Wells Fargo & Company — 2013 Form 10-K
Business context and period. This annual report covers the fiscal year ended December 31, 2013. Wells Fargo is a diversified financial services holding company with Community Banking, Wholesale Banking, and Wealth, Brokerage and Retirement operating segments. It reported more than 9,000 domestic stores and 264,900 full-time-equivalent team members at year-end.
Financial position and performance
- At December 31, 2013, the company reported $1.5 trillion in assets, $826 billion in loans, $1.1 trillion in deposits, and $170 billion in stockholders’ equity. Wells Fargo Bank, N.A. held approximately 90% of company assets.
- The supplied filing text does not provide clear values for revenue, net income, operating cash flow, margins, debt, or detailed liquidity measures. These items are incorporated by reference to the 2013 Annual Report to Stockholders, which is not included in the supplied text.
- The ratio of earnings to fixed charges, including deposit interest, was 7.91 in 2013 versus 6.08 in 2012. Excluding deposit interest, it was 10.68 versus 8.40. The ratio including fixed charges and preferred dividends was 5.99 versus 4.90 including deposit interest, and 7.36 versus 6.21 excluding it.
- FDIC deposit insurance assessments, including FICO assessments, totaled $1.0 billion for 2013.
Changes, capital actions, and shareholder matters
- The fixed-charge coverage ratios shown in the filing improved from 2012 to 2013. The supplied text does not provide the detailed year-over-year operating results needed to assess changes in revenue, earnings, credit costs, or segment performance.
- After receiving no Federal Reserve objection to its 2013 capital plan, the company increased its quarterly common dividend to $0.30 per share, redeemed certain preferred securities, and repurchased common shares. Its 2014 capital plan was submitted in January 2014; the Federal Reserve’s review results were expected in March 2014.
- In the fourth quarter, Wells Fargo repurchased 30,034,399 common shares under its existing authorization. No warrants were repurchased during the quarter.
Outlook, risks, and contingencies
- The filing text provides no quantified earnings or revenue guidance. Management described significant uncertainty around the effects of ongoing financial-sector regulation and rules still being developed.
- Key regulatory exposures include Basel III capital requirements, potential leverage and liquidity rules, stress testing and restrictions on capital distributions, Dodd-Frank enhanced prudential standards, and Volcker Rule compliance. The company stated that Basel III requirements began phasing in on January 1, 2014, with full phase-in scheduled by 2022.
- Other risks include changing interest-rate and monetary conditions, intense competition, consumer-protection and mortgage regulation, restrictions on transfers and dividends from bank subsidiaries, and the possibility that regulators could require additional capital or limit business activities.
- The company submitted resolution plans for the holding company and its principal bank subsidiary in June 2013. Regulatory findings of deficiencies could lead to stricter requirements or restrictions. Legal proceedings are discussed in an incorporated note, but the supplied text does not describe specific matters or quantify potential exposure.
Most important facts for investors to verify
- Review the incorporated 2013 Annual Report for complete income statements, cash-flow statements, balance-sheet details, credit quality, net interest margin, segment results, capital ratios, and liquidity disclosures.
- Confirm the drivers and sustainability of the improvement in fixed-charge coverage and assess trends in loan growth, deposit costs, mortgage activity, and credit losses.
- Check the 2014 capital-plan and stress-test outcomes, capital-distribution approvals, and the effect of new capital and liquidity rules.
- Review the legal-proceedings disclosures and related reserves, as the supplied filing text does not provide specific claims or amounts.