**Form 10-Q**

 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

** **

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

 

| **For Quarter Ended September 30,  2002** |   | **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 the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90days.             Yes     ý     No     o

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.  Common Stock (without par value):  1,000 shares outstanding as of November 12,2002.

 

The registrant meets the conditions set forth in General InstructionH(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduceddisclosure format.

 

 

----

 

PART I.  FINANCIAL INFORMATION

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated BalanceSheets (Unaudited)

 

(Thousands of Dollars)

 
|                                                                                                       |   | **September  30,  2002** |       | **December  31,  2001** |   |
|------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|-------------------------|--------|
|                                                                                                       |   |                     |       |                    |   |
| Assets                                                                                                     |   |                     |       |                    |   |
|                                                                                                       |   |                     |       |                    |   |
| Cash and cash  equivalents                                                                                 |   | $                        | 221,271    |                    | $      | 260,038 |   |
|                                                                                                       |   |                     |       |                    |   |
| Securities  available-for-sale                                                                             |   | 1,517,153                |       | 1,377,148               |   |
|                                                                                                       |   |                     |       |                    |   |
| Finance  receivables                                                                                       |   | 15,541,008               |       | 13,433,569              |   |
|                                                                                                       |   |                     |       |                    |   |
| Less allowance  for credit losses                                                                          |   | 593,245                  |       | 521,948                 |   |
|                                                                                                       |   |                     |       |                    |   |
| Finance  receivables - net                                                                                 |   | 14,947,763               |       | 12,911,621              |   |
|                                                                                                       |   |                     |       |                    |   |
| Notes receivable  - affiliates                                                                             |   | 600,600                  |       | 636,588                 |   |
|                                                                                                       |   |                     |       |                    |   |
| Property and  equipment (at cost, less accumulated depreciation of $98,132 for 2002 and  $87,299 for 2001) |   | 134,581                  |       | 94,017                  |   |
|                                                                                                       |   |                     |       |                    |   |
| Deferred income  taxes                                                                                     |   | 57,718                   |       | 62,290                  |   |
|                                                                                                       |   |                     |       |                    |   |
| Goodwill                                                                                                   |   | 342,422                  |       | 335,990                 |   |
|                                                                                                       |   |                     |       |                    |   |
| Other assets                                                                                               |   | 213,668                  |       | 231,570                 |   |
|                                                                                                       |   |                     |       |                    |   |
| Total assets                                                                                               |   | $                        | 18,035,176 |                    | $      | 15,909,262 |   |

 

See accompanying notes to consolidated financial statements.

 

2

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated BalanceSheets (Unaudited)

 

(Thousands of Dollars)

 
|                                                                                            |   | **September  30,  2002** |       | **December  31,  2001** |   |
|-------------------------------------------------------------------------------------------------|--------|--------------------------|------------|-------------------------|--------|
|                                                                                            |   |                     |       |                    |   |
| Liabilities and  Stockholder’s Equity                                                      |   |                     |       |                    |   |
|                                                                                            |   |                     |       |                    |   |
| Loans payable -  short-term:                                                                    |   |                     |       |                    |   |
| Commercial paper                                                                                |   | $                        | 4,337,990  |                    | $      | 4,067,707 |   |
| Affiliates                                                                                      |   | 113,600                  |       | 64,600                  |   |
| Other                                                                                           |   | 114,298                  |       | 93,742                  |   |
| Unearned  insurance premiums and commissions                                                    |   | 135,260                  |       | 133,465                 |   |
| Insurance claims  and policy reserves                                                           |   | 34,460                   |       | 34,635                  |   |
| Accrued interest  payable                                                                       |   | 137,575                  |       | 131,752                 |   |
| Other  liabilities                                                                              |   | 475,206                  |       | 426,876                 |   |
| Long-term debt:                                                                                 |   |                     |       |                    |   |
| Senior                                                                                          |   | 9,150,480                |       | 8,145,636               |   |
| Affiliate                                                                                       |   | 1,200,000                |       | 700,000                 |   |
|                                                                                            |   |                     |       |                    |   |
| Total  liabilities                                                                              |   | 15,698,869               |       | 13,798,413              |   |
|                                                                                            |   |                     |       |                    |   |
|                                                                                            |   |                     |       |                    |   |
| 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                  |       | 442,302                 |   |
| Retained  earnings                                                                              |   | 1,860,541                |       | 1,657,815               |   |
| Accumulated  other comprehensive income, net of income taxes                                    |   | 29,609                   |       | 6,877                   |   |
|                                                                                            |   |                     |       |                    |   |
| Total  stockholder’s equity                                                                |   | 2,336,307                |       | 2,110,849               |   |
|                                                                                            |   |                     |       |                    |   |
| Total  liabilities and stockholder’s equity                                                |   | $                        | 18,035,176 |                    | $      | 15,909,262 |   |

 

See accompanying notes to consolidated financial statements.

 

3

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated Statementsof Income (Unaudited)

 

