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þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2003

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-2979

WELLS FARGO & COMPANY
(Exact name of registrant as specified in its charter)

420 Montgomery Street, San Francisco, California 94104
(Address of principal executive offices) (Zip Code)

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 (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Wells Fargo & Company (the Company) is filing this Amendment No. 1 on Form 10-Q/A to amend its Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 to account for certain automobile leases as operating leases instead of direct financing leases. This amendment reflects the guidance specified in Topic D-107, Lessor Consideration of Third-Party Residual Value Guarantees, issued in May 2003 by the Emerging Issues Task Force of the Financial Accounting Standards Board. The Company’s implementation of this guidance did not have a material effect on the Company’s results of operations or financial position for any period covered in the Amendment 1. This guidance resulted in auto leases being reclassified from loans to operating lease assets included in other assets on the balance sheet. In addition, the revised income statement presentation reflects a reduction of interest income related to direct financing leases and the recognition of rental income and depreciation expense on operating leases. Refer to Note 2 (Auto Lease Accounting and Reclassifications) to Financial Statements included in this Amendment No. 1 for a summary of the impact of applying the guidance in Topic D-107 on the Company’s current and prior period results of operations and financial condition.

•

Part I, Item 1(Financial Statements) and Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) primarily to reflect the guidance set forth in Topic D-107. In addition, the Company has reclassified other amounts to conform with current financial statement presentation, including certain mortgages, loan charge-offs and recoveries from junior lien mortgages to first mortgages and, in the statement of cash flows provided separate presentation of mortgage servicing rights impairment.

•

Part II, Item 6 (Exhibits, Financial Statement Schedules, and Reports on Form 8-K) to revise Exhibits 99(a) and 99(b) to reflect the guidance set forth in Topic D-107, and to refile Exhibits 31(a), 31(b), 32(a) and 32(b).

This Amendment No. 1 does not change any information contained in any other item of the Company’s Form 10-Q as originally filed on August 8, 2003. This Amendment No. 1 also does not reflect events that have occurred after the original filing date of the Form 10-Q and does not change the “Factors That May Affect Future Results” discussion in the Form 10-Q. Refer to that section in the Company’s Form 10-Q for the quarter ended September 30, 2003 for a more current discussion of some of the factors that may cause actual results to differ from expectations.


PART I	Financial Information
Item 1.	Financial Statements	Page
	Consolidated Statement of Income		2
	Consolidated Balance Sheet		3
	Consolidated Statement of Changes in Stockholders’ Equity and Comprehensive Income		4
	Consolidated Statement of Cash Flows		5
	Notes to Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
	Summary Financial Data		33
	Overview		34
	Critical Accounting Policies		36
	Earnings Performance		37
	Net Interest Income		37
	Noninterest Income		41
	Noninterest Expense		43
	Operating Segment Results		44
	Balance Sheet Analysis		45
	Securities Available for Sale		44
	Loan Portfolio		47
	Nonaccrual Loans and Other Assets		48
	Loans 90 Days Past Due and Still Accruing		49
	Allowance for Loan Losses		50
	Other Assets		51
	Deposits		52
	Regulatory and Agency Capital Requirements		52
	Off-Balance Sheet Arrangements and Contractual Obligations		53
	Asset/Liability and Market Risk Management		53
	Capital Management		57
	Factors that May Affect Future Results		58
Item 4.	Controls and Procedures		64
PART II	Other Information
Item 6.	Exhibits and Reports on Form 8-K		65
Signature			68



	Quarter ended June 30					,	Six months ended June 30					,
(in millions, except per share amounts)	2003			2002			2003			2002

		(Revised)			(Revised)			(Revised)			(Revised)
INTEREST INCOME
Securities available for sale	$	435		$	656		$	888		$	1,312
Mortgages held for sale		864			440			1,678			1,031
Loans held for sale		67			73			134			142
Loans		3,409			3,282			6,741			6,471
Other interest income		80			79			141			151

Total interest income		4,855			4,530			9,582			9,107


INTEREST EXPENSE
Deposits		425			483			852			977
Short-term borrowings		87			131			182			305
Long-term debt		341			344			671			674
Guaranteed preferred beneficial interests in Company’s
subordinated debentures		29			30			56			58

Total interest expense		882			988			1,761			2,014


NET INTEREST INCOME		3,973			3,542			7,821			7,093
Provision for loan losses		421			400			831			870

Net interest income after provision for loan losses		3,552			3,142			6,990			6,223


NONINTEREST INCOME
Service charges on deposit accounts		587			547			1,140			1,052
Trust and investment fees		470			472			929			934
Credit card fees		257			223			501			424
Other fees		373			326			739			637
Mortgage banking		543			412			1,104			772
Operating leases		245			289			496			595
Insurance		289			269			556			532
Net gains on debt securities available for sale		20			45			38			81
Net losses from equity investments		(47	)		(58	)		(145	)		(78	)
Other		220			142			431			325

Total noninterest income		2,957			2,667			5,789			5,274


NONINTEREST EXPENSE
Salaries		1,155			1,106			2,296			2,182
Incentive compensation		503			362			950			719
Employee benefits		350			364			769			693
Equipment		305			228			573			464
Net occupancy		288			274			585			543
Operating leases		178			205			365			430
Net losses on dispositions of premises and equipment		10			29			6			27
Other		1,369			1,042			2,570			2,104

Total noninterest expense		4,158			3,610			8,114			7,162


INCOME BEFORE INCOME TAX EXPENSE AND EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE		2,351			2,199			4,665			4,335
Income tax expense		826			781			1,648			1,539


NET INCOME BEFORE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE		1,525			1,418			3,017			2,796
Cumulative effect of change in accounting principle		—			—			—			(276	)


NET INCOME	$	1,525		$	1,418		$	3,017		$	2,520


NET INCOME APPLICABLE TO COMMON STOCK	$	1,524		$	1,417		$	3,015		$	2,518


EARNINGS PER COMMON SHARE BEFORE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
Earnings per common share	$	.91		$	.83		$	1.80		$	1.64

Diluted earnings per common share	$	.90		$	.82		$	1.78		$	1.62


EARNINGS PER COMMON SHARE
Earnings per common share	$	.91		$	.83		$	1.80		$	1.48


Diluted earnings per common share	$	.90		$	.82		$	1.78		$	1.46


DIVIDENDS DECLARED PER COMMON SHARE	$	.30		$	.28		$	.60		$	.54


Average common shares outstanding		1,675.7			1,710.4			1,678.5			1,706.7


Diluted average common shares outstanding		1,690.6			1,730.8			1,692.1			1,725.1



	June 30		,	December 31		,	June 30		,
(in millions, except shares)	2003			2002			2002

		(Revised)			(Revised)			(Revised)
ASSETS
Cash and due from banks	$	16,045		$	17,820		$	14,701
Federal funds sold and securities purchased under resale agreements		2,768			3,174			3,741
Securities available for sale		24,625			27,947			37,132
Mortgages held for sale		58,716			51,154			24,685
Loans held for sale		7,009			6,665			5,165

Loans		211,434			192,478			180,242
Allowance for loan losses		3,853			3,819			3,834

Net loans		207,581			188,659			176,408


Mortgage servicing rights, net		3,821			4,489			5,956
Premises and equipment, net		3,604			3,688			3,638
Goodwill		9,803			9,753			9,724
Other assets		35,611			35,848			33,585


Total assets	$	369,583		$	349,197		$	314,735


LIABILITIES
Noninterest-bearing deposits	$	80,943		$	74,094		$	61,499
Interest-bearing deposits		149,941			142,822			131,712

Total deposits		230,884			216,916			193,211
Short-term borrowings		23,883			33,446			30,107
Accrued expenses and other liabilities		20,682			18,311			17,134
Long-term debt		58,513			47,320			41,913
Guaranteed preferred beneficial interests in Company’s subordinated debentures		3,385			2,885			2,885


Total liabilities		337,347			318,878			285,250


STOCKHOLDERS’ EQUITY
Preferred stock		375			251			341
Unearned ESOP shares		(323	)		(190	)		(287	)

Total preferred stock		52			61			54
Common stock — $1-2/3 par value, authorized 6,000,000,000 shares; issued 1,736,381,025 shares		2,894			2,894			2,894
Additional paid-in capital		9,536			9,498			9,488
Retained earnings		21,281			19,355			17,488
Cumulative other comprehensive income		1,185			976			919
Treasury stock – 57,992,372 shares, 50,474,518 shares and 26,756,638 shares		(2,712	)		(2,465	)		(1,358	)


Total stockholders’ equity		32,236			30,319			29,485


Total liabilities and stockholders’ equity	$	369,583		$	349,197		$	314,735

WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME



																				Cumulative
						Unearned					Additional									other			Total
	Number of		Preferred			ESOP			Common		paid-in			Retained			Treasury			comprehensive			stockholders’
(in millions, except shares)	shares		stock			shares			stock		capital			earnings			stock			income			equity

														(Revised)									(Revised)
BALANCE DECEMBER 31, 2001			$	218		$	(154	)	$	2,894	$	9,436		$	15,966		$	(1,937	)	$	752		$	27,175

Comprehensive income:
Net income															2,520									2,520
Other comprehensive income, net of tax:
Translation adjustments																					4			4
Net unrealized gains on securities available for sale and other retained interests, net of reclassification of $45 million of net gains included in net income																					265			265
Net unrealized gains on derivatives and hedging activities, net of reclassification of $112 million of net losses on cash flow hedges included in net income																					(102	)		(102	)

Total comprehensive income																								2,687
Common stock issued		8,439,025										28			(73	)		366						321
Common stock issued for acquisitions		12,017,193										4						531						535
Common stock repurchased		8,649,792																(426	)					(426	)
Preferred stock (238,000) issued to ESOP				238			(255	)				17												—
Preferred stock released to ESOP							122					(8	)											114
Preferred stock (115,420) converted to common shares		2,322,964		(115	)							11						104						—
Preferred stock dividends															(2	)								(2	)
Common stock dividends															(923	)								(923	)
Change in Rabbi trust assets and similar arrangements (classified as treasury stock)																		4						4

Net change				123			(133	)		—		52			1,522			579			167			2,310


BALANCE JUNE 30, 2002			$	341		$	(287	)	$	2,894	$	9,488		$	17,488		$	(1,358	)	$	919		$	29,485


BALANCE DECEMBER 31, 2002			$	251		$	(190	)	$	2,894	$	9,498		$	19,355		$	(2,465	)	$	976		$	30,319

Comprehensive income:
Net income															3,017									3,017
Other comprehensive income, net of tax:
Translation adjustments																					20			20
Net unrealized gains on securities available for sale and other retained interests, net of reclassification of $6 million of net gains included in net income																					2			2
Net unrealized gains on derivatives and hedging activities, net of reclassification of $30 million of net losses on cash flow hedges included in net income																					187			187

Total comprehensive income																								3,226
Common stock issued		9,502,120										26			(80	)		442						388
Common stock issued for acquisitions		123,188																6						6
Common stock repurchased		20,032,901																(922	)					(922	)
Preferred stock (260,200) issued to ESOP				260			(279	)				19												—
Preferred stock released to ESOP							146					(9	)											137
Preferred stock (135,878) converted to common shares		2,889,739		(136	)							2						134						—
Preferred stock dividends															(2	)								(2	)
Common stock dividends															(1,009	)								(1,009	)
Change in Rabbi trust assets and similar arrangements (classified as treasury stock)																		93						93

Net change				124			(133	)		—		38			1,926			(247	)		209			1,917


BALANCE JUNE 30, 2003			$	375		$	(323	)	$	2,894	$	9,536		$	21,281		$	(2,712	)	$	1,185		$	32,236



	Six months ended June 30					,
(in millions)	2003			2002

	(Revised)			(Revised)

Cash flows from operating activities:
Net income	$	3,017		$	2,520
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Provision for loan losses		831			870
Net provision for mortgage servicing rights in excess of fair value		1,212			785
Depreciation and amortization		2,598			2,112
Net gains on securities available for sale		(9	)		(75	)
Net gains of mortgage loan originations / sales activities		(1,468	)		(292	)
Net gains on sales of loans		(5	)		(8	)
Net losses on dispositions of premises and equipment		6			27
Net gains on dispositions of operations		(27	)		(3	)
Release of preferred shares to ESOP		137			114
Net increase in trading assets		(1,114	)		(566	)
Deferred income tax (benefit) expense		(288	)		149
Net decrease (increase) in accrued interest receivable		15			(50	)
Net (decrease) increase in accrued interest payable		(21	)		41
Originations of mortgages held for sale		(205,330	)		(111,945	)
Proceeds from sales of mortgages held for sale		199,519			117,958
Principal collected on mortgages held for sale		1,737			553
Net increase in loans held for sale		(344	)		(420	)
Other assets, net		(4,653	)		(3,552	)
Other accrued expenses and liabilities, net		2,278			444


Net cash (used) provided by operating activities		(1,909	)		8,662


Cash flows from investing activities:
Securities available for sale:
Proceeds from sales		1,453			10,485
Proceeds from prepayments and maturities		5,863			4,200
Purchases		(4,157	)		(9,825	)
Net cash paid for acquisitions		(768	)		(532	)
Net increase in banking subsidiaries’ loan originations, net of collections		(4,330	)		(8,144	)
Proceeds from sales (including participations) of loans by banking subsidiaries		764			641
Purchases (including participations) of loans by banking subsidiaries		(12,461	)		(1,341	)
Principal collected on nonbank entities’ loans		10,112			5,563
Loans originated by nonbank entities		(9,460	)		(6,885	)
Purchases of loans by nonbank entities		(3,682	)		—
Proceeds from dispositions of operations		30			34
Proceeds from sales of foreclosed assets		135			269
Net decrease (increase) in federal funds sold and securities purchased under resale agreements		406			(1,045	)
Net increase in mortgage servicing rights		(1,907	)		(1,143	)
Other, net		3,653			(791	)


Net cash used by investing activities		(14,349	)		(8,514	)


Cash flows from financing activities:
Net increase in deposits		13,968			1,345
Net decrease in short-term borrowings		(9,563	)		(8,562	)
Proceeds from issuance of long-term debt		19,885			11,164
Repayment of long-term debt		(9,445	)		(5,673	)
Proceeds from issuance of guaranteed preferred beneficial interests in Company’s subordinated debentures		500			450
Proceeds from issuance of common stock		350			269
Repurchase of common stock		(922	)		(426	)
Payment of cash dividends on preferred and common stock		(1,011	)		(925	)
Other, net		721			(57	)


Net cash provided (used) by financing activities		14,483			(2,415	)


Net change in cash and due from banks		(1,775	)		(2,267	)

Cash and due from banks at beginning of period		17,820			16,968


Cash and due from banks at end of period	$	16,045		$	14,701


Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	1,740		$	2,055
Income taxes		1,790			943
Noncash investing and financing activities:
Transfers from loans to foreclosed assets	$	242		$	291
Net transfers from mortgages held for sale to loans		179			172

Wells Fargo & Company and Subsidiaries (consolidated) (the Company) is a diversified financial services company providing banking, insurance, investments, mortgage banking and consumer finance through banking stores, the internet and other distribution channels to consumers, commercial businesses and financial institutions in all 50 states of the U.S. and in other countries. Wells Fargo & Company (the Parent) is a financial holding company and a bank holding company.

The accounting and reporting policies of the Company conform with generally accepted accounting principles (GAAP) and prevailing practices in the financial services industry. Preparing the financial statements in conformity with GAAP requires management to 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. Certain amounts in the financial statements for prior periods have been reclassified to conform with the current financial statement presentation, as discussed in Note 2 (Auto Lease Accounting and Reclassifications).

The information furnished in these unaudited interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the periods presented. These adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q/A. The results of operations in the interim statements do not necessarily indicate the results that may be expected for the full year. The interim financial information should be read in conjunction with the Company’s 2002 Annual Report on Form 10-K/A filed on January 16, 2004 (2002 Form 10-K/A).

Descriptions of the significant accounting policies of the Company are included in Note 1 (Summary of Significant Accounting Policies) to Financial Statements in the Company’s 2002 Form 10-K/A. There have been no significant changes to these policies, except as noted below.

The consolidated financial statements of the Company include the accounts of the Parent, and its majority-owned subsidiaries, which are consolidated on a line-by-line basis. Significant intercompany accounts and transactions are eliminated in consolidation. Other affiliates in which there is at least 20% ownership are generally accounted for by the equity method; those in which there is less than 20% ownership are generally carried at cost, except for marketable equity securities, which are carried at fair value with changes in fair value included in other comprehensive income, and certain variable interest entities as described below. Assets that are accounted for by either the equity or cost method are included in other assets.

