----

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**Form 10-Q**

**SECURITIES AND EXCHANGECOMMISSION****Washington, D.C.  20549**

**Quarterly ReportPursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934**

| For Quarter Ended | June 30, 2001 |   | Commission file number | 2-80466 |
|-------------------|---------------|--------|------------------------|---------|
|              |               |   |                   |         |

 

| **Wells Fargo Financial, Inc.**                         |
|---------------------------------------------------------|
| ****                                                    |
| (Exact name of  registrant as specified in its charter) |

** **

| **Iowa**                                                         | **42  1186565**                       |
|------------------------------------------------------------------|---------------------------------------|
| ****                                                             | ****                                  |
| (State or other  jurisdiction of  incorporation or organization) | (I.R.S. Employer  Identification No.) |
|                                                             |                                  |
| **206  Eighth Street, Des Moines, Iowa**                         | **50309**                             |
|                                                                  |                                       |
| (Address of principal  executive offices)                        | (Zip Code)                            |
|                                                             |                                  |
| Registrant’s telephone  number, including area code         | **(515)  243-2131**                   |
|                                                             |                                       |

Indicate by check mark whether theregistrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor 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 ý              No  o.

Indicate the number of shares outstandingof each of the issuer’s classes of common stock, as of the latest practicabledate.  Common Stock (without parvalue):  1,000 shares outstanding as ofAugust 10,  2001.

The registrant meets the conditions setforth in General Instruction H(1)(a) and (b) of Form 10-Q and is thereforefiling this Form with the reduced disclosure format.

----

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**PART I.  FINANCIALINFORMATION**

**WELLS FARGO FINANCIAL, INC.**

**Consolidated Balance Sheets (Unaudited)**

**(Thousands of Dollars)**

|                                   | June  30,                       |       | December  31, |       |
|----------------------------------------|---------------------------------|------------|---------------|------------|
|                                   |                                 |       |               |       |
| Assets                                 | 2001                            |       | 2000          |       |
|                                   |                                 |       |               |       |
| Cash and cash  equivalents             | $                               | 246,982    |          | $          | 205,036 |   |
| Securities  available-for-sale         | 1,289,492                       |       | 1,215,135     |       |
| Finance receivables                    | 12,578,460                      |       | 11,417,862    |       |
| Less allowance for  credit losses      | 509,850                         |       | 462,555       |       |
|                                   |                                 |       |               |       |
|                                   | Finance receivables –  net | 12,068,610 |          | 10,955,307 |   |
|                                   |                                 |       |               |       |
| Notes receivable –  affiliates    | 474,958                         |       | 505,386       |       |
| Property and equipment  (at cost, less |                            |       |          |       |
| accumulated  depreciation of $145,947  |                            |       |          |       |
| for 2001 and $148,042  for 2000)       | 69,342                          |       | 63,651        |       |
| Deferred income taxes                  | 114,159                         |       | 111,262       |       |
| Other assets                           | 583,285                         |       | 520,971       |       |
|                                   |                                 |       |               |       |
|                                   | Total assets                    | $          | 14,846,828    |       | $ | 13,576,748 |   |
|                                   |                                 |       |               |       |

See accompanying notes to consolidatedfinancial statements. 

**WELLS FARGO FINANCIAL, INC.**

**Consolidated Balance Sheets (Unaudited)**

**(Thousands of Dollars)**

|                                         | June  30,                                                                                      |        | December  31, |        |
|----------------------------------------------|------------------------------------------------------------------------------------------------|-------------|---------------|-------------|
|                                         |                                                                                                |        |               |        |
|                                         | 2001                                                                                           |        | 2000          |        |
|                                         |                                                                                                |        |               |        |
| Liabilities  and Stockholder’s Equity   |                                                                                           |        |          |        |
| Loans payable -  short-term:                 |                                                                                           |        |          |        |
|                                         | Commercial paper                                                                               | $3,376,262  |          | $2,973,508  |   |
|                                         | Affiliates                                                                                     |        |          | 99,379      |   |
|                                         | Other                                                                                          | 138,833     |          | 709,988     |   |
| Unearned insurance  premiums and commissions | 139,856                                                                                        |        | 139,476       |        |
| Insurance claims and  policy reserves        | 34,913                                                                                         |        | 34,978        |        |
| Accrued interest  payable                    | 129,164                                                                                        |        | 121,007       |        |
| Other payables to  affiliates                | 40,385                                                                                         |        | 48,761        |        |
| Other liabilities                            | 408,791                                                                                        |        | 370,363       |        |
| Long-term debt:                              |                                                                                           |        |          |        |
|                                         | Senior                                                                                         | 8,021,735   |          | 6,968,803   |   |
|                                         | Affiliate                                                                                      | 500,000     |          | 255,870     |   |
|                                         |                                                                                                |        |               |        |
|                                         | Total liabilities                                                                              | 12,789,939  |          | 11,722,133  |   |
|                                         |                                                                                                |        |               |        |
| Stockholder’s equity:                   |                                                                                           |        |          |        |
|                                         | Common stock without  par value (authorized 1,000 shares, issued and outstanding 1,000 shares) | 3,855       |          | 3,855       |   |
|                                         | Additional paid in  capital                                                                    | 442,302     |          | 312,302     |   |
|                                         | Retained earnings                                                                              | 1,605,724   |          | 1,540,902   |   |
|                                         | Accumulated other  comprehensive income (loss), net of income taxes                            | 5,008       |          | (2,444      | ) |
|                                         |                                                                                                |        |               |        |
|                                         | Total stockholder’s  equity                                                               | 2,056,889   |          | 1,854,615   |   |
|                                         |                                                                                                |        |               |        |
|                                         | Total liabilities and  stockholder’s equity                                               | $14,846,828 |          | $13,576,748 |   |
|                                         |                                                                                                |        |               |        |
|                                              |                                                                                                |             |               |             |  |  |  |

See accompanying notes to consolidatedfinancial statements.