(Thousands of Dollars)

 
|                                |   | **Quarter  Ended September 30,** |    | **Nine  Months Ended September 30,** |   |
|-------------------------------------|--------|----------------------------------|---------|--------------------------------------|--------|
|                                |   | **2002**                         |    | **2001**                             |   | **2002** |   | **2001** |   |
| Income:                             |   |                             |    |                                 |   |   |   |   |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Finance charges  and interest       |   | $                                | 615,442 |                                 | $      | 560,401 |   | $ | 1,755,398 |   | $ | 1,651,846 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Insurance  premiums and commissions |   | 29,765                           |    | 31,003                               |   | 88,129 |   | 91,327 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Other income                        |   | 79,052                           |    | 74,831                               |   | 224,701 |   | 205,985 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Total income                        |   | 724,259                          |    | 666,235                              |   | 2,068,228 |   | 1,949,158 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Expenses:                           |   |                             |    |                                 |   |   |   |   |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Operating  expenses                 |   | 235,492                          |    | 233,268                              |   | 708,946 |   | 671,996 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Goodwill  amortization              |   |                             |    | 9,416                                |   |   |   | 27,755 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Interest and  debt expense          |   | 167,335                          |    | 171,072                              |   | 478,930 |   | 539,761 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Provision for  credit losses        |   | 152,517                          |    | 133,638                              |   | 451,352 |   | 362,679 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Insurance losses  and loss expenses |   | 12,449                           |    | 11,369                               |   | 36,807 |   | 32,517 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Total expenses                      |   | 567,793                          |    | 558,763                              |   | 1,676,035 |   | 1,634,708 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Income before  income taxes         |   | 156,466                          |    | 107,472                              |   | 392,193 |   | 314,450 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Income taxes                        |   | 57,783                           |    | 39,904                               |   | 144,467 |   | 117,301 |   |
|                                |   |                             |    |                                 |   |   |   |   |   |
| Net income                          |   | $                                | 98,683  |                                 | $      | 67,568 |   | $ | 247,726 |   | $ | 197,149 |   |

 

See accompanying notes to consolidated financial statements.

 

4

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated Statementsof Comprehensive Income (Unaudited)

 

(Thousands of Dollars)

 
|                                                                                      |   | **Quarter  Ended September 30,** |    | **Nine  Months Ended September 30,** |   |
|-------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------------------------------------|--------|
|                                                                                      |   | **2002**                         |    | **2001**                             |   | **2002** |   | **2001** |   |
|                                                                                      |   |                             |    |                                 |   |   |   |   |   |
| Net income                                                                                |   | $                                | 98,683  |                                 | $      | 67,568 |   | $ | 247,726 |   | $ | 197,149 |   |
|                                                                                      |   |                             |    |                                 |   |   |   |   |   |
| Other  comprehensive income, before income taxes:                                         |   |                             |    |                                 |   |   |   |   |   |
| Unrealized gains  on securities available-for-sale:                                       |   |                             |    |                                 |   |   |   |   |   |
| Unrealized gains  arising during the period                                               |   | 25,899                           |    | 23,832                               |   | 30,354 |   | 36,890 |   |
| Reclassification  adjustment for net losses (gains) included in net income                |   | 3,583                            |    | (1,867                               | )      | 5,940 |   | (3,137 | ) |
|                                                                                      |   |                             |    |                                 |   |   |   |   |   |
|                                                                                      |   | 29,482                           |    | 21,965                               |   | 36,294 |   | 33,753 |   |
|                                                                                      |   |                             |    |                                 |   |   |   |   |   |
| Unrealized  (losses) on derivatives and hedging activities:                               |   |                             |    |                                 |   |   |   |   |   |
| Unrealized  (losses) arising during the period                                            |   | (1,318                           | )       |                                 |   | (1,318 | ) |   |   |
|                                                                                      |   |                             |    |                                 |   |   |   |   |   |
| Foreign currency  translation adjustment                                                  |   | (3,936                           | )       | (2,509                               | )      | (288 | ) | (2,840 | ) |
|                                                                                      |   |                             |    |                                 |   |   |   |   |   |
| Other  comprehensive income before income taxes                                           |   | 24,228                           |    | 19,456                               |   | 34,688 |   | 30,913 |   |
|                                                                                      |   |                             |    |                                 |   |   |   |   |   |
| Income tax  expense related to:                                                           |   |                             |    |                                 |   |   |   |   |   |
| Unrealized gains  on securities available-for-sale and derivatives and hedging activities |   | 9,539                            |    | 7,538                                |   | 11,956 |   | 11,543 |   |
| Other  comprehensive income, net of income taxes                                          |   | 14,689                           |    | 11,918                               |   | 22,732 |   | 19,370 |   |
|                                                                                      |   |                             |    |                                 |   |   |   |   |   |
| Comprehensive  income                                                                     |   | $                                | 113,372 |                                 | $      | 79,486 |   | $ | 270,458 |   | $ | 216,519 |   |

 

See accompanying notes to consolidated financial statements.

 

5

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated Statementsof Cash Flows (Unaudited)(Thousands of Dollars)