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities, which clarifies the rules of consolidation for certain entities in which the equity investors do not have a controlling financial interest or do

not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. These entities are referred to as variable interest entities (VIEs). An enterprise’s variable interest in a variable interest entity arises from either contractual, ownership, or other monetary interests in the entity, which change with the entity’s net asset value changes. Effective for VIEs formed after January 31, 2003, and effective for all existing VIEs on July 1, 2003, the Company must consolidate a VIE if it will absorb a majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both.

The Company has several stock-based employee compensation plans, which are described more fully in Note 15 (Common Stock and Stock Plans) to Financial Statements in the Company’s 2002 Form 10-K/A. As permitted by Statement of Financial Accounting Standards No. 123 (FAS 123), Accounting for Stock-Based Compensation, the Company uses the intrinsic value method of Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees, to account for its stock-based employee compensation plans. Pro forma net income and earnings per common share information is provided as if the Company accounted for its employee stock option plans under the fair value method of FAS 123.

In May 2003, the Emerging Issues Task Force (EITF) published Topic D-107, Lessor Consideration of Third-Party Residual Value Guarantees, which clarifies accounting guidance for certain lease transactions with residual value guarantees. Based on this new guidance, the Company has determined that certain auto leases previously accounted for as direct financing leases should be recorded as operating leases. This guidance resulted in a reclassification of auto leases from loans to operating lease assets included in other assets on the balance sheet. In addition, the revised income statement presentation reflects a reduction of interest income related to direct financing leases and the recognition of rental income and depreciation expense on operating leases. Previously reported unaudited interim consolidated financial statements and the notes to those financial statements, have been presented in conformity with the guidance in Topic D-107. The following tables present certain captions of the statement of income for the quarter and six-months ended June 30, 2003 and 2002, certain captions of the statement of cash flows for the six-months ended June 30, 2003 and 2002 and certain captions in the Company’s balance sheet at June 30, 2003 and 2002, revised to conform with the guidance in Topic D-107.



	Six months ended June 30								,
	2003				2002
STATEMENT OF INCOME:	As		As		As		As
(in millions, except per share data)	Previously Reported		Revised		Previously Reported		Revised


Net interest income	$	7,972	$	7,821	$	7,293	$	7,093
Provision for loan losses		849		831		900		870
Net interest income after provision for loan losses		7,123		6,990		6,393		6,223
Operating lease income		—		496		—		595
Total noninterest income		5,291		5,789		4,679		5,274
Operating lease expense		—		365		—		430
Total noninterest expense		7,749		8,114		6,732		7,162
Income tax expense		1,648		1,648		1,541		1,539
Net income		3,017		3,017		2,523		2,520

Earnings per share:
Basic		1.80		1.80		1.48		1.48
Diluted		1.78		1.78		1.46		1.46

Other information:
Net loan charge-offs		849		829		873		848

In addition to the matter discussed above, the Company has reclassified other amounts to conform with current financial statement presentation including certain mortgages, loan charge-offs and recoveries from junior lien mortgages to first mortgages and, in the statement of cash flows, provided separate presentation of mortgage servicing right impairments.

The Company regularly explores opportunities to acquire financial institutions and related financial services businesses. Generally, management of the Company does not make a public announcement about an acquisition opportunity until a definitive agreement has been signed.

The Company had two pending business combinations as of June 30, 2003, with approximately $3.2 billion in total assets, including the pending acquisition of Pacific Northwest Bancorp, with approximately $3.1 billion in assets. The primary operating subsidiary of Pacific Northwest Bancorp, Pacific Northwest Bank, has locations in Washington and Oregon.

Pending certain shareholder and regulatory approval, the transactions are expected to be completed during third quarter 2003.

The gross carrying amount and accumulated amortization for intangible assets are presented in the following table:

The following table shows the current period and estimated future amortization expense for amortized intangible assets:

The projections of amortization expense shown above for mortgage servicing rights are based on existing asset balances and the existing interest rate environment as of June 30, 2003. Future amortization expense may be significantly different depending upon changes in the mortgage servicing portfolio, mortgage interest rates and market conditions.

The following table summarizes changes in the carrying amount of goodwill as allocated to the Company’s operating segments for the purpose of goodwill impairment analysis.

Goodwill amounts allocated to the operating segments for goodwill impairment analysis differ from amounts allocated to the Company’s operating segments for management reporting discussed in Note 9 (Operating Segments). The balance of goodwill for management reporting is summarized below:

The Company is authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. All preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. No preference shares have been issued under this authorization.

The table below is a summary of the Company’s preferred stock. A detailed description of the Company’s preferred stock is provided in Note 14 (Preferred Stock) to Financial Statements included in the Company’s 2002 Form 10-K/A.



	Shares issued and outstanding						Carrying amount (in millions)									Adjustable
	June 30,		Dec. 31,		June 30,		June 30,			Dec. 31,			June 30,			dividends rate
	2003		2002		2002		2003			2002			2002			Minimum			Maximum

Adjustable-Rate Cumulative, Series B (1)		1,460,000		1,460,000		1,460,000	$	73		$	73		$	73			5.50	%		10.50	%

2003 ESOP Cumulative Convertible (2)		130,910		—		—		131			—			—			8.50			9.50

2002 ESOP Cumulative Convertible (2)		59,741		64,049		128,804		60			64			129			10.50			11.50

2001 ESOP Cumulative Convertible (2)		45,106		46,126		57,826		45			46			58			10.50			11.50

2000 ESOP Cumulative Convertible (2)		34,092		34,742		39,242		34			35			39			11.50			12.50

1999 ESOP Cumulative Convertible (2)		12,932		13,222		15,222		13			13			15			10.30			11.30

1998 ESOP Cumulative Convertible (2)		4,985		5,095		5,945		5			5			6			10.75			11.75

1997 ESOP Cumulative Convertible (2)		5,781		5,876		7,376		6			6			7			9.50			10.50

1996 ESOP Cumulative Convertible (2)		5,327		5,407		7,407		5			6			8			8.50			9.50

1995 ESOP Cumulative Convertible (2)		3,008		3,043		5,243		3			3			5			10.00			10.00

ESOP Cumulative Convertible (2)		—		—		802		—			—			1			9.00			9.00

Unearned ESOP shares (3)		—		—		—		(323	)		(190	)		(287	)		—			—


Total		1,761,882		1,637,560		1,727,867	$	52		$	61		$	54

The table below shows earnings per common share, diluted earnings per common share and a reconciliation of the numerator and denominator of both earnings per common share calculations.



	Quarter				Six months
	ended June 30,				ended June 30,
(in millions, except per share amounts)	2003		2002		2003		2002


Net income before effect of change in accounting principle	$	1,525	$	1,418	$	3,017	$	2,796
Less: Preferred stock dividends		1		1		2		2

Net income applicable to common stock before effect of change in accounting principle (numerator)		1,524		1,417		3,015		2,794
Cumulative effect of change in accounting principle (numerator)		—		—		—		(276	)

Net income applicable to common stock (numerator)	$	1,524	$	1,417	$	3,015	$	2,518


EARNINGS PER COMMON SHARE
Average common shares outstanding (denominator)		1,675.7		1,710.4		1,678.5		1,706.7


Per share before effect of change in accounting principle	$	.91	$	.83	$	1.80	$	1.64
Per share effect of change in accounting principle		—		—		—		(.16	)

Per share	$	.91	$	.83	$	1.80	$	1.48


DILUTED EARNINGS PER COMMON SHARE
Average common shares outstanding		1,675.7		1,710.4		1,678.5		1,706.7
Add: Stock options		14.4		20.1		13.1		18.0
Restricted share rights		.5		.3		.5		.4

Diluted average common shares outstanding (denominator)		1,690.6		1,730.8		1,692.1		1,725.1


Per share before effect of change in accounting principle	$	.90	$	.82	$	1.78	$	1.62
Per share effect of change in accounting principle		—		—		—		(.16	)

Per share	$	.90	$	.82	$	1.78	$	1.46

At June 30, 2003 and 2002, options to purchase 35.5 million and 37.2 million shares, respectively, were outstanding but not included in the computation of earnings per share. The exercise price was higher than the market price, and the options were therefore antidilutive.

8. Guaranteed Preferred Beneficial Interests in Company’s Subordinated Debentures

In February 2002, the Company formed Wells Fargo Capital VII (the Trust), to issue trust preferred securities. On May 5, 2003, the Trust issued to the public $500 million in trust preferred securities in the form of its 5.85% Capital Securities and issued to the Company $15 million of trust common securities. The Trust used the proceeds to purchase $515 million of the Company’s 5.85% junior subordinated debentures due May 1, 2033 (the Debentures). The Debentures are the sole assets of the Trust and are subordinate to all of the Company’s existing and future obligations for borrowed or purchased money, obligations under letters of credit and certain derivative contracts, and any guarantees by the Company of any of such obligations. Concurrent with the issuance of the Debentures and the trust preferred and common securities, the Company issued a guarantee related to the trust preferred securities for the benefit of the holders.

The Company treats the trust preferred securities as Tier 1 capital. The Debentures, the common securities issued by the Trust, and the related income effects are eliminated within the Company’s consolidated financial statements. The Company’s obligations under the Debentures, the related indenture, the trust agreement relating to the trust securities, and the guarantee constitute a full and unconditional guarantee by the Company of the obligations of the Trust under the trust preferred securities.

The stated maturity date of the Debentures is May 1, 2033. In addition, the Debentures are subject to redemption at the option of the Company, subject to prior regulatory approval, in whole or in part on or after May 2, 2008 or in whole, but not in part, within 90 days after the occurrence of certain events that either would have a negative tax effect on the Trust or the Company, would cause the trust preferred securities to no longer qualify as Tier 1 capital, or would result in the Trust being treated as an investment company. Upon repayment of the Debentures at their stated maturity or following their earlier redemption, the Trust will use the proceeds of such repayment to redeem an equivalent amount of outstanding trust preferred securities and trust common securities.

The Company has 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 the Company’s 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 GAAP. The management accounting process measures the performance of the operating segments based on the Company’s management structure and is not necessarily comparable with similar information for other financial services companies. The Company’s operating segments are defined by product type and customer segments. Changes in management structure and/or the allocation process may result in changes in allocations, transfers and assignments. In that case, results for prior periods would be (and have been) restated for comparability.

The Community Banking Group offers a complete line of diversified financial products and services to individual consumers and small businesses with annual sales predominantly up to $10 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 and securities brokerage through affiliates and venture capital financing. These products and services include Wells Fargo Funds®, a family of mutual funds, as well as personal trust, employee benefit trust and agency assets. Loan products include lines of credit, equity lines and loans, equipment and transportation (auto, recreational vehicle and marine) loans, education loans, origination and purchase of residential mortgage loans for sale to investors and servicing of mortgage loans. 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, medical 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) and time deposits.

Community Banking provides access to customers through a wide range of channels, which encompass a network of traditional banking stores, banking centers, in-store banking centers, business centers and ATMs. Additionally, PhoneBank ^SM 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.

The Wholesale Banking Group serves businesses across the United States with annual sales predominantly 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, online/electronic products, insurance and insurance brokerage services, and investment banking services. 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 loans to consumers and purchase sales finance contracts from retail merchants from offices throughout the United States, Canada and in the Caribbean. Automobile finance operations specialize in purchasing sales finance contracts directly from automobile dealers and making loans secured by automobiles in the United States and Puerto Rico. Wells Fargo Financial also provides credit cards, and lease and other commercial financing.

The Reconciliation Column consists of Treasury equity investment activities and balances and unallocated goodwill balances held at the enterprise level.

The following table provides the results for the Company’s three major operating segments.



(income/expense in millions,	Community				Wholesale					Wells Fargo					Reconciliation						Consolidated
average balances in billions)	Banking				Banking					Financial					column (2)						Company
Quarter ended June 30,	2003		2002		2003		2002			2003		2002			2003			2002			2003		2002

Net interest income (1)	$	2,865	$	2,524	$	560	$	569		$	550	$	452		$	(2	)	$	(3	)	$	3,973	$	3,542
Provision for loan losses		227		182		46		73			148		145			—			—			421		400
Noninterest income		2,186		1,950		656		632			95		87			20			(2	)		2,957		2,667
Noninterest expense		3,200		2,747		636		589			321		272			1			2			4,158		3,610

Income (loss) before income tax expense (benefit)		1,624		1,545		534		539			176		122			17			(7	)		2,351		2,199
Income tax expense (benefit)		565		544		189		193			66		47			6			(3	)		826		781

Net income (loss)	$	1,059	$	1,001	$	345	$	346		$	110		75		$	11		$	(4	)	$	1,525	$	1,418


Average loans	$	136	$	109	$	50	$	50		$	19	$	15		$	—		$	—		$	205	$	174
Average assets		270		218		78		70			21		17			6			6			375		311
Average core deposits		184		162		21		17			—		—			—			—			205		179

Six months ended June 30,

Net interest income (1)	$	5,642	$	5,072	$	1,111	$	1,135		$	1,073	$	893		$	(5	)	$	(7	)	$	7,821	$	7,093
Provision for loan losses		442		438		100		158			289		274			—			—			831		870
Noninterest income		4,293		3,864		1,309		1,216			186		178			1			16			5,789		5,274
Noninterest expense		6,226		5,435		1,256		1,183			629		542			3			2			8,114		7,162

Income (loss) before income tax expense (benefit) and effect of change in accounting principle		3,267		3,063		1,064		1,010			341		255			(7	)		7			4,665		4,335
Income tax expense (benefit)		1,150		1,079		371		362			129		96			(2	)		2			1,648		1,539

Net income (loss) before effect of change in accounting principle		2,117		1,984		693		648			212		159			(5	)		5			3,017		2,796
Cumulative effect of change in accounting principle		—		--		—		(98	)		—		(178	)		—			—			—		(276	)

Net income (loss)	$	2,117	$	1,984	$	693	$	550		$	212	$	(19	)	$	(5	)	$	5		$	3,017	$	2,520


Average loans	$	132	$	106	$	50	$	50		$	18	$	15		$	—		$	—		$	200	$	171
Average assets		263		220		76		70			20		17			6			6			365		313
Average core deposits		180		161		21		18			—		—			—			—			201		179

Mortgage banking activities, included in the Community Banking and Wholesale Banking operating segments, consist of residential and commercial mortgage originations and servicing.

The managed servicing portfolio totaled $651 billion at June 30, 2003, $614 billion at December 31, 2002 and $566 billion at June 30, 2002, and included loans subserviced for others of $23 billion, $36 billion and $51 billion, respectively.

Net of valuation allowance, mortgage servicing rights (MSRs) totaled $3.8 billion (.73% of the total mortgage loans serviced for others) at June 30, 2003, compared with $6.0 billion (1.30%) at June 30, 2002.

Each quarter, the Company evaluates MSRs for possible impairment based on the difference between the carrying amount and current fair value of the MSRs, in accordance with FAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. If a temporary impairment exists, a valuation allowance is established for any excess of amortized cost, as adjusted for hedge accounting, over the current fair value through a charge to income. The Company has a policy of reviewing MSRs for other-than-temporary impairment each quarter and recognizes 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 asset and the valuation allowance, precluding subsequent reversals. See Note 1 (Summary of Significant Accounting Policies - Transfer and Servicing of Financial Assets) to Financial Statements in the Company’s 2002 Form 10-K/A for additional discussion of the Company’s policy for valuation of MSRs. The Company determined that a portion of the asset was not recoverable and reduced both the asset and the previously designated valuation allowance by a $535 million write-down in second quarter 2003 and $846 million write-down in the first six months of 2003.



	Quarter ended June 30					,	Six months ended June 30					,
(in millions)	2003			2002			2003			2002


Mortgage servicing rights:
Balance, beginning of period	$	6,652		$	8,604		$	6,677		$	7,365
Originations (1)		892			461			1,495			1,122
Purchases (1)		462			314			856			716
Amortization		(926	)		(366	)		(1,729	)		(736	)
Write-down		(535	)		—			(846	)		—
Other (includes changes in mortgage servicing rights due to hedging)		(170	)		(1,148	)		(78	)		(602	)

Balance, end of period	$	6,375		$	7,865		$	6,375		$	7,865


Valuation Allowance:
Balance, beginning of period	$	2,469		$	1,466		$	2,188		$	1,124
Provision for mortgage servicing rights in excess of fair value		620			443			1,212			785
Write-down of mortgage servicing rights		(535	)		—			(846	)		—

Balance, end of period	$	2,554		$	1,909		$	2,554		$	1,909


Mortgage servicing rights, net	$	3,821		$	5,956		$	3,821		$	5,956

The following table provides the components of the Company’s managed servicing portfolio:

Significant guarantees that the Company provides to third parties include standby letters of credit, various indemnification agreements, guarantees accounted for as derivatives, contingent consideration related to business combinations and contingent performance guarantees.