**WELLS FARGO FINANCIAL, INC.**

**Consolidated Statements of Income (Unaudited)**

**(Thousands of Dollars)**

|         | Quarter  Ended June 30,             |    | Six  Months Ended June 30, |    |
|--------------|-------------------------------------|---------|----------------------------|---------|
|         |                                     |    |                            |    |
|         | 2001                                |    | 2000                       |    | 2001 |   | 2000 |   |
|         |                                     |    |                            |    |  |   |  |   |
| Income:      |                                |    |                       |    |   |   |   |   |
|         | Finance charges and  interest       | $       | 548,612                    |    | $ | 452,664 |   | $ | 1,091,445 |   | $ | 901,656 |   |
|         | Insurance premiums and  commissions | 29,984  |                       | 26,537  |   | 60,324 |   | 52,185 |   |
|         | Other income                        | 66,901  |                       | 47,850  |   | 131,154 |   | 98,323 |   |
|         |                                |         |                       |         |   |  |   |  |   |
|         | Total income                        | 645,497 |                       | 527,051 |   | 1,282,923 |   | 1,052,164 |   |
|         |                                     |    |                            |    |  |   |  |   |
| Expenses:    |                                |    |                       |    |   |   |   |   |
|         | Operating expenses                  | 231,828 |                       | 200,133 |   | 457,067 |   | 405,298 |   |
|         | Interest and debt expense           | 178,925 |                       | 152,254 |   | 368,689 |   | 295,799 |   |
|         | Provision for credit  losses        | 120,606 |                       | 72,584  |   | 229,041 |   | 149,943 |   |
|         | Insurance losses and  loss expenses | 9,884   |                       | 11,384  |   | 21,148 |   | 24,695 |   |
|         |                                |         |                       |         |   |  |   |  |   |
|         | Total expenses                      | 541,243 |                       | 436,355 |   | 1,075,945 |   | 875,735 |   |
|         |                                     |    |                            |    |  |   |  |   |
|         | Income before income  taxes         | 104,254 |                       | 90,696  |   | 206,978 |   | 176,429 |   |
| Income taxes | 39,475                              |    | 33,566                     |    | 77,397 |   | 65,162 |   |
|         |                                     |    |                            |    |  |   |  |   |
|         | Net income                          | $       | 64,779                     |    | $ | 57,130 |   | $ | 129,581 |   | $ | 111,267 |   |
|         |                                     |    |                            |    |  |   |  |   |
|              |                                     |         |                            |         |  |  |  |  |  |  |  |  |  |  |  |

See accompanying notes to consolidatedfinancial statements.

**WELLS FARGO FINANCIAL, INC.**

**Consolidated Statements of Comprehensive Income (Unaudited)**

**(Thousands of Dollars)**

|                                                                                                | Quarter  Ended June 30,                                          |   | Six  Months Ended June 30, |   |
|-----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                |                                                                            |   |                                      |   |
|                                                                                                | 2001                                                                       |   | 2000                                 |   | 2001 |   | 2000 |   |
|                                                                                                |                                                                            |   |                                      |   |  |   |  |   |
| Net income                                                                                          | $                                                                          | 64,779 |                                 | $      | 57,130 |   | $ | 129,581 |   | $ | 111,267 |   |
| Other comprehensive  income (loss), before income taxes:                                            |                                                                       |   |                                 |   |   |   |   |   |
|                                                                                                | Unrealized gains  (losses) on securities available-for-sale:               |   |                                 |   |   |   |   |   |   |
|                                                                                                | Unrealized gains  (losses) arising during the period                       | (3,148 | )                                    | (1,863 | ) | 13,058 |   | (9,374 | ) |
|                                                                                                | Reclassification  adjustment for net (gains) losses included in net income | 840    |                                 | 1,075  |   | (1,270 | ) | (1,298 | ) |
|                                                                                                |                                                                            |   |                                      |   |  |   |  |   |
|                                                                                                | (2,308                                                                     | )      | (788                                 | )      | 11,788 |   | (10,672 | ) |
|                                                                                                | Foreign currency  translation adjustment                                   | 2,101  |                                 | (924   | ) | (331 | ) | (1,107 | ) |
|                                                                                                |                                                                       |        |                                 |        |   |  |   |  |   |
|                                                                                                | Other comprehensive  income (loss) before income taxes                     | (207   | )                                    | (1,712 | ) | 11,457 |   | (11,779 | ) |
| Income tax (benefit)  expense related to unrealized gains (losses) on securities available-for-sale | (879                                                                       | )      | (302                                 | )      | 4,005 |   | (3,669 | ) |
|                                                                                                |                                                                            |   |                                      |   |  |   |  |   |
| Other comprehensive  income (loss), net of income taxes                                             | 672                                                                        |   | (1,410                               | )      | 7,452 |   | (8,110 | ) |
|                                                                                                |                                                                            |   |                                      |   |  |   |  |   |
|                                                                                                | Comprehensive income                                                       | $      | 65,451                               |   | $ | 55,720 |   | $ | 137,033 |   | $ | 103,157 |   |
|                                                                                                |                                                                            |   |                                      |   |  |   |  |   |
|                                                                                                     |                                                                            |        |                                      |        |  |  |  |  |  |  |  |  |  |  |  |  |

See accompanying notes to consolidatedfinancial statements.