 
|                                                                                                                          |   | **Nine  Months Ended September 30,** |    |
|-------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                                                          |   | **2002**                             |    | **2001** |   |
| Cash flows from  operating activities:                                                                                        |   |                                 |    |   |   |
| Net income                                                                                                                    |   | $                                    | 247,726 |   | $ | 197,149 |   |
| Adjustments to  reconcile net income to net cash flows from operating activities, net of  effect of contributed subsidiaries: |   |                                 |    |   |   |
| Provision for  credit losses                                                                                                  |   | 451,352                              |    | 362,679 |   |
| Depreciation and  amortization                                                                                                |   | 14,090                               |    | 40,175 |   |
| Deferred income  taxes                                                                                                        |   | (6,841                               | )       | 13,523 |   |
| Other assets                                                                                                                  |   | 15,640                               |    | 41,371 |   |
| Unearned  insurance premiums and commissions                                                                                  |   | 1,795                                |    | (3,709 | ) |
| Insurance claims  and policy reserves                                                                                         |   | (175                                 | )       | (72 | ) |
| Accrued interest  payable                                                                                                     |   | 5,823                                |    | 10,189 |   |
| Other payables  to affiliates                                                                                                 |   | 92,299                               |    | 31,475 |   |
| Other  liabilities                                                                                                            |   | (45,313                              | )       | 4,106 |   |
|                                                                                                                          |   |                                 |    |   |   |
| Net cash  provided by operating activities                                                                                    |   | 776,396                              |    | 696,886 |   |
|                                                                                                                          |   |                                 |    |   |   |
| Cash flows from  investing activities:                                                                                        |   |                                 |    |   |   |
| Finance  receivables:                                                                                                         |   |                                 |    |   |   |
| Principal  collected                                                                                                          |   | 8,029,894                            |    | 7,087,213 |   |
| Receivables  originated or purchased                                                                                          |   | (10,235,582                          | )       | (8,245,133 | ) |
| Proceeds from  sales of securities                                                                                            |   | 636,351                              |    | 267,253 |   |
| Proceeds from  maturities of securities                                                                                       |   | 98,397                               |    | 98,938 |   |
| Purchases of  securities                                                                                                      |   | (845,556                             | )       | (499,033 | ) |
| Net additions to  property and equipment                                                                                      |   | (53,766                              | )       | (25,353 | ) |
| Net decrease  (increase) in notes receivable – affiliates, net of effect of contributed  subsidiaries                    |   | 35,988                               |    | (60,563 | ) |
| Cash and cash  equivalents of subsidiary transferred                                                                          |   |                                 |    | (1,567 | ) |
| Net cash used  for acquisitions                                                                                               |   | (280,756                             | )       | (324,573 | ) |
| Other                                                                                                                         |   | 3,990                                |    | (73,449 | ) |
|                                                                                                                          |   |                                 |    |   |   |
| Net cash used by  investing activities                                                                                        |   | (2,611,040                           | )       | (1,776,267 | ) |
|                                                                                                                          |   |                                 |    |   |   |
| Cash flows from  financing activities:                                                                                        |   |                                 |    |   |   |
| Net increase in  loans payable – short term                                                                              |   | 339,839                              |    | 199,873 |   |
| Proceeds from  issuance of long term debt:                                                                                    |   |                                 |    |   |   |
| Senior                                                                                                                        |   | 2,326,503                            |    | 1,683,668 |   |
| Affiliate                                                                                                                     |   | 500,000                              |    | 244,130 |   |
| Repayment of  senior long-term debt                                                                                           |   | (1,325,465                           | )       | (1,072,234 | ) |
| Capital  contribution by parent                                                                                               |   |                                 |    | 130,000 |   |
| Dividends paid                                                                                                                |   | (45,000                              | )       | (85,000 | ) |
|                                                                                                                          |   |                                 |    |   |   |
| Net cash  provided by financing activities                                                                                    |   | 1,795,877                            |    | 1,100,437 |   |
|                                                                                                                          |   |                                 |    |   |   |
| Net (decrease)  increase in cash and cash equivalents                                                                         |   | (38,767                              | )       | 21,056 |   |
|                                                                                                                          |   |                                 |    |   |   |
| Cash and cash  equivalents beginning of period                                                                                |   | 260,038                              |    | 205,036 |   |
|                                                                                                                          |   |                                 |    |   |   |
| Cash and cash  equivalents end of period                                                                                      |   | $                                    | 221,271 |   | $ | 226,092 |   |

 

See accompanying notes to consolidated financial statements.

 

6

----

 

WELLS FARGO FINANCIAL,INC.

 

Consolidated Statementsof 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** |   | **Unrealized  Gains  (Losses on)  Derivatives  and Hedging  Activities** |   | **Total** |   |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Balance,  December 31, 2000       |   | $                 | 3,855  |                             | $      | 312,302                |   | $                                                   | 1,540,902 |                                                                 | $      | (11,220 | ) | $ | 8,776 |   | $ |   |   | $ | 1,854,615 |   |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Comprehensive  income (loss):     |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Net income                        |   |              |   |                             |   | 197,149                |   |                                                |      |                                                                 |   |   |   | 197,149 |   |
| Other                             |   |              |   |                             |   |                   |   | (2,840                                              | )         | 22,210                                                               |   |   |   | 19,370 |   |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Capital  contribution from parent |   |              |   | 130,000                          |   |                   |   |                                                |      |                                                                 |   |   |   | 130,000 |   |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Dividends                         |   |              |   |                             |   | (85,000                | )      |                                                |      |                                                                 |   |   |   | (85,000 | ) |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Transfer of  subsidiary           |   |              |   |                             |   | (4,759                 | )      |                                                |      |                                                                 |   |   |   | (4,759 | ) |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Balance,  September 30, 2001      |   | $                 | 3,855  |                             | $      | 442,302                |   | $                                                   | 1,648,292 |                                                                 | $      | (14,060 | ) | $ | 30,986 |   | $ |   |   | $ | 2,111,375 |   |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Balance,  December 31, 2001       |   | $                 | 3,855  |                             | $      | 442,302                |   | $                                                   | 1,657,815 |                                                                 | $      | (14,335 | ) | $ | 21,212 |   | $ |   |   | $ | 2,110,849 |   |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Comprehensive  income (loss):     |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Net income                        |   |              |   |                             |   | 247,726                |   |                                                |      |                                                                 |   |   |   | 247,726 |   |
| Other                             |   |              |   |                             |   |                   |   | (288                                                | )         | 23,877                                                               |   | (857 | ) | 22,732 |   |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Dividends                         |   |              |   |                             |   | (45,000                | )      |                                                |      |                                                                 |   |   |   | (45,000 | ) |
|                              |   |              |   |                             |   |                   |   |                                                |      |                                                                 |   |   |   |   |   |
| Balance,  September 30, 2002      |   | $                 | 3,855  |                             | $      | 442,302                |   | $                                                   | 1,860,541 |                                                                 | $      | (14,623 | ) | $ | 45,089 |   | $ | (857 | ) | $ | 2,336,307 |   |

 

See accompanying notes to consolidated financial statements.

