for our participant population. These demographic
assumptions are reviewed periodically. In general, the range
of assumptions is narrow. 

EXPECTED LONG-TERM RATE OF RETURN ON PLAN ASSETS
We determine the expected return on plan assets each year
based on the composition of assets and the expected long-
term rate of return on that portfolio. The expected long-term
rate of return assumption is a long-term assumption and is
not anticipated to change significantly from year to year. 

To determine if the expected rate of return is reasonable,
we consider such factors as (1) the actual return earned on
plan assets, (2) historical rates of return on the various asset
classes in the plan portfolio, (3) projections of returns on
various asset classes, and (4) current/prospective capital mar-
ket conditions and economic forecasts. Including 2005, we
have used an expected rate of return of 9% on plan assets
for the past nine years. In light of the market conditions in
recent years, including a marked increase in volatility, we

reduced the expected long-term rate of return on plan assets
to 8.75% for 2006. Differences in each year, if any, between
expected and actual returns are included in our unrecognized
net actuarial gain or loss amount. We generally amortize any
unrecognized net actuarial gain or loss in excess of a 5%
corridor (as defined in FAS 87, Employers’ Accounting for
Pensions) in net periodic pension expense calculations over
the next five years. Our average remaining service period is
approximately 11 years. See Note 15 (Employee Benefits and
Other Expenses) to Financial Statements for information on
funding, changes in the pension benefit obligation, and plan
assets (including the investment categories, asset allocation
and the fair value).

We use November 30 as the measurement date for our
pension assets and projected benefit obligations. If we were
to assume a 1% increase/decrease in the expected long-term
rate of return, holding the discount rate and other actuarial
assumptions constant, pension expense would decrease/increase
by approximately $50 million. 

DISCOUNT RATE
We use the discount rate to determine the present value of
our future benefit obligations. It reflects the rates available
on long-term high-quality fixed-income debt instruments,
and is reset annually on the measurement date. As the basis
for determining our discount rate, we review the Moody’s
Aa Corporate Bond Index, on an annualized basis, and the
rate of a hypothetical portfolio using the Hewitt Yield Curve
(HYC) methodology, which was developed by our indepen-
dent actuary. The instruments used in both the Moody’s Aa
Corporate Bond Index and the HYC consist of high quality
bonds for which the timing and amount of cash outflows
approximates the estimated payouts of our Cash Balance
Plan. We lowered our discount rate to 5.75% in 2005 from
6% in 2004 and 6.5% in 2003, reflecting the decline in 
market interest rates during these periods.

If we were to assume a 1% increase in the discount rate,

and keep the expected long-term rate of return and other
actuarial assumptions constant, pension expense would
decrease by approximately $59 million. If we were to
assume a 1% decrease in the discount rate, and keep other
assumptions constant, pension expense would increase 
by approximately $104 million. The decrease in pension
expense due to a 1% increase in discount rate differs from the
increase in pension expense due to a 1% decrease in discount
rate due to the impact of the 5% gain/loss corridor. 

40

Earnings Performance

Net Interest Income
Net interest income is the interest earned on debt securities,
loans (including yield-related loan fees) and other interest-
earning assets minus the interest paid for deposits and long-
term and short-term debt. The net interest margin is the
average yield on earning assets minus the average interest
rate paid for deposits and our other sources of funding. Net
interest income and the net interest margin are presented on
a taxable-equivalent basis to consistently reflect income from
taxable and tax-exempt loans and securities based on a 35%
marginal tax rate. 

Net interest income on a taxable-equivalent basis was
$18.6 billion in 2005, compared with $17.3 billion in 2004,
an increase of 8%, reflecting solid loan growth (other than
ARMs) and a relatively flat net interest margin. 

Our net interest margin was 4.86% for 2005 and 4.89%
for 2004. During a year in which the Federal Reserve raised
rates eight times and the yield curve flattened, our net interest
margin remained essentially flat compared with a year ago.
Given the prospect of higher short-term interest rates and 
a flatter yield curve, beginning in second quarter 2004, as 
part of our asset/liability management strategy, we sold the
lowest-yielding ARMs on our balance sheet, replacing some
of these loans with higher-yielding ARMs. Over the last
seven quarters, we sold $65 billion in ARMs at an average
yield of 4.28%. As a result, the average yield on our 1-4
family first mortgage portfolio — which includes ARMs —
increased from 5.19% on an average balance of $89.4 billion
in second quarter 2004 to 6.75% on an average balance 
of $76.2 billion in fourth quarter 2005. At year-end 2005,
yields on new ARMs being held for investment within real
estate 1-4 family mortgage loans were more than 1% higher

than the average yield on the ARMs sold since second quarter
2004. Our net interest margin has performed better than our
peers’ due to our balance sheet repositioning actions and our
ability to grow transaction and savings deposits while main-
taining our deposit pricing discipline.

Average earning assets increased $29.2 billion to 

$383.5 billion in 2005 from $354.3 billion in 2004. Loans
averaged $296.1 billion in 2005, compared with $269.6 billion
in 2004. Average mortgages held for sale were $39.0 billion
in 2005 and $32.3 billion in 2004. Debt securities available
for sale averaged $33.1 billion in both 2005 and 2004. 

Average core deposits are an important contributor to
growth in net interest income and the net interest margin.
This low-cost source of funding rose 9% from 2004. Average
core deposits were $242.8 billion and $223.4 billion and
funded 54.5% and 54.4% of average total assets in 2005
and 2004, respectively. Total average retail core deposits,
which exclude Wholesale Banking core deposits and retail
mortgage escrow deposits, for 2005 grew $18.2 billion, 
or 10%, from a year ago. Average mortgage escrow 
deposits were $16.7 billion in 2005 and $14.1 billion in
2004. Savings certificates of deposits increased on average
from $18.9 billion in 2004 to $22.6 billion in 2005 and 
noninterest-bearing checking accounts and other core 
deposit categories increased on average from $204.5 billion
in 2004 to $220.1 billion in 2005. Total average interest-
bearing deposits increased to $194.6 billion in 2005 from
$182.6 billion a year ago. Total average noninterest-bearing
deposits increased to $87.2 billion in 2005 from $79.3 billion
a year ago.

Table 3 presents the individual components of net interest

income and the net interest margin.

41

Table 3: Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) (1)(2)

(in millions)

EARNING ASSETS
Federal funds sold, securities purchased under

resale agreements and other short-term investments

$

Trading assets
Debt securities available for sale (3):

Securities of U.S. Treasury and federal agencies
Securities of U.S. states and political subdivisions
Mortgage-backed securities:

Federal agencies
Private collateralized mortgage obligations

Total mortgage-backed securities

Other debt securities (4)

Total debt securities available for sale (4)

Mortgages held for sale (3)
Loans held for sale (3)
Loans:

Average
balance

5,448
5,411

997
3,395

19,768
5,128
24,896
3,846
33,134
38,986
2,857

Commercial and commercial real estate:

Commercial
Other real estate mortgage
Real estate construction
Lease financing

Total commercial and commercial real estate

Consumer:

Real estate 1-4 family first mortgage
Real estate 1-4 family junior lien mortgage
Credit card
Other revolving credit and installment

Total consumer

Foreign

Total loans (5)

Other

Total earning assets

FUNDING SOURCES
Deposits:

Interest-bearing checking
Market rate and other savings
Savings certificates
Other time deposits
Deposits in foreign offices

Total interest-bearing deposits

Short-term borrowings
Long-term debt
Guaranteed preferred beneficial interests in Company’s

subordinated debentures (6)

Total interest-bearing liabilities

Portion of noninterest-bearing funding sources

Total funding sources

Net interest margin and net interest income on

a taxable-equivalent basis (7)

NONINTEREST-EARNING ASSETS
Cash and due from banks
Goodwill
Other

Total noninterest-earning assets

NONINTEREST-BEARING FUNDING SOURCES
Deposits
Other liabilities
Stockholders’ equity
Noninterest-bearing funding sources used to

fund earning assets

Net noninterest-bearing funding sources

TOTAL ASSETS

58,434
29,098
11,086
5,226
103,844

78,170
55,616
10,663
43,102
187,551
4,711
296,106
1,581

$383,523

$

3,607
129,291
22,638
27,676
11,432
194,644
24,074
79,137

            —
297,855
85,668

$383,523

$ 13,173
10,705
38,389

$ 62,267

$ 87,218
21,559
39,158

(85,668)
$ 62,267

$445,790

3.81
8.27

6.02
5.60
5.94
7.10
6.24
5.67
5.10

6.76
6.31
6.67
5.91
6.58

6.42
6.61
12.33
8.80
7.36
13.49
7.19
4.34
6.81

1.43
1.45
2.90
3.29
3.12
1.98
3.09
3.62

—
2.50
—

1.95

Yields/
rates

                     2005
Interest
income/
expense

Average
balance

Yields/
rates

2004
Interest
income/
expense

3.01%
3.52

$

1.49%
2.75

$

164
190

38
266

1,162
283
1,445
       266
2,015
2,213
146

3,951
1,836
740
       309
6,836

5,016
3,679
1,315
    3,794
13,804
       636
21,276
         68
  26,072

51
1,874
656
910
       357
3,848
744
2,866

          —
7,458
          —

    7,458

$ 4,254
5,286

1,161
3,501

21,404
     3,604
25,008
     3,395
33,065
32,263
8,201

49,365
28,708
8,724
     5,068
91,865

87,700
44,415
8,878
   33,528
174,521
     3,184
269,570
     1,709
$354,348

$ 3,059
122,129
18,850
29,750
     8,843
182,631
26,130
67,898

           —
276,659
   77,689

$354,348

64
145

46
267

1,248
      180
1,428
      236
1,977
1,737
292

2,848
1,535
463
      316
5,162

4,772
2,300
1,048
   3,022
11,142
      487
16,791
        65
  21,071

13
838
425
427
      124
1,827
353
1,637

        —
3,817
        —

   3,817

4.05
8.00

6.03
5.16
5.91
7.72
6.24
5.38
3.56

5.77
5.35
5.30
6.23
5.62

5.44
5.18
11.80
9.01
6.38
15.30
6.23
3.81
5.97

.44
.69
2.26
1.43
1.40
1.00
1.35
2.41

—
1.38
—

1.08

4.86%

$18,614

4.89%

$17,254

$ 13,055
10,418
   32,758

$ 56,231

$ 79,321
18,764
35,835

(77,689)
$ 56,231

$410,579

(1) Our average prime rate was 6.19%, 4.34%, 4.12%, 4.68% and 6.91% for 2005, 2004, 2003, 2002 and 2001, respectively. The average three-month London Interbank

Offered Rate (LIBOR) was 3.56%, 1.62%, 1.22%, 1.80% and 3.78% for the same years, respectively.

(2) Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(3) Yields are based on amortized cost balances computed on a settlement date basis.
(4) Includes certain preferred securities.

42

Average
balance

$

2,961
4,747

1,770
2,106

26,718
    2,341
29,059
3,029
35,964
39,858
5,380

46,520
25,413
7,925
 4,079
83,937

32,669
25,220
6,810
 24,072
88,771
   1,774
174,482
  1,436
$264,828

$ 2,494
93,787
24,278
8,191
 5,011
133,761
33,278
42,158

    2,780
211,977
   52,851

$264,828

                                   2002
Interest
income/
expense

Yields/
rates

1.73%
3.58

$       51
169

5.57
8.33

7.23
7.18
7.22
7.74
7.25
6.13
4.69

6.80
6.17
5.69
6.32
6.48

6.69
7.07
12.27
10.28
8.20
18.90
7.48
4.87
7.04

.55
.95
3.21
1.86
1.58
1.43
1.61
3.33

4.23
1.88
—

1.51

95
167

1,856
  163
2,019
  232
2,513
2,450
252

3,164
1,568
451
      258
5,441

2,185
1,783
836
 2,475
7,279
     335
13,055
   72

18,562

14
893
780
153
       79
1,919
536
1,404

     118
3,977
        —

   3,977

Average
balance

$

2,741
2,580

2,158
2,026

27,433
     1,766
29,199
3,343
36,726
23,677
4,820

48,648
24,194
8,073
 4,024
84,939

23,359
17,587
6,270
 23,459
70,675
 1,603
157,217
    1,262

$229,023

$ 2,178
80,585
29,850
1,332
6,209
120,154
33,885
34,501

1,394
189,934
 39,089

$229,023

                                   2001
Interest
income/
expense

Yields/
rates

3.72%
4.44

$

102
115

137
154

1,917
      148
2,065
      254
2,610
1,595
317

3,896
1,934
654
      278
6,762

1,761
1,619
838
   2,674
6,892
      333
13,987
        69

 18,795

35
1,675
1,530
67
      246
3,553
1,273
1,826

        89
6,741
        —

   6,741

6.55
7.98

7.19
8.55
7.27
7.80
7.32
6.72
6.58

8.01
7.99
8.10
6.90
7.96

7.54
9.20
13.36
11.40
9.75
20.82
8.90
5.50

8.24

1.59
2.08
5.13
5.04
3.96
2.96
3.76
5.29

6.40
3.55
—

2.95

Average
balance

Yields/
rates

2003
Interest
income/
expense

1.16%
2.56

$

49
156

58
196

1,276
      120
1,396
      240
1,890
3,136
251

2,876
1,405
406
      277
4,964

3,115
1,836
922
   2,713
8,586
      396
13,946
        74
  19,502

7
705
529
305
        67
1,613
322
1,355

      121
3,411
        —

   3,411

4.74
8.62

7.37
6.24
7.26
7.75
7.32
5.34
3.51

6.08
5.44
5.11
6.22
5.80

5.54
5.80
12.06
9.09
6.85
18.00
6.54
4.57
6.16

.27
.66
2.53
1.20
1.11
1.00
1.08
2.52

3.66
1.37
—

1.08

$

4,174
6,110

1,286
2,424

18,283
     2,001
20,284
     3,302
27,296
58,672
7,142

47,279
25,846
7,954
     4,453
85,532

56,252
31,670
7,640
   29,838
125,400
     2,200
213,132
     1,626
$318,152

$

2,571
106,733
20,927
25,388
     6,060
161,679
29,898
53,823

     3,306
248,706
   69,446

$318,152

$ 13,433
9,905
   36,123

$ 59,461

$ 76,815
20,030
32,062

  (69,446)
$ 59,461

$377,613

5.08%

$16,091

5.53%

$14,585

5.29%

$12,054

$ 13,820
9,737
  33,340

$ 56,897

$ 63,574
17,054
29,120

 (52,851)
$ 56,897

$321,725

$ 14,608
9,514
   32,222

$ 56,344

$ 55,333
13,214
26,886

 (39,089)
$ 56,344

$285,367

(5) Nonaccrual loans and related income are included in their respective loan categories.
(6) At December 31, 2003, upon adoption of FIN 46 (revised December 2003), Consolidation of Variable Interest Entities (FIN 46R), these balances were reflected in

long-term debt. See Note 12 (Long-Term Debt) to Financial Statements for more information.

(7) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for all

years presented.

43

Card fees increased 19% to $1,458 million in 2005 from
$1,230 million in 2004, predominantly due to increases in credit
card accounts and credit and debit card transaction volume. 

Mortgage banking noninterest income increased to

$2,422 million in 2005 from $1,860 million in 2004, due to
an increase in net gains on mortgage loan origination/sales
activities partly offset by the decline in net servicing income. 
Net gains on mortgage loan origination/sales activities
were $1,085 million in 2005, up from $539 million in 2004,
primarily due to higher origination volume. Originations were
$366 billion in 2005 and $298 billion in 2004. The 1-4 family
first mortgage unclosed pipeline was $50 billion at both
year-end 2005 and 2004.

Net servicing income was $987 million in 2005 compared

with $1,037 million in 2004. Servicing income includes net
derivative gains and losses and is net of amortization and
impairment of MSRs, which are all influenced by both the
level and direction of mortgage interest rates. The Company’s
portfolio of loans serviced for others was $871 billion at
December 31, 2005, up 27% from $688 billion at year-end
2004. Given a larger servicing portfolio year over year, 
the increase in servicing income was partly offset by higher
amortization of MSRs. Servicing fees increased to 
$2,457 million in 2005 from $2,101 million in 2004 and
amortization of MSRs increased to $1,991 million in 2005
from $1,826 million in 2004. Servicing income in 2005 
also included a higher MSRs valuation allowance release of
$378 million in 2005 compared with $208 million in 2004,
due to higher long-term interest rates in certain quarters 
of 2005. The increase in fee revenue and the higher MSRs
valuation allowance release were mostly offset by the
decrease in net derivative gains to $143 million in 2005 
from $554 million in 2004.

Net losses on debt securities were $120 million for 2005,
compared with $15 million for 2004. Net gains from equity
investments were $511 million in 2005, compared with 
$394 million in 2004, primarily reflecting the continued
strong performance of our venture capital business.

We routinely review our investment portfolios and recognize

impairment write-downs based primarily on issuer-specific
factors and results, and our intent to hold such securities. 
We also consider general economic and market conditions,
including industries in which venture capital investments 
are made, and adverse changes affecting the availability of
venture capital. We determine impairment based on all of the
information available at the time of the assessment, but new
information or economic developments in the future could
result in recognition of additional impairment.

Noninterest Income

Table 4: Noninterest Income

(in millions)

Year ended December 31, ___% Change
2004/
2005
2003

2005/
2004

2003

2004

Service charges on 
deposit accounts

Trust and investment fees:

$ 2,512 $ 2,417 $ 2,297

4%

5%

Trust,investment and IRA fees
Commissions and all other fees

1,855

1,509
       581       607

1,345
592

23
(4)

Total trust and 

investment fees 

Card fees

Other fees:

Cash network fees
Charges and fees on loans
All other

Total other fees

2,436

2,116

1,937

1,458

1,230

1,079

180
921

180
1,022

179
756
       727       678       625
1,560
1,779

1,929

15

19

—
11
7
8

12
3

9

14

1
22
8
14

Mortgage banking:

Servicing income,net of amortization
and provision for impairment

987

1,037

(954)

(5)

—

Net gains on mortgage loan
origination/sales activities

All other

Total mortgage banking

Operating leases
Insurance
Trading assets
Net gains (losses) on debt

539

1,085

3,019
       350       284       447
2,512
1,860

2,422

812
1,215
571

836
1,193
523

937
1,071
502

101
23
30

(3)
2
9

securities available for sale

(120)

(15)

4

700

(82)
(36)
(26)

(11)
11
4

—

Net gains from 

equity investments
Net gains on sales of loans
Net gains (losses) on dispositions

of operations

All other

Total

511
5

394
11

14

(15)
       680       580

55
28

29
371

$14,445 $12,909 $12,382

30
(55)

616
(61)

—
17

12

—
56

4

We earn trust, investment and IRA fees from managing and
administering assets, including mutual funds, corporate trust,
personal trust, employee benefit trust and agency assets. At
December 31, 2005, these assets totaled $783 billion, up 11%
from $705 billion at December 31, 2004. At December 31, 2004,
we acquired $24 billion in mutual fund assets and $5 billion
in institutional investment accounts from Strong Financial
Corporation (Strong Financial). When the Wells Fargo
Funds® and certain Strong Financial funds merged in April
2005, we renamed our mutual fund family the Wells Fargo
Advantage FundsSM. Generally, trust, investment and IRA
fees are based on the market value of the assets that are
managed, administered, or both. The increase in these fees
was due to additional revenue from the December 31, 2004,
acquisition of assets from the Strong Financial transaction
and our successful efforts to grow our investment businesses.
Also, we receive commissions and other fees for providing

services for retail and discount brokerage customers. At
December 31, 2005 and 2004, brokerage balances were 
$97 billion and $86 billion, respectively. Generally, these 
fees are based on the number of transactions executed at 
the customer’s direction. 

44

Noninterest Expense

Table 5: Noninterest Expense

(in millions)

Year ended December 31,
2003
2004
2005

_ _ % Change
2004/
2005/
2003
2004

Salaries
Incentive compensation
Employee benefits
Equipment
Net occupancy
Operating leases
Outside professional services
Contract services
Travel and entertainment
Outside data processing
Advertising and promotion
Postage
Telecommunications
Insurance
Stationery and supplies
Operating losses
Security
Core deposit intangibles
Charitable donations
Net losses from debt 
extinguishment

All other

Total

$ 6,215 $ 5,393 $ 4,832
2,054
1,560
1,246
1,177
702
509
866
389
404
392
336
343
197
241
193
163
142
237

2,366
1,874
1,267
1,412
635
835
596
481
449
443
281
278
224
205
194
167
123
61

1,807
1,724
1,236
1,208
633
669
626
442
418
459
269
296
247
240
192
161
134
248

15% 12%
(12)
31
11
9
(1)
3
17
3
— (10)
31
25
(28)
(5)
14
9
3
7
17
(3)
(20)
4
(14)
(6)
25
(9)
(15) —
(1)
(1)
(6)
5

1
4
(8)
(75)

11
       901
1,207
$19,018 $17,573 $17,190

174
997

— (94) —
(17)
(10)

8

2

Noninterest expense in 2005 increased 8% to $19.0 billion
from $17.6 billion in 2004, primarily due to increased mort-
gage production and continued investments in new stores
and additional sales-related team members. Noninterest
expense in 2005 included a $117 million expense to adjust
the estimated lives for certain depreciable assets, primarily
building improvements, $62 million of airline lease write-
downs, $56 million of integration expense and $25 million
for the adoption of FIN 47, which relates to recognition 
of obligations associated with the retirement of long-lived
assets, such as building and leasehold improvements. Home
Mortgage expenses increased $426 million from 2004,
reflecting higher production costs from an increase in loan
origination volume. For 2004, employee benefits included 
a $44 million special 401(k) contribution and charitable
donations included a $217 million contribution to the 
Wells Fargo Foundation.

See “Current Accounting Developments” for information
on accounting for share-based awards, such as stock option
grants. On January 1, 2006, we adopted FAS 123R, which
requires that we include the cost of such grants in our
income statement over the vesting period of the award.

Income Tax Expense
Our effective income tax rate for 2005 decreased to 33.57%
from 34.87% for 2004, due primarily to higher tax-exempt
income and income tax credits, and the tax benefit associated
with our donation of appreciated securities. 

Operating Segment Results
Our lines of business for management reporting are Community
Banking, Wholesale Banking and Wells Fargo Financial. 
For a more complete description of our operating segments,
including additional financial information and the underlying
management accounting process, see Note 19 (Operating
Segments) to Financial Statements.

COMMUNITY BANKING’S net income increased 13% to 
$5.5 billion in 2005 from $4.9 billion in 2004. Total 
revenue for 2005 increased 9%, driven by loan and deposit
growth and higher mortgage origination volumes. The 
provision for credit losses for 2005 increased $108 million,
or 14%, reflecting incremental consumer bankruptcy filings
before the mid-October legislative reform. Noninterest
expense for 2005 increased $982 million, or 8%, driven 
by mortgage production, growth in other businesses, and
investments in new stores, sales staff and technology.
Average loans were $187.0 billion in 2005, up 5% from
$178.9 billion in 2004. 

WHOLESALE BANKING’S net income was a record $1.73 billion
in 2005, up 8% from $1.60 billion in 2004, driven largely 
by a 15% increase in earning assets, as well as very low loan
losses. Average loans increased 17% to $62.2 billion in 2005
from $53.1 billion in 2004, with double-digit increases
across wholesale lending businesses. The provision for credit
losses decreased to $1 million in 2005 from $62 million in
2004, with loan charge-offs at very low levels throughout
2005. Noninterest income increased 13% to $3.4 billion 
in 2005 from $3.0 billion in 2004, largely due to the 
Strong Financial acquisition completed at the end of 2004.
Noninterest expense increased 16% to $3.17 billion in 2005
from $2.73 billion in 2004, due to the Strong Financial 
acquisition and airline lease writedowns.

WELLS FARGO FINANCIAL’S net income decreased 34% to 
$409 million in 2005 from $617 million in 2004. Net
income was reduced by incremental bankruptcies related 
to the change in bankruptcy law and the $163 million first
quarter 2005 initial implementation of conforming to more
stringent FFIEC charge-off timing rules. Also, a $100 million
provision for credit losses was taken in third quarter 2005
for estimated losses from Hurricane Katrina. Total revenue
rose 12% in 2005, reaching $4.7 billion, compared with
$4.2 billion in 2004, due to higher net interest income.
Noninterest expense increased $202 million, or 9%, in 2005
from 2004, reflecting investments in new consumer finance
stores and additional team members. 

Segment results for prior periods have been revised due 

to the realignment of our automobile financing businesses
into Wells Fargo Financial in 2005, designed to leverage the
expertise, systems and resources of the existing businesses. 

45

Balance Sheet Analysis

Securities Available for Sale
Our securities available for sale portfolio consists of both
debt and marketable equity securities. We hold debt 
securities available for sale primarily for liquidity, interest
rate risk management and yield enhancement. Accordingly,
this portfolio primarily includes very liquid, high-quality
federal agency debt securities. At December 31, 2005, we held
$40.9 billion of debt securities available for sale, compared
with $33.0 billion at December 31, 2004, with a net unrealized
gain of $591 million and $1.2 billion for the same periods,
respectively. We also held $900 million of marketable equity
securities available for sale at December 31, 2005, and
$696 million at December 31, 2004, with a net unrealized
gain of $342 million and $189 million for the same 
periods, respectively.

The weighted-average expected maturity of debt securities
available for sale was 5.9 years at December 31, 2005. Since
79% of this portfolio is mortgage-backed securities, the
expected remaining maturity may differ from contractual
maturity because borrowers may have the right to prepay
obligations before the underlying mortgages mature. 

The estimated effect of a 200 basis point increase or
decrease in interest rates on the fair value and the expected
remaining maturity of the mortgage-backed securities 
available for sale portfolio is shown in Table 6.

Table 6: Mortgage-Backed Securities

(in billions)

At December 31, 2005

At December 31, 2005,

Fair 
value

$32.4

Net unrealized
gain (loss)

Remaining
maturity

$ .4

5.3 yrs.

assuming a 200 basis point:
Increase in interest rates
Decrease in interest rates

29.9
33.5

(2.1)
1.5

7.5 yrs.
2.0 yrs.

See Note 5 (Securities Available for Sale) to Financial
Statements for securities available for sale by security type.

Loan Portfolio
A comparative schedule of average loan balances is included
in Table 3; year-end balances are in Note 6 (Loans and
Allowance for Credit Losses) to Financial Statements.

Loans averaged $296.1 billion in 2005, compared with
$269.6 billion in 2004, an increase of 10%. Total loans at
December 31, 2005, were $310.8 billion, compared with
$287.6 billion at year-end 2004, an increase of 8%. Average
1-4 family first mortgages decreased $9.5 billion, or 11%,
and average junior liens increased $11.2 billion, or 25%, in
2005 compared with a year ago. Average commercial and
commercial real estate loans increased $12.0 billion, or 13%,
in 2005 compared with a year ago. Average mortgages held
for sale increased $6.7 billion, or 21%, to $39.0 billion in

46

2005 from $32.3 billion in 2004, due to higher origination
volume. Residential mortgage originations of $366 billion
were up 23% from $298 billion in 2004. Loans held for 
sale decreased to $612 million at December 31, 2005, from
$8.7 billion a year ago, due to the transfer of student loans
held for sale to the held for investment portfolio. Our decision
to hold these loans for investment was based on present yields
and our intent and ability to hold this portfolio for the 
foreseeable future.

Table 7 shows contractual loan maturities and interest

rate sensitivities for selected loan categories.

Table 7: Maturities for Selected Loan Categories

(in millions)

                                       December 31, 2005
Total

Within
one
year

After
one year
through
fiveyears

After
five
years

Selected loan maturities:

Commercial
Other real estate mortgage
Real estate construction
Foreign

Total selected loans

$18,748
3,763
5,081
      525
$28,117

11,777
6,887

$31,627 $11,177 $ 61,552
28,545
13,005
13,406
1,438
   3,995    1,032      5,552
$54,286 $26,652 $109,055

Sensitivity of loans due after 
one year to changes in 
interest rates:
Loans at fixed interest rates
Loans at floating/variable 

interest rates
Total selected loans

$11,145 $ 7,453

  43,141   19,199
$54,286 $26,652

Deposits
Year-end deposit balances are in Table 8. Comparative 
detail of average deposit balances is included in Table 3.
Average core deposits funded 54.5% and 54.4% of average
total assets in 2005 and 2004, respectively. Total average
interest-bearing deposits rose from $182.6 billion in 2004 
to $194.6 billion in 2005. Total average noninterest-bearing
deposits rose from $79.3 billion in 2004 to $87.2 billion 
in 2005. Savings certificates increased on average from 
$18.9 billion in 2004 to $22.6 billion in 2005. 

Table 8: Deposits

(in millions)

December 31,
2004

2005

%
Change

Noninterest-bearing
Interest-bearing checking
Market rate and 
other savings
Savings certificates
Core deposits

Other time deposits
Deposits in foreign offices

$ 87,712
3,324

$ 81,082
3,122

134,811
    27,494
253,341
46,488
    14,621

126,648
   18,851
229,703
36,622
     8,533

Total deposits

$314,450

$274,858

8%
6

6
46
10
27
71

14

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Off-Balance Sheet Arrangements, Variable Interest
Entities, Guarantees and Other Commitments
We consolidate our majority-owned subsidiaries and sub-
sidiaries in which we are the primary beneficiary. Generally,
we use the equity method of accounting if we own at least
20% of an entity and we carry the investment at cost if we
own less than 20% of an entity. See Note 1 (Summary of
Significant Accounting Policies) to Financial Statements for
our consolidation policy.

In the ordinary course of business, we engage in financial

transactions that are not recorded on the balance sheet, or
may be recorded on the balance sheet in amounts that are
different than the full contract or notional amount of the
transaction. These transactions are designed to (1) meet the
financial needs of customers, (2) manage our credit, market
or liquidity risks, (3) diversify our funding sources or 
(4) optimize capital, and are accounted for in accordance
with U.S. generally accepted accounting principles (GAAP).
Almost all of our off-balance sheet arrangements result
from securitizations. We routinely securitize home mortgage
loans and, from time to time, other financial assets, including
student loans, commercial mortgages and automobile receiv-
ables. We normally structure loan securitizations as sales, 
in accordance with FAS 140. This involves the transfer of
financial assets to certain qualifying special-purpose entities
that we are not required to consolidate. In a securitization,
we can convert the assets into cash earlier than if we held 
the assets to maturity. Special-purpose entities used in these
types of securitizations obtain cash to acquire assets by 
issuing securities to investors. In a securitization, we record 
a liability related to standard representations and warranties
we make to purchasers and issuers for receivables transferred.
Also, we generally retain the right to service the transferred
receivables and to repurchase those receivables from the 
special-purpose entity if the outstanding balance of the
receivable falls to a level where the cost exceeds the benefits
of servicing such receivables. 

At December 31, 2005, securitization arrangements
sponsored by the Company consisted of $121 billion in
securitized loan receivables, including $75 billion of home
mortgage loans. At December 31, 2005, the retained servicing
rights and other beneficial interests related to these securiti-
zations were $4,426 million, consisting of $3,501 million in
securities, $784 million in servicing assets and $141 million
in other retained interests. Related to our securitizations, 
we have committed to provide up to $40 million in 
credit enhancements. 

We also hold variable interests greater than 20% but 
less than 50% in certain special-purpose entities formed to
provide affordable housing and to securitize corporate 
debt that had approximately $3 billion in total assets at
December 31, 2005. We are not required to consolidate

these entities. Our maximum exposure to loss as a result of
our involvement with these unconsolidated variable interest
entities was approximately $870 million at December 31, 2005,
predominantly representing investments in entities formed to
invest in affordable housing. We, however, expect to recover
our investment over time primarily through realization of
federal low-income housing tax credits.

For more information on securitizations including sales
proceeds and cash flows from securitizations, see Note 20
(Securitizations and Variable Interest Entities) to Financial
Statements.

Home Mortgage, in the ordinary course of business, origi-
nates a portion of its mortgage loans through unconsolidated
joint ventures in which we own an interest of 50% or less.
Loans made by these joint ventures are funded by Wells Fargo
Bank, N.A., or an affiliated entity, through an established line
of credit and are subject to specified underwriting criteria. 
At December 31, 2005, the total assets of these mortgage
origination joint ventures were approximately $55 million.
We provide liquidity to these joint ventures in the form of
outstanding lines of credit and, at December 31, 2005, these
liquidity commitments totaled $358 million. 

We also hold interests in other unconsolidated joint 
ventures formed with unrelated third parties to provide 
efficiencies from economies of scale. A third party manages
our real estate lending services joint ventures and provides
customers title, escrow, appraisal and other real estate related
services. Our merchant services joint venture includes credit
card processing and related activities. At December 31, 2005,
total assets of our real estate lending and merchant services
joint ventures were approximately $715 million.

When we acquire brokerage, asset management and

insurance agencies, the terms of the acquisitions may provide
for deferred payments or additional consideration, based 
on certain performance targets. At December 31, 2005, the
amount of contingent consideration we expected to pay was
not significant to our financial statements. 

