10-K 1 a2072635z10-k.txt 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2001 Commission File Number 001-2979 WELLS FARGO & COMPANY (Exact name of registrant as specified in its charter) Delaware No. 41-0449260 (State of incorporation) (I.R.S. Employer Identification No.) 420 Montgomery Street, San Francisco, California 94163 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 1-800-411-4932 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of Each Exchange Title of Each Class on Which Registered ------------------- --------------------- Common Stock, par value $1-2/3 New York Stock Exchange Chicago Stock Exchange Preferred Share Purchase Rights New York Stock Exchange Chicago Stock Exchange 6-3/4% Convertible Subordinated Debentures Due 2003 New York Stock Exchange Adjustable Rate Cumulative Preferred Stock, Series B New York Stock Exchange No securities are registered pursuant to Section 12(g) of the Act. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] As of February 28, 2002, 1,706,170,079 shares of common stock were outstanding having an aggregate market value, based on a closing price of $46.90 per share, of $80,019 million. At that date, the aggregate market value of common stock held by non-affiliates was approximately $78,322 million. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Company's 2001 Annual Report to Stockholders are incorporated by reference into Parts I, II and IV of this Form 10-K, and portions of the Company's definitive Proxy Statement for its 2002 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K. The cross-reference index on the following page identifies by page numbers the portions of each document that are incorporated by reference into this Form 10-K. Only those portions identified in the cross-reference index are incorporated into this Form 10-K. FORM 10-K CROSS-REFERENCE INDEX

Page(s) ------------------------------------------------- FORM Annual Proxy 10-K Report (1) Statement (2) ----- ------- --------- PART I Item 1. Business Description of Business 2-9 33-98 -- Statistical Disclosure: Distribution of Assets, Liabilities and Stockholders' Equity; Interest Rates and Interest Differential 10 40-43 -- Investment Portfolio -- 44, 58, 64-65 -- Loan Portfolio 11-12 45, 47-48, 58-59, 66-68 -- Summary of Loan Loss Experience 13-15 47-48, 59, 68 -- Deposits -- 45, 70 -- Return on Equity and Assets -- 34-35 -- Short-Term Borrowings -- 70 -- Derivative Financial Instruments -- 60-61, 91-93 -- Item 2. Properties 16 69 -- Item 3. Legal Proceedings -- 90 -- Item 4. Submission of Matters to a Vote of Security Holders (3) -- -- -- PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters -- 53 -- Item 6. Selected Financial Data -- 36 -- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations -- 34-53 -- Item 7A. Quantitative and Qualitative Disclosures About Market Risk -- 49-50 -- Item 8. Financial Statements and Supplementary Data -- 54-98 -- Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure (3) -- -- -- PART III Item 10. Directors and Executive Officers of the Registrant 17-20 -- 6-9, 35, 36 Item 11. Executive Compensation -- -- 13-31, 35, 36 Item 12. Security Ownership of Certain Beneficial Owners and Management -- -- 4-5 Item 13. Certain Relationships and Related Transactions -- -- 14-15, 32-35 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 21-27 54-98 -- SIGNATURES 28 -- -- ------------------------------------------------------------------------------------------------------------------------