The Company issues standby letters of credit, which include performance and financial guarantees, on behalf of customers in connection with contracts between the customers and third parties whereby the Company assures that the third parties will receive specified funds if customers fail to meet their contractual obligations. Standby letters of credit totaled $7.6 billion at June 30, 2003, including financial guarantees of $3.7 billion that the Company had issued or purchased participations in. A major portion of all fees received from the issuance of standby letters of credit are deferred and, at June 30, 2003, were immaterial to the Company’s financial statements.

The Company enters into indemnification agreements in the ordinary course of business under which the Company agrees to indemnify third parties against any damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with the Company. These relationships or transactions include those arising from service as a director or officer of the Company, underwriting agreements relating to the Company’s securities, securities lending, acquisition agreements, and various other business transactions or arrangements. Because the extent of the Company’s obligations under these indemnification agreements depends entirely upon the occurrence of future events, the Company’s potential future liability under these agreements is not determinable.

The Company writes options, floors and caps. Options are exercisable based on favorable market conditions. Periodic settlements occur on floors and caps based on market conditions. At June 30, 2003, the fair value reflected in the Company’s balance sheet of the written options liability was $520 million and the written floors and caps liability was $245 million. The Company’s ultimate obligation under written options, floors and caps is based on future market conditions and is only quantifiable at settlement. Options written to customers are predominantly offset with purchased options; other written options are entered into to mitigate balance sheet risk.

The Company also enters into credit default swaps under which it buys protection from or sells protection to a counterparty in the event of default of a reference obligation. At June 30, 2003, the gross carrying amount of the contracts sold was a $19 million liability. The maximum amount the Company would be required to pay under those swaps in which it sold protection, assuming all reference obligations default at a total loss, without recoveries, was $2.49 billion. The Company has bought protection of $2.45 billion of notional exposure. Almost all of the protection purchases offset (i.e., use the same reference obligation and maturity) the contracts in which the Company is providing protection to a counterparty.

In connection with certain brokerage, asset management and insurance agency acquisitions made by the Company, the terms of the acquisition agreement provide for deferred payments or additional consideration based on certain performance targets. At June 30, 2003, the amount of contingent consideration expected to be paid was not material to the Company’s financial statements.

The Company has entered into various contingent performance guarantees through credit risk participation arrangements with terms ranging from 1 to 30 years. The Company 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 the Company’s obligations under these contingent performance guarantees depends entirely upon future events, the Company’s potential future liability under these agreements is not determinable.

Fair Value Hedges
The Company uses derivative contracts to manage the risk associated with changes in the fair value of mortgage servicing rights and other retained interests. Changes in options valuations 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 overall evaluation of hedge effectiveness, but are reflected in earnings. The change in value of derivatives excluded from the assessment of hedge effectiveness was a net gain of $301 million and $649 million in the second quarter and first six months of 2003, respectively, compared with a net gain of $203 million and $478 million in the same periods of 2002. Also, the Company recognized a net gain from ineffectiveness in these hedging relationships of $107 million and $309 million in the second quarter and first six months of 2003, respectively, compared with $299 million and $596 million in the same periods of 2002. The gains were more than offset by higher valuation provision for impairment and amortization expense on mortgage servicing rights and other retained interests of $1,618 million and $3,100 million in the second quarter and first six months of 2003, respectively, and $1,009 million and $2,116 million in the same periods of 2002. The total gains on the mortgage-related derivative contracts, amortization expense and valuation provision for impairment are included in mortgage banking noninterest income. See Note 10 (Mortgage Banking Activities).

In fourth quarter 2002, the Company began using derivative contracts to hedge changes in fair value of certain commercial real estate mortgages and franchise loans due to changes in LIBOR interest rates. The Company originates these loans with the intent to sell them. The ineffective portion of these fair value hedges was a net loss of $5 million and $11 million for the second quarter and first six months of 2003, respectively, recorded in mortgage banking noninterest income. All components of gain or loss on these derivative contracts are included in the assessment of hedge effectiveness.

The Company also enters into interest rate swaps to convert certain of its fixed-rate long-term debt to floating-rate debt. The ineffective portion of these fair value hedges was not material in the second quarter and first six months of 2003 and 2002.

As of June 30, 2003, all designated fair value hedges continued to qualify as fair value hedges.

Cash Flow Hedges
The Company uses derivative contracts to convert commercial floating-rate loans and certain of its floating-rate senior debt to fixed rates and to hedge forecasted sales of its mortgage loans. The Company recognized a net loss of $16 million and $54 million in the second quarter and first six months of 2003, respectively, which represents the total ineffectiveness of cash flow hedges, compared with a net loss of $62 million and $170 million in the same periods of 2002. All components of gain or loss on these derivative contracts are included in the assessment of hedge effectiveness, except for volatility and the passage of time related to options hedging commercial loans indexed to LIBOR. As of June 30, 2003, all designated cash flow hedges continued to qualify as cash flow hedges.

At June 30, 2003, the Company expected that $138 million of deferred net gains on derivative instruments included in other comprehensive income will be reclassified to earnings during the next twelve months, compared with $63 million of deferred net gains at June 30, 2002. Gains and losses on derivative contracts that are reclassified from cumulative other comprehensive income to current period earnings are included in the same line item in which the hedged item’s effect in earnings is recorded. The Company is hedging its exposure to the variability of future cash flows for all forecasted transactions for a maximum of two years for hedges converting floating-rate loans to fixed, four years for hedges converting floating-rate senior debt to fixed, and one year for hedges of forecasted sales of mortgage loans.

The following table summarizes the credit risk amount and estimated net fair value for the Company’s derivative financial instruments.

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 (See Note 9 to Financial Statements) consists of WFFI and other affiliated consumer finance entities managed by WFFI but not included in WFFI reported below.



	Quarter ended June 30, 2003
						Other
						consolidating					Consolidated
(in millions)	Parent			WFFI		subsidiaries		Eliminations			Company


Dividends from subsidiaries:
Bank	$	797		$	—	$	—	$	(797	)	$	—
Nonbank		675			—		—		(675	)		—
Interest income from loans		—			673		2,736		—			3,409
Interest income from subsidiaries		126			—		—		(126	)		—
Other interest income		19			19		1,408		—			1,446

Total interest income		1,617			692		4,144		(1,598	)		4,855


Short-term borrowings		19			22		111		(65	)		87
Long-term debt		139			166		82		(46	)		341
Other interest expense		—			—		454		—			454

Total interest expense		158			188		647		(111	)		882


NET INTEREST INCOME		1,459			504		3,497		(1,487	)		3,973
Provision for loan losses		—			186		235		—			421

Net interest income after provision for loan losses		1,459			318		3,262		(1,487	)		3,552


NONINTEREST INCOME
Fee income – nonaffiliates		—			48		1,639		—			1,687
Other		45			60		1,186		(21	)		1,270

Total noninterest income		45			108		2,825		(21	)		2,957


NONINTEREST EXPENSE
Salaries and benefits		25			174		1,809		—			2,008
Other		34			130		2,022		(36	)		2,150

Total noninterest expense		59			304		3,831		(36	)		4,158


INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES		1,445			122		2,256		(1,472	)		2,351
Income tax (benefit) expense		(35	)		46		815		—			826
Equity in undistributed income of subsidiaries		45			—		—		(45	)		—


NET INCOME	$	1,525		$	76	$	1,441	$	(1,517	)	$	1,525



	Quarter ended June 30, 2002
						Other
						consolidating					Consolidated
(in millions)	Parent			WFFI		subsidiaries		Eliminations			Company


Dividends from subsidiaries:
Bank	$	1,186		$	—	$	—	$	(1,186	)	$	—
Nonbank		20			—		—		(20	)		—
Interest income from loans		—			558		2,724		—			3,282
Interest income from subsidiaries		82			—		12		(94	)		—
Other interest income		19			20		1,209		—			1,248

Total interest income		1,307			578		3,945		(1,300	)		4,530

Short-term borrowings		33			35		131		(68	)		131
Long-term debt		111			134		109		(10	)		344
Other interest expense		—			—		513		—			513

Total interest expense		144			169		753		(78	)		988


NET INTEREST INCOME		1,163			409		3,192		(1,222	)		3,542
Provision for loan losses		—			159		241		—			400

Net interest income after provision for loan losses		1,163			250		2,951		(1,222	)		3,142


NONINTEREST INCOME
Fee income – nonaffiliates		—			48		1,520		—			1,568
Other		36			62		1,024		(23	)		1,099

Total noninterest income		36			110		2,544		(23	)		2,667


NONINTEREST EXPENSE
Salaries and benefits		64			141		1,627		—			1,832
Other		12			107		1,698		(39	)		1,778

Total noninterest expense		76			248		3,325		(39	)		3,610


INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES		1,123			112		2,170		(1,206	)		2,199
Income tax (benefit) expense		(56	)		42		795		—			781
Equity in undistributed income of subsidiaries		239			—		—		(239	)		—


NET INCOME	$	1,418		$	70	$	1,375	$	(1,445	)	$	1,418



	Six months ended June 30, 2003
						Other
						consolidating					Consolidated
(in millions)	Parent			WFFI		subsidiaries		Eliminations			Company


Dividends from subsidiaries:
Bank	$	1,790		$	—	$	—	$	(1,790	)	$	—
Nonbank		720			—		—		(720	)		—
Interest income from loans		2			1,307		5,432		—			6,741
Interest income from subsidiaries		235			—		—		(235	)		—
Other interest income		35			38		2,768		—			2,841

Total interest income		2,782			1,345		8,200		(2,745	)		9,582

Short-term borrowings		42			44		232		(136	)		182
Long-term debt		261			312		171		(73	)		671
Other interest expense		—			—		908		—			908

Total interest expense		303			356		1,311		(209	)		1,761


NET INTEREST INCOME		2,479			989		6,889		(2,536	)		7,821
Provision for loan losses		—			330		501		—			831

Net interest income after provision for loan losses		2,479			659		6,388		(2,536	)		6,990


NONINTEREST INCOME
Fee income – nonaffiliates		—			100		3,209		—			3,309
Other		75			109		2,338		(42	)		2,480

Total noninterest income		75			209		5,547		(42	)		5,789


NONINTEREST EXPENSE
Salaries and benefits		67			339		3,609		—			4,015
Other		44			259		3,865		(69	)		4,099

Total noninterest expense		111			598		7,474		(69	)		8,114


INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE AND EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES		2,443			270		4,461		(2,509	)		4,665
Income tax (benefit) expense		(73	)		102		1,619		—			1,648
Equity in undistributed income of subsidiaries		501			—		—		(501	)		—


NET INCOME	$	3,017		$	168	$	2,842	$	(3,010	)	$	3,017



	Six months ended June 30, 2002
						Other
						consolidating						Consolidated
(in millions)	Parent			WFFI		subsidiaries			Eliminations			Company


Dividends from subsidiaries:
Bank	$	1,479		$	—	$	—		$	(1,479	)	$	—
Nonbank		46			—		—			(46	)		—
Interest income from loans		—			1,097		5,374			—			6,471
Interest income from subsidiaries		169			—		9			(178	)		—
Other interest income		43			39		2,554			—			2,636

Total interest income		1,737			1,136		7,937			(1,703	)		9,107

Short-term borrowings		72			50		311			(128	)		305
Long-term debt		217			262		213			(18	)		674
Other interest expense		—			—		1,035			—			1,035

Total interest expense		289			312		1,559			(146	)		2,014


NET INTEREST INCOME		1,448			824		6,378			(1,557	)		7,093
Provision for loan losses		—			299		571			—			870

Net interest income after provision for loan losses		1,448			525		5,807			(1,557	)		6,223


NONINTEREST INCOME
Fee income – nonaffiliates		—			97		2,950			—			3,047
Other		109			112		2,046			(40	)		2,227

Total noninterest income		109			209		4,996			(40	)		5,274


NONINTEREST EXPENSE
Salaries and benefits		91			281		3,222			—			3,594
Other		19			217		3,404			(72	)		3,568

Total noninterest expense		110			498		6,626			(72	)		7,162


INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE, EQUITY IN UNDISTRIBUTED INCOME OF SUBSIDIARIES AND EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE		1,447			236		4,177			(1,525	)		4,335
Income tax (benefit) expense		(100	)		87		1,552			—			1,539
Equity in undistributed income of subsidiaries		992			—		—			(992	)		—


NET INCOME BEFORE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE		2,539			149		2,625			(2,517	)		2,796
Cumulative effect of change in accounting principle		(19	)		—		(257	)		—			(276	)

NET INCOME	$	2,520		$	149	$	2,368		$	(2,517	)	$	2,520



	June 30, 2003
					Other
					consolidating					Consolidated
(in millions)	Parent		WFFI		subsidiaries		Eliminations			Company


ASSETS
Cash and cash equivalents due from:
Subsidiary banks	$	4,246	$	53	$	—	$	(4,299	)	$	—
Nonaffiliates		325		73		18,416		(1	)		18,813
Securities available for sale		929		1,656		22,047		(7	)		24,625
Mortgages and loans held for sale		—		—		65,725		—			65,725

Loans		1		19,622		191,811		—			211,434
Loans to nonbank subsidiaries		20,586		770		—		(21,356	)		—
Allowance for loan losses		—		686		3,167		—			3,853

Net loans		20,587		19,706		188,644		(21,356	)		207,581

Investments in subsidiaries:
Bank		32,699		—		—		(32,699	)		—
Nonbank		4,038		—		—		(4,038	)		—
Other assets		2,972		742		49,795		(670	)		52,839


Total assets	$	65,796	$	22,230	$	344,627	$	(63,070	)	$	369,583


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	—	$	103	$	235,111	$	(4,330	)	$	230,884
Short-term borrowings		950		4,185		29,501		(10,753	)		23,883
Accrued expenses and other liabilities		1,440		879		19,487		(1,124	)		20,682
Long-term debt		27,739		15,011		25,307		(9,544	)		58,513
Indebtedness to subsidiaries		981		—		—		(981	)		—
Guaranteed preferred beneficial interests in Company’s subordinated debentures		2,450		—		935		—			3,385

Total liabilities		33,560		20,178		310,341		(26,732	)		337,347
Stockholders’ equity		32,236		2,052		34,286		(36,338	)		32,236


Total liabilities and stockholders’ equity	$	65,796	$	22,230	$	344,627	$	(63,070	)	$	369,583



	June 30, 2002
					Other
					consolidating					Consolidated
(in millions)	Parent		WFFI		subsidiaries		Eliminations			Company


ASSETS
Cash and cash equivalents due from:
Subsidiary banks	$	3,697	$	54	$	—	$	(3,751	)	$	—
Nonaffiliates		143		146		18,153		—			18,442
Securities available for sale		1,129		1,450		34,559		(6	)		37,132
Mortgages and loans held for sale		—		—		29,850		—			29,850

Loans		2		14,835		165,405		—			180,242
Loans to nonbank subsidiaries		10,534		609		—		(11,143	)		—
Allowance for loan losses		—		584		3,250		—			3,834

Net loans		10,536		14,860		162,155		(11,143	)		176,408

Investments in subsidiaries:
Bank		31,173		—		—		(31,173	)		—
Nonbank		4,623		—		—		(4,623	)		—
Other assets		2,250		705		50,808		(860	)		52,903


Total assets	$	53,551	$	17,215	$	295,525	$	(51,556	)	$	314,735


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	—	$	85	$	196,883	$	(3,757	)	$	193,211
Short-term borrowings		3,816		4,097		28,588		(6,394	)		30,107
Accrued expenses and other liabilities		1,363		709		16,424		(1,362	)		17,134
Long-term debt		15,382		10,101		19,519		(3,089	)		41,913
Indebtedness to subsidiaries		1,555		—		—		(1,555	)		—
Guaranteed preferred beneficial interests in Company’s subordinated debentures		1,950		—		935		—			2,885

Total liabilities		24,066		14,992		262,349		(16,157	)		285,250
Stockholders’ equity		29,485		2,223		33,176		(35,399	)		29,485