As a financial services provider, we routinely commit to
extend credit, including loan commitments, standby letters 
of credit and financial guarantees. A significant portion of
commitments to extend credit may expire without being drawn
upon. These commitments are subject to the same credit
policies and approval process used for our loans. For more
information, see Note 6 (Loans and Allowance for Credit
Losses) and Note 24 (Guarantees) to Financial Statements. 
In our venture capital and capital markets businesses, we

commit to fund equity investments directly to investment
funds and to specific private companies. The timing of future
cash requirements to fund these commitments generally
depends on the venture capital investment cycle, the period
over which privately-held companies are funded by venture
capital investors and ultimately sold or taken public. This

47

cycle can vary based on market conditions and the industry
in which the companies operate. We expect that many of
these investments will become public, or otherwise become
liquid, before the balance of unfunded equity commitments
is used. At December 31, 2005, these commitments were
approximately $650 million. Our other investment commit-
ments, principally related to affordable housing, civic and
other community development initiatives, were approximately
$465 million at December 31, 2005.

In the ordinary course of business, we enter into indem-

nification agreements, including underwriting agreements
relating to offers and sales of our securities, acquisition
agreements, and various other business transactions or
arrangements, such as relationships arising from service as 
a director or officer of the Company. For more information,
see Note 24 (Guarantees) to Financial Statements. 

Contractual Obligations 
In addition to the contractual commitments and arrange-
ments described above, which, depending on the nature of
the obligation, may or may not require use of our resources,
we enter into other contractual obligations in the ordinary
course of business, including debt issuances for the funding
of operations and leases for premises and equipment. 

Table 9 summarizes these contractual obligations at
December 31, 2005, except obligations for short-term 
borrowing arrangements and pension and postretirement
benefit plans. More information on these obligations is in
Note 11 (Short-Term Borrowings) and Note 15 (Employee
Benefits and Other Expenses) to Financial Statements. The
table also excludes other commitments more fully described
under “Off-Balance Sheet Arrangements, Variable Interest
Entities, Guarantees and Other Commitments.”

We enter into derivatives, which create contractual 
obligations, as part of our interest rate risk management
process, for our customers or for other trading activities. 
See “Asset/Liability and Market Risk Management” in this
report and Note 26 (Derivatives) to Financial Statements for
more information. 

Transactions with Related Parties
FAS 57, Related Party Disclosures, requires disclosure of
material related party transactions, other than compensation
arrangements, expense allowances and other similar items in
the ordinary course of business. The Company had no related
party transactions required to be reported under FAS 57 for
the years ended December 31, 2005, 2004 and 2003. 

Table 9: Contractual Obligations

(in millions)

Contractual payments by period:

Deposits
Long-term debt (2)
Operating leases
Purchase obligations (3)
Total contractual obligations

Note(s) to
Financial Statements

Less than
1 year

1-3
years

3-5
years

More than
5 years

Indeterminate

maturity (1)

Total

10
7, 12
7

$80,461
11,124
514
      548
$92,647

$ 5,785
27,704
786
      244
$34,519

$ 1,307
15,869
535
        28
$17,739

$

231
24,971
898
        —
$26,100

$226,666
—
—
          —
$226,666

$314,450
79,668
2,733
        820
$397,671

(1) Represents interest-bearing and noninterest-bearing checking, market rate and other savings accounts.
(2) Includes capital leases of $14 million.
(3) Represents agreements to purchase goods or services.

48

Risk Management

Credit Risk Management Process
Our credit risk management process provides for decentral-
ized management and accountability by our lines of business.
Our overall credit process includes comprehensive credit
policies, frequent and detailed risk measurement and model-
ing, extensive credit training programs and a continual loan
audit review process. In addition, regulatory examiners
review and perform detailed tests of our credit underwriting,
loan administration and allowance processes. 

Managing credit risk is a company-wide process. We have

credit policies for all banking and nonbanking operations
incurring credit risk with customers or counterparties that
provide a consistent, prudent approach to credit risk man-
agement. We use detailed tracking and analysis to measure
credit performance and exception rates and we routinely
review and modify credit policies as appropriate. We have
corporate data integrity standards to ensure accurate and
complete credit performance reporting. We strive to identify
problem loans early and have dedicated, specialized collec-
tion and work-out units.

The Chief Credit Officer, who reports directly to the
Chief Executive Officer, provides company-wide credit over-
sight. Each business unit with direct credit risks has a credit
officer and has the primary responsibility for managing its
own credit risk. The Chief Credit Officer delegates authority,
limits and other requirements to the business units. These
delegations are routinely reviewed and amended if there are
significant changes in personnel, credit performance, or busi-
ness requirements. The Chief Credit Officer is a member of
the Company’s Management Committee.

Our business units and the office of the Chief Credit
Officer periodically review all credit risk portfolios to ensure
that the risk identification processes are functioning properly
and that credit standards are followed. Business units con-
duct quality assurance reviews to ensure that loans meet
portfolio or investor credit standards. Our loan examiners
and internal auditors also independently review portfolios
with credit risk. 

Our primary business focus in middle-market commercial
and residential real estate, auto and small consumer lending,
results in portfolio diversification. We ensure that we use
appropriate methods to understand and underwrite risk.

In our wholesale portfolios, larger or more complex loans

are individually underwritten and judgmentally risk rated.
They are periodically monitored and prompt corrective
actions are taken on deteriorating loans. Smaller, more
homogeneous loans are approved and monitored using 
statistical techniques.

Retail loans are typically underwritten with statistical
decision-making tools and are managed throughout their life
cycle on a portfolio basis. The Chief Credit Officer establishes
corporate standards for model development and validation
to ensure sound credit decisions and regulatory compliance.

Each business unit completes quarterly asset quality fore-
casts to quantify its intermediate-term outlook for loan losses
and recoveries, nonperforming loans and market trends. To
make sure our overall allowance for credit losses is adequate
we conduct periodic stress tests. This includes a portfolio loss
simulation model that simulates a range of possible losses 
for various sub-portfolios assuming various trends in loan
quality. We assess loan portfolios for geographic, industry, 
or other concentrations and use mitigation strategies, which
may include loan sales, syndications or third party insurance,
to minimize these concentrations, as we deem necessary.
We routinely review and evaluate risks that are not 
borrower specific but that may influence the behavior of a
particular credit, group of credits or entire sub-portfolios. We
also assess risk for particular industries, geographic locations
such as states or Metropolitan Statistical Areas (MSAs) and
specific macroeconomic trends.

NONACCRUAL LOANS AND OTHER ASSETS
Table 10 shows the five-year trend for nonaccrual loans 
and other assets. We generally place loans on nonaccrual 
status when: 

• the full and timely collection of interest or principal

becomes uncertain; 

• they are 90 days (120 days with respect to real estate

1-4 family first and junior lien mortgages) past due for
interest or principal (unless both well-secured and in
the process of collection); or 

• part of the principal balance has been charged off. 
Note 1 (Summary of Significant Accounting Policies) to

Financial Statements describes our accounting policy for
nonaccrual loans.

The decrease in nonaccrual loans was primarily due 

to payoffs of commercial and commercial real estate 
nonaccrual loans.

We expect that the amount of nonaccrual loans will
change due to portfolio growth, portfolio seasoning, routine
problem loan recognition and resolution through collections,
sales or charge-offs. The performance of any one loan can 
be affected by external factors, such as economic conditions,
or factors particular to a borrower, such as actions of a 
borrower’s management. 

If interest due on the book balances of all nonaccrual
loans (including loans that were but are no longer on nonac-
crual at year end) had been accrued under the original terms,
approximately $85 million of interest would have been
recorded in 2005, compared with payments of $35 million
recorded as interest income. 

Most of the foreclosed assets at December 31, 2005, have

been in the portfolio one year or less.

49

Table 10: Nonaccrual Loans and Other Assets

(in millions)

Nonaccrual loans:

Commercial and commercial real estate:

Commercial
Other real estate mortgage
Real estate construction
Lease financing

Total commercial and commercial real estate

Consumer:

Real estate 1-4 family first mortgage
Real estate 1-4 family junior lien mortgage
Other revolving credit and installment

Total consumer

Foreign

Total nonaccrual loans (1)
As a percentage of total loans

Foreclosed assets
Real estate investments (2)

Total nonaccrual loans and other assets

As a percentage of total loans

                                                                                                     December 31,
2001

2004

2003

2002

2005

$ 286
165
31
       45
527

471
144
     171
786
       25
1,338

$   345
229
57
      68
699

386
92
     160
638
      21
1,358

$   592
285
56
  73
1,006

274
87
      88
449
        3
1,458

$ 796
192
93
      79
1,160

230
49
48
327
        5
1,492

.43%

.47%

.58%

.78%

191
         2

$1,531

212
        2

$1,572

198
        6

$1,662

195
        4

$1,691

.49%

.55%

.66%

.88%

$   827
210
145
163
1,345

205
22
59
286
   9
1,640

.98%

160
      2

$1,802

1.08%

(1) Includes impaired loans of $190 million, $309 million, $629 million, $612 million and $823 million at December 31, 2005, 2004, 2003, 2002 and 2001, respectively.

(See Note 1 (Summary of Significant Accounting Policies) and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements for further discussion of impaired loans.)

(2) Real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if these assets were recorded as loans.
Real estate investments totaled $84 million, $4 million, $9 million, $9 million and $24 million at December 31, 2005, 2004, 2003, 2002 and 2001, respectively.

Table 11: Loans 90 Days or More Past Due and Still Accruing
(Excluding Insured/Guaranteed GNMA Advances)

(in millions)

Commercial and 

commercial real estate:
Commercial
Other real estate 
mortgage

Real estate construction
Total commercial

and commercial 
real estate

Consumer:

Real estate 

1-4 family 
first mortgage

Real estate 

1-4 family junior 
lien mortgage

Credit card
Other revolving credit 
and installment
Total consumer

Foreign

Total

                                                        December 31,
2001
2003
2005

2004

2002

$ 18

$ 26

$ 87

$ 92

$ 60

13
      9

6
     6

9
6

7
11

22
   47

40

38

102

110

129

103

148

117

104

145

50
159

 290
602
    41

$683

40
150

 306
644
   76

29
134

 271
551
   43

18
130

 282
534
   28

17
116

268
546
23

$758

$696

$672

$698

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
Loans in this category are 90 days or more past due as to
interest or principal and still accruing, because they are 
(1) well-secured and in the process of collection or (2) real
estate 1-4 family first mortgage loans or consumer loans exempt
under regulatory rules from being classified as nonaccrual.
The total of loans 90 days or more past due and still
accruing was $3,606 million, $2,578 million, $2,337 million,
$672 million and $698 million at December 31, 2005, 2004,
2003, 2002 and 2001, respectively. At December 31, 2005, 2004,
and 2003, the total included $2,923 million, $1,820 million
and $1,641 million, respectively, in advances pursuant to
our servicing agreements to Government National Mortgage
Association (GNMA) mortgage pools whose repayments are
insured by the Federal Housing Administration or guaranteed
by the Department of Veterans Affairs. Before clarifying
guidance issued in 2003 as to classification as loans, GNMA
advances were included in other assets. Table 11 provides
detail by loan category excluding GNMA advances. 

50

ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses, which consists of the
allowance for loan losses and the reserve for unfunded credit
commitments, is management’s estimate of credit losses
inherent in the loan portfolio at the balance sheet date. We
assume that our allowance for credit losses as a percentage
of charge-offs and nonaccrual loans will change at different
points in time based on credit performance, loan mix and
collateral values. Any loan with past due principal or interest
that is not both well-secured and in the process of collection
generally is charged off (to the extent that it exceeds the fair
value of any related collateral) based on loan category after a
defined period of time. Also, a loan is charged off when clas-
sified as a loss by either internal loan examiners or regulatory
examiners. The detail of the changes in the allowance for
credit losses, including charge-offs and recoveries by loan
category, is in Note 6 (Loans and Allowance for Credit
Losses) to Financial Statements.

At December 31, 2005, the allowance for loan losses 

was $3.87 billion, or 1.25% of total loans, compared 
with $3.76 billion, or 1.31%, at December 31, 2004, and
$3.89 billion, or 1.54%, at December 31, 2003. The decrease
in the ratio of the allowance for loan losses to total loans was
primarily due to a continued shift toward a higher percentage
of consumer loans in our portfolio, including consumer loans
and some small business loans, which have shorter loss
emergence periods, and home mortgage loans, which have
inherently lower losses that emerge over a longer time frame
compared to other consumer products. We have historically
experienced lower losses on our residential real estate secured
consumer loan portfolio. 

The allowance for credit losses was $4.06 billion at

December 31, 2005, and $3.95 billion at December 31, 2004.
The ratio of the allowance for credit losses to net charge-offs
was 178% and 237% at December 31, 2005 and 2004,
respectively. This ratio fluctuates from period to period and
the decrease in 2005 reflects increased loss rates within the
various consumer and small business portfolios impacted by
higher consumer bankruptcies in fourth quarter 2005. 

The ratio of the allowance for credit losses to total nonac-
crual loans was 303% and 291% at December 31, 2005 and
2004, respectively. This ratio may fluctuate significantly from
period to period due to such factors as the mix of loan types
in the portfolio, borrower credit strength and the value and
marketability of collateral. Over half of nonaccrual loans
were home mortgages and other consumer loans at
December 31, 2005. Nonaccrual loans are generally written
down to a net realizable value at the time they are placed on
nonaccrual and accounted for on a cost recovery basis. 

The provision for credit losses totaled $2.38 billion in
2005, and $1.72 billion in both 2004 and 2003. In 2005, the
provision included $100 million in excess of net charge-offs,

which was our estimate of probable credit losses related 
to Hurricane Katrina. We continue to work with customers
under various payment moratoriums and forbearance 
programs to re-evaluate and refine our estimates as more
information becomes available and can be confirmed in 
subsequent quarters.

Net charge-offs in 2005 were .77% of average total
loans, compared with .62% in 2004 and .81% in 2003.
Higher net charge-offs in 2005 included the additional credit
losses from the change in bankruptcy laws and conforming
Wells Fargo Financial to FFIEC charge-off rules. A portion
of these bankruptcy charge-offs represent an acceleration of
charge-offs that would have likely occurred in 2006. The
increase in consumer bankruptcies primarily impacted our
credit card, unsecured consumer loans and lines, auto and
small business portfolios. 

The reserve for unfunded credit commitments was 
$186 million at December 31, 2005, and $188 million at
December 31, 2004, less than 5% of the total allowance for
credit losses related to this potential risk for both years.

The allocated component of the allowance for credit losses

was $3.41 billion at December 31, 2005, and $3.06 billion at
December 31, 2004, an increase of $347 million year over
year. Changes in the allocated allowance reflect changes in
statistically derived loss estimates, historical loss experience,
and current trends in borrower risk and/or general economic
activity on portfolio performance. The unallocated allowance
decreased to $648 million, or 16% of the allowance for credit
losses, at December 31, 2005, from $888 million, or 22%, at
December 31, 2004.

We consider the allowance for credit losses of $4.06 billion

adequate to cover credit losses inherent in the loan portfolio,
including unfunded credit commitments, at December 31, 2005.
The process for determining the adequacy of the allowance
for credit losses is critical to our financial results. It requires
difficult, subjective and complex judgments, as a result of 
the need to make estimates about the effect of matters that
are uncertain. (See “Financial Review – Critical Accounting
Policies – Allowance for Credit Losses.”) Therefore, we 
cannot provide assurance that, in any particular period, we
will not have sizeable credit losses in relation to the amount
reserved. We may need to significantly adjust the allowance
for credit losses, considering current factors at the time,
including economic conditions and ongoing internal and
external examination processes. Our process for determining
the adequacy of the allowance for credit losses is discussed
in Note 6 (Loans and Allowance for Credit Losses) to
Financial Statements.

51

Asset/Liability and Market Risk Management
Asset/liability management involves the evaluation, monitoring
and management of interest rate risk, market risk, liquidity
and funding. The Corporate Asset/Liability Management
Committee (Corporate ALCO) — which oversees these 
risks and reports periodically to the Finance Committee 
of the Board of Directors — consists of senior financial 
and business executives. Each of our principal business
groups—Community Banking (including Mortgage Banking),
Wholesale Banking and Wells Fargo Financial — have 
individual asset/liability management committees and
processes linked to the Corporate ALCO process.

INTEREST RATE RISK
Interest rate risk, which potentially can have a significant
earnings impact, is an integral part of being a financial inter-
mediary. We are subject to interest rate risk because: 

• assets and liabilities may mature or reprice at different
times (for example, if assets reprice faster than liabilities
and interest rates are generally falling, earnings will 
initially decline); 

• assets and liabilities may reprice at the same time but
by different amounts (for example, when the general
level of interest rates is falling, we may reduce rates
paid on checking and savings deposit accounts by an
amount that is less than the general decline in market
interest rates); 

• short-term and long-term market interest rates may

change by different amounts (for example, the shape 
of the yield curve may affect new loan yields and 
funding costs differently); or 

• the remaining maturity of various assets or liabilities
may shorten or lengthen as interest rates change (for
example, if long-term mortgage interest rates decline
sharply, mortgage-backed securities held in the securities
available for sale portfolio may prepay significantly earlier
than anticipated—which could reduce portfolio income). 

Interest rates may also have a direct or indirect effect on
loan demand, credit losses, mortgage origination volume, the
value of MSRs, the value of the pension liability and other
sources of earnings. 

We assess interest rate risk by comparing our most likely
earnings plan with various earnings simulations using many
interest rate scenarios that differ in the direction of interest
rate changes, the degree of change over time, the speed of
change and the projected shape of the yield curve. For exam-
ple, as of December 31, 2005, our most recent simulation
indicated estimated earnings at risk of less than 1% of our
most likely earnings plan over the next 12 months using a
scenario in which the federal funds rate dropped 200 basis
points to 2.25% and the 10-year Constant Maturity Treasury
bond yield dropped 125 basis points to 3.25% over the
same period. Simulation estimates depend on, and will
change with, the size and mix of our actual and projected

52

balance sheet at the time of each simulation. Due to timing
differences between the quarterly valuation of MSRs and
the eventual impact of interest rates on mortgage banking
volumes, earnings at risk in any particular quarter could 
be higher than the average earnings at risk over the twelve
month simulation period, depending on the path of interest
rates and on our MSRs hedging strategies. See “Mortgage
Banking Interest Rate Risk” below. 

We use exchange-traded and over-the-counter interest rate
derivatives to hedge our interest rate exposures. The notional
or contractual amount, credit risk amount and estimated net
fair values of these derivatives as of December 31, 2005 and
2004, are presented in Note 26 (Derivatives) to Financial
Statements. We use derivatives for asset/liability management
in three ways: 

• to convert a major portion of our long-term fixed-rate
debt, which we issue to finance the Company, from
fixed-rate payments to floating-rate payments by 
entering into receive-fixed swaps; 

• to convert the cash flows from selected asset and/or 

liability instruments/portfolios from fixed-rate payments
to floating-rate payments or vice versa; and 

• to hedge our mortgage origination pipeline, funded
mortgage loans and MSRs using interest rate swaps,
swaptions, futures, forwards and options. 

MORTGAGE BANKING INTEREST RATE RISK
We originate, fund and service mortgage loans, which subjects
us to various risks, including credit, liquidity and interest rate
risks. We avoid unwanted credit and liquidity risks by selling
or securitizing virtually all of the long-term fixed-rate mort-
gage loans we originate and most of the ARMs we originate.
From time to time, we hold originated ARMs in portfolio as
an investment for our growing base of core deposits, and we
may subsequently sell some or all of these ARMs as part of
our corporate asset/liability management.

While credit and liquidity risks are relatively low 
for mortgage banking activities, interest rate risk can be 
substantial. Changes in interest rates may potentially impact
origination and servicing fees, the value of our MSRs, the
income and expense associated with instruments used to hedge
changes in the value of MSRs, and the value of derivative
loan commitments extended to mortgage applicants.

Interest rates impact the amount and timing of origina-
tion and servicing fees because consumer demand for new
mortgages and the level of refinancing activity are sensitive
to changes in mortgage interest rates. Typically, a decline in
mortgage interest rates will lead to an increase in mortgage
originations and fees and, depending on our ability to retain
market share, may also lead to an increase in servicing fees.
Given the time it takes for consumer behavior to fully react
to interest rate changes, as well as the time required for 
processing a new application, providing the commitment, 
and securitizing and selling the loan, interest rate changes will

impact origination and servicing fees with a lag. The amount
and timing of the impact on origination and servicing fees
will depend on the magnitude, speed and duration of the
change in interest rates.

Under GAAP, MSRs are adjusted at the end of each 
quarter to the lower of cost or market. While the valuation 
of MSRs can be highly subjective and involve complex 
judgments by management about matters that are inherently
unpredictable, changes in interest rates influence a variety 
of assumptions included in the periodic valuation of MSRs.
Assumptions affected include prepayment speed, expected
returns and potential risks on the servicing asset portfolio,
the value of escrow balances and other servicing valuation
elements impacted by interest rates.

A decline in interest rates increases the propensity for 
refinancing, reduces the expected duration of the servicing
portfolio and therefore reduces the estimated value of MSRs.
This reduction in value causes a charge to income as a result
of increasing the valuation allowance for potential MSRs
impairment (net of any gains on derivatives used to hedge
MSRs). We typically do not fully hedge with financial 
instruments (derivatives or securities) all of the potential
decline in the value of our MSRs to a decline in interest rates
because the potential increase in origination/servicing fees 
in that scenario provides a partial “natural business hedge.”
In a rising rate period, when the MSRs valuation is not fully
hedged with derivatives, the amount of valuation allowance
that can be recaptured into income will typically — although
not always — exceed the losses on any derivatives hedging
the MSRs.

Hedging the various sources of interest rate risk in mort-
gage banking is a complex process that requires sophisticated
modeling and constant monitoring. While we attempt to 
balance these various aspects of the mortgage business, 
there are several potential risks to earnings:

• MSRs valuation changes associated with interest rate
changes are recorded in earnings immediately within
the accounting period in which those interest rate
changes occur, whereas the impact of those same
changes in interest rates on origination and servicing
fees occur with a lag and over time. Thus, the mortgage
business could be protected from adverse changes in
interest rates over a period of time on a cumulative
basis but still display large variations in income in any
accounting period.

• The degree to which the “natural business hedge” off-
sets changes in MSRs valuations is imperfect, varies at
different points in the interest rate cycle, and depends
not just on the direction of interest rates but on the
pattern of quarterly interest rate changes. For example,
given the relatively high level of refinancing activity in
recent years and the increase in interest rates in 2005,
any significant increase in refinancing activity would
likely occur only if rates drop substantially from year-
end 2005 levels.

• Origination volumes, the valuation of MSRs and hedging
results and associated costs are also impacted by many
factors. Such factors include the mix of new business
between ARMs and fixed-rated mortgages, the relation-
ship between short-term and long-term interest rates,
the degree of volatility in interest rates, the relationship
between mortgage interest rates and other interest rate
markets, and other interest rate factors. Many of these
factors are hard to predict and we may not be able to
directly or perfectly hedge their effect. 

• While our hedging activities are designed to balance

our mortgage banking interest rate risks, the financial
instruments we use, including mortgage, U.S. Treasury,
and LIBOR-based futures, forwards, swaps and options,
may not perfectly correlate with the values and income
being hedged.

Our MSRs totaled $12.5 billion, net of a valuation
allowance of $1.2 billion at December 31, 2005, and 
$7.9 billion, net of a valuation allowance of $1.6 billion, at
December 31, 2004. The weighted-average note rate of our
owned servicing portfolio was 5.72% at December 31, 2005,
and 5.75% at December 31, 2004. Our MSRs were 1.44%
of mortgage loans serviced for others at December 31, 2005,
and 1.15% at December 31, 2004. 

As part of our mortgage banking activities, we enter into
commitments to fund residential mortgage loans at specified
times in the future. A mortgage loan commitment is an interest
rate lock that binds us to lend funds to a potential borrower
at a specified interest rate and within a specified period of
time, generally up to 60 days after inception of the rate lock.
These loan commitments are derivative loan commitments if
the loans that will result from the exercise of the commitments
will be held for sale. Under FAS 133, Accounting for Derivative
Instruments and Hedging Activities (as amended), these 
derivative loan commitments are recognized at fair value 
on the consolidated balance sheet with changes in their fair
values recorded as part of income from mortgage banking
operations. Consistent with EITF 02-3, Issues Involved 
in Accounting for Derivative Contracts Held for Trading
Purposes and Contracts Involved in Energy Trading and Risk
Management Activities, and SEC Staff Accounting Bulletin
No. 105, Application of Accounting Principles to Loan
Commitments, we record no value for the loan commitment
at inception. Subsequent to inception, we recognize fair 
value of the derivative loan commitment based on estimated
changes in the fair value of the underlying loan that would
result from the exercise of that commitment and on changes
in the probability that the loan will fund within the terms of
the commitment. The value of that loan is affected primarily
by changes in interest rates and the passage of time. We also
apply a fall-out factor to the valuation of the derivative loan
commitment for the probability that the loan will not fund
within the terms of the commitments. The value of the MSRs is
recognized only after the servicing asset has been contractually
separated from the underlying loan by sale or securitization.

53

Outstanding derivative loan commitments expose us to 
the risk that the price of the loans underlying the commitments
might decline due to increases in mortgage interest rates from
inception of the rate lock to the funding of the loan. To 
minimize this risk, we utilize options, futures and forwards
to economically hedge the potential decreases in the values
of the loans that could result from the exercise of the loan
commitments. We expect that these derivative financial
instruments will experience changes in fair value that will
either fully or partially offset the changes in fair value of 
the derivative loan commitments.

MARKET RISK – TRADING ACTIVITIES
From a market risk perspective, our net income is exposed 
to changes in interest rates, credit spreads, foreign exchange
rates, equity and commodity prices and their implied 
volatilities. The primary purpose of our trading businesses 
is to accommodate customers in the management of their
market price risks. Also, we take positions based on market
expectations or to benefit from price differences between
financial instruments and markets, subject to risk limits
established and monitored by Corporate ALCO. All securities,
foreign exchange transactions, commodity transactions and
derivatives — transacted with customers or used to hedge
capital market transactions with customers — are carried at
fair value. The Institutional Risk Committee establishes and
monitors counterparty risk limits. The notional or contractual
amount, credit risk amount and estimated net fair value of
all customer accommodation derivatives at December 31, 2005
and 2004, are included in Note 26 (Derivatives) to Financial
Statements. Open, “at risk” positions for all trading business
are monitored by Corporate ALCO.

The standardized approach for monitoring and reporting

market risk for the trading activities is the value-at-risk
(VAR) metrics complemented with factor analysis and stress
testing. VAR measures the worst expected loss over a given
time interval and within a given confidence interval. We
measure and report daily VAR at 99% confidence interval
based on actual changes in rates and prices over the past
250 days. The analysis captures all financial instruments
that are considered trading positions. The average one-day
VAR throughout 2005 was $18 million, with a lower bound
of $11 million and an upper bound of $24 million.

MARKET RISK – EQUITY MARKETS
We are directly and indirectly affected by changes in the
equity markets. We make and manage direct equity invest-
ments in start-up businesses, emerging growth companies,
management buy-outs, acquisitions and corporate recapital-
izations. We also invest in non-affiliated funds that make
similar private equity investments. These private equity
investments are made within capital allocations approved 
by management and the Board of Directors (the Board).

54

The Board reviews business developments, key risks and 
historical returns for the private equity investments at least
annually. Management reviews these investments at least
quarterly and assesses them for possible other-than-temporary
impairment. For nonmarketable investments, the analysis is
based on facts and circumstances of each investment and the
expectations for that investment’s cash flows and capital needs,
the viability of its business model and our exit strategy. Private
equity investments totaled $1,537 million at December 31, 2005,
and $1,449 million at December 31, 2004. 

We also have marketable equity securities in the available
for sale investment portfolio, including securities relating to
our venture capital activities. We manage these investments
within capital risk limits approved by management and the
Board and monitored by Corporate ALCO. Gains and losses
on these securities are recognized in net income when realized
and other-than-temporary impairment may be periodically
recorded when identified. The initial indicator of impairment
for marketable equity securities is a sustained decline in market
price below the amount recorded for that investment. We
consider a variety of factors, such as the length of time and
the extent to which the market value has been less than cost;
the issuer’s financial condition, capital strength, and near-term
prospects; any recent events specific to that issuer and 
economic conditions of its industry; and, to a lesser degree,
our investment horizon in relationship to an anticipated 
near-term recovery in the stock price, if any. The fair value 
of marketable equity securities was $900 million and cost
was $558 million at December 31, 2005, and $696 million
and $507 million, respectively, at December 31, 2004.

Changes in equity market prices may also indirectly affect
our net income (1) by affecting the value of third party assets
under management and, hence, fee income, (2) by affecting
particular borrowers, whose ability to repay principal and/or
interest may be affected by the stock market, or (3) by
affecting brokerage activity, related commission income and
other business activities. Each business line monitors and
manages these indirect risks.

LIQUIDITY AND FUNDING
The objective of effective liquidity management is to ensure
that we can meet customer loan requests, customer deposit
maturities/withdrawals and other cash commitments effi-
ciently under both normal operating conditions and under
unpredictable circumstances of industry or market stress. 
To achieve this objective, Corporate ALCO establishes and
monitors liquidity guidelines that require sufficient asset-based
liquidity to cover potential funding requirements and to avoid
over-dependence on volatile, less reliable funding markets. 
We set these guidelines for both the consolidated balance sheet
and for the Parent to ensure that the Parent is a source of
strength for its regulated, deposit-taking banking subsidiaries.

Debt securities in the securities available for sale portfolio
provide asset liquidity, in addition to the immediately liquid
resources of cash and due from banks and federal funds sold and
securities purchased under resale agreements. The weighted-
average expected remaining maturity of the debt securities
within this portfolio was 5.9 years at December 31, 2005. Of
the $40.3 billion (cost basis) of debt securities in this portfolio
at December 31, 2005, $5.1 billion, or 13%, is expected to
mature or be prepaid in 2006 and an additional $5.5 billion,
or 14%, in 2007. Asset liquidity is further enhanced by our
ability to sell or securitize loans in secondary markets through
whole-loan sales and securitizations. In 2005, we sold mortgage
loans of approximately $435 billion, including securitized
home mortgage loans and commercial mortgage loans of
approximately $190 billion. The amount of mortgage loans,
home equity loans and other consumer loans available to 
be sold or securitized was approximately $150 billion at
December 31, 2005.

Core customer deposits have historically provided a sizeable

source of relatively stable and low-cost funds. Average core
deposits and stockholders’ equity funded 63.2% and 63.1%
of average total assets in 2005 and 2004, respectively.

The remaining assets were funded by long-term debt,
deposits in foreign offices, short-term borrowings (federal
funds purchased, securities sold under repurchase agreements,
commercial paper and other short-term borrowings) and
trust preferred securities. Short-term borrowings averaged
$24.1 billion in 2005 and $26.1 billion in 2004. Long-term
debt averaged $79.1 billion in 2005 and $67.9 billion in 2004.
We anticipate making capital expenditures of approxi-
mately $900 million in 2006 for our stores, relocation and
remodeling of Company facilities, and routine replacement
of furniture, equipment and servers. We fund expenditures
from various sources, including cash flows from operations,
retained earnings and borrowings.

Liquidity is also available through our ability to raise
funds in a variety of domestic and international money and
capital markets. We access capital markets for long-term
funding by issuing registered debt, private placements and
asset-backed secured funding. Rating agencies base their
ratings on many quantitative and qualitative factors, including
capital adequacy, liquidity, asset quality, business mix and
level and quality of earnings. Material changes in these 
factors could result in a different debt rating; however, a
change in debt rating would not cause us to violate any of
our debt covenants. In September 2003, Moody’s Investors
Service rated Wells Fargo Bank, N.A. as “Aaa,” its highest
investment grade, and rated the Company’s senior debt 
rating as “Aa1.” In July 2005, Dominion Bond Rating
Service raised the Company’s senior debt rating to “AA”
from “AA(low).” 

Table 12 provides the credit ratings of the Company and

Wells Fargo Bank, N.A. as of December 31, 2005.

Table 12: Credit Ratings

Wells Fargo & Company Wells Fargo Bank, N.A.
Senior Subordinated Commercial Long-term Short-term 
borrowings
debt

deposits

paper

debt

Moody’s
Standard &
Poor’s
Fitch, Inc.
Dominion Bond 
Rating Service

Aa1

Aa2

AA-
AA

A+
AA-

P-1

A-1+
F1+

Aaa

AA
AA+

P-1

A-1+
F1+

AA

AA(low)

R-1(middle) AA(high) R-1(high)

On June 29, 2005, the SEC adopted amendments to its
rules with respect to the registration, communications and
offerings processes under the Securities Act of 1933. The rules,
which became effective December 1, 2005, facilitate access
to the capital markets by well-established public companies,
modernize the existing restrictions on corporate communications
during a securities offering and further integrate disclosures
under the Securities Act of 1933 and the Securities Exchange
Act of 1934. The amended rules provide the most flexibility
to “well-known seasoned issuers” (Seasoned Issuers),
including the option of automatic effectiveness upon filing 
of shelf registration statements and relief under the less
restrictive communications rules. Seasoned Issuers generally
include those companies with a public float of common 
equity of at least $700 million or those companies that have
issued at least $1 billion in aggregate principal amount of
non-convertible securities, other than common equity, in the
last three years. Based on each of these criteria calculated 
as of December 1, 2005, the Company met the eligibility
requirements to qualify as a Seasoned Issuer.

