Wells Fargo & Company (WFC)

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Wells Fargo & Co. (WFC)

Company Conference Presentation

March 05, 2013, 08:00 AM ET


Timothy J. Sloan - Senior EVP and CFO


Timothy J. Sloan

Thank you, [Keith], and good morning, everyone. I appreciate the opportunity to speak to you about Wells Fargo today. Let me start with a little proviso and that is that this presentation includes certain forward-looking statements regarding our expectations about the future. A number of factors many of which are beyond our control could cause actual results to differ materially for management's current expectations. Please refer to the appendix for information regarding our forward-looking statements where you can find more information about our risk factors.

At Wells Fargo, everything we do starts with our vision to satisfy all our customers' financial needs and to help them succeed financially. We believe this consistent vision is a key differentiator for Wells Fargo and is one of the reasons that we've been successful through many different economic cycles and many different interest rate environments.

At Wells Fargo, we have over 70 million customers. We serve one of three U.S. households. We've created a deep and broad distribution system to serve these customers when, where and how they want to be served, whether it's in person, in one of our stores, over the phone, online, by mobile. With over 9,000 stores in all 50 states and over 12,000 ATMs, we have more stores to serve more communities than any other U.S. bank. We believe that that's a very powerful advantage for Wells Fargo as well as for our customers.

We also have leading market share across a variety of products that help us meet our consumer and our commercial customers' financial needs. We've been the largest small business lender for 10 consecutive years and one in every 10 small businesses banks with Wells Fargo. We're now the largest auto lender in the country in addition to the leading position that we've had in the used car lending market for quite some time. As you know, we're the largest residential mortgage originator as well as the largest residential mortgage servicer.

We're also the number one lender to mid-sized companies and we've grown loans to middle market customers for the last 10 consecutive quarters and we're the leader in serving our customers' wealth management and brokerage needs. We operate the third largest full service retail brokerage company.

Our leading position across a number of businesses is reflected in our balance business model. Our loan portfolio reflects diversity in serving both consumer and commercial customers. We are balanced between fee and spread income in terms of our total revenues and our sources of fee generation are also very balanced as you can see in that pie chart on your right.

The combination of this scale and the level of diversification as a significant advantage for our company were demonstrated by our results last year. We generated 6% revenue growth and we've earned a record $18.9 billion, up 19% from 2011. And our earnings per share also grew by 19%.

We grew our loan portfolio by $30 billion which was up 4% year-over-year reducing our liquidating portfolio by approximately $18 billion. We grew core deposits by $73 billion which was up 8% year-over-year. And we increased our ROA by 60 basis points and our ROE by 102 basis points.

This is my favorite slide in the presentation. Thanks for giving me intro, Keith, I appreciate it. In fact, I think it's really the only slide that we need to show. We've achieved 12 consecutive quarters of EPS growth and seven consecutive quarters of record EPS.

Think about the environment that we've been in during the last two years on even economic growth, declining interest rates, a lot of regulatory change as well as some economic challenges that we've seen both in Europe and in Asia. Our ability to grow through all of those challenges reflects the benefit of our diversified model.

I believe that our strong performance speaks for itself. Let me spend some time comparing our results to our large and regional bank peers. Our 6% revenue growth in 2012 was higher than any of our larger bank peers and in line with our regional bank peers.

Another way to look at our revenue generation versus peers is to look at asset productivity. What do we do with our size? And this is shown as revenue divided by assets, which demonstrates our success at cross sell. On that basis, you can see that we've produced more revenue per asset last year than our large and regional bank peers.

And if you look at fee income to assets, we also outperformed our peers in 2012. If you look at our performance over the past 10 years, we've generated strong results than our large bank peers and we're at the top compared to our regional bank peers.

This outperformance reflects our focus on cross sell. A lot of people talk about it. We've been doing it for a long time. We achieved record cross sell results across the franchise in the fourth quarter with retail banking cross-sell at 6.05 products for household, our Wealth, Brokerage and Retirement business at 10.27 products per household and Wholesale Banking cross-sell at 6.8 products per relationship.

The remaining focused on meeting our customers' financial needs. We've been able to generate strong fee income growth that was well diversified. This demonstrates that we don't have an over focus on managing our net interest margin. Our strong deposit growth has put pressure on our net interest margin. The increased deposits provide us with many opportunities to meet the other financial needs of our deposit customers and generate strong fee income.

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