Total liabilities and stockholders’ equity	$	53,551	$	17,215	$	295,525	$	(51,556	)	$	314,735



	Six months ended June 30, 2003
							Other
							consolidating
							subsidiaries/			Consolidated
(in millions)	Parent			WFFI			eliminations			Company


Cash flows from operating activities:
Net cash provided (used) by operating activities	$	2,530		$	656		$	(5,095	)	$	(1,909	)


Cash flows from investing activities:
Securities available for sale:
Proceeds from sales		19			99			1,335			1,453
Proceeds from prepayments and maturities		84			104			5,675			5,863
Purchases		(8	)		(299	)		(3,850	)		(4,157	)
Net cash paid for acquisitions		—			(600	)		(168	)		(768	)
Net increase in banking subsidiaries’ loan originations, net of collections		—			—			(4,330	)		(4,330	)
Proceeds from sales (including participations) of loans by banking subsidiaries		—			—			764			764
Purchases (including participations) of loans by banking subsidiaries		—			—			(12,461	)		(12,461	)
Principal collected on nonbank entities’ loans		3,683			6,116			313			10,112
Loans originated by nonbank entities		—			(9,089	)		(371	)		(9,460	)
Purchases of loans by nonbank entities		(3,682	)		—			—			(3,682	)
Net advances to nonbank entities		(477	)		—			477			—
Capital notes and term loans made to subsidiaries		(4,980	)		—			4,980			—
Principal collected on notes/loans made to subsidiaries		43			—			(43	)		—
Net increase in investment in subsidiaries		(50	)		—			50			—
Other, net		—			129			2,188			2,317

Net cash used by investing activities		(5,368	)		(3,540	)		(5,441	)		(14,349	)


Cash flows from financing activities:
Net increase in deposits		—			15			13,953			13,968
Net decrease in short-term borrowings		(2,326	)		(290	)		(6,947	)		(9,563	)
Proceeds from issuance of long-term debt		10,017			4,484			5,384			19,885
Repayment of long-term debt		(2,359	)		(894	)		(6,192	)		(9,445	)
Proceeds from issuance of guaranteed preferred beneficial interests in Company’s subordinated debentures		500			—			—			500
Proceeds from issuance of common stock		350			—			—			350
Repurchase of common stock		(922	)		—			—			(922	)
Payment of cash dividends on preferred and common stock		(1,011	)		(600	)		600			(1,011	)
Other, net		—			—			721			721

Net cash provided by financing activities		4,249			2,715			7,519			14,483

Net change in cash and due from banks		1,411			(169	)		(3,017	)		(1,775	)
Cash and due from banks at beginning of period		3,160			295			14,365			17,820

Cash and due from banks at end of period	$	4,571		$	126		$	11,348		$	16,045



	Six months ended June 30, 2002
							Other
							consolidating
							subsidiaries/			Consolidated
(in millions)	Parent			WFFI			eliminations			Company


Cash flows from operating activities:
Net cash provided by operating activities	$	2,020		$	493		$	6,149		$	8,662


Cash flows from investing activities:
Securities available for sale:
Proceeds from sales		357			352			9,776			10,485
Proceeds from prepayments and maturities		61			60			4,079			4,200
Purchases		(71	)		(481	)		(9,273	)		(9,825	)
Net cash (paid for) acquired from acquisitions		(455	)		(281	)		204			(532	)
Net increase in banking subsidiaries’ loan originations, net of collections		—			—			(8,144	)		(8,144	)
Proceeds from sales (including participations) of loans by banking subsidiaries		—			—			641			641
Purchases (including participations) of loans by banking subsidiaries		—			—			(1,341	)		(1,341	)
Principal collected on nonbank entities’ loans		—			5,286			277			5,563
Loans originated by nonbank entities		—			(6,640	)		(245	)		(6,885	)
Net advances to nonbank entities		(126	)		—			126			—
Principal collected on notes/loans made to subsidiaries		231			—			(231	)		—
Net increase in investment in subsidiaries		(77	)		—			77			—
Other, net		—			32			(2,708	)		(2,676	)

Net cash used by investing activities		(80	)		(1,672	)		(6,762	)		(8,514	)


Cash flows from financing activities:
Net increase in deposits		—			8			1,337			1,345
Net decrease in short-term borrowings		(1,301	)		(53	)		(7,208	)		(8,562	)
Proceeds from issuance of long-term debt		2,500			1,998			6,666			11,164
Repayment of long-term debt		(1,577	)		(784	)		(3,312	)		(5,673	)
Proceeds from issuance of guaranteed preferred beneficial interests in Company’s subordinated debentures		450			—			—			450
Proceeds from issuance of common stock		269			—			—			269
Repurchase of common stock		(426	)		—			—			(426	)
Payment of cash dividends on preferred and common stock		(925	)		(45	)		45			(925	)
Other, net		—			—			(57	)		(57	)

Net cash (used) provided by financing activities		(1,010	)		1,124			(2,529	)		(2,415	)

Net change in cash and due from banks		930			(55	)		(3,142	)		(2,267	)
Cash and due from banks at beginning of period		2,910			255			13,803			16,968

Cash and due from banks at end of period	$	3,840		$	200		$	10,661		$	14,701



										% Change
	Quarter ended									June 30, 2003 from						Six months ended
	June 30		,	Mar. 31		,	June 30		,	Mar. 31		,	June 30		,	June 30		,	June 30		,	%
(in millions, except per share amounts)	2003			2003			2002			2003			2002			2003			2002			Change


For the Period

Before effect of change in accounting principle (1)
Net income	$	1,525		$	1,492		$	1,418			2	%		8	%	$	3,017		$	2,796			8	%
Diluted earnings per common share		.90			.88			.82			2			10			1.78			1.62			10

Profitability ratios (annualized)
Net income to average total assets (ROA)		1.63	%		1.70	%		1.83	%		(4	)		(11	)		1.67	%		1.80	%		(7	)
Net income applicable to common stock to average common stockholders’ equity (ROE)		19.62			19.80			19.73			(1	)		(1	)		19.71			19.87			(1	)

After effect of change in accounting principle
Net income	$	1,525		$	1,492		$	1,418			2			8		$	3,017		$	2,520			20
Diluted earnings per common share		.90			.88			.82			2			10			1.78			1.46			22

Profitability ratios (annualized)
ROA		1.63	%		1.70	%		1.83	%		(4	)		(11	)		1.67	%		1.63	%		2
ROE		19.62			19.80			19.73			(1	)		(1	)		19.71			17.91			10

Efficiency ratio (2)		60.0			59.2			58.1			1			3			59.6			57.9			3

Total revenue	$	6,930		$	6,682		$	6,209			4			12		$	13,610		$	12,367			10

Dividends declared per common share		.30			.30			.28			—			7			.60			.54			11

Average common shares outstanding		1,675.7			1,681.5			1,710.4			—			(2	)		1,678.5			1,706.7			(2	)
Diluted average common shares outstanding		1,690.6			1,694.1			1,730.8			—			(2	)		1,692.1			1,725.1			(2	)

Average loans	$	204,824		$	195,057		$	174,243			5			18		$	199,968		$	170,557			17
Average assets		375,088			355,108			311,008			6			21			365,153			312,632			17
Average core deposits		205,428			196,802			179,394			4			15			201,140			178,526			13

Net interest margin		5.09	%		5.27	%		5.62	%		(3	)		(9	)		5.18	%		5.63	%		(8	)

At Period End
Securities available for sale	$	24,625		$	26,168		$	37,132			(6	)		(34	)	$	24,625		$	37,132			(34	)
Loans		211,434			201,822			180,242			5			17			211,434			180,242			17
Allowance for loan losses		3,853			3,840			3,834			—			—			3,853			3,834			—
Goodwill		9,803			9,799			9,724			—			1			9,803			9,724			1
Assets		369,583			369,607			314,735			—			17			369,583			314,735			17
Core deposits		210,722			203,185			181,807			4			16			210,722			181,807			16
Common stockholders’ equity		32,184			30,684			29,431			5			9			32,184			29,431			9
Stockholders’ equity		32,236			30,732			29,485			5			9			32,236			29,485			9
Tier 1 capital (3)		23,811			21,951			20,522			8			16			23,811			20,522			16
Total capital (3)		34,318			32,577			29,191			5			18			34,318			21,191			18

Capital ratios
Common stockholders’ equity to assets		8.71	%		8.30	%		9.35	%		5			(7	)		8.71	%		9.35	%		(7	)
Stockholders’ equity to assets		8.72			8.31			9.37			5			(7	)		8.72			9.37			(7	)
Risk-based capital (3)
Tier 1 capital		7.98			7.37			8.03			8			(1	)		7.98			8.03			(1	)
Total capital		11.50			10.94			11.42			5			1			11.50			11.42			1
Tier 1 leverage (3)		6.58			6.42			6.87			2			(4	)		6.58			6.87			(4	)

Book value per common share	$	19.18		$	18.32		$	17.21			5			11		$	19.18		$	17.21			11

Staff (active, full-time equivalent)		135,500			131,600			123,500			3			10			135,500			123,500			10

Common Stock Price
High	$	52.80		$	49.13		$	53.44			7			(1	)	$	52.80		$	53.44			(1	)
Low		45.01			43.27			48.12			4			(6	)		43.27			42.90			1
Period end		50.40			44.99			50.06			12			1			50.40			50.06			1

This report on Form 10-Q/A for the quarter ended June 30, 2003, including Item 1( Financial Statements) and Item 2 (Management Discussion and Analysis of Financial Condition and Results of Operations) of Part I, contains forward-looking statements about the Company. Broadly speaking, forward-looking statements include forecasts of future financial results and condition, expectations for future operations and business, and any assumptions underlying those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual outcomes and results might differ significantly from forecasts and expectations. Please refer to “Factors that May Affect Future Results” for a discussion of some of the factors that may cause results to differ.

Wells Fargo & Company is a $370 billion diversified financial services company providing banking, insurance, investments, mortgage banking and consumer finance through banking stores, the internet and other distribution channels to consumers, commercial businesses and financial institutions in all 50 states of the U.S. and in other countries. It ranked fourth in assets and third in market capitalization among U.S. bank holding companies at June 30, 2003. In this Form 10-Q/A, Wells Fargo & Company and Subsidiaries (consolidated) is referred to as the Company and Wells Fargo & Company alone is referred to as the Parent.

Certain amounts in the Financial Review for prior periods have been reclassified to conform with the current financial statement presentation.

Net income for second quarter 2003 increased 8% to $1.53 billion, from $1.42 billion for second quarter 2002. Diluted earnings per common share for second quarter 2003 were $.90, compared with $.82 for second quarter 2002. Return on average assets (ROA) was 1.63% and return of average common equity (ROE) was 19.62% for second quarter 2003, compared with 1.83% and 19.73%, respectively, for the same period of 2002.

Net income for the first six months of 2003 was $3.02 billion, or $1.78 per share, compared with $2.80 billion, or $1.62 per share, before the effect of a first quarter accounting change related to FAS 142, Goodwill and Other Intangible Assets, for the first six months of 2002. On the same basis, ROA was 1.67% in the first half of 2003, compared with 1.80% for the first half of 2002. ROE was 19.71% in the first half of 2003, compared with 19.87% for the first half of 2002.

Net interest income on a taxable-equivalent basis was $3.99 billion for second quarter 2003 and $7.86 billion for the first half of 2003, compared with $3.57 billion and $7.14 billion for the same periods of 2002. The Company’s net interest margin was 5.09% and 5.18% for the second quarter and first half of 2003, respectively, compared with 5.62% and 5.63% for the same periods of 2002.

Noninterest income was $2.96 billion and $5.79 billion for the second quarter and first half of 2003, respectively, compared with $2.67 billion and $5.27 billion for the same periods of 2002.

Revenue, the sum of net interest income and noninterest income, increased 12% to $6.93 billion in second quarter 2003 from $6.21 billion in second quarter 2002. Revenue increased 10% to $13.61 billion in the first half of 2003 from $12.37 billion in the first half of 2002.

Noninterest expense was $4.16 billion and $8.11 billion for the second quarter and first half of 2003, respectively, compared with $3.61 billion and $7.16 billion for the same periods of 2002.

During second quarter 2003, net charge-offs were $415 million, or .81% of average total loans (annualized), compared with $377 million, or .87%, in second quarter 2002. The provision for loan losses was $421 million and $831 million in the second quarter and first half of 2003, respectively, compared with $400 million and $870 million in the same periods of 2002. The allowance for loan losses was $3.85 billion, or 1.82% of total loans, at June 30, 2003, compared with $3.82 billion, or 1.98%, at December 31, 2002 and $3.83 billion, or 2.13%, at June 30, 2002.

At June 30, 2003, total nonaccrual loans were $1.56 billion, or .7% of total loans, compared with $1.49 billion, or .8%, at December 31, 2002 and $1.67 billion, or .9%, at June 30, 2002. Foreclosed assets were $190 million at June 30, 2003, compared with $195 million at December 31, 2002 and $183 million at June 30, 2002.

The ratio of common stockholders’ equity to total assets was 8.71% at June 30, 2003, compared with 8.67% at December 31, 2002 and 9.35% at June 30, 2002. The Company’s total risk-based capital (RBC) ratio at June 30, 2003 was 11.50% and its Tier 1 RBC ratio was 7.98%, exceeding the minimum regulatory guidelines of 8% and 4%, respectively, for bank holding companies. The Company’s RBC ratios at June 30, 2002 were 11.42% and 8.03%, respectively. The Company’s Tier 1 leverage ratios were 6.58% and 6.87% at June 30, 2003 and June 30, 2002, respectively, exceeding the minimum regulatory guideline of 3% for bank holding companies.

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46 (FIN 46), Consolidation of Variable Interest Entities. The Company adopted the disclosure provisions of FIN 46 effective December 31, 2002. On February 1, 2003, the Company adopted the recognition and measurement provisions of FIN 46 for variable interest entities (VIEs) formed after January 31, 2003, and, on December 31, 2003, for all existing VIEs. The adoption of FIN 46 did not have a material effect on the Company’s financial statements.

The Company is a majority variable interest holder in certain special purpose entities that have been consolidated effective July 1, 2003, and that were formed to securitize high-yield corporate debt and real estate investment trust securities with approximately $600 million in total assets at June 30, 2003. The maximum estimated exposure to loss for these entities was approximately $35 million. The Company holds variable interests greater than 20% but less than 50% in certain special purpose entities formed to provide affordable housing that had approximately $1.1 billion

in total assets at June 30, 2003, and a maximum estimated exposure to loss of approximately $375 million. These entities are not required to be consolidated.

Historically, issuer trusts that issued trust preferred securities have been consolidated by their parent companies and trust preferred securities have been treated as eligible for Tier 1 capital treatment by bank holding companies under Federal Reserve rules and regulations relating to minority interests in equity accounts of consolidated subsidiaries. Applying the provisions of FIN 46, the Company is no longer permitted to consolidate the issuer trusts, beginning on December 31, 2003. Although the Federal Reserve has stated in its July 2, 2003 Supervisory Letter that trust preferred securities will be treated as Tier 1 capital until notice is given to the contrary, the Supervisory Letter also indicates that the Federal Reserve will review the regulatory implications of any accounting treatment changes and will provide further guidance if necessary or warranted.

In April 2003, the FASB issued Statement of Financial Accounting Standards No. 149 (FAS 149), Amendment of Statement 133 on Derivative Instruments and Hedging Activities, to provide additional clarification of certain terms and investment characteristics. This statement will be applied prospectively and is effective for contracts entered into or modified after June 30, 2003. The Company does not expect that the adoption of FAS 149 will have a material effect on the Company’s financial statements.

In May 2003, the FASB issued Statement No. 150 (FAS 150), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. FAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments, including mandatorily redeemable preferred securities, were previously classified as equity or as mezzanine debt. The Company adopted FAS 150 effective July 1, 2003 and the adoption of the standard did not have a material effect on the Company’s financial statements.

In May 2003, the Emerging Issues Task Force published Topic D-107, Lessor Consideration of Third-Party Residual Value Guarantees, which clarified accounting guidance for certain lease transactions with residual value guarantees. Based on this guidance, the Company determined that certain auto leases previously accounted for as direct finance leases should be recorded as operating leases. The Company’s implementation of this guidance on January 16, 2004 did not have a material effect on the Company’s results of operations or financial condition for any period in which such leasing activities were present (1998 through 2003).