**WELLS FARGO FINANCIAL, INC.**

**Consolidated Statements of Cash Flows (Unaudited)**

**(Thousands of Dollars)**

|                                                  | Six  Months Ended June 30,                                                                                                    |       |
|-------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                  |                                                                                                                               |       |
|                                                  | 2001                                                                                                                          |       | 2000 |   |
|                                                  |                                                                                                                               |       |  |   |
| Cash flows from  operating activities:                |                                                                                                                          |       |   |   |
|                                                  | Net income                                                                                                                    | $          | 129,581 |   | $ | 111,267 |   |
|                                                  | Adjustments to  reconcile net income to net cash flows from operating activities, net of  effect of contributed subsidiaries: |       |   |   |   |
|                                                  | Provision for credit  losses                                                                                                  | 229,041    |   | 149,943 |   |
|                                                  | Depreciation and  amortization                                                                                                | 26,660     |   | 24,980 |   |
|                                                  | Deferred income taxes                                                                                                         | 3,892      |   | (8,956 | ) |
|                                                  | Other assets                                                                                                                  | 43,645     |   | (8,488 | ) |
|                                                  | Unearned insurance  premiums and commissions                                                                                  | 380        |   | 2,295 |   |
|                                                  | Insurance claims and  policy reserves                                                                                         | (65        | ) | 1,180 |   |
|                                                  | Accrued interest  payable                                                                                                     | 8,157      |   | 2,723 |   |
|                                                  | Other payables to  affiliates                                                                                                 | (8,376     | ) | 90,136 |   |
|                                                  | Other liabilities                                                                                                             | (47,210    | ) | (21,927 | ) |
|                                                  |                                                                                                                               |       |  |   |
| Net cash provided by  operating activities            | 385,705                                                                                                                       |       | 343,153 |   |
|                                                  |                                                                                                                               |       |  |   |
| Cash flows from  investing activities:                |                                                                                                                          |       |   |   |
|                                                  | Finance receivables:                                                                                                          |       |   |   |   |
|                                                  | Principal collected                                                                                                           | 4,697,127  |   | 3,670,810 |   |
|                                                  | Receivables originated  or purchased                                                                                          | (5,254,036 | ) | (4,526,337 | ) |
|                                                  | Proceeds from sales of  securities                                                                                            | 189,726    |   | 58,076 |   |
|                                                  | Proceeds from  maturities of securities                                                                                       | 71,884     |   | 62,952 |   |
|                                                  | Purchases of  securities                                                                                                      | (326,154   | ) | (98,906 | ) |
|                                                  | Net additions to  property and equipment                                                                                      | (12,970    | ) | (6,258 | ) |
|                                                  | Net decrease in notes  receivable – affiliates, net of effect of contributed subsidiaries                                | 30,428     |   | 33,673 |   |
|                                                  | Cash and cash  equivalents of contributed subsidiaries received and subsidiary transferred                                    | (1,567     | ) | (6 | ) |
|                                                  | Net cash used for  acquisition                                                                                                | (324,573   | ) |   |   |
|                                                  | Other                                                                                                                         | (28,963    | ) | 53,001 |   |
|                                                  |                                                                                                                               |       |  |   |
| Net cash used by  investing activities                | (959,098                                                                                                                      | )          | (752,995 | ) |
|                                                  |                                                                                                                               |       |  |   |
| Cash flows from  financing activities:                |                                                                                                                          |       |   |   |
|                                                  | Net decrease in loans  payable – short term                                                                              | (267,780   | ) | (248,356 | ) |
|                                                  | Proceeds from issuance  of long term debt:                                                                                    |       |   |   |   |
|                                                  | Senior                                                                                                                        | 1,081,364  |   | 685,886 |   |
|                                                  | Affiliate                                                                                                                     | 244,130    |   | 500,000 |   |
|                                                  | Repayment of senior  long-term debt                                                                                           | (512,375   | ) | (497,999 | ) |
|                                                  | Capital contribution  by parent                                                                                               | 130,000    |   |   |   |
|                                                  | Dividends paid                                                                                                                | (60,000    | ) | (45,000 | ) |
|                                                  |                                                                                                                               |       |  |   |
| Net cash provided by  financing activities            | 615,339                                                                                                                       |       | 394,531 |   |
|                                                  |                                                                                                                               |       |  |   |
| Net increase  (decrease) in cash and cash equivalents | 41,946                                                                                                                        |       | (15,311 | ) |
|                                                  |                                                                                                                          |       |   |   |
| Cash and cash  equivalents beginning of period        | 205,036                                                                                                                       |       | 178,970 |   |
|                                                  |                                                                                                                               |       |  |   |
| Cash and cash  equivalents end of period              | $                                                                                                                             | 246,982    |   | $ | 163,659 |   |
|                                                  |                                                                                                                               |       |  |   |
|                                                       |                                                                                                                               |            |  |  |  |  |  |  |

See accompanying notes to consolidatedfinancial statements.

