8-KOther Events

WELLS FARGO & COMPANY/MN 8-K Report, Corporate Update (Nov 15, 2005)

Filed November 15, 2005For Securities:WFCWFC-PDWFC-PCWFC-PYWFC-PAWFC-PLWFCNPWFC-PZ

Summary

Wells Fargo & Company/MN (WFC) filed an 8-K on November 15, 2005, to disclose an anticipated increase in net loan charge-offs for the fourth quarter of 2005. This increase is directly attributed to a rise in consumer bankruptcies occurring in advance of new bankruptcy laws scheduled to take effect on October 17, 2005. The company estimates these accelerated charge-offs will amount to approximately $175 million, or $0.07 per share after tax. While a portion of these losses represents an acceleration of charges that would have likely occurred in 2006, the company cautions that the actual impact could differ from this estimate. This disclosure is made in accordance with the Private Securities Litigation Reform Act of 1995, highlighting the forward-looking nature of the estimate and the assumptions upon which it is based, including timely notification of bankruptcies and consistent performance of consumer loan portfolios.

Key Highlights

  • 1Wells Fargo anticipates an additional $175 million in net loan charge-offs for Q4 2005 due to increased consumer bankruptcies.
  • 2This charge-off increase is linked to individuals filing for bankruptcy before new, stricter bankruptcy laws took effect on October 17, 2005.
  • 3The estimated impact translates to approximately $0.07 per share (after tax) for the fourth quarter.
  • 4The company believes a portion of these charge-offs are simply an acceleration of losses that would have occurred in 2006.
  • 5The disclosure includes forward-looking statements and caveats about potential variations from the estimate based on assumptions.
  • 6Investors are directed to prior SEC filings (10-K, 10-Q) for factors that could affect loan portfolio performance and charge-offs.

Frequently Asked Questions

Wells Fargo is reporting an increase in net loan charge-offs for the fourth quarter of 2005 because of a surge in consumer bankruptcies filed just before new, more restrictive bankruptcy laws became effective on October 17, 2005. This filing addresses the estimated financial impact of these pre-emptive filings.

The company estimates that these increased consumer bankruptcies will result in additional net loan charge-offs of approximately $175 million for the fourth quarter of 2005. This is expected to reduce earnings per share by approximately $0.07 after tax.

Wells Fargo believes that a part of these increased charge-offs represents an acceleration of losses that would have likely been recognized in future periods, specifically in 2006. However, the full impact is subject to certain assumptions.

Yes, the company notes that this estimate is a forward-looking statement. The actual impact could be greater than estimated if key assumptions, such as timely notification of bankruptcies and consistent performance of consumer loan portfolios, do not hold true.