The Company’s accounting policies are fundamental to understanding management’s discussion and analysis of results of operations and financial condition. The Company has identified three policies as being critical because they require management to make particularly difficult, subjective and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These policies relate to the allowance for loan losses, the valuation of mortgage servicing rights and pension accounting. The Company, in consultation with the

Audit and Examination Committee of the Board of Directors, has reviewed and approved these critical accounting policies, which are further described in “Financial Review — Critical Accounting Policies” and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in the Company’s 2002 Form 10-K/A.

Net interest income is the difference between interest income (which includes yield-related loan fees) and interest expense. Net interest income on a taxable equivalent basis increased to $3.99 billion in second quarter 2003, from $3.57 billion in second quarter 2002, an increase of 12%. The increase was primarily due to growth in mortgages held for sale and loans, particularly in home equity and home mortgage products. Strong growth in noninterest-bearing checking accounts and low cost core deposits also contributed to growth in net interest income. These factors were partially offset by a decline in investment portfolio income following the sale and prepayment of mortgage-backed securities and reduced loan yields due to a lower interest rate environment.

Net interest income on a taxable-equivalent basis expressed as a percentage of average total earning assets is referred to as the net interest margin, which represents the average net effective yield on earning assets. The net interest margin decreased to 5.09% in second quarter 2003 from 5.62% in second quarter 2002. While loan growth had a positive impact on net interest income, it adversely impacted the net interest margin because the new loans in a declining interest rate environment were at yields below the existing portfolio of loans. The increase in mortgages held for sale alone accounted for over half the decline in the net interest margin. In addition, during the past several quarters, the Company has shortened the duration of its portfolio through sales and prepayments of long-term mortgage-backed securities, and in second quarter 2003, the Company modestly lengthened the duration of its funding. While this has had a negative impact on the net interest margin, it will provide flexibility to add securities in the event that longer-term interest rates continue to rise.

Individual components of net interest income and the net interest margin are presented in the rate/yield table on page 38.

Earning assets increased $60.8 billion in second quarter 2003 from the same period last year due to an increase in average loans and mortgages held for sale. Loans averaged $204.8 billion in second quarter 2003 compared with $174.2 billion in second quarter 2002. Average mortgages held for sale increased to $65.5 billion in second quarter 2003 from $26.6 billion in second quarter 2002 and increased to $62.0 billion in the first six months of 2003 from $31.8 billion in the first six months of 2002. The increase for both periods was due to increased originations including refinancing activity. Debt securities available for sale averaged $24.2 billion in second quarter 2003 compared with $39.4 billion in second quarter 2002.



	Quarter ended June 30																,
	2003								2002
							Interest								Interest
	Average			Yields/			income/		Average			Yields/			income/
(in millions)	balance			rates			expense		balance			rates			expense


EARNING ASSETS
Federal funds sold and securities purchased under resale agreements	$	6,405			1.20	%	$	19	$	2,810			1.59	%	$	11
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies		1,288			4.67			14		1,798			5.65			25
Securities of U.S. states and political subdivisions		2,063			9.09			43		2,148			8.27			43
Mortgage-backed securities:
Federal agencies		15,696			8.29			302		29,865			7.00			510
Private collateralized mortgage obligations		1,994			6.91			33		2,562			7.29			46

Total mortgage-backed securities		17,690			8.13			335		32,427			7.03			556
Other debt securities (4)		3,167			7.87			59		2,982			7.63			56

Total debt securities available for sale (4)		24,208			7.99			451		39,355			7.08			680
Mortgages held for sale (3)		65,493			5.28			864		26,561			6.60			440
Loans held for sale (3)		7,063			3.82			67		5,321			5.50			73
Loans:
Commercial		47,484			6.11			723		46,628			6.94			807
Real estate 1-4 family first mortgage		50,292			5.75			723		33,549			6.71			562
Other real estate mortgage		25,661			5.51			352		25,711			6.26			401
Real estate construction		7,983			5.24			104		7,935			5.80			115
Consumer:
Real estate 1-4 family junior lien mortgage		30,341			6.16			466		24,328			7.16			434
Credit card		7,456			11.88			221		6,616			12.33			204
Other revolving credit and installment		28,876			9.05			653		23,646			10.37			612

Total consumer		66,673			8.05			1,340		54,590			9.17			1,250
Lease financing		4,570			6.39			72		4,082			6.47			65
Foreign		2,161			17.77			96		1,748			19.11			84

Total loans (5)		204,824			6.67			3,410		174,243			7.56			3,284
Other		7,717			3.14			62		6,660			4.04			67

Total earning assets	$	315,710			6.22			4,873	$	254,950			7.18			4,555


FUNDING SOURCES
Deposits:
Interest-bearing checking	$	2,536			.31			2	$	2,694			.64			4
Market rate and other savings		104,603			.69			179		92,725			.96			223
Savings certificates		21,355			2.60			138		24,862			3.30			205
Other time deposits		26,912			1.29			87		6,213			1.98			30
Deposits in foreign offices		6,278			1.22			19		4,982			1.67			21

Total interest-bearing deposits		161,684			1.05			425		131,476			1.47			483
Short-term borrowings		30,218			1.16			87		31,921			1.65			131
Long-term debt		51,677			2.64			341		41,234			3.34			344
Guaranteed preferred beneficial interests in Company’s subordinated debentures		3,215			3.63			29		2,885			4.20			30

Total interest-bearing liabilities		246,794			1.43			882		207,516			1.91			988
Portion of noninterest-bearing funding sources		68,916			—			—		47,434			—			—

Total funding sources	$	315,710			1.13			882	$	254,950			1.56			988

Net interest margin and net interest income on a taxable-equivalent basis (6)					5.09	%	$	3,991					5.62	%	$	3,567


NONINTEREST-EARNING ASSETS
Cash and due from banks	$	13,320							$	13,417
Goodwill		9,802								9,718
Other		36,256								32,923

Total noninterest-earning assets	$	59,378							$	56,058


NONINTEREST-BEARING FUNDING SOURCES
Deposits	$	76,934							$	59,113
Other liabilities		20,169								15,511
Preferred stockholders’ equity		47								50
Common stockholders’ equity		31,144								28,818
Noninterest-bearing funding sources used to fund earning assets		(68,916	)							(47,434	)

Net noninterest-bearing funding sources	$	59,378							$	56,058


TOTAL ASSETS	$	375,088							$	311,008



	Six months ended June 30																,
	2003								2002
							Interest								Interest
	Average			Yields/			income/		Average			Yields/			income/
(in millions)	balance			rates			expense		balance			rates			expense


EARNING ASSETS
Federal funds sold and securities purchased under resale agreements	$	4,762			1.24	%	$	29	$	2,601			1.72	%	$	22
Debt securities available for sale (3):
Securities of U.S. Treasury and federal agencies		1,291			4.99			30		1,920			5.76			53
Securities of U.S. states and political subdivisions		2,051			8.92			85		2,114			8.29			84
Mortgage-backed securities:
Federal agencies		16,697			8.05			623		29,508			7.05			1,014
Private collateralized mortgage obligations		2,009			7.09			68		2,627			7.09			92

Total mortgage-backed securities		18,706			7.94			691		32,135			7.05			1,106
Other debt securities (4)		3,092			7.72			116		3,089			7.66			114

Total debt securities available for sale (4)		25,140			7.84			922		39,258			7.10			1,357
Mortgages held for sale (3)		61,977			5.41			1,678		31,826			6.45			1,031
Loans held for sale (3)		7,033			3.85			134		5,203			5.50			142
Loans:
Commercial		47,247			6.18			1,450		46,648			6.99			1,617
Real estate 1-4 family first mortgage		47,757			5.85			1,393		31,174			6.88			1,071
Other real estate mortgage		25,524			5.59			709		25,500			6.33			801
Real estate construction		7,945			5.25			207		7,983			5.77			228
Consumer:
Real estate 1-4 family junior lien mortgage		29,473			6.17			902		23,322			7.22			836
Credit card		7,428			12.16			452		6,594			12.29			406
Other revolving credit and installment		28,134			9.36			1,308		23,597			10.43			1,223

Total consumer		65,035			8.24			2,662		53,513			9.26			2,465
Lease financing		4,403			6.27			137		4,073			6.48			131
Foreign		2,057			18.16			187		1,666			19.42			162

Total loans (5)		199,968			6.78			6,745		170,557			7.64			6,475
Other		7,417			3.04			113		6,384			4.10			131

Total earning assets	$	306,297			6.34			9,621	$	255,829			7.22			9,158


FUNDING SOURCES
Deposits:
Interest-bearing checking	$	2,472			.34			4	$	2,548			.67			9
Market rate and other savings		102,720			.72			366		91,415			.96			434
Savings certificates		21,678			2.68			288		25,279			3.44			431
Other time deposits		23,739			1.32			156		5,456			2.00			55
Deposits in foreign offices		6,307			1.22			38		5,842			1.66			48

Total interest-bearing deposits		156,916			1.09			852		130,540			1.51			977
Short-term borrowings		30,842			1.19			182		36,748			1.67			305
Long-term debt		49,183			2.73			671		39,457			3.43			674
Guaranteed preferred beneficial interests in Company’s subordinated debentures		3,051			3.72			56		2,673			4.35			58

Total interest-bearing liabilities		239,992			1.48			1,761		209,418			1.94			2,014
Portion of noninterest-bearing funding sources		66,305			—			—		46,411			—			—

Total funding sources	$	306,297			1.16			1,761	$	255,829			1.59			2,014

Net interest margin and net interest income on a taxable-equivalent basis (6)					5.18	%	$	7,860					5.63	%	$	7,144


NONINTEREST-EARNING ASSETS
Cash and due from banks	$	13,504							$	13,985
Goodwill		9,796								9,725
Other		35,556								33,093

Total noninterest-earning assets	$	58,856							$	56,803


NONINTEREST-BEARING FUNDING SOURCES
Deposits	$	74,270							$	59,284
Other liabilities		19,990								15,517
Preferred stockholders’ equity		53								56
Common stockholders’ equity		30,848								28,357
Noninterest-bearing funding sources used to fund earning assets		(66,305	)							(46,411	)

Net noninterest-bearing funding sources	$	58,856							$	56,803


TOTAL ASSETS	$	365,153							$	312,632

An important contributor to the growth in net interest income from second quarter 2002 was a 15% increase in core deposits, the Company’s low-cost source of funding. Average core deposits were $205.4 billion and $179.4 billion and funded 54.8% and 57.7% of the Company’s average total assets in second quarter 2003 and 2002, respectively. While savings certificates of deposits declined on average from $24.9 billion in second quarter 2002 to $21.4 billion in second quarter 2003, noninterest-bearing checking accounts and other core deposit categories increased on average from $154.5 billion in second quarter 2002 to $184.0 billion in second quarter 2003 reflecting a combination of growth in mortgage escrow deposits, resulting from higher origination volume, and growth in primary account relationships. Total average interest-bearing deposits increased to $161.7 billion in second quarter 2003 from $131.5 billion a year ago. For the same periods, total average noninterest-bearing deposits increased to $76.9 billion from $59.1 billion.



				Quarter									Six months
	ended June 30					,	%			ended June 30					,	%
(in millions)	2003			2002			Change			2003			2002			Change


Service charges on deposit accounts	$	587		$	547			7	%	$	1,140		$	1,052			8	%
Trust and investment fees:
Trust, investment and IRA fees		322			341			(6	)		647			677			(4	)
Commissions and all other fees		148			131			13			282			257			10

Total trust and investment fees		470			472			—			929			934			(1	)

Credit card fees		257			223			15			501			424			18

Other fees:
Cash network fees		46			45			2			88			92			(4	)
Charges and fees on loans		186			138			35			366			271			35
All other		141			143			(1	)		285			274			4

Total other fees		373			326			14			739			637			16

Mortgage banking:
Origination and other closing fees		334			204			64			610			424			44
Servicing fees, net of amortization and provision for impairment		(741	)		(48	)		—			(1,184	)		(122	)		870
Net gains on mortgage loan origination/ sales activities		831			172			383			1,468			292			403
All other		119			84			42			210			178			18

Total mortgage banking		543			412			32			1,104			772			43

Operating leases		245			289			(15	)		496			595			(17	)
Insurance		289			269			7			556			532			5
Net gains on debt securities available for sale		20			45			(56	)		38			81			(53	)
Net losses from equity investments		(47	)		(58	)		(19	)		(145	)		(78	)		86
Net gains on sales of loans		5			2			150			5			8			(38	)
Net gains on dispositions of operations		—			—			—			27			3			800
All other		215			140			54			399			314			27


Total	$	2,957		$	2,667			11	%	$	5,789		$	5,274			10	%

Service charges on deposit accounts increased 7% due to growth in primary accounts and increased activity.

The Company earns trust, investment and IRA fees from managing and administering assets, which include mutual funds, corporate trust, personal trust, employee benefit trust and agency assets. Generally, these fees are based on the market value of the assets that are managed, administered, or both. The decrease in trust, investment and IRA fees for the second quarter and first six months of 2003 was primarily due to a change in the mutual fund mix from equity funds to money market funds. Additionally, the Company receives commission and other fees for providing services for retail and discount brokerage customers. Generally, these fees are based on the number of transactions executed at the direction of the customer. The increase in commissions and all other fees for the second quarter and first six months of 2003 was primarily due to the acquisition of FAS Holdings, Inc., a brokerage company, in July 2002.

Credit card fees increased 15% and 18% for the second quarter and first half of 2003, respectively, predominantly due to an increase in credit card accounts and credit and debit card transaction volume. In second quarter 2003, VISA USA Inc. reached a tentative agreement to settle merchant litigation, which included reducing some interchange fees to retailers. Absent any

effort to increase volume or reprice these transactions the tentative settlement is expected to reduce fee income by approximately $30 million per quarter.

Mortgage banking noninterest income was $543 million and $1,104 million in the second quarter and first six months of 2003, respectively, compared with $412 million and $772 million for the same periods of 2002. Origination and other closing fees increased to $334 million and net gains on mortgage loan origination/sales activities increased to $831 million in second quarter 2003. For the first six months of 2003, origination and other closing fees increased to $610 million and net gains on mortgage loan origination/sales activities increased to $1,468 million. The increase was primarily due to increased mortgage origination volume, gains on loan sales, and free-standing derivative gains. Originations during second quarter 2003 grew to $135 billion from $62 billion during the same period of 2002. Mortgages held for sale increased to $58.7 billion at June 30, 2003 from $51.2 billion at December 31, 2002 and $24.7 billion at June 30, 2002.

Net servicing fees were a loss of $741 million and $1,184 million in the second quarter and first six months of 2003, respectively, and a loss of $48 million and $122 million in the same periods of 2002, reflecting increased amortization and valuation provision for impairment of mortgage servicing rights (MSRs). At June 30, 2003, the Federal National Mortgage Association (FNMA) Current Coupon rate (i.e., the secondary market par mortgage yield for 30 year fixed-rate mortgages) was 4.57%, compared with 6.03% at June 30, 2002. Consequently, assumed prepayment speeds, an important element in determining the fair value of MSRs, increased in second quarter 2003 resulting in higher amortization of $926 million and higher valuation provision for impairment of $620 million, compared with $366 million and $443 million, respectively, in second quarter 2002.

The Company recognized a direct write-down of MSRs of $535 million and $846 million during the second quarter and first six months of 2003, respectively. See “Financial Review – Critical Accounting Policies – Mortgage Servicing Rights Valuation” in the Company’s 2002 Form 10-K/A for the method used to evaluate MSRs for impairment and to determine if such impairment is other-than-temporary. Key assumptions, including the sensitivity of those assumptions, used to determine the value of MSRs are disclosed in Notes 1 and 22 (Securitizations) to Financial Statements in the Company’s 2002 Form 10-K/A.

Net losses from equity investments in the second quarter and first six months of 2003 were $47 million and $145 million, respectively, compared with $58 million and $78 million for the same periods of 2002. Absent any significant reversal in equity markets, the Company does not anticipate the need to record any additional losses in its private and public equity portfolios in the near future.

The Company routinely reviews its investment portfolios for impairment. Such write-downs are based primarily on issuer-specific factors and results. General economic and market conditions, including those events occurring in the technology and telecommunications industries and adverse changes impacting the availability of venture capital financing are also taken into account. While the determination of impairment is based on all of the information available at the time of the assessment, new information or economic developments in the future could lead to additional impairment.