PARENT. In July 2005, the Parent’s registration statement with
the SEC for issuance of $30 billion in senior and subordinated
notes, preferred stock and other securities became effective.
During 2005, the Parent issued a total of $16.0 billion of senior
notes, including approximately $1.3 billion (denominated 
in pounds sterling) sold primarily in the United Kingdom.
Also, in 2005, the Parent issued $1.5 billion (denominated 
in Australian dollars) in senior notes under the Parent’s
Australian debt issuance program. At December 31, 2005,
the Parent’s remaining authorized issuance capacity under its
effective registration statements was $24.8 billion. We used the
proceeds from securities issued in 2005 for general corporate
purposes and expect that the proceeds in the future will
also be used for general corporate purposes. In January and
February 2006, the Parent issued a total of $3.6 billion in senior
notes, including approximately $900 million denominated 
in pounds sterling. The Parent also issues commercial paper
from time to time. 

55

WELLS FARGO BANK, N.A. In March 2003, Wells Fargo Bank, N.A.
established a $50 billion bank note program under which 
it may issue up to $20 billion in short-term senior notes 
outstanding at any time and up to a total of $30 billion in
long-term senior notes. Securities are issued under this 
program as private placements in accordance with Office of
the Comptroller of the Currency (OCC) regulations. During
2005, Wells Fargo Bank, N.A. issued $2.3 billion in long-term
senior notes. At December 31, 2005, the remaining long-term
issuance authority was $6.7 billion. Wells Fargo Bank, N.A.
also issued $1.5 billion in subordinated debt in 2005.

Capital Management

We have an active program for managing stockholder capital.
We use capital to fund organic growth, acquire banks and
other financial services companies, pay dividends and repur-
chase our shares. Our objective is to produce above-market
long-term returns by opportunistically using capital when
returns are perceived to be high and issuing/accumulating
capital when such costs are perceived to be low.

From time to time our Board of Directors authorizes 
the Company to repurchase shares of our common stock.
Although we announce when our Board authorizes share
repurchases, we typically do not give any public notice
before we repurchase our shares. Various factors determine
the amount and timing of our share repurchases, including
our capital requirements, the number of shares we expect 
to issue for acquisitions and employee benefit plans, market
conditions (including the trading price of our stock), and
legal considerations. These factors can change at any time,
and there can be no assurance as to the number of shares 
we will repurchase or when we will repurchase them.

Historically, our policy has been to repurchase shares
under the “safe harbor” conditions of Rule 10b-18 of the
Exchange Act including a limitation on the daily volume of
repurchases. Rule 10b-18 imposes an additional daily volume
limitation on share repurchases during a pending merger or
acquisition in which shares of our stock will constitute some
or all of the consideration. Our management may determine
that during a pending stock merger or acquisition when 
the safe harbor would otherwise be available, it is in the
Company’s best interest to repurchase shares in excess of 

WELLS FARGO FINANCIAL. In November 2003, Wells Fargo
Financial Canada Corporation (WFFCC), a wholly-owned
Canadian subsidiary of Wells Fargo Financial, Inc. (WFFI),
qualified for distribution with the provincial securities
exchanges in Canada $1.5 billion (Canadian) of issuance
authority. In December 2004, WFFCC amended its existing
shelf registration by adding $2.5 billion (Canadian) of
issuance authority. During 2005, WFFCC issued $2.2 billion
(Canadian) in senior notes. The remaining issuance capacity
for WFFCC of $700 million (Canadian) expired in
December 2005. In January 2006, a $7.0 billion (Canadian)
shelf registration became effective. In 2005, WFFI entered
into a secured borrowing arrangement for $1 billion (U.S.).
Under the terms of the arrangement, WFFI pledged auto
loans as security for the borrowing.

this additional daily volume limitation. In such cases, we
intend to repurchase shares in compliance with the other
conditions of the safe harbor, including the standing daily
volume limitation that applies whether or not there is a
pending stock merger or acquisition. 

In 2005, the Board of Directors authorized the repurchase 

of up to 75 million additional shares of our outstanding
common stock. During 2005, we repurchased approximately
53 million shares of our common stock. At December 31, 2005,
the total remaining common stock repurchase authority was
approximately 35 million shares. 

Our potential sources of capital include retained earnings,

and issuances of common and preferred stock and subordi-
nated debt. In 2005, retained earnings increased $4.1 billion,
predominantly as a result of net income of $7.7 billion less
dividends of $3.4 billion. In 2005, we issued $1.9 billion of
common stock under various employee benefit and director
plans and under our dividend reinvestment and direct stock
purchase programs. 

The Company and each of our subsidiary banks are 
subject to various regulatory capital adequacy requirements
administered by the Federal Reserve Board and the OCC.
Risk-based capital guidelines establish a risk-adjusted ratio
relating capital to different categories of assets and off-balance
sheet exposures. At December 31, 2005, the Company and
each of our covered subsidiary banks were “well capitalized”
under applicable regulatory capital adequacy guidelines. See
Note 25 (Regulatory and Agency Capital Requirements) to
Financial Statements for additional information.

56

Comparison of 2004 with 2003

Net income in 2004 increased 13% to $7.0 billion from 
$6.2 billion in 2003. Diluted earnings per common share
increased 12% to $4.09 in 2004 from $3.65 in 2003. In
addition to incremental investments in new stores, sales-
focused team members and technology, 2004 results included
$217 million ($.08 per share) of charitable contribution
expense for the Wells Fargo Foundation, $44 million ($.02
per share) for a special 401(k) contribution and $19 million
($.01 per share) in integration expense related to the Strong
Financial transaction. We also took significant actions to
reposition our balance sheet in 2004 designed to improve
earning asset yields and to reduce long-term debt costs. The
extinguishment of high interest rate debt reduced earnings by
$174 million ($.06 per share) for 2004. Return on average
assets was 1.71% and return on average common equity was
19.56% in 2004, up from 1.64% and 19.36%, respectively,
for 2003.

Net interest income on a taxable-equivalent basis was
$17.3 billion in 2004, compared with $16.1 billion in 2003,
an increase of 7%. The increase was primarily due to strong
consumer loan growth, especially in mortgage products. The
benefit of this growth was partially offset by lower loan yields
as new volumes were added below the portfolio average.
The net interest margin for 2004 decreased to 4.89%
from 5.08% in 2003. The decrease was primarily due to
lower investment portfolio yields following maturities and
prepayments of higher yielding mortgage-backed securities,
and the addition of new consumer and commercial loans
with yields below the existing portfolio average. These 
factors were partially offset by the benefits of balance 
sheet repositioning actions taken in 2004.

Noninterest income was $12.9 billion in 2004, compared

with $12.4 billion in 2003, an increase of 4%, driven by
growth across our business, with particular strength in trust,
investment and IRA fees, card fees, loan fees and gains on
equity investments. 

Mortgage banking noninterest income was $1,860 million
in 2004, compared with $2,512 million in 2003. Net servicing
income was $1,037 million in 2004, compared with losses 
of $954 million in 2003. The increase in net servicing income
in 2004, compared with 2003, reflected a reduction of 
$934 million in amortization due to an increase in average

interest rates and higher gross servicing fees resulting from
growth in the servicing portfolio. In addition, to reflect the
higher value of our MSRs, we reversed $208 million of the
valuation allowance in 2004, compared with an impairment
provision of $1,092 million in 2003. Net derivative gains on
fair value hedges of our MSRs were $554 million and
$1,111 million in 2004 and 2003, respectively. 

Net gains on mortgage loan origination/sales activities
were $539 million in 2004, compared with $3,019 million
for 2003. Lower gains in 2004 compared with 2003 reflected
lower origination volume and a decrease in margins, due 
primarily to the increase in average interest rates and lower
consumer demand. Originations during 2004 declined to
$298 billion from $470 billion in 2003. 

Revenue, the sum of net interest income and noninterest
income, increased 6% to a record $30.1 billion in 2004 from
$28.4 billion in 2003, despite a 37% decrease in mortgage
originations as the refinance driven market declined from its
exceptional 2003 level. Despite our balance sheet reposition-
ing actions in 2004, which reduced 2004 revenue growth by
approximately 1 percentage point due to the loss on sale of
lower yielding assets, and our significant level of investment
spending, operating leverage improved during 2004 with 
revenue growing 6% and noninterest expense up only 2%.
For the year, Home Mortgage revenue declined $807 million,
or 16%, from $5.2 billion in 2003 to $4.4 billion in 2004. 

Noninterest expense was $17.6 billion in 2004, compared

with $17.2 billion in 2003, an increase of 2%. 

During 2004, net charge-offs were $1.67 billion, or
.62% of average total loans, compared with $1.72 billion,
or .81%, during 2003. The provision for credit losses was
$1.72 billion in 2004, flat compared with 2003. The allowance
for credit losses, which consists of the allowance for loan 
losses and the reserve for unfunded credit commitments, was
$3.95 billion, or 1.37% of total loans, at December 31, 2004,
and $3.89 billion, or 1.54%, at December 31, 2003.

At December 31, 2004, total nonaccrual loans were 

$1.36 billion, or .47% of total loans, down from $1.46 billion,
or .58%, at December 31, 2003. Foreclosed assets were
$212 million at December 31, 2004, compared with 
$198 million at December 31, 2003.

57

Controls and Procedures

Disclosure Controls and Procedures

As required by SEC rules, the Company’s management evaluated the effectiveness, as of December 31, 2005, of the
Company’s disclosure controls and procedures. The Company’s chief executive officer and chief financial officer 
participated in the evaluation. Based on this evaluation, the Company’s chief executive officer and the chief financial
officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2005.

Internal Control over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange 
Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal
financial officers and effected by the company’s board of directors, management and other personnel, to provide 
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with GAAP and includes those policies and procedures that:

• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions 

and dispositions of assets of the company;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial

statements in accordance with GAAP, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or 

disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become 
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate. No change occurred during fourth quarter 2005 that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting. Management’s report on internal control
over financial reporting is set forth below, and should be read with these limitations in mind.

Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial
reporting for the Company. Management assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2005, using the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control – Integrated Framework. Based on this assessment, management
concluded that as of December 31, 2005, the Company’s internal control over financial reporting was effective.

KPMG LLP, the independent registered public accounting firm that audited the Company’s financial statements

included in this Annual Report, issued an audit report on management’s assessment of the Company’s internal 
control over financial reporting. KPMG’s audit report appears on the following page.

58

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders 
Wells Fargo & Company:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control
over Financial Reporting, that Wells Fargo & Company and Subsidiaries (“the Company”) maintained effective 
internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Company’s management is responsible for maintaining effective internal control over financial reporting and 
for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an
opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over
financial reporting based on our audit. 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing
and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on
the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures 
may deteriorate. 

In our opinion, management’s assessment that the Company maintained effective internal control over financial
reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal
Control – Integrated Framework issued by COSO. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established 
in Internal Control – Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheet of the Company as of December 31, 2005 and 2004, and the related
consolidated statements of income, changes in stockholders’ equity and comprehensive income, and cash flows for
each of the years in the three-year period ended December 31, 2005, and our report dated February 21, 2006,
expressed an unqualified opinion on those consolidated financial statements.

San Francisco, California
February 21, 2006 

59

Financial Statements

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Income

(in millions, except per share amounts)

INTEREST INCOME
Trading assets
Securities available for sale
Mortgages held for sale
Loans held for sale
Loans
Other interest income

Total interest income

INTEREST EXPENSE
Deposits
Short-term borrowings
Long-term debt
Guaranteed preferred beneficial interests 

in Company’s subordinated debentures

Total interest expense

NET INTEREST INCOME
Provision for credit losses
Net interest income after provision for credit losses

NONINTEREST INCOME
Service charges on deposit accounts
Trust and investment fees
Card fees
Other fees
Mortgage banking
Operating leases
Insurance
Net gains (losses) on debt securities available for sale
Net gains from equity investments
Other

Total noninterest income

NONINTEREST EXPENSE
Salaries
Incentive compensation
Employee benefits
Equipment
Net occupancy
Operating leases
Other

Total noninterest expense

INCOME BEFORE INCOME TAX EXPENSE 
Income tax expense

NET INCOME

EARNINGS PER COMMON SHARE 

DILUTED EARNINGS PER COMMON SHARE 

DIVIDENDS DECLARED PER COMMON SHARE

Average common shares outstanding

Diluted average common shares outstanding

The accompanying notes are an integral part of these statements.

60

2005

$

190
1,921
2,213
146
21,260
         232
  25,962

3,848
744
2,866

           —
     7,458

18,504
     2,383
   16,121

2,512
2,436
1,458
1,929
2,422
812
1,215
(120)
511
     1,270
  14,445

6,215
2,366
1,874
1,267
1,412
635
     5,249
   19,018

11,548
     3,877

$ 7,671

$

$

$

4.55

4.50

2.00

1,686.3

1,705.5

Year ended December 31,
2003

2004

$

145
1,883
1,737
292
16,781
       129
 20,967

1,827
353
1,637

         —
    3,817

17,150
    1,717
 15,433

2,417
2,116
1,230
1,779
1,860
836
1,193
(15)
394
    1,099
 12,909

5,393
1,807
1,724
1,236
1,208
633
    5,572
 17,573

10,769
    3,755

$   7,014

$

$

$

4.15

4.09

1.86

1,692.2

1,713.4

$

156
1,816
3,136
251
13,937
       122
  19,418

1,613
322
1,355

       121
     3,411

16,007
     1,722
  14,285

2,297
1,937
1,079
1,560
2,512
937
1,071
4
55
       930
  12,382

4,832
2,054
1,560
1,246
1,177
702
     5,619
  17,190

9,477
     3,275

$ 6,202

$

$

$

3.69

3.65

1.50

1,681.1

1,697.5

Wells Fargo & Company and Subsidiaries
Consolidated Balance Sheet

(in millions, except shares)

ASSETS
Cash and due from banks
Federal funds sold, securities purchased under 

resale agreements and other short-term investments

Trading assets
Securities available for sale
Mortgages held for sale
Loans held for sale

Loans
Allowance for loan losses

Net loans

Mortgage servicing rights, net
Premises and equipment, net
Goodwill
Other assets

Total assets

LIABILITIES
Noninterest-bearing deposits
Interest-bearing deposits

Total deposits

Short-term borrowings
Accrued expenses and other liabilities
Long-term debt

Total liabilities

STOCKHOLDERS’ EQUITY
Preferred stock
Common stock – $12/3 par value, authorized 6,000,000,000 shares;

issued 1,736,381,025 shares 

Additional paid-in capital
Retained earnings
Cumulative other comprehensive income
Treasury stock – 58,797,993 shares and 41,789,388 shares 
Unearned ESOP shares

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these statements.

          December 31,
2004

2005

$ 15,397

$  12,903

5,306
10,905
41,834
40,534
612

310,837
     (3,871)

 306,966

12,511
4,417
10,787
   32,472
$481,741

$ 87,712
 226,738

314,450
23,892
23,071
    79,668

 441,081

5,020
9,000
33,717
29,723
8,739

287,586
    (3,762)

 283,824

7,901
3,850
10,681
   22,491
$427,849

$ 81,082
 193,776

274,858
21,962
19,583
   73,580

 389,983

325

270

2,894
9,934
30,580
665
(3,390)
        (348)

    40,660

$481,741

2,894
9,806
26,482
950
(2,247)
       (289)

   37,866

$427,849

61

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income

(in millions, except shares)

BALANCE DECEMBER 31, 2002
Comprehensive income
Net income – 2003
Other comprehensive income, net of tax:

Translation adjustments
Net unrealized losses on securities available
for sale and other retained interests
Net unrealized gains on derivatives and

hedging activities

Total comprehensive income
Common stock issued
Common stock issued for acquisitions
Common stock repurchased
Preferred stock (260,200) issued to ESOP
Preferred stock released to ESOP
Preferred stock (223,660) converted 

to common shares

Preferred stock (1,460,000) redeemed
Preferred stock dividends
Common stock dividends
Change in Rabbi trust assets and similar

arrangements (classified as treasury stock)

Other, net
Net change

BALANCE DECEMBER 31, 2003
Comprehensive income
Net income – 2004
Other comprehensive income, net of tax:

Translation adjustments
Net unrealized losses on securities available
for sale and other retained interests
Net unrealized gains on derivatives and

hedging activities

Total comprehensive income
Common stock issued
Common stock issued for acquisitions
Common stock repurchased
Preferred stock (321,000) issued to ESOP
Preferred stock released to ESOP
Preferred stock (265,537) converted 

to common shares
Common stock dividends
Change in Rabbi trust assets and similar

arrangements (classified as treasury stock)

Other, net
Net change

BALANCE DECEMBER 31, 2004
Comprehensive income
Net income – 2005
Other comprehensive income, net of tax:

Translation adjustments
Net unrealized losses on securities available
for sale and other retained interests
Net unrealized gains on derivatives and

hedging activities
Total comprehensive income
Common stock issued
Common stock issued for acquisitions
Common stock repurchased
Preferred stock (363,000) issued to ESOP
Preferred stock released to ESOP
Preferred stock (307,100) converted 

to common shares
Common stock dividends
Other, net
Net change

BALANCE DECEMBER 31, 2005

Number
of common
shares

Preferred
stock

Common Additional
paid-in
capital

stock

Retained
earnings

Cumulative
other
comprehensive
income

Treasury Unearned
ESOP
shares

stock

Total
stock-
holders’
equity

1,685,906,507

$ 251

$ 2,894

$ 9,498

$ 19,355

$ 976

$ (2,465)

$(190)

$ 30,319

6,202

(190)

(3)
(2,527)

63
66

19
(16)

13

26

(117)

53

1,221
585
(1,482)

211

(279)
240

26,063,731
12,399,597
(30,779,500)

4,519,039

260

(224)
(73)

___________
     12,202,867

____
   (37)

______
       —

______
    145

             5
    3,487

_____
   (38)

97
______
     632

_____
    (39)

6,202

26

(117)

         53
6,164
1,094
651
(1,482)
—
224

—
(73)
(3)
(2,527)

97
           5
   4,150

1,698,109,374

  214

  2,894

   9,643

   22,842

   938

  (1,833)

  (229)

  34,469

7,014

(206)

(3,150)

129
1

23
(19)

29

29,969,653
153,482
(38,172,556)

321

4,531,684

(265)

______________
       (3,517,737)

1,694,591,637

_____
    56

 270

_______
       —

_______
      163

        (18)
     3,640

 2,894

 9,806

 26,482

12

(22)

22

______
    12

  950

5

(298)

8

7,014

12

(22)

          22
7,026
1,446
9
(2,188)
—
265

—
(3,150)

7
        (18)
    3,397

1,523
8
(2,188)

236

(344)
284

7
_________
      (414)

______
    (60)

 (2,247)

  (289)

  37,866

7,671

5

(298)

            8
7,386
1,510
122
(3,159)
—
307

—
(3,375)
            3
    2,794

1,617
110
(3,159)

286

(387)
328

7,671

(198)

91
12

25
(21)

21

28,764,493
1,954,502
(52,798,864)

362

5,071,264

(307)

_____________
    (17,008,605)

1,677,583,032

_____
    55

$325

______
        —

______
     128

(3,375)
________
     4,098

_____
 (285)

           3
  (1,143)

_____
    (59)

$2,894

$9,934

$30,580

$ 665

$(3,390)

$(348)

$40,660

The accompanying notes are an integral part of these statements.

62

Net cash provided (used) by operating activities

      (9,333)

       6,485

Wells Fargo & Company and Subsidiaries
Consolidated Statement of Cash Flows

(in millions)

Cash flows from operating activities:

Net income
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses
Provision (reversal of provision) for mortgage servicing rights in excess of fair value
Depreciation and amortization
Net gains on securities available for sale
Net gains on mortgage loan origination/sales activities 
Other net losses (gains)
Preferred shares released to ESOP
Net decrease (increase) in trading assets
Net increase in deferred income taxes
Net increase in accrued interest receivable
Net increase (decrease) in accrued interest payable
Originations of mortgages held for sale
Proceeds from sales of mortgages originated for sale
Principal collected on mortgages originated for sale
Net decrease (increase) in loans originated for sale 
Other assets, net
Other accrued expenses and liabilities, net

Cash flows from investing activities:
Securities available for sale:

Sales proceeds
Prepayments and maturities
Purchases

Net cash acquired from (paid for) acquisitions
Increase in banking subsidiaries’ loan originations, net of collections
Proceeds from sales (including participations) of loans by banking subsidiaries
Purchases (including participations) of loans by banking subsidiaries 
Principal collected on nonbank entities’ loans
Loans originated by nonbank entities
Purchases of loans by nonbank entities
Proceeds from sales of foreclosed assets
Net increase in federal funds sold, securities purchased 

under resale agreements and other short-term investments

Net increase in mortgage servicing rights
Other, net

Net cash used by investing activities

Cash flows from financing activities:

Net increase in deposits
Net increase (decrease) in short-term borrowings
Proceeds from issuance of long-term debt
Long-term debt repayment
Proceeds from issuance of guaranteed preferred beneficial interests 

in Company’s subordinated debentures

Proceeds from issuance of common stock
Preferred stock redeemed
Common stock repurchased
Cash dividends paid on preferred and common stock
Other, net

Net cash provided by financing activities

Net change in cash and due from banks

Cash and due from banks at beginning of year

Cash and due from banks at end of year

Supplemental disclosures of cash flow information:

Cash paid during the year for:

Interest
Income taxes

2005

Year ended December 31,

2004

2003

$

7,671

$

7,014

$

6,202

2,383
(378)
4,161
(40)
(1,085)
(75)
307
(1,905)
813
(796)
311
(230,897)
214,740
1,426
683
(10,237)
       3,585

1,717
(208)
3,449
(60)
(539)
9
265
(81)
432
(196)
47
(221,978)
217,272
1,409
(1,331)
(2,468)
       1,732

19,059
6,972
(28,634)
66
(42,309)
42,239
(8,853)
22,822
(33,675)
—
444

(281)
(4,595)
      (3,324)

    (30,069)

38,961
1,878
26,473
(18,576)

—
1,367
—
(3,159)
(3,375)
      (1,673)

     41,896

2,494

     12,903

$ 15,397

6,322
8,823
(16,583)
(331)
(33,800)
14,540
(5,877)
17,996
(27,751)
—
419

(1,287)
(1,389)
         (516)

   (39,434)

27,327
(2,697)
29,394
(19,639)

—
1,271
—
(2,188)
(3,150)
           (13)

    30,305

(2,644)

     15,547

$ 12,903

1,722
1,092
4,305
(62)
(3,019)
(11)
224
1,248
1,698
(148)
(63)
(382,335)
404,207
3,136
(832)
(5,099)
     (1,070)

31,195

7,357
13,152
(25,131)
(822)
(36,235)
1,590
(15,087)
17,638
(21,792)
(3,682)
264

(208)
(3,875)
      3,852

(62,979)

28,643
(8,901)
29,490
(17,931)

700
944
(73)
(1,482)
(2,530)
         651

    29,511

(2,273)

    17,820

$ 15,547

$

7,769
3,584

$

3,864
2,326

$

3,348
2,713

Noncash investing and financing activities:

Net transfers from loans to mortgages held for sale
Net transfers from loans held for sale to loans
Transfers from loans to foreclosed assets
Transfers from mortgages held for sale to securities available for sale

41,270
7,444
567
5,490

11,225
—
603
—

The accompanying notes are an integral part of these statements.

368
—
411
—

63

Notes to Financial Statements

Note 1: Summary of Significant Accounting Policies

Trading Assets
Trading assets are primarily securities, including corporate
debt, U.S. government agency obligations and other securities
that we acquire for short-term appreciation or other trading
purposes, and the fair value of derivatives held for customer
accommodation purposes or proprietary trading. Trading
assets are carried at fair value, with realized and unrealized
gains and losses recorded in noninterest income.

Securities
SECURITIES AVAILABLE FOR SALE Debt securities that we might
not hold until maturity and marketable equity securities are
classified as securities available for sale and reported at esti-
mated fair value. Unrealized gains and losses, after applicable
taxes, are reported in cumulative other comprehensive income.
We use current quotations, where available, to estimate the
fair value of these securities. Where current quotations are
not available, we estimate fair value based on the present
value of future cash flows, adjusted for the credit rating of
the securities, prepayment assumptions and other factors. 

We reduce the asset value when we consider the declines
in the value of debt securities and marketable equity securi-
ties to be other-than-temporary and record the estimated loss
in noninterest income. The initial indicator of impairment
for both debt and marketable equity securities is a sustained
decline in market price below the amount recorded for that
investment. We consider the length of time and the extent 
to which market value has been less than cost, any recent
events specific to the issuer and economic conditions of its
industry and our investment horizon in relationship to an
anticipated near-term recovery in the stock or bond price, 
if any.

For marketable equity securities, we also consider the
issuer’s financial condition, capital strength, and near-term
prospects.

For debt securities we also consider:
• the cause of the price decline – general level of interest

rates and industry and issuer-specific factors;

• the issuer’s financial condition, near term prospects 
and current ability to make future payments in a 
timely manner;

• the issuer’s ability to service debt; and
• any change in agencies’ ratings at evaluation date from

acquisition date and any likely imminent action.

Wells Fargo & Company is a diversified financial services
company. We provide banking, insurance, investments, 
mortgage banking and consumer finance through banking
stores, the internet and other distribution channels to 
consumers, businesses and institutions in all 50 states of 
the U.S. and in other countries. In this Annual Report, 
Wells Fargo & Company and Subsidiaries (consolidated) 
are called the Company. Wells Fargo & Company (the Parent)
is a financial holding company and a bank holding company.
Our accounting and reporting policies conform with 
U.S. generally accepted accounting principles (GAAP) and
practices in the financial services industry. To prepare the
financial statements in conformity with GAAP, management
must make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and income and expenses during the reporting
period. Management has made significant estimates in several
areas, including the allowance for credit losses (Note 6),
valuing mortgage servicing rights (Notes 20 and 21) and
pension accounting (Note 15). Actual results could differ
from those estimates. 

The following is a description of our significant 

accounting policies.

Consolidation
Our consolidated financial statements include the accounts
of the Parent and our majority-owned subsidiaries and vari-
able interest entities (VIEs) (defined below) in which we are
the primary beneficiary. Significant intercompany accounts
and transactions are eliminated in consolidation. If we own
at least 20% of an entity, we generally account for the
investment using the equity method. If we own less than
20% of an entity, we generally carry the investment at cost,
except marketable equity securities, which we carry at fair
value with changes in fair value included in other compre-
hensive income. Assets accounted for under the equity or
cost method are included in other assets.

We are a variable interest holder in certain special pur-
pose entities in which we do not have a controlling financial
interest or do not have enough equity at risk for the entity to
finance its activities without additional subordinated finan-
cial support from other parties. Our variable interest arises
from contractual, ownership or other monetary interests in
the entity, which change with fluctuations in the entity’s net
asset value. We consolidate a VIE if we are the primary ben-
eficiary because we will absorb a majority of the entity’s
expected losses, receive a majority of the entity’s expected
residual returns, or both. 

64

We manage these investments within capital risk limits
approved by management and the Board of Directors and
monitored by the Corporate Asset/Liability Management
Committee. We recognize realized gains and losses on the
sale of these securities in noninterest income using the 
specific identification method. 

Unamortized premiums and discounts are recognized in
interest income over the contractual life of the security using
the interest method. As principal repayments are received 
on securities (i.e., primarily mortgage-backed securities) a
pro-rata portion of the unamortized premium or discount is
recognized in interest income.

NONMARKETABLE EQUITY SECURITIES Nonmarketable equity
securities include venture capital equity securities that are
not publicly traded and securities acquired for various pur-
poses, such as to meet regulatory requirements (for example,
Federal Reserve Bank and Federal Home Loan Bank stock).
We review these assets at least quarterly for possible other-
than-temporary impairment. Our review typically includes
an analysis of the facts and circumstances of each invest-
ment, the expectations for the investment’s cash flows and
capital needs, the viability of its business model and our exit
strategy. These securities are accounted for under the cost or
equity method and are included in other assets. We reduce
the asset value when we consider declines in value to be
other-than-temporary. We recognize the estimated loss as 
a loss from equity investments in noninterest income.

Mortgages Held for Sale
Mortgages held for sale include residential mortgages that
were originated in accordance with secondary market pricing
and underwriting standards and certain mortgages originated
initially for investment and not underwritten to secondary
market standards, and are stated at the lower of cost or market
value. Gains and losses on loan sales (sales proceeds minus
carrying value) are recorded in noninterest income. Direct
loan origination costs and fees are deferred at origination 
of the loan. These deferred costs and fees are recognized in
mortgage banking noninterest income upon sale of the loan.

Loans Held for Sale
Loans held for sale are carried at the lower of cost or market
value. Gains and losses on loan sales (sales proceeds minus
carrying value) are recorded in noninterest income. Direct
loan origination costs and fees are deferred at origination 
of the loan. These deferred costs and fees are recognized in
noninterest income upon the sale of the loan.

Loans
Loans are reported at their outstanding principal balances
net of any unearned income, charge-offs, unamortized deferred
fees and costs on originated loans and premiums or discounts
on purchased loans, except for certain purchased loans, which
are recorded at fair value on their purchase date. Unearned
income, deferred fees and costs, and discounts and premiums
are amortized to income over the contractual life of the loan
using the interest method.

Lease financing assets include aggregate lease rentals, net
of related unearned income, which includes deferred investment
tax credits, and related nonrecourse debt. Leasing income is
recognized as a constant percentage of outstanding lease
financing balances over the lease terms.

Loan commitment fees are generally deferred and amor-
tized into noninterest income on a straight-line basis over the
commitment period.

From time to time, we pledge loans, primarily 1-4 family

mortgage loans, to secure borrowings from the Federal
Home Loan Bank.

NONACCRUAL LOANS We generally place loans on nonaccrual
status when: 

• the full and timely collection of interest or principal

becomes uncertain; 

• they are 90 days (120 days with respect to real estate

1-4 family first and junior lien mortgages) past due for
interest or principal (unless both well-secured and in
the process of collection); or 

• part of the principal balance has been charged off. 
Generally, consumer loans not secured by real estate are
placed on nonaccrual status only when part of the principal
has been charged off. These loans are entirely charged off
when deemed uncollectible or when they reach a defined
number of days past due based on loan product, industry
practice, country, terms and other factors.

When we place a loan on nonaccrual status, we reverse the
accrued and unpaid interest receivable against interest income
and account for the loan on the cash or cost recovery method,
until it qualifies for return to accrual status. Generally, we
return a loan to accrual status when (a) all delinquent interest
and principal becomes current under the terms of the loan
agreement or (b) the loan is both well-secured and in the
process of collection and collectibility is no longer doubtful,
after a period of demonstrated performance.

IMPAIRED LOANS We assess, account for and disclose as
impaired certain nonaccrual commercial and commercial 
real estate loans that are over $3 million. We consider a loan
to be impaired when, based on current information and
events, we will probably not be able to collect all amounts
due according to the loan contract, including scheduled
interest payments. 

When we identify a loan as impaired, we measure the
impairment based on the present value of expected future
cash flows, discounted at the loan’s effective interest rate,
except when the sole (remaining) source of repayment for
the loan is the operation or liquidation of the collateral. In
these cases we use an observable market price or the current
fair value of the collateral, less selling costs, instead of dis-
counted cash flows. 

If we determine that the value of the impaired loan is less

than the recorded investment in the loan (net of previous
charge-offs, deferred loan fees or costs and unamortized 
premium or discount), we recognize impairment through an
allocated reserve or a charge-off to the allowance.

65

ALLOWANCE FOR CREDIT LOSSES The allowance for credit losses,
which consists of the allowance for loan losses and the reserve
for unfunded credit commitments, is management’s estimate
of credit losses inherent in the loan portfolio at the balance
sheet date. Our determination of the allowance, and the
resulting provision, is based on judgments and assumptions,
including:

• general economic conditions;
• loan portfolio composition;
• loan loss experience;
• management’s evaluation of credit risk relating to pools

of loans and individual borrowers;

• sensitivity analysis and expected loss models; and 
• observations from our internal auditors, internal loan

review staff or banking regulators. 

Transfers and Servicing of Financial Assets
We account for a transfer of financial assets as a sale when
we surrender control of the transferred assets. Servicing
rights and other retained interests in the sold assets are
recorded by allocating the previously recorded investment
between the assets sold and the interest retained based on
their relative fair values at the date of transfer. We determine
the fair values of servicing rights and other retained interests
at the date of transfer using the present value of estimated
future cash flows, using assumptions that market partici-
pants use in their estimates of values. We use quoted market
prices when available to determine the value of other
retained interests.

We recognize the rights to service mortgage loans for oth-

ers, or mortgage servicing rights (MSRs), as assets whether
we purchase the servicing rights or sell or securitize loans we
originate and retain servicing rights. MSRs are amortized in
proportion to, and over the period of, estimated net servicing
income. The amortization of MSRs is analyzed monthly and
is adjusted to reflect changes in prepayment speeds, as well
as other factors.