**WELLS FARGO FINANCIAL, INC.**

**Consolidated Statements of Stockholder’s Equity (Unaudited)**

**(Thousands of Dollars)**
|                              |         |   |                       |   |              |    | Accumulated Other Comprehensive Income  (Loss) |      |                                                         |   |
|-----------------------------------|--------------|--------|----------------------------|--------|-------------------|---------|------------------------------------------------|-----------|--------------------------------------------------------------|--------|
|                              |         |   |                       |   |              |    |                                                |      |                                                         |   |
|                              | Common Stock |   | Additional Paid In Capital |   | Retained Earnings |    | Foreign Currency Translation                   |      | Unrealized Gains (Losses) on Securities  Available- for-Sale |   | Total |   |
|                              |              |   |                            |   |                   |    |                                                |      |                                                              |   |  |   |
| Balance,  December 31, 1999       | $            | 3,855  |                       | $      | 196,697           |    | $                                              | 1,407,743 |                                                         | $      | (9,575 | ) | $ | (11,156 | ) | $ | 1,587,564 |   |
| Comprehensive  income (loss):     |         |   |                       |   |              |    |                                           |      |                                                         |   |   |   |
|                              | Net  income  |   |                       |   |              | 111,267 |                                           |      |                                                         |   |   | 111,267 |   |
|                              | Other        |   |                       |   |              |    |                                           | (1,107    | )                                                            | (7,003 | ) | (8,110 | ) |
| Contributed  subsidiaries         |         |   | 12,427                     |   | (11,168           | )       |                                           |      |                                                         |   | 1,259 |   |
| Transfer  of subsidiary           |         |   |                       |   | (60,171           | )       |                                           |      | 3,095                                                        |   | (57,076 | ) |
| Dividends                         |         |   |                       |   | (45,000           | )       |                                           |      |                                                         |   | (45,000 | ) |
|                              |              |   |                            |   |                   |    |                                                |      |                                                              |   |  |   |
| Balance,  June 30, 2000           | $            | 3,855  |                       | $      | 209,124           |    | $                                              | 1,402,671 |                                                         | $      | (10,682 | ) | $ | (15,064 | ) | $ | 1,589,904 |   |
|                              |              |   |                            |   |                   |    |                                                |      |                                                              |   |  |   |
| Balance,  December 31, 2000       | $            | 3,855  |                       | $      | 312,302           |    | $                                              | 1,540,902 |                                                         | $      | (11,220 | ) | $ | 8,776 |   | $ | 1,854,615 |   |
| Comprehensive  income (loss):     |         |   |                       |   |              |    |                                           |      |                                                         |   |   |   |
|                              | Net  income  |   |                       |   |              | 129,581 |                                           |      |                                                         |   |   | 129,581 |   |
|                              | Other        |   |                       |   |              |    |                                           | (331      | )                                                            | 7,783  |   | 7,452 |   |
| Capital  contribution from parent |         |   | 130,000                    |   |              |    |                                           |      |                                                         |   | 130,000 |   |
| Dividends                         |         |   |                       |   | (60,000           | )       |                                           |      |                                                         |   | (60,000 | ) |
| Transfer  of subsidiary           |         |   |                       |   | (4,759            | )       |                                           |      |                                                         |   | (4,759 | ) |
|                              |              |   |                            |   |                   |    |                                                |      |                                                              |   |  |   |
| Balance,  June 30, 2001           | $            | 3,855  |                       | $      | 442,302           |    | $                                              | 1,605,724 |                                                         | $      | (11,551 | ) | $ | 16,559 |   | $ | 2,056,889 |   |
|                              |              |   |                            |   |                   |    |                                                |      |                                                              |   |  |   |

See accompanying notes to consolidatedfinancial statements.

**WELLS FARGO FINANCIAL, INC.**

**Notes to Consolidated Financial Statements (Unaudited)**

The accompanying unaudited consolidatedfinancial statements and notes have been prepared in accordance with theaccounting policies set forth in Wells Fargo Financial, Inc.’s 2000 AnnualReport on Form 10-K, except as described in note 8, and should be read inconjunction with the Notes to Consolidated Financial Statements therein.  In the opinion of management, alladjustments (none of which were other than normal recurring accruals) necessaryto present fairly the financial statements for the periods presented have beenincluded.

The results of operations for interimperiods are not necessarily indicative of the results to be expected for theentire year.

1.          Principlesof Consolidation.

The consolidated financial statementsinclude the accounts of Wells Fargo Financial, Inc. (the “Company”) andsubsidiaries (collectively, “Wells Fargo Financial”).  Intercompany accounts and transactions are eliminated.  The Company is a wholly-owned subsidiary ofWells Fargo Financial Services, Inc. (the “Parent”) which is a wholly-ownedsubsidiary of Wells Fargo & Company (“Wells Fargo”).

2.          DividendRestrictions.

Certain long-term debt instrumentsrestrict payment of dividends on and acquisitions of the Company’s commonstock.  In addition, such debtinstruments and the Company’s bank credit agreements contain certainrequirements as to maintenance of net worth (as defined).  Approximately $1,059 million of consolidatedstockholder’s equity was unrestricted at June 30, 2001.

3.          OtherIncome.

Income from affiliates was $8.5 millionand $9.9 million for the quarters ended June 30, 2001 and 2000, respectively,and $19.9 million and $18.6 million for the six months ended June 30, 2001 and2000, respectively.

Interest and dividends from securitiesavailable-for-sale and cash equivalents were $20.1 million and $18.7 millionfor the quarters ended June 30, 2001 and 2000, and $39.1 million and $38.6million for the six months ended June 30, 2001 and 2000 respectively.

4.          FinanceReceivables.

Finance receivables are as follows:

