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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

þ  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005

OR

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)

Registrant’s telephone number, including area code: 1-800-292-9932

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.

Yes  þ     No  o

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

Yes  þ     No  o

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

 

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FORM 10-Q
CROSS-REFERENCE INDEX

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PART I — FINANCIAL INFORMATION

FINANCIAL REVIEW

SUMMARY FINANCIAL DATA

(1)		The efficiency ratio is defined as noninterest expense divided by total revenue (net interest income and noninterest income).
(2)		Core deposits consist of noninterest-bearing deposits, interest-bearing checking, savings certificates and market rate and other savings.
(3)		Retail core deposits consist of total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits.
(4)		See Note 17 (Regulatory and Agency Capital Requirements) to Financial Statements for additional information.

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This Report on Form 10-Q for the quarter ended June 30, 2005, including the Financial Review and the Financial Statements and related Notes, has forward-looking statements, which include forecasts of our financial results and condition, expectations for our operations and business, and our assumptions for those forecasts and expectations. Do not unduly rely on forward-looking statements. Actual results might differ significantly from our forecasts and expectations. Please refer to “Factors that May Affect Future Results” in this Report for a discussion of some factors that may cause results to differ.

OVERVIEW

Wells Fargo & Company is a $435 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, businesses and institutions in all 50 states of the U.S. and in other countries. We ranked fifth in assets and fourth in market value of our common stock among U.S. bank holding companies at June 30, 2005. When we refer to “the Company”, “we”, “our” and “us” in this Report, we mean Wells Fargo & Company and Subsidiaries (consolidated). When we refer to the Parent, we mean Wells Fargo & Company.

Diluted earnings per share were a record $1.12, up 12% from $1.00 in second quarter 2004 and up 15% (annualized) from $1.08 in first quarter 2005. We continued to have strong growth in loans and core deposits, revenue growth again exceeded expense growth, credit quality remained excellent, and our net interest margin improved further in the quarter. Despite a $559 million decline in revenue from Wells Fargo Home Mortgage (Home Mortgage), consolidated earnings per share were up 12% in second quarter 2005 from a year ago, led by double-digit revenue growth in our businesses other than Home Mortgage. We achieved strong double-digit, year-over-year profit growth in regional banking, consumer finance, middle market/large corporate banking, asset-based lending, capital markets, corporate trust, international and private equity investing.

Our corporate vision is to satisfy all the financial needs of our customers, help them succeed financially, be recognized as the premier financial services company in our markets and be one of America’s great companies. Our primary strategy to achieve this vision is to increase the number of products we provide to our customers and to focus on providing each customer with all of the financial products that fulfill their needs. Our cross-sell strategy and diversified business model facilitates growth in strong and weak economic cycles, as we can grow by expanding the number of products our current customers have with us. We estimate that our average banking household now has 4.7 products with us, which we believe is among the highest, if not the highest, in our industry. Our goal is eight products per customer, which is currently half of our estimate of potential demand. Our core products grew this quarter compared with a year ago, with average loans up 11% and average core deposits up 6%.

We believe it is important to maintain a well-controlled environment as we continue to grow our businesses. We manage our credit risk by maintaining prudent credit policies for underwriting and effective procedures for monitoring and review. We have a well-diversified loan portfolio, measured by industry, geography and product type. We manage the interest rate and market risks inherent in our asset and liability balances within prudent ranges, while ensuring adequate liquidity and funding. Our stockholder value has increased over time due to customer satisfaction, strong financial results, investment in our businesses and the prudent way we attempt to manage our business risks.

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Our financial results included the following:

Net income for second quarter 2005 was $1.91 billion, up 11% from $1.71 billion for second quarter 2004. Diluted earnings per common share for second quarter 2005 were $1.12, up 12% from $1.00 for second quarter 2004. Return on average assets (ROA) increased to 1.76% and return on average common equity (ROE) was 19.76% for second quarter 2005.

Net income for the first six months of 2005 was $3.77 billion, or $2.20 per share, compared with $3.48 billion, or $2.03 per share, for the first half of 2004. ROA was 1.75% in the first half of 2005, compared with 1.76% for the first half of 2004. ROE was 19.68% in the first half of 2005, compared with 19.94% for the first half of 2004.

Net interest income on a taxable-equivalent basis was $4.56 billion and $9.05 billion for the second quarter and first half of 2005, respectively, compared with $4.25 billion and $8.33 billion for the same periods of 2004. Net interest income for second quarter 2005 increased 7% from the prior year on 6% earning asset growth and a 6 basis point increase in the net interest margin. Even though we sold $18 billion of adjustable rate mortgages and auto loans in early 2005, earning assets grew 6% to $374.5 billion in second quarter 2005 from a year ago. While temporarily reducing earning asset growth, previous balance sheet repositioning actions contributed to the 6 basis point increase in the margin to 4.89% from 4.83% a year ago. The net interest margin was 4.88% for the first half of 2005 and 4.89% for the same period of 2004.

Noninterest income increased $129 million, or 4%, to $3.33 billion in second quarter 2005 from $3.20 billion in second quarter 2004. Excluding the $256 million decrease in mortgage banking, noninterest income increased 14% from second quarter 2004. Noninterest income increased 11% to $6.97 billion in the first six months of 2005 from $6.30 billion in the first six months of 2004. The growth in noninterest income for both periods reflected double-digit increases in trust and investment fees, card fees, loan fees and gains from equity investments, offset in second quarter 2005 by the decrease in mortgage banking noninterest income.

Revenue, the sum of net interest income and noninterest income, increased 6% to $7.87 billion in second quarter 2005 from $7.43 billion in second quarter 2004. Home Mortgage revenue declined $559 million, or 42%, from $1.3 billion in second quarter 2004 to $774 million in second quarter 2005. Combined revenue of businesses other than Home Mortgage grew 16% in second quarter 2005 from second quarter 2004. Revenue increased 9% to $15.95 billion in the first half of 2005 from $14.57 billion in the first half of 2004. Revenue growth was broad based across most of our businesses and reflected solid growth in both net interest income and noninterest income.

Noninterest expense was $4.55 billion and $9.25 billion for the second quarter and first half of 2005, respectively, compared with $4.35 billion and $8.38 billion for the same periods of 2004.

Loss rates and nonperforming assets continued at or near historical lows. During second quarter 2005, net charge-offs were $454 million, or .62% of average total loans (annualized), compared with $390 million, or .59%, in second quarter 2004. During the first half of 2005, net charge-offs were $1,039 million, or .72%, and included $163 million, or .11%, related to the timing of credit loss recognition at Wells Fargo Financial upon adoption of Federal Financial Institutions Examination Council (FFIEC) guidelines, compared with $794 million, or .61%, during the first half of 2004. The provision for credit losses was $454 million and $1,039 million for the second

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quarter and first half of 2005, respectively, compared with $440 million and $844 million for the same periods of 2004. The allowance for credit losses, which consists of the allowance for loan losses and the reserve for unfunded credit commitments, was $3.94 billion, or 1.31% of total loans, at June 30, 2005, compared with $3.95 billion, or 1.37%, at December 31, 2004, and $3.94 billion, or 1.46%, at June 30, 2004.

At June 30, 2005, total nonaccrual loans were $1.20 billion, or .40% of total loans, compared with $1.36 billion, or .47%, at December 31, 2004, and $1.38 billion, or .51%, at June 30, 2004. Total nonperforming assets (NPAs) were $1.39 billion, or .46% of total loans, at June 30, 2005, compared with $1.57 billion, or .55%, at December 31, 2004, and $1.62 billion, or .60%, at June 30, 2004. The $181 million decline in NPAs from December 31, 2004, primarily reflected lower consumer NPAs due to the impact of the higher charge-offs at Wells Fargo Financial in first quarter 2005 to conform its credit write-off practices with FFIEC standards and the continued decline in commercial NPAs due to overall economic improvements. Foreclosed assets were $187 million at June 30, 2005, compared with $212 million at December 31, 2004, and $235 million at June 30, 2004.

The ratio of stockholders’ equity to total assets was 9.03% at June 30, 2005, compared with 8.85% at December 31, 2004, and 8.44% at June 30, 2004. Our total risk-based capital (RBC) ratio at June 30, 2005, was 12.17% and our Tier 1 RBC ratio was 8.57%, exceeding the minimum regulatory guidelines of 8% and 4%, respectively, for bank holding companies. Our RBC ratios at December 31, 2004, were 12.07% and 8.41%, respectively. Our Tier 1 leverage ratios were 7.28% and 7.08% at June 30, 2005, and December 31, 2004, respectively, exceeding the minimum regulatory guideline of 3% for bank holding companies.

Recent Accounting Standards

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS 123R), which replaces FAS 123, Accounting for Stock-Based Compensation, and supercedes Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Securities and Exchange Commission (SEC) registrants originally would have been required to adopt FAS 123R’s provisions at the beginning of their first interim period after June 15, 2005. On April 14, 2005, the SEC announced that registrants could delay adoption of FAS 123R’s provisions until the beginning of their next fiscal year. We currently expect to adopt FAS 123R on January 1, 2006, as required, using the “modified prospective” transition method. The scope of FAS 123R includes a wide range of stock-based compensation arrangements including stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee stock purchase plans. FAS 123R will require us to measure the cost of employee services received in exchange for an award of equity instruments based on the fair value of the award on the grant date. That cost must be recognized in the income statement over the vesting period of the award. Under the “modified prospective” transition method, awards that are granted, modified or settled beginning at the date of adoption will be measured and accounted for in accordance with FAS 123R. In addition, expense must be recognized in the statement of income for unvested awards that were granted prior to the date of adoption. The expense will be based on the fair value determined at the grant date. We currently estimate that the adoption of FAS 123R will reduce earnings by approximately $.06 per share in 2006 and we will continue to evaluate the impact of adoption on our financial statements.

