Wells Fargo to Reduce Quarterly Common Stock Dividend
March 06 2009 - 8:00AM
Business Wire
Wells Fargo & Company (NYSE:WFC) announced today that its
Board of Directors will reduce the quarterly common stock dividend
from $.34 to $.05 per share. The next dividend is expected to be
declared in April 2009. This reduction will enable the Company to
retain an additional $5 billion in common equity each year.
�This was a very difficult decision but it�s absolutely right
for our Company and our shareholders because it will further
strengthen our ability to grow market share and to continue our
long track record of profitable growth,� said President and CEO
John Stumpf. �We will return to a more normalized dividend level as
soon as practical. We have among the most loyal shareholders in
America � individuals and institutions alike � and we�ve always
recognized the value of dividends. Operating results for the first
two months of the year are strong. Our ability to grow market share
in this environment and to benefit from new business opportunities
remains second to none. Our merger with Wachovia is on track and we
remain as optimistic as ever about its potential benefits for all
our stakeholders.�
Chief Financial Officer Howard Atkins said, �In the current
environment, the ability to generate capital organically is more
important than ever. The best way to build capital is to earn it,
which is what we�ve done for many years and continue to do in this
quarter. The dividend reduction will enable us to reinvest
approximately $5 billion per year in our businesses at a time when
we can profitably gain market share for the long term while
creating a larger capital cushion in the near term to protect
against a more adverse credit cycle if it occurs. Our business
model and our performance to date confirm that we�re uniquely
positioned to profitably build market share. Our strong operating
results for the first two months of 2009 have been driven by
continued growth in lending, deposits and mortgage volumes.
Mortgage originations for the first two months alone were $59
billion, exceeding in two months the exceptionally strong fourth
quarter of 2008, and mortgage applications were $107 billion. Our
capital position, adjusted for risk, is near the top of our peer
group. At December 31, 2008, stockholders� equity was $99 billion
with Tier 1 Capital at 7.84 percent � 30 percent above the 6
percent regulatory minimum for well-capitalized banks. Our tangible
common equity was $36 billion, 2.86 percent of tangible assets and
3.32 percent of regulatory risk-weighted assets. These ratios are
after significantly reducing the risk in the Wachovia loan and
securities portfolios, about half of the combined balance sheet of
the new Wells Fargo. By immediately writing down loans and
securities at Wachovia through purchase accounting adjustments at
close, we have already significantly reduced the risk of loss to
tangible common equity. Since these losses have already been
recognized, our future earnings will be higher and therefore
tangible common equity can now grow faster. Adjusted for the fact
that we already accounted for these future losses, our tangible
common equity as a percent of regulatory risk-weighted assets would
have been 5.2 percent at December 31, 2008. While many factors
affect capital, the $5 billion of additional retained earnings from
the dividend reduction is the equivalent of about a 40 basis point
improvement to our tangible common equity ratio.
�The Wachovia merger is proceeding as planned and is on track.
We�re on track to achieve $5 billion in annual merger-related
expense savings which will be fully realized upon completion of the
integration and we have already begun to realize these savings. We
also expect that total merger integration costs will be lower than
originally projected because certain costs, such as those
associated with contract terminations, retention payments and
building exit costs are coming in lower than originally expected.
In addition to expense savings from consolidating the two banks, we
now expect newly identified expense management initiatives to
reduce 2009 expenses by $2 billion, starting in the second
quarter.�
Stumpf continued, �The U.S. Treasury�s Capital Purchase Program
investment is generating a return for the U.S. taxpayer � at
significant cost to the Company. The actions we�re taking every day
to build our Company and to strengthen our balance sheet �
including the dividend and expense reductions announced today � are
the right thing to do in any event for our shareholders, customers,
and team members and these actions will help us repay the
government�s investment at the earliest practical date.�
In accordance with the Private Securities Litigation Reform Act
of 1995, we caution you that this news release contains
forward-looking statements about our future common stock dividends
and our future financial results and condition, including
statements about our ability to profitably grow market share in the
future, our ability to grow tangible common equity in the future,
the anticipated cost saves and other financial benefits of the
Wachovia merger and expected merger expenses compared with previous
estimates. Forward-looking statements give our expectations for the
future. They speak only as of the date of this news release, and we
do not undertake to update them to reflect changes that occur after
that date. There are a number of factors that could cause results
to differ significantly from our expectations, including further
declines in home prices and increases in unemployment and continued
disruption and volatility in the financial and credit markets. For
a discussion of these and other factors that could cause results to
differ from our expectations, refer to the �Risk Factors� section
of our Annual Report on Form 10-K for the year ended December 31,
2008, as filed with the Securities and Exchange Commission and
available at www.sec.gov. This news release also contains
statements about our first quarter 2009 performance to date. This
performance is not necessarily indicative of our future financial
results and condition for future periods including as of and for
the quarter ended March 31, 2009.
Wells Fargo & Company is a diversified financial services
company with $1.3 trillion in assets, providing banking, insurance,
investments, mortgage and consumer finance through more than
11,000�stores, over 12,000 ATMs and the internet (wellsfargo.com)
across North America and internationally. Wells Fargo Bank, N.A.
has the highest credit rating currently given to U.S. banks by
Moody�s Investors Service, �Aa1,� and Standard & Poor�s Ratings
Services, �AA+.�
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Apr 2023 to Apr 2024