(1) The information required to be submitted in response to these items is incorporated by reference to the identified portions of the Company's 2001 Annual Report to Stockholders. Pages 33 through 98 of the 2001 Annual Report to Stockholders have been filed as Exhibit 13 to this Form 10-K. (2) The information required to be submitted in response to these items is incorporated by reference to the identified portions of the Company's definitive Proxy Statement for the 2002 Annual Meeting of Stockholders to be held on April 23, 2002, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A. (3) Not applicable. 1 DESCRIPTION OF BUSINESS GENERAL Wells Fargo & Company is a diversified financial services company organized under the laws of Delaware and registered as a bank holding company and financial holding company under the Bank Holding Company Act of 1956, as amended (BHC Act). Based on assets at December 31, 2001, it was the fifth largest bank holding company in the United States. In this report, Wells Fargo & Company and Subsidiaries (consolidated) is referred to as the Company and Wells Fargo & Company alone is referred to as the Parent. The Parent's subsidiaries engage in banking and a variety of related financial services businesses. Retail, commercial and corporate banking services are provided through bank subsidiaries located in Alaska, Arizona, California, Colorado, Idaho, Illinois, Indiana, Iowa, Michigan, Minnesota, Montana, Nebraska, Nevada, New Mexico, North Dakota, Ohio, Oregon, South Dakota, Texas, Utah, Washington, Wisconsin and Wyoming. Other financial services are provided by subsidiaries engaged in various businesses, principally: wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance, commercial finance, securities brokerage and investment banking, insurance agency services, computer and data processing services, trust services, mortgage-backed securities servicing and venture capital investment. On October 25, 2000, the Company completed its merger with First Security Corporation (the FSCO Merger), with First Security Corporation surviving the merger as a wholly-owned subsidiary of the Parent. The Company accounted for the FSCO Merger under the pooling-of-interests method of accounting. Accordingly, the information included in this report, including the Financial Statements and Supplementary Data, and Management's Discussion and Analysis of Financial Condition and Results of Operations, presents the combined results as if the merger had been in effect for all periods presented. The Company has three operating segments for management reporting purposes: Community Banking, Wholesale Banking and Wells Fargo Financial. The 2001 Annual Report to Stockholders includes financial information and descriptions of these operating segments. The Company had 119,714 full-time equivalent team members at December 31, 2001. HISTORY AND GROWTH The Company is the product of the merger of equals involving Norwest Corporation and the former Wells Fargo & Company, completed on November 2, 1998 (the WFC Merger). On completion of the WFC Merger, Norwest Corporation changed its name to Wells Fargo & Company. Norwest Corporation, prior to the WFC Merger, provided banking services to customers in 16 states and additional financial services through subsidiaries engaged in a variety of businesses including mortgage banking and consumer finance. The former Wells Fargo & Company's principal subsidiary, Wells Fargo Bank, N.A., was the successor to the banking portion of the business founded by Henry Wells and William G. Fargo in 1852. That business later operated the westernmost leg of the Pony Express and ran stagecoach lines in the western part of the United States. The California banking business was separated from the express business in 1905, was merged in 1960 with American Trust Company, another of the 2 oldest banks in the Western United States, and became Wells Fargo Bank, N.A., a national banking association, in 1968. The former Wells Fargo & Company acquired First Interstate Bancorp in April 1996. First Interstate's assets had an approximate book value of $55 billion. The transaction was valued at approximately $11.3 billion and was accounted for as a purchase. The Company expands its business, in part, by acquiring banking institutions and other companies engaged in activities that are financial in nature. The Company continues to explore opportunities to acquire banking institutions and other financial services companies. Discussions are continually being carried on related to such possible acquisitions. The Company cannot predict whether, or on what terms, such discussions will result in further acquisitions. As a matter of policy, the Company generally does not comment on such discussions or possible acquisitions until a definitive acquisition agreement has been signed. COMPETITION The financial services industry is highly competitive. The Company's subsidiaries compete with financial services providers, such as banks, savings and loan associations, credit unions, finance companies, mortgage banking companies, insurance companies, and money market and mutual fund companies. They also face increased competition from nonbank institutions such as brokerage houses and insurance companies, as well as from financial services subsidiaries of commercial and manufacturing companies. Many of these competitors enjoy the benefits of fewer regulatory constraints and some have lower cost structures. Securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. Acquisitions of this type could significantly change the competitive environment in which the Company conducts business. The financial services industry is also likely to become more competitive as further technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties. REGULATION AND SUPERVISION The following discussion, together with Notes 3 (Cash, Loan and Dividend Restrictions) and 22 (Risk-Based Capital) to Financial Statements included in the 2001 Annual Report to Stockholders sets forth the material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides certain information specific to the Company. This regulatory framework is intended to protect depositors, federal deposit insurance funds and the banking system as a whole, and not to protect security holders. To the extent that the information describes statutory and regulatory provisions, it is qualified in its entirety by reference to those provisions. Further, such statutes, regulations and policies are continually under review by Congress and state legislatures, and federal and state regulatory agencies. A change in statutes, regulations or regulatory policies applicable to the Company, including changes in interpretation or implementation thereof, could have a material effect on the Company's business. Applicable laws and regulations could restrict the Company's ability to diversify into other areas of financial services, acquire depository institutions, and pay dividends on the Company's capital stock. They could also require the Company to provide financial support to one or more of its 3 subsidiary banks, maintain capital balances in excess of those desired by management, and pay higher deposit insurance premiums as a result of a general deterioration in the financial condition of depository institutions. GENERAL PARENT BANK HOLDING COMPANY. As a bank holding company, the Company is subject to regulation under the BHC Act and to inspection, examination and supervision by the Board of Governors of the Federal Reserve System (Federal Reserve Board or FRB). SUBSIDIARY BANKS. The Company's national subsidiary banks are subject to regulation and examination primarily by the Office of the Comptroller of the Currency (OCC) and secondarily by the Federal Deposit Insurance Corporation (FDIC) and the FRB. The Company's state-chartered banks are subject to primary federal regulation and examination by the FDIC or the FRB and, in addition, are regulated and examined by their respective state banking departments. NONBANK SUBSIDIARIES. Many of the Company's nonbank subsidiaries are also subject to regulation by the FRB and other applicable federal and state agencies. The Company's brokerage subsidiaries are regulated by the Securities and Exchange Commission (SEC), the National Association of Securities Dealers, Inc. and state securities regulators. The Company's insurance subsidiaries are subject to regulation by applicable state insurance regulatory agencies. Other nonbank subsidiaries of the Company are subject to the laws and regulations of both the federal government and the various states in which they conduct business. 4 PARENT BANK HOLDING COMPANY ACTIVITIES "FINANCIAL IN NATURE" REQUIREMENT. As a bank holding company that has elected to become a financial holding company pursuant to the BHC Act, the Company may affiliate with securities firms and insurance companies and engage in other activities that are financial in nature or incidental or complementary to activities that are financial in nature. "Financial in nature" activities include securities underwriting, dealing and market making, sponsoring mutual funds and investment companies, insurance underwriting and agency, merchant banking, and activities that the FRB, in consultation with the Secretary of the Treasury, determines from time to time to be financial in nature or incidental to such financial activity or is complementary to a financial activity and does not pose a safety and soundness risk. A bank holding company that is not also a financial holding company is limited to engaging in banking and such other activities as determined by the FRB to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Federal Reserve Board approval is not required for the Company to acquire a company (other than a bank holding company, bank or savings association) engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB. Prior FRB approval is required before the Company may acquire the beneficial ownership or control of more than 5% of the voting shares or substantially all of the assets of a bank holding company, bank or savings association. If any subsidiary bank of the Company ceases to be "well capitalized" or "well managed" under applicable regulatory standards, the FRB may, among other actions, order the Company to divest the subsidiary bank. Alternatively, the Company may elect to conform its activities to those permissible for a bank holding company that is not also a financial holding company. If any subsidiary bank of the Company receives a rating under the Community Reinvestment Act of 1977 of less than satisfactory, the Company will be prohibited, until the rating is raised to satisfactory or better, from engaging in new activities or acquiring companies other than bank holding companies, banks or savings associations. The Company became a financial holding company effective March 13, 2000. It continues to maintain its status as a bank holding company for purposes of other FRB regulations. INTERSTATE BANKING. Under the Riegle-Neal Interstate Banking and Branching Act (Riegle-Neal Act), a bank holding company may acquire banks in states other than its home state, subject to any state requirement that the bank has been organized and operating for a minimum period of time, not to exceed five years, and the requirement that the bank holding company not control, prior to or following the proposed acquisition, more than 10% of the total amount of deposits of insured depository institutions nationwide or, unless the acquisition is the bank holding company's initial entry into the state, more than 30% of such deposits in the state (or such lesser or greater amount set by the state). The Riegle-Neal Act also authorizes banks to merge across state lines, thereby creating interstate branches. Banks are also permitted to acquire and to establish DE NOVO branches in other states where authorized under the laws of those states. REGULATORY APPROVAL. In determining whether to approve a proposed bank acquisition, federal bank regulators will consider, among other factors, the effect of the acquisition on competition, the 5 public benefits expected to be received from the acquisition, the projected capital ratios and levels on a post-acquisition basis, and the acquiring institution's record of addressing the credit needs of the communities it serves, including the needs of low and moderate income neighborhoods, consistent with the safe and sound operation of the bank, under the Community Reinvestment Act of 1977, as amended. DIVIDEND RESTRICTIONS The Parent is a legal entity separate and distinct from its subsidiary banks and other subsidiaries. Its principal source of funds to pay dividends on its common and preferred stock and principal and interest on its debt is dividends from its subsidiaries. Various federal and state statutory provisions and regulations limit the amount of dividends the Parent's subsidiary banks and certain other subsidiaries may pay without regulatory approval. For information about the restrictions applicable to the Parent's subsidiary banks, see Note 3 (Cash, Loan and Dividend Restrictions) to Financial Statements included in the 2001 Annual Report to Stockholders. Federal bank regulatory agencies have the authority to prohibit the Parent's subsidiary banks from engaging in unsafe or unsound practices in conducting their businesses. The payment of dividends, depending on the financial condition of the bank in question, could be deemed an unsafe or unsound practice. The ability of the Parent's subsidiary banks to pay dividends in the future is currently, and could be further, influenced by bank regulatory policies and capital guidelines. HOLDING COMPANY STRUCTURE TRANSFER OF FUNDS FROM SUBSIDIARY BANKS. The Parent's subsidiary banks are subject to restrictions under federal law that limit the transfer of funds or other items of value from such subsidiaries to the Parent and its nonbank subsidiaries (including affiliates) in so-called "covered transactions." In general, covered transactions include loans and other extensions of credit, investments and asset purchases, as well as other transactions involving the transfer of value from a subsidiary bank to an affiliate or for the benefit of an affiliate. Unless an exemption applies, covered transactions by a subsidiary bank with a single affiliate are limited to 10% of the subsidiary bank's capital and surplus and, with respect to all covered transactions with affiliates in the aggregate, to 20% of the subsidiary bank's capital and surplus. Also, loans and extensions of credit to affiliates generally are required to be secured in specified amounts. A bank's transactions with its nonbank affiliates are also generally required to be on arm's length terms. SOURCE OF STRENGTH. The FRB has a policy that a bank holding company is expected to act as a source of financial and managerial strength to each of its subsidiary banks and, under appropriate circumstances, to commit resources to support each such subsidiary bank. This support may be required at times when the bank holding company may not have the resources to provide the support. The OCC may order the assessment of the Parent if the capital of one of its national bank subsidiaries were to become impaired. If the Parent failed to pay the assessment within three months, the OCC could order the sale of the Parent's stock in the national bank to cover the deficiency. Capital loans by the Parent to any of its subsidiary banks are subordinate in right of payment to deposits and certain other indebtedness of the subsidiary bank. In addition, in the event of the Parent's bankruptcy, any commitment by the Parent to a federal bank regulatory agency to maintain 6 the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a priority of payment. DEPOSITOR PREFERENCE. The Federal Deposit Insurance Act (FDI Act) provides that, in the event of the "liquidation or other resolution" of an insured depository institution, the claims of depositors of the institution (including the claims of the FDIC as subrogee of insured depositors) and certain claims for administrative expenses of the FDIC as a receiver will have priority over other general unsecured claims against the institution. If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, nondeposit creditors, including the Parent, with respect to any extensions of credit they have made to such insured depository institution. LIABILITY OF COMMONLY CONTROLLED INSTITUTIONS. All of the Parent's banks are insured by the FDIC. FDIC-insured depository institutions can be held liable for any loss incurred, or reasonably expected to be incurred, by the FDIC due to the default of an FDIC-insured depository institution controlled by the same bank holding company, and for any assistance provided by the FDIC to an FDIC-insured depository institution that is in danger of default and that is controlled by the same bank holding company. "Default" means generally the appointment of a conservator or receiver. "In danger of default" means generally the existence of certain conditions indicating that a default is likely to occur in the absence of regulatory assistance. CAPITAL REQUIREMENTS The Parent is subject to risk-based capital requirements and guidelines imposed by the FRB, which are substantially similar to the capital requirements and guidelines imposed by the FRB, the OCC and the FDIC on depository institutions under their jurisdictions. For information about these capital requirements and guidelines, see Note 22 (Risk-Based Capital) to Financial Statements included in the 2001 Annual Report to Stockholders. The FRB may set higher capital requirements for holding companies whose circumstances warrant it. For example, holding companies experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum supervisory levels, without significant reliance on intangible assets. Also, the FRB considers a "tangible Tier 1 leverage ratio" (deducting all intangibles) and other indications of capital strength in evaluating proposals for expansion or new activities. Effective April 1, 2002, new FRB rules will govern the regulatory treatment of merchant banking investments and certain other equity investments, including investments made by the Company's venture capital subsidiaries, in non-financial companies held by bank holding companies. The rules generally impose a capital charge that increases incrementally as the banking organization's level of concentration in equity investments increases. An 8% Tier 1 capital deduction would apply on covered investments that in total represent up to 15% of an organization's Tier 1 capital. For covered investments that total more than 25% of the organization's Tier 1 capital, a top marginal charge of 25% would be established. The Company does not expect the new rules to have a significant impact on the Company. FRB, FDIC and OCC rules also require the Company to incorporate market and interest rate risk components into their risk-based capital standards. Under the market risk requirements, capital is allocated to support the amount of market risk related to a financial institution's ongoing trading activities. 7 In December 2001, the Basel Committee on Banking Supervision updated the status of the revised draft Basel Capital Accord issued earlier in 2001. The Basel Committee continues to evaluate certain aspects of the draft Accord and expects to issue a new consultative package during 2002. The draft Basel Accord incorporates three pillars that address (a) minimum capital requirements, (b) supervisory review, which relates to an institution's capital adequacy and internal assessment process, and (c) market discipline, through effective disclosure to encourage safe and sound banking practices. Embodied within these pillars are aspects of risk assessment that relate to credit risk, interest rate risk, operational risk, among others, and certain proposed approaches by the Basel Committee to complete such assessments may be considered complex. The Company continues to monitor the status of the Basel Accord, which may be finalized by the end of 2002, with required implementation of the new framework not anticipated prior to 2005. From time to time, the FRB and the Federal Financial Institutions Examination Council (FFIEC) propose changes and amendments to, and issue interpretations of, risk based capital guidelines and related reporting instructions. Such proposals or interpretations could, if implemented in the future, affect the Company's reported capital ratios and net risk-adjusted assets. As an additional means to identify problems in the financial management of depository institutions, the FDI Act requires federal bank regulatory agencies to establish certain non-capital safety and soundness standards for institutions for which they are the primary federal regulator. The standards relate generally to operations and management, asset quality, interest rate exposure and executive compensation. The agencies are authorized to take action against institutions that fail to meet such standards. The FDI Act requires federal bank regulatory agencies to take "prompt corrective action" with respect to FDIC-insured depository institutions that do not meet minimum capital requirements. A depository institution's treatment for purposes of the prompt corrective action provisions will depend upon how its capital levels compare to various capital measures and certain other factors, as established by regulation. DEPOSIT INSURANCE ASSESSMENTS Through the Bank Insurance Fund (BIF), the FDIC insures the deposits of the Parent's depository institution subsidiaries up to prescribed limits for each depositor. The amount of FDIC assessments paid by each BIF member institution is based on its relative risk of default as measured by regulatory capital ratios and other factors. Specifically, the assessment rate is based on the institution's capitalization risk category and supervisory subgroup category. An institution's capitalization risk category is based on the FDIC's determination of whether the institution is well capitalized, adequately capitalized or less than adequately capitalized. An institution's supervisory subgroup category is based on the FDIC's assessment of the financial condition of the institution and the probability that FDIC intervention or other corrective action will be required. The BIF assessment rate currently ranges from zero to 27 cents per $100 of domestic deposits. The BIF assessment rate for the Parent's depository institutions currently is zero. The FDIC may increase or decrease the assessment rate schedule on a semiannual basis. An increase in the BIF assessment rate could have a material adverse effect on the Parent's earnings, depending on the amount of the increase. The FDIC is authorized to terminate a depository institution's deposit insurance upon a finding by the FDIC that the institution's financial condition is unsafe or unsound or that the institution has engaged in unsafe or unsound practices or has violated any applicable 8 rule, regulation, order or condition enacted or imposed by the institution's regulatory agency. The termination of deposit insurance for one or more of the Parent's subsidiary depository institutions could have a material adverse effect on the Parent's earnings, depending on the collective size of the particular institutions involved. All FDIC-insured depository institutions must pay an annual assessment to provide funds for the payment of interest on bonds issued by the Financing Corporation, a federal corporation chartered under the authority of the Federal Housing Finance Board. The bonds (commonly referred to as FICO bonds) were issued to capitalize the Federal Savings and Loan Insurance Corporation. FDIC-insured depository institutions paid approximately 1.9 cents per $100 of BIF-assessable deposits in 2001. The FDIC established the FICO assessment rate effective for the first quarter of 2002 at approximately 1.8 cents annually per $100 of BIF-assessable deposits. FISCAL AND MONETARY POLICIES The Company's business and earnings are affected significantly by the fiscal and monetary policies of the federal government and its agencies. The Company is particularly affected by the policies of the FRB, which regulates the supply of money and credit in the United States. Among the instruments of monetary policy available to the FRB are (a) conducting open market operations in United States government securities, (b) changing the discount rates of borrowings of depository institutions, (c) imposing or changing reserve requirements against depository institutions' deposits, and (d) imposing or changing reserve requirements against certain borrowings by banks and their affiliates. These methods are used in varying degrees and combinations to directly affect the availability of bank loans and deposits, as well as the interest rates charged on loans and paid on deposits. The policies of the FRB may have a material effect on the Company's business, results of operations and financial condition. PRIVACY PROVISIONS OF THE GRAMM-LEACH-BLILEY ACT Federal banking regulators, as required under the Gramm-Leach-Bliley Act (the GLB Act), have adopted rules limiting the ability of banks and other financial institutions to disclose nonpublic information about consumers to nonaffiliated third parties. The rules require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties. The privacy provisions of the GLB Act affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors. FUTURE LEGISLATION Various legislation, including proposals to change substantially the financial institution regulatory system, is from time to time introduced in Congress. This legislation may change banking statutes and the operating environment of the Company in substantial and unpredictable ways. If enacted, this legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions. The Company cannot predict whether any of this potential legislation will be enacted and, if enacted, the effect that it, or any implementing regulations, would have on the Company's business, results of operations or financial condition. 9 ANALYSIS OF CHANGES IN NET INTEREST INCOME The following table allocates the changes in net interest income on a taxable-equivalent basis to changes in either average balances or average rates for both interest-earning assets and interest-bearing liabilities. Because of the numerous simultaneous volume and rate changes during any period, it is not possible to precisely allocate such changes between volume and rate. For this table, changes that are not solely due to either volume or rate are allocated to these categories in proportion to the percentage changes in average volume and average rate.