|                             | June  30,                             |      | December  31, |      |
|----------------------------------|---------------------------------------|-----------|---------------|-----------|
|                             |                                       |      |               |      |
| (In Thousands)                   | 2001                                  |      | 2000          |      |
|                             |                                       |      |               |      |
| United States consumer  finance: |                                  |      |          |      |
|                             | Loans secured by real  estate         | $         | 2,751,978     |      | $ | 2,507,419 |   |
|                             | Consumer loans                        | 1,382,069 |          | 1,460,746 |   |
|                             |                                       |      |               |      |
|                             | Total loans                           | 4,134,047 |          | 3,968,165 |   |
|                             | Sales finance  contracts              | 1,215,962 |          | 1,295,147 |   |
|                             | Credit cards                          | 1,128,583 |          | 1,148,486 |   |
|                             |                                       |      |               |      |
|                             | Total United States  consumer finance | 6,478,592 |          | 6,411,798 |   |
|                             |                                       |           |               |      |
| Canadian consumer finance:       |                                  |      |          |      |
|                             | Loans secured by real  estate         | 89,302    |          | 85,000    |   |
|                             | Consumer loans                        | 461,786   |          | 452,581   |   |
|                             |                                       |      |               |      |
|                             | Total loans                           | 551,088   |          | 537,581   |   |
|                             | Sales finance  contracts              | 486,698   |          | 497,379   |   |
|                             | Credit cards                          | 23,434    |          | 21,298    |   |
|                             |                                       |      |               |      |
|                             | Total Canadian  consumer finance      | 1,061,220 |          | 1,056,258 |   |
|                             |                                       |      |               |      |
| Automobile finance               | 3,207,497                             |      | 3,078,026     |      |
| Leasing                          | 1,271,292                             |      | 442,665       |      |
| Other                            | 559,859                               |      | 429,115       |      |
|                             |                                       |      |               |      |
|                             | Total finance  receivables            | $         | 12,578,460    |      | $ | 11,417,862 |   |
|                             |                                       |      |               |      |
|                                  |                                       |           |               |           |  |  |  |  |

5.          Allowancefor Credit Losses.

The analysis of the allowance for creditlosses is as follows:

|                                                     | Quarter  Ended June 30, |    | Six  Months Ended June 30, |   |
|----------------------------------------------------------|-------------------------|---------|----------------------------|--------|
|                                                     |                         |    |                            |   |
| (In Thousands)                                           | 2001                    |    | 2000                       |   | 2001 |   | 2000 |   |
|                                                     |                         |    |                            |   |  |   |  |   |
| Allowance for credit  losses beginning of period         | $                       | 503,074 |                       | $      | 381,978 |   | $ | 462,555 |   | $ | 367,712 |   |
| Provision for credit  losses charged to expense          | 120,606                 |    | 72,584                     |   | 229,041 |   | 149,943 |   |
| Write-offs                                               | (132,909                | )       | (79,103                    | )      | (260,428 | ) | (167,628 | ) |
| Recoveries                                               | 19,079                  |    | 15,083                     |   | 39,107 |   | 30,672 |   |
| Allowance related to  businesses contributed or acquired |                    |    |                       |   | 39,575 |   | 9,843 |   |
|                                                     |                         |    |                            |   |  |   |  |   |
| Allowance for credit  losses end of period               | $                       | 509,850 |                       | $      | 390,542 |   | $ | 509,850 |   | $ | 390,542 |   |
|                                                     |                         |    |                            |   |  |   |  |   |

6.          Statementsof Consolidated Cash Flows.

The Company and its subsidiaries considerhighly liquid debt instruments purchased with an original maturity of threemonths or less to be cash equivalents. Supplemental disclosure of certain cash flow information is presentedbelow:

|           | Quarter  Ended June 30, |   | Six  Months Ended June 30, |   |
|----------------|-------------------------|--------|----------------------------|--------|
|           |                         |   |                            |   |
| (In Thousands) | 2001                    |   | 2000                       |   | 2001 |   | 2000 |   |
|           |                         |   |                            |   |  |   |  |   |
| Cash paid for: |                    |   |                       |   |   |   |   |   |
|           | Interest                | $      | 162,494                    |   | $ | 146,627 |   | $ | 347,422 |   | $ | 306,604 |   |
|           | Income taxes            | 26,204 |                       | 18,457 |   | 66,627 |   | 22,767 |   |
|                |                         |        |                            |        |  |  |  |  |  |  |  |  |  |

 

7.          SegmentInformation.

The Company has four reportable segments:U.S. consumer finance, Canadian consumer finance, automobile finance, andleasing.  The Company’s operatingsegments are determined by product type and geography.  U.S. consumer finance operations make loansto individuals and purchase sales finance contracts through 785 consumerfinance branches in 47 states, Guam, Saipan, and Puerto Rico.  The U.S. consumer finance segment alsoissues credit cards through two banking subsidiaries.  Canadian consumer finance operations make loans to individualsand purchase sales finance contracts through 162 consumer finance branches inthe 10 provinces.  Automobile financeoperations specialize in purchasing sales finance contracts directly fromautomobile dealers and making loans secured by automobiles through 187 branchesin 34 states and Puerto Rico.  Leasingoperations specialize in financing commercial equipment such as office copiers,telephone systems, health care equipment, small computers, and light industrialequipment.  Lease finance receivablesare generated primarily from equipment distributors ranging from smallindependently-owned vendors to large equipment manufacturers.  Results from insurance operations areincluded in the appropriate segment.

Selected financial information for eachsegment is shown below:

(In Thousands)