 

7

----

 

WELLS FARGO FINANCIAL,INC.

 

Notes to ConsolidatedFinancial Statements (Unaudited)

 

The accompanying unaudited consolidated financial statements and noteshave been prepared in accordance with the accounting policies set forth inWells Fargo Financial, Inc.’s 2001 Annual Report on Form 10-K, except asdescribed in note 8, and should be read in conjunction with the Notes toConsolidated Financial Statements therein. In the opinion of management, all adjustments (none of which were otherthan normal recurring accruals) necessary to present fairly the financial statementsfor the periods presented have been included. The results of operations for interim periods are not necessarilyindicative of the results to be expected for the entire year.

 

1.             Principles ofConsolidation.

 

The consolidated financial statements include the accounts of WellsFargo Financial, Inc. (the “Company”) and subsidiaries (collectively, “WellsFargo Financial”).  Intercompanyaccounts and transactions are eliminated. The Company is a wholly-owned subsidiary of Wells Fargo Financial Services,Inc. (the “Parent”) which is a wholly-owned subsidiary of Wells Fargo &Company (“Wells Fargo”).

 

2.             DividendRestrictions.

 

Certain long-term debt instruments restrict payment of dividends on andacquisitions of the Company’s common stock. In addition, such debt instruments and the Company’s bank creditagreements contain certain requirements as to maintenance of net worth (asdefined).  Approximately $1.1 billion ofconsolidated stockholder’s equity was unrestricted at September 30, 2002.

 

3.             Other Income.

 

Income from affiliates was $13.0 million and $10.5 million for thequarters ended September 30, 2002 and 2001, respectively, and $39.6 million and$30.4 million for the nine months ended September 30, 2002 and 2001,respectively.

 

Interest and dividends from securities available-for-sale and cashequivalents were $19.4 million and $20.4 million for the quarters endedSeptember 30, 2002 and 2001, respectively, and $58.7 million and $59.6 millionfor the nine months ended September 30, 2002 and 2001, respectively.

 

8

----

 

4.             FinanceReceivables.

 

Finance receivables are as follows:

 
| **(In Thousands)**                    |   | **September  30,  2002** |       | **December  31,  2001** |   |
|---------------------------------------|--------|--------------------------|------------|-------------------------|--------|
|                                  |   |                     |       |                    |   |
| United States  consumer finance:      |   |                     |       |                    |   |
| Real estate –  secured loans     |   | $                        | 3,732,963  |                    | $      | 2,984,226 |   |
| Consumer loans                        |   | 1,504,527                |       | 1,483,055               |   |
|                                  |   |                     |       |                    |   |
| Total loans                           |   | 5,237,490                |       | 4,467,281               |   |
|                                  |   |                     |       |                    |   |
| Sales finance  contracts              |   | 1,149,502                |       | 1,228,396               |   |
| Credit cards                          |   | 1,592,112                |       | 1,341,039               |   |
|                                  |   |                     |       |                    |   |
| Total United  States consumer finance |   | 7,979,104                |       | 7,036,716               |   |
|                                  |   |                     |       |                    |   |
| Canadian  consumer finance:           |   |                     |       |                    |   |
| Real estate –  secured loans     |   | 111,670                  |       | 90,919                  |   |
| Consumer loans                        |   | 470,781                  |       | 461,668                 |   |
|                                  |   |                     |       |                    |   |
| Total loans                           |   | 582,451                  |       | 552,587                 |   |
|                                  |   |                     |       |                    |   |
| Sales finance  contracts              |   | 638,113                  |       | 585,725                 |   |
| Credit cards                          |   | 27,729                   |       | 24,494                  |   |
|                                  |   |                     |       |                    |   |
| Total Canadian  consumer finance      |   | 1,248,293                |       | 1,162,806               |   |
|                                  |   |                     |       |                    |   |
| Automobile  finance                   |   | 4,012,938                |       | 3,375,101               |   |
|                                  |   |                     |       |                    |   |
| Leasing                               |   | 1,251,259                |       | 1,290,658               |   |
|                                  |   |                     |       |                    |   |
| Other                                 |   | 1,049,414                |       | 568,288                 |   |
|                                  |   |                     |       |                    |   |
| Total finance  receivables(1)         |   | $                        | 15,541,008 |                    | $      | 13,433,569 |   |

 

----

(1)     Outstanding receivablebalances at September 30, 2002 and December 31, 2001 are net of unearnedincome, including net deferred fees, of $2.51 billion and $2.25 billion,respectively.  Non-accrual financereceivables were $68.6 million at September 30, 2002 compared with $76.0million at December 31, 2001.  Inaddition, finance receivables outstanding which were more than three paymentscontractually delinquent and which were still accruing interest were $145.5million at September 30, 2002 compared with $172.4 million atDecember 31, 2001.

 

9

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5.             Allowance forCredit Losses.

 

The analysis of the allowance for credit losses is as follows:

 
|                                                  |   | **Quarter  Ended September 30,** |    | **Nine  Months Ended September 30,** |   |
|-------------------------------------------------------|--------|----------------------------------|---------|--------------------------------------|--------|
| **(In  Thousands)**                                   |   | **2002**                         |    | **2001**                             |   | **2002** |   | **2001** |   |
|                                                  |   |                             |    |                                 |   |   |   |   |   |
| Allowance for  credit losses beginning of period      |   | $                                | 584,315 |                                 | $      | 509,850 |   | $ | 521,948 |   | $ | 462,555 |   |
|                                                  |   |                             |    |                                 |   |   |   |   |   |
| Provision for  credit losses charged to expense       |   | 152,517                          |    | 133,638                              |   | 451,352 |   | 362,679 |   |
|                                                  |   |                             |    |                                 |   |   |   |   |   |
| Write-offs                                            |   | (163,835                         | )       | (142,803                             | )      | (448,167 | ) | (403,231 | ) |
|                                                  |   |                             |    |                                 |   |   |   |   |   |
| Recoveries                                            |   | 23,253                           |    | 19,075                               |   | 70,873 |   | 58,182 |   |
|                                                  |   |                             |    |                                 |   |   |   |   |   |
| Allowance  related to business combinations and other |   | (3,005                           | )       |                                 |   | (2,761 | ) | 39,575 |   |
|                                                  |   |                             |    |                                 |   |   |   |   |   |
| Allowance for  credit losses end of period            |   | $                                | 593,245 |                                 | $      | 519,760 |   | $ | 593,245 |   | $ | 519,760 |   |