To determine the fair value of MSRs, we use a valuation

model that calculates the present value of estimated future
net servicing income. We use assumptions in the valuation
model that market participants use in estimating future net
servicing income, including estimates of prepayment speeds,
discount rate, cost to service, escrow account earnings, con-
tractual servicing fee income, ancillary income and late fees. 
At the end of each quarter, we evaluate MSRs for possible

impairment based on the difference between the carrying
amount and current fair value, in accordance with Statement
of Financial Accounting Standards No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities (FAS 140). To evaluate and measure impairment
we stratify the portfolio based on certain risk characteristics,
including loan type and note rate. If temporary impairment

exists, we establish a valuation allowance through a charge to
income for those risk stratifications with an excess of amortized
cost over the current fair value. If we later determine that all
or a portion of the temporary impairment no longer exists
for a particular risk stratification, we will reduce the valuation
allowance through an increase to income. 

Under our policy, we evaluate other-than-temporary
impairment of MSRs by considering both historical and
projected trends in interest rates, pay off activity and whether
the impairment could be recovered through interest rate
increases. We recognize a direct write-down when we 
determine that the recoverability of a recorded valuation
allowance is remote. A direct write-down permanently
reduces the carrying value of the MSRs, while a valuation
allowance (temporary impairment) can be reversed.

Premises and Equipment
Premises and equipment are carried at cost less accumulated
depreciation and amortization. Capital leases are included 
in premises and equipment at the capitalized amount less
accumulated amortization.

We primarily use the straight-line method of depreciation
and amortization. Estimated useful lives range up to 40 years
for buildings, up to 10 years for furniture and equipment,
and the shorter of the estimated useful life or lease term for
leasehold improvements. We amortize capitalized leased assets
on a straight-line basis over the lives of the respective leases.

Goodwill and Identifiable Intangible Assets
Goodwill is recorded when the purchase price is higher than
the fair value of net assets acquired in business combinations
under the purchase method of accounting. 

We assess goodwill for impairment annually, and more
frequently in certain circumstances. We assess goodwill for
impairment on a reporting unit level by applying a fair-
value-based test using discounted estimated future net cash
flows. Impairment exists when the carrying amount of the
goodwill exceeds its implied fair value. We recognize impair-
ment losses as a charge to noninterest expense (unless related
to discontinued operations) and an adjustment to the carry-
ing value of the goodwill asset. Subsequent reversals of
goodwill impairment are prohibited. 

We amortize core deposit intangibles on an accelerated

basis based on useful lives of 10 to 15 years. We review
core deposit intangibles for impairment whenever events 
or changes in circumstances indicate that their carrying
amounts may not be recoverable. Impairment is indicated
if the sum of undiscounted estimated future net cash flows
is less than the carrying value of the asset. Impairment is
permanently recognized by writing down the asset to 
the extent that the carrying value exceeds the estimated
fair value. 

66

Operating Lease Assets
Operating lease rental income for leased assets, generally
automobiles, is recognized in other income on a straight-line
basis over the lease term. Related depreciation expense is
recorded on a straight-line basis over the life of the lease,
taking into account the estimated residual value of the leased
asset. On a periodic basis, leased assets are reviewed for
impairment. Impairment loss is recognized if the carrying
amount of leased assets exceeds fair value and is not recover-
able. The carrying amount of leased assets is not recoverable
if it exceeds the sum of the undiscounted cash flows expected
to result from the lease payments and the estimated residual
value upon the eventual disposition of the equipment. Auto
lease receivables are written off when 120 days past due. 

Pension Accounting
We account for our defined benefit pension plans using an
actuarial model required by FAS 87, Employers’ Accounting
for Pensions. This model allocates pension costs over the 
service period of employees in the plan. The underlying 
principle is that employees render service ratably over this
period and, therefore, the income statement effects of 
pensions should follow a similar pattern. 

One of the principal components of the net periodic 
pension calculation is the expected long-term rate of return on
plan assets. The use of an expected long-term rate of return
on plan assets may cause us to recognize pension income
returns that are greater or less than the actual returns of 
plan assets in any given year.

The expected long-term rate of return is designed to
approximate the actual long-term rate of return over time
and is not expected to change significantly. Therefore, the
pattern of income/expense recognition should closely match
the stable pattern of services provided by our employees over
the life of our pension obligation. To determine if the expected
rate of return is reasonable, we consider such factors as 
(1) the actual return earned on plan assets, (2) historical
rates of return on the various asset classes in the plan 
portfolio, (3) projections of returns on various asset classes,
and (4) current/prospective capital market conditions and
economic forecasts. Differences in each year, if any, between
expected and actual returns are included in our unrecognized
net actuarial gain or loss amount. We generally amortize 
any unrecognized net actuarial gain or loss in excess of a 
5% corridor (as defined in FAS 87) in net periodic pension 
calculations over the next five years.

We use a discount rate to determine the present value 
of our future benefit obligations. The discount rate reflects
the rates available at the measurement date on long-term
high-quality fixed-income debt instruments and is reset 
annually on the measurement date (November 30). 

Income Taxes
We file a consolidated federal income tax return and, in 
certain states, combined state tax returns. 

We determine deferred income tax assets and liabilities
using the balance sheet method. Under this method, the net
deferred tax asset or liability is based on the tax effects of
the differences between the book and tax bases of assets and
liabilities, and recognizes enacted changes in tax rates and
laws. Deferred tax assets are recognized subject to manage-
ment judgment that realization is more likely than not.
Foreign taxes paid are generally applied as credits to reduce
federal income taxes payable.

Stock-Based Compensation
We have several stock-based employee compensation plans,
which are described more fully in Note 14. As permitted by
FAS 123, Accounting for Stock-Based Compensation, we have
elected to apply the intrinsic value method of Accounting
Principles Board Opinion 25, Accounting for Stock Issued to
Employees (APB 25), in accounting for stock-based employee
compensation plans through December 31, 2005. Pro forma
net income and earnings per common share information is
provided below, as if we accounted for employee stock
option plans under the fair value method of FAS 123. 
On December 16, 2004, the FASB issued FAS 123
(revised 2004), Share-Based Payment (FAS 123R), which
replaced FAS 123 and superceded APB 25. We adopted FAS
123R on January 1, 2006, which requires us to measure the
cost of employee services received in exchange for an award
of equity instruments, such as stock options or restricted
stock, based on the fair value of the award on the grant
date. This cost must be recognized in the income statement
over the vesting period of the award. 

(in millions, except per
share amounts)

Year ended December 31,
2003

2004

2005

Net income, as reported

$7,671

$7,014

$6,202

Add: Stock-based employee 
compensation expense 
included in reported net 
income, net of tax
Less: Total stock-based 

employee compensation 
expense under the fair value 
method for all awards,
net of tax 

Net income, pro forma

Earnings per common share 

As reported
Pro forma

Diluted earnings per common share

As reported
Pro forma

1

2

3

   (188)

$7,484

   (275)

$6,741

   (198)

$6,007

$ 4.55
4.44

$ 4.50
4.38

$ 4.15
3.99

$ 4.09
3.93

$ 3.69
3.57

$ 3.65
3.53

67

Stock options granted in each of our February 2005 
and February 2004 annual grants, under our Long-Term
Incentive Compensation Plan (the Plan), fully vested upon
grant, resulting in full recognition of stock-based compensa-
tion expense for both grants in the year of the grant under
the fair value method in the table on the previous page.
Stock options granted in our 2003, 2002 and 2001 annual
grants under the Plan vest over a three-year period, and
expense reflected in the table for these grants is recognized
over the vesting period.

Earnings Per Common Share
We present earnings per common share and diluted earnings
per common share. We compute earnings per common share
by dividing net income (after deducting dividends on preferred
stock) by the average number of common shares outstanding
during the year. We compute diluted earnings per common
share by dividing net income (after deducting dividends on
preferred stock) by the average number of common shares
outstanding during the year, plus the effect of common stock
equivalents (for example, stock options, restricted share
rights and convertible debentures) that are dilutive.

Derivatives and Hedging Activities
We recognize all derivatives on the balance sheet at fair
value. On the date we enter into a derivative contract, we
designate the derivative as (1) a hedge of the fair value of 
a recognized asset or liability (“fair value” hedge), (2) a
hedge of a forecasted transaction or of the variability of 
cash flows to be received or paid related to a recognized 
asset or liability (“cash flow” hedge) or (3) held for trading,
customer accommodation or for risk management not 
qualifying for hedge accounting (“free-standing derivative”).
For a fair value hedge, we record changes in the fair value of
the derivative and, to the extent that it is effective, changes
in the fair value of the hedged asset or liability attributable
to the hedged risk, in current period earnings in the same
financial statement category as the hedged item. For a 
cash flow hedge, we record changes in the fair value of the
derivative to the extent that it is effective in other compre-
hensive income. We subsequently reclassify these changes 
in fair value to net income in the same period(s) that the
hedged transaction affects net income in the same financial
statement category as the hedged item. For free-standing
derivatives, we report changes in the fair values in current
period noninterest income.

We formally document at inception the relationship
between hedging instruments and hedged items, our risk
management objective, strategy and our evaluation of effec-
tiveness for our hedge transactions. This includes linking 
all derivatives designated as fair value or cash flow hedges 
to specific assets and liabilities on the balance sheet or to 
specific forecasted transactions. Periodically, as required, we

68

also formally assess whether the derivative we designated 
in each hedging relationship is expected to be and has been
highly effective in offsetting changes in fair values or cash
flows of the hedged item using either the dollar offset or the
regression analysis method. If we determine that a derivative is
not highly effective as a hedge, we discontinue hedge accounting.
We discontinue hedge accounting prospectively when 
(1) a derivative is no longer highly effective in offsetting
changes in the fair value or cash flows of a hedged item, 
(2) a derivative expires or is sold, terminated, or exercised,
(3) a derivative is dedesignated as a hedge, because it is
unlikely that a forecasted transaction will occur, or (4) we
determine that designation of a derivative as a hedge is no
longer appropriate.

When we discontinue hedge accounting because a deriva-

tive no longer qualifies as an effective fair value hedge, we
continue to carry the derivative on the balance sheet at its
fair value with changes in fair value included in earnings,
and no longer adjust the previously hedged asset or liability
for changes in fair value. Previous adjustments to the hedged
item are accounted for in the same manner as other compo-
nents of the carrying amount of the asset or liability. 

When we discontinue hedge accounting because it is
probable that a forecasted transaction will not occur, we
continue to carry the derivative on the balance sheet at its
fair value with changes in fair value included in earnings,
and immediately recognize gains and losses that were 
accumulated in other comprehensive income in earnings. 

When we discontinue hedge accounting because the hedg-

ing instrument is sold, terminated, or no longer designated
(dedesignated), the amount reported in other comprehensive
income up to the date of sale, termination or dedesignation
continues to be reported in other comprehensive income
until the forecasted transaction affects earnings. 

In all other situations in which we discontinue hedge
accounting, the derivative will be carried at its fair value on
the balance sheet, with changes in its fair value recognized in
current period earnings.

We occasionally purchase or originate financial instru-
ments that contain an embedded derivative. At inception 
of the financial instrument, we assess (1) if the economic
characteristics of the embedded derivative are clearly and
closely related to the economic characteristics of the financial
instrument (host contract), (2) if the financial instrument 
that embodies both the embedded derivative and the host
contract is measured at fair value with changes in fair value
reported in earnings, or (3) if a separate instrument with 
the same terms as the embedded instrument would meet the
definition of a derivative. If the embedded derivative does
not meet any of these conditions, we separate it from the
host contract and carry it at fair value with changes recorded
in current period earnings. 

Note 2: Business Combinations

We regularly explore opportunities to acquire financial services
companies and businesses. Generally, we do not make a public
announcement about an acquisition opportunity until a
definitive agreement has been signed.

Effective December 31, 2004, we completed the acquisition

of $29 billion in assets under management, consisting of 
$24 billion in mutual fund assets and $5 billion in institutional
investment accounts, from Strong Financial Corporation.
Other business combinations completed in 2005, 2004 and
2003 are presented below.

(in millions)

2005
Certain branches of PlainsCapital Bank, Amarillo, Texas
First Community Capital Corporation, Houston, Texas
Other (1)

2004
Other (2)

2003
Certain assets of Telmark, LLC, Syracuse, New York
Pacific Northwest Bancorp, Seattle, Washington
Two Rivers Corporation, Grand Junction, Colorado
Other (3)

At December 31, 2005, we had three pending business
combinations with total assets of approximately $278 million.
We expect to complete these transactions by second 
quarter 2006.

For information on contingent consideration related 
to acquisitions, which is considered to be a guarantee, see
Note 24. 

Date

July 22
July 31
Various

Various

February 28
October 31
October 31
Various

(1) Consists of 8 acquisitions of insurance brokerage and lockbox processing businesses.
(2) Consists of 13 acquisitions of insurance brokerage and payroll services businesses.
(3) Consists of 14 acquisitions of asset management, commercial real estate brokerage, bankruptcy and insurance brokerage businesses.

Assets

$ 190
644
      40
$ 874

$

74

$ 660
3,245
74
   136
$ 4,115

69

Note 3: Cash, Loan and Dividend Restrictions

Federal Reserve Board regulations require that each of our
subsidiary banks maintain reserve balances on deposits with
the Federal Reserve Banks. The average required reserve 
balance was $1.4 billion in 2005 and $1.2 billion in 2004.
Federal law restricts the amount and the terms of both
credit and non-credit transactions between a bank and its
nonbank affiliates. They may not exceed 10% of the bank’s
capital and surplus (which for this purpose represents Tier 1
and Tier 2 capital, as calculated under the risk-based capital
guidelines, plus the balance of the allowance for credit losses
excluded from Tier 2 capital) with any single nonbank affili-
ate and 20% of the bank’s capital and surplus with all its
nonbank affiliates. Transactions that are extensions of credit
may require collateral to be held to provide added security to
the bank. (For further discussion of risk-based capital, see
Note 25.)

Dividends paid by our subsidiary banks are subject to
various federal and state regulatory limitations. Dividends
that may be paid by a national bank without the express

approval of the Office of the Comptroller of the Currency
(OCC) are limited to that bank’s retained net profits for the
preceding two calendar years plus retained net profits up to
the date of any dividend declaration in the current calendar
year. Retained net profits, as defined by the OCC, consist 
of net income less dividends declared during the period. We
also have state-chartered subsidiary banks that are subject 
to state regulations that limit dividends. Under those provi-
sions, our national and state-chartered subsidiary banks
could have declared additional dividends of $1,185 million
at December 31, 2005, without obtaining prior regulatory
approval. Our nonbank subsidiaries are also limited by cer-
tain federal and state statutory provisions and regulations
covering the amount of dividends that may be paid in any
given year. Based on retained earnings at year-end 2005, 
our nonbank subsidiaries could have declared additional 
dividends of $2,411 million at December 31, 2005, without
obtaining prior approval.

Note 4: Federal Funds Sold, Securities Purchased Under Resale Agreements 

and Other Short-Term Investments

The table to the right provides the detail of federal funds
sold, securities purchased under resale agreements and other
short-term investments.

(in millions)

Federal funds sold and securities 

purchased under resale agreements

Interest-earning deposits

Other short-term investments

Total

             December 31,
2004

2005

$3,789

847

     670

$5,306

$3,009

1,397

     614

$5,020

70

Note 5: Securities Available for Sale

The following table provides the cost and fair value for the
major categories of securities available for sale carried at fair

value. There were no securities classified as held to maturity
as of the periods presented.

(in millions)

Securities of U.S. Treasury and federal agencies
Securities of U.S. states and political subdivisions
Mortgage-backed securities:

Federal agencies
Private collateralized 

mortgage obligations (1)
Total mortgage-backed securities

Other

Total debt securities 

Marketable equity securities

Total (2)

Cost

$

845
3,048

25,304

    6,628
31,932
    4,518
40,343
       558

$40,901

                                                                                                                                           December 31,
                       2004
Fair
value

                                       2005
Fair
value

Cost

Unrealized
gross
gains

Unrealized
gross
losses

Unrealized Unrealized
gross
losses

gross
gains

$

4
149

336

     128
464
       75
692
     349

$1,041

$ (10)
(6)

$

839
3,191

$ 1,128
3,429

$

16
196

$ (4)
(4)

$ 1,140
3,621

(24)

25,616

20,198

750

(4)

20,944

      (6)
(30)
(55)
(101)
    (7)

    6,750
32,366
    4,538
40,934
       900

   4,082
24,280
   2,974
31,811
      507

$(108)

$41,834

$32,318

     121
871
     157
1,240
     198

$1,438

   (4)
(8)
  (14)
(30)
   (9)

$(39)

   4,199
25,143
   3,117
33,021
      696

$33,717

(1) Substantially all of the private collateralized mortgage obligations are AAA-rated bonds collateralized by 1-4 family residential first mortgages.
(2) At December 31, 2005, we held no securities of any single issuer (excluding the U.S.Treasury and federal agencies) with a book value that exceeded 10% of stockholders’ equity.

The following table shows the unrealized gross losses 
and fair value of securities in the securities available for 
sale portfolio at December 31, 2005 and 2004, by length 
of time that individual securities in each category had been 
in a continuous loss position. 

The decline in fair value for the debt securities that had
been in a continuous loss position for 12 months or more at
December 31, 2005, was primarily due to changes in market

interest rates and not due to the credit quality of the securities.
We believe that the principal and interest on these securities
are fully collectible and we have the intent and ability to
retain our investment for a period of time to allow for any
anticipated recovery in market value. We have reviewed these
securities in accordance with our policy and do not consider
them to be other-than-temporarily impaired.

(in millions)

     Less than 12 months
Fair
value

Unrealized
gross
losses

   12 months or more
Fair
value

Unrealized
gross
losses

Unrealized
gross
losses

Total
Fair
value

December 31, 2005

Securities of U.S. Treasury and federal agencies
Securities of U.S. states and political subdivisions
Mortgage-backed securities:

Federal agencies
Private collateralized

mortgage obligations
Total mortgage-backed securities

Other

Total debt securities

Marketable equity securities

Total

December 31, 2004

Securities of U.S. Treasury and federal agencies
Securities of U.S. states and political subdivisions
Mortgage-backed securities:

Federal agencies
Private collateralized

mortgage obligations
Total mortgage-backed securities

Other

Total debt securities 

Marketable equity securities

Total 

$ (6)
(3)

(22)

    (6)
(28)
 (38)
(75)
    (7)

$(82)

$ (4)
(1)

(4)

    (4)
(8)
 (11)
(24)
    (9)

$(33)

$ 341
204

2,213

  1,494
3,707
     890
5,142
     185

$5,327

$ 304
65

450

     981
1,431
     584
2,384
       44

$ 2,428

$ (4)
(3)

(2)

   —
(2)
  (17)
(26)
   —

$(26)

$ —
(3)

—

   —
—
    (3)
(6)
   —

$ (6)

$142
57

89

    —
89
  338
626
    —

$626

$ —
62

—

    —
—
    56
118
    —

$118

$ (10)
(6)

$ 483
261

(24)

2,302

      (6)
(30)
    (55)
(101)
      (7)

$(108)

$

(4)
(4)

(4)

      (4)
(8)
    (14)
(30)
      (9)

$ (39)

  1,494
3,796
  1,228
5,768
     185

$5,953

$ 304
127

450

     981
1,431
     640
2,502
       44

$ 2,546

71

Securities pledged where the secured party has the right 
to sell or repledge totaled $5.3 billion at December 31, 2005,
and $2.3 billion at December 31, 2004. Securities pledged
where the secured party does not have the right to sell or
repledge totaled $24.3 billion at December 31, 2005, and
$19.4 billion at December 31, 2004, primarily to secure trust
and public deposits and for other purposes as required or
permitted by law. We have accepted collateral in the form 
of securities that we have the right to sell or repledge of 
$3.4 billion at December 31, 2005, and $2.5 billion at
December 31, 2004, of which we sold or repledged 
$2.3 billion and $1.7 billion, respectively. 

The following table shows the realized net gains on the

sales of securities from the securities available for sale 
portfolio, including marketable equity securities. 

(in millions)

Realized gross gains
Realized gross losses (1)
Realized net gains 

2005

$ 355

 (315)

$ 40

Year ended December 31,
2003

2004

$ 168

  (108)

$ 60

$ 178

(116)

$ 62

(1) Includes other-than-temporary impairment of $45 million, $9 million and 

$50 million for 2005, 2004 and 2003, respectively.

The following table shows the remaining contractual
principal maturities and contractual yields of debt securities
available for sale. The remaining contractual principal 
maturities for mortgage-backed securities were allocated
assuming no prepayments. Remaining expected maturities
will differ from contractual maturities because borrowers may
have the right to prepay obligations before the underlying
mortgages mature.

(in millions)

amount

Total Weighted-
average
yield

                                                                                                                 December 31, 2005
           Remaining contractual principal maturity

Within one year
Yield

Amount

After one year
through five years
Yield
Amount

After five years
through ten years
Yield
Amount

  After ten years
Yield
Amount

Securities of U.S. Treasury 
and federal agencies
Securities of U.S. states and
political subdivisions
Mortgage-backed securities:

Federal agencies
Private collateralized

mortgage obligations

Total mortgage-backed securities

Other

Total debt securities at fair value (1)

$

839

4.38%

$ 50

5.11% $ 677

4.21% $

93

4.69% $

19

6.88%

3,191

25,616

    6,750
32,366
    4,538

$40,934

7.57

5.68

5.40
5.62
6.11

5.80%

86

33

    —
33
  225

$394

6.63

6.02

—
6.02
5.80

281

6.06

560

7.25

2,264

7.87

49

6.51

69

5.91

25,465

5.68

       —
49
  2,773

—
6.51
5.70

       42
111
     953

6.45
6.12
7.13

    6,708
32,173
       587

5.40
5.62
6.53

5.91% $3,780

5.47% $1,717

6.97% $35,043

5.78%

(1) The weighted-average yield is computed using the contractual life amortization method.

72

Note 6: Loans and Allowance for Credit Losses

A summary of the major categories of loans outstanding is
shown in the following table. Outstanding loan balances
reflect unearned income, net deferred loan fees, and unamor-
tized discount and premium totaling $3,918 million and
$3,766 million at December 31, 2005 and 2004, respectively.
Loan concentrations may exist when there are amounts
loaned to a multiple number of borrowers engaged in similar
activities or similar types of loans extended to a diverse group
of borrowers that would cause them to be similarly impacted
by economic or other conditions. At December 31, 2005 and
2004, we did not have concentrations representing 10% or
more of our total loan portfolio in commercial loans (by
industry); commercial real estate loans (other real estate
mortgage and real estate construction) (by state or property
type); or other revolving credit and installment loans (by
product type). Our real estate 1-4 family mortgage loans to
borrowers in the state of California represented approximately

14% of total loans at December 31, 2005, compared with
18% at the end of 2004. These loans are mostly within the
larger metropolitan areas in California, with no single area
consisting of more than 3% of our total loans. Changes in
real estate values and underlying economic conditions for
these areas are monitored continuously within our credit 
risk management process. 

Some of our real estate 1-4 family mortgage loans, including
first mortgage and home equity products, include an interest-
only feature as part of the loan terms. At December 31, 2005,
such loans were approximately 26% of total loans, compared
with 28% at the end of 2004. Substantially all of these loans
are considered to be prime or near prime. We do not offer
option adjustable-rate mortgage products, nor do we offer
variable-rate mortgage products with fixed payment amounts,
commonly referred to within the financial services industry as
negative amortizing mortgage loans.

(in millions)

Commercial and commercial real estate:

Commercial
Other real estate mortgage
Real estate construction
Lease financing

Total commercial and commercial real estate

Consumer:

Real estate 1-4 family first mortgage
Real estate 1-4 family junior lien mortgage
Credit card
Other revolving credit and installment

Total consumer

Foreign

Total loans

                                                                                                                    December 31,
2001

2005

2003

2004

2002

$ 61,552
28,545
13,406
      5,400
108,903

77,768
59,143
12,009
    47,462
196,382
      5,552
$310,837

$ 54,517
29,804
9,025
     5,169
98,515

87,686
52,190
10,260
   34,725
184,861
     4,210
$287,586

$ 48,729
27,592
8,209
     4,477
89,007

83,535
36,629
8,351
   33,100
161,615
  2,451
$253,073

$ 47,292
25,312
7,804
     4,085
84,493

44,119
28,147
7,455
   26,353
106,074
  1,911
$192,478

$ 47,547
24,808
7,806
     4,017
84,178

29,317
21,801
6,700
   23,502
81,320
     1,598
$167,096

For certain extensions of credit, we may require collateral,
based on our assessment of a customer’s credit risk. We hold
various types of collateral, including accounts receivable,
inventory, land, buildings, equipment, automobiles, financial
instruments, income-producing commercial properties and 
residential real estate. Collateral requirements for each customer
may vary according to the specific credit underwriting, terms
and structure of loans funded immediately or under a 
commitment to fund at a later date.

A commitment to extend credit is a legally binding agree-
ment to lend funds to a customer, usually at a stated interest
rate and for a specified purpose. These commitments have

fixed expiration dates and generally require a fee. When we
make such a commitment, we have credit risk. The liquidity
requirements or credit risk will be lower than the contractual
amount of commitments to extend credit because a significant
portion of these commitments are expected to expire without
being used. Certain commitments are subject to loan agree-
ments with covenants regarding the financial performance 
of the customer that must be met before we are required to
fund the commitment. We use the same credit policies in
extending credit for unfunded commitments and letters of
credit that we use in making loans. For information on
standby letters of credit, see Note 24.

73

In addition, we manage the potential risk in credit com-
mitments by limiting the total amount of arrangements, both
by individual customer and in total, by monitoring the size
and maturity structure of these portfolios and by applying
the same credit standards for all of our credit activities. 

The total of our unfunded loan commitments, net of all
funds lent and all standby and commercial letters of credit
issued under the terms of these commitments, is summarized
by loan category in the following table: 

(in millions)

Commercial and commercial real estate:

Commercial
Other real estate mortgage
Real estate construction
Total commercial and 

commercial real estate

Consumer:

Real estate 1-4 family first mortgage
Real estate 1-4 family junior lien mortgage
Credit card
Other revolving credit and installment

Total consumer

Foreign

                    December 31,
2004

2005

$ 71,548
2,398
      9,369

$ 59,603
2,788
     7,164

83,315

69,555

10,229
37,909
45,270
    13,957
107,365
         675

9,009
31,396
38,200
   15,427
94,032
        407

Total unfunded loan commitments

$191,355

$163,994

We have an established process to determine the adequacy

of the allowance for credit losses that assesses the risks and
losses inherent in our portfolio. This process supports an
allowance consisting of two components, allocated and
unallocated. For the allocated component, we combine 
estimates of the allowances needed for loans analyzed on 
a pooled basis and loans analyzed individually (including
impaired loans).

Approximately two-thirds of the allocated allowance 
is determined at a pooled level for consumer loans and some
segments of commercial small business loans. We use fore-
casting models to measure inherent loss in these portfolios.
We frequently validate and update these models to capture
recent behavioral characteristics of the portfolios, as well as
changes in our loss mitigation or marketing strategies.

The remaining allocated allowance is for commercial loans,
commercial real estate loans and lease financing. We initially
estimate this portion of the allocated allowance by applying
historical loss factors statistically derived from tracking loss
content associated with actual portfolio movements over a
specified period of time, using a standardized loan grading

process. Based on this process, we assign loss factors to each
pool of graded loans and a loan equivalent amount for
unfunded loan commitments and letters of credit. These 
estimates are then adjusted or supplemented where necessary
from additional analysis of long term average loss experience,
external loss data, or other risks identified from current 
conditions and trends in selected portfolios. Also, we 
individually review nonperforming loans over $3 million 
for impairment based on cash flows or collateral. We include
the impairment on these nonperforming loans in the allocated
allowance unless it has already been recognized as a loss.

The potential risk from unfunded loan commitments and

letters of credit for wholesale loan portfolios is considered
along with the loss analysis of loans outstanding. Unfunded
commercial loan commitments and letters of credit are 
converted to a loan equivalent factor as part of the analysis.
The reserve for unfunded credit commitments was $186 million
at December 31, 2005, and $188 million at December 31, 2004,
both representing less than 5% of the total allowance for
credit losses.

The allocated allowance is supplemented by the unallo-
cated allowance to adjust for imprecision and to incorporate
the range of probable outcomes inherent in estimates used
for the allocated allowance. The unallocated allowance is 
the result of our judgment of risks inherent in the portfolio,
economic uncertainties, historical loss experience and other
subjective factors, including industry trends. 

No material changes in estimation methodology for the

allowance for credit losses were made in 2005. 

The ratios of the allocated allowance and the unallocated
allowance to the total allowance may change from period to
period. The total allowance reflects management’s estimate
of credit losses inherent in the loan portfolio, including
unfunded credit commitments, at December 31, 2005.

Like all national banks, our subsidiary national banks

continue to be subject to examination by their primary 
regulator, the Office of the Comptroller of the Currency
(OCC), and some have OCC examiners in residence. The
OCC examinations occur throughout the year and target
various activities of our subsidiary national banks, including
both the loan grading system and specific segments of the
loan portfolio (for example, commercial real estate and
shared national credits). The Parent and its nonbank 
subsidiaries are examined by the Federal Reserve Board.

We consider the allowance for credit losses of $4.06 billion
adequate to cover credit losses inherent in the loan portfolio,
including unfunded credit commitments, at December 31, 2005.

74

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded credit commitments.

Changes in the allowance for credit losses were:

(in millions)

Balance, beginning of year

Provision for credit losses

Loan charge-offs:

Commercial and commercial real estate:

Commercial
Other real estate mortgage
Real estate construction
Lease financing

Total commercial and commercial real estate

Consumer:

Real estate 1-4 family first mortgage
Real estate 1-4 family junior lien mortgage
Credit card
Other revolving credit and installment

Total consumer

Foreign

Total loan charge-offs

Loan recoveries:

Commercial and commercial real estate:

Commercial
Other real estate mortgage
Real estate construction
Lease financing

Total commercial and commercial real estate

Consumer:

Real estate 1-4 family first mortgage
Real estate 1-4 family junior lien mortgage
Credit card
Other revolving credit and installment

Total consumer

Foreign

Total loan recoveries

Net loan charge-offs

Other

Balance, end of year

Components:

Allowance for loan losses
Reserve for unfunded credit commitments (1)

Allowance for credit losses

Net loan charge-offs as a percentage of average total loans

Allowance for loan losses as a percentage of total loans
Allowance for credit losses as a percentage of total loans

2005

$ 3,950

2,383

(406)
(7)
(6)
       (35)
(454)

(111)
(136)
(553)
 (1,480)
(2,280)
    (298)
 (3,032)

133
16
13
        21
183

21
31
86
      365
503
        63
     749
 (2,283)

           7

$ 4,057

$ 3,871
      186
$ 4,057

2004

$ 3,891

1,717

(424)
(25)
(5)
      (62)
(516)

(53)
(107)
(463)
     (919)
(1,542)
     (143)
 (2,201)

150
17
6
       26
199

6
24
62
     220
312
       24
     535
 (1,666)

         8

$ 3,950

$ 3,762
     188
$ 3,950

2003

$ 3,819

1,722

(597)
(33)
(11)
      (41)
(682)

(47)
(77)
(476)
    (827)
(1,427)
    (105)
  (2,214)

177
11
11
          8
207

10
13
50
  196
269
    19
  495
 (1,719)

        69

$ 3,891

$ 3,891
       —
$ 3,891

Year ended December 31,
2001

2002

$ 3,717

1,684

$ 3,681

1,727

(716)
(24)
(40)
(21)
(801)

(39)
(55)
(407)
     (770)
(1,271)
      (84)
  (2,156)

162
16
19
       —
197

8
10
47
     205
270
       14
     481
(1,675)

       93

$ 3,819

$ 3,819
       —
$ 3,819

(692)
(32)
(37)
(22)
(783)

(40)
(36)
(421)
     (770)
(1,267)
      (78)
 (2,128)

96
22
3
       —
121

6
8
40
     203
257
       18
     396
 (1,732)

       41

$ 3,717

$ 3,717
       —
$ 3,717

.77%

1.25%
1.31

.62%

1.31%
1.37

.81%

1.54%
1.54

.96%

1.98%
1.98

1.10%

2.22%
2.22

(1) Effective September 30, 2004, we transferred the portion of the allowance for loan losses related to commercial lending commitments and letters of credit to other liabilities.

75

The average recorded investment in impaired loans during

2005, 2004 and 2003 was $260 million, $481 million and
$668 million, respectively. 

All of our impaired loans are on nonaccrual status. When
the ultimate collectibility of the total principal of an impaired
loan is in doubt, all payments are applied to principal, under
the cost recovery method. When the ultimate collectibility 
of the total principal of an impaired loan is not in doubt,
contractual interest is credited to interest income when
received, under the cash basis method. Total interest income
recognized for impaired loans in 2005, 2004 and 2003 under
the cash basis method was not significant.