|                          | U.S. Consumer Finance |    | Canadian Consumer Finance |   | Automobile Finance |   | Leasing   |    | Other*    |   | Total     |   |
|-------------------------------|-----------------------|---------|---------------------------|--------|--------------------|--------|-----------|---------|-----------|--------|-----------|--------|
|                          |                       |    |                           |   |                    |   |           |    |           |   |           |   |
| Quarter Ended June 30,:       | 2001                  |    | 2000                      |   | 2001               |   | 2000      |    | 2001      |   | 2000      |   | 2001 |   | 2000 |   | 2001 |   | 2000 |   | 2001 |   | 2000 |   |
|                          |                       |    |                           |   |                    |   |           |    |           |   |           |   |  |   |  |   |  |   |  |   |  |   |  |   |
| Finance  charges and interest | $                     | 304,548 |                      | $      | 260,124            |   | $         | 60,815  |      | $      | 61,726    |   | $ | 130,065 |   | $ | 102,479 |   | $ | 37,411 |   | $ | 12,761 |   | $ | 15,773 |   | $ | 15,574 |   | $ | 548,612 |   | $ | 452,664 |   |
| Total  income                 | 369,737               |    | 315,365                   |   | 67,940             |   | 68,703    |    | 138,133   |   | 106,517   |   | 45,037 |   | 13,967 |   | 24,650 |   | 22,499 |   | 645,497 |   | 527,051 |   |
| Net  income                   | 32,360                |    | 35,635                    |   | 9,408              |   | 4,862     |    | 15,311    |   | 13,794    |   | 6,440 |   | 2,475 |   | 1,260 |   | 364 |   | 64,779 |   | 57,130 |   |
|                          |                  |    |                      |   |               |   |      |    |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Six Months Ended June 30,:    |                  |    |                      |   |               |   |      |    |      |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finance  charges and interest | $                     | 608,630 |                      | $      | 517,934            |   | $         | 121,741 |      | $      | 123,099   |   | $ | 259,985 |   | $ | 204,201 |   | $ | 69,432 |   | $ | 25,589 |   | $ | 31,657 |   | $ | 30,833 |   | $ | 1,091,445 |   | $ | 901,656 |   |
| Total  income                 | 740,326               |    | 630,659                   |   | 135,367            |   | 136,593   |    | 275,467   |   | 212,801   |   | 82,247 |   | 27,973 |   | 49,516 |   | 44,138 |   | 1,282,923 |   | 1,052,164 |   |
| Net  income (loss)            | 64,159                |    | 73,948                    |   | 19,716             |   | 11,658    |    | 26,755    |   | 23,649    |   | 14,623 |   | 5,172 |   | 4,328 |   | (3,160 | ) | 129,581 |   | 111,267 |   |
| Total  assets                 | 8,226,148             |    | 7,487,581                 |   | 1,236,999          |   | 1,126,482 |    | 3,471,367 |   | 2,448,133 |   | 1,373,595 |   | 376,964 |   | 538,719 |   | 499,773 |   | 14,846,828 |   | 11,938,933 |   |

 

| * | Information  from other segments below the quantitative threshold are attributable to  miscellaneous insurance companies, collection services, operations in  Argentina and commercial finance operations including rediscounting.  Subsidiaries engaged in multiple peril  crop insurance were transferred to another subsidiary of Wells Fargo  effective June 1, 2000. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

8.          RecentAccounting Standards.

In June 1998, the Financial AccountingStandards Board (FASB) issued Statement of Financial Accounting Standards No.133 (FAS 133), Accounting for Derivative Instruments and HedgingActivities.  In July 1999, the FASBissued FAS 137, Deferral of the Effective Date of FASB Statement No. 133, whichdeferred the effective date for implementation of FAS 133 to no later thanJanuary 1, 2001 for the Company’s financial statements.  In June 2000, the FASB issued FAS 138,Accounting for Certain Derivative Instruments and Certain Hedging Activities,an amendment to FAS 133.  The Companyimplemented the statements on January 1, 2001 and there was no material impacton the Company’s financial statements as a result of the implementation.

In September 2000, the FASB issuedStatement No. 140 (FAS 140), Accounting for the Transfers and Servicing of FinancialAssets and Extinguishments of Liabilities, which replaces FAS 125 (of the sametitle).  FAS 140 revises certainstandards in the accounting for securitizations and other transfers offinancial assets and collateral, and requires certain disclosures relating tosecuritization transactions and collateral, but it carries over most of FAS125’s provisions.  The collateral anddisclosure provisions of FAS 140 were effective for year-end 2000 financialstatements.  The other provisions ofthis Statement were effective for transfers and servicing of financial assetsand extinguishments of liabilities occurring after March 31, 2001; the Companyimplemented the revised provisions when effective and there was no materialimpact on the financial statements.

In July 2001, FASB issued Statement No.141 (FAS 141), Business Combinations, and Statement No. 142 (FAS 142), Goodwilland Other Intangible Assets.

FAS 141, effective June 30, 2001,requires that all business combinations initiated after June 30, 2001 be accountedfor under the purchase method of accounting; the use of thepooling-of-interests method of accounting is eliminated.  FAS 141 also establishes how the purchasemethod is to be applied for business combinations completed after June 30,2001.  This guidance is similar toprevious GAAP, however, FAS 141 establishes additional disclosure requirementsfor transactions occurring after the effective date.

FAS 142, effective on July 1, 2001,eliminates amortization of goodwill associated with business combinationscompleted after June 30, 2001.  During atransition period goodwill associated with business combinations completedprior to July 1, 2001, will continue to be amortized through the incomestatement.  All goodwill amortizationexpense will cease effective January 1, 2002. However, goodwill will be assessed (at least annually) for impairment atthe reporting unit level by applying a fair-value-based test.  FAS 142 also provides additional guidance onacquired intangibles that should be separately recognized and amortized, whichcould result in the recognition of additional intangible assets, as comparedwith previous GAAP.

Under FAS 142, the Company’s goodwillamortization expense (included in noninterest expense) will be approximately $9million quarterly for the remainder of 2001. The elimination of goodwill amortization effective January 1, 2002 isexpected to reduce noninterest expense by approximately $38 million (pretax)and increase net income by approximately $26 million (after tax), for the yearended December 31, 2002, compared with 2001.

The initial goodwill impairmentassessment is expected to be completed in early 2002; the Company cannotdetermine if a transition impairment charge will be recognized in 2002.