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On March 30, 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations — An Interpretation of FASB Statement No. 143 (FIN 47). FIN 47 was issued to address diverse accounting practices that developed with respect to the timing of liability recognition for legal obligations associated with the retirement of a tangible long-lived asset when the timing and/or method of settlement of the obligation are conditional on a future event. FIN 47 requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN 47 is effective no later than December 31, 2005. We are currently evaluating the impact of adopting FIN 47 on our financial statements.

On June 29, 2005, the FASB ratified the decisions reached by the Emerging Issues Task Force (EITF) with respect to Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (EITF 04-5). The EITF reached a consensus that the general partners in a limited partnership are presumed to control that limited partnership regardless of the extent of the general partners’ ownership interest in the limited partnership. The EITF also reached a consensus that the presumption may be overcome if the limited partners have either (a) the substantive ability to dissolve (liquidate) the limited partnership or otherwise remove the general partners without cause or (b) substantive participating rights. The guidance reached in the consensus is effective immediately for all newly formed limited partnerships and existing limited partnerships that are modified. The guidance will be effective for existing limited partnerships beginning January 1, 2006. We do not expect that EITF 04-5 will have a material impact on our financial statements.

On May 5, 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections (FAS 154), replacing APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements. Unless specified in an accounting standard, FAS 154 requires retrospective application to prior periods’ financial statements for changes in accounting principle and corrections of errors. APB Opinion 20 previously provided that most changes in accounting principle be recognized by including in net income the cumulative effect of changing to the new principle in the period of adoption. We will adopt the provisions of FAS 154 effective January 1, 2006.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are fundamental to understanding our results of operations and financial condition, because some accounting policies require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. Three of these policies are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different conditions or using different assumptions. These policies govern the allowance for credit losses, the valuation of mortgage servicing rights and pension accounting. Management has reviewed and approved these critical accounting policies and has discussed these policies with the Audit and Examination Committee. These policies are described in “Financial Review — Critical Accounting Policies” and Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2004 (2004 Form 10-K).

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EARNINGS PERFORMANCE

NET INTEREST INCOME

Net interest income is the interest earned on debt securities, loans (including yield-related loan fees) and other interest-earning assets minus the interest paid for deposits and long-term and short-term debt. The net interest margin is the average yield on earning assets minus the average interest rate paid for deposits and our other sources of funding. Net interest income and the net interest margin are presented in the following table on a taxable-equivalent basis to consistently reflect income from taxable and tax-exempt loans and securities based on a 35% marginal tax rate.

Net interest income on a taxable-equivalent basis increased 7% to $4.56 billion in second quarter 2005 from $4.25 billion in second quarter 2004, primarily due to 6% earning asset growth, despite a decrease in debt securities available for sale and 1-4 family first mortgage loans related to balance sheet repositioning actions taken during the past year.

The net interest margin increased to 4.89% in second quarter 2005 from 4.83% in second quarter 2004 and was up 2 basis points from first quarter 2005, primarily due to strong core deposit growth and improved asset yields following the balance sheet repositioning actions.

Individual components of net interest income and the net interest margin are presented in the following table.

Average earning assets increased 6% to $374.5 billion in second quarter 2005 from the same period in 2004 despite the sale of $18 billion of adjustable rate mortgages and auto loans in early 2005. Loans averaged $295.6 billion in second quarter 2005, compared with $266.2 billion in second quarter 2004. Average debt securities available for sale decreased to $29.4 billion in second quarter 2005 from $32.1 billion in second quarter 2004.

Average core deposits are an important contributor to growth in net interest income and the net interest margin. This low-cost source of funding rose 6% from a year ago. Average core deposits were $238.3 billion and $224.9 billion in second quarter 2005 and 2004, respectively. Total average retail core deposits, which exclude Wholesale Banking core deposits and retail mortgage escrow deposits, for second quarter 2005, grew $16.2 billion, or 9%, from a year ago. Average retail mortgage escrow deposits were $15.7 billion for second quarter 2005, down $754 million from a year ago. Average savings certificates of deposit increased to $20.9 billion in second quarter 2005 from $18.7 billion in second quarter 2004 and average noninterest-bearing checking accounts and other core deposit categories increased to $217.4 billion in second quarter 2005 from $206.2 billion in second quarter 2004. Total average interest-bearing deposits increased to $188.1 billion in second quarter 2005 from $182.3 billion in second quarter 2004.

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AVERAGE BALANCES, YIELDS AND RATES PAID (TAXABLE-EQUIVALENT BASIS) (1) (2)

(1)		Our average prime rate was 5.92% and 4.00% for the quarters ended June 30, 2005 and 2004, respectively, and 5.68% and 4.00% for the six months ended June 30, 2005 and 2004, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 3.29% and 1.30% for the quarters ended June 30, 2005 and 2004, respectively, and 3.07% and 1.21% for the six months ended June 30, 2005 and 2004, 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 the periods presented.

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NONINTEREST INCOME

We earn trust, investment and IRA fees from managing and administering assets, which include mutual funds, corporate trust, personal trust, employee benefit trust and agency assets. At June 30, 2005, these assets totaled $732 billion, up 17% from $625 billion at June 30, 2004. This increase included $24 billion in mutual fund assets and $5 billion in institutional investment accounts acquired from Strong Financial at December 31, 2004. Upon the merger of the Wells Fargo Funds® and certain Strong Financial funds in April 2005, we renamed our mutual fund family the Wells Fargo Advantage Funds^SM. Generally, these trust and investment fees are based on the market value of the assets that are managed, administered, or both. The increase in trust, investment and IRA fees of 19% for second quarter 2005 compared with second quarter 2004 was due to the acquisition of assets from the Strong Financial transaction and our successful efforts to grow these businesses.

Additionally, we receive commissions and other fees for providing services to retail and discount brokerage customers. At June 30, 2005 and 2004, brokerage balances were $90 billion and $75 billion, respectively. Generally, these fees are based on the number of transactions executed at the customer’s direction.

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Card fees increased 17% and 16% for the second quarter and first half of 2005, respectively, predominantly due to an increase in credit card accounts and credit and debit card transaction volume.

Mortgage banking noninterest income was $237 million and $1,051 million in the second quarter and first half of 2005, respectively, compared with $493 million and $808 million in the same periods of 2004.

Net servicing fees were $(99) million and $357 million in the second quarter and first half of 2005, respectively, compared with $461 million and $627 million in the same periods of 2004. Servicing fees are presented net of amortization and impairment of mortgage servicing rights (MSRs) and net derivative gains and losses, which are all influenced by both the level and direction of mortgage interest rates. The decrease in net servicing fees in second quarter 2005, compared with the prior year, reflected higher MSRs impairment and amortization due to higher assumed prepayment speeds resulting from a decline in market interest rates during the quarter. Mortgage banking servicing fees in the second quarter and first half of 2005 included $304 million and $33 million, respectively, in MSRs impairment provision compared with a $585 million and $185 million valuation allowance release in the same periods of 2004. Amortization of MSRs was $493 million and $963 million in the second quarter and first half of 2005, respectively, and $431 million and $942 million in the same periods of 2004. Net derivative gains (losses) were $105 million and $190 million in the second quarter and first half of 2005, respectively, and $(204) million and $334 million in the same periods of 2004.

Net gains (losses) on mortgage loan origination/sales activities reflected net gains of $250 million and $543 million in the second quarter and first half of 2005, respectively, compared with $(52) million and $46 million for the same periods of 2004. The net loss of $52 million in second quarter 2004 reflected $161 million of losses connected with the sale of $10.5 billion of adjustable rate mortgages related to balance sheet repositioning activities. Originations during second quarter 2005 declined to $85 billion from $96 billion in second quarter 2004. For the first half of 2005, originations totaled $150 billion compared with $161 billion in 2004. The first mortgage unclosed pipeline was $73 billion at June 30, 2005, up from $50 billion at December 31, 2004.

Net gains (losses) on debt securities available for sale were $39 million and $35 million in the second quarter and first half of 2005, respectively, compared with $(61) million and $(28) million in the same periods of 2004. Net gains from equity investments were $201 million and $272 million in the second quarter and first half of 2005, respectively, and $81 million and $176 million in the same periods of 2004.

We routinely review our investment portfolios and recognize impairment write-downs based primarily on issuer-specific factors and results, and our intent to hold such securities. We also consider general economic and market conditions, including industries in which venture capital investments are made, and adverse changes affecting the availability of venture capital. We determine impairment based on all of the information available at the time of the assessment, but new information or economic developments in the future could result in recognition of additional impairment.

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NONINTEREST EXPENSE

Noninterest expense increased 5% to $4.6 billion in second quarter 2005, compared with $4.4 billion in second quarter 2004, primarily due to continued investments in new stores and additional sales-related team members.

The Strong Financial transaction added $143 million of noninterest expense for the first half of 2005, including $12 million of integration costs.

See “Recent Accounting Standards” for information with respect to the accounting for share-based awards, such as stock option grants and the required date of adoption. Upon adoption, we will be required to include the cost of such grants in our statement of income over the vesting period of the award.