Nonaccrual loans were $1,338 million and $1,358 million
at December 31, 2005 and 2004, respectively. Loans past due
90 days or more as to interest or principal and still accruing
interest were $3,606 million at December 31, 2005, and
$2,578 million at December 31, 2004. The 2005 and 2004
balances included $2,923 million and $1,820 million, 
respectively, in advances pursuant to our servicing agree-
ments to the Government National Mortgage Association
mortgage pools whose repayments are insured by the Federal
Housing Administration or guaranteed by the Department of
Veteran Affairs. 

The recorded investment in impaired loans and the

methodology used to measure impairment was:

(in millions)

Impairment measurement based on:

Collateral value method
Discounted cash flow method

Total (1)

              December 31,
2004
2005

$115
   75

$190

$183
  126

$309

(1) Includes $56 million and $107 million of impaired loans with a related allowance
of $10 million and $17 million at December 31, 2005 and 2004, respectively.

76

Note 7: Premises, Equipment, Lease Commitments and Other Assets

(in millions)

Land
Buildings
Furniture and equipment
Leasehold improvements
Premises and equipment leased 

under capital leases
Total premises and equipment

Less: Accumulated depreciation 

and amortization

2005

$ 649
3,617
3,425
1,115

60
8,866

  4,449

Net book value, premises and equipment $4,417

   December 31,
2004

$ 585
2,974
3,110
1,049

60
7,778

3,928

$3,850

Depreciation and amortization expense for premises and
equipment was $810 million, $654 million and $666 million
in 2005, 2004 and 2003, respectively.

Net gains (losses) on dispositions of premises and equipment,
included in noninterest expense, were $56 million, $(5) million
and $(46) million in 2005, 2004 and 2003, respectively.

We have obligations under a number of noncancelable
operating leases for premises (including vacant premises) 
and equipment. The terms of these leases, including renewal
options, are predominantly up to 15 years, with the longest
up to 72 years, and many provide for periodic adjustment 
of rentals based on changes in various economic indicators.
The future minimum payments under noncancelable operating
leases and capital leases, net of sublease rentals, with terms
greater than one year as of December 31, 2005, were:

(in millions)

Operating leases

Capital leases

Year ended December 31,
2006
2007
2008
2009
2010
Thereafter

Total minimum lease payments

Executory costs
Amounts representing interest

Present value of net minimum 

lease payments

$ 514
426
360
298
237
     898

$2,733

$ 4
2
2
1
1
14

24

(2)
(8)

$14

Operating lease rental expense (predominantly for premises),

net of rental income, was $583 million, $586 million and 
$574 million in 2005, 2004 and 2003, respectively.

The components of other assets were:

(in millions)

Nonmarketable equity investments:
Private equity investments
Federal bank stock
All other

Total nonmarketable equity

investments (1)

Operating lease assets
Accounts receivable
Interest receivable
Core deposit intangibles
Foreclosed assets
Due from customers on acceptances
Other

          December 31,
2004

2005

$ 1,537
1,402
2,151

5,090

3,414
11,606
2,279
489
191
104
9,299

$ 1,449
1,713
2,067

5,229

3,642
2,682
1,483
603
212
170
8,470

Total other assets

$32,472

$22,491

(1) At December 31, 2005 and 2004, $3.1 billion and $3.3 billion, respectively,
of nonmarketable equity investments, including all federal bank stock,
were accounted for at cost.

Income related to nonmarketable equity investments was:

(in millions)

Year ended December 31,
2003

2004

2005

Net gains (losses) from private equity 

investments

Net gains from all other nonmarketable 

equity investments
Net gains from nonmarketable 

equity investments

$351

$319

$ (3)

43

33

116

$394

$352

$113

77
77

Note 8:

Intangible Assets

The gross carrying amount of intangible assets and 
accumulated amortization was:

(in millions)

2005
Gross Accumulated
carrying amortization
amount

 December 31,
                     2004
Gross Accumulated
carrying amortization
amount

As of December 31, 2005, the current year and estimated

future amortization expense for amortized intangible 
assets was:

(in millions)

Mortgage
servicing
rights

Core
deposit
intangibles

Other

Total

Amortized intangible assets:
Mortgage servicing
rights, before
valuation 
allowance (1)

Core deposit 
intangibles

Other

Total amortized 

$ 25,126

$ 11,428

$ 18,903

$ 9,437

2,432
        567

1,943
312

2,426
 567

1,823
296

2006
2007
2008
2009
2010

Year ended 

December 31, 2005
Estimate for year ended 

December 31,

$1,991

$123

$55

$2,169

$ 1,959
1,659
1,426
1,246
1,068

$111
101
93
85
77

$ 48
46
30
25
23

$ 2,118
1,806
1,549
1,356
1,168

intangible assets $28,125

$13,683

$21,896

$11,556

Unamortized 

intangible asset 
(trademark)

$

14

$

14

(1) See Note 21 for additional information on MSRs and the related 

valuation allowance.

We based the projections of amortization expense for
mortgage servicing rights shown above on existing asset 
balances and the existing interest rate environment as 
of December 31, 2005. Future amortization expense may 
be significantly different depending upon changes in the
mortgage servicing portfolio, mortgage interest rates and
market conditions. We based the projections of amortization
expense for core deposit intangibles shown above on existing
asset balances at December 31, 2005. Future amortization
expense may vary based on additional core deposit 
intangibles acquired through business combinations.

78

Note 9: Goodwill

The changes in the carrying amount of goodwill as allocated to our operating segments for goodwill impairment analysis were:

(in millions)

December 31, 2003

Goodwill from business combinations
Foreign currency translation adjustments 

December 31, 2004

Reduction in goodwill related to divested businesses
Goodwill from business combinations
Realignment of automobile financing business
Foreign currency translation adjustments

December 31, 2005

Community
Banking

Wholesale
Banking

Wells Fargo
Financial

Consolidated
Company

$ 7,286
5
—

7,291
(31)
125
(11)
—
$7,374

$ 2,735
302
—

3,037
(3)
13
—
—
$3,047

$ 350
—
3

353
—
—
11
2
$366

$ 10,371
307
3

10,681
(34)
138
—
2
$10,787

For goodwill impairment testing, enterprise-level goodwill
acquired in business combinations is allocated to reporting units
based on the relative fair value of assets acquired and recorded
in the respective reporting units. Through this allocation, we
assigned enterprise-level goodwill to the reporting units that 
are expected to benefit from the synergies of the combination.
We used discounted estimated future net cash flows to evaluate
goodwill reported at all reporting units. 

For our goodwill impairment analysis, we allocate all 
of the goodwill to the individual operating segments. For
management reporting we do not allocate all of the goodwill
to the individual operating segments: some is allocated at 
the enterprise level. See Note 19 for further information 
on management reporting. The balances of goodwill for
management reporting were:

(in millions)

December 31, 2004

December 31, 2005

Community
Banking

$ 3,433

$3,527

Wholesale
Banking

$ 1,087

$1,097

Wells Fargo
Financial

$364

$366

Enterprise

$ 5,797

$5,797

Consolidated
Company

$ 10,681

$10,787

79

Note 10: Deposits

The total of time certificates of deposit and other time
deposits issued by domestic offices was $74,023 million 
and $55,495 million at December 31, 2005 and 2004,
respectively. Substantially all of those deposits were 
interest bearing. The contractual maturities of those 
deposits were:

(in millions)

2006
2007
2008
2009
2010
Thereafter

Total

December 31, 2005

$66,700
3,886
1,899
769
538
231
$74,023

Of those deposits, the amount of time deposits with a
denomination of $100,000 or more was $56,123 million 
and $41,851 million at December 31, 2005 and 2004,
respectively. The contractual maturities of these 
deposits were:

(in millions)

December 31, 2005

Three months or less
After three months through six months
After six months through twelve months
After twelve months

Total

$45,763
2,154
5,867
2,339
$56,123

Time certificates of deposit and other time deposits issued
by foreign offices with a denomination of $100,000 or more
represent the majority of all of our foreign deposit liabilities
of $14,621 million and $8,533 million at December 31, 2005
and 2004, respectively.

Demand deposit overdrafts of $618 million and $470 mil-

lion were included as loan balances at December 31, 2005
and 2004, respectively.

Note 11: Short-Term Borrowings

The table below shows selected information for short-term borrowings, which generally mature in less than 30 days.

(in millions)

Amount

2005
Rate

                     2004
Rate

Amount

          2003
Rate

Amount

As of December 31,
Commercial paper and other short-term borrowings

Federal funds purchased and securities sold under 

agreements to repurchase

Total

Year ended December 31,
Average daily balance
Commercial paper and other short-term borrowings

Federal funds purchased and securities sold under 

agreements to repurchase

Total

Maximum month-end balance
Commercial paper and other short-term borrowings (1)

Federal funds purchased and securities sold under 

agreements to repurchase (2)

$ 3,958

3.80%

$ 6,225

2.40%

$ 6,709

1.26%

  19,934

$23,892

3.99

3.96

15,737

$21,962

2.04

2.14

17,950

$24,659

.84

.95

$ 9,548

3.09%

$10,010

1.56%

$11,506

1.22%

  14,526

$24,074

3.09

3.09

16,120

$26,130

$15,075

N/A

$16,492

22,315

N/A

22,117

1.22

1.35

N/A

N/A

18,392

$29,898

$14,462

24,132

.99

1.08

N/A

N/A

N/A – Not applicable.
(1) Highest month-end balance in each of the last three years was in January 2005, July 2004 and January 2003.
(2) Highest month-end balance in each of the last three years was in August 2005, June 2004 and April 2003.

80

Note 12: Long-Term Debt

Following is a summary of our long-term debt based on original maturity (reflecting unamortized debt discounts and premiums,
where applicable):

(in millions)

Wells Fargo & Company (Parent only)

Senior
Fixed-Rate Notes (1)
Floating-Rate Notes
Extendable Notes (2)
Equity-Linked Notes (3)
Convertible Debenture (4)

Total senior debt – Parent 

Subordinated
Fixed-Rate Notes (1)
FixFloat Notes 

Total subordinated debt – Parent

Junior Subordinated
Fixed-Rate Notes (1)(5)

Total junior subordinated debt – Parent

Total long-term debt – Parent

Wells Fargo Bank, N.A. and its subsidiaries (WFB, N.A.)

Senior
Fixed-Rate Notes (1)
Floating-Rate Notes 
Floating-Rate Federal Home Loan Bank (FHLB) Advances (6)
FHLB Notes and Advances
Equity-Linked Notes (3)
Notes payable by subsidiaries
Obligations of subsidiaries under capital leases (Note 7)

Total senior debt – WFB, N.A.

Subordinated
FixFloat Notes (7)
Fixed-Rate Notes (1)
Other notes and debentures

Total subordinated debt – WFB, N.A.
Total long-term debt – WFB, N.A.

Wells Fargo Financial, Inc., and its subsidiaries (WFFI) 

Senior
Fixed-Rate Notes
Floating-Rate Notes

Total long-term debt – WFFI

Maturity
date(s)

2006-2035
2006-2015
2008-2015
2006-2014
2033

2011-2023
2012

Stated
interest
rate(s)

2.20-6.875%
Varies
Varies
Varies
Varies

4.625-6.65%
4.00% through 2006, varies

2031-2034

5.625-7.00%

2006-2019
2006-2034
—
2012
2006-2014
—

—
2010-2015
2006-2013

1.16-4.24%
Varies
—
5.20%
Varies
—

—
4.07-7.55%
4.50-12.00%

2005

 December 31,
2004

$16,081
21,711
10,000
444
3,000
51,236

4,558
300
4,858

3,247
3,247
59,341

256
3,138
—
203
229
—
14
3,840

—
4,330
13
4,343
8,183

$12,970
20,155
5,500
472
3,000
42,097

4,502
299
4,801

3,248
3,248
50,146

218
7,615
1,400
200
40
79
   19
9,571

998
2,821
     11
3,830
13,401

2006-2034
2007-2010

2.06-7.47%
Varies

7,159
1,714
$   8,873

5,343
1,303
$  6,646

(1) We entered into interest rate swap agreements for a major portion of these notes, whereby we receive fixed-rate interest payments approximately equal to 
interest on the notes and make interest payments based on an average one-month, three-month or six-month London Interbank Offered Rate (LIBOR).

(2) The extendable notes are floating-rate securities with an initial maturity of 13 months or 2 years, which can be extended, respectively, on a rolling monthly basis,

to a final maturity of 5 or 6 years, or, on a 6 month rolling basis, to a final maturity of 10 years, at the investor’s option.

(3) These notes are linked to baskets of equities, commodities or equity indices.
(4) On April 15, 2003, we issued $3 billion of convertible senior debentures as a private placement. In November 2004, we amended the indenture under which the 
debentures were issued to eliminate a provision in the indenture that prohibited us from paying cash upon conversion of the debentures if an event of default 
as defined in the indenture exists at the time of conversion. We then made an irrevocable election under the indenture on December 15, 2004, that upon conversion 
of the debentures, we must satisfy the accreted value of the obligation (the amount accrued to the benefit of the holder exclusive of the conversion spread) in cash 
and may satisfy the conversion spread (the excess conversion value over the accreted value) in either cash or stock. We can also redeem all or some of the convertible
debt securities for cash at any time on or after May 5, 2008, at their principal amount plus accrued interest, if any.

(5) Effective December 31, 2003, as a result of the adoption of FIN 46R we deconsolidated certain wholly-owned trusts formed for the sole purpose of issuing trust 

preferred securities (the Trusts). The junior subordinated debentures held by the Trusts are included in the Company’s long-term debt.

(6) During 2005, the FHLB exercised their put options on all outstanding floating-rate advances.
(7) Note was called in June 2005.

(continued on following page)

81

Maturity
date(s)

2006-2045
2008-2009
2012

2006-2009
2011-2015

2026-2031
2027-2034

Stated
interest
rate(s)

1.50-6.90%
Varies
Varies

1.00-13.87%
Varies

7.73-10.18%
Varies

2005

 December 31,
2004

$

502
500
14
—
1,016

1,138
66
1,204

869
182
1,051
3,271
$79,668

$

564
500
1
 1
 1,066

1,194
 95
1,289

865
  167
1,032
3,387
$73,580

The interest rates on floating-rate notes are determined

periodically by formulas based on certain money market
rates, subject, on certain notes, to minimum or maximum
interest rates.

As part of our long-term and short-term borrowing
arrangements, we are subject to various financial and 
operational covenants. Some of the agreements under which
debt has been issued have provisions that may limit the
merger or sale of certain subsidiary banks and the issuance
of capital stock or convertible securities by certain subsidiary
banks. At December 31, 2005, we were in compliance with
all the covenants.

(continued from previous page)

(in millions)

Other consolidated subsidiaries

Senior
Fixed-Rate Notes
Floating-Rate FHLB Advances
Other notes and debentures – Floating-Rate
Obligations of subsidiaries under capital leases (Note 7)
Total senior debt – Other consolidated subsidiaries

Subordinated
Fixed-Rate Notes (1)
Other notes and debentures – Floating-Rate

Total subordinated debt – Other consolidated subsidiaries

Junior Subordinated
Fixed-Rate Notes (5)
Floating-Rate Notes (5)

Total junior subordinated debt – Other consolidated subsidiaries

Total long-term debt – Other consolidated subsidiaries

Total long-term debt

At December 31, 2005, aggregate annual maturities of
long-term debt obligations (based on final maturity dates)
were as follows:

(in millions)

2006
2007
2008
2009
2010
Thereafter

Total

Parent

$ 7,309
10,557
11,648
5,904
6,911
  17,012

$59,341

Company

$11,124
13,962
13,742
6,926
8,943
24,971
$79,668

82

Note 13: Preferred Stock

We are authorized to issue 20 million shares of preferred
stock and 4 million shares of preference stock, both without
par value. Preferred shares outstanding rank senior to com-
mon shares both as to dividends and liquidation preference
but have no general voting rights. We have not issued any
preference shares under this authorization.

ESOP CUMULATIVE CONVERTIBLE PREFERRED STOCK
All shares of our ESOP (Employee Stock Ownership Plan)
Cumulative Convertible Preferred Stock (ESOP Preferred
Stock) were issued to a trustee acting on behalf of the 
Wells Fargo & Company 401(k) Plan (the 401(k) Plan).
Dividends on the ESOP Preferred Stock are cumulative 
from the date of initial issuance and are payable quarterly 

at annual rates ranging from 8.50% to 12.50%, depending
upon the year of issuance. Each share of ESOP Preferred
Stock released from the unallocated reserve of the 401(k)
Plan is converted into shares of our common stock based 
on the stated value of the ESOP Preferred Stock and the 
then current market price of our common stock. The ESOP
Preferred Stock is also convertible at the option of the holder
at any time, unless previously redeemed. We have the option
to redeem the ESOP Preferred Stock at any time, in whole or
in part, at a redemption price per share equal to the higher
of (a) $1,000 per share plus accrued and unpaid dividends or
(b) the fair market value, as defined in the Certificates of
Designation for the ESOP Preferred Stock. 

Shares issued
and outstanding
      December 31,
2004

2005

Carrying amount
(in millions)
   December 31,
2004

2005

Adjustable
         dividend rate
Maximum

Minimum

ESOP Preferred Stock (1):

2005

2004

2003 

2002 

2001 

2000 

1999 

1998 

1997 

1996 

Total ESOP Preferred Stock 
Unearned ESOP shares (2)

102,184

74,880

52,643

39,754

28,263

19,282

6,368

1,953

136

—

89,420

60,513

46,694

34,279

24,362

8,722

2,985

2,206

$ 102

$ —

9.75%

10.75%

75

53

40

28

19

6

2

—

90

61

47

34

24

9

3

2

8.50

8.50

10.50

10.50

11.50

10.30

10.75

9.50

8.50

9.50

9.50

11.50

11.50

12.50

11.30

11.75

10.50

9.50

—
325,463

    382
269,563

—
$ 325
$(348)

—
$ 270
$(289)

(1) Liquidation preference $1,000.
(2) In accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership
Plans, we recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are
reduced as shares of the ESOP Preferred Stock are committed to be released. For information on dividends paid, see Note 14.

83

Note 14: Common Stock and Stock Plans

Common Stock
Our reserved, issued and authorized shares of common stock
at December 31, 2005, were:

Dividend reinvestment and 

common stock purchase plans

Director plans
Stock plans (1)

Total shares reserved

Shares issued
Shares not reserved

Total shares authorized

Number of shares

3,088,307
651,102
307,357,126
311,096,535
1,736,381,025
3,952,522,440
6,000,000,000

(1) Includes employee option, restricted shares and restricted share rights, 401(k),

profit sharing and compensation deferral plans.

Dividend Reinvestment and Common Stock Purchase Plans
Participants in our dividend reinvestment and common stock
direct purchase plans may purchase shares of our common
stock at fair market value by reinvesting dividends and/or
making optional cash payments, under the plan’s terms.

Director Plans
We provide a stock award to non-employee directors as 
part of their annual retainer under our director plans. We
also provide annual grants of options to purchase common
stock to each non-employee director elected or re-elected 
at the annual meeting of stockholders. The options can be
exercised after six months and through the tenth anniversary
of the grant date. 

Employee Stock Plans
LONG-TERM INCENTIVE PLANS Our stock incentive plans provide
for awards of incentive and nonqualified stock options, stock
appreciation rights, restricted shares, restricted share rights,
performance awards and stock awards without restrictions.
Options must have an exercise price at or above fair market
value (as defined in the plan) of the stock at the date of grant
(except for substitute or replacement options granted in 
connection with mergers or other acquisitions) and a term 
of no more than 10 years. Options granted in 2003 and
prior generally become exercisable over three years from 
the date of grant. Options granted in 2004 and the beginning
of 2005 generally were fully vested upon grant. Effective
April 26, 2005, options granted under our plan generally
cannot fully vest in less than one year. Options granted 
generally have a contractual term of 10 years. Except as 
otherwise permitted under the plan, if employment is ended
for reasons other than retirement, permanent disability or
death, the option period is reduced or the options are canceled. 

84

Options also may include the right to acquire a “reload”

stock option. If an option contains the reload feature and 
if a participant pays all or part of the exercise price of the
option with shares of stock purchased in the market or 
held by the participant for at least six months, upon exercise
of the option, the participant is granted a new option to 
purchase, at the fair market value of the stock as of the date
of the reload, the number of shares of stock equal to the 
sum of the number of shares used in payment of the exercise
price and a number of shares with respect to related statutory
minimum withholding taxes. Options granted after 2003 did
not include a reload feature.

We did not record any compensation expense for the
options granted under the plans during 2005, 2004 and
2003, as the exercise price was equal to the quoted market
price of the stock at the date of grant. The total number of
shares of common stock available for grant under the plans
at December 31, 2005, was 116,604,733.

Holders of restricted shares and restricted share rights 
are entitled to the related shares of common stock at no cost
generally over three to five years after the restricted shares 
or restricted share rights were granted. Holders of restricted
shares generally are entitled to receive cash dividends paid
on the shares. Holders of restricted share rights generally are
entitled to receive cash payments equal to the cash dividends
that would have been paid had the restricted share rights
been issued and outstanding shares of common stock. Except
in limited circumstances, restricted shares and restricted
share rights are canceled when employment ends. 

In 2005, 26,400 restricted shares and restricted share
rights were granted with a weighted-average grant-date 
per share fair value of $61.59. In 2004, no restricted shares 
or restricted share rights were granted. In 2003, 61,740
restricted shares and restricted share rights were granted
with a weighted-average grant-date per share fair value 
of $56.05. At December 31, 2005, 2004 and 2003, there
were 353,022, 448,150 and 577,722 restricted shares 
and restricted share rights outstanding, respectively. The
compensation expense for the restricted shares and restricted
share rights equals the quoted market price of the related
stock at the date of grant and is accrued over the vesting
period. We recognized total compensation expense for the
restricted shares and restricted share rights of $2 million 
in 2005, $3 million in 2004 and $4 million in 2003.

For various acquisitions and mergers since 1992, we 
converted employee and director stock options of acquired
or merged companies into stock options to purchase our
common stock based on the terms of the original stock
option plan and the agreed-upon exchange ratio.

BROAD-BASED PLANS In 1996, we adopted the PartnerShares®
Stock Option Plan, a broad-based employee stock option
plan. It covers full- and part-time employees who were 
generally not included in the long-term incentive plans
described on the preceding page. The total number of 
shares of common stock authorized for issuance under the
plan since inception through December 31, 2005, was
54,000,000, including 3,669,903 shares available for grant.
No options have been granted under the PartnerShares Plan
since 2002. The exercise date of options granted under the
PartnerShares Plan is the earlier of (1) five years after the

date of grant, or (2) when the quoted market price of the
stock reaches a predetermined price. These options generally
expire 10 years after the date of grant. Because the exercise
price of each PartnerShares grant has been equal to or higher
than the quoted market price of our common stock at the
date of grant, we have not recognized any compensation
expense in 2005 and prior years.

The following table summarizes stock option activity 

and related information for the three years ended 
December 31, 2005.

                 Director Plans
Number Weighted-average
exercise price

Long-Term Incentive Plans
Number Weighted-average
exercise price

                      Broad-Based Plans
Weighted-average
Number
exercise price

Options outstanding as of December 31, 2002

349,108

$ 36.78

93,379,737

$ 40.35

50,088,196

$ 43.25

2003:

Granted
Canceled
Exercised
Acquisitions

Options outstanding as of December 31, 2003

2004:

Granted
Canceled
Exercised

Options outstanding as of December 31, 2004

2005:

Granted
Canceled
Exercised
Acquisitions

Options outstanding as of December 31, 2005

Outstanding options exercisable as of:

December 31, 2003
December 31, 2004
December 31, 2005

62,346
—
(59,707)
 4,769

356,516

50,960
—
(21,427)

386,049

64,252
(3,594)
(57,193)
—

389,514

353,131
386,049
389,514

47.22
—
26.90
31.42

40.19

56.39
—
18.81

43.51

59.33
19.93
27.66
—

23,052,384 (1)
(1,529,868)
(13,884,561)
889,842

101,907,534

21,983,690 (1)
(1,241,637)
(18,574,660)

104,074,927

21,601,697(1)
(623,384)
(14,514,952)
52,824

46.04
46.76
31.96
25.89

42.56

57.41
48.06
37.89

46.46

60.12
51.80
42.20
27.35

—
(4,293,930)
(6,408,797)
      —

39,385,469

—
(2,895,200)
(3,792,605)

32,697,664

—
(2,475,617)
(5,729,286)
—

$48.67

110,591,112

$49.65

24,492,761

$ 40.08
43.51
48.67

63,257,541
84,702,073
103,053,320

$ 40.33
46.64
49.80

12,063,244
8,590,539
14,444,786

(1) Includes 4,014,597, 4,909,864 and 2,311,824 reload grants in 2005, 2004 and 2003, respectively.

The following table presents the weighted-average per
share fair value of options granted estimated using a Black-
Scholes option-pricing model and the weighted-average
assumptions used.

Per share fair value of options granted:

Director Plans
Long-Term Incentive Plans

Expected life (years)
Expected volatility
Risk-free interest rate
Expected annual dividend yield

2005

2004

2003

$6.27
7.50

$9.34
9.32

$9.59
9.48

4.4
16.1%
4.0
3.4

4.4
23.8%
2.9
3.4

4.3
29.2%
2.5
2.9

—
46.85
34.09
—

44.35

—
48.26
34.84

45.10

—
47.51
42.78
—

$45.51

$ 35.21
35.99
42.10

85

This table is a summary of our stock option plans described on the preceding page.

Range of exercise prices

Number  

                                                                   Options outstanding
Weighted-average
remaining contractual
life (in yrs.)

Weighted-average
exercise price

December 31, 2005
                             Options exercisable
Weighted-average
Number
exercise price

Director Plans

$13.49-$16.00
$16.01-$25.04
$25.05-$38.29
$38.30-$51.00
$51.01-$69.01

Long-Term Incentive Plans

$3.37-$5.06
$5.07-$7.60
$11.42-$17.13
$17.14 -$25.71
$25.72-$38.58
$38.59-$71.30

Broad-Based Plans
$16.56
$24.85-$37.81
$37.82-$46.50
$46.51-$51.15

2,530
17,010
34,620
197,942
137,412

29,012
4,366
101,430
57,574
16,442,280
93,956,450

287,403
5,107,673
8,661,248
10,436,437

$13.49
24.09
33.09
46.51
59.38

$ 4.23
5.84
16.53
23.33
34.24
52.41

$16.56
35.35
46.44
50.50

1.01
.49
1.88
5.60
7.69

6.50
20.02
.60
3.53
2.98
5.99

.56
2.42
4.86
6.22

2,530
17,010
34,620
197,942
137,412

29,012
4,366
101,430
57,574
16,277,280
86,583,658

287,403
5,107,673
8,540,348
509,362

$13.49
24.09
33.09
46.51
59.38

$ 4.23
5.84
16.53
23.33
34.22
52.80

$16.56
35.35
46.50
50.50

EMPLOYEE STOCK OWNERSHIP PLAN Under the Wells Fargo &
Company 401(k) Plan (the 401(k) Plan), a defined contribution
ESOP, the 401(k) Plan may borrow money to purchase our
common or preferred stock. Since 1994, we have loaned
money to the 401(k) Plan to purchase shares of our ESOP
Preferred Stock. As we release and convert ESOP Preferred
Stock into common shares, we record compensation expense
equal to the current market price of the common shares.
Dividends on the common shares allocated as a result of the
release and conversion of the ESOP Preferred Stock reduce
retained earnings and the shares are considered outstanding

for computing earnings per share. Dividends on the unallocated
ESOP Preferred Stock do not reduce retained earnings, and
the shares are not considered to be common stock equivalents
for computing earnings per share. Loan principal and interest
payments are made from our contributions to the 401(k)
Plan, along with dividends paid on the ESOP Preferred
Stock. With each principal and interest payment, a portion
of the ESOP Preferred Stock is released and, after conversion
of the ESOP Preferred Stock into common shares, allocated
to the 401(k) Plan participants.

The balance of ESOP shares, the dividends on allocated shares of common stock and unreleased preferred shares paid to the

401(k) Plan and the fair value of unearned ESOP shares were:

(in millions, except shares)

Shares outstanding
                  __________December 31,
2003
2004

2005

Allocated shares (common)
Unreleased shares (preferred) 

36,917,501
325,463

33,921,758
269,563

31,927,982
214,100

Fair value of unearned ESOP shares

$325

$270

$214

Dividends paid
Year ended December 31,
2003

2004

$61
32

$46
26

2005

$71
39

Deferred Compensation Plan for Independent Sales Agents
WF Deferred Compensation Holdings, Inc. is a wholly
owned subsidiary of the Parent formed solely to sponsor 
a deferred compensation plan for independent sales agents
who provide investment, financial and other qualifying 
services for or with respect to participating affiliates. 

The plan, which became effective January 1, 2002, allows
participants to defer all or part of their eligible compensation
payable to them by a participating affiliate. The Parent 
has fully and unconditionally guaranteed the deferred 
compensation obligations of WF Deferred Compensation
Holdings, Inc. under the plan. 

86

Note 15: Employee Benefits and Other Expenses

Employee Benefits
We sponsor noncontributory qualified defined benefit 
retirement plans including the Cash Balance Plan. The 
Cash Balance Plan is an active plan that covers eligible
employees (except employees of certain subsidiaries). 

Under the Cash Balance Plan, eligible employees’ Cash
Balance Plan accounts are allocated a compensation credit
based on a percentage of their certified compensation. The
compensation credit percentage is based on age and years 
of credited service. In addition, investment credits are 
allocated to participants quarterly based on their accumulated
balances. Employees become vested in their Cash Balance
Plan accounts after completing five years of vesting service 
or reaching age 65, if earlier.

Although we were not required to make a contribution 
in 2005 for our Cash Balance Plan, we funded the maximum
amount deductible under the Internal Revenue Code, or
$288 million. The total amount contributed for our pension
plans was $340 million. We expect that we will not be
required to make a contribution in 2006 for the Cash
Balance Plan. The maximum we can contribute in 2006 for
the Cash Balance Plan depends on several factors, including
the finalization of participant data. Our decision on how
much to contribute, if any, depends on other factors, 
including the actual investment performance of plan assets.
Given these uncertainties, we cannot at this time reliably
estimate the maximum deductible contribution or the
amount that we will contribute in 2006 to the Cash 

Balance Plan. For the unfunded nonqualified pension plans
and postretirement benefit plans, we will contribute the 
minimum required amount in 2006, which equals the benefits
paid under the plans. In 2005, we paid $78 million in benefits
for the postretirement plans, which included $29 million 
in retiree contributions, and $13 million for the unfunded
pension plans.

We sponsor defined contribution retirement plans 
including the 401(k) Plan. Under the 401(k) Plan, after 
one month of service, eligible employees may contribute up
to 25% of their pretax certified compensation, although 
there may be a lower limit for certain highly compensated
employees in order to maintain the qualified status of the
401(k) Plan. Eligible employees who complete one year 
of service are eligible for matching company contributions,
which are generally a 100% match up to 6% of an employee’s
certified compensation. The matching contributions generally
vest over four years.

Expenses for defined contribution retirement plans were
$370 million, $356 million and $257 million in 2005, 2004
and 2003, respectively.

We provide health care and life insurance benefits for 
certain retired employees and reserve the right to terminate
or amend any of the benefits at any time.

The information set forth in the following tables is 
based on current actuarial reports using the measurement
date of November 30 for our pension and postretirement
benefit plans.

87

The changes in the projected benefit obligation during 2005 and 2004 and the amounts included in the Consolidated Balance

Sheet at December 31, 2005 and 2004, were:

(in millions)

                                                                                                                                      December 31,
                                                         2004
                                                      2005
             Pension benefits
    Pension benefits
Non-
Non-
qualified
qualified

Other
benefits

Other
benefits

Qualified

Qualified

Projected benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Amendments
Actuarial gain (loss)
Benefits paid
Foreign exchange impact
Projected benefit obligation at end of year

$3,777
208
220
—
37
43
(242)
2
$4,045

$228
21
14
—
—
27
(13)
—
$277

$751
21
41
29
(44)
(12)
(78)
1
$709

$3,387
170
215
—
(54)
296
(240)
 3
$3,777

$202
23
13
—
(12)
27
(25)
—
$228

$698
17
43
26
(1)
37
(70)
1
$751

The weighted-average assumptions used to determine the

The accumulated benefit obligation for the defined benefit

projected benefit obligation were:

pension plans was $4,076 million and $3,786 million at
December 31, 2005 and 2004, respectively.

     2005
Pension  
Other
benefits(1) benefits

Year ended December 31,
              2004
Pension
Other
benefits(1) benefits

Discount rate
Rate of compensation increase

5.75%
4.0

5.75%
—

6.0%
4.0

6.0%
—

(1) Includes both qualified and nonqualified pension benefits.