9.          BusinessCombinations.

Effective January 31, 2001, the Companyacquired substantially all of the assets and assumed certain liabilities ofConseco Finance Vendor Services Corporation, a leasing company based inParamus, New Jersey.  The acquisitionwas accounted for as a purchase.  Theassets and liabilities acquired were recorded at fair value, and the Company’sfinancial statements contain only the results of operations since theacquisition date.  Conseco FinanceVendor Services Corporation had lease receivables outstanding of $825 millionand had another $135 million of lease receivables under management at the timeof acquisition.

**WELLS FARGO FINANCIAL, INC.**

**Management’s Discussion and Analysisof Financial Condition and Results of Operations**

*Statements made in Management’s Discussion and Analysis maybe forward-looking and are made pursuant to the safe harbor provisions of thePrivate Securities Litigation Reform Act of 1995.  Forward-looking statements address management’s present expectationsabout future performance and involve inherent risks and uncertainties.  A number of important factors (some of whichare beyond the Company’s control) could cause actual results to differmaterially from those in the forward-looking statements.  Those factors include the economic environment,competition, products and pricing in the geographic and business areas in whichthe Company conducts its operations, prevailing interest rates, changes ingovernment regulations and policies affecting financial services companies,credit quality and credit risk management, acquisitions, and integration ofacquired businesses.*

Wells Fargo Financial’s performance forthe second quarter of 2001 closely paralleled performance for the first sixmonths of 2001.  The discussion andanalysis that follows, therefore, is limited to a discussion of the first sixmonths as a whole and does not include a separate discussion of the secondquarter unless otherwise noted.

Wells Fargo Financial’s net income forthe first six months of 2001 was $129.6 million compared with $111.3 millionfor the first six months of 2000.  Netincome in the first quarter of 2000 included a $7.1 million loss incurred bysubsidiaries engaged in multiple peril crop insurance business.  On June 1, 2000 these subsidiaries weretransferred to another affiliate of Wells Fargo & Company.  Excluding these operations, net incomeincreased to $129.6 million for the first six months of 2001 compared with$118.4 million in the first six months of 2000.

Well’s Fargo Financial’s total income(revenue) increased 22% for the first six months ($1,282.9 million in the firstsix months of 2001 compared with $1,052.2 million in the first six months of2000).

Income from finance charges and interestincreased 21% for the first six months ($1,091.4 million in the first sixmonths of 2001 compared with $901.7 million in the first six months of2000).  Changes in income from financecharges and interest result predominantly from (1) changes in the amount offinance receivables outstanding and (2) changes in the rate of charge on thosereceivables. In total, average finance receivables outstanding in the first sixmonths of 2001 increased 30% from the first six months of 2000; average U.S.consumer finance receivables outstanding increased 19%, average Canadian consumerfinance receivables outstanding increased 1%, average automobile financereceivables outstanding increased 43%, average leasing finance receivablesoutstanding increased 192%, and average other finance receivables outstandingincreased 23%.

| Rate of charge on  finance receivables: | 2001                       |   | 2000   |   |
|-----------------------------------------|----------------------------|--------|--------|--------|
|                                    |                            |   |        |   |
|                                    | U.S. consumer finance      | 18.87  | %      | 19.05  | % |
|                                    | Canadian consumer  finance | 23.84  |   | 24.38  |   |
|                                    | Automobile finance         | 16.62  |   | 18.60  |   |
|                                    | Leasing                    | 12.20  |   | 13.18  |   |
|                                    | Other                      | 14.38  |   | 17.54  |   |
|                                    | Total                      | 17.92  |   | 19.22  |   |
|                                         |                            |        |        |        |  |  |

The increases in income from financecharges and interest were due predominantly to growth in average receivablesoutstanding.  Growth in averagereceivables for U.S. consumer finance was due to the purchase of $400 millionin credit card receivables on June 30, 2000 and due to regular businessactivity.  Growth in average receivablesfor automobile finance was due primarily to the purchase of Flagship CreditCorporation on December 20, 2000.  Theaverage receivable growth in leasing receivables was due primarily to thepurchase of Conseco Finance Vendor Service Corporation on January 31,2001.  The majority of the increase inother average receivables was due to significant receivable growth of therediscounting operations.  Changes inthe earned rates of charge were due to changes in prevailing market ratescombined with a change in the portfolio mix. The decline in the earned rate of charge for automobile finance waspredominantly due to the change in portfolio mix as a result of the Flagshippurchase. The decline in the earned rate of charge for other financereceivables occurred due to the change in portfolio mix occurring due to thegrowth of rediscounting operations.

Other income increased 33% ($131.2million in the first six months of 2001 compared with $98.3 million in thefirst six months of 2000).  The increasein other income was due predominantly to additional fee income originating fromthe companies acquired in the past year.

Operating expenses increased 13% ($457.1million in the first six months of 2001 compared with $405.3 million in thefirst six months of 2000).  The increasewas due primarily to increases in employee compensation and benefits and othercosts relating to business expansion and acquisitions.

Interest and debt expense increased 25%($368.7 million in the first six months of 2001 compared with $295.8 million inthe first six months of 2000).  Changesin interest and debt expense result predominantly from (1) changes in theamount of borrowings outstanding and (2) changes in the cost of thoseborrowings.  Average total outstandingborrowings in the first six months of 2001 increased 28% from the first sixmonths of 2000.

|            | Six  Months Ended June 30, |   |
|-----------------|----------------------------|--------|
|            |                            |   |
| Costs of funds: | 2001                       |   | 2000 |   |
|            |                            |   |  |   |
|            | Short-term                 | 5.60   | % | 6.27 | % |
|            | Long-term                  | 6.54   |   | 6.56 |   |
|            | Total                      | 6.26   |   | 6.47 |   |

Changes in average debt outstandinggenerally correspond to changes in average finance receivables outstandingcombined with the change in notes receivable - affiliates.  Average finance receivables and notes receivable- affiliates increased 29% from the first six months of 2000.