INCOME TAX EXPENSE

Our effective income tax rate for the first half of 2005 was 33.57%, compared with 34.90% for the same period of 2004. Based primarily on our donations of appreciated securities to the Wells Fargo Foundation and our investment in affordable housing and new markets tax credits, the lower effective income tax rate for the first half of 2005 reflects our expected rate for the full year. This resulted in an effective rate of 33.15% for second quarter 2005.

OPERATING SEGMENT RESULTS

Our lines of business for management reporting consist of Community Banking, Wholesale Banking and Wells Fargo Financial.

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Community Banking’s net income decreased $47 million, or 4%, from $1,338 million in second quarter 2004 to $1,291 million in second quarter 2005. Excluding the impact of a $559 million decline in Home Mortgage revenue between the same periods, Community Banking realized a strong increase in net income. Net income increased 7% to $2,695 million for the first half of 2005 from $2,521 million for the first half of 2004. Net interest income increased 5% to $3,150 million, and 8% to $6,269 million in the second quarter and first half of 2005, respectively, from the same periods of 2004, primarily due to a higher net interest margin and strong growth in consumer loans and growth in noninterest-bearing deposits. Loan growth was partially offset by the sales of low-yielding adjustable rate mortgages and auto loans in prior quarters and a decline in loans held for sale. Average loans in Community Banking grew 6% and average core deposits grew 8% from second quarter 2004. The provision for credit losses was $213 million in both second quarter 2005 and 2004. Noninterest income for second quarter 2005 decreased by $55 million from second quarter 2004 due to a decline in Home Mortgage noninterest income, which more than offset solid growth in other fee lines. Noninterest income for the first half of 2005 increased by $477 million over the same period in 2004. Noninterest expense increased by $252 million and $765 million in the second quarter and first half of 2005, respectively, over the same periods in 2004, primarily due to an increase in the number of team members.

Wholesale Banking’s net income was $462 million in second quarter 2005, up 20% from $385 million in second quarter 2004. Net income was $887 million for the first half of 2005, up 6% from $833 million in the first half of 2004. Wholesale Banking recorded a recovery of provision for credit losses of $10 million in second quarter 2005 and a provision for credit losses of $18 million in second quarter 2004. Noninterest income increased 21% to $871 million and 11% to $1,716 million in the second quarter and first half of 2005, respectively, from the same periods of 2004, primarily due to realized gains from debt securities and equity investments and the impact of the Strong Financial transaction. Noninterest expense increased 13% to $750 million and 12% to $1,495 million in the second quarter and first half of 2005, respectively, from the same periods of 2004, largely due to the impact of the Strong Financial transaction.

Wells Fargo Financial’s net income was $157 million in second quarter 2005, up 50% from $105 million for second quarter 2004. Net income was $184 million for the first half of 2005 and $241 million for the same period in 2004. First quarter 2005 results included $163 million in credit losses to conform Wells Fargo Financial’s charge-off timing estimates with FFIEC guidelines. Net interest income increased 17% to $798 million, and 18% to $1,567 million for the second quarter and first half of 2005, respectively, from the same periods of 2004, due to growth in average loans. The provision for credit losses increased by $42 million and $253 million in the second quarter and first half of 2005, respectively, compared with the same periods of 2004, due to growth in average loans and the $163 million FFIEC-related credit loss recognized in first quarter 2005. Noninterest income increased $33 million, or 39%, and $23 million, or 12%, from the second quarter and first half of 2004, respectively, to the same periods of 2005, primarily due to gains on sales of consumer and mortgage loans. Noninterest expense increased $38 million, or 10%, and $112 million, or 15%, from the second quarter and first half of 2004, respectively, to the same periods of 2005, reflecting business expansion and additional team members.

For a more complete description of our operating segments, including additional financial information and the underlying management accounting process, see Note 12 (Operating Segments) to Financial Statements.

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BALANCE SHEET ANALYSIS

A comparison between the June 30, 2005, December 31, 2004, and June 30, 2004, balance sheets is presented below.

SECURITIES AVAILABLE FOR SALE

Our securities available for sale portfolio includes both debt and marketable equity securities. We hold debt securities available for sale primarily for liquidity, interest rate risk management and yield enhancement purposes. Accordingly, this portfolio primarily includes very liquid, high-quality federal agency debt securities. At June 30, 2005, we held $28.3 billion of debt securities available for sale, compared with $33.0 billion at December 31, 2004, with a net unrealized gain of $.9 billion and $1.2 billion for the same periods. In addition, we held $891 million of marketable equity securities available for sale at June 30, 2005, and $696 million at December 31, 2004, with a net unrealized gain of $261 million and $189 million for the same periods.

The weighted-average expected maturity of debt securities available for sale was 4.6 years at June 30, 2005. Since 74% of this portfolio is mortgage-backed securities, the expected remaining maturity may differ from contractual maturity because borrowers may have the right to prepay obligations before the underlying mortgages mature.

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 shown below.

MORTGAGE-BACKED SECURITIES

See Note 4 (Securities Available for Sale) to Financial Statements for securities available for sale by security type.

LOAN PORTFOLIO

A comparative schedule of average loan balances is included in the table on pages 8 and 9; quarter-end balances are in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements.

Loans averaged $295.6 billion in second quarter 2005, compared with $266.2 billion in second quarter 2004, an increase of 11%. Total loans at June 30, 2005, were $301.7 billion, compared with $269.7 billion at June 30, 2004, an increase of 12%. Average 1-4 family first mortgages decreased $9.8 billion, or 11%, in second quarter 2005 compared with a year ago due to a

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redesignation of loans held for investment to the held for sale portfolio. Average commercial and commercial real estate loans increased $11.5 billion, or 13%, in second quarter 2005 compared with a year ago. Mortgages held for sale decreased to $31.7 billion in second quarter 2005, from $39.4 billion a year ago, due to lower origination volume. Loans held for sale decreased to $651 million in second quarter 2005 from $8.2 billion a year ago, due to a redesignation of student loans held for sale to the held for investment portfolio. Our decision to hold these loans for investment was based on present yields and our intent and ability to hold this portfolio for the foreseeable future.

DEPOSITS

The increase in average deposits of $9.7 billion from $263.9 billion in second quarter 2004 to $273.6 billion in second quarter 2005 was predominantly due to growth in market rate savings and noninterest-bearing deposits, offset by a decrease in other time deposits.

OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS

In the ordinary course of business, we engage in financial transactions that are not recorded on the balance sheet, or may be recorded on the balance sheet in amounts that are different than the full contract or notional amount of the transaction. We also enter into certain contractual obligations. For additional information on off-balance sheet arrangements and other contractual obligations see “Financial Review — Off-Balance Sheet Arrangements and Aggregate Contractual Obligations” in our 2004 Form 10-K and Note 16 (Guarantees) to Financial Statements in this Report.

RISK MANAGEMENT

CREDIT RISK MANAGEMENT PROCESS

Our credit risk management process provides for decentralized management and accountability by our lines of business. Our overall credit process includes comprehensive credit policies, frequent and detailed risk measurement and modeling, extensive credit training programs and a continual loan audit review process. In addition, regulatory examiners review and perform detailed tests of our credit underwriting, loan administration and allowance processes.

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Nonaccrual Loans and Other Assets

The table below shows the comparative data for nonaccrual loans and other assets. We generally place loans on nonaccrual status (1) when the full and timely collection of interest or principal becomes uncertain, (2) when they are 90 days (120 days with respect to real estate 1-4 family first and junior lien mortgages) past due for interest or principal (unless both well-secured and in the process of collection) or (3) when part of the principal balance has been charged off. Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2004 Form 10-K describes our accounting policy for nonaccrual loans.

NONACCRUAL LOANS AND OTHER ASSETS

(1)		Includes impaired loans of $268 million, $309 million and $510 million at June 30, 2005, December 31, 2004, and June 30, 2004, respectively. (See Note 5 to Financial Statements in this Report and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in our 2004 Form 10-K for further information on impaired loans.)
(2)		Real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if these assets were recorded as loans. Real estate investments totaled $14 million at June 30, 2005, and $4 million at both December 31 and June 30, 2004.

We expect that the amount of nonaccrual loans will change due to portfolio growth, portfolio seasoning, routine problem loan recognition and resolution through collections, sales or charge-offs. The performance of any loan can be affected by external factors, such as economic conditions, or factors particular to a borrower, such as actions of a borrower’s management.

The decrease in total nonaccrual loans and other assets from December 31, 2004, reflected a lower level of consumer nonperforming loans due to the impact of higher charge-offs at Wells Fargo Financial to conform its credit charge-off practices with FFIEC standards and the continued decline in commercial nonperforming loans due to overall economic improvements.

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Loans 90 Days or More Past Due and Still Accruing

Loans included in this category are 90 days or more past due as to interest or principal and still accruing, because they are (1) well-secured and in the process of collection or (2) real estate 1-4 family first mortgage loans or consumer loans exempt under regulatory rules from being classified as nonaccrual.

The total of loans 90 days or more past due and still accruing was $2,518 million, $2,578 million and $2,382 million at June 30, 2005, December 31, 2004, and June 30, 2004, respectively. At June 30, 2005, December 31, 2004, and June 30, 2004, the total included $1,943 million, $1,820 million and $1,700 million, respectively, in advances pursuant to our servicing agreements to Government National Mortgage Association (GNMA) mortgage pools whose repayments are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs.