-------------------------------------------------------------------------------------------------------------------------- Year ended December 31, ------------------------------------------------------------- 2001 OVER 2000 2000 over 1999 ---------------------------- -------------------------- (in millions) VOLUME RATE TOTAL Volume Rate Total -------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in interest income: Federal funds sold and securities purchased under resale agreements $ 12 $ (60) $ (48) $ 40 $ 17 $ 57 Debt securities available for sale: Securities of U.S. Treasury and federal agencies (84) 11 (73) (173) 35 (138) Securities of U.S. states and political subdivisions (8) -- (8) (2) (4) (6) Mortgage-backed securities: Federal agencies 28 (14) 14 187 117 304 Private collateralized mortgage obligations (57) 18 (39) (114) 31 (83) Other securities (7) -- (7) 46 6 52 Mortgages held for sale 883 (137) 746 (213) 111 (102) Loans held for sale (8) (93) (101) (18) 59 41 Loans: Commercial 295 (662) (367) 588 305 893 Real estate 1-4 family first mortgage 250 (134) 116 241 23 264 Other real estate mortgage 145 (234) (89) 330 48 378 Real estate construction 104 (145) (41) 167 25 192 Consumer: Real estate 1-4 family junior lien mortgage 566 (196) 370 377 57 434 Credit card 56 (74) (18) 26 47 73 Other revolving credit and monthly payment 191 (148) 43 271 36 307 Lease financing 8 1 9 74 (13) 61 Foreign (4) (6) (10) 14 8 22 Other 44 (52) (8) (2) 39 37 ------ ------- ------ ------ ------ ------- Total increase (decrease) in interest income 2,414 (1,925) 489 1,839 947 2,786 ------ ------- ------ ------ ------ ------- Increase (decrease) in interest expense: Deposits: Interest-bearing checking (27) 18 (9) 3 30 33 Market rate and other savings 415 (546) (131) 64 323 387 Savings certificates (14) (72) (86) 1 153 154 Other time deposits (160) (26) (186) 25 32 57 Deposits in foreign offices 16 (140) (124) 260 31 291 Short-term borrowings 306 (791) (485) 319 312 631 Long-term debt 332 (445) (113) 276 210 486 Guaranteed preferred beneficial interests in Company's subordinated debentures 31 (16) 15 -- 2 2 ------ ------- ------ ------ ------ ------- Total increase (decrease) in interest expense 899 (2,018) (1,119) 948 1,093 2,041 ------ ------- ------ ------ ------ ------- Increase (decrease) in net interest income on a taxable-equivalent basis $1,515 $ 93 $1,608 $ 891 $ (146) $ 745 ====== ======= ====== ====== ====== ======= --------------------------------------------------------------------------------------------------------------------------