 

 

6.             Statements ofConsolidated Cash Flows.

 

The Company and its subsidiaries consider highly liquid debt instrumentspurchased with an original maturity of three months or less to be cashequivalents.  Supplemental disclosure ofcertain cash flow information is presented below:

 
|                |   | **Quarter  Ended September 30,** |    | **Nine  Months Ended September 30,** |   |
|---------------------|--------|----------------------------------|---------|--------------------------------------|--------|
| **(In  Thousands)** |   | **2002**                         |    | **2001**                             |   | **2002** |   | **2001** |   |
|                |   |                             |    |                                 |   |   |   |   |   |
| Cash paid for:      |   |                             |    |                                 |   |   |   |   |   |
| Interest            |   | $                                | 158,748 |                                 | $      | 188,717 |   | $ | 475,851 |   | $ | 536,139 |   |
| Income taxes        |   | 33,230                           |    | 11,664                               |   | 103,320 |   | 78,291 |   |
|                     |        |                                  |         |                                      |        |  |  |  |  |  |  |  |  |

 

10

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7.             SegmentInformation.

 

The Company has four reportable segments: U.S. consumer finance,Canadian consumer finance, automobile finance, and leasing.  The Company’s operating segments aredetermined by product type and geography. U.S. consumer finance operations make loans to individuals and purchasesales finance contracts through 770 consumer finance branches in 47 states,Guam, Saipan, and Puerto Rico.  The U.S.consumer finance segment also issues credit cards through two bankingsubsidiaries.  Canadian consumer financeoperations make loans to individuals and purchase sales finance contractsthrough 163 consumer finance branches in the 10 provinces.  Automobile finance operations specialize inpurchasing sales finance contracts directly from automobile dealers and makingloans secured by automobiles through 190 branches in 34 states and PuertoRico.  Leasing operations specialize infinancing commercial equipment such as office copiers, telephone systems,health care equipment, small computers, and light industrial equipment.  Lease finance receivables are generatedprimarily from equipment distributors ranging from small independently-ownedvendors to large equipment manufacturers. Results from insurance operations are included in the appropriatesegment.

 

Selected financial information for each segment is shown below:

 

(In Thousands)
|                             |   | **U.S.  Consumer  Finance** |    | **Canadian  Consumer  Finance** |   | **Automobile  Finance** |   | **Leasing** |    | **Other*** |   | **Total** |   |
|----------------------------------|--------|-----------------------------|---------|---------------------------------|--------|-------------------------|--------|-------------|---------|------------|--------|-----------|--------|
|                             |   | **2002**                    |    | **2001**                        |   | **2002**                |   | **2001**    |    | **2002**   |   | **2001**  |   | **2002** |   | **2001** |   | **2002** |   | **2001** |   | **2002** |   | **2001** |   |
| Quarter Ended   September 30,:   |   |                        |    |                            |   |                    |   |        |    |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |                        |    |                            |   |                    |   |        |    |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finance charges and interest     |   | $                           | 336,703 |                            | $      | 309,938                 |   | $           | 69,573  |       | $      | 62,633    |   | $ | 157,415 |   | $ | 133,235 |   | $ | 34,767 |   | $ | 37,977 |   | $ | 16,984 |   | $ | 16,618 |   | $ | 615,442 |   | $ | 560,401 |   |
| Total income                     |   | 394,498                     |    | 382,965                         |   | 89,127                  |   | 69,464      |    | 164,889    |   | 141,203   |   | 48,100 |   | 45,685 |   | 27,645 |   | 26,918 |   | 724,259 |   | 666,235 |   |
| Net income                       |   | 44,253                      |    | 41,257                          |   | 21,512                  |   | 8,721       |    | 17,734     |   | 10,422    |   | 11,820 |   | 4,681 |   | 3,364 |   | 2,487 |   | 98,683 |   | 67,568 |   |
|                             |   |                        |    |                            |   |                    |   |        |    |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Nine Months Ended September 30,: |   |                        |    |                            |   |                    |   |        |    |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                             |   |                        |    |                            |   |                    |   |        |    |       |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Finance charges and interest     |   | $                           | 964,358 |                            | $      | 918,568                 |   | $           | 200,999 |       | $      | 184,374   |   | $ | 440,373 |   | $ | 393,220 |   | $ | 107,520 |   | $ | 107,409 |   | $ | 42,148 |   | $ | 48,275 |   | $ | 1,755,398 |   | $ | 1,651,846 |   |
| Total income                     |   | 1,151,484                   |    | 1,123,291                       |   | 234,241                 |   | 204,831     |    | 464,576    |   | 416,670   |   | 144,639 |   | 127,932 |   | 73,288 |   | 76,434 |   | 2,068,228 |   | 1,949,158 |   |
| Net income                       |   | 99,679                      |    | 105,416                         |   | 47,222                  |   | 28,437      |    | 59,103     |   | 37,177    |   | 32,465 |   | 19,304 |   | 9,257 |   | 6,815 |   | 247,726 |   | 197,149 |   |
| Total assets                     |   | 9,887,780                   |    | 8,620,014                       |   | 1,549,777               |   | 1,259,277   |    | 4,220,059  |   | 3,548,719 |   | 1,356,514 |   | 1,402,845 |   | 1,021,046 |   | 643,680 |   | 18,035,176 |   | 15,474,535 |   |
|                                  |        |                             |         |                                 |        |                         |        |             |         |            |        |           |        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

----

*                      Informationfrom other segments below the quantitative threshold are attributable tomiscellaneous insurance companies, collection services, operations in Argentina(2001 only) and commercial finance operations including rediscounting.