LOANS 90 DAYS OR MORE PAST DUE AND STILL ACCRUING
(EXCLUDING INSURED/GUARANTEED GNMA ADVANCES)

Allowance for Credit Losses

The allowance for credit losses, which consists of the allowance for loan losses and the reserve for unfunded credit commitments, is management’s estimate of credit losses inherent in the loan portfolio at the balance sheet date. We assume that our allowance for credit losses as a percentage of charge-offs and nonperforming loans will change at different points in time based on credit performance, loan mix and collateral values. The analysis of the changes in the allowance for credit losses, including charge-offs and recoveries by loan category, is presented in Note 5 (Loans and Allowance for Credit Losses) to Financial Statements.

We consider the allowance for credit losses of $3.94 billion adequate to cover credit losses inherent in the loan portfolio, including unfunded credit commitments, at June 30, 2005. The process for determining the adequacy of the allowance for credit losses is critical to our financial results. It requires difficult, subjective and complex judgments, as a result of the need to make estimates about the effect of matters that are uncertain. (See “Financial Review — Critical

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Accounting Policies — Allowance for Credit Losses” in our 2004 Form 10-K.) Therefore, we cannot provide assurance that, in any particular period, we will not have sizeable credit losses in relation to the amount reserved. We may need to significantly adjust the allowance for credit losses, considering current factors at the time, including economic conditions and ongoing internal and external examination processes. Our process for determining the adequacy of the allowance for credit losses is discussed in Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in our 2004 Form 10-K.

ASSET/LIABILITY AND MARKET RISK MANAGEMENT

Asset/liability management involves the evaluation, monitoring and management of interest rate risk, market risk, liquidity and funding. The Corporate Asset/Liability Management Committee (Corporate ALCO) — which oversees these risks and reports periodically to the Finance Committee of the Board of Directors — consists of senior financial and business executives. Each of our principal business groups — Community Banking (including Mortgage Banking), Wholesale Banking and Wells Fargo Financial — have individual asset/liability management committees and processes linked to the Corporate ALCO process.

Interest Rate Risk

Interest rate risk, which potentially can have a significant earnings impact, is an integral part of being a financial intermediary. We are subject to interest rate risk because:

•		assets and liabilities may mature or reprice at different times (for example, if assets reprice faster than liabilities and interest rates are generally falling, earnings will initially decline);
•		assets and liabilities may reprice at the same time but by different amounts (for example, when the general level of interest rates is falling, we may reduce rates paid on checking and savings deposit accounts by an amount that is less than the general decline in market interest rates);
•		short-term and long-term market interest rates may change by different amounts (i.e., the shape of the yield curve may affect new loan yields and funding costs differently); or
•		the remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change (for example, if long-term mortgage interest rates decline sharply, mortgage-backed securities held in the securities available for sale portfolio may prepay significantly earlier than anticipated — which could reduce portfolio income). In addition, interest rates may have an indirect impact on loan demand, credit losses, mortgage origination volume, the value of mortgage servicing rights, the value of the pension liability and other sources of earnings.

We assess interest rate risk by comparing our most likely earnings plan with various earnings models using many 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. Currently, earnings are relatively neutral to both rising and falling rates. For example, as of June 30, 2005, our simulation indicated estimated earnings at risk of less than 1% of our most likely earnings plan to a scenario in which the federal funds rate dropped 100 basis points over the next twelve months and the 10-year Constant Maturity Treasury Bond yield dropped 110 basis points over the same period. Similarly, we estimated earnings at risk of less than 1% to a scenario in which the federal funds rate increased 250 basis points and the 10-year Constant

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Maturity Treasury Bond yield increased 215 basis points over the next twelve months. Simulation estimates depend on, and will change with, the size and mix of our actual and projected balance sheet at the time of each simulation.

We use exchange-traded and over-the-counter interest rate derivatives to hedge our interest rate exposures. The credit risk amount and estimated net fair values of these derivatives as of June 30, 2005, and December 31, 2004, are presented in Note 18 (Derivatives) to Financial Statements. We use derivatives for asset/liability management in three ways:

•		to convert most of the long-term fixed-rate debt to floating-rate payments by entering into receive-fixed swaps at issuance;
•		to convert the cash flows from selected asset and/or liability instruments/portfolios from fixed to floating payments or vice versa; and
•		to hedge the mortgage origination pipeline, funded mortgage loans and mortgage servicing rights using swaptions, futures, forwards and options.

Mortgage Banking Interest Rate Risk

We originate, fund and service mortgage loans, which subjects us to a number of risks, including credit, liquidity and interest rate risks. We manage credit and liquidity risk by selling or securitizing most of the mortgage loans we originate. Changes in interest rates, however, may have a significant effect on mortgage banking income in any quarter and over time. Interest rates impact both the value of the mortgage servicing rights (MSRs), which is adjusted to the lower of cost or fair value, and the future earnings of the mortgage business, which are driven by origination volume and the duration of our servicing. We manage both risks by hedging the impact of interest rates on the value of the MSRs using derivatives, combined with the “natural hedge” provided by the origination and servicing components of the mortgage business; however, we do not hedge 100% of these two risks.

We hedge a significant portion of the value of our MSRs against a change in interest rates with derivatives. 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 our MSRs for any given change in long-term interest rates.

The value of our MSRs is influenced primarily by prepayment speed assumptions affecting the duration of the mortgage loans to which our 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. In contrast, prepayment speed assumptions would tend to slow in a rising interest rate environment and increase the value of the MSRs.

For a given decline in interest rates, a portion of the potential reduction in the value of our MSRs 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. With much lower long-term interest rates, the decline in the value of our MSRs and the effect on net income would be immediate whereas the additional origination and servicing fee income accrues over time. Under generally accepted accounting principles (GAAP), impairment of our MSRs, due to a decrease in long-term rates or other reasons, is charged immediately to earnings through an increase to the valuation allowance.

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In scenarios of sustained increases in long-term interest rates, origination fees may decline as refinancing activity slows. In such higher interest rate scenarios, the duration of the servicing portfolio may lengthen. In such circumstances, we may reduce periodic amortization of MSRs, and may recover some or all of the previously established valuation allowance.

Our MSRs totaled $8.5 billion, net of a valuation allowance of $1.6 billion, at June 30, 2005, and $7.9 billion, net of a valuation allowance of $1.6 billion, at December 31, 2004. The weighted-average note rate of our owned servicing portfolio was 5.75% at both June 30, 2005, and December 31, 2004. Our MSRs were 1.12% of mortgage loans serviced for others at June 30, 2005, and 1.15% at December 31, 2004.

Market Risk — Trading Activities

From a market risk perspective, our net income is exposed to changes in interest rates, credit spreads, foreign exchange rates, equity and commodity prices and their implied volatilities. The primary purpose of our trading businesses is to accommodate customers in the management of their market price risks. Also, we take positions based on market expectations or to benefit from price differences between financial instruments and markets, subject to risk limits established and monitored by Corporate ALCO. All securities, loans, foreign exchange transactions, commodity transactions and derivatives — transacted with customers or used to hedge capital market transactions with customers — are carried at fair value. The Institutional Risk Committee establishes and monitors counterparty risk limits. The notional or contractual amount, credit risk amount and estimated net fair value of all customer accommodation derivatives at June 30, 2005, and December 31, 2004, are included in Note 18 (Derivatives) to Financial Statements. Open, “at risk” positions for all trading business are monitored by Corporate ALCO.

The standardized approach for monitoring and reporting market risk for the trading activities is the value-at-risk (VAR) metrics complemented with factor analysis and stress testing. Value-at-risk measures the worst expected loss over a given time interval and within a given confidence interval. We measure and report daily VAR at 99% confidence interval based on actual changes in rates and prices over the past 250 days. The analysis captures all financial instruments that are considered trading positions. The average one-day VAR throughout second quarter 2005 was $21 million, with a lower bound of $17 million and an upper bound of $25 million.

Market Risk — Equity Markets

We are directly and indirectly affected by changes in the equity markets. We make and manage direct equity investments in start-up businesses, emerging growth companies, management buy-outs, acquisitions and corporate recapitalizations. We also invest in non-affiliated funds that make similar private equity investments. These private equity investments are made within capital allocations approved by management and the Board of Directors (the Board). The Board reviews business developments, key risks and historical returns for the private equity investments at least annually. Management reviews these investments at least quarterly and assesses them for possible other-than-temporary impairment. For nonmarketable investments, the analysis is based on facts and circumstances of each individual investment and the expectations for that investment’s cash flows and capital needs, the viability of its business model and our exit strategy. Private equity investments totaled $1,485 million at June 30, 2005, and $1,449 million at December 31, 2004.

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We also have marketable equity securities in the available for sale investment portfolio, including securities relating to our venture capital activities. We manage these investments within capital risk limits approved by management and the Board and monitored by Corporate ALCO. Gains and losses on these securities are recognized in net income when realized and, in addition, other-than-temporary impairment may be periodically recorded. The initial indicator of impairment for marketable equity securities is a sustained decline in market price below the amount recorded for that investment. We consider a variety of factors, such as the length of time and the extent to which the market value has been less than cost; the issuer’s financial condition, capital strength, and near-term prospects; any recent events specific to that issuer and economic conditions of its industry; and, to a lesser degree, our investment horizon in relationship to an anticipated near-term recovery in the stock price, if any. The fair value of marketable equity securities was $891 million and cost was $630 million at June 30, 2005, and $696 million and $507 million, respectively, at December 31, 2004.