10 LOAN PORTFOLIO The following table presents the remaining contractual principal maturities of selected loan categories at December 31, 2001 and a summary of the major categories of loans outstanding at the end of the last five years. At December 31, 2001, the Company did not have loan concentrations that exceeded 10% of total loans, except as shown below.

----------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 2001 ----------------------------------------------------------------- OVER ONE YEAR THROUGH FIVE YEARS OVER FIVE YEARS -------------------- -------------------- FLOATING FLOATING OR OR December 31, ONE YEAR FIXED ADJUSTABLE FIXED ADJUSTABLE ----------------------------------------- (in millions) OR LESS RATE RATE RATE RATE TOTAL 2000 1999 1998 1997 ----------------------------------------------------------------------------------------------------------------------------------- Selected loan maturities: Commercial $15,379 $11,377 $18,220 $ 487 $ 2,084 $ 47,547 $ 50,518 $ 41,671 $ 38,218 $ 34,368 Real estate 1-4 family first mortgage 428 1,039 95 12,323 11,703 25,588 18,464 13,506 12,613 15,220 Other real estate mortgage 4,590 11,006 373 4,475 4,364 24,808 23,972 20,899 18,033 17,587 Real estate construction 3,199 2,517 1,560 395 135 7,806 7,715 6,067 4,529 3,941 Foreign 274 1,097 -- 213 14 1,598 1,624 1,600 1,528 1,155 ------- ------- ------- ------- ------- -------- -------- -------- -------- -------- Total selected loan maturities $23,870 $27,036 $20,248 $17,893 $18,300 107,347 102,293 83,743 74,921 72,271 ======= ======= ======= ======= ======= -------- -------- -------- -------- -------- Other loan categories: Consumer: Real estate 1-4 family junior lien mortgage 25,530 18,218 12,949 11,135 10,622 Credit card 6,700 6,616 5,805 6,119 6,989 Other revolving credit and monthly payment 23,502 23,974 20,617 19,441 20,255 -------- -------- -------- -------- -------- Total consumer 55,732 48,808 39,371 36,695 37,866 Lease financing 9,420 10,023 9,890 8,046 6,298 -------- -------- -------- -------- -------- Total loans $172,499 $161,124 $133,004 $119,662 $116,435 ======== ======== ======== ======== ======== -----------------------------------------------------------------------------------------------------------------------------------

The table at the top of the following page summarizes other real estate mortgage loans by state and property type. The table at the bottom of the following page summarizes real estate construction loans by state and project type. 11 REAL ESTATE MORTGAGE LOANS BY STATE AND PROPERTY TYPE (excluding 1-4 family first mortgages)

----------------------------------------------------------------------------------------------------------------------------------- December 31, 2001 ---------------------------------------------------------------------------------------------------------------- Other Non- California Texas Colorado Minnesota states (2) All states accruals --------------- --------------- -------------- -------------- --------------- ---------------- as a % Total Non- Total Non- Total Non- Total Non- Total Non- Total Non- of total (in millions) Loans accrual loans accrual loans accrual loans accrual loans accrual loans accrual by type ----------------------------------------------------------------------------------------------------------------------------------- Office buildings $3,147 $ 5 $ 630 $ 5 $ 252 $-- $ 146 $-- $ 2,724 $ 14 $ 6,899 $ 24 --% Industrial 2,347 10 274 7 208 -- 285 3 1,264 7 4,378 27 1 Retail buildings 1,516 3 345 8 253 1 251 3 1,891 34 4,256 49 1 Hotels/motels 417 1 287 -- 57 -- 50 -- 1,446 17 2,257 18 1 Apartments 715 1 201 -- 86 -- 79 -- 735 1 1,816 2 -- Agricultural 397 4 77 -- 29 -- 91 3 585 36 1,179 43 4 Land 381 1 202 -- 59 1 51 -- 427 3 1,120 5 -- Institutional 222 11 45 4 15 -- 5 -- 204 9 491 24 5 1-4 family structures (1) 42 -- 8 -- 12 -- 7 -- 93 -- 162 -- -- Other 727 9 278 3 150 -- 134 1 961 5 2,250 18 1 ------ --- ------ --- ------ --- ------ --- ------- ---- -------- ---- Total by state $9,911 $45 $2,347 $27 $1,121 $ 2 $1,099 $10 $10,330 $126 $24,808 $210 1% ====== === ====== === ====== === ====== === ======= ==== ======= ==== == % of total loans 40% 9% 5% 4% 42% 100% ====== ====== ====== ====== ======= ======= Nonaccruals as a % of total by state --% 1% --% 1% 1% === === === === === -----------------------------------------------------------------------------------------------------------------------------------

(1) Represents loans to real estate developers secured by 1-4 family residential developments. (2) Consists of 46 states; no state had loans in excess of $1,071 million at December 31, 2001. REAL ESTATE CONSTRUCTION LOANS BY STATE AND PROPERTY TYPE