 

11

----

 

8.             Recent AccountingStandards.

 

In June 2001, the Financial Accounting Board (FASB) issued StatementNo. 142 (FAS 142), Goodwill and Other Intangible Assets.

 

FAS 142 eliminates amortization of goodwill associated with businesscombinations completed after June 30, 2001. During the transition period from July 1, 2001 through December 31,2001, goodwill associated with business combinations completed prior to July 1,2001, continued to be amortized through the income statement.  Effective January 1, 2002, goodwill amortizationceased.

 

As required by FAS 142, goodwill was assessed for impairment at thereporting unit level by applying a fair-value-based test during the firstquarter of 2002.  The Company determinedno goodwill impairment had occurred in its reporting units.

 

 

“Adjusted Earnings” - FAS 142 Transitional Disclosure

 

Under FAS 142, effective January 1, 2002 amortization of goodwill wasdiscontinued.  For comparability, thetable

below reconciles the Company’s reported earnings to “adjusted”earnings, which exclude goodwill amortization.

 
|                              |   | **September 30, 2001** |   |
|-----------------------------------|--------|------------------------|--------|
| **(In  Thousands)**               |   | **Quarter  ended**     |   | **Nine months  ended** |   |
|                              |   |                   |   |   |   |
| Net income                        |   |                   |   |   |   |
| Reported net income               |   | $                      | 67,568 |   | $ | 197,149 |   |
| Goodwill amortization, net of tax |   | 6,516                  |   | 19,238 |   |
| Adjusted net income               |   | $                      | 74,084 |   | $ | 216,387 |   |

 

12

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9.             Goodwill.

 

The changes in the carrying amount of goodwill for the quarter and ninemonths ended September 30, 2002, respectively, are as follows:

 
| **(In  Thousands)**                      |   | **U.S.  Consumer Finance** |   | **Canadian  Consumer Finance** |   | **Automobile  Finance** |   | **Leasing** |    | **Other** |   | **Total** |   |
|------------------------------------------|--------|----------------------------|--------|--------------------------------|--------|-------------------------|--------|-------------|---------|-----------|--------|-----------|--------|
| Quarter ended  September 30, 2002        |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Balance as of  June 30, 2002             |   | $                          | 12,894 |                           | $      | 35,540                  |   | $           | 178,815 |      | $      | 110,417   |   | $ | 6,329 |   | $ | 343,995 |   |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Foreign currency  translation adjustment |   |                       |   | (1,573                         | )      |                    |   |        |    |      |   | (1,573    | )      |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Balance as of September  30, 2002        |   | $                          | 12,894 |                           | $      | 33,967                  |   | $           | 178,815 |      | $      | 110,417   |   | $ | 6,329 |   | $ | 342,422 |   |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Nine months  ended September 30, 2002    |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Balance as of  December 31, 2001         |   | $                          | 12,894 |                           | $      | 33,864                  |   | $           | 178,815 |      | $      | 110,417   |   | $ |   |   | $ | 335,990 |   |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Goodwill  acquired (1)                   |   |                       |   |                           |   |                    |   |        |    | 6,333     |   | 6,333     |   |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Purchase  accounting adjustment          |   |                       |   |                           |   |                    |   |        |    | (4        | )      | (4        | )      |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Foreign currency  translation adjustment |   |                       |   | 103                            |   |                    |   |        |    |      |   | 103       |   |
|                                     |   |                       |   |                           |   |                    |   |        |    |      |   |      |   |
| Balance as of  September 30, 2002        |   | $                          | 12,894 |                           | $      | 33,967                  |   | $           | 178,815 |      | $      | 110,417   |   | $ | 6,329 |   | $ | 342,422 |   |

 

(1) The additionalgoodwill resulted from the purchase of the rediscount operations of WashingtonMutual Bank, FA on March 28, 2002.

 

13

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WELLS FARGO FINANCIAL,INC.

 

Management’s Discussionand Analysisof Financial Condition and Results of Operations

 

 

*Statementsmade in Management’s Discussion and Analysis may be forward-looking and aremade pursuant to the safe harbor provisions of the Private SecuritiesLitigation 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 differ materiallyfrom those in the forward-looking statements. Those factors include the economic environment, competition, productsand pricing in the geographic and business areas in which the Company conductsits operations, prevailing interest rates, changes in government regulationsand policies affecting financial services companies, credit quality and creditrisk management, acquisitions, and integration of acquired businesses.*

 

The discussion and analysis that follows is limited to a discussion ofthe first nine months as a whole and does not include a separate discussion ofthe third quarter unless otherwise noted. In this quarterly report on Form 10-Q, the discussion and analysisincludes the accounts of Wells Fargo Financial, Inc. (the Company) andsubsidiaries (collectively, “Wells Fargo Financial”).

 

Wells Fargo Financial’s net income for the first nine months of 2002was $247.7 million compared with $197.1 million for the first nine months of2001.  Wells Fargo Financial adopted FAS142, Goodwill and Other Intangible Assets, effective January 1, 2002.  Accordingly, goodwill amortizationceased.  Net income in the first ninemonths of 2001 included $19.3 million of goodwill amortization (net oftax).  Excluding amortization ofgoodwill, net income for the first nine months of 2002 was $247.7 millioncompared with $216.4 million for the first nine months of 2001.