	Quarter								Six months
	ended June 30				,	%			ended June 30				,	%
(in millions)	2003		2002			Change			2003		2002			Change


Salaries	$	1,155	$	1,106			4	%	$	2,296	$	2,182			5	%
Incentive compensation		503		362			39			950		719			32
Employee benefits		350		364			(4	)		769		693			11
Equipment		305		228			34			573		464			23
Net occupancy		288		274			5			585		543			8
Operating leases		178		205			(13	)		365		430			(15	)
Net losses on dispositions of premises and equipment		10		29			(66	)		6		27			(78	)
Outside professional services		111		103			8			223		202			10
Contract services		250		107			134			405		224			81
Outside data processing		103		87			18			202		171			18
Telecommunications		86		78			10			164		170			(4	)
Travel and entertainment		92		83			11			177		158			12
Advertising and promotion		96		79			22			176		144			22
Postage		87		59			47			171		124			38
Stationery and supplies		57		55			4			111		113			(2	)
Insurance		69		61			13			119		112			6
Operating losses		64		30			113			120		76			58
Security		42		40			5			84		79			6
Core deposit intangibles		36		39			(8	)		72		79			(9	)
All other		276		221			25			546		452			21


Total	$	4,158	$	3,610			15	%	$	8,114	$	7,162			13	%

The increase in noninterest expense, including increases in salaries, incentive compensation, contract services, postage and advertising and promotion, was largely due to the growth in the mortgage and home equity businesses, which accounted for approximately 70% of the increase from second quarter 2002.

Equipment and net occupancy expense increases were attributable to the Company’s continued investment in support of its revenue growth, including new stores, and productivity enhancements.

Community Banking’s net income increased 6% to $1,059 million in second quarter 2003 from $1,001 million in second quarter 2002. Net income increased 7% to $2,117 million for the first six months of 2003 from $1,984 million from the first six months of 2002. Net interest income increased to $2,865 million in second quarter 2003 from $2,524 million in second quarter 2002, primarily due to growth in consumer loans, mortgages held for sale and deposits. Average loans in Community Banking grew 25% and average core deposits grew 14% from second quarter 2002. The provision for loan losses increased by $45 million for second quarter 2003 due to growth in average loans. Noninterest income for second quarter 2003 increased by $236 million over the same period in 2002 due to increases in mortgage banking fees, consumer loan fees, deposit service charges and credit card fees. Noninterest expense increased by $453 million in second quarter 2003 over the same period in 2002 due primarily to increased mortgage and home equity originations.

Wholesale Banking’s net income was $345 million in second quarter 2003, compared with $346 million in second quarter 2002. Net income was $693 million for the first six months of 2003, compared with $648 million, before the effect of change in accounting principle, in the first six months of 2002, an increase of 7%. Net interest income decreased 2% to $560 million for second quarter 2003 from $569 million in second quarter 2002. The provision for loan losses decreased by $27 million to $46 million in second quarter 2003 and by $58 million to $100 million for the first six months of 2003. Noninterest income increased 4% to $656 million and 8% to $1,309 million in the second quarter and first six months of 2003, respectively, from $632 million and $1,216 million in the same periods of 2002 primarily due to higher asset-based lending income, insurance brokerage fees and commissions. The increase was partially offset by lower investment income. Noninterest expense increased 8% to $636 million and 6% to $1,256 million in the second quarter and first six months of 2003, respectively, from $589 million and $1,183 million in the same periods of 2002 largely due to higher personnel expense resulting from increased benefit costs and full-time employees.

Wells Fargo Financial’s net income was $110 million in second quarter 2003 compared with $75 million for the same period in 2002, an increase of 47%. Net income was $212 million for the first six months of 2003 and $159 million, before the effect of change in accounting principle, for the same period in 2002. Net interest income increased 22% to $550 million for second quarter 2003 from $452 million for second quarter 2002 due to lower funding costs combined with growth in average loans. Net interest income increased 20% for the first six months of 2003 compared with the same period in 2002. The provision for loan losses increased by $3 million and $15 million in the second quarter and first six months of 2003, respectively.

The following table provides the cost and fair value for the major components of securities available for sale carried at fair value. There were no securities classified as held to maturity at the end of the periods presented.



	June 30, 2003				Dec. 31, 2002				June 30, 2002
			Estimated				Estimated				Estimated
			fair				fair				fair
(in millions)	Cost		value		Cost		value		Cost		value


Securities of U.S. Treasury and federal agencies	$	1,171	$	1,228	$	1,315	$	1,381	$	1,719	$	1,776
Securities of U.S. states and political subdivisions		2,196		2,375		2,232		2,382		2,353		2,464
Mortgage-backed securities:
Federal agencies		14,599		15,603		17,766		19,090		26,456		27,521
Private collateralized mortgage obligations (1)		1,862		1,961		1,775		1,880		2,130		2,195

Total mortgage-backed securities		16,461		17,564		19,541		20,970		28,586		29,716
Other		2,673		2,848		2,608		2,658		2,555		2,587

Total debt securities		22,501		24,015		25,696		27,391		35,213		36,543
Marketable equity securities		527		610		598		556		634		589


Total	$	23,028	$	24,625	$	26,294	$	27,947	$	35,847	$	37,132

The decrease in federal agencies mortgage-backed securities was predominantly due to the prepayment of mortgage-backed securities held and sales of certain longer-maturity securities subject to prepayment risk.

The following table provides the components of the estimated unrealized net gains on securities available for sale. The estimated unrealized net gains on securities available for sale are reported on an after-tax basis as a component of cumulative other comprehensive income.

The following table provides the components of the total realized net (losses) gains on the sales of securities from the securities available for sale portfolio, including those related to marketable equity securities.

The weighted average expected remaining maturity of the debt securities portion of the securities available for sale portfolio was 4 years and 11 months at June 30, 2003. Remaining maturities will differ from contractual maturities because mortgage debt issuers have the right to prepay obligation prior to contractual maturity.

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 indicated below.



										% Change
										June 30, 2003 from
	June 30		,	Dec. 31		,	June 30		,	Dec. 31		,	June 30		,
(in millions)	2003			2002			2002			2002			2002


Commercial (1)	$	47,577		$	47,292		$	47,413			1	%		—	%
Real estate 1-4 family first mortgage		53,420			44,119			36,501			21			46
Other real estate mortgage (2)		25,703			25,312			25,665			2			—
Real estate construction		7,853			7,804			7,853			1			—
Consumer:
Real estate 1-4 family junior lien mortgage		31,514			28,147			25,601			12			23
Credit card		7,626			7,455			6,781			2			12
Other revolving credit and installment		30,943			26,353			24,504			17			26

Total consumer		70,083			61,955			56,886			13			23
Lease financing		4,556			4,085			4,073			12			12
Foreign		2,242			1,911			1,851			17			21


Total loans (net of unearned income, including net deferred loan fees, of $3,784, $3,699 and $3,481)	$	211,434		$	192,478		$	180,242			10	%		17	%

The table below presents comparative data for nonaccrual loans and other assets. A loan is placed on nonaccrual status (a) upon becoming 90 days past due as to interest or principal (unless both well-secured and in the process of collection), (b) when the full timely collection of interest or principal becomes uncertain or (c) when a portion of the principal balance has been charged off. Real estate 1-4 family loans (first and junior liens) are placed on nonaccrual status within 120 days of becoming past due as to interest or principal, regardless of security. Management’s classification of a loan as nonaccrual does not necessarily indicate that the principal of the loan is uncollectible in whole or in part. The table below excludes certain loans that are 90 days or more past due and still accruing that are presented in the table on the following page.

The Company generally identifies loans to be evaluated for impairment when such loans are over $1 million and on nonaccrual. However, not all nonaccrual loans are impaired. Loans are considered impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. See Note 1 to Financial Statements in the Company’s 2002 Form 10-K/A for further discussion of impaired loans.

The table below shows the recorded investment in impaired loans and the method used to measure impairment for the periods presented:

The average recorded investment in impaired loans was $696 million and $739 million during second quarter 2003 and 2002, respectively, and $670 million and $768 million during the first six months of 2003 and 2002, respectively. Total interest income recognized on impaired loans was $2 million and $4 million during second quarter 2003 and 2002, respectively, and $5 million and $7 million during the first six months of 2003 and 2002, respectively, which was predominantly recorded using the cost recovery method. Under the cost recovery method, all payments received are applied to principal. This method is used when the ultimate collectibility of the total principal is in doubt.

The following table shows loans contractually past due 90 days or more as to interest or principal, but still accruing. All loans in this category are (a) both well-secured and in the process of collection or (b) real estate 1-4 family first mortgage loans or consumer loans that are exempt under regulatory rules from being classified as nonaccrual. Real estate 1-4 family loans (first and junior liens) are placed on nonaccrual within 120 days of becoming past due and are excluded from the following table.



	Quarter						Six months
	ended June 30					,	ended June 30					,
(in millions)	2003			2002			2003			2002


Balance, beginning of period	$	3,840		$	3,793		$	3,819		$	3,717

Allowances related to business combinations/other		7			18			32			95

Provision for loan losses		421			400			831			870

Loan charge-offs:
Commercial		(147	)		(183	)		(300	)		(375	)
Real estate 1-4 family first mortgage		(9	)		(12	)		(21	)		(21	)
Other real estate mortgage		(9	)		(2	)		(10	)		(12	)
Real estate construction		(3	)		(3	)		(6	)		(23	)
Consumer:
Real estate 1-4 family junior lien mortgage		(19	)		(15	)		(37	)		(25	)
Credit card		(116	)		(105	)		(228	)		(208	)
Other revolving credit and installment		(198	)		(170	)		(398	)		(383	)

Total consumer		(333	)		(290	)		(663	)		(616	)
Lease financing		(10	)		(5	)		(20	)		(9	)
Foreign		(25	)		(23	)		(45	)		(44	)

Total loan charge-offs		(536	)		(518	)		(1,065	)		(1,100	)

Loan recoveries:
Commercial		37			53			75			84
Real estate 1-4 family first mortgage		3			3			5			5
Other real estate mortgage		3			5			5			9
Real estate construction		4			7			9			8
Consumer:
Real estate 1-4 family junior lien mortgage		4			3			7			6
Credit card		13			12			25			24
Other revolving credit and installment		50			54			99			109

Total consumer		67			69			131			139
Lease financing		2			—			3			—
Foreign		5			4			8			7

Total loan recoveries		121			141			236			252

Net loan charge-offs		(415	)		(377	)		(829	)		(848	)


Balance, end of period	$	3,853		$	3,834		$	3,853		$	3,834


Net loan charge-offs (annualized) as a percentage of average total loans		.81	%		.87	%		.84	%		1.00	%


Allowance as a percentage of total loans		1.82	%		2.13	%		1.82	%		2.13	%

The Company considers the allowance for loan losses of $3.85 billion adequate to cover probable losses inherent in loans, loan commitments and standby and other letters of credit at June 30, 2003. The Company’s determination of the level of the allowance for loan losses rests upon various judgments and assumptions, including (1) general economic conditions, (2) loan portfolio composition, (3) prior loan loss experience, (4) the evaluation of credit risk related to both individual borrowers and pools of homogenous loans, (5) periodic use of sensitivity analysis and expected loss simulation modeling and (6) the Company’s ongoing examination process and that of its regulators. The allowance for loan losses consists of a component for individual loan

impairment and multiple components of collective loan impairment. The Company considers relevant observable data in the recognition and measurement of the components of collective loan impairment.



	June 30		,	December 31		,	June 30		,
(in millions)	2003			2002			2002


Trading assets	$	11,281		$	10,167		$	6,874
Accounts receivable		2,508			5,219			3,323
Nonmarketable equity investments:
Private equity investments		1,704			1,657			1,642
Federal bank stock		1,676			1,591			1,419
All other		1,629			1,473			1,293

Total nonmarketable equity investments		5,009			4,721			4,354

Operating lease assets		3,924			4,104			4,718
Government National Mortgage Association (GNMA) pool buy-outs		2,306			2,336			2,435
Interest receivable		1,124			1,139			1,334
Core deposit intangibles		795			868			944
Interest-earning deposits		513			352			2,107
Foreclosed assets		190			195			183
Due from customers on acceptances		110			110			83
Other		7,851			6,637			7,230


Total other assets	$	35,611		$	35,848		$	33,585

Trading assets consist largely of securities, including corporate debt, U.S. government agency obligations, and the fair value of derivative instruments held for customer accommodation purposes. Interest income from trading assets was $41 million and $48 million in second quarter 2003 and 2002, respectively, and $72 million and $92 million in the first half of 2003 and 2002, respectively. Noninterest income from trading assets was $132 million and $92 million in second quarter 2003 and 2002, respectively, and $242 million and $167 million in the first half of 2003 and 2002, respectively, and is included in the “other” category of noninterest income.

Net losses from nonmarketable equity investments were $34 million and $130 million for the second quarter and first six months of 2003, respectively, compared with $25 million and $45 million for the same periods of 2002.

GNMA pool buy-outs are advances made to GNMA mortgage pools that are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). These advances are made to buy out delinquent loans under the Company’s servicing agreements. The Company undertakes the collection and foreclosure process for the FHA and VA. After the foreclosure process is complete, the Company is reimbursed for substantially all costs incurred, including the advances.

The increase in other time deposits was primarily due to an increase in certificates of deposit greater than $100,000 sold to institutional customers.

The Company and each of the subsidiary banks are subject to various regulatory capital adequacy requirements administered by the Federal Reserve Board and the Office of the Comptroller of the Currency. Risk-based capital (RBC) guidelines establish a risk-adjusted ratio relating capital to different categories of assets and off-balance sheet exposures.



														To be well
														capitalized under
														the FDICIA
						For capital								prompt corrective
	Actual					adequacy purposes								action provisions
(in billions)	Amount		Ratio			Amount				Ratio				Amount				Ratio
As of June 30, 2003:
Total capital (to risk-weighted assets)
Wells Fargo & Company	$	34.3		11.50	%		³	$	23.9		³	8.00	%
Wells Fargo Bank, N.A.		20.3		11.94			³		13.6		³	8.00			³	$	17.0		³	10.00	%
Wells Fargo Bank Minnesota, N.A.		3.4		11.49			³		2.4		³	8.00			³		3.0		³	10.00
Tier 1 capital (to risk-weighted assets)
Wells Fargo & Company	$	23.8		7.98	%		³	$	11.9		³	4.00	%
Wells Fargo Bank, N.A.		13.1		7.72			³		6.8		³	4.00			³	$	10.2		³	6.00	%
Wells Fargo Bank Minnesota, N.A.		3.1		10.54			³		1.2		³	4.00			³		1.8		³	6.00
Tier 1 capital (to average assets) (Leverage ratio)
Wells Fargo & Company	$	23.8		6.58	%		³	$	14.5		³	4.00	%(1)
Wells Fargo Bank, N.A.		13.1		6.61			³		7.9		³	4.00	(1)		³	$	9.9		³	5.00	%
Wells Fargo Bank Minnesota, N.A.		3.1		5.65			³		2.2		³	4.00	(1)		³		2.8		³	5.00

To remain a seller/servicer in good standing, the Company’s mortgage banking affiliate must maintain specified levels of shareholders’ equity as required by the United States Department of Housing and Urban Development, Government National Mortgage Association, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. The equity requirements are generally based on the size of the loan portfolio being serviced for each investor. At June 30, 2003, the equity requirements for these agencies ranged from $1 million to $191 million. The mortgage banking affiliate had capital levels in excess of these agency levels.

In the ordinary course of business, the Company engages in financial transactions, in accordance with generally accepted accounting principles (GAAP), that are not recorded on the Company’s balance sheet or may be recorded on the Company’s balance sheet in amounts that are different than the full contract or notional amount of the transaction. (See Note 1 to Financial Statements for the Company’s accounting policy relating to consolidation.) Such transactions are structured to meet the financial needs of customers, manage the Company’s credit, market or liquidity risks, diversify funding sources or optimize capital.

Off-balance sheet arrangements include (1) securitization activities in the ordinary course of business, including mortgage loans and other financial assets (student loans, commercial mortgages and automobile receivables), (2) investment vehicles, typically in the form of certain collateralized debt obligations and (3) unconsolidated joint ventures, used to support origination activities of the Company’s mortgage banking affiliate or formed with third parties for economies of scale.

In the ordinary course of operations, the Company enters into certain contractual obligations. Such obligations include (1) the acceptance of deposits, (2) the funding of operations through debt issuances, (3) leases for premises and equipment, (4) purchase obligations and (5) certain derivative instrument contracts.

For additional information on off-balance sheet arrangements and other contractual obligations see Note 11 (Guarantees) to Financial Statements and “Financial Review – Overview – Recent Accounting Standards” in this report and “Financial Review – Off-Balance Sheet Arrangements and Other Contractual Obligations” in the Company’s 2002 Form 10-K/A.