----------------------------------------------------------------------------------------------------------------------------------- December 31, 2001 ---------------------------------------------------------------------------------------------------------------- Other Non- California Texas Arizona Colorado states (1) All states accruals --------------- --------------- -------------- -------------- --------------- ---------------- as a % Total Non- Total Non- Total Non- Total Non- Total Non- Total Non- of total (in millions) Loans accrual loans accrual loans accrual loans accrual loans accrual loans accrual by type ----------------------------------------------------------------------------------------------------------------------------------- Retail buildings $ 263 $-- $ 42 $-- $206 $ -- $ 35 $-- $ 455 $ -- $1,001 $ -- --% 1-4 family: Land 133 -- 24 -- 1 -- 33 -- 120 -- 311 -- -- Structures 177 -- 223 1 120 3 196 -- 1,326 83 2,042 87 4 Land (excluding 1-4 family) 442 -- 70 1 64 -- 60 -- 534 -- 1,170 1 -- Apartments 198 -- 36 -- 26 -- 17 -- 345 50 622 50 8 Office buildings 415 -- 102 -- 66 -- 122 -- 612 -- 1,317 -- -- Industrial 158 -- 97 1 44 -- 32 -- 185 -- 516 1 -- Hotels/motels 85 -- 14 -- 15 -- 10 -- 111 1 235 1 -- Institutional 41 -- 11 -- 4 -- 5 -- 69 -- 130 -- -- Agricultural 15 -- 1 -- -- -- 1 -- 8 -- 25 -- -- Other 20 -- 65 1 17 -- 30 -- 305 4 437 5 1 ------ --- ---- ---- ---- --- ----- --- ------ ---- ------- ---- Total by state $1,947 $-- $685 $ 4 $563 $ 3 $541 $-- $4,070 $138 $7,806 $145 2% ====== === ==== ==== ==== === ==== === ====== ==== ====== ==== === % of total loans 25% 9% 7% 7% 52% 100% ====== ===== ==== ===== ====== ====== Nonaccruals as a % of total by state --% 1% 1% --% 3% === ==== === === === ---------------------------------------------------------------------------------------------------------------

(1) Consists of 43 states; no state had loans in excess of $533 million at December 31, 2001. 12 CHANGES IN THE ALLOWANCE FOR LOAN LOSSES

------------------------------------------------------------------------------------------------------------------- (in millions) 2001 2000 1999 1998 1997 ------------------------------------------------------------------------------------------------------------------- BALANCE, BEGINNING OF YEAR $ 3,719 $ 3,344 $ 3,307 $ 3,220 $ 3,202 Allowances related to business combinations 41 265 48 148 172 Provision for loan losses 1,780 1,329 1,104 1,617 1,203 Loan charge-offs: Commercial (692) (429) (395) (271) (369) Real estate 1-4 family first mortgage (29) (16) (14) (29) (28) Other real estate mortgage (32) (32) (28) (54) (27) Real estate construction (37) (8) (2) (3) (5) Consumer: Real estate 1-4 family junior lien mortgage (47) (34) (33) (31) (37) Credit card (421) (367) (403) (549) (593) Other revolving credit and monthly payment (770) (623) (585) (1,069) (672) ------- ------- ------- ------- ------- Total consumer (1,238) (1,024) (1,021) (1,649) (1,302) Lease financing (94) (52) (38) (49) (49) Foreign (78) (86) (90) (84) (37) ------- ------- ------- ------- ------- Total loan charge-offs (2,200) (1,647) (1,588) (2,139) (1,817) ------- ------- ------- ------- ------- Loan recoveries: Commercial 96 98 90 87 110 Real estate 1-4 family first mortgage 3 4 6 12 10 Other real estate mortgage 22 13 38 79 63 Real estate construction 3 4 5 4 12 Consumer: Real estate 1-4 family junior lien mortgage 11 14 15 7 10 Credit card 40 39 49 59 64 Other revolving credit and monthly payment 203 213 243 187 166 ------- ------- ------- ------- ------- Total consumer 254 266 307 253 240 Lease financing 25 13 12 12 15 Foreign 18 30 15 14 10 ------- ------- ------- ------- ------- Total loan recoveries 421 428 473 461 460 ------- ------- ------- ------- ------- Total net loan charge-offs (1,779) (1,219) (1,115) (1,678) (1,357) ------- ------- ------- ------- ------- BALANCE, END OF YEAR $ 3,761 $ 3,719 $ 3,344 $ 3,307 $ 3,220 ======= ======= ======= ======= ======= Total net loan charge-offs as a percentage of average total loans 1.09% .84% .90% 1.44% 1.19% ======= ======= ======= ======= ======= Allowance as a percentage of total loans 2.18% 2.31% 2.51% 2.76% 2.77% ======= ======= ======= ======= ======= -------------------------------------------------------------------------------------------------------------------

The ratio of the allowance for loan losses to total nonaccrual loans was 229% and 311% at December 31, 2001 and 2000, respectively. This ratio may fluctuate significantly from period to period due to such factors as the mix of loan types in the portfolio, the prospects of borrowers and the value and marketability of collateral as well as, for the nonaccrual portfolio taken as a whole, wide variances from period to period in 13 terms of delinquency and relationship of book to contractual principal balance. Classification of a loan as nonaccrual does not necessarily indicate that the principal of a loan is uncollectible in whole or in part. Consequently, the ratio of the allowance for loan losses to nonaccrual loans, taken alone and without taking into account numerous additional factors, is not a reliable indicator of the adequacy of the allowance for loan losses. Indicators of the credit quality of the Company's loan portfolio and the method of determining the allowance for loan losses are discussed below and in greater detail in the 2001 Annual Report to Stockholders. ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES The table below provides a breakdown of the allowance for loan losses by loan category.

----------------------------------------------------------------------------------------------------------------------------------- December 31, ----------------------------------------------------------------------------------------------------------------------------------- (in millions) 2001 2000 1999 1998 1997 ----------------------------------------------------------------------------------------------------------------------------------- Commercial $ 882 $ 798 $ 655 $ 664 $ 603 Real estate 1-4 family first mortgage 64 55 64 58 71 Other real estate mortgage 276 220 220 238 284 Real estate construction 86 69 58 62 51 Consumer: Credit card 394 394 349 356 483 Other consumer 659 556 428 588 575 ------ ------ ------ ------ ------ Total consumer 1,053 950 777 944 1,058 Lease financing 155 67 71 66 67 Foreign 116 95 62 79 43 ------ ------ ------ ------ ------ Total allocated 2,632 2,254 1,907 2,111 2,177 Unallocated component of the allowance (1) 1,129 1,465 1,437 1,196 1,043 ------ ------ ------ ------ ------ Total $3,761 $3,719 $3,344 $3,307 $3,220 ====== ====== ====== ====== ======

December 31, ------------------------------------------------------------------------------------------------------ 2001 2000 1999 1998 1997 ------------------ ------------------ ------------------ ------------------ ------------------ Alloc. Loan Alloc. Loan Alloc. Loan Alloc. Loan Alloc. Loan allow. catgry allow. catgry allow. catgry allow. catgry allow. catgry as % as % as % as % as % as % as % as % as % as % of loan of total of loan of total of loan of total of loan of total of loan of total catgry loans catgry loans catgry loans catgry loans catgry loans ------- -------- ------- -------- ------- -------- ------- -------- ------- -------- Commercial 1.86% 28% 1.58% 31% 1.57% 31% 1.74% 32% 1.75% 30% Real estate 1-4 family first mortgage .25 15 .30 12 .47 10 .46 11 .47 13 Other real estate mortgage 1.11 14 .92 15 1.05 16 1.32 15 1.61 15 Real estate construction 1.10 5 .90 5 .96 5 1.37 4 1.29 3 Consumer: Credit card 5.88 4 5.96 4 6.01 4 5.82 5 6.91 6 Other consumer 1.34 28 1.32 26 1.28 26 1.92 25 1.86 27 --- --- --- --- --- Total consumer 1.89 32 1.95 30 1.97 30 2.57 30 2.79 33 Lease financing 1.65 5 .67 6 .72 7 .82 7 1.06 5 Foreign 7.26 1 5.89 1 3.88 1 5.17 1 3.72 1 --- --- --- --- --- Total allocated 1.53 100% 1.40 100% 1.43 100% 1.76 100% 1.87 100% === === === === === Unallocated component of the allowance (1) .65 .91 1.08 1.00 .90 ---- ---- ---- ---- ---- Total 2.18% 2.31% 2.51% 2.76% 2.77% ==== ==== ==== ==== ==== -----------------------------------------------------------------------------------------------------------------------------------