 

Well’s Fargo Financial’s total income (revenue) increased 6% for thefirst nine months ($2,068.2 million in the first nine months of 2002 comparedwith $1,949.2 million in the first nine months of 2001).

 

Income from finance charges and interest increased 6% for the firstnine months ($1,755.4 million in the first nine months of 2002 compared with$1,651.8 million in the first nine months of 2001).  Changes in income from finance charges and interest resultpredominantly from (1) changes in the amount of finance receivables outstandingand (2) changes in the rate of charge on those receivables. In total, averagefinance receivables outstanding in the first nine months of 2002 increased 15%from the first nine months of 2001; average U.S. consumer finance receivablesoutstanding increased 13%, average Canadian consumer finance receivablesoutstanding increased 16%, average automobile finance receivables outstandingincreased 14%, average leasing finance receivables outstanding increased 7%,and average other finance receivables outstanding increased 76%.

 
| **Rate of  charge on finance receivables:** |   | **2002** |   | **2001** |   |
|---------------------------------------------|--------|----------|--------|----------|--------|
|                                        |   |     |   |     |   |
| U.S. consumer  finance                      |   | 17.52    | %      | 18.89    | %      |
| Canadian  consumer finance                  |   | 22.40    |   | 23.72    |   |
| Automobile  finance                         |   | 16.30    |   | 16.57    |   |
| Leasing                                     |   | 11.32    |   | 12.07    |   |
| Other                                       |   | 6.59     |   | 13.30    |   |
| Total                                       |   | 16.42    |   | 17.83    |   |

 

14

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The increase in income from finance charges and interest was due togrowth in average receivables outstanding. Growth in average receivables for U.S. consumer finance, Canadianconsumer finance and automobile finance was due to regular business activity.  The increase in average leasing financereceivables was due primarily to the purchase of Conseco Finance VendorServices Corporation on January 31, 2001. The majority of the increase in other average receivables was due tosignificant receivable growth of the rediscounting operations.  Changes in the earned rates of charge weredue to changes in prevailing market rates combined with a change in portfoliomix.  The decline in the earned rate ofcharge for other finance receivables resulted from the change in portfolio mixdue to the growth of rediscounting operations and the transfer of the Company’soperations in Argentina to its parent during December 2001.

 

Other income increased 9% ($224.7 million in the first nine months of2002 compared with $206.0 million in the first nine months of 2001).  The increase in other income was due to anincrease in income from affiliates and due to additional fee income originatingfrom growth in the leasing and credit card businesses.

 

Operating expenses increased 5% ($708.9 million in the first ninemonths of 2002 compared with $672.0 million in the first nine months of2001).  The increase was due primarilyto increases in employee compensation and benefits and other costs relating tobusiness expansion and acquisitions.

 

Interest and debt expense decreased 11% ($478.9 million in the firstnine months of 2002 compared with $539.8 million in the first nine months of2001).  Changes in interest and debtexpense result predominantly from (1) changes in the amount of borrowings outstandingand (2) changes in the cost of those borrowings.  Average total outstanding borrowings in the first nine months of2002 increased 15% from the first nine months of 2001.

 
|                 |   | **Nine  Months Ended September 30,** |   |
|----------------------|--------|--------------------------------------|--------|
| **Costs of  funds:** |   | **2002**                             |   | **2001** |   |
|                 |   |                                 |   |   |   |
| Short-term           |   | 2.08                                 | %      | 5.05 | % |
| Long-term            |   | 5.91                                 |   | 6.45 |   |
| Total                |   | 4.70                                 |   | 6.01 |   |

 

Changes in average debt outstanding generally correspond to changes inaverage finance receivables outstanding combined with the change in notesreceivable - affiliates.  Averagefinance receivables and notes receivable - affiliates increased 16% for thefirst nine months of 2002.

 

Provision for credit losses increased 24% ($451.4 million in the firstnine months of 2002 compared with $362.7 million in the first nine months of2001).  Third quarter 2002 write-offsincluded $21 million of charges already provided for in the second quarter of2002, due to the adoption of a new delinquency and loss recognition policy inthe U.S. consumer finance businesses.

 

Net write-offs increased 9% ($377.3 million in the first nine months of2002 compared with $345.0 million in the first nine months of 2001).  The increase was due primarily to higherwrite-offs in the Company’s U.S. consumer finance, Canadian consumer financeand automobile portfolios and the change in delinquency and loss recognitionpolicy noted above.  These increaseswere partially offset by improvements in leasing business and other financebusinesses.  Write-offs after recoveriesas a percentage of average net receivables decreased to 2.65 percent for thefirst nine months of 2002 compared with 2.79 percent in the first nine monthsof 2001(see following table).

 

15

----

 
|                                                                                      |   |     |   |
|-------------------------------------------------------------------------------------------|--------|----------|--------|
| **Nine  Months Ended September 30,**                                                      |
| **2002**                                                                                  |   | **2001** |
| Net write-offs, not annualized, as a  percentage of average net receivables  outstanding: |   |     |   |   |   |
| U.S. consumer  finance                                                                    |   | 3.10     | %      | 3.29 | % |
| Canadian  consumer finance                                                                |   | 3.18     |   | 3.19 |   |
| Automobile  finance                                                                       |   | 2.43     |   | 2.15 |   |
| Leasing                                                                                   |   | 1.68     |   | 1.89 |   |
| Other                                                                                     |   | .39      |   | 1.69 |   |
| Total                                                                                     |   | 2.65     |   | 2.79 |   |

 