The changes in the fair value of plan assets during 2005 and 2004 were:

(in millions)

Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contribution
Plan participants’ contributions
Benefits paid
Foreign exchange impact
Fair value of plan assets at end of year

                                                                2005

            Pension benefits
Non-
qualified

Qualified

Other
benefits

$4,457
400
327
—
(242)
2
$4,944

$ —
—
13
—
(13)
—
$ — 

$329
34
56
29
(78)
—
$370

Year ended December 31,
                                                           2004
             Pension benefits
Non-
qualified

Other
benefits

Qualified

$3,690
450
555
—
(240)
2
$4,457

$ —
—
25
—
(25)
—
$ —

$272
27
74
26
(70)
 —
$329

We seek to achieve the expected long-term rate of return

with a prudent level of risk given the benefit obligations 
of the pension plans and their funded status. We target the
Cash Balance Plan’s asset allocation for a target mix range 
of 40–70% equities, 20–50% fixed income, and approximately
10% in real estate, venture capital, private equity and other
investments. The target ranges employ a Tactical Asset

Allocation overlay, which is designed to overweight stocks 
or bonds when a compelling opportunity exists. The Employee
Benefit Review Committee (EBRC), which includes several
members of senior management, formally reviews the 
investment risk and performance of the Cash Balance Plan 
on a quarterly basis. Annual Plan liability analysis and 
periodic asset/liability evaluations are also conducted.

88

The weighted-average allocation of plan assets was:

Pension
plan
assets

                                      Percentage of plan assets at December 31,
                            2004
Other
benefit
plan assets

                 2005
Other
benefit
plan assets

Pension
plan
assets

Equity securities
Debt securities
Real estate
Other

Total

69%
27
3
1
100%

58%
40
1
1
100%

63%
33
3
1
100%

51%
46
1
2
100%

This table reconciles the funded status of the plans to the amounts included in the Consolidated Balance Sheet.

(in millions)

                                                       2005

         Pension benefits
Non-
qualified

Qualified

                                                                                                                                 December 31,
                                                                  2004
           Pension benefits
Non-
qualified

Other
benefits

Other
benefits

Qualified

Funded status (1)
Employer contributions in December
Unrecognized net actuarial loss
Unrecognized net transition asset
Unrecognized prior service cost
Accrued benefit income (cost)

Amounts recognized in the balance sheet

consist of:

Prepaid benefit cost
Accrued benefit liability 
Accumulated other 

comprehensive income

Accrued benefit income (cost)

$ 899
—
615
—
(25)
$1,489

$ 1,489
—

—
$ 1,489

$(277)
2
42
—
(11)
$(244)

$ — 
(245)

1
$(244)

$(339)
4
131
3
(51)
$(252)

$ — 
(252)

—
$(252)

$ 680
—
647
—
 (67)
$1,260

$1,260
—

—
$1,260

$(228)
1
25
—
(20)
$(222)

$ —
(223)

1
$(222)

$(422)
5
158
3
 (8)
$(264)

$ —
(264)

—
$(264)

(1) Fair value of plan assets at year end less projected benefit obligation at year end.

The table to the right provides information for pension

plans with benefit obligations in excess of plan assets, 
substantially due to our nonqualified pension plans.

The net periodic benefit cost was:

(in millions)                                                                              

Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets

December 31,
2004

2005

$359
297
60

$294
247
55

(in millions)

Service cost
Interest cost
Expected return 
on plan assets

Recognized 

net actuarial 
loss (gain) (1)
Amortization of 

prior service cost

Amortization of 
unrecognized 
transition asset

Settlement

Net periodic 

benefit cost

                                     2005

                                            2004

         Pension benefits
Non-
qualified

Qualified

Other
benefits

         Pension benefits
Non-
qualified

Qualified

Other
benefits

$ 208
220

(393)

68

(4)

—
—

$   99

$21
14

—

3

(2)

—
—

$36

$ 21
41

(25)

6

(1)

—
—

$ 42

$ 170
215

(327)

51

(1)

—
(2)

$23
13

—

1

(1)

—
2

$ 17
43

(23)

2

(1)

—
—

(1) Net actuarial loss (gain) is generally amortized over five years.

Year ended December 31,
                                             2003

     Pension benefits
Non-
qualified

Qualified

Other
benefits

$ 164
209

(275)

85

16

—
—

$22
14

—

7

—

—
—

$ 15
42

(18)

(3)

(1)

1
—

$ 106

$38

$ 38

$ 199

$43

$ 36

89

The investment strategy for the postretirement plans is
maintained separate from the strategy for the pension plans.
The general target asset mix is 55–65% equities and 35–45%
fixed income. In addition, the Retiree Medical Plan Voluntary
Employees’ Beneficiary Association (VEBA) considers the
effect of income taxes by utilizing a combination of variable
annuity and low turnover investment strategies. Members of
the EBRC formally review the investment risk and performance
of the postretirement plans on a quarterly basis.

Future benefits, reflecting expected future service that 

we expect to pay under the pension and other benefit 
plans, were:

(in millions)

           Pension benefits
Non-qualified

Qualified

Other
benefits

Year ended December 31,

2006
2007
2008
2009
2010
2011-2015

$ 288
315
366
329
339
1,986

$ 24
27
28
34
33
158

$ 54
55
56
57
62
313

Other Expenses
Expenses exceeding 1% of total interest income and noninterest
income that are not otherwise shown separately in the financial
statements or Notes to Financial Statements were:

(in millions)

Outside professional services
Contract services
Travel and entertainment
Outside data processing
Advertising and promotion
Postage
Telecommunications

2005

$835
596
481
449
443
281
278

Year ended December 31,
2003

2004

$669
626
442
418
459
269
296

$509
866
389
404
392
336
343

The weighted-average assumptions used to determine the

net periodic benefit cost were:

                2005

                  2004
Other
Other Pension
Pension
benefits(1) benefits benefits(1) benefits

Year ended December 31,
                  2003
Other
Pension
benefits(1) benefits

6.0%

6.0%

6.5%

6.5%

7.0%

7.0%

Discount rate
Expected 

return on 
plan assets

Rate of 

9.0

9.0

compensation 
increase

4.0

—

9.0

4.0

9.0

—

9.0

4.0

9.0

—

(1) Includes both qualified and nonqualified pension benefits.

The long-term rate of return assumptions above were

derived based on a combination of factors including 
(1) long-term historical return experience for major asset
class categories (for example, large cap and small cap 
domestic equities, international equities and domestic fixed
income), and (2) forward-looking return expectations for
these major asset classes. 

To account for postretirement health care plans we use a
health care cost trend rate to recognize the effect of expected
changes in future health care costs due to medical inflation,
utilization changes, new technology, regulatory requirements
and Medicare cost shifting. We assumed average annual
increases of 9.5% for health care costs for 2006. The rate 
of average annual increases is assumed to trend down 1%
each year between 2006 and 2010. By 2010 and thereafter,
we assumed rates of 5.5% for HMOs and for all other types
of coverage. Increasing the assumed health care trend by 
one percentage point in each year would increase the benefit
obligation as of December 31, 2005, by $52 million and 
the total of the interest cost and service cost components 
of the net periodic benefit cost for 2005 by $4 million.
Decreasing the assumed health care trend by one percentage
point in each year would decrease the benefit obligation as 
of December 31, 2005, by $48 million and the total of the
interest cost and service cost components of the net periodic
benefit cost for 2005 by $4 million.

90

Note 16:

Income Taxes

The components of income tax expense were:

(in millions)

Current:

Federal
State and local
Foreign

Deferred:

Federal
State and local

Total

2005

$2,627
346
91
3,064

715
98
813

$3,877

$2,815
354
154
3,323

379
53
432
$3,755

$1,298
165
114
1,577

1,492
206
1,698
$3,275

The tax benefit related to the exercise of employee 

stock options recorded in stockholders’ equity was 
$143 million, $175 million and $148 million for 2005, 
2004 and 2003, respectively.

We had a net deferred tax liability of $5,595 million and
$4,940 million at December 31, 2005 and 2004, respectively.
The tax effects of temporary differences that gave rise to 
significant portions of deferred tax assets and liabilities 
are presented in the table to the right.

We have determined that a valuation reserve is not
required for any of the deferred tax assets since it is more
likely than not that these assets will be realized principally
through carry back to taxable income in prior years, future
reversals of existing taxable temporary differences, and, 
to a lesser extent, future taxable income and tax planning
strategies. Our conclusion that it is “more likely than not”
that the deferred tax assets will be realized is based on federal
taxable income in excess of $17 billion in the carry-back
period, substantial state taxable income in the carry-back
period, as well as a history of growth in earnings.

Year ended December 31,
2003

2004

(in millions)

             December 31,
2004

2005

Deferred Tax Assets

Allowance for loan losses
Net tax-deferred expenses
Other

Total deferred tax assets

Deferred Tax Liabilities

Core deposit intangibles
Leasing
Mark to market
Mortgage servicing
FAS 115 adjustment
FAS 133 adjustment
Other

Total deferred tax liabilities

$1,471
179
461
2,111

153
2,430
708
3,517
368
29
501
7,706

$1,430
217
402
2,049

188
2,461
448
2,848
535
23
486
6,989

Net Deferred Tax Liability

$5,595

$4,940

The deferred tax liability related to 2005, 2004 or 2003

unrealized gains and losses on securities available for sale
along with the deferred tax liability related to certain derivative
and hedging activities for 2005 and 2004, had no effect on
income tax expense as these gains and losses, net of taxes,
were recorded in cumulative other comprehensive income.
The table below reconciles the statutory federal income

tax expense and rate to the effective income tax expense 
and rate.

(in millions)

Statutory federal income tax expense and rate
Change in tax rate resulting from:

State and local taxes on income, net of

federal income tax benefit
Tax-exempt income and tax credits
Donations of appreciated securities
Other

                             2005
Rate

Amount 

                               2004
Rate

Amount

Year ended December 31,
                       2003
Rate

Amount

$4,042

35.0%

$3,769

35.0%

$3,317

35.0%

289
(327)
(33)
(94)

2.5
(2.8)
(.3)
(.8)

265
(224)
—
(55)

2.5
(2.1)
—
(.5)

241
(161)
(90)
(32)

2.5
(1.7)
(.9)
(.3)

Effective income tax expense and rate

$3,877

33.6%

$3,755

34.9%

$3,275

34.6%

91

Note 17: Earnings Per Common Share

The table below shows earnings per common share and
diluted earnings per common share and reconciles the
numerator and denominator of both earnings per common
share calculations.

(in millions, except per share amounts)

Net income 
Less: Preferred stock dividends
Net income applicable to common stock (numerator)

EARNINGS PER COMMON SHARE
Average common shares outstanding (denominator)

Per share

DILUTED EARNINGS PER COMMON SHARE
Average common shares outstanding
Add:

Stock options
Restricted share rights

Diluted average common shares outstanding (denominator)

Per share

At December 31, 2005, 2004 and 2003, options to purchase
4.9 million, 3.3 million and 4.4 million shares, respectively,
were outstanding but not included in the calculation of earn-
ings per common share because the exercise price was higher
than the market price, and therefore they were antidilutive.

2005

$ 7,671
—
$ 7,671

1,686.3

$

4.55

1,686.3
18.9
.3
1,705.5

$

4.50

2004

$ 7,014
—
$ 7,014

1,692.2

$

4.15

1,692.2
20.8
    .4
1,713.4

$

4.09

Year ended December 31,
2003

$ 6,202
    3
$ 6,199

1,681.1

$

3.69

1,681.1
16.0
        .4
1,697.5

$

3.65

92

Note 18: Other Comprehensive Income

The components of other comprehensive income and the related tax effects were:

(in millions)

                                            2005
Net of
Tax
tax
effect

Before
tax

Before
tax

                     2004
Net of
Tax
tax
effect

Year ended December 31,
          2003
Net of
tax

Tax
effect

Before
tax

Translation adjustments 

$

8

$      3

$      5

$ 20

$

8

$  12

$

42

$  16

$

26

Securities available for sale and other 

retained interests:
Net unrealized gains (losses) arising

during the year

Reclassification of gains included 

in net income

Net unrealized losses arising 

during the year

Derivatives and hedging activities:

Net unrealized gains (losses) arising 

during the year

Reclassification of net losses (gains) 
on cash flow hedges included in 
net income

Net unrealized gains arising 

during the year

(401)

(143)

(258)

(64)

(24)

(40)

(465)

(167)

(298)

35

(72)

 (37)

12

(27)

(15)

23

(45)

(22)

(117)

(68)

(185)

(42)

(26)

(68)

(75)

(42)

(117)

349

134

215

(376)

(137)

(239)

(1,629)

(603)

(1,026)

(335)

(128)

(207)

14

6

8

413

37

152

15

8

261

22

 1,707

78

628

25

1,079

53

$ 12

$  

(65)

$ (27)

$  

(38)

Other comprehensive income

$(443)

$(158)

$(285)

$ 20

$

Cumulative other comprehensive income balances were:

(in millions)

Balance, December 31, 2002

Net change

Balance, December 31, 2003

Net change

Balance, December 31, 2004 

Net change

Balance, December 31, 2005

Translation
adjustments

Net unrealized 
gains (losses) on
securities and other
retained interests

Net unrealized 
gains (losses) on
derivatives and other
hedging activities

Cumulative other 
comprehensive income  

$(14)

26
12

12
$ 24

  5
$ 29

$1,030

(117)
913

(22)
$ 891

(298)
$ 593

$(40)

53
13

22
$ 35

8
$ 43

$  976

(38)
938

12
$  950

  (285)
$ 665

93

Note 19: Operating Segments

We have three lines of business for management reporting:
Community Banking, Wholesale Banking and Wells Fargo
Financial. The results for these lines of business are based 
on our management accounting process, which assigns 
balance sheet and income statement items to each responsible
operating segment. This process is dynamic and, unlike
financial accounting, there is no comprehensive, authoritative
guidance for management accounting equivalent to generally
accepted accounting principles. The management accounting
process measures the performance of the operating segments
based on our management structure and is not necessarily
comparable with similar information for other financial 
services companies. We define our operating segments by
product type and customer segments. If the management
structure and/or the allocation process changes, allocations,
transfers and assignments may change. To reflect the 
realignment of our automobile financing businesses into
Wells Fargo Financial in 2005, segment results for prior 
periods have been revised.

The Community Banking Group offers a complete line 
of banking and diversified financial products and services to
consumers and small businesses with annual sales generally
up to $20 million in which the owner generally is the financial
decision maker. Community Banking also offers investment
management and other services to retail customers and high
net worth individuals, insurance, securities brokerage through
affiliates and venture capital financing. These products and
services include the Wells Fargo Advantage FundsSM, a family
of mutual funds, as well as personal trust and agency assets.
Loan products include lines of credit, equity lines and loans,
equipment and transportation (recreational vehicle and
marine) loans, education loans, origination and purchase 
of residential mortgage loans and servicing of mortgage
loans and credit cards. Other credit products and financial
services available to small businesses and their owners
include receivables and inventory financing, equipment 
leases, real estate financing, Small Business Administration
financing, venture capital financing, cash management, 
payroll services, retirement plans, Health Savings Accounts
and credit and debit card processing. Consumer and business
deposit products include checking accounts, savings deposits,
market rate accounts, Individual Retirement Accounts
(IRAs), time deposits and debit cards.

Community Banking serves customers through a wide
range of channels, which include traditional banking stores,
in-store banking centers, business centers and ATMs. Also,
Phone BankSM centers and the National Business Banking
Center provide 24-hour telephone service. Online banking
services include single sign-on to online banking, bill pay 
and brokerage, as well as online banking for small business.

94

The Wholesale Banking Group serves businesses across

the United States with annual sales generally in excess of
$10 million. Wholesale Banking provides a complete line 
of commercial, corporate and real estate banking products
and services. These include traditional commercial loans 
and lines of credit, letters of credit, asset-based lending,
equipment leasing, mezzanine financing, high-yield debt,
international trade facilities, foreign exchange services, 
treasury management, investment management, institutional
fixed income and equity sales, interest rate, commodity and
equity risk management, online/electronic products such as
the Commercial Electronic Office® (CEO®) portal, insurance
brokerage services and investment banking services.
Wholesale Banking manages and administers institutional
investments, employee benefit trusts and mutual funds,
including the Wells Fargo Advantage Funds. Wholesale
Banking includes the majority ownership interest in the
Wells Fargo HSBC Trade Bank, which provides trade 
financing, letters of credit and collection services and is
sometimes supported by the Export-Import Bank of the
United States (a public agency of the United States offering
export finance support for American-made products).
Wholesale Banking also supports the commercial real 
estate market with products and services such as construction
loans for commercial and residential development, land
acquisition and development loans, secured and unsecured
lines of credit, interim financing arrangements for completed
structures, rehabilitation loans, affordable housing loans 
and letters of credit, permanent loans for securitization,
commercial real estate loan servicing and real estate and
mortgage brokerage services.

Wells Fargo Financial includes consumer finance and auto
finance operations. Consumer finance operations make direct
consumer and real estate loans to individuals and purchase
sales finance contracts from retail merchants from offices
throughout the United States and in Canada, Latin America,
the Caribbean, Guam and Saipan. Automobile finance oper-
ations specialize in purchasing sales finance contracts directly
from automobile dealers and making loans secured by auto-
mobiles in the United States, Canada and Puerto Rico. 
Wells Fargo Financial also provides credit cards and lease
and other commercial financing.

The “Other” Column consists of unallocated goodwill
balances held at the enterprise level. This column also may
include separately identified transactions recorded at the
enterprise level for management reporting.

(income/expense in millions,
average balances in billions)

2005
Net interest income (1)
Provision for credit losses 
Noninterest income
Noninterest expense
Income before income 

tax expense 
Income tax expense

Net income

2004
Net interest income (1)
Provision for credit losses 
Noninterest income
Noninterest expense
Income (loss) before income 
tax expense (benefit) 
Income tax expense (benefit) 

Net income (loss)

2003
Net interest income (1)
Provision for credit losses 
Noninterest income
Noninterest expense
Income (loss) before income 
tax expense (benefit) 
Income tax expense (benefit) 

Net income (loss)

2005
Average loans
Average assets
Average core deposits

2004
Average loans
Average assets
Average core deposits

Community
Banking

Wholesale
Banking

Wells Fargo
Financial

Other (2)

Consolidated
Company

$12,708
895
9,822
13,294

8,341
2,812

$ 5,529

$ 12,019
787
8,670
12,312

7,590
2,678

$ 4,912

$ 11,360
817
8,336
12,332

6,547
2,259

$ 4,288

$ 187.0
298.6
218.2

$ 178.9
284.2
197.8

$2,387
1
3,352
3,165

2,573
840

$1,733

$ 2,209
62
2,974
2,728

2,393
794

$ 1,599

$ 2,228
177
2,707
2,579

2,179
733

$ 1,446

$ 62.2
88.7
24.6

$ 53.1
77.6
25.5

$3,409
1,487
1,271
2,559

634
225

$ —
—
—
—

—
—

$ 409

$ —

$ 2,922
868
1,265
2,357

962
345

$ 617

$ 2,435
698
1,339
2,228

848
317

$  531

$ 46.9
52.7
—

$ 37.6
43.0
.1

$ —
—
—
176

(176)
(62)

$(114)

$ (16)
30
—
51

(97)
(34)

$ (63)

$ —
5.8
—

$ —
5.8
—

$18,504
2,383
14,445
  19,018

11,548
3,877

$ 7,671

$ 17,150
1,717
12,909
17,573

10,769
3,755

$ 7,014

$ 16,007
1,722
12,382
17,190

9,477
3,275

$ 6,202

$ 296.1
445.8
242.8

$ 269.6
410.6
223.4

(1) Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned 
on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on
segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment.
In general, Community Banking has excess liabilities and receives interest credits for the funding it provides the other segments.

(2) The items recorded at the enterprise level included a $176 million loss on debt extinguishment for 2004 and a $30 million non-recurring loss on sale of a sub-prime 

credit card portfolio and $51 million of other charges related to employee benefits and software for 2003.

95

Note 20: Securitizations and Variable Interest Entities

We also retained some AAA-rated floating-rate mortgage-
backed securities. The fair value at the date of securitization
was determined using quoted market prices. The implied
CPR, life, and discount spread to the London Interbank
Offered Rate (LIBOR) curve at the date of securitization 
is presented in the following table.

Prepayment speed (annual CPR)
Life (in years)
Discount spread to LIBOR curve

Retained interest – AAA
mortgage-backed securities
2004

2005

26.8%
2.4
.22%

34.8%
2.2
.32%

Key economic assumptions and the sensitivity of the 
current fair value to immediate adverse changes in those
assumptions at December 31, 2005, for mortgage servicing
rights, both purchased and retained, and other retained
interests related to residential mortgage loan securitizations
are presented in the following table.

($ in millions)

Mortgage Other retained 
interests

servicing rights

Fair value of retained interests
Expected weighted-average life (in years)

$12,687
5.8

$ 223
6.4

Prepayment speed assumption (annual CPR)

11.6%

8.6%

Decrease in fair value from 

10% adverse change

Decrease in fair value from 

25% adverse change

$

441

$

7  

1,032

17

Discount rate assumption 

10.5%

10.5%

Decrease in fair value from 

100 basis point adverse change

Decrease in fair value from 

200 basis point adverse change

$

476

$

7    

916

14

Key economic assumptions and the sensitivity of the 
current fair value to immediate adverse changes in those
assumptions at December 31, 2005, for the AAA-rated 
floating-rate mortgage-backed securities related to residential
mortgage loan securitizations are presented in the table on
the next page. The fair value of these securities was determined
using quoted market prices.

We routinely originate, securitize and sell into the secondary
market home mortgage loans and, from time to time, other
financial assets, including student loans, commercial mortgage
loans, home equity loans, auto receivables and securities. 
We typically retain the servicing rights and may retain 
other beneficial interests from these sales. Through these
securitizations, which are structured without recourse to 
us and with no restrictions on the retained interests, we may
be exposed to a liability under standard representations and
warranties we make to purchasers and issuers. The amount
recorded for this liability was not material to our consolidated
financial statements at year-end 2005 or 2004. We do not
have significant credit risks from the retained interests. 
We recognized gains of $326 million from sales of 
financial assets in securitizations in 2005 and $199 million
in 2004. Additionally, we had the following cash flows with
our securitization trusts.

(in millions)

Mortgage

   2005
Other
loans financial
assets

Year ended December 31,
                       2004
Other 
financial 
assets

Mortgage
loans

Sales proceeds from 

securitizations

Servicing fees
Cash flows on other 
retained interests

$40,982
154

$225
—

$33,550
88

560

6

138

$ —
—

11

In the normal course of creating securities to sell to
investors, we may sponsor special-purpose entities that 
hold, for the benefit of the investors, financial instruments
that are the source of payment to the investors. Special-purpose
entities are consolidated unless they meet the criteria for 
a qualifying special-purpose entity in accordance with 
FAS 140 or are not required to be consolidated under 
existing accounting guidance.

For securitizations completed in 2005 and 2004, we 
used the following assumptions to determine the fair value
of mortgage servicing rights and other retained interests at
the date of securitization.

Prepayment speed 

(annual CPR (1)) (2)

Life (in years) (2)
Discount rate (2)

Mortgage 
servicing rights
2004
2005

Other retained
           interests
2004
2005

16.9% 16.8%

5.6

4.9

10.1% 9.9%

12.7% 14.9%

7.0

3.9

10.2% 10.3%

(1) Constant prepayment rate.
(2) Represents weighted averages for all retained interests resulting from 

securitizations completed in 2005 and 2004.

96

($ in millions)

Retained 
interest – AAA 
mortgage- 
backed 
securities

Fair value of retained interests
Expected weighted-average life (in years)

Prepayment speed assumption (annual CPR)

Decrease in fair value from 10% adverse change 
Decrease in fair value from 25% adverse change 

Discount spread to LIBOR curve assumption 

Decrease in fair value from 10 basis point adverse change
Decrease in fair value from 20 basis point adverse change

$3,358
2.2

28.1%

$ —
—

$

.22%
7
14

The sensitivities in the previous tables are hypothetical
and should be relied on with caution. Changes in fair value
based on a 10% variation in assumptions generally cannot
be extrapolated because the relationship of the change in 
the assumption to the change in fair value may not be linear.
Also, in the previous tables, the effect of a variation in a 
particular assumption on the fair value of the retained 
interest is calculated independently without changing any
other assumption. In reality, changes in one factor may result
in changes in another (for example, changes in prepayment
speed estimates could result in changes in the discount rates),
which might magnify or counteract the sensitivities.

This table presents information about the principal balances of owned and securitized loans.

(in millions)

Commercial and commercial real estate:

Commercial
Other real estate mortgage
Real estate construction
Lease financing

Total commercial and commercial real estate

Consumer:

Real estate 1-4 family first mortgage
Real estate 1-4 family junior lien mortgage
Credit card
Other revolving credit and installment

Total consumer

Foreign

Less:

Total loans owned and securitized

Securitized loans
Mortgages held for sale
Loans held for sale

Total loans held

                                                 December 31,

Total loans (1)

Delinquent loans (2)

2005

2004

2005

2004

Year ended December 31,
Net charge-offs (recoveries)
2004
2005

$ 304 $ 371
370
63
  68
872

344
40
45
733

709
194
159
470
1,532
71

724
132
150
476
1,482
99

$ 273
11
(7)
14
291

$  274
32
(1)
  36
341

90
105
467
1,115
1,777
239

47
83
401
699
1,230
 122

$2,336 $2,453

$2,307

$1,693

$ 61,552
45,042
13,406
5,400
125,400

$ 54,517
48,402
9,025
   5,169
117,113

136,261
59,143
12,009
48,287
255,700
5,930

387,030

35,047
40,534
612

132,703
52,190
10,260
 43,744
238,897
4,527

360,537

34,489
29,723
8,739

$ 310,837

$287,586

(1) Represents loans on the balance sheet or that have been securitized, but excludes securitized loans that we continue to service but as to which we have no other

continuing involvement.

(2) Includes nonaccrual loans and loans 90 days or more past due and still accruing.

We are a variable interest holder in certain special-purpose

entities that are consolidated because we absorb a majority
of each entity’s expected losses, receive a majority of each
entity’s expected returns or both. We do not hold a majority
voting interest in these entities. Our consolidated variable
interest entities (VIEs), substantially all of which were
formed to invest in securities and to securitize real estate
investment trust securities, had approximately $2.5 billion
and $6 billion in total assets at December 31, 2005 and
2004, respectively. The primary activities of these entities
consist of acquiring and disposing of, and investing and 
reinvesting in securities, and issuing beneficial interests secured
by those securities to investors. The creditors of most of these
consolidated entities have no recourse against us.

We also hold variable interests greater than 20% but 
less than 50% in certain special-purpose entities formed 
to provide affordable housing and to securitize corporate
debt that had approximately $3 billion in total assets at
December 31, 2005 and 2004. We are not required to 
consolidate these entities. Our maximum exposure to loss 
as a result of our involvement with these unconsolidated
variable interest entities was approximately $870 million 
and $950 million at December 31, 2005 and 2004, respectively,
predominantly representing investments in entities formed to
invest in affordable housing. We, however, expect to recover
our investment over time primarily through realization of
federal low-income housing tax credits.

97

Note 21: Mortgage Banking Activities

Mortgage banking activities, included in the Community
Banking and Wholesale Banking operating segments, 
consist of residential and commercial mortgage originations
and servicing. 

The components of mortgage banking noninterest 

income were:

(in millions)

Servicing income, net:
Servicing fees (1)
Amortization
Reversal of provision (provision) 
for mortgage servicing rights
in excess of fair value
Net derivative gains (losses):
Fair value hedges (2)
Other (3)

Total servicing 
income, net

Net gains on mortgage loan

origination/sales activities

All other

Total mortgage banking 
noninterest income

Year ended December 31,
2003

2004

2005

$ 2,457
(1,991)

$ 2,101
(1,826)

$ 1,787
(2,760)

378

(46)
189

987

1,085
350

208

554
—

1,037

539
284

(1,092)

1,111
—

(954)

3,019
447

The changes in mortgage servicing rights were:

(in millions)

Mortgage servicing rights:
Balance, beginning of year

Originations (1)
Purchases (1)
Amortization
Write-down
Other (includes changes in 

mortgage servicing rights 
due to hedging)

Balance, end of year

Valuation allowance:
Balance, beginning of year

Provision (reversal of provision) 

for mortgage servicing rights 
in excess of fair value
Write-down of mortgage 

servicing rights

Year ended December 31,
2003

2004

2005

$ 9,466
2,652
2,683
(1,991)
—

$ 8,848
1,769
1,353
(1,826)
(169)

$ 6,677
3,546
2,140
(2,760)
(1,338)

888
$13,698

(509)
$ 9,466

583
$ 8,848

$ 1,565

$ 1,942

$ 2,188

(378)

(208)

1,092

—

(169)

(1,338)

Balance, end of year

$ 1,187

$ 1,565

$ 1,942

$ 2,422

$ 1,860

$ 2,512

Mortgage servicing rights, net

$12,511

$ 7,901

$ 6,906

Ratio of mortgage servicing rights to 

related loans serviced for others

1.44%

1.15%

1.15%

(1) Based on December 31, 2005, assumptions, the weighted-average amortization
period for mortgage servicing rights added during the year was approximately
5.6 years.

The components of our managed servicing portfolio were:

(in billions)

Loans serviced for others (1)
Owned loans serviced (2)
Total owned servicing

Sub-servicing

Total managed servicing portfolio

   December 31,
2004

2005

$ 871
118
989
27

$1,016

$688
117
805
27

$832

(1) Consists of 1-4 family first mortgage and commercial mortgage loans.
(2) Consists of mortgages held for sale and 1-4 family first mortgage loans.

(1) Includes impairment write-downs on other retained interests of $79 million 
for 2003. There were no impairment write-downs on other retained interests
for 2005 and 2004.

(2) Results related to mortgage servicing rights fair value hedging activities 

consist of gains (losses) excluded from the evaluation of hedge effectiveness
and the ineffective portion of the change in the value of these derivatives.
Gains and losses excluded from the evaluation of hedge effectiveness are
those caused by market conditions (volatility) and the spread between spot
and forward rates priced into the derivative contracts (the passage of time).
See Note 26 – Fair Value Hedges for additional discussion and detail.

(3) Other consists of results from free-standing derivatives used to economically
hedge the risk of changes in fair value of mortgage servicing rights. See Note
26 – Free-Standing Derivatives for additional discussion and detail.

At the end of each quarter, we evaluate MSRs for possible

impairment based on the difference between the carrying
amount and current fair value of the MSRs by risk stratification.
If a temporary impairment exists, we establish a valuation
allowance for any excess of amortized cost, as adjusted 
for hedge accounting, over the current fair value through 
a charge to income. We have a policy of reviewing MSRs 
for other-than-temporary impairment each quarter and 
recognize a direct write-down when the recoverability of 
a recorded valuation allowance is determined to be remote.
Unlike a valuation allowance, a direct write-down permanently
reduces the carrying value of the MSRs and the valuation
allowance, precluding subsequent reversals. (See Note 1 –
Transfers and Servicing of Financial Assets for additional 
discussion of our policy for valuation of MSRs.) 

98

Note 22: Condensed Consolidating Financial Statements

Following are the condensed consolidating financial 
statements of the Parent and Wells Fargo Financial, Inc. 
and its wholly-owned subsidiaries (WFFI). The Wells Fargo
Financial business segment for management reporting 

Condensed Consolidating Statement of Income

(see Note 19) consists of WFFI and other affiliated consumer
finance entities managed by WFFI that are included within
other consolidating subsidiaries in the following tables.