(1) This amount and any unabsorbed portion of the allocated allowance are also available for any of the above listed loan categories. See Note 5 (Loans and Allowance for Loan Losses) to Financial Statements included in the 2001 Annual Report to Stockholders for the description of the process used by the Company to determine the adequacy and the components (allocated and unallocated) of the allowance for loan losses. 14 At December 31, 2001, the allowance for loan losses was $3,761 million, or 2.18% of total loans, compared with $3,719 million, or 2.31%, at December 31, 2000. During 2001, the net provision for loan losses approximated charge-offs. The components of the allowance, allocated and unallocated, are shown in the table on the previous page. The allocated component increased to $2,632 million at December 31, 2001 from $2,254 million at December 31, 2000, while the unallocated decreased to $1,129 million at December 31, 2001 from $1,465 million at December 31, 2000. At December 31, 2001, the unallocated portion of the allowance amounted to 30% of the total allowance, compared with 39% at December 31, 2000. The $378 million increase in the allocated component of the allowance was attributable to growth in the loan portfolio along with a shift in the composition of risk in the portfolio during 2001. Approximately $160 million of this increase is attributable to loan growth. The remaining $218 million increase reflects additions to allocated allowances caused by a change in risk assumptions in the commercial and wholesale lines of business and higher estimated loss rates in the retail line of business. Changes in allocated loan loss allowances arrived at through this methodology reflect management's judgment concerning the effect of recent economic activity on portfolio performance. Analyzing the movements in the allocated allowance strictly from a loan volume perspective indicates that, had the ratio of allocated allowance to loans outstanding remained flat with the 2000 ratio of 1.40%, the allocated allowance would have increased by approximately $161 million, as loans outstanding grew by $11 billion during the year. There were no material changes in estimation methods and assumptions for the allowance that took place during 2001. The Company considers the allowance for loan losses of $3,761 million adequate to cover losses inherent in loans, loan commitments, and standby and other letters of credit at December 31, 2001. The foregoing discussion contains forward-looking statements about the adequacy of the Company's allowance for loan losses. These forward-looking statements are inherently subject to risks and uncertainties. A number of factors--many of which are beyond the Company's control--could cause actual losses to be more than estimated losses. For a discussion of some of the other factors that could cause actual losses to be more than estimated losses, see "Factors That May Affect Future Results" in the "Financial Review" section of the 2001 Annual Report to Stockholders. 15 PROPERTIES The Company owns its corporate headquarters building in San Francisco, California as well as regional headquarters buildings in Phoenix, Arizona and Portland, Oregon and data processing support and administrative facilities in Tempe, Arizona; Minneapolis, Minnesota; Billings, Montana and Salt Lake City, Utah. In addition, the Company leases office space for data processing support and various administrative departments in major locations in Alaska, Arizona, California, Colorado, Minnesota, Oregon, Texas, and Utah. As of December 31, 2001, the Company provided banking, mortgage and consumer finance through more than 5,400 stores under various types of ownership and leasehold agreements. Wells Fargo Home Mortgage (WFHM) owns its headquarters in Des Moines, Iowa and servicing centers located in Minneapolis, Minnesota and Riverside, California. In addition, WFHM leases servicing centers in Minneapolis, Minnesota and Charlotte, North Carolina, other offices in Springfield, Illinois; St. Louis, Missouri and San Bernardino, California, an operations center in Frederick, Maryland and all mortgage production offices nationwide. Wells Fargo Financial owns its headquarters in Des Moines, Iowa, and leases all branch locations. The Company is also a joint venture partner in one office building in downtown Los Angeles, California, and one office building in downtown Minneapolis, Minnesota. For further information with respect to premises and equipment and commitments under noncancelable leases for premises and equipment, refer to Note 6 (Premises, Equipment, Lease Commitments, Interest Receivable and Other Assets) to Financial Statements included in the 2001 Annual Report to Stockholders. 16 EXECUTIVE OFFICERS OF THE REGISTRANT

YEARS WITH COMPANY OR NAME AND COMPANY POSITION POSITIONS HELD DURING THE PAST FIVE YEARS AGE PREDECESSORS -------------------------- ----------------------------------------- --- ------------ Howard I. Atkins Executive Vice President and Chief Financial Officer (August 2001 to 51 0 Executive Vice Present); Executive Vice President and Chief Financial Officer of New President and Chief York Life Insurance Co. (April 1996 to July 2001) Financial Officer John A. Berg Group Executive Vice President (North Central Banking) (November 2000 56 26 Group Executive to Present); Group Executive Vice President (Central Banking) Vice President (North (November 1998 to November 2000); Senior Vice President and Regional Central Banking) Group Head of former Norwest (March 1998 to November 1998); Regional President (Greater Minnesota/La Crosse Region) (January 1990 to March 1998) Leslie S. Biller Vice Chairman and Chief Operating Officer (November 1998 to Present); 54 14 Vice Chairman and President and Chief Operating Officer of former Norwest (February Chief Operating Officer 1997 to November 1998); Executive Vice President (South Central Community Banking) (July 1990 to February 1997) Patricia R. Callahan Executive Vice President (Human Resources) (November 1998 to 48 24 Executive Vice President Present); Executive Vice President of former Wells Fargo (Personnel) (Human Resources) (September 1998 to November 1998); Executive Vice President (Wholesale Banking) (July 1997 to September 1998); Executive Vice President (Personnel) (March 1993 to July 1997) James R. Campbell Group Executive Vice President (January 2002 to Present); Group 59 37 Group Executive Executive Vice President (Minnesota Banking and Investments Group) Vice President (November 2000 to January 2002); Group Executive Vice President (Minnesota Banking) (November 1998 to November 2000); Executive Vice President (North Central Banking) of former Norwest (August 1997 to November 1998); Executive Vice President (Commercial Banking Services, Specialized Lending and Nebraska) (January 1996 to August 1997)

17 EXECUTIVE OFFICERS OF THE REGISTRANT (continued)

YEARS WITH COMPANY OR NAME AND COMPANY POSITION POSITIONS HELD DURING THE PAST FIVE YEARS AGE PREDECESSORS -------------------------- ----------------------------------------- --- ------------ C. Webb Edwards Executive Vice President (Technology and Operations) (November 1998 54 17 Executive Vice President to Present); Executive Vice President of the former Norwest (April (Technology and Operations) 1995 to November 1998); and President and Chief Executive Officer of Wells Fargo Services Company (formerly known as Norwest Services, Inc. and Norwest Technical Services, Inc.) (May 1995 to Present) David A. Hoyt Group Executive Vice President (Wholesale Banking) (November 1998 to 46 20 Group Executive Present); Vice Chair (Real Estate, Capital Markets, International) of Vice President (Wholesale former Wells Fargo (May 1997 to November 1998); Executive Vice Banking) President (Capital Markets, Special Loans) (September 1994 to May 1997) Michael R. James Group Executive Vice President (Business Banking and Consumer 50 28 Group Executive Vice Lending) (July 2000 to Present); Executive Vice President of Wells President (Business Banking Fargo Bank, N.A. (Business Banking Group Head) (July 1997 to July and Consumer Lending) 2000); Executive Vice President (Business Banking Group Division Manager) (June 1992 to July 1997) Richard M. Kovacevich Chairman, President and Chief Executive Officer (April 2001 to 58 16 Chairman, President and Present); President and Chief Executive Officer (November 1998 to Chief Executive Officer April 2001); Chairman and Chief Executive Officer of former Norwest (February 1997 to November 1998); Chairman, President and Chief Executive Officer (May 1995 to January 1997) Dennis J. Mooradian Group Executive Vice President (Private Client Services) (July 1999 54 5 Group Executive Vice to Present); Executive Vice President of Wells Fargo Bank, N.A. (May President (Private Client 1996 to July 1999) Services) David J. Munio Executive Vice President (Chief Credit Officer) (November 2001 to 57 28 Executive Vice Present); Executive Vice President and Deputy Chief Credit Officer of President (Chief Wells Fargo Bank, N.A. (September 1999 to November 2001); Executive Credit Officer) Vice President (Loan Supervision) (April 1996 to September 1999)