Provision for credit losses increased 53%($229.0 million in the first six months of 2001 compared with $149.9 million inthe first six months of 2000).  Netwrite-offs increased 62% in the first six months of 2001.  The increase was due primarily to higherwrite-offs in the Company’s U.S. consumer finance and leasing portfolios (seefollowing table).  This increase waspartially offset by improvements in the automobile finance business and theCompany’s private label credit card business in Canada.

 

|                                                                                     | Six  Months Ended June 30, |   |
|------------------------------------------------------------------------------------------|----------------------------|--------|
|                                                                                     |                            |   |
| Net write-offs, not  annualized, as a percentage of average net receivables outstanding: | 2001                       |   | 2000 |   |
|                                                                                     |                            |   |  |   |
|                                                                                     | U.S. consumer finance      | 2.17   |  % | 1.25 | % |
|                                                                                     | Canadian consumer  finance | 2.04   |   | 2.74 |   |
|                                                                                     | Automobile finance         | 1.35   |   | 1.56 |   |
|                                                                                     | Leasing                    | 1.11   |   | .46 |   |
|                                                                                     | Other                      | 1.30   |   | 1.49 |   |
|                                                                                     | Total                      | 1.82   |   | 1.46 |   |
|                                                                                          |                            |        |  |  |  |  |

Through June 30, 2001, the provision forcredit losses exceeded net write-offs by $7.7 million.  At June 30, 2001, the Company had anallowance for credit losses of $509.9 million (4.05% of receivables) comparedwith $462.6 million (4.05% of receivables) at December 31, 2000.  There were no material changes in estimationmethods and assumptions during 2001 and 2000. Non-accrual finance receivables were $74.6 million at June 30, 2001compared with $58.0 million at December 31, 2000.  In addition, finance receivables outstanding which were more thanthree payments contractually delinquent and which were still accruing interestwere $172.4 million at June 30, 2001 compared with $159.9 million at December31, 2000.  Management believes theallowance for credit losses at June 30, 2001, is adequate to absorb probablelosses on existing receivables in the finance receivables portfolio.

Income taxes increased 19% ($77.4 millionin the first six months of 2001 compared with $65.2 million in the first sixmonths of 2000).  Income before incometaxes increased 17% ($207.0 million in the first six months of 2001 comparedwith $176.4 million in the first six months of 2000.)  The effective tax rate was 37.4% for the first six months of 2001and 36.9% for the first six months of 2000.

The Company maintains bank lines ofcredit and revolving credit agreements to provide an alternative source ofliquidity to support the Company’s commercial paper borrowings.  At June 30, 2001, lines of credit andrevolving credit agreements totaling $2,364 million were being maintained at 19domestic and international banks; the entire amount was available on thatdate.  Additionally, the Company’s banksubsidiaries, Wells Fargo Financial Bank and Wells Fargo Financial NationalBank, have access to federal funds borrowings. At June 30, 2001, federal funds availability at the two banks was $869million.

The Company and a Canadian subsidiaryobtain long-term debt capital primarily from the issuance of debt securities tothe public through underwriters on a firm-commitment basis and the issuance ofdebt securities to institutional investors. The Company and a Canadian subsidiary also obtain long-term debt fromthe issuance of medium-term notes (which have maturities ranging from ninemonths to 30 years) through underwriters (acting as agent or principal).

The Company anticipates the continuedavailability of borrowed funds, at prevailing interest rates, to provide forWells Fargo Financial’s growth in the foreseeable future.  Funds are also generated internally frompayments of principal and interest on Wells Fargo Financial’s financereceivables.

**PART II.  OTHERINFORMATION**

**WELLS FARGO FINANCIAL, INC.**

*Item 5.  OtherInformation.*

**RATIOS OF EARNINGS TO FIXED CHARGES**

The following table sets forth the ratiosof earnings to fixed charges of Wells Fargo Financial, Inc. and itssubsidiaries for the periods indicated:

|                                 | Years  Ended December 31, |   |
|--------------------------------------|---------------------------|--------|
|                                 |                           |   |
| Six  Months Ended June 30, 2001 | 2000                      |   | 1999 |   | 1998 |   | 1997 |   | 1996 |   |
|                                      |                           |   |  |   |  |   |  |   |  |   |
| 1.55                                 | 1.58                      |   | 1.78 |   | 1.72 |   | 2.00 |   | 2.11 |   |
|                                      |                           |        |  |  |  |  |  |  |  |  |  |

The ratios of earnings to fixed chargeshave been computed by dividing net earnings plus fixed charges and income taxesby fixed charges.  Fixed charges consistof interest and debt expense plus one-third of rentals (which is deemedrepresentative of the interest factor).

*Item 6.  Exhibits andReports on Form 8-K.*

(a)         Exhibits:

| Exhibit  (12) | Computation  of ratios of earnings to fixed charges for the years ended December 31, 2000,  1999, 1998, 1997 and 1996 and the six months ended June 30, 2001. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

(b)        Reportson 8-K

No reports on Form 8-K were filed duringthe quarter for which this report is filed.

**S I G N A T U R E S**

Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.

|                        | WELLS  FARGO FINANCIAL, INC. |
|-----------------------------|------------------------------|
|                        |                         |
| Date:  August 10, 2001 |                         |   |
|                        |                         |   |
|                        | By                           | /s/  Eric Torkelson |
|                        |                              |
|                        |                         | Eric  Torkelson |
|                        |                         | Senior  Vice President and Controller |
|                        |                         | (Principal  Accounting Officer) |