Asset/liability management consists of the evaluation, monitoring, and management of the Company’s interest rate risk, market risk and liquidity and funding. The Corporate Asset/Liability Management Committee (Corporate ALCO) maintains oversight of these risks. The Committee consists of senior financial and senior business executives. Each of the Company’s principal business groups – Community Banking (including Mortgage Banking) and Wholesale Banking – have individual asset/liability management committees and processes that are linked to the Corporate ALCO process.

Interest rate risk, one of the more prominent risks in terms of potential earnings impact, is an inevitable part of being a financial intermediary. For more information, see “Financial Review – Asset/Liability and Market Risk Management – Interest Rate Risk” in the Company’s 2002 Form 10-K/A. The principal tool used to evaluate the Company’s interest rate risk is a simulation of net income under various economic and interest rate scenarios.

The Company assesses its interest rate risk by comparing its most likely earnings plan over a twelve-month period to various earnings simulations performed under multiple 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. Simulated earnings at risk over the twelve month period beginning June 30, 2003 were within 1% of the Company’s most likely earnings under lower and higher interest rate scenarios based on its most recent simulations. The low interest rate scenario assumed that the Federal Funds rate would decline to and remain at .75% for the 12 month period, and that the 10 year constant maturity Treasury (CMT) bond yield would decline to and remain at a rate of 3.00%. The high interest rate scenario assumed Federal Funds would increase to a rate of 3.25% by the end of the 12 month period, and that the 10 year CMT would reach a rate of 6.00%. Simulation estimates are highly dependent on and will change with the size and mix of the Company’s actual and projected balance sheet at the time each simulation is done.

The Company uses exchange-traded and over-the-counter interest rate derivatives to hedge its interest rate exposures. The credit risk amount and estimated net fair values of these derivatives as of June 30, 2003 and December 31, 2002 are indicated in Note 12 (Derivative Instruments and Hedging Activities) to Financial Statements. Derivatives are used for asset/liability management in three ways: (a) a major portion of the Company’s long-term fixed-rate debt is converted to floating-rate payments by entering into received-fixed swaps at issuance; (b) the cash flows from selected asset and/or liability instruments/portfolios are converted from fixed to floating payments or vice versa; and (c) the Company’s mortgage operation actively uses swaptions, futures, forwards and rate options to hedge interest rate lock commitments, mortgages held for sale and mortgage servicing rights.

The Company originates, funds and services mortgage loans. These activities subject the Company to a number of risks, including credit, liquidity and interest rate risks. The Company manages credit and liquidity risk by selling or securitizing most of the loans it originates. Changes in interest rates, however, may have a potentially large impact on mortgage banking income in any calendar quarter and over time. The Company manages both the risk to net income over time from all sources as well as the risk to an immediate reduction in the fair value of its mortgage servicing rights. The Company relies on mortgage loans held on its balance sheet and derivative instruments to maintain these risks within Corporate ALCO parameters.

At June 30, 2003, the Company had mortgage servicing rights (MSRs) of $3.8 billion, net of a valuation allowance of $2.6 billion. The Company’s MSRs were valued at .73% of mortgage

loans serviced for others at June 30, 2003, down from .92% at December 31, 2002 and 1.30% at June 30, 2002.

The value of the MSRs is influenced by prepayment speed assumptions affecting the duration of the mortgage loans to which the MSRs relate. Changes in long-term interest rates affect these prepayment speed assumptions. For example, a decrease in long-term rates would accelerate prepayment speed assumptions as borrowers refinance their existing mortgage loans and decrease the value of the MSRs.

The Company mitigates this risk in two ways. First, a significant portion of the MSRs are hedged against a decrease in interest rates with derivative contracts. The principal source of risk in this hedging process is the risk that changes in the value of the hedging contracts may not match changes in the value of the hedged portion of the MSRs for any given change in long-term interest rates.

Second, a portion of the potential reduction in the value of the MSRs for a given decline in interest rates is offset by estimated increases in origination and servicing fees over time from new mortgage activity or refinancing associated with that decline in interest rates. In a scenario of much lower long-term interest rates, the decline in the value of the MSRs and its impact on net income would be immediate whereas the additional fee income accrues over time. Under GAAP, impairment of the MSRs, due to a decrease in long-term rates or other reasons, is reflected as a charge to earnings through an increase to the valuation allowance.

In scenarios of sustained increases in long-term interest rates, origination fees may eventually decline as refinancing activity slows. In such higher interest rate scenarios the duration of the servicing portfolio may extend. In such circumstances, periodic amortization of servicing costs would be reduced, there may not be a need for additions to the valuation allowance and some or all of the valuation allowance could be released.

The Company incurs interest rate risk, foreign exchange risk, equity price risk and commodity price risk in several trading businesses managed under limits set by Corporate ALCO. The primary purpose of these businesses is to accommodate customers in the management of their market price risks. Additionally, the Company takes positions based on market expectations or to benefit from price differentials between financial instruments and markets. All securities, loans, foreign exchange transactions, commodity transactions and derivatives transacted with customers or used to hedge capital market transactions done with customers are carried at fair value. Counterparty risk limits are established and monitored by the Institutional Risk Committee. Open, “at risk” positions for all trading business are monitored by Corporate ALCO.

Equity markets impact the Company in both direct and indirect ways. For more information, see “Financial Review – Asset/Liability and Market Risk Management – Market Risk – Equity Markets” in the Company’s 2002 Form 10-K/A. The Company makes and manages direct equity investments in start up businesses, emerging growth companies, management buy-outs,

acquisitions and corporate recapitalizations. The Company also invests in non-affiliated funds that make similar private equity investments. These private equity investments are made within capital allocations approved by the Company’s management or its Board of Directors. Management reviews these investments at least quarterly and assesses them for possible other-than-temporary impairment. At June 30, 2003, private equity investments totaled $1,704 million, compared with $1,657 million at December 31, 2002.

The Company has marketable equity securities in its securities available for sale investment portfolio, including shares distributed from the Company’s venture capital activities. These securities are managed within capital risk limits approved by management. Gains and losses on these securities are recognized in net income when realized and, in addition, other-than-temporary impairment may be periodically recorded. At June 30, 2003, the fair value of marketable equity securities was $610 million and cost was $527 million, compared with $556 million and $598 million, respectively, at December 31, 2002.

The objective of effective liquidity management is to ensure that the Company can efficiently meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments under both normal operating conditions and under unforeseen and 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. To ensure that the Parent is a source of strength for its regulated, deposit-taking subsidiary banks, the Company sets liquidity management guidelines for both the consolidated and Parent balance sheets.

In addition to the immediately liquid resources of cash and due from banks and federal funds sold and securities purchased under resale agreements, asset liquidity is provided by the debt securities in the securities available for sale portfolio. Asset liquidity is further enhanced by the Company’s ability to sell or securitize loans in secondary markets.

Core customer deposits have historically provided the Company with a sizeable source of relatively stable and low-cost funds.

The remaining funding of assets is mostly provided by long-term debt, deposits in foreign offices, short-term borrowings (federal funds purchased and securities sold under repurchase agreements, commercial paper and other short-term borrowings) and trust preferred securities. Liquidity for the Company is also available through the Company’s ability to raise funds in a variety of domestic and international money and capital markets.

Parent. The Parent has registered with the Securities and Exchange Commission (SEC) to issue a variety of securities, including senior and subordinated notes and preferred and common securities to be issued by one or more trusts that are directly or indirectly owned by the Company and consolidated in the financial statements. In March 2003, the Parent registered for issuance an additional $15.3 billion in senior and subordinated notes and preferred and common securities. During the second quarter and first six months of 2003, the Parent issued $2.6 billion and

$7.0 billion, respectively, of senior notes. Also, during second quarter 2003, Wells Fargo Capital VII issued a total of $500 million of trust preferred securities. At June 30, 2003, the Parent’s remaining issuance capacity under effective registration statements was $14.9 billion. In July 2003, the Parent issued $380 million in senior notes and $200 million of trust preferred securities. The Company used the proceeds from securities issued in the first six months of 2003 for general corporate purposes and expects that it will use the proceeds from the future issuance of any securities for general corporate purposes as well. The Parent also issues commercial paper and has two back-up credit facilities amounting to $2 billion.

On April 15, 2003, the Company issued $3 billion of convertible senior debentures as a private placement. As described in Item 2 of Part II of the Company’s report on Form 10-Q for the quarter ended June 30, 2003, the convertible debentures are convertible into shares of the Company’s common stock under certain circumstances. While the Company has the ability to settle the entire amount of the conversion rights granted in this convertible debt offering in cash, common stock or a combination, the Company intends to settle the principal amount in cash and to settle the conversion spread (the excess conversion value over the principal) in either cash or stock. The Company 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.

Bank Note Program. 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 and subordinated notes. This program updates and supercedes the bank note program established in February 2001. Securities are issued under this program as private placements in accordance with the Office of the Comptroller of the Currency’s regulations. During the second quarter and first six months of 2003, Wells Fargo Bank, N.A. issued $4.2 billion and $8.6 billion, respectively, in senior long-term notes. At June 30, 2003, the remaining issuance authority under the long-term portion was $15.7 billion.

Wells Fargo Financial. During the second quarter and first six months of 2003, Wells Fargo Financial Canada Corporation, a wholly owned Canadian subsidiary of Wells Fargo Financial, Inc., issued $200 million and $400 million (Canadian), respectively, in senior notes, leaving at June 30, 2003 a total of $550 million (Canadian) available for issuance.

The Company has an active program for managing stockholder capital. The objective of effective capital management is to produce above market long-term returns by opportunistically using capital when returns are perceived to be high and issuing/accumulating capital when costs are perceived to be low.

The Company uses capital to fund organic growth, acquire banks and other financial services companies, pay dividends and repurchase its shares. During the first six months of 2003, the Company’s consolidated assets increased by $20 billion, or 6%. During 2002, the Board of Directors authorized the repurchase of up to 50 million additional shares of the Company’s outstanding common stock. During the first six months of 2003, the Company repurchased approximately 20 million shares of its common stock for a total of $922 million. At

June 30, 2003, the total remaining common stock repurchase authority was approximately 38 million shares. In July 2003, the Board of Directors approved an increase in the Company’s quarterly common stock dividend to 45 cents per share from 30 cents per share, representing a 50% increase in the quarterly dividend.

The Company’s potential sources of capital include retained earnings, issuance of common and preferred stock and issuance of subordinated debt and trust preferred securities. In the first six months of 2003, net income was $3.0 billion and retained earnings increased by $1.9 billion, after payment of $1.0 billion in common stock dividends. In the first six months of 2003, the Company issued a total of $524 million in common stock for various employee stock plans, which included $136 million related to the conversion of preferred stock to common stock under the Employee Stock Ownership Plan.

We make forward-looking statements in this report and in other reports and proxy statements we file with the SEC. In addition, our senior management might make forward-looking statements orally to analysts, investors, the media and others. You should consider forward-looking statements in light of the following discussion.

Broadly speaking, forward-looking statements include:

•

projections of our revenues, income, earnings per share, capital expenditures, dividends, capital structure or other financial items;

•

descriptions of plans or objectives of our management for future operations, products or services, including pending acquisitions;

•

forecasts of our future economic performance; and

•

descriptions of assumptions underlying or relating to any of the foregoing.

In this report, for example, we make forward-looking statements discussing our expectations about:

•

future credit losses and nonperforming assets;

•

the future value of mortgage servicing rights;

•

the future value of equity securities, including those in our venture capital portfolios;

•

the impact of new accounting standards;

•

future short-term and long-term interest rate levels and their impact on our net interest margin, net income, liquidity and capital; and

•

the impact of the VISA USA Inc. settlement on our earnings.

Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements often include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” or similar expressions. Do not unduly rely on forward-looking statements. They give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we might not update them to reflect changes that occur after the date they are made.

There are several factors—many beyond our control—that could cause results to differ significantly from our expectations. We describe some of these factors below. We describe other factors, such as credit, market, operational, liquidity, interest rate and other risks, elsewhere in this report (see, for example, “Balance Sheet Analysis”). We describe factors relating to the regulation and supervision of the Company in our 2002 Form 10-K/A. Any factor described in this report or in our 2002 Form 10-K/A could by itself, or together with one or more other factors, adversely affect our business, results of operations and/or financial condition. There are factors not described in this report or in our 2002 Form 10-K/A that could cause results to differ from our expectations.

As a financial services company, our earnings are significantly affected by general business and economic conditions.

Our business and earnings are impacted by general business and economic conditions in the United States and abroad. These conditions include short-term and long-term interest rates, inflation, monetary supply, fluctuations in both debt and equity capital markets, and the strength of the U.S. economy and the local economies in which we operate. For example, an economic downturn, increase in unemployment, or other events that negatively impact household and/or corporate incomes could decrease the demand for the Company’s loan and non-loan products and services and increase the number of customers who fail to pay interest or principal on their loans.

Geopolitical conditions can also impact our earnings. Acts or threats of terrorism, actions taken by the U.S. or other governments in response to acts or threats of terrorism and/or military conflicts including the aftermath of the war with Iraq, could impact business and economic conditions in the U.S. and abroad. The terrorist attacks in 2001, for example, caused an immediate decrease in demand for air travel, which adversely affected not only the airline industry but also other travel-related and leisure industries, such as lodging, gaming and tourism.

We discuss other business and economic conditions in more detail elsewhere in this report.

Our earnings are significantly affected by the fiscal and monetary policies of the federal government and its agencies.

The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the United States. Its policies determine in large part our cost of funds for lending and investing and the return we earn on those loans and investments, both of which impact our net interest margin, and can materially affect the value of financial instruments we hold, such as debt securities and mortgage servicing rights. Its policies also can affect our borrowers, potentially increasing the risk that they may fail to repay their loans. Changes in Federal Reserve Board policies are beyond our control and hard to predict or anticipate.

We operate in a highly competitive industry which could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Banks, securities firms and insurance companies can now merge by creating a new type of financial services company called a “financial holding company,” which can offer virtually any type of

financial service, including banking, securities underwriting, insurance (both agency and underwriting) and merchant banking. Recently, a number of foreign banks have acquired financial services companies in the United States, further increasing competition in the U.S. market. Also, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Many of our competitors have fewer regulatory constraints and some have lower cost structures.

The holding company, its subsidiary banks and many of its nonbank subsidiaries are heavily regulated at the federal and state levels. This regulation is to protect depositors, federal deposit insurance funds and the banking system as a whole, not security holders. Congress and state legislatures and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect us in substantial and unpredictable ways including limiting the types of financial services and products we may offer and/or increasing the ability of nonbanks to offer competing financial services and products. Also, our failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies and damage to our reputation. For more information, refer to the “Regulation and Supervision” section and to Notes 4 (Cash, Loan and Dividend Restrictions) and 26 (Regulatory and Agency Capital Requirements) to Financial Statements in the Company’s 2002 Form 10-K/A.

Various legislation, including proposals to substantially change the financial institution regulatory system and to expand or contract the powers of banking institutions and bank holding companies, is from time to time introduced in the Congress. This legislation may change banking statutes and the operating environment of the Company and its subsidiaries in substantial and unpredictable ways. If enacted, such 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. We 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 financial condition or results of operations of the Company or any of its subsidiaries.

We depend on the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit, we may assume that a customer’s audited financial statements conform with GAAP and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. We also may rely on the audit

report covering those financial statements. Our financial condition and results of operations could be negatively impacted to the extent we rely on financial statements that do not comply with GAAP or that are materially misleading.

Consumers may decide not to use banks to complete their financial transactions.

Technology and other changes are allowing parties to complete financial transactions that historically have involved banks. For example, consumers can now pay bills and transfer funds directly without banks. The process of eliminating banks as intermediaries, known as “disintermediation,” could result in the loss of fee income, as well as the loss of customer deposits and income generated from those deposits.

Maintaining or increasing our market share depends on market acceptance and regulatory approval of new products and services.

Our success depends, in part, on our ability to adapt our products and services to evolving industry standards. There is increasing pressure on financial services companies to provide products and services at lower prices. This can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies, including internet-based services, could require us to make substantial expenditures to modify or adapt our existing products and services. We might not successfully introduce new products and services, achieve market acceptance of our products and services, and/or develop and maintain loyal customers.

Negative public opinion could damage our reputation and adversely impact our earnings.