18 EXECUTIVE OFFICERS OF THE REGISTRANT (continued)

YEARS WITH COMPANY OR NAME AND COMPANY POSITION POSITIONS HELD DURING THE PAST FIVE YEARS AGE PREDECESSORS -------------------------- ----------------------------------------- --- ------------ Mark C. Oman Group Executive Vice President (Mortgage and Home Equity) (November 47 22 Group Executive 1998 to Present); Executive Vice President (Mortgage Services and Vice President (Mortgage Iowa Community Banking) of former Norwest (February 1997 to November and Home Equity) 1998); and Chairman of Wells Fargo Home Mortgage, Inc. (formerly known as Norwest Mortgage, Inc.) (February 1997 to Present); Chief Executive Officer (August 1989 to January 2001); President (August 1989 to February 1997) Clyde W. Ostler Group Executive Vice President (Internet Services) (October 1999 to 55 31 Group Executive Present); Group Executive Vice President (Investments) (November 1998 Vice President (Internet to October 1999); Vice Chair (Trust and Investment Services) of Services) former Wells Fargo (May 1993 to November 1998) Daniel W. Porter Group Executive Vice President (Wells Fargo Financial) and Chairman 46 2 Group Executive Vice and Chief Executive Officer of Wells Fargo Financial, Inc. President (Wells Fargo (December 1999 to Present); various positions with GE Capital since Financial) 1986 including Managing Director of GE Capital Europe in London (European Transportation Group) (March 1998 to December 1999); President of Global Consumer Development (September 1997 to March 1998); and President and Chief Executive Officer of Retailer Financial Services (April 1994 to September 1997) Les L. Quock, CPA Senior Vice President and Controller (November 1998 to Present); 48 22 Senior Vice President and Senior Vice President (Payment Systems Services Group) of former Controller (Principal Wells Fargo (February 1997 to November 1998); Senior Vice President Accounting Officer) (Business Banking Group) (November 1993 to February 1997) Stanley S. Stroup Executive Vice President and General Counsel (November 1998 to 58 18 Executive Vice President Present); Executive Vice President and General Counsel of former and General Counsel Norwest (February 1993 to November 1998) John G. Stumpf Group Executive Vice President (Western Banking) (May 2000 to 48 20 Group Executive Present); Group Executive Vice President (Southwestern Banking) Vice President (Western (November 1998 to May 2000); Regional President (Texas) of former Banking) Norwest (July 1994 to November 1998)

19 EXECUTIVE OFFICERS OF THE REGISTRANT (continued)

YEARS WITH COMPANY OR NAME AND COMPANY POSITION POSITIONS HELD DURING THE PAST FIVE YEARS AGE PREDECESSORS -------------------------- ----------------------------------------- --- ------------ Carrie L. Tolstedt Group Executive Vice President (California and Border Banking) 42 12 Group Executive Vice (January 2001 to Present); Regional President of Wells Fargo Bank, President (California and N.A. (Central California Banking) (December 1998 to January 2001); Border Banking) Regional Manager of Norwest Bank Minnesota, N.A. (Greater Minnesota Community Banking) (May 1998 to December 1998); Executive Vice President of FirstMerit Corporation and President and Chief Executive Officer of Citizens National Bank and Peoples National Bank (August 1996 to May 1998)

There is no family relationship among the above officers. All executive officers serve at the pleasure of the Board of Directors. 20 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Financial Statements, Schedules and Exhibits: (1) The consolidated financial statements and related notes, the independent auditors' report thereon and supplementary data that appear on pages 54 through 98 of the 2001 Annual Report to Stockholders are incorporated herein by reference. (2) Financial Statement Schedules: All schedules are omitted, because they are either not applicable or the required information is shown in the consolidated financial statements or the notes thereto. (3) Exhibits: The Company's SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214. First Security Corporation filed documents under SEC file number 001-6906.