Changes in equity market prices may also indirectly affect our net income (1) by affecting the value of third party assets under management and, hence, fee income, (2) by affecting particular borrowers, whose ability to repay principal and/or interest may be affected by the stock market, or (3) by affecting brokerage activity, related commission income and other business activities. Each business line monitors and manages these indirect risks.

Liquidity and Funding

The objective of effective liquidity management is to ensure that we can meet customer loan requests, customer deposit maturities/withdrawals and other cash commitments efficiently under both normal operating conditions and under 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. We set liquidity management guidelines for both the consolidated balance sheet as well as for the Parent specifically to ensure that the Parent is a source of strength for its regulated, deposit-taking banking subsidiaries. Debt securities in the securities available for sale portfolio provide asset liquidity, 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 further enhanced by our ability to sell or securitize loans in secondary markets through whole-loan sales and securitizations.

Core customer deposits have historically provided a sizeable source of relatively stable and low-cost funds. The remaining assets were funded by long-term debt, deposits in foreign offices, short-term borrowings (federal funds purchased, securities sold under repurchase agreements, commercial paper and other short-term borrowings) and trust preferred securities.

Liquidity is also available through our ability to raise funds in a variety of domestic and international money and capital markets. We access capital markets for long-term funding by issuing registered debt, private placements and asset-based secured funding. In September 2003, Moody’s Investors Service raised Wells Fargo Bank, N.A.’s credit rating to “Aaa,” its highest investment grade, from “Aa1” and raised the Company’s senior debt rating to “Aa1” from “Aa2.” In October 2003, Standard & Poor’s Ratings Service raised the counterparty ratings on the Company to “AA-minus/A-1-plus” from “A-plus/A-1” and the revised outlook for the Company to stable from positive. In July 2005, Dominion Bond Rating Service raised the

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Company’s long-term debt rating to “AA” from “AA (low).” Rating agencies base their ratings on many quantitative and qualitative factors, including capital adequacy, liquidity, asset quality, business mix and level and quality of earnings.

Parent. In June 2004, the Parent’s registration statement with the Securities and Exchange Commission (SEC) for issuance of $20 billion in senior and subordinated notes, preferred stock and other securities became effective. During the second quarter and first half of 2005, the Parent issued a total of $4.9 billion and $10.7 billion of senior notes, respectively. At June 30, 2005, the Parent’s remaining issuance capacity under its effective registration statements was $1.2 billion. We used the proceeds from securities issued in the first half of 2005 for general corporate purposes and expect that the proceeds in the future will also be used for general corporate purposes. In July 2005, the Parent’s registration statement with the SEC for issuance of $30 billion in senior and subordinated notes, preferred stock and other securities became effective. The Parent also issues commercial paper and has a $1 billion back-up credit facility. In July 2005, the Parent issued $2 billion (Australian) in senior notes under the Parent’s Australian debt issuance program.

Wells Fargo Bank, N.A. 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. Securities are issued under this program as private placements in accordance with Office of the Comptroller of the Currency (OCC) regulations. During the second quarter and first half of 2005, Wells Fargo Bank, N.A. issued $50 million and $1.6 billion in senior long-term notes, respectively. At June 30, 2005, the remaining issuance authority under the long-term portion was $7.4 billion. In addition, outside of the bank note program, Wells Fargo Bank, N.A. issued $1.5 billion in subordinated debt during the first half of 2005.

Wells Fargo Financial. In November 2003, Wells Fargo Financial Canada Corporation (WFFCC), a wholly owned Canadian subsidiary of Wells Fargo Financial, Inc. (WFFI), qualified for distribution with the provincial securities exchanges in Canada $1.5 billion (Canadian) of issuance authority. In December 2004, WFFCC amended its existing shelf registration by adding $2.5 billion (Canadian) of issuance authority. During the second quarter and first half of 2005, WFFCC issued $1.4 billion (Canadian) and $1.7 billion (Canadian) in senior notes, respectively. At June 30, 2005, the remaining issuance capacity for WFFCC was $1.2 billion (Canadian). During second quarter 2005, WFFI entered into an auto securitization accounted for as a secured borrowing arrangement for $1 billion (US). Under the terms of the arrangement, WFFI pledged auto loans as security for the borrowing.

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CAPITAL MANAGEMENT

We have an active program for managing stockholder capital. We use capital to fund organic growth, acquire banks and other financial services companies, pay dividends and repurchase our shares. Our objective is to produce above market long-term returns by opportunistically using capital when returns are perceived to be high and issuing/accumulating capital when such costs are perceived to be low. Growth in average earning assets was 6% from second quarter 2004. ROE was 19.76% for second quarter 2005 and 19.57% for second quarter 2004.

From time to time our Board authorizes the Company to repurchase shares of its common stock. Although we announce when our Board authorizes share repurchases, we typically do not give any public notice before we repurchase our shares. Various factors determine the amount and timing of our share repurchases, including our capital requirements, the number of shares we expect to issue for acquisitions and employee benefit plans, market conditions (including the trading price of our stock), and legal considerations. These factors can change at any time, and there can be no assurance as to the number of shares we will repurchase or when we will repurchase them.

Historically, our policy has been to repurchase shares under the “safe harbor” conditions of Rule 10b-18 of the Exchange Act including a limitation on the daily volume of repurchases. In November 2003, the SEC amended Rule 10b-18 to impose an additional daily volume limitation on share repurchases during a pending merger or acquisition in which shares of our stock will constitute some or all of the consideration. Our management may determine that during a pending stock merger or acquisition when the safe harbor would otherwise be available, it is in the Company’s best interest to repurchase shares in excess of this additional daily volume limitation. In such cases, we intend to repurchase shares in compliance with the other conditions of the safe harbor, including the standing daily volume limitation that applies whether or not there is a pending stock merger or acquisition.

In April 2004, the Board authorized the repurchase of up to 25 million additional shares of common stock. In January 2005, the Board authorized the repurchase of up to 25 million additional shares of common stock. During the first half of 2005, we repurchased approximately 23 million shares of our common stock. At June 30, 2005, the total remaining common stock repurchase authority under the January 2005 authorization was approximately 15 million shares. In July 2005, the Board authorized the repurchase of up to 25 million additional shares of common stock. (For additional information regarding share repurchases and repurchase authorizations, see Part II Item 2 on page 66.) Also in July 2005, the Board authorized a quarterly common stock dividend of 52 cents per share, an increase of 4 cents per share, or 8%, from the prior quarter.

Our potential sources of capital include retained earnings, and issuances of common and preferred stock and subordinated debt. In the first half of 2005, retained earnings increased $2.1 billion, predominantly as a result of net income of $3.8 billion less dividends of $1.6 billion. For the first half of 2005, stock repurchases represented 36% of net income and the combination of stock repurchases and dividends represented 80% of net income. In the first half of 2005, we issued $824 million of common stock under various employee benefit and director plans and under our dividend reinvestment program.

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FACTORS THAT MAY AFFECT FUTURE RESULTS

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.

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:

•		the impact of new accounting standards, including the impact on our earnings per share of the adoption of FAS 123R;
•		the effective income tax rate for the full year 2005;
•		future credit losses and nonperforming assets, including changes in the amount of nonaccrual loans due to portfolio growth, portfolio seasoning and other factors;
•		future short-term and long-term interest rate levels and their impact on our net interest margin, net income, liquidity and capital;
•		the use of proceeds from the issuance of debt securities by the Parent;
•		the timing of the closing of pending business combination transactions;
•		the amount and timing of future contributions to the Cash Balance Plan;
•		the recovery of our investment in variable interest entities; and
•		future reclassification to earnings of deferred net gains on derivatives.

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 a number of factors—many beyond our control—that could cause results to differ significantly from our expectations. Some of these factors are described below. Other factors, such as credit, market, operational, liquidity, interest rate and other risks, are described elsewhere in this report (see, for example, “Balance Sheet Analysis”). Factors relating to regulation and supervision are described in our 2004 Form 10-K. Any factor described in this report or in our 2004 Form 10-K could by itself, or together with one or more other factors, adversely affect our business, results of operations or financial condition. There are also other factors that we have not described in this report or in our 2004 Form 10-K that could cause results to differ from our expectations.

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Industry Factors

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

Our business and earnings are affected 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, an increase in unemployment, or other events that affect household and/or corporate incomes could decrease the demand for 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 affect 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, could affect business and economic conditions in the U.S. and abroad. The terrorist attacks in 2001, for example, caused an immediate decrease in air travel, which affected the airline industry, lodging, gaming and tourism.

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

The fiscal and monetary policies of the federal government and its agencies significantly affect our earnings.

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 affect our net interest margin. They also 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.

The financial services industry is highly competitive.

We operate in a highly competitive industry that could become even more competitive as a result of legislative, regulatory and technological changes, and continued consolidation. Banks, securities firms and insurance companies now can merge by creating 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.

We are heavily regulated by federal and state agencies.

The Parent, our subsidiary banks and many of our 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

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and federal and state regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including 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, if we do not comply with laws, regulations or policies, we could receive regulatory sanctions and damage to our reputation. For more information, refer to the “Regulation and Supervision” section and to Note 3 (Cash, Loan and Dividend Restrictions) and Note 26 (Regulatory and Agency Capital Requirements) to Financial Statements in our 2004 Form 10-K.

Future legislation could change our competitive position.

Legislation is from time to time introduced in the Congress, including proposals to substantially change the financial institution regulatory system and to expand or contract the powers of banking institutions and bank holding companies. This legislation may change banking statutes and our operating environment 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 regulations, would have on our financial condition or results of operations.