Reputation risk, or the risk to our earnings and capital from negative public opinion, is inherent in our business. Negative public opinion can result from our actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, and from actions taken by government regulators and community organizations in response to those activities. Negative public opinion can adversely affect our ability to keep and attract customers and can expose us to litigation and regulatory action. Because virtually all our businesses operate under the “Wells Fargo” brand, actual or alleged conduct by one business can result in negative public opinion about other Wells Fargo businesses. Although we take steps to minimize reputation risk in dealing with our customers and communities, as a large diversified financial services company with a relatively high industry profile, the risk will always be present in our organization.

The holding company relies on dividends from its subsidiaries for most of its revenue.

The holding company is a separate and distinct legal entity from its subsidiaries. It receives substantially all of its revenue from dividends from its subsidiaries. These dividends are the principal source of funds to pay dividends on the holding company’s common and preferred stock and interest and principal on its debt. Various federal and/or state laws and regulations limit the amount of dividends that our bank and certain of our nonbank subsidiaries may pay to the holding company. Also, the holding company’s right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s

creditors. For more information, refer to “Regulation and Supervision—Dividend Restrictions” and “—Holding Company Structure” in the Company’s 2002 Form 10-K/A.

Our accounting policies and methods are key to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain.

Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Our management must exercise judgment in selecting and applying many of these accounting policies and methods so that not only do they comply with generally accepted accounting principles but also that they reflect management’s judgment as to the most appropriate manner in which to record and report our financial condition and results of operations. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which might be reasonable under the circumstances yet might result in our reporting materially different amounts than would have been reported under a different alternative. Note 1 to Financial Statements in the Company’s 2002 Form 10-K/A describes our significant accounting policies.

We are a diversified financial services company. In addition to banking, we provide insurance, investments, mortgages and consumer finance. Although we believe our diversity helps mitigate the impact to the Company when downturns affect any one segment of our industry, it also means that our earnings could be subject to different risks and uncertainties. We discuss some examples below.

Merchant Banking. Our merchant banking activities include venture capital investments, which have a much greater risk of capital losses than our traditional banking activities. Also, it is difficult to predict the timing of any gains from these activities. Realization of gains from our venture capital investments depends on a number of factors—many beyond our control—including general economic conditions, the prospects of the companies in which we invest, when these companies go public, the size of our position relative to the public float, and whether we are subject to any resale restrictions. Factors such as a slowdown in consumer demand or a deterioration in capital spending on technology and telecommunications equipment, could result in declines in the values of our publicly-traded and private equity securities. If we determine that the declines are other-than-temporary, additional impairment charges would be recognized. Also, we will realize losses to the extent we sell securities at less than book value. For more information, see in this report “Balance Sheet Analysis—Securities Available for Sale.”

Mortgage Banking. The impact of interest rates on our mortgage banking business can be large and complex. Changes in interest rates can impact loan origination fees and loan servicing fees, which account for a significant portion of mortgage-related revenues. A decline in mortgage rates generally increases the demand for mortgage loans as borrowers refinance, but also generally leads to accelerated payoffs in our mortgage servicing portfolio. Conversely, in a constant or increasing rate environment, we would expect fewer loans to be refinanced and a decline in payoffs in our servicing portfolio. Although the Company uses dynamic and sophisticated models to assess the impact of interest rates on mortgage fees, amortization of mortgage servicing rights, and the value of mortgage servicing assets, the estimates of net income and fair value produced by these models are

dependent on estimates and assumptions of future loan demand, prepayment speeds and other factors which may overstate or understate actual subsequent experience. In addition, although the Company uses derivative instruments to hedge the value of its servicing portfolio, the hedges do not cover the full value of the portfolio and the Company can provide no assurances that the hedges will be effective to offset significant decreases in the value of the portfolio. For more information, see “Financial Review—Critical Accounting Policies—Mortgage Servicing Rights Valuation and Risk Management—Asset /Liability and Market Risk Management” in the Company’s 2002 Form 10-K/A.

We rely on other companies to provide key components of our business infrastructure.

Third parties provide key components of our business infrastructure such as internet connections and network access. Any disruption in internet, network access or other voice or data communication services provided by these third parties or any failure of these third parties to handle current or higher volumes of use could adversely affect our ability to deliver products and services to our customers and otherwise to conduct our business. Technological or financial difficulties of a third party service provider could adversely affect our business to the extent those difficulties result in the interruption or discontinuation of services provided by that party.

We regularly explore opportunities to acquire financial institutions and other financial services providers. We cannot predict the number, size or timing of future acquisitions. We typically do not comment publicly on a possible acquisition or business combination until we have signed a definitive agreement for the transaction.

Our ability to successfully complete an acquisition generally is subject to regulatory approval, and we cannot be certain when or if, or on what terms and conditions, any required regulatory approvals will be granted. We might be required to divest banks or branches as a condition to receiving regulatory approval.

Difficulty in integrating an acquired company may cause us not to realize expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits from the acquisition. Specifically, the integration process could result in higher than expected deposit attrition (run-off), loss of key employees, the disruption of our business or the business of the acquired company, or otherwise adversely affect our ability to maintain relationships with customers and employees or achieve the anticipated benefits of the acquisition. Also, the negative impact of any divestitures required by regulatory authorities in connection with acquisitions or business combinations may be greater than expected.

Our business model is dependent on sharing information between the family of companies owned by Wells Fargo to better satisfy our customers’ needs. Laws that restrict the ability of our companies to share information about customers could negatively impact our revenue and profit.

Our success depends, in large part, on our ability to attract and retain key people. Competition for the best people in most activities engaged in by the Company can be intense. We may not be able to hire people or to keep them.

Our stock price can fluctuate widely in response to a variety of factors including:

•

actual or anticipated variations in our quarterly operating results;

•

recommendations by securities analysts;

•

new technology used, or services offered, by our competitors;

•

significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors;

•

failure to integrate our acquisitions or realize anticipated benefits from our acquisitions;

•

operating and stock price performance of other companies that investors deem comparable to us;

•

news reports relating to trends, concerns and other issues in the financial services industry;

•

changes in government regulations; and

•

geopolitical conditions such as acts or threats of terrorism or military conflicts.

General market fluctuations, industry factors and general economic and political conditions and events, such as the recent terrorist attacks, economic slowdowns or recessions, interest rate changes, credit loss trends or currency fluctuations, also could cause our stock price to decrease regardless of our operating results.

As required by SEC rules, the Company’s management evaluated the effectiveness, as of June 30, 2003, 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 June 30, 2003.

No change occurred during the second quarter of 2003 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 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

(d)

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

(e)

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

(f)

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

(g)

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

3(h)

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

(i)

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

(j)

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

(k)

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

(l)

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

(m)

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

(n)

Certificate of Designations for the Company’s 2002 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3 to the Company’s Current Report on Form 8-K dated April 16, 2002

(o)

Certificate of Designations for the Company’s 2003 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 15, 2003

(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

(b)

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)

Performance-Based Compensation Policy, filed, incorporated by reference to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003

(b)

Directors Stock Compensation and Deferral Plan, filed, incorporated by reference to Exhibit 10(b) to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003

31(a)

Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

(b)

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith

32(a)

Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350, furnished herewith

(b)

Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350, furnished herewith

99(a)

Computation of Ratios of Earnings to Fixed Charges, filed herewith. The ratios of earnings to fixed charges, including interest on deposits, were 3.53 and 3.13 for the quarters ended June 30, 2003 and 2002, respectively, and 3.51 and 3.06 for the six months ended June 30, 2003 and 2002, respectively. The ratios of earnings to fixed charges, excluding interest on deposits, were 5.66 and 4.99 for the quarters ended June 30, 2003 and 2002, respectively, and 5.65 and 4.85 for the six months ended June 30, 2003 and 2002, respectively.

99(b)

Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends, filed herewith. The ratios of earnings to fixed charges and preferred dividends, including interest on deposits, were 3.52 and 3.12 for the quarters ended June 30, 2003 and 2002, respectively, and 3.51 and 3.06 for the six months ended June 30, 2003 and 2002, respectively. The ratios of earnings to fixed charges and preferred dividends, excluding interest on deposits, were 5.64 and 4.98 for the quarters ended June 30, 2003 and 2002, respectively, and 5.63 and 4.84 for the six months ended June 30, 2003 and 2002, respectively.

(b)

The Company filed the following reports on Form 8-K during the second quarter of 2003:

(1)

April 11, 2003, under Item 5, regarding the sale by the Company of $3 billion aggregate principal amount of floating-rate convertible debt securities due 2033

(2)

April 15, 2003, under Item 12, regarding the Company’s financial results for the quarter ended March 31, 2003

(3)

May 5, 2003, under Item 7, filing as exhibits documents regarding the issuance by Wells Fargo Capital VII of its 5.85% Capital Securities and the issuance by the Company of its 5.85% Junior Subordinated Debentures due May 1, 2033

(4)

May 5, 2003, under Item 7, regarding the issuance by the Company of Notes linked to the Dow Jones Industrial Average due May 5, 2010

Pursuant to the requirements 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.


Delaware		41-0449260
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


PART I — FINANCIAL INFORMATION
	CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
	CONSOLIDATED STATEMENT OF CASH FLOWS
	NOTES TO FINANCIAL STATEMENTS
		SUMMARY FINANCIAL DATA
		OVERVIEW
		CRITICAL ACCOUNTING POLICIES
		EARNINGS PERFORMANCE
			NET INTEREST INCOME
		LOAN PORTFOLIO
		NONACCRUAL LOANS AND OTHER ASSETS
			Loans 90 Days or More Past Due and Still Accruing
		ALLOWANCE FOR LOAN LOSSES
		OTHER ASSETS
		DEPOSITS
		ASSET/LIABILITY AND MARKET RISK MANAGEMENT
		CAPITAL MANAGEMENT
		FACTORS THAT MAY AFFECT FUTURE RESULTS
	CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
Exhibit 31(a)
Exhibit 31(b)
Exhibit 32(a)
Exhibit 32(b)
Exhibit 99(a)
Exhibit 99(b)



(in millions)	Date	Assets


Certain assets of Towle Financial Services/Midwest, Inc., Minneapolis, Minnesota	January 1	$	5
Certain assets of Wraith, Scarlett & Randolph Insurance Services, Inc., Woodland, California	January 1		1
Pate Insurance Agency, Homer, Alaska	January 1		1
Certain assets of Montgomery Asset Management, LLC, San Francisco, California	January 18		36
Certain assets of Telmark, LLC, Syracuse, New York	February 28		660
Certain assets of S.N. Potter Insurance Agency, Inc., Stockton, California	June 1		2


		$	705



	June 30, 2003				June 30, 2002
	Gross		Accumulated		Gross		Accumulated
(in millions)	carrying amount		amortization		carrying amount		amortization


Amortized intangible assets:
Mortgage servicing rights, before valuation allowance (1)	$	12,970	$	6,595	$	11,497	$	3,632
Core deposit intangibles		2,415		1,620		2,415		1,471
Other		385		268		363		240

Total amortized intangible assets	$	15,770	$	8,483	$	14,275	$	5,343


Unamortized intangible asset (trademark)	$	14			$	14



	June 30				,
(in billions)	2003		2002


Managed Servicing Portfolio:
Loans serviced for others	$	522	$	458
Owned loans serviced (portfolio and held for sale)		106		57

Total owned servicing		628		515
Sub-servicing		23		51

Total managed servicing	$	651	$	566


		Shares Outstanding July 31, 2003
Common stock, $1-2/3 par value		1,679,532,244



	Quarter ended June 30,				Six months ended June 30				,
(in millions, except per share amounts)	2003		2002		2003		2002


Net income, as reported	$	1,525	$	1,418	$	3,017	$	2,520
Add: Stock-based employee compensation expense included in reported net income, net of tax		1		1		1		2
Less: Total stock-based employee compensation expense under the fair value method for all awards, net of tax		57		51		103		96

Net income, pro forma	$	1,469	$	1,368	$	2,915	$	2,426


Earnings per common share
As reported	$	.91	$	.83	$	1.80	$	1.48
Pro forma		.88		.80		1.74		1.42
Diluted earnings per common share
As reported	$	.90	$	.82	$	1.78	$	1.46
Pro forma		.87		.79		1.72		1.40



BALANCE SHEET:	June 30, 2003				June 30, 2002
	As		As		As		As
(in millions)	Previously Reported		Revised		Previously Reported		Revised


Total loans	$	215,392	$	211,434	$	185,001	$	180,242
Allowance for loan losses		3,894		3,853		3,883		3,834
Net loans		211,498		207,581		181,118		176,408
Other assets		31,756		35,611		28,942		33,585
Total assets		369,645		369,583		314,802		314,735

Accrued expenses and other liabilities		20,705		20,682		17,159		17,134
Retained earnings		21,320		21,281		17,530		17,488
Total stockholders’ equity		32,275		32,236		29,527		29,485
Total liabilities and stockholders’ equity		369,645		369,583		314,802		314,735



	Mortgage		Core
	servicing		deposit
(in millions)	rights		intangibles		Other		Total


Six months ended June 30, 2003 (actual)	$	1,729	$	72	$	16	$	1,817


Six months ended December 31, 2003 (estimate)	$	1,477	$	69	$	12	$	1,558


Estimate for year ended December 31,
2004		2,120		131		22		2,273
2005		1,225		120		17		1,362
2006		675		108		13		796
2007		380		99		12		491
2008		216		91		11		318

(1)		Liquidation preference $50.
(2)		Liquidation preference $1,000.
(3)		In accordance with the American Institute of Certified Public Accountants (AICPA) Statement of Position 93-6, Employers’ Accounting for Employee Stock Ownership Plans, the Company 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.

(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 actual 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 reconciling items for revenue (i.e., net interest income plus noninterest income) and net income are Treasury equity investment activities. The material item in the reconciliation column for average assets is unallocated goodwill held at the enterprise level.



	June 30, 2003					December 31, 2002
	Credit		Estimated			Credit		Estimated
	risk		net fair			risk		net fair
(in millions)	amount (2)		value			amount (2)		value


ASSET/LIABILITY MANAGEMENT HEDGES (1)
Interest rate contracts	$	2,113	$	1,560		$	3,438	$	2,631

CUSTOMER ACCOMMODATIONS AND TRADING (1)
Interest rate contracts		3,723		(230	)		3,343		31
Commodity contracts		66		—			28		4
Equity contracts		100		21			29		(20	)
Foreign exchange contracts		313		37			271		30
Credit contracts		29		(17	)		52		(11	)

(1)		The Company anticipates performance by substantially all of the counterparties for these contracts or the underlying financial instruments.
(2)		Credit risk amounts reflect the replacement cost for those contracts in a gain position in the event of nonperformance by counterparties.

(1)		Change in accounting principle relates to transitional goodwill impairment charge recorded in first quarter 2002 related to the adoption of FAS 142, Goodwill and Other Intangible Assets.
(2)		The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
(3)		See the Regulatory and Agency Capital Requirements section for additional information.

(1)		The average prime rate of the Company was 4.25% and 4.75% for the quarters ended June 30, 2003 and 2002, respectively, and 4.25% and 4.75% for the six months ended June 30, 2003 and 2002, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 1.24% and 1.92% for the quarters ended June 30, 2003 and 2002, respectively, and 1.29% and 1.91% for the six months ended June 30, 2003 and 2002, 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 all periods presented.

(1)		Includes agricultural loans (loans to finance agricultural production and other loans to farmers) of $3,755 million, $4,473 million and $3,952 million at June 30, 2003, December 31, 2002 and June 30, 2002, respectively.
(2)		Includes agricultural loans that are secured by real estate of $1,098 million, $1,111 million and $1,185 million at June 30, 2003, December 31, 2002 and June 30, 2002, respectively.

(1)		Includes commercial agricultural loans of $50 million, $48 million and $50 million at June 30, 2003, December 31, 2002 and June 30, 2002, respectively.
(2)		Includes agricultural loans secured by real estate of $28 million, $30 million and $18 million at June 30, 2003, December 31, 2002 and June 30, 2002, respectively.
(3)		Includes impaired loans of $715 million, $612 million and $780 million at June 30, 2003, December 31, 2002 and June 30, 2002, respectively.
(4)		Represents the amount of real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if such assets were recorded as loans. Real estate investments totaled $9 million, $9 million and $13 million at June 30, 2003, December 31, 2002 and June 30, 2002, respectively.


Dated: January 16, 2004	WELLS FARGO & COMPANY

	By:	/s/ RICHARD D. LEVY

		Richard D. Levy Senior Vice President and Controller (Principal Accounting Officer)