Exhibit number Description ------ ----------- 3(a) Restated Certificate of Incorporation, incorporated by reference to Exhibit 3(b) to the Company's Current Report on Form 8-K dated June 28, 1993. Certificates of Amendment of Certificate of Incorporation, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated July 3, 1995 (authorizing preference stock), Exhibits 3(b) and 3(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (changing the Company's name and increasing authorized common and preferred stock, respectively) and Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 (increasing authorized common stock) (b) Certificate of Change of Location of Registered Office and Change of Registered Agent, incorporated by reference to Exhibit 3(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (c) Certificate of Designations for the Company's ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 (d) Certificate of Designations for the Company's 1995 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 21 3(e) Certificate Eliminating the Certificate of Designations for the Company's Cumulative Convertible Preferred Stock, Series B, incorporated by reference to Exhibit 3(a) to the Company's Current Report on Form 8-K dated November 1, 1995 (f) Certificate Eliminating the Certificate of Designations for the Company's 10.24% Cumulative Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated February 20, 1996 (g) Certificate of Designations for the Company's 1996 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated February 26, 1996 (h) Certificate of Designations for the Company's 1997 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated April 14, 1997 (i) Certificate of Designations for the Company's 1998 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated April 20, 1998 (j) Certificate of Designations for the Company's Adjustable Cumulative Preferred Stock, Series B, incorporated by reference to Exhibit 3(j) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (k) Certificate of Designations for the Company's Series C Junior Participating Preferred Stock, incorporated by reference to Exhibit 3(l) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 (l) Certificate Eliminating the Certificate of Designations for the Company's Series A Junior Participating Preferred Stock, incorporated by reference to Exhibit 3(a) to the Company's Current Report on Form 8-K dated April 21, 1999 (m) Certificate of Designations for the Company's 1999 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3(b) to the Company's Current Report on Form 8-K dated April 21, 1999 (n) Certificate of Designations for the Company's 2000 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3(o) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 (o) Certificate of Designations for the Company's 2001 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company's Current Report on Form 8-K dated April 17, 2001 22 3(p) By-Laws, incorporated by reference to Exhibit 3(m) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 4(a) See Exhibits 3(a) through 3(p) (b) Rights Agreement, dated as of October 21, 1998, between the Company and ChaseMellon Shareholder Services, LLC, as Rights Agent, incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form 8-A dated October 21, 1998 (c) The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company. 10*(a) Long-Term Incentive Compensation Plan, as amended effective November 23, 1999 (including Forms of Award Term Sheet for grants of restricted share rights), incorporated by reference to Exhibit 10(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Amendment to Long-Term Incentive Compensation Plan, effective November 1, 2000, filed as paragraph (1) of Exhibit 10(ff) hereto. Forms of Non-Qualified Stock Option and Restricted Stock Agreements for grants subsequent to November 2, 1998, incorporated by reference to Exhibit 10(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Forms of Non-Qualified Stock Option and Restricted Stock Agreements for grants prior to November 2, 1998, incorporated by reference to Exhibit 10(a) to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 *(b) Long-Term Incentive Plan, incorporated by reference to Exhibit A to the former Wells Fargo's Proxy Statement filed March 14, 1994 *(c) Wells Fargo Bonus Plan, incorporated by reference to Exhibit 10(c) to the Company's Annual Report on Form 10-K for the year ended December 31, 2000 *(d) Performance-Based Compensation Policy, incorporated by reference to Exhibit 10(d) to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 *(e) 1990 Equity Incentive Plan, incorporated by reference to Exhibit 10(f) to the former Wells Fargo's Annual Report on Form 10-K for the year ended December 31, 1995 *(f) 1982 Equity Incentive Plan, incorporated by reference to Exhibit 10(g) to the former Wells Fargo's Annual Report on Form 10-K for the year ended December 31, 1993 23 10*(g) Employees' Stock Deferral Plan, incorporated by reference to Exhibit 10(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998. Amendment to Employees' Stock Deferral Plan, effective November 1, 2000, filed as paragraph (2) of Exhibit 10(ff) hereto *(h) Deferred Compensation Plan, incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 *(i) 1999 Directors Stock Option Plan, incorporated by reference to Exhibit 10(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001. *(j) 1990 Director Option Plan for directors of the former Wells Fargo, incorporated by reference to Exhibit 10(c) to the former Wells Fargo's Annual Report on Form 10-K for the year ended December 31, 1997 *(k) 1987 Director Option Plan for directors of the former Wells Fargo, incorporated by reference to Exhibit A to the former Wells Fargo's Proxy Statement filed March 10, 1995, and as further amended by the amendment adopted September 16, 1997, incorporated by reference to Exhibit 10 to the former Wells Fargo's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 *(l) First Security Corporation Comprehensive Management Incentive Plan, incorporated by reference to Exhibit 10.1 to First Security Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 *(m) Deferred Compensation Plan for Non-Employee Directors of the former Norwest, incorporated by reference to Exhibit 10(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999. Amendment to Deferred Compensation Plan for Non-Employee Directors, effective November 1, 2000, filed as paragraph (4) of Exhibit 10(ff) hereto *(n) Directors' Stock Deferral Plan for directors of the former Norwest, incorporated by reference to Exhibit 10(d) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999. Amendment to Directors' Stock Deferral Plan, effective November 1, 2000, filed as paragraph (5) of Exhibit 10(ff) hereto *(o) Directors' Formula Stock Award Plan for directors of the former Norwest, incorporated by reference to Exhibit 10(e) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999. Amendment to Directors' Formula Stock Award Plan, effective November 1, 2000, filed as paragraph (6) of Exhibit 10(ff) hereto *(p) Deferral Plan for Directors of the former Wells Fargo, incorporated by reference to Exhibit 10(b) to the former Wells Fargo's Annual Report on Form 10-K for the year ended December 31, 1997 24 10*(q) 1999 Deferral Plan for Directors, incorporated by reference to Exhibit 10(q) of the Company's Annual Report on Form 10-K for the year ended December 31, 1999. Amendment to 1999 Deferral Plan for Directors, effective November 1, 2000, filed as paragraph (7) of Exhibit 10(ff) hereto *(r) 1999 Directors Formula Stock Award Plan, incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 *(s) Supplemental 401(k) Plan, incorporated by reference to Exhibit 10(a) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999. Amendment to Supplemental 401(k) Plan, effective November 1, 2000, filed as paragraph (9) of Exhibit 10(ff) hereto. *(t) Supplemental Cash Balance Plan, incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 *(u) Supplemental Long Term Disability Plan, incorporated by reference to Exhibit 10(f) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. Amendment to Supplemental Long Term Disability Plan, incorporated by reference to Exhibit 10(g) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 *(v) Agreement between the Company and Richard M. Kovacevich dated March 18, 1991, incorporated by reference to Exhibit 19(e) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1991. Amendment effective January 1, 1995, to the March 18, 1991 agreement between the Company and Richard M. Kovacevich, incorporated by reference to Exhibit 10(c) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 *(w) Agreement, dated July 11, 2001, between the Company and Howard I. Atkins, incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2001 *(x) Amended and Restated Employment Agreement, dated as of October 18, 2000, between the Company and Spencer F. Eccles, incorporated by reference to Exhibit 10(x) to the Company's Annual Report on Form 10-K for the year ended December 31, 2000 *(y) Agreement between the Company and Mark C. Oman, dated May 7, 1999 and agreements between the Company and two other executive officers, dated October 7, 1998, and October 25, 1999, respectively, incorporated by reference to Exhibit 10(y) to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 25 10*(z) Form of severance agreement between the Company and seven executive officers, including Richard M. Kovacevich, Les S. Biller, Mark C. Oman and C. Webb Edwards, incorporated by reference to Exhibit 10(ee) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998. Amendment effective January 1, 1995, to the March 11, 1991 agreement between the Company and Richard M. Kovacevich, incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 *(aa) Description of Supplemental Retirement Benefit Arrangement for C. Webb Edwards, incorporated by reference to Exhibit 10(aa) to the Company's Annual Report on Form 10-K for the year ended December 31, 2000 *(bb) Consulting Agreement dated January 25, 1999, between the Company and Chang-Lin Tien, incorporated by reference to Exhibit 10(gg) to the Company's Annual Report on Form 10-K for the year ended December 31, 1998 *(cc) Description of Relocation Program, filed herewith *(dd) Description of Executive Financial Planning Program, incorporated by reference to Exhibit 10(ee) to the Company's Annual Report on Form 10-K for the year ended December 31, 1999 *(ee) Executive Loan Plan, incorporated by reference to Exhibit 10(i) to the former Wells Fargo's Annual Report on Form 10-K for the year ended December 31, 1994 *(ff) Amendments to Long-Term Incentive Compensation Plan, Employees' Stock Deferral Plan, Deferred Compensation Plan for Non-Employee Directors, Directors' Stock Deferral Plan, Directors' Formula Stock Award Plan, 1999 Deferral Plan for Directors, and Supplemental 401(k) Plan, incorporated by reference to Exhibit 10(ff) to the Company's Annual Report on Form 10-K for the year ended December 31, 2000 (gg) Agreement between the Company and an executive officer, incorporated by reference to Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2001 (hh) PartnerShares Stock Option Plan, as amended through February 26, 2002, filed herewith --------------- * Management contract or compensatory plan or arrangement Stockholders may obtain a copy of any of the foregoing exhibits, upon payment of a reasonable fee, by writing Wells Fargo & Company, Office of the Secretary, Wells Fargo Center, N9305-173, Sixth and Marquette, Minneapolis, Minnesota 55479. 26 12(a) Computation of Ratios of Earnings to Fixed Charges -- the ratios of earnings to fixed charges, including interest on deposits, were 1.79, 1.82, 2.07, 1.62 and 1.79 for the years ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively. The ratios of earnings to fixed charges, excluding interest on deposits, were 2.64, 2.67, 3.29, 2.51 and 3.02 for the years ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively. (b) Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends -- the ratios of earnings to fixed charges and preferred dividends, including interest on deposits, were 1.79, 1.81, 2.05, 1.60 and 1.77 for the years ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively. The ratios of earnings to fixed charges and preferred dividends, excluding interest on deposits, were 2.62, 2.65, 3.22, 2.45 and 2.93 for the years ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively. 13 2001 Annual Report to Stockholders, pages 33 through 98 21 Subsidiaries of the Company 23 Consent of Independent Accountants 24 Powers of Attorney

(b) The Company filed the following reports on Form 8-K during the fourth quarter of 2001: (1) October 16, 2001, under Item 5, containing the Company's financial results for the quarter ended September 30, 2001 STATUS OF PRIOR DOCUMENTS The Wells Fargo & Company Annual Report on Form 10-K for the year ended December 31, 2001, at the time of filing with the Securities and Exchange Commission, shall modify and supersede all documents filed prior to January 1, 2002 pursuant to Sections 13, 14 and 15(d) of the Securities Exchange Act of 1934 (other than the Current Report on Form 8-K filed October 14, 1997, containing a description of the Company's common stock) for purposes of any offers or sales of any securities after the date of such filing pursuant to any Registration Statement or Prospectus filed pursuant to the Securities Act of 1933 which incorporates by reference such Annual Report on Form 10-K. 27 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 15, 2002. WELLS FARGO & COMPANY By: RICHARD M. KOVACEVICH ------------------------------------- Richard M. Kovacevich Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated. By: HOWARD I. ATKINS ------------------------------------ Howard I. Atkins Executive Vice President and Chief Financial Officer (Principal Financial Officer) By: LES L. QUOCK ------------------------------------ Les L. Quock Senior Vice President and Controller (Principal Accounting Officer) The Directors of Wells Fargo & Company listed below have duly executed powers of attorney empowering Philip J. Quigley to sign this document on their behalf. Leslie S. Biller Richard D. McCormick J.A. Blanchard III Cynthia H. Milligan Michael R. Bowlin Benjamin F. Montoya David A. Christensen Donald B. Rice Spencer F. Eccles Judith M. Runstad Robert L. Joss Susan G. Swenson Reatha Clark King Michael W. Wright Richard M. Kovacevich By: PHILIP J. QUIGLEY ------------------------------------ Philip J. Quigley Director and Attorney-in-fact March 15, 2002 28