(in millions)

Parent

WFFI

Other
consolidating
subsidiaries

Eliminations

Consolidated
Company 

Year ended December 31, 2005

Dividends from subsidiaries:

Bank
Nonbank

Interest income from loans
Interest income from subsidiaries
Other interest income

Total interest income

Deposits
Short-term borrowings
Long-term debt

Total interest expense

NET INTEREST INCOME
Provision for credit losses
Net interest income after provision for credit losses

NONINTEREST INCOME
Fee income – nonaffiliates
Other

Total noninterest income

NONINTEREST EXPENSE
Salaries and benefits
Other 

Total noninterest expense

INCOME BEFORE INCOME TAX EXPENSE 

(BENEFIT) AND EQUITY IN UNDISTRIBUTED 
INCOME OF SUBSIDIARIES
Income tax expense (benefit)   
Equity in undistributed income of subsidiaries

NET INCOME

$4,675
763
—
2,215
105
7,758

—
256
2,000
2,256

5,502
—
5,502

—
     298
     298

92
50
     142

5,658
145
2,158

$7,671

$ —
—
4,467
—
104
4,571

—
223
1,362
1,585

2,986
1,582
1,404

224
223
447

985
759
1,744

107
(2)
—

$   109

$ —
—
16,809
—
4,493
21,302

3,848
897
598
5,343

15,959
801
15,158

8,111
5,727
13,838

9,378
8,398
17,776

11,220
3,734
—

$ 7,486

$(4,675)
(763)
(16)
(2,215)
—
(7,669)

—
(632)
(1,094)
(1,726)

(5,943)
—
(5,943)

—
(138)
(138)

—
(644)
(644)

(5,437)
—
(2,158)

$(7,595)

$ —
—
21,260
—
  4,702
  25,962

3,848
744
  2,866
  7,458

18,504
  2,383
16,121

8,335
  6,110
  14,445

10,455
8,563
  19,018

11,548
3,877
—

$ 7,671

99

Condensed Consolidating Statements of Income

(in millions)

Parent

WFFI

Other
consolidating
subsidiaries

Eliminations

Consolidated
Company

Year ended December 31, 2004

Dividends from subsidiaries:

Bank
Nonbank

Interest income from loans
Interest income from subsidiaries
Other interest income

Total interest income

Deposits
Short-term borrowings
Long-term debt

Total interest expense

NET INTEREST INCOME
Provision for credit losses
Net interest income after provision for credit losses

NONINTEREST INCOME
Fee income – nonaffiliates
Other

Total noninterest income

NONINTEREST EXPENSE
Salaries and benefits
Other 

Total noninterest expense

INCOME BEFORE INCOME TAX EXPENSE 

(BENEFIT) AND EQUITY IN UNDISTRIBUTED 
INCOME OF SUBSIDIARIES

Income tax expense (benefit)
Equity in undistributed income of subsidiaries

NET INCOME

Year ended December 31, 2003

Dividends from subsidiaries:

Bank
Nonbank

Interest income from loans
Interest income from subsidiaries
Other interest income

Total interest income

Short-term borrowings
Long-term debt
Other interest expense

Total interest expense

NET INTEREST INCOME
Provision for credit losses
Net interest income after provision for credit losses

NONINTEREST INCOME
Fee income – nonaffiliates
Other

Total noninterest income

NONINTEREST EXPENSE
Salaries and benefits
Other 

Total noninterest expense

INCOME BEFORE INCOME TAX EXPENSE 

(BENEFIT) AND EQUITY IN UNDISTRIBUTED 
INCOME OF SUBSIDIARIES

Income tax expense (benefit)
Equity in undistributed income of subsidiaries

NET INCOME

100

$3,652
307
—
1,117
91
5,167

—
106
872
978
4,189
—
4,189

—
139
139

64
313
377

3,951
(97)
2,966

$7,014

$5,194
841
2
567
75
6,679

81
560
—
  641

6,038
 —
6,038

—
 167
167

134
18
     152

6,053
(48)
 101

$6,202

$ —
—
3,548
—
 84
3,632

—
47
1,089
1,136
2,496
833
1,663

223
256
479

944
746
1,690

452
159
—

$ 293

$ —
—
2,799
—
77
2,876

73
730
—
803

2,073
814
1,259

209
239
448

745
583
1,328

379
143
—

$ 236

$ —
—
13,233
—
4,011
  17,244

1,827
458
387
 2,672
14,572
 884
  13,688

7,319
 5,053
  12,372

7,916
 7,820
  15,736

10,324
3,693
—

$ 6,631

$ —
—
11,136
—
  5,329
  16,465

413
321
1,734
2,468

13,997
908
13,089

6,664
5,195
11,859

7,567
8,301
15,868

9,080
3,180
—

$ 5,900

$(3,652)
(307)
—
(1,117)
—
(5,076)

—
(258)
(711)
(969)
(4,107)
—
(4,107)

—
(81)
(81)

—
(230)
(230)

(3,958)
—
(2,966)

$(6,924)

$(5,194)
(841)
—
(567)
—
(6,602)

(245)
(256)
—
(501)

(6,101)
—
(6,101)

—
(92)
(92)

—
(158)
(158)

(6,035)
—
(101)

$(6,136)

$ —
—
16,781
—
4,186
20,967

1,827
353
1,637
3,817
17,150
1,717
15,433

7,542
5,367
12,909

8,924
8,649
17,573

10,769
3,755
 —

$ 7,014

$     —       
—
13,937
—
5,481
19,418

322
1,355
1,734
3,411

16,007
1,722
14,285

6,873
5,509
12,382

8,446
8,744
17,190

9,477
3,275
—

$ 6,202

Condensed Consolidating Balance Sheets

(in millions)

Parent

WFFI

Other
consolidating
subsidiaries

Eliminations

Consolidated
Company

December 31, 2005

ASSETS
Cash and cash equivalents due from:

Subsidiary banks
Nonaffiliates

Securities available for sale
Mortgages and loans held for sale
Loans
Loans to subsidiaries:

Bank
Nonbank

Allowance for loan losses
Net loans

Investments in subsidiaries:

Bank
Nonbank
Other assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Short-term borrowings
Accrued expenses and other liabilities
Long-term debt
Indebtedness to subsidiaries
Total liabilities
Stockholders’ equity

Total liabilities and stockholders’ equity

December 31, 2004

ASSETS
Cash and cash equivalents due from:

Subsidiary banks
Nonaffiliates

Securities available for sale
Mortgages and loans held for sale
Loans
Loans to subsidiaries:

Bank
Nonbank

Allowance for loan losses
Net loans

Investments in subsidiaries:

Bank
Nonbank
Other assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
Short-term borrowings
Accrued expenses and other liabilities
Long-term debt
Indebtedness to subsidiaries
Total liabilities
Stockholders’ equity

Total liabilities and stockholders’ equity

$ 10,720
74
888
—
1

3,100
44,935
—
48,036

37,298
4,258
6,272
$107,546

$

—
81
3,480
59,341
3,984
66,886
40,660
$107,546

$ 9,493
226
1,419
—
1

700
36,368
  —
37,069

35,357
4,413
4,720
$ 92,697

$

—
65
2,535
50,146
2,085
54,831
37,866
$ 92,697

$

255
219
1,763
32
44,598

—
1,003
(1,280)
44,321

—
—
1,247
$47,837

$ —
9,005
1,241
35,087
—
45,333
2,504
$47,837

$

171
311
1,841
23
33,624

—
856
(952)
33,528

—
—
807
$36,681

$ —
5,662
1,103
27,508
—
34,273
2,408
$36,681

$

25
20,410
39,189
41,114
267,121

—
—
(2,591)
  264,530

—
—
65,336
$430,604

$325,450
28,746
20,856
16,613
—
391,665
38,939
$430,604

$

—
17,386
30,463
38,439
253,961

—
—
(2,810)
  251,151

—
—
 48,997
$386,436

$284,522
27,985
17,342
19,354
 —
349,203
37,233
$386,436

$ (11,000)
—
(6)
—
(883)

(3,100)
(45,938)
             —
(49,921)

(37,298)
(4,258)
(1,763)
$(104,246)

$ (11,000)
(13,940)
(2,506)
(31,373)
(3,984)
(62,803)
(41,443)
$(104,246)

$

(9,664)
—
(6)
—
—

(700)
(37,224)
—
(37,924)

(35,357)
(4,413)
(601)
$ (87,965)

$

(9,664)
(11,750)
(1,397)
(23,428)
(2,085)
(48,324)
(39,641)
$ (87,965)

$          —
20,703
41,834
41,146
310,837

—
—
(3,871)
306,966

—
—
71,092
$481,741

$314,450
23,892
23,071
79,668
       —
441,081
40,660
$481,741

$          —
17,923
33,717
38,462
287,586

—
—
(3,762)
283,824

—
—
53,923
$427,849

$274,858
21,962
19,583
73,580
—
389,983
37,866
$427,849

101

Condensed Consolidating Statement of Cash Flows

(in millions)

Parent

WFFI

Other
consolidating
subsidiaries/
eliminations

Consolidated
Company

$    5,396

$    1,159

$(15,888)

$  (9,333)

631
90
(231)
—

—

—

—
—
—
(3,166)
(10,751)
2,950
194
     —
(10,283)

—
1,048
18,297
(8,216)
1,367
(3,159)
(3,375)
     —
5,962

1,075

9,719

281
248
(486)
—

(953)

232

—
19,542
(29,757)
—
—
—
—
(1,059)
  (11,952)

—
3,344
11,891
(4,450)
—
—
—
     —
10,785

(8)

482

474

$ 10,794

$

18,147
6,634
(27,917)
66

(41,356)

42,007

(8,853)
3,280
(3,918)
3,166
10,751
(2,950)
(194)
(6,697)
(7,834)

38,961
(2,514)
(3,715)
(5,910)
—
—
—
(1,673)
25,149

1,427

2,702

19,059
6,972
(28,634)
66

(42,309)

42,239

(8,853)
22,822
(33,675)
—
—
—
—
(7,756)
  (30,069)

38,961
1,878
26,473
(18,576)
1,367
(3,159)
(3,375)
(1,673)
41,896

2,494

12,903

$ 4,129

$ 15,397

Year ended December 31, 2005

Cash flows from operating activities:
Net cash provided (used) by operating activities

Cash flows from investing activities:
Securities available for sale:

Sales proceeds
Prepayments and maturities 
Purchases

Net cash acquired from acquisitions
Increase in banking subsidiaries’ loan
originations, net of collections

Proceeds from sales (including participations) of loans by 

banking subsidiaries

Purchases (including participations) of loans by 

banking subsidiaries

Principal collected on nonbank entities’ loans
Loans originated by nonbank entities
Net advances to nonbank entities
Capital notes and term loans made to subsidiaries
Principal collected on notes/loans made to subsidiaries
Net decrease (increase) in investment in subsidiaries
Other, net

Net cash used by investing activities

Cash flows from financing activities:

Net increase in deposits
Net increase (decrease) in short-term borrowings
Proceeds from issuance of long-term debt
Long-term debt repayment
Proceeds from issuance of common stock 
Common stock repurchased
Cash dividends paid on common stock
Other, net

Net cash provided by financing activities

Net change in cash and due from banks

Cash and due from banks at beginning of year

Cash and due from banks at end of year

102

Condensed Consolidating Statement of Cash Flows

(in millions)

Parent

WFFI

Other
consolidating
subsidiaries/
eliminations

Consolidated
Company

Year ended December 31, 2004

Cash flows from operating activities:
Net cash provided by operating activities

Cash flows from investing activities:
Securities available for sale:

Sales proceeds 
Prepayments and maturities 
Purchases

Net cash paid for acquisitions
Increase in banking subsidiaries’ loan
originations, net of collections

Proceeds from sales (including participations) of loans by 

banking subsidiaries

Purchases (including participations) of loans by 

banking subsidiaries

Principal collected on nonbank entities’ loans
Loans originated by nonbank entities
Net advances to nonbank entities
Capital notes and term loans made to subsidiaries
Principal collected on notes/loans made to subsidiaries
Net decrease (increase) in investment in subsidiaries
Other, net

Net cash used by investing activities

Cash flows from financing activities:
Net increase (decrease) in deposits
Net increase (decrease) in short-term borrowings
Proceeds from issuance of long-term debt
Long-term debt repayment
Proceeds from issuance of common stock 
Common stock repurchased
Cash dividends paid on common stock
Other, net

Net cash provided by financing activities

Net change in cash and due from banks

Cash and due from banks at beginning of year

Cash and due from banks at end of year

$ 3,848

$ 1,297

$ 1,340

$   6,485

78
160
(207)
—

—

—

—
—
—
(92)
(11,676)
896
(353)
    —
(11,194)

—
(831)
19,610
(4,452)
1,271
(2,188)
(3,150)
  —
10,260

2,914

6,805

268
152
(580)
—

—

—

—
17,668
(27,778)
—
—
—
—
(121)
  (10,391)

(110)
683
12,919
(4,077)
—
—
—
  —
 9,415

321

161

482

$ 9,719

$

5,976
8,511
(15,796)
(331)

(33,800)

14,540

(5,877)
328
27
92
11,676
(896)
353
(2,652)
(17,849)

27,437
(2,549)
(3,135)
(11,110)
—
—
—
(13)
10,630

(5,879)

 8,581

6,322
8,823
(16,583)
(331)

(33,800)

14,540

(5,877)
17,996
(27,751)
—
—
—
—
 (2,773)
  (39,434)

27,327
(2,697)
29,394
(19,639)
1,271
(2,188)
(3,150)
(13)
30,305

(2,644)

15,547

$ 2,702

$ 12,903

103

Condensed Consolidating Statement of Cash Flows

(in millions)

Parent

WFFI

Other
consolidating
subsidiaries/
eliminations

Consolidated
Company

Year ended December 31, 2003

Cash flows from operating activities:
Net cash provided by operating activities

Cash flows from investing activities:
Securities available for sale:

Sales proceeds
Prepayments and maturities 
Purchases

Net cash paid for acquisitions
Increase in banking subsidiaries’ loan
originations, net of collections

Proceeds from sales (including participations) of loans by 

banking subsidiaries

Purchases (including participations) of loans by 

banking subsidiaries

Principal collected on nonbank entities’ loans
Loans originated by nonbank entities
Purchases of loans by nonbank entities
Net advances to nonbank entities
Capital notes and term loans made to subsidiaries
Principal collected on notes/loans made to subsidiaries
Net decrease (increase) in investment in subsidiaries
Other, net

Net cash used by investing activities

Cash flows from financing activities:

Net increase in deposits
Net decrease in short-term borrowings
Proceeds from issuance of long-term debt
Long-term debt repayment
Proceeds from issuance of guaranteed preferred beneficial

interests in Company’s subordinated debentures

Proceeds from issuance of common stock 
Preferred stock redeemed
Common stock repurchased
Cash dividends paid on preferred and common stock
Other, net

Net cash provided by financing activities

Net change in cash and due from banks

Cash and due from banks at beginning of year

Cash and due from banks at end of year

Note 23: Legal Actions 

$  6,352

$    1,271

$  23,572

$  31,195

146
150
(655)
(55)

—

—

—
3,683
—
(3,682)
(2,570)
(14,614)
6,160
122
      —
(11,315)

—
(1,182)
15,656
(3,425)

700
944
(73)
(1,482)
(2,530)
—
8,608

3,645

3,160

347
223
(732)
(600)

—

—

—
13,335
(21,035)
—
—
—
—
—
107
(8,355)

22
(676)
10,355
(2,151)

—
—
—
—
(600)
—
6,950

(134)

 295

$ 6,805

$       161

6,864
12,779
(23,744)
(167)

(36,235)

1,590

(15,087)
620
(757)
—
2,570
14,614
(6,160)
(122)
  (74)
(43,309)

28,621
(7,043)
3,479
(12,355)

—
—
—
—
600
651
13,953

(5,784)

    14,365

$ 8,581

7,357
13,152
(25,131)
(822)

(36,235)

1,590

(15,087)
17,638
(21,792)
(3,682)
—
—
—
—
33
 (62,979)

28,643
(8,901)
29,490
(17,931)

700
944
(73)
(1,482)
(2,530)
651
29,511

(2,273)

17,820

$ 15,547

In the normal course of business, we are subject to pending
and threatened legal actions, some for which the relief or
damages sought are substantial. After reviewing pending 
and threatened actions with counsel, and any specific
reserves established for such matters, management believes
that the outcome of such actions will not have a material

adverse effect on the results of operations or stockholders’
equity. We are not able to predict whether the outcome of
such actions may or may not have a material adverse effect 
on results of operations in a particular future period as the
timing and amount of any resolution of such actions and its
relationship to the future results of operations are not known.

104

Note 24: Guarantees

We provide significant guarantees to third parties including
standby letters of credit, various indemnification agreements,
guarantees accounted for as derivatives, contingent consider-
ation related to business combinations and contingent 
performance guarantees. 

We issue standby letters of credit, which include performance

and financial guarantees, for customers in connection with
contracts between the customers and third parties. Standby
letters of credit assure that the third parties will receive 
specified funds if customers fail to meet their contractual
obligations. We are obliged to make payment if a customer
defaults. Standby letters of credit were $10.9 billion at
December 31, 2005, and $9.4 billion at December 31, 2004,
including financial guarantees of $6.4 billion and $5.3 billion,
respectively, that we had issued or purchased participations
in. Standby letters of credit are net of participations sold to
other institutions of $2.1 billion at December 31, 2005, 
and $1.7 billion at December 31, 2004. We consider the
credit risk in standby letters of credit in determining the
allowance for credit losses. Deferred fees for these standby
letters of credit were not significant to our financial statements.
We also had commitments for commercial and similar 
letters of credit of $761 million at December 31, 2005, 
and $731 million at December 31, 2004. At December 31,
2004, we also provided a back-up liquidity facility to a 
commercial paper conduit that we considered to be a financial
guarantee. This credit facility, which was terminated in
2005, would have required us to advance, under certain 
conditions, up to $860 million at December 31, 2004. This
back-up liquidity facility was included within our commercial
loan commitments at December 31, 2004, and was substantially
collateralized in the event it was drawn upon.

We enter into indemnification agreements in the ordinary
course of business under which we agree to indemnify third
parties against any damages, losses and expenses incurred in
connection with legal and other proceedings arising from
relationships or transactions with us. These relationships or
transactions include those arising from service as a director 
or officer of the Company, underwriting agreements relating to
our securities, securities lending, acquisition agreements, and
various other business transactions or arrangements. Because
the extent of our obligations under these agreements depends
entirely upon the occurrence of future events, our potential
future liability under these agreements is not determinable.

We write options, floors and caps. Options are exercisable

based on favorable market conditions. Periodic settlements
occur on floors and caps based on market conditions. The
fair value of the written options liability in our balance sheet

was $563 million at December 31, 2005, and $374 million
at December 31, 2004. The aggregate written floors and caps
liability was $169 million and $227 million, respectively. Our
ultimate obligation under written options, floors and caps is
based on future market conditions and is only quantifiable
at settlement. The notional value related to written options
was $45.5 billion at December 31, 2005, and $29.7 billion
at December 31, 2004, and the aggregate notional value
related to written floors and caps was $24.3 billion and
$34.7 billion, respectively. We offset substantially all 
options written to customers with purchased options.

We also enter into credit default swaps under which 
we buy loss protection from or sell loss protection to a
counterparty in the event of default of a reference obligation.
The carrying amount of the contracts sold was a liability 
of $6 million at December 31, 2005, and $2 million at
December 31, 2004. The maximum amount we would be
required to pay under the swaps in which we sold protection,
assuming all reference obligations default at a total loss,
without recoveries, was $2.7 billion and $2.6 billion 
based on notional value at December 31, 2005 and 2004,
respectively. We purchased credit default swaps of comparable
notional amounts to mitigate the exposure of the written
credit default swaps at December 31, 2005 and 2004. These
purchased credit default swaps had terms (i.e., used the same
reference obligation and maturity) that would offset our
exposure from the written default swap contracts in which
we are providing protection to a counterparty.

In connection with certain brokerage, asset management
and insurance agency acquisitions we have made, the terms
of the acquisition agreements provide for deferred payments
or additional consideration based on certain performance
targets. At December 31, 2005 and 2004, the amount of
contingent consideration we expected to pay was not 
significant to our financial statements.

We have entered into various contingent performance
guarantees through credit risk participation arrangements
with remaining terms ranging from one to 24 years. We will 
be required to make payments under these guarantees if a
customer defaults on its obligation to perform under certain
credit agreements with third parties. Because the extent of
our obligations under these guarantees depends entirely 
on future events, our potential future liability under these
agreements is not fully determinable. However, our exposure
under most of the agreements can be quantified and for
those agreements our exposure was contractually limited 
to an aggregate liability of approximately $110 million at
December 31, 2005, and $370 million at December 31, 2004.

105

Note 25: Regulatory and Agency Capital Requirements

The Company and each of its subsidiary banks are subject to
various regulatory capital adequacy requirements administered
by the Federal Reserve Board (FRB) and the OCC, respectively.
The Federal Deposit Insurance Corporation Improvement
Act of 1991 (FDICIA) required that the federal regulatory
agencies adopt regulations defining five capital tiers for banks:
well capitalized, adequately capitalized, undercapitalized, 
significantly undercapitalized and critically undercapitalized.
Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary
actions by regulators that, if undertaken, could have a 
direct material effect on our financial statements.

Quantitative measures, established by the regulators to
ensure capital adequacy, require that the Company and each
of the subsidiary banks maintain minimum ratios (set forth
in the table below) of capital to risk-weighted assets. There
are three categories of capital under the guidelines. Tier 1
capital includes common stockholders’ equity, qualifying 
preferred stock and trust preferred securities, less goodwill
and certain other deductions (including a portion of servicing
assets and the unrealized net gains and losses, after taxes, 
on securities available for sale). Tier 2 capital includes preferred
stock not qualifying as Tier 1 capital, subordinated debt, 
the allowance for credit losses and net unrealized gains on
marketable equity securities, subject to limitations by the
guidelines. Tier 2 capital is limited to the amount of Tier 1
capital (i.e., at least half of the total capital must be in the
form of Tier 1 capital). Tier 3 capital includes certain qualifying
unsecured subordinated debt.

We do not consolidate our wholly-owned trusts (the Trusts)
formed solely to issue trust preferred securities. The amount

(in billions)

of trust preferred securities issued by the Trusts that was
includable in Tier 1 capital in accordance with FRB risk-
based capital guidelines was $4.2 billion at December 31,
2005. The junior subordinated debentures held by the 
Trusts were included in the Company’s long-term debt. 
(See Note 12.)

Under the guidelines, capital is compared with the relative

risk related to the balance sheet. To derive the risk included
in the balance sheet, a risk weighting is applied to each 
balance sheet asset and off-balance sheet item, primarily
based on the relative credit risk of the counterparty. For
example, claims guaranteed by the U.S. government or one
of its agencies are risk-weighted at 0% and certain real estate
related loans risk-weighted at 50%. Off-balance sheet items,
such as loan commitments and derivatives, are also applied 
a risk weight after calculating balance sheet equivalent
amounts. A credit conversion factor is assigned to loan 
commitments based on the likelihood of the off-balance
sheet item becoming an asset. For example, certain loan
commitments are converted at 50% and then risk-weighted
at 100%. Derivatives are converted to balance sheet 
equivalents based on notional values, replacement costs 
and remaining contractual terms. (See Notes 6 and 26 for
further discussion of off-balance sheet items.) For certain
recourse obligations, direct credit substitutes, residual 
interests in asset securitization, and other securitized 
transactions that expose institutions primarily to credit risk,
the capital amounts and classification under the guidelines
are subject to qualitative judgments by the regulators about
components, risk weightings and other factors.

                            Actual
Ratio

Amount

For capital
    adequacy purposes
Ratio

Amount

To be well
capitalized under
the FDICIA
prompt corrective
                 action provisions
Ratio
Amount

As of December 31, 2005:

Total capital (to risk-weighted assets)
Wells Fargo & Company
Wells Fargo Bank, N.A.

Tier 1 capital (to risk-weighted assets)
Wells Fargo & Company
Wells Fargo Bank, N.A.

Tier 1 capital (to average assets)

(Leverage ratio)

Wells Fargo & Company
Wells Fargo Bank, N.A.

$44.7
34.7

$31.7
25.2

$31.7
25.2

11.64%
11.04

8.26%
8.01

> $30.7
> 25.2

> $15.4
> 12.6

>8.00%
>8.00

>4.00%
>4.00

>$31.5

>10.00%

>$18.9

> 6.00%

6.99%
6.61

>$18.1
> 15.3

>4.00%(1)
>4.00    (1)

>$19.1

> 5.00%

(1) The leverage ratio consists of Tier 1 capital divided by quarterly average total assets, excluding goodwill and certain other items. The minimum leverage ratio guideline

is 3% for banking organizations that do not anticipate significant growth and that have well-diversified risk, excellent asset quality, high liquidity, good earnings,
effective management and monitoring of market risk and, in general, are considered top-rated, strong banking organizations.

106

Management believes that, as of December 31, 2005, the
Company and each of the covered subsidiary banks met all
capital adequacy requirements to which they are subject.

The most recent notification from the OCC categorized

each of the covered subsidiary banks as well capitalized,
under the FDICIA prompt corrective action provisions
applicable to banks. To be categorized as well capitalized,
the institution must maintain a total risk-based capital ratio
as set forth in the table on the previous page and not be 
subject to a capital directive order. There are no conditions
or events since that notification that management believes

Note 26: Derivatives

Our approach to managing interest rate risk includes the 
use of derivatives. This helps minimize significant, unplanned
fluctuations in earnings, fair values of assets and liabilities,
and cash flows caused by interest rate volatility. This
approach involves modifying the repricing characteristics of
certain assets and liabilities so that changes in interest rates
do not have a significant adverse effect on the net interest
margin and cash flows. As a result of interest rate fluctuations,
hedged assets and liabilities will gain or lose market value. 
In a fair value hedging strategy, the effect of this unrealized
gain or loss will generally be offset by income or loss on the
derivatives linked to the hedged assets and liabilities. In a
cash flow hedging strategy, we manage the variability of 
cash payments due to interest rate fluctuations by the effective
use of derivatives linked to hedged assets and liabilities.
We use derivatives as part of our interest rate risk 

management, including interest rate swaps, caps and floors,
futures and forward contracts, and options. We also offer
various derivatives, including interest rate, commodity, 
equity, credit and foreign exchange contracts, to our customers
but usually offset our exposure from such contracts by 
purchasing other financial contracts. The customer accom-
modations and any offsetting financial contracts are treated
as free-standing derivatives. Free-standing derivatives also
include derivatives we enter into for risk management that
do not otherwise qualify for hedge accounting. To a lesser
extent, we take positions based on market expectations 
or to benefit from price differentials between financial 
instruments and markets.

By using derivatives, we are exposed to credit risk if
counterparties to financial instruments do not perform as
expected. If a counterparty fails to perform, our credit risk 
is equal to the fair value gain in a derivative contract. We
minimize credit risk through credit approvals, limits and
monitoring procedures. Credit risk related to derivatives is
considered and, if material, provided for separately. As we
generally enter into transactions only with counterparties
that carry high quality credit ratings, losses from counterparty
nonperformance on derivatives have not been significant.
Further, we obtain collateral, where appropriate, to reduce
risk. To the extent the master netting arrangements meet the
requirements of FASB Interpretation No. 39, Offsetting of

have changed the risk-based capital category of any of the
covered subsidiary banks.

As an approved seller/servicer, Wells Fargo Bank, N.A.,
through its mortgage banking division, is required to maintain
minimum levels of shareholders’ equity, as specified by various
agencies, including the United States Department of Housing
and Urban Development, Government National Mortgage
Association, Federal Home Loan Mortgage Corporation and
Federal National Mortgage Association. At December 31,
2005, Wells Fargo Bank, N.A. met these requirements.

Amounts Related to Certain Contracts, as amended by 
FASB Interpretation No. 41, Offsetting of Amounts Related
to Certain Repurchase and Reverse Repurchase Agreements,
amounts are shown net in the balance sheet.

Our derivative activities are monitored by the Corporate

Asset/Liability Management Committee. Our Treasury 
function, which includes asset/liability management, is
responsible for various hedging strategies developed 
through analysis of data from financial models and other
internal and industry sources. We incorporate the resulting
hedging strategies into our overall interest rate risk 
management and trading strategies.

Fair Value Hedges
We use derivatives, such as interest rate swaps, swaptions,
Treasury futures and options, Eurodollar futures and options,
and forward contracts, to manage the risk of changes in the
fair value of MSRs and other retained interests. Derivative
gains or losses caused by market conditions (volatility) and
the spread between spot and forward rates priced into the
derivative contracts (the passage of time) are excluded from
the evaluation of hedge effectiveness, but are reflected in
earnings. Net derivative gains and losses related to our 
mortgage servicing activities are included in “Servicing
income, net” in Note 21. 

We use derivatives, such as Treasury and LIBOR futures
and swaptions, to hedge changes in fair value due to changes
in interest rates of our commercial real estate mortgages and
franchise loans held for sale. The ineffective portion of these
fair value hedges is recorded as part of mortgage banking
noninterest income in the income statement. We also enter
into interest rate swaps, designated as fair value hedges, to
convert certain of our fixed-rate long-term debt to floating-
rate debt. In addition, we enter into cross-currency swaps
and cross-currency interest rate swaps to hedge our exposure
to foreign currency risk and interest rate risk associated 
with the issuance of non-U.S. dollar denominated debt. 
For commercial real estate, long-term debt and foreign 
currency hedges, all parts of each derivative’s gain or loss 
are included in the assessment of hedge effectiveness.

At December 31, 2005, all designated fair value hedges

continued to qualify as fair value hedges.

107

Cash Flow Hedges
We hedge floating-rate senior debt against future interest 
rate increases by using interest rate swaps to convert floating-
rate senior debt to fixed rates and by using interest rate caps
and floors to limit variability of rates. We also use derivatives,
such as Treasury futures, forwards and options, Eurodollar
futures, and forward contracts, to hedge forecasted sales 
of mortgage loans. Gains and losses on derivatives that are
reclassified from cumulative other comprehensive income 
to current period earnings, are included in the line item 
in which the hedged item’s effect in earnings is recorded. 
All parts of gain or loss on these derivatives are included 
in the assessment of hedge effectiveness. As of December 31,
2005, all designated cash flow hedges continued to qualify 
as cash flow hedges.

At December 31, 2005, we expected that $13 million of

deferred net losses on derivatives in other comprehensive
income will be reclassified as earnings during the next twelve
months, compared with $8 million and $9 million of deferred
net losses at December 31, 2004 and 2003, respectively. 
We are hedging our exposure to the variability of future 
cash flows for all forecasted transactions for a maximum 
of one year for hedges converting floating-rate loans to fixed
rates, 10 years for hedges of floating-rate senior debt and 
one year for hedges of forecasted sales of mortgage loans.

The following table provides derivative gains and losses

related to fair value and cash flow hedges resulting from 
the change in value of the derivatives excluded from the
assessment of hedge effectiveness and the change in value 
of the ineffective portion of the derivatives.

(in millions)

Gains (losses) from derivatives related to MSRs 

and other retained interests from change in value of:

Derivatives excluded from the assessment of 

hedge effectiveness

Ineffective portion of derivatives

Net derivative gains (losses) related to MSRs 

and other retained interests

Losses from ineffective portion of change in 
the value of other fair value hedges (1)

Gains from ineffective portion of change in 

the value of cash flow hedges

(1) Includes commercial real estate, long-term debt and foreign currency.

Free-Standing Derivatives 
We enter into various derivatives primarily to provide 
derivative products to customers. To a lesser extent, we 
take positions based on market expectations or to benefit
from price differentials between financial instruments and
markets. These derivatives are not linked to specific assets
and liabilities on the balance sheet or to forecasted transactions
in an accounting hedge relationship and, therefore, do not
qualify for hedge accounting. We also enter into free-standing
derivatives for risk management that do not otherwise qualify
for hedge accounting. They are carried at fair value with
changes in fair value recorded as part of other noninterest
income in the income statement.

Interest rate lock commitments for residential mortgage
loans that we intend to resell are considered free-standing
derivatives. Our interest rate exposure on these derivative
loan commitments is economically hedged with Treasury
futures, forwards and options, Eurodollar futures, and 
forward contracts. The commitments and free-standing
derivatives are carried at fair value with changes in fair 
value recorded as a part of mortgage banking noninterest
income in the income statement. We record a zero fair value
for a derivative loan commitment at inception consistent
with EITF 02-3, Issues Involved in Accounting for Derivative
Contracts Held for Trading Purposes and Contracts 
Involved in Energy Trading and Risk Management Activities,

108

2005

$ 338

(384)

$ (46)

$ (15)

$ 23

2004

                     December 31,
2003

$ 944

(390)

$ 554

$ (21)

$ 10

$   908

     203

$1,111

$ (22)

$     72

and Securities and Exchange Commission (SEC) Staff
Accounting Bulletin No. 105, Application of Accounting
Principles to Loan Commitments. Changes subsequent to
inception are based on changes in fair value of the underlying
loan resulting from the exercise of the commitment and
changes in the probability that the loan will fund within the
terms of the commitment, which is affected primarily by
changes in interest rates and passage of time. The aggregate
fair value of derivative loan commitments on the consolidated
balance sheet at December 31, 2005 and 2004, was a net 
liability of $54 million and $38 million, respectively; and 
is included in the caption “Interest rate contracts – Options
written” under Customer Accommodations and Trading 
in the following table.

In 2005, we also used derivatives, such as swaps, 

swaptions, Treasury futures and options, Eurodollar futures
and options, and forward contracts, to economically hedge
the risk of changes in the fair value of MSRs and other
retained interests, with the resulting gain or loss reflected 
in income. Net derivative gains of $189 million for 2005
from economic hedges related to our mortgage servicing
activities are included on the income statement in “Mortgage
Banking – Servicing income, net.” The aggregate fair value
of these economic hedges was a net asset of $32 million 
at December 31, 2005, and is included on the balance 
sheet in “Other assets.”

The total notional or contractual amounts, credit risk amount and estimated net fair value for derivatives were:

                                                                                                                                                                 December 31,
                                                                               2004
Estimated
net fair
value

 2005
Estimated
net fair
value

Notional or
contractual
amount 

Credit
risk
amount (1)

Credit
risk
amount (1)

Notional or
contractual
amount 

(in millions)

ASSET/LIABILITY MANAGEMENT

HEDGES

Interest rate contracts:

Swaps 
Futures
Floors and caps purchased 
Floors and caps written
Options purchased 
Options written
Forwards 
Equity contracts:

Options purchased
Options written 
Forwards

Foreign exchange contracts:

Swaps
Forwards

CUSTOMER ACCOMMODATIONS

AND TRADING 
Interest rate contracts:

Swaps 
Futures
Floors and caps purchased 
Floors and caps written 
Options purchased 
Options written 
Forwards 

Commodity contracts:

Swaps 
Futures
Floors and caps purchased
Floors and caps written 
Options purchased
Options written

Equity contracts:

Swaps
Futures
Options purchased
Options written 

Foreign exchange contracts:

Swaps
Futures
Options purchased
Options written
Forwards and spots

Credit contracts:
Swaps

$ 36,978
25,485
5,250
5,250
26,508
405
106,146

3
75
15

4,217
1,000

92,462
251,534
7,169
12,653
10,160
41,124
56,644

20,633
555
5,464
6,356
12
52

55
480
1,810
1,601

1,078
53
2,280
2,219
21,516

5,454

$   409
—
87
—
103
1
126

1
—
2

142
11

1,175
—
33
—
129
41
17

599
—
195
—
7
—

5
—
253
—

35
—
60
—
220

23

$ 26
—
87
(13)
103
(3)
18

1
(3)
2

93
—

133
—
33
(27)
129
(160)
(61)

(1)
—
195
(130)
7
(33)

(2)
—
253
(263)

1
—
60
(59)
22

(33)

$ 27,145
10,314
1,400
—
51,670
—
103,948

25
99
19

—
—

74,659
152,943
32,715
34,119
699
26,418
46,167

4,427
230
391
609
35
42

4
730
1,011
935

673
24
2,211
2,187
25,788

5,443

$   626
—
25
—
49
—
137

1
—
1

—
—

1,631
—
170
1
4
45
13

141
—
39
—
17
—

—
—
189
—

53
—
79
—
489

36

(1) Credit risk amounts reflect the replacement cost for those contracts in a gain position in the event of nonperformance by all counterparties.