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 affected by relying 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 now allow parties to complete financial transactions without banks. For example, consumers can 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.

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Company Factors

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 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 services, could require us to make substantial expenditures to modify or adapt our existing products and services. We might not be successful in introducing new products and services, achieving market acceptance of our products and services, or developing and maintaining 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 Parent relies on dividends from its subsidiaries for most of its revenue.

The Parent 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 Parent’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 Parent. Also, the Parent’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 our 2004 Form 10-K.

Our accounting policies and methods are key to how we report our financial condition and results of operations. They may require management to make estimates about matters that are 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 they comply with GAAP and reflect management’s judgment of the most appropriate manner to report our financial condition and results. In some cases, management must select the accounting policy or method to apply from

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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 (Summary of Significant Accounting Policies) to Financial Statements in our 2004 Form 10-K describes our significant accounting policies.

Three accounting policies are critical to presenting our financial condition and results. They require management to make difficult, subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions. These critical accounting policies relate to: (1) the allowance for credit losses, (2) the valuation of mortgage servicing rights, and (3) pension accounting. Because of the uncertainty of estimates about these matters, we cannot provide any assurance that we will not:

•

significantly increase our allowance for credit losses and/or sustain credit losses that are significantly higher than the reserve provided;

•

recognize significant provision for impairment of our mortgage servicing rights; or

•

significantly increase our pension liability.

For more information, see “Critical Accounting Policies” in our 2004 Form 10-K and refer in this report to “Balance Sheet Analysis” and “Asset/Liability and Market Risk Management.”

Changes in accounting standards could materially impact our financial statements.

From time to time the Financial Accounting Standards Board (FASB) and SEC may change the financial accounting and reporting standards that govern the preparation of our financial statements. These changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements.

We have businesses other than banking.

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 lessen the effect when downturns affect any one segment of our industry, it also means our earnings could be subject to different risks and uncertainties. We discuss some examples below.

Merchant Banking. Our merchant banking business, which includes venture capital investments, has a much greater risk of capital losses than our traditional banking business. Also, it is difficult to predict the timing of any gains from this business. 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 decline in capital spending, 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.”

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Mortgage Banking. The effect of interest rates on our mortgage business can be large and complex. Changes in interest rates can affect 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. We use dynamic, sophisticated models to assess the effect of interest rates on mortgage fees, amortization of mortgage servicing rights, and the value of mortgage servicing rights. The estimates of net income and fair value produced by these models, however, depend on assumptions of future loan demand, prepayment speeds and other factors that may overstate or understate actual experience. We use derivatives to hedge the value of our servicing portfolio but they do not cover the full value of the portfolio. We cannot assure that the hedges will offset significant decreases in the value of the portfolio. For more information, see “Critical Accounting Policies—Valuation of Mortgage Servicing Rights” in our 2004 Form 10-K and “Asset /Liability and Market Risk Management” in this report.

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 have an active acquisition program.

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

We must generally receive federal regulatory approval before we can acquire a bank or bank holding company. In determining whether to approve a proposed bank acquisition, federal bank regulators will consider, among other factors, the effect of the acquisition on competition, financial condition, and future prospects including current and projected capital ratios and levels, the competence, experience, and integrity of management and record of compliance with laws and regulations, the convenience and needs of the communities to be served, including the acquiring institution’s record of compliance under the Community Reinvestment Act, and the effectiveness of the acquiring institution in combating money laundering activities. In addition, 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 sell 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. The integration could result in higher than expected deposit attrition (run-off), loss of key employees, disruption of our business or the business of the

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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 effect of any divestitures required by regulatory authorities in acquisitions or business combinations may be greater than expected.

Legislative Risk

Our business model depends on sharing information among 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 affect our revenue and profit.

Our business could suffer if we fail to attract and retain skilled people.

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

Our stock price can be volatile.

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 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.

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CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by SEC rules, the Company’s management evaluated the effectiveness, as of June 30, 2005, 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 chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2005.

Internal Control Over Financial Reporting

Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•		Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the company;
•		Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
•		Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. No change occurred during second quarter 2005 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME

The accompanying notes are an integral part of these statements.

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WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

The accompanying notes are an integral part of these statements.

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

The accompanying notes are an integral part of these statements.

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WELLS FARGO & COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS

The accompanying notes are an integral part of these statements.

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Wells Fargo & Company is a diversified financial services company. We provide banking, insurance, investments, mortgage banking and consumer finance through banking stores, the internet and other distribution channels to consumers, businesses and institutions in all 50 states of the U.S. and in other countries. When we refer to “the Company,” “we,” “our” and “us” in this Form 10-Q, we mean Wells Fargo & Company and Subsidiaries (consolidated). Wells Fargo & Company (the Parent) is a financial holding company and a bank holding company.

Our accounting and reporting policies conform with generally accepted accounting principles (GAAP) and practices in the financial services industry. To prepare the financial statements in conformity with GAAP, management must 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.

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. 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 Annual Report on Form 10-K for the year ended December 31, 2004 (2004 Form 10-K).

Descriptions of our significant accounting policies are included in Note 1 (Summary of Significant Accounting Policies) to Financial Statements in our 2004 Form 10-K. There have been no significant changes to these policies.

STOCK-BASED COMPENSATION

We have several stock-based employee compensation plans, which are described more fully in Note 15 (Common Stock and Stock Plans) to Financial Statements in our 2004 Form 10-K. As permitted by Statement of Financial Accounting Standards No. 123 (FAS 123), Accounting for Stock-Based Compensation, we have elected to continue applying the intrinsic value method of Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees (APB 25), in accounting for stock-based employee compensation plans. Pro forma net income and earnings per common share information is provided in the table on the following page, as if we accounted for employee stock option plans under the fair value method of FAS 123.

On December 16, 2004, the Financial Accounting Standards Board issued Statement No. 123 (revised 2004), Share-Based Payment (FAS 123R), which replaces FAS 123 and supercedes APB 25. Securities and Exchange Commission (SEC) registrants were originally required to adopt FAS 123R’s provisions at the beginning of their first interim period after June 15, 2005. On April 14, 2005, the SEC announced that registrants could delay adoption of FAS 123R’s provisions until the beginning of their next fiscal year. We currently expect to adopt FAS 123R on January 1, 2006, as required, which will require us to measure the cost of employee services received in exchange for an award of equity instruments, such as stock options or restricted stock, based on the fair value of the award on the grant date. This cost must be recognized in the statement of income over the vesting period of the award.

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Stock options granted in each of our February 2005 and February 2004 grants, under our Long-Term Incentive Compensation Plan, fully vested upon grant, resulting in full recognition of stock-based compensation expense for both grants under the fair value method in the table above.

2.

BUSINESS COMBINATIONS

We regularly explore opportunities to acquire financial services companies and businesses. Generally, we do not make a public announcement about an acquisition opportunity until a definitive agreement has been signed.

In the six months ended June 30, 2005, we completed acquisitions of two insurance brokerage businesses with total assets of approximately $15 million. At June 30, 2005, we had three pending business combinations, with total assets of approximately $732 million. On July 31, 2005, we completed the acquisition of First Community Capital Corporation. We expect to complete the remaining two acquisitions by September 30, 2005.

3.

FEDERAL FUNDS SOLD, SECURITIES PURCHASED UNDER RESALE AGREEMENTS AND OTHER SHORT-TERM INVESTMENTS

The following table provides the detail of federal funds sold, securities purchased under resale agreements and other short-term investments.

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4. SECURITIES AVAILABLE FOR SALE

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

(1)

Most of the private collateralized mortgage obligations are AAA-rated bonds collateralized by 1-4 family residential first mortgages.

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

The following table shows the realized net gains (losses) on the sales of securities from the securities available for sale portfolio, including marketable equity securities.

(1)

Includes other-than-temporary impairment of $5 million and $15 million for the second quarter and first half of 2005, respectively, and $8 million for both the second quarter and first half of 2004.

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5. LOANS AND ALLOWANCE FOR CREDIT LOSSES

A summary of the major categories of loans outstanding is shown in the following table. Outstanding loan balances reflect unearned income, net deferred loan fees, and unamortized discount and premium totaling $3,727 million, $3,766 million and $3,531 million, at June 30, 2005, December 31, 2004, and June 30, 2004, respectively.

The recorded investment in impaired loans and the methodology used to measure impairment was:

(1)

Includes $117 million, $107 million and $30 million of impaired loans with a related allowance of $17 million, $17 million and $3 million at June 30, 2005, December 31, 2004, and June 30, 2004, respectively.

The average recorded investment in impaired loans was $281 million and $515 million during second quarter 2005 and 2004, respectively, and $291 million and $544 million in the first half of 2005 and 2004, respectively.

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The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded credit commitments. Changes in the allowance for credit losses were:

(1)

Effective September 30, 2004, we transferred the portion of the allowance for loan losses related to commercial lending commitments and letters of credit to other liabilities.

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6. OTHER ASSETS

The components of other assets were:

(1)

At June 30, 2005, December 31, 2004, and June 30, 2004, $3.2 billion, $3.3 billion and $3.0 billion, respectively, of nonmarketable equity investments, including all federal bank stock, were accounted for at cost.

Income related to nonmarketable equity investments was:

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7. INTANGIBLE ASSETS

The gross carrying amount of intangible assets and accumulated amortization at June 30, 2005 and 2004, was:

(1)

See Note 14 for additional information on mortgage servicing rights and the related valuation allowance.

As of June 30, 2005, the current year and estimated future amortization expense for amortized intangible assets was:

We based the projections of amortization expense for mortgage servicing rights shown above on existing asset balances and the existing interest rate environment as of June 30, 2005. Future amortization expense may be significantly different depending upon changes in the mortgage servicing portfolio, mortgage interest rates and market conditions. We based the projections of amortization expense for core deposit intangibles shown above on existing asset balances at June 30, 2005. Future amortization expense may vary based on additional core deposit intangibles acquired through business combinations.

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8. GOODWILL

The changes in the carrying amount of goodwill as allocated to our operating segments for goodwill impairment analysis were:

For our goodwill impairment analysis, we allocate all of the goodwill to the individual operating segments. For management reporting we do not allocate all of the goodwill to the individual operating segments: some is allocated at the enterprise level. See Note 12 for further information on management reporting. The balances of goodwill for management reporting were:

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9. PREFERRED STOCK

We are authorized to issue 20 million shares of preferred stock and 4 million shares of preference stock, both without par value. Preferred shares outstanding rank senior to common shares both as to dividends and liquidation preference but have no general voting rights. We have not issued any preference shares under this authorization.

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

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10. EMPLOYEE BENEFITS

We sponsor noncontributory qualified defined benefit retirement plans including the Cash Balance Plan. The Cash Balance Plan is an active plan, which covers eligible employees (except employees of certain subsidiaries).

We expect that we will not be required to make a minimum contribution in 2005 for the Cash Balance Plan. The maximum contribution amount in 2005 for the Cash Balance Plan depends on several factors, including the finalization of participant data. Our decision on how much to contribute, if any, depends on factors such as the actual investment performance of plan assets. Given these uncertainties, we cannot at this time reliably estimate the maximum deductible contribution or the amount that we will contribute in 2005 to the Cash Balance Plan.

The net periodic benefit cost for the second quarter and first half of 2005 and 2004 was:

(1)

Net actuarial loss is generally amortized over five years.

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11. EARNINGS PER COMMON SHARE

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

In second quarter 2005 and 2004, options to purchase 3.7 million and 2.7 million shares, respectively, were outstanding but not included in the calculation of earnings per share because the exercise price was higher than the market price, and therefore they were antidilutive.

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12. OPERATING SEGMENTS

We have 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 our 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 generally accepted accounting principles. The management accounting process measures the performance of the operating segments based on our management structure and is not necessarily comparable with similar information for other financial services companies. We define our operating segments by product type and customer segments. If the management structure and/or the allocation process changes, allocations, transfers and assignments may change. In first quarter 2005, results for prior periods have been restated for comparability due to such a change.

The Community Banking Group offers a complete line of diversified financial products and services to consumers and small businesses with annual sales generally 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, securities brokerage through affiliates and venture capital financing. These products and services include Wells Fargo Advantage Funds^SM, 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 and servicing of mortgage loans and credit cards. 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), time deposits and debit cards.

Community Banking serves customers through a wide range of channels, which include traditional banking stores, in-store banking centers, business centers and ATMs. Also, Phone Bank^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 generally 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 such as the CEO® (Commercial Electronic Office®) portal, insurance brokerage services and investment banking services. Wholesale Banking manages and administers institutional investments and mutual funds, including the Wells Fargo Advantage Funds. Upon the April 2005 merger of the Wells Fargo Funds® and certain funds acquired in the Strong Financial transaction, we renamed our mutual fund family the Wells Fargo Advantage

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Funds. 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 consumer and real estate loans to individuals and purchase sales finance contracts from retail merchants from offices throughout the United States and in Canada, Latin America, the Caribbean, Guam and Saipan. Automobile finance operations specialize in purchasing sales finance contracts directly from automobile dealers and making loans secured by automobiles in the United States, Canada and Puerto Rico. Wells Fargo Financial also provides credit cards and lease and other commercial financing.

The “Other” Column consists of unallocated goodwill balances held at the enterprise level. This column also may include separately identified transactions recorded at the enterprise level for management reporting.

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(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 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 to other segments.
(2)		The noninterest expense item for second quarter 2004 is a $176 million loss on debt extinguishment recorded at the enterprise level.

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13. VARIABLE INTEREST ENTITIES

We are a variable interest holder in certain special-purpose entities that are consolidated because we will absorb a majority of each entity’s expected losses, receive a majority of each entity’s expected returns or both. We do not hold a majority voting interest in these entities. Substantially all of these entities were formed to invest in securities and to securitize real estate investment trust securities and had approximately $7 billion in total assets at June 30, 2005, and $6 billion at December 31, 2004. The primary activities of these entities consist of acquiring and disposing of, and investing and reinvesting in securities, and issuing beneficial interests secured by those securities to investors. The creditors of substantially all of these consolidated entities have no recourse against our general credit.

We also hold variable interests greater than 20% but less than 50% in certain special-purpose entities formed to provide affordable housing and to securitize high-yield corporate debt that had approximately $3 billion in total assets at both June 30, 2005, and December 31, 2004. We are not required to consolidate these entities. Our maximum exposure to loss related to these unconsolidated entities was approximately $940 million at June 30, 2005, and $950 million at December 31, 2004, respectively, predominantly representing investments in entities formed to invest in affordable housing. We, however, expect to recover our investment over time through realization of federal low-income housing tax credits.

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14. MORTGAGE BANKING ACTIVITIES

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

The components of mortgage banking noninterest income were:

(1)

See Note 18 — Fair Value Hedges for additional discussion and detail of net derivative gains and losses.

Each quarter, we evaluate mortgage servicing rights (MSRs) for possible impairment based on the difference between the carrying amount and current fair value of the MSRs by risk stratification. If a temporary impairment exists, we establish a valuation allowance for any excess of amortized cost, as adjusted for hedge accounting, over the current fair value through a charge to income. We have a policy of reviewing MSRs for other-than-temporary impairment each quarter and recognize 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 and the valuation allowance, precluding subsequent reversals. (See Note 1 – Transfers and Servicing of Financial Assets to Financial Statements in our 2004 Form 10-K for additional discussion of our policy for valuation of MSRs.)

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The changes in mortgage servicing rights were:

(1)

Based on June 30, 2005, assumptions, the weighted-average amortization period for mortgage servicing rights added during the second quarter and first half of 2005 was approximately 4.7 years and 4.8 years, respectively.

The components of the managed servicing portfolio were:

(1)		Consists of 1-4 family first mortgages and commercial mortgage loans.
(2)		Consists of mortgage loans held for sale and 1-4 family first mortgages.

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15. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

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 12) consists of WFFI and other affiliated consumer finance entities managed by WFFI that are included within other consolidating subsidiaries in the following tables.

Condensed Consolidating Statement of Income

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Condensed Consolidating Statement of Income

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Condensed Consolidating Statement of Income

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Condensed Consolidating Statement of Income

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Condensed Consolidating Balance Sheet

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Condensed Consolidating Balance Sheet

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Condensed Consolidating Statement of Cash Flows

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Condensed Consolidating Statement of Cash Flows

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16. GUARANTEES

We provide guarantees to third parties including standby letters of credit, various indemnification agreements, guarantees accounted for as derivatives, contingent consideration related to business combinations and contingent performance guarantees.

We issue standby letters of credit, which include performance and financial guarantees, for customers in connection with contracts between the customers and third parties. Standby letters of credit assure that the third parties will receive specified funds if customers fail to meet their contractual obligations. We are obliged to make payment if a customer defaults. Standby letters of credit were $10.1 billion at June 30, 2005, and $9.4 billion at December 31, 2004, including financial guarantees of $5.5 billion and $5.3 billion, respectively, that we had issued or purchased participations in. Standby letters of credit are net of participations sold to other institutions of $1.8 billion at June 30, 2005, and $1.7 billion at December 31, 2004. We consider the credit risk in standby letters of credit in determining the allowance for credit losses. Deferred fees for these standby letters of credit were not significant to our financial statements. We also had commitments for commercial and similar letters of credit of $844 million at June 30, 2005, and $731 million at December 31, 2004. We have also provided a back-up liquidity facility to a commercial paper conduit that we consider to be a financial guarantee, which would have required us to advance, under certain conditions, up to $896 million at June 30, 2005, and up to $860 million at December 31, 2004. This back-up liquidity facility has been included within our commercial loan commitments and was substantially collateralized in the event it was drawn upon.

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

We write options, floors and caps. Options are exercisable based on favorable market conditions. Periodic settlements occur on floors and caps based on market conditions. The fair value of the written options liability in our balance sheet was $478 million at June 30, 2005, and $374 million at December 31, 2004, and the aggregate written floors and caps liability was $59 million and $227 million, respectively. Our ultimate obligation under written options, floors and caps is based on future market conditions and is only quantifiable at settlement. The notional value related to written options was $59.5 billion at June 30, 2005, and $29.7 billion at December 31, 2004, and the aggregate notional value related to written floors and caps was $18.9 billion and $34.7 billion, respectively. We offset substantially all options written to customers with purchased options.