$ 524
—
25
—
49
—
113

1
(18) 
—

—
—

28
—
170
(189)
4
(45)
(19)

(27)
—
39
(37)
17
(6)

—
—
189
(181)

52
—
79
(79)
19

(22)

109

Note 27: Fair Value of Financial Instruments

FAS 107, Disclosures about Fair Value of Financial
Instruments, requires that we disclose estimated fair values
for our financial instruments. This disclosure should be read
with the financial statements and Notes to Financial Statements
in this Annual Report. The carrying amounts in the following
table are recorded in the Consolidated Balance Sheet under
the indicated captions.

We base fair values on estimates or calculations using 
present value techniques when quoted market prices are not
available. Because broadly-traded markets do not exist for
most of our financial instruments, we try to incorporate 
the effect of current market conditions in the fair value 
calculations. These valuations are our estimates, and are
often calculated based on current pricing policy, the economic
and competitive environment, the characteristics of the 
financial instruments and other such factors. These calculations
are subjective, involve uncertainties and significant judgment
and do not include tax ramifications. Therefore, the results
cannot be determined with precision, substantiated by 
comparison to independent markets and may not be realized
in an actual sale or immediate settlement of the instruments.
There may be inherent weaknesses in any calculation technique,
and changes in the underlying assumptions used, including
discount rates and estimates of future cash flows, that could
significantly affect the results. 

We have not included certain material items in our 
disclosure, such as the value of the long-term relationships
with our deposit, credit card and trust customers, since these
intangibles are not financial instruments. For all of these 
reasons, the total of the fair value calculations presented 
do not represent, and should not be construed to represent, 
the underlying value of the Company.

Financial Assets
SHORT-TERM FINANCIAL ASSETS
Short-term financial assets include cash and due from banks,
federal funds sold and securities purchased under resale
agreements and due from customers on acceptances. The
carrying amount is a reasonable estimate of fair value
because of the relatively short time between the origination
of the instrument and its expected realization.

TRADING ASSETS
Trading assets are carried at fair value.

SECURITIES AVAILABLE FOR SALE
Securities available for sale are carried at fair value. 
For further information, see Note 5.

MORTGAGES HELD FOR SALE
The fair value of mortgages held for sale is based on quoted
market prices or on what secondary markets are currently
offering for portfolios with similar characteristics.

110

LOANS HELD FOR SALE
The fair value of loans held for sale is based on what 
secondary markets are currently offering for portfolios 
with similar characteristics.

LOANS
The fair valuation calculation differentiates loans based on
their financial characteristics, such as product classification,
loan category, pricing features and remaining maturity.
Prepayment estimates are evaluated by product and loan rate.

The fair value of commercial loans, other real estate

mortgage loans and real estate construction loans is calculated
by discounting contractual cash flows using discount rates
that reflect our current pricing for loans with similar 
characteristics and remaining maturity.

For real estate 1-4 family first and junior lien mortgages,
fair value is calculated by discounting contractual cash flows,
adjusted for prepayment estimates, using discount rates
based on current industry pricing for loans of similar size,
type, remaining maturity and repricing characteristics.

For consumer finance and credit card loans, the portfolio’s

yield is equal to our current pricing and, therefore, the fair
value is equal to book value.

For other consumer loans, the fair value is calculated by
discounting the contractual cash flows, adjusted for prepayment
estimates, based on the current rates we offer for loans with
similar characteristics.

Loan commitments, standby letters of credit and commercial

and similar letters of credit not included in the following 
table had contractual values of $191.4 billion, $10.9 billion 
and $761 million, respectively, at December 31, 2005, and
$164.0 billion, $9.4 billion and $731 million, respectively, 
at December 31, 2004. These instruments generate ongoing 
fees at our current pricing levels. Of the commitments at
December 31, 2005, 40% mature within one year. Deferred
fees on commitments and standby letters of credit totaled 
$47 million and $46 million at December 31, 2005 and 2004,
respectively. Carrying cost estimates fair value for these fees.

NONMARKETABLE EQUITY INVESTMENTS
There are generally restrictions on the sale and/or liquidation
of our nonmarketable equity investments, including federal
bank stock. Federal bank stock carrying value approximates
fair value. We use all facts and circumstances available to
estimate the fair value of our cost method investments. 
We typically consider our access to and need for capital
(including recent or projected financing activity), qualitative
assessments of the viability of the investee, and prospects 
for its future.

Financial Liabilities
DEPOSIT LIABILITIES
FAS 107 states that the fair value of deposits with no stated
maturity, such as noninterest-bearing demand deposits, 
interest-bearing checking and market rate and other savings,
is equal to the amount payable on demand at the measurement
date. The amount included for these deposits in the following
table is their carrying value at December 31, 2005 and 2004.
The fair value of other time deposits is calculated based on
the discounted value of contractual cash flows. The discount
rate is estimated using the rates currently offered for like
wholesale deposits with similar remaining maturities.

SHORT-TERM FINANCIAL LIABILITIES
Short-term financial liabilities include federal funds pur-
chased and securities sold under repurchase agreements,
commercial paper and other short-term borrowings. 
The carrying amount is a reasonable estimate of fair 
value because of the relatively short time between the 
origination of the instrument and its expected realization.

LONG-TERM DEBT 
The discounted cash flow method is used to estimate the 
fair value of our fixed-rate long-term debt. Contractual 
cash flows are discounted using rates currently offered 
for new notes with similar remaining maturities.

Derivatives 
The fair values of derivatives are reported in Note 26.

Limitations
We make these fair value disclosures to comply with the
requirements of FAS 107. The calculations represent man-
agement’s best estimates; however, due to the lack of broad
markets and the significant items excluded from this disclosure,
the calculations do not represent the underlying value of the
Company. The information presented is based on fair value
calculations and market quotes as of December 31, 2005
and 2004. These amounts have not been updated since year
end; therefore, the valuations may have changed significantly
since that point in time.

As discussed above, some of our asset and liability financial
instruments are short-term, and therefore, the carrying amounts
in the Consolidated Balance Sheet approximate fair value.
Other significant assets and liabilities, which are not consid-
ered financial assets or liabilities and for which fair values
have not been estimated, include mortgage servicing rights,
premises and equipment, goodwill and other intangibles,
deferred taxes and other liabilities.

This table is a summary of financial instruments, as
defined by FAS 107, excluding short-term financial assets
and liabilities, for which carrying amounts approximate 
fair value, and trading assets, securities available for sale 
and derivatives, which are carried at fair value.

(in millions)

FINANCIAL ASSETS
Mortgages held for sale
Loans held for sale
Loans, net 
Nonmarketable equity investments

FINANCIAL LIABILITIES
Deposits
Long-term debt (1)

                                                                                                   December 31,
                                    2004
                                    2005
Estimated
Estimated
fair value
fair value

Carrying
amount

Carrying
amount

$ 40,534
612
306,966
5,090

$ 40,666
629
307,721
5,533

$ 29,723
8,739
283,824
5,229

$  29,888
8,972
285,488
5,494

314,450
79,654

314,301
78,868

274,858
73,560

274,900
74,085

(1) The carrying amount and fair value exclude obligations under capital leases of $14 million and $20 million at December 31, 2005 and 2004, respectively.

111

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders 
Wells Fargo & Company:

We have audited the accompanying consolidated balance sheet of Wells Fargo & Company and Subsidiaries (“the 
Company”) as of December 31, 2005 and 2004, and the related consolidated statements of income, changes in 
stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended 
December 31, 2005. These consolidated financial statements are the responsibility of the Company’s management. 
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board 
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the 
accounting principles used and significant estimates made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the 
financial position of the Company as of December 31, 2005 and 2004, and the results of their operations and their 
cash flows for each of the years in the three-year period ended December 31, 2005, in conformity with U.S. generally 
accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board 
(United States), the effectiveness of the Company’s internal control over financial reporting as of December 31, 2005, 
based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring 
Organizations of the Treadway Commission (COSO), and our report dated February 21, 2006, expressed an unqualified 
opinion on management’s assessment of, and the effective operation of, internal control over financial reporting.

San Francisco, California
February 21, 2006

112

Quarterly Financial Data
Condensed Consolidated Statement of Income — Quarterly (Unaudited)

(in millions, except per share amounts)

INTEREST INCOME
INTEREST EXPENSE

NET INTEREST INCOME

2005
                                            Quarter ended
Mar. 31

Sept. 30

June 30

Dec. 31

2004
                                             Quarter ended
Mar. 31

Sept. 30

June 30

Dec. 31

$   7,244 $ 6,645
   1,969
4,676

2,405

4,839

$ 6,200
1,664
4,536

$ 5,873
1,420
4,453

$  5,635
1,179
4,456

$ 5,405
 987
4,418

Provision for credit losses
Net interest income after provision for credit losses

703
4,136

    641
4,035

 454
4,082

NONINTEREST INCOME
Service charges on deposit accounts
Trust and investment fees
Card fees
Other fees
Mortgage banking
Operating leases
Insurance
Net gains (losses) on debt securities available for sale
Net gains from equity investments
Other

Total noninterest income

NONINTEREST EXPENSE
Salaries
Incentive compensation
Employee benefits
Equipment
Net occupancy
Operating leases
Other

Total noninterest expense

INCOME BEFORE INCOME TAX EXPENSE
Income tax expense

655
623
394
478
628
200
272
(124)
93
434
3,653

1,613
663
428
328
344
161
1,346
4,883

2,906
976

654
614
377
520
743
202
248
(31)
146
354
 3,827

1,571
676
467
306
354
159
1,356
 4,889

2,973
  998

625
597
361
478
237
202
358
39
201
  231
  3,329

1,551
562
432
263
310
157
 1,279
4,554

2,857
947

585
3,868

578
602
326
453
814
208
337
(4)
71
251
3,636

1,480
465
547
370
404
158
1,268
4,692

2,812
  956

465
3,991

594
543
321
479
790
211
265
3
170
336
3,712

1,438
526
451
410
301
164
1,681
4,971

2,732
 947

408
4,010

618
508
319
452
262
207
264
10
48
212
2,900

1,383
449
390
254
309
158
1,277
4,220

2,690
942

$ 5,069
843
4,226

440
3,786

$ 4,858
808
4,050

404
3,646

611
530
308
437
493
209
347
(61)
81
245
     3,200

1,295
441
391
271
304
156
 1,495
  4,353

2,633
 919

594
535
282
411
315
209
317
33
95
306
 3,097

1,277
391
492
301
294
155
1,119
4,029

2,714
947

NET INCOME 

$ 1,930 $  1,975

$ 1,910

$ 1,856

$ 1,785

$ 1,748

$ 1,714

$ 1,767

EARNINGS PER COMMON SHARE 

DILUTED EARNINGS PER COMMON SHARE

DIVIDENDS DECLARED PER COMMON SHARE

$

$

$

1.15 $

1.17

$    1.14

1.14 $

1.16

$    1.12

$

$

1.09

1.08

.52 $

.52

$   

.48

$        .48

$

$

$

1.06

1.04

.48

$ 

$ 

$

1.03

1.02

.48

$

$

$

1.02

$

1.04

1.00

$   1.03

.45

$

.45

Average common shares outstanding

1,675.4

1,686.8

1,687.7

1,695.4

1,692.7

1,688.9

1,688.1

1,699.3

Diluted average common shares outstanding

1,693.9

1,705.3

1,707.2

1,715.7

1,715.0

1,708.7

1,708.3

1,721.2

Market price per common share (1)

High
Low
Quarter end

$ 64.70 $ 62.87
58.00
58.57

57.62
62.83

$ 62.22
57.77
61.58

$ 62.75
58.15
59.80

$ 64.04
57.55
62.15

$ 59.86
56.12
59.63

$ 59.72
54.32
57.23

$ 58.98
55.97
56.67

(1) Based on daily prices reported on the New York Stock Exchange Composite Transaction Reporting System.

113

Average Balances, Yields and Rates Paid (Taxable-Equivalent Basis) — Quarterly (1)(2) (Unaudited)

(in millions)

EARNING ASSETS
Federal funds sold, securities purchased
under resale agreements and other 
short-term investments

Trading assets
Debt securities available for sale (3):

Securities of U.S. Treasury and federal agencies
Securities of U.S. states and political subdivisions
Mortgage-backed securities:

Federal agencies
Private collateralized mortgage obligations

Total mortgage-backed securities

Other debt securities (4)

Total debt securities available for sale (4)

Mortgages held for sale (3)
Loans held for sale (3)
Loans:

Commercial and commercial real estate:

Commercial
Other real estate mortgage
Real estate construction
Lease financing

Total commercial and commercial real estate

Consumer:

Real estate 1-4 family first mortgage
Real estate 1-4 family junior lien mortgage
Credit card
Other revolving credit and installment

Total consumer

Foreign

Other

Total loans (5)

Total earning assets

FUNDING SOURCES
Deposits:

Interest-bearing checking
Market rate and other savings
Savings certificates
Other time deposits
Deposits in foreign offices

Total interest-bearing deposits

Short-term borrowings
Long-term debt

Total interest-bearing liabilities

Portion of noninterest-bearing funding sources
Total funding sources
Net interest margin and net interest income on 

a taxable-equivalent basis (6)

NONINTEREST-EARNING ASSETS
Cash and due from banks
Goodwill
Other

Total noninterest-earning assets

NONINTEREST-BEARING FUNDING SOURCES
Deposits
Other liabilities
Stockholders’ equity
Noninterest-bearing funding sources used to

fund earning assets

Net noninterest-bearing funding sources

TOTAL ASSETS

Average
balance

                                                          2005
Interest
Yields/
income/
rates
expense

Quarter ended December 31,
                                                        2004
Interest
Yields/
income/
rates
expense

Average
balance

$ 5,158
5,061

3.64%
3.82

$      47
48

$     4,967
5,040

2.01%
2.73

$     26
34

1,051
3,256

23,545
8,060
31,605
4,843
40,755
42,036
603

61,297
28,425
13,040
5,347
108,109

76,233
58,157
11,326
46,593
192,309
5,278
305,696
1,415

$400,724

$ 3,797
132,042
26,610
33,321
14,347
210,117
25,395
79,169
314,681
86,043
$400,724

$ 13,508
10,780
43,469

$ 67,757

$ 90,937
23,049
39,814

(86,043)
$ 67,757

$468,481

3.90
8.22

5.94
5.71
5.88
6.79
6.12
5.97
6.41

7.35
6.84
7.26
5.77
7.13

6.75
7.28
12.81
9.13
7.84
13.08
7.68
4.49

7.23

1.79
1.86
3.26
4.07
3.71
2.51
3.79
4.19
3.04
—
2.39

10
64

347
114
461
   82
617
628
10

1,135
489
239
77
1,940

1,291
1,067
363
1,071
3,792
174
5,906
   16

7,272

17
619
219
341
135
1,331
242
832
2,405
—
2,405

1,101
3,624

21,916
 3,787
25,703
3,246
33,674
32,373
8,536

51,896
29,412
9,246
5,109
95,663

86,389
50,909
9,706
 34,475
181,479
 4,025
281,167
 1,698

$367,455

$    3,244
125,350
18,697
30,460
 10,026
187,777
26,315
70,646
284,738
82,717
$367,455

3.72
8.31

6.08
5.35
5.97
7.91
6.32
5.48
4.05

5.93
5.67
5.80
5.84
5.84

5.70
5.54
11.57
8.99
6.59
14.00
6.44
4.19

6.16

.68
.83
2.32
1.98
1.95
1.22
1.90
2.70
1.65
—
1.28

10
71

321
 49
370
 59
510
443
87

774
419
135
 75
1,403

1,233
709
281
 779
3,002
 141
4,546
17

5,663

5
262
108
152
 49
576
126
477
1,179
—
1,179

4.84%

$4,867

4.88%

$4,484

$ 13,366
10,436
34,002

$ 57,804

$  82,958
20,336
37,227

(82,717)
$ 57,804

$425,259

(1) Our average prime rate was 6.97% and 4.94% for the quarters ended December 31, 2005 and 2004, respectively. The average three-month London Interbank Offered Rate (LIBOR) 

was 4.34% and 2.30% for the same quarters, respectively.

(2) Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories.
(3) Yields are based on amortized cost balances computed on a settlement date basis.
(4) Includes certain preferred securities.
(5) Nonaccrual loans and related income are included in their respective loan categories.
(6) Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for both quarters presented.

114
114

Glossary

Collateralized debt obligations: Securitized corporate debt.

Core deposits: Deposits acquired in a bank’s natural market area,
counted as a stable source of funds for lending. These deposits 
generally have a predictable cost and customer loyalty.

Core deposit intangibles: The present value of the difference in cost of
funding provided by core deposit balances compared with alternative
funding with similar terms assigned to acquired core deposit balances
by a buyer.

Cost method of accounting: Investment in the subsidiary is carried at
cost, and the parent company accounts for the subsidiary’s operations
only to the extent that the subsidiary declares dividends. Generally
used if investment ownership is less than 20%.

Derivatives: Financial contracts whose value is derived from publicly
traded securities, interest rates, currency exchange rates or market
indices. Derivatives cover a wide assortment of financial contracts,
including forward contracts, futures, options and swaps.

Diluted earnings per share: Net income divided by the average 
number of common shares outstanding during the year, plus the effect
of common stock equivalents (for example, stock options, restricted
share rights and convertible debentures) that are dilutive.

Earnings per share: Net income divided by the average number of
common shares outstanding during the year.

Effectiveness/ineffectiveness (of derivatives): Effectiveness is the 
gain or loss on a hedging instrument that exactly offsets the loss or
gain on the hedged item. Any difference would be the effect of hedge
ineffectiveness, which is recognized currently in earnings.

Equity method of accounting: Investment in the subsidiary is 
originally recorded at cost, and the value of the investment is 
increased or decreased based on the investor’s proportional share 
of the change in the subsidiary’s net worth. Generally used if 
investment ownership is 20% or more but less than 50%.

Federal Reserve Board (FRB): The Board of Governors of the Federal
Reserve System, charged with supervising and regulating bank holding
companies, including financial holding companies.

Futures and forward contracts: Contracts in which the buyer agrees to
purchase and the seller agrees to deliver a specific financial instrument
at a predetermined price or yield. May be settled either in cash or by
delivery of the underlying financial instrument.

GAAP (Generally accepted accounting principles): Accounting rules
and conventions defining acceptable practices in recording transactions
and preparing financial statements. U.S. GAAP is primarily determined
by the Financial Accounting Standards Board (FASB).

Hedge: Financial technique to offset the risk of loss from price fluctuations
in the market by offsetting the risk in another transaction. The risk in
one position counterbalances the risk in another transaction.

Interest rate floors and caps: Interest rate protection instruments
where the seller pays the buyer an interest differential, which 
represents the difference between a short-term rate (e.g., three-
month LIBOR) and an agreed-upon rate (the strike rate) applied 
to a notional principal amount.

Interest rate swap contracts: Primarily an asset/liability management
strategy to reduce interest rate risk. Interest rate swap contracts are
exchanges of interest rate payments, such as fixed-rate payments for
floating-rate payments, based on notional principal amounts.

Mortgage servicing rights: The rights to service mortgage loans for
others, which are acquired through purchases or kept after sales or
securitizations of originated loans.

Net interest margin: The average yield on earning assets minus the
average interest rate paid for deposits and debt.

Notional amount: A number of currency units, shares, or other units
specified in a derivative contract.

Office of the Comptroller of the Currency (OCC): Part of the U.S.
Treasury department and the primary regulator for banks with 
national charters.

Options: Contracts that grant the purchaser, for a premium payment,
the right, but not the obligation, to either purchase or sell the 
associated financial instrument at a set price during a period or 
at a specified date in the future.

Other-than-temporary impairment: A write-down of certain assets
recorded when a decline in the fair market value below the carrying
value of the asset is considered not to be temporary. Applies to 
goodwill, mortgage servicing rights, other intangible assets, securities
available for sale and nonmarketable equity securities. (See Note 1 –
Summary of Significant Accounting Policies for impairment policies 
for specific categories of assets.)

Qualifying special-purpose entities (QSPE): A trust or other legal 
vehicle that meets certain conditions, including (1) that it is distinct
from the transferor, (2) activities are limited, and (3) the types of assets 
it may hold and conditions under which it may dispose of noncash
assets are limited. A QSPE is not consolidated on the balance sheet.

Securitize/securitization: The process and the result of pooling 
financial assets together and issuing liability and equity obligations
backed by the resulting pool of assets to convert those assets into 
marketable securities.

Special-purpose entities (SPE): A legal entity, sometimes a trust or a
limited partnership, created solely for the purpose of holding assets.

Taxable-equivalent basis: Basis of presentation of net interest income
and the net interest margin adjusted to consistently reflect income
from taxable and tax-exempt loans and securities based on a 35% 
marginal tax rate. The yield that a tax-free investment would provide 
to an investor if the tax-free yield was “grossed up” by the amount of
taxes not paid.

Underlying: A specified interest rate, security price, commodity price,
foreign exchange rate, index of prices or rates or other variable. An
underlying may be the price or rate of an asset or liability, but is not 
the asset or liability itself.

Value at risk: The amount or percentage of value that is at risk of being
lost from a change in prevailing interest rates.

Variable interest entity (VIE): An entity in which the equity investors 
(1) do not have a controlling financial interest, or (2) do not have 
sufficient equity at risk for the entity to finance its activities without
subordinated financial support from other parties.

Yield curve (shape of the yield curve, flat yield curve): A graph 
showing the relationship between the yields on bonds of the same
credit quality with different maturities. For example, a “normal”, or 
“positive”, yield curve exists when long-term bonds have higher yields
than short-term bonds. A “flat” yield curve exists when yields are the
same for short-term and long-term bonds. A “steep” yield curve exists
when yields on long-term bonds are significantly higher than on 
short-term bonds.

115

Wells Fargo & Company

Highest Market Caps, Year-End 2005,
among Fortune 100

Market
Cap

Fortune Rank*
(Revenue)

1. General Electric (GE)
2. Exxon Mobil (XOM)
3. Microsoft (MSFT)
4. Citigroup (C)
5. Wal-Mart Stores (WMT)
6. Bank of America (BAC)
7.
8. AIG (AIG)
9. Pfizer (PFE)
Intel (INTC)

Johnson & Johnson (JNJ)

10.

$372 billion
363
287
246
190
187
185
181
181
158

5
2
41
8
1
18
30
9
24
50

11. Altria Group (MO)
12. Procter & Gamble (PG)
13.
JP Morgan Chase (JPM)
14. Berkshire Hathaway
15. ChevronTexaco (CVX)
16.
17. Cisco Systems (CSCO)
18. Wells Fargo (WFC)
19. PepsiCo (PEP)
20. Coca-Cola (KO)

IBM (IBM)

157
140
139
138
131
130
113
105
99
98

17
26
20
12
6
10
91
52
61
92

*4/05
Stock Listing
Wells Fargo & Company is listed and trades on the New York Stock
Exchange and the Chicago Stock Exchange in the United States.
Our trading symbol is WFC.

Common Stock
1,677,583,032 common shares outstanding (12/31/05)

Stock Purchase and Dividend Reinvestment
You can buy Wells Fargo stock directly from Wells Fargo, even if you’re
not a Wells Fargo stockholder, through optional cash payments or
automatic monthly deductions from a bank account.You can also have
your dividends reinvested automatically. It’s a convenient, economical
way to increase your Wells Fargo investment.

Call 1-877-840-0492 for an enrollment kit including a plan prospectus.

Form 10-K
We will send the Wells Fargo’s 2005 Annual Report on Form 10-K
(including the financial statements filed with the Securities and
Exchange Commission) without charge to any stockholder who 
asks for a copy in writing. Stockholders also can ask for copies of 
any exhibit to the Form 10-K. We will charge a fee to cover expenses
to prepare and send any exhibits. Please send requests to:
Corporate Secretary, Wells Fargo & Company, Wells Fargo Center,
MAC N9305-173, Sixth and Marquette, Minneapolis, MN 55479.

SEC Filings
Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports,
are available free of charge on our website (www.wellsfargo.com),
as soon as reasonably practicable after they are electronically filed 
with or furnished to the SEC.Those reports and amendments are 
also available free of charge on the SEC’s website at www.sec.gov.

Independent Registered 
Public Accounting Firm
KPMG LLP
San Francisco, CA
415-963-5100

Contacts
Investor Relations
1-888-662-7865
investorrelations@wellsfargo.com

Stockholder Communications
Shareholder Services and Transfer Agent
Wells Fargo Shareowner Services
P.O. Box 64854
Saint Paul, MN 55164-0854
1-877-840-0492
www.wellsfargo.com/com/shareowner_services

Corporate Information
Annual Stockholders’ Meeting 
1:30 p.m., Tuesday, April 25, 2006 
The Stanford Court Hotel
905 California Street
San Francisco, CA

Proxy statement and form of proxy will be mailed to stockholders
beginning on or about March 17, 2006.

Certifications
Our chief executive officer certified to the New York Stock Exchange
(NYSE) that, as of May 23, 2005, he was not aware of any violation by
the Company of the NYSE’s corporate governance listing standards.
The certifications of our chief executive officer and chief financial officer
required under Section 302 of the Sarbanes-Oxley Act of 2002 were
filed as Exhibits 31(a) and 31(b), respectively, to our 2005 Form 10-K.

FORWARD-LOOKING STATEMENTS In this report we may make forward-looking statements about our company’s financial condition, results of operations,
plans, objectives  and  future  performance  and  business. We  make  forward-looking  statements  when  we  use  words  such  as “believe,” “expect,” “anticipate,”
“estimate,” “may,” “can,” “will” or  similar  expressions. Forward-looking  statements  involve  risks  and  uncertainties. They  are  based  on  current  expectations.
Several factors could cause actual results to differ significantly from expectations including • our ability to grow revenue by selling more products to our customers 
•  the  effect  of  an  economic  slowdown  on  the  demand  for  our  products  and  services  •  the  effect  of  a  fall  in  stock  market  prices  on  fee  income  from  our 
brokerage and asset management businesses • the effect of changes in interest rates on our net interest margin and our mortgage originations and mortgage
servicing rights • the adequacy of our loan loss allowance • changes in the value of our venture capital investments • changes in our accounting policies or in
accounting  standards  •  mergers  and  acquisitions  •  federal  and  state  regulations  •  reputational  damage  from  negative  publicity  •  the  loss  of  checking  and 
saving  account  deposits  to  other  investments  such  as  the  stock  market  •  fiscal  and  monetary  policies  of  the  Federal  Reserve  Board. For  more  information 
about factors that could cause actual results to differ from expectations, refer to the Financial Review and the Financial Statements and related Notes in this
report and to the “Risk Factors” and “Regulation and Supervision” sections of our 2005 Annual Report on Form 10-K filed with the Securities and Exchange
Commission and available on the SEC’s website at www.sec.gov.
© 2006 Wells Fargo & Company. All rights reserved.

116

Which Measures Really Matter? 2005 Update

In our past two annual reports, we said to you, our owners, that we
measure success differently than our competitors—to reflect more
accurately how financial services companies, like ours, create value

for customers and stockholders. Here’s an update on the progress
we’re making in the areas we believe are the best long-term
indicators for future success in the financial services industry.

Financial Performance*

.

9
2
3

.

1
0
3

.

4
8
2

.

2
5
2

.

0
1
2
$

0
5
4

.

9
0
4

.

5
6
3

.

2
3
3

.

.

7
9
1
$

.

7
8
1

.

4
9
1

.

6
9
1

.

6
9
1

%
7
2
1

.

5
0
1

5
0
1

0
0
1

9
7

4
7
$

03 

02 

01 
04 
Revenue (billions)
20-year compound annual growth rate: 12% 

05 

03 

02 

04 

01 
Earnings Per Share diluted**
20-year compound annual growth rate: 14%

05 

05 

04 

02 

01 
03 
Return on Equity (ROE)
ROE: cents earned for every dollar 
stockholders invest in the company

* before effect of change in accounting principles, 2001 includes venture capital impairment
** includes all common stock equivalents  (”in the money stock” options, warrants and rights, convertible bonds and convertible preferred stock)

Sales

3
4

.

0
4

.

7
4

.

.

8
4

9
4

.

2
4

.

8
3

.

6
3 4
4

.

.

8
4

.

9
4

.

6
4

.

7
3 5

.

.

0 5
5

.

.

1
1
9 3
6
2

.

.

7
3
2

%
2
3
2

.

02 

04 

01 
03 
05 
Market Capitalization
(billions)

.

1
3
3

.

4
5
8

.

9
5
8

.

7
8
8

.

5
0
9

%
3
3
8

.

05

04

03

02

01
Product Solutions (Sales) 
Per Banker* Per Day
* platform full-time equivalent (FTE) team member

04 

02 

01 
03 
Products Per Banking 
Household

05 

05 

03 

04 

02 

01 
Commercial/Corporate 
Products Per Banking 
Customer

04 

02 

03 

01 
Retail Banking Households 
with Credit Cards

05 

04 

03 

02 

01 
Retail Checking Households 
with Debit Cards

05 

Managing Risk

The higher a company’s credit rating
(based on its ability to meet debt obli-
gations) the less interest it has to pay 
to borrow money.Wells Fargo Bank:
only U.S. bank rated “Aaa.”

Moody’s

Number of S&P companies
with higher rating

Wells Fargo Bank, N.A.
Issuer
Long-term deposits
Financial Strength
Wells Fargo & Company
Subordinated Debt
Issuer
Senior Debt

Aaa
Aaa
A

Aa2
Aa1
Aa1

None
None
None

One
Six
Six

%
8
0
1

.

8
8
0

.

6
6
0

.

5
5
0

.

9
4
0

.

04 

03 

02 

01 
Nonperforming Assets 
(NPAs)/Total Loans

05 

Earning More Business

4
1
  3
5
7
2

8
4
2

7
1
2

7
8
1
$

03 

04 

05 

02 

01 
Deposits
(billions)

0
7
4

3
3
3

6
6
  3
8
9
2

2
0
2
$

9
8
9

5
0
8

0
1
  7
1
8
  5
2
6
4
$

0
7

2
7

9
4

4
3

5
2
$

0
8
8

1
9
7

4
5
8 6
7
5
$

04 

02 

01 
03 
Mortgage Originations
(billions)

05 

04 

02 

03 
01 
05 
Mortgage Servicing
Portfolio
(billions)

04 

05 

02 

03 
01 
National Home Equity
Group Loans
(billions)

03 

04 

05 

02 
Assets Managed, 
Administered 
(billions) includes brokerage

Retaining Customers, Team Members

)
.
t
s
e
(

%
4
0
1

.

9
8

.

0
8

.

5
7

.

5
7

.

1

:

8
5

.

1

:

.

1
4

1

:

5
2

.

1

:

7
1.

*
*

%
4
3

8
2

9
  2
5
2

0
3

Online

8
1

8

8
  2
5
  2
2
2

6
6
6

1
3
5

5
1
4

7
9
2

5
8
1

02 

04 

01 
05 
03 
Retaining Customers  
(annual percent of high-value* checking  
account customers who leave us) 
* top 20 percent of banking customers 
   based on balances

05

04

National average

03
Team Member Engagement 
Ratio of engaged to actively disengaged
Gallup survey of Wells Fargo Regional 
Banking team members

02 

04 

03 

01 
Retaining Team Members  
(annual percent of team members who leave us) 

05 

** excludes Wells Fargo Financial 

(consumer finance)

05 

02 

03 

01 
04 
Active Online Middle-Market/
Large Corporate Customers
(thousands)

05

02

04

03

01
Active Online 
Small Business Customers
(thousands)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OUR VISION:
Satisfy all our customers’ financial needs and
help them succeed financially.

NUESTRA VISION:
Deseamos satisfacer todas las necesidades
financieras de nuestros clientes y ayudarlos a
tener éxito en el área financiera.

NOTRE VISION:
Satisfaire tous les besoins financiers de nos
clients et les aider à atteindre le succès financier.

Wells Fargo & Company
420 Montgomery Street
San Francisco, California 94104

1-866-878- 5865
wellsfargo.com

America’s “Most admired”
Large Bank Fortune