We also enter into credit default swaps under which we buy loss protection from or sell loss protection to a counterparty in the event of default of a reference obligation. The carrying amount of the contracts sold was a $6 million liability at June 30, 2005, and a $2 million liability at December 31, 2004. The maximum amount we would be required to pay under the swaps in

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which we sold protection, assuming all reference obligations default at a total loss, without recoveries, was $2.7 billion and $2.6 billion based on notional value at June 30, 2005, and December 31, 2004, respectively. We purchased credit default swaps of comparable notional amounts to mitigate the exposure of the written credit default swaps at June 30, 2005, and December 31, 2004. These purchased credit default swaps had terms (i.e., used the same reference obligation and maturity) that would offset our exposure from the written default swap contracts in which we are providing protection to a counterparty.

In connection with certain brokerage, asset management and insurance agency acquisitions we have made, the terms of the acquisition agreements provide for deferred payments or additional consideration based on certain performance targets. At June 30, 2005, and December 31, 2004, the amount of contingent consideration we expected to pay was not significant to our financial statements.

We have entered into various contingent performance guarantees through credit risk participation arrangements with terms ranging from 1 to 24 years. We 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 our obligations under these guarantees depends entirely on future events, our potential future liability under these agreements is not fully determinable. However our exposure under most of the agreements can be quantified and for those agreements our exposure was contractually limited to an aggregate liability of approximately $100 million at June 30, 2005, and $370 million at December 31, 2004.

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17. REGULATORY AND AGENCY CAPITAL REQUIREMENTS

The Company and each of its 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, respectively.

We do not consolidate our wholly-owned trusts (the Trusts) formed solely to issue trust preferred securities. The amount of trust preferred securities issued by the Trusts that was includable in Tier 1 capital in accordance with Federal Reserve Board risk-based capital guidelines was $4.1 billion at June 30, 2005. The junior subordinated debentures held by the Trusts were included in the Company’s long-term debt.

(1)

The leverage ratio consists of Tier 1 capital divided by quarterly average total assets, excluding goodwill and certain other items. The minimum leverage ratio guideline is 3% for banking organizations that do not anticipate significant growth and that have well-diversified risk, excellent asset quality, high liquidity, good earnings, effective management and monitoring of market risk and, in general, are considered top-rated, strong banking organizations.

As an approved seller/servicer, Wells Fargo Bank, N.A., through its mortgage banking division, is required to maintain minimum levels of shareholders’ equity, as specified by various agencies, including the United States Department of Housing and Urban Development, Government National Mortgage Association, Federal Home Loan Mortgage Corporation and Federal National Mortgage Association. At June 30, 2005, Wells Fargo Bank, N.A. met these requirements.

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18. DERIVATIVES

Fair Value Hedges

We use derivatives to manage the risk of changes in the fair value of mortgage servicing rights and other retained interests. Derivative gains or losses 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 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 $202 million and $430 million in the second quarter and first half of 2005, respectively, compared with a net gain of $6 million and $351 million in the same periods of 2004. The ineffective portion of the change in value of these derivatives was a net loss of $97 million and $240 million in the second quarter and first half of 2005, respectively, compared with a net loss of $210 million and $17 million in the same periods of 2004. Net derivative gains were $105 million and $190 million in the second quarter and first half of 2005, respectively, compared with net derivative losses of $204 million and net derivative gains of $334 million in the same periods of 2004. Net derivative gains and losses related to our mortgage servicing activities are included in “Servicing fees, net of amortization and provision for impairment” in Note 14.

We use derivatives to hedge changes in fair value of our commercial real estate mortgages and franchise loans due to changes in LIBOR interest rates. We originate a portion of these loans with the intent to sell them. The ineffective portion of these fair value hedges was a net loss of $4 million and $9 million in the second quarter and first half of 2005, respectively, and a net loss of $5 million and $10 million in the same periods of 2004, respectively, recorded as part of mortgage banking noninterest income in the statement of income. For the commercial real estate and franchise loan hedges, all parts of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

We enter into interest rate swaps, designated as fair value hedges, to convert certain of our fixed-rate long-term debt to floating-rate debt. The ineffective part of these fair value hedges was not significant in the second quarter or first half of 2005 or 2004. For long-term debt, all parts of each derivative’s gain or loss are included in the assessment of hedge effectiveness.

We also enter into foreign currency contracts to hedge our exposure to interest rate risk and foreign currency risk associated with the issuance of non-U.S. dollar denominated debt.

At June 30, 2005, all designated fair value hedges continued to qualify as fair value hedges.

Cash Flow Hedges

We use derivatives to convert floating-rate loans to fixed rates and to hedge forecasted sales of mortgage loans. We also hedge floating-rate senior debt against future interest rate increases by using interest rate swaps to convert floating-rate senior debt to fixed rates and by using interest rate caps and floors to limit variability of rates. We recognized a net loss of $20 million and $8 million in the second quarter and first half of 2005, respectively, and a net gain of $47 million and $33 million in the same periods of 2004, respectively, which represents the total ineffectiveness of cash flow hedges. Gains and losses on derivatives that are reclassified from

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cumulative other comprehensive income to current period earnings are included in the line item in which the hedged item’s effect in earnings is recorded. All parts of gain or loss on these derivatives are included in the assessment of hedge effectiveness. As of June 30, 2005, all designated cash flow hedges continued to qualify as cash flow hedges.

At June 30, 2005, we expected that $23 million of deferred net losses on derivatives in other comprehensive income will be reclassified as earnings during the next twelve months, compared with $74 million of deferred net losses at June 30, 2004. We are hedging our exposure to the variability of future cash flows for all forecasted transactions for a maximum of one year for hedges converting floating-rate loans to fixed, ten years for hedges of floating-rate senior debt and one year for hedges of forecasted sales of mortgage loans.

Free-Standing Derivatives

Interest rate lock commitments for residential mortgage loans that we intend to resell are considered free-standing derivatives. Our interest rate exposure on these derivative loan commitments is economically hedged with options, futures and forwards. The aggregate fair value of derivative loan commitments on the consolidated balance sheet was a net asset of $10 million at June 30, 2005, and a net liability of $38 million at December 31, 2004; and is included in the caption “Interest rate contracts” under Customer Accommodations and Trading in the following table.

Derivative Financial Instruments – Summary Information

The total credit risk amount and estimated net fair value for derivatives at June 30, 2005, and December 31, 2004, were:

(1)

Credit risk amounts reflect the replacement cost for those contracts in a gain position in the event of nonperformance by all counterparties.

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PART II – OTHER INFORMATION

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows Company repurchases of its common stock for each calendar month in the quarter ended June 30, 2005.

Item 4.

Submission of Matters to a Vote of Security Holders

The Company held its Annual Meeting of Stockholders on April 26, 2005. There were 1,695,977,708 shares of common stock outstanding and entitled to vote at the meeting. A total of 1,478,313,717 shares of common stock were represented at the meeting in person or by proxy, representing 87.2% of the shares outstanding and entitled to vote at the meeting.

At the meeting, stockholders:

	(1)		re-elected all 14 of the Company’s directors;
	(2)		approved the Company’s amended and restated Long-Term Incentive Compensation Plan;
	(3)		ratified the appointment of KPMG LLP as independent auditors for 2005;
	(4)		rejected the stockholder proposal regarding payday lending;
	(5)		rejected the stockholder proposal regarding executive compensation and predatory lending;
	(6)		rejected the stockholder proposal regarding performance shares;
	(7)		rejected the stockholder proposal regarding chief executive officer compensation; and
	(8)		rejected the stockholder proposal regarding separation of Board Chair and CEO positions.

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The voting results for each matter were:

(1)

Election of Directors

(2)

Proposal to Approve Amended and Restated Long-Term Incentive Compensation Plan

(3)

Proposal to Ratify Appointment of KPMG LLP

(4)

Stockholder Proposal Regarding Payday Lending

(5)

Stockholder Proposal Regarding Executive Compensation and Predatory Lending

(6)

Stockholder Proposal Regarding Performance Shares

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(7)

Proposal Regarding Chief Executive Officer Compensation

(8)

Proposal Regarding Separation of Board Chair and CEO Positions

Item 6.

Exhibits

The Company’s SEC file number is 001-2979. On and before November 2, 1998, the Company filed documents with the SEC under the name Norwest Corporation. The former Wells Fargo & Company filed documents under SEC file number 001-6214.

	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 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
	(d)		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
	(e)		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
	(f)		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

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	3(g)		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
	(h)		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
	(i)		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
	(j)		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
	(k)		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
	(l)		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
	(m)		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
	(n)		Certificate of Designations for the Company’s 2004 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, 2004
	(o)		Certificate of Designations for the Company’s 2005 ESOP Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 3(a) to the Company’s Current Report on Form 8-K dated March 15, 2005
	(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
	4(a)		See Exhibits 3(a) through 3(p)
	(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

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	10(a)		Long-Term Incentive Compensation Plan, incorporated by reference to Exhibit 10 to the Company’s Current Report on Form 8-K filed May 2, 2005
	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		Computation of Ratios of Earnings to Fixed Charges, filed herewith. The ratios of earnings to fixed charges, including interest on deposits, were 2.67 and 3.95 for the quarters ended June 30, 2005 and 2004, respectively, and 2.78 and 4.06 for the six months ended June 30, 2005 and 2004, respectively. The ratios of earnings to fixed charges, excluding interest on deposits, were 4.22 and 6.29 for the quarters ended June 30, 2005 and 2004, respectively, and 4.40 and 6.42 for the six months ended June 30, 2005 and 2004, respectively.

SIGNATURE

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.

Dated: August 4, 2005	WELLS FARGO & COMPANY
	By:	/s/ RICHARD D. LEVY
		Richard D. Levy
		Senior Vice President and Controller (Principal Accounting Officer)

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