Through September 30, 2002, the provision for credit losses exceedednet write-offs by $74.1 million.  AtSeptember 30, 2002, the Company had an allowance for credit losses of$593.2 million (3.82% of receivables) compared with $521.9 million (3.89% ofreceivables) at December 31, 2001. Non-accrual finance receivables were $68.6 million at September 30, 2002compared with $76.0 million at December 31, 2001.  In addition, finance receivables outstanding which were more thanthree payments contractually delinquent and which were still accruing interestwere $145.5 million at September 30, 2002 compared with $172.4 million atDecember 31, 2001.  The process ofdetermining the allowance for credit losses is a critical accounting policy ofthe Company.  The process requiressubjective and complex judgements by management. Assumptions about economicconditions, unemployment rates, and projected write-offs are factors consideredwhen evaluating the allowance for losses. Management believes that the allowance for credit losses at September30, 2002, is adequate to absorb probable losses on existing receivables in thefinance receivables portfolio.  However,no assurance can be given that the Company will not, in any particular period,sustain credit losses that are sizeable in relation to the amount reserved, orthat subsequent evaluations of the portfolio, in light of the factors thenprevailing, including economic conditions and the ongoing examination processby the Company, will not require significant increases in the allowance forcredit losses.

 

Income taxes increased 23% ($144.5 million in the first nine months of2002 compared with $117.3 million in the first nine months of 2001).  Income before income taxes increased 25%($392.2 million in the first nine months of 2002 compared with $314.5 millionin the first nine months of 2001.)  Theeffective tax rate was 36.8% for the first nine months of 2002 and 37.3% forthe first nine months of 2001.

 

On October 22, 2002, Wells Fargo Financial, Inc. announced that it willno longer issue term debt securities in the United States.  For the quarter and nine months endedSeptember 30, 2002, Wells Fargo Financial, Inc. issued $700 million and $2.1billion, respectively, of senior notes, leaving at September 30, 2002 a totalof $1.6 billion available for issuance. For those same periods, Wells Fargo Financial, Inc.’s wholly-ownedCanadian subsidiary Wells Fargo Financial Canada Corporation (WFFC) issued $200million (Canadian) and $350 million (Canadian), respectively, in senior notes,leaving at September 30, 2002 a total of $950 million (Canadian) available forissuance.

 

On October 22, 2002, Wells Fargo & Company issued a full andunconditional guarantee of all outstanding term debt securities and commercialpaper of Wells Fargo Financial, Inc. Subject to receiving required consents and approvals, Wells FargoFinancial, Inc. will cease filing periodic reports under the SecuritiesExchange Act of 1934 and will no longer be a separately rated company.  Wells Fargo & Company also guaranteedall outstanding commercial paper of WFFC and subject to receiving requiredconsents and approvals, intends to effectively substitute its guarantee for theguarantee of Wells Fargo Financial, Inc. with respect to the outstanding termdebt of WFFC.  WFFC expects to continueto issue term debt and commercial paper in Canada, fully guaranteed by WellsFargo & Company.

 

16

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The Company maintains bank lines of credit and revolving creditagreements to provide an alternative source of liquidity to support theCompany’s commercial paper borrowings. At September 30, 2002, lines of credit and revolving credit agreementstotaling $2,752 million were being maintained at 19 domestic and internationalbanks; the entire amount was available on that date.  On October 31, 2002, the Company terminated 16 of theseagreements totaling $2,500 million. Additionally, the Company’s bank subsidiaries, Wells Fargo FinancialBank and Wells Fargo Financial National Bank, have access to federal fundsborrowings.  At September 30, 2002,federal funds availability at the two banks was $583 million.

 

The Company’s Canadian subsidiary obtains long-term debt capitalprimarily from the issuance of debt securities to the public throughunderwriters on a firm-commitment basis and the issuance of debt securities toinstitutional investors.  The Company’sCanadian subsidiary also obtains long-term debt from the issuance ofmedium-term notes (which have maturities ranging from nine months to 30 years)through underwriters (acting as agent or principal).

 

The Company anticipates the continued availability of borrowed funds,at prevailing interest rates, to provide for Wells Fargo Financial’s growth inthe foreseeable future.  Funds are alsogenerated internally from payments of principal and interest on Wells FargoFinancial’s finance receivables.

 

CONTROLS AND PROCEDURES

 

EVALUATION OF DISCLOSURE CONTROLS ANDPROCEDURES

Under Securities and Exchange Commission(SEC) rules, Wells Fargo Financial, Inc. is required to maintain disclosurecontrols and procedures designed to ensure that information required to bedisclosed by Wells Fargo Financial, Inc. in the reports that it files orsubmits under the Securities Exchange Act of 1934 is recorded, processed,summarized and reported within the time periods specified in the SEC’s rulesand forms.  Within the 90-day periodprior to the filing date of this report, Wells Fargo Financial, Inc. carriedout an evaluation of the effectiveness of the design and operation of its disclosurecontrols and procedures.  The managementof Wells Fargo Financial, Inc., including the chief executive officer and chieffinancial officer, supervised and participated in the evaluation.  Based on this evaluation, the chiefexecutive officer and the chief financial officer concluded that Wells FargoFinancial, Inc.’s disclosure controls and procedures were effective as of theevaluation date.

 

CHANGES IN INTERNAL CONTROLS

There were no significant changes in WellsFargo Financial, Inc.’s internal controls or in other factors that couldsignificantly affect these controls subsequent to the date of their evaluation.

 

17

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PART II.  OTHER INFORMATION

 

WELLS FARGO FINANCIAL,INC.

 

*Item 5.  Other Information.*

 

RATIOS OF EARNINGS TOFIXED CHARGES

 

The following table sets forth the ratios of earnings to fixed chargesof Wells Fargo Financial, Inc. and its subsidiaries for the periods indicated:

 
| **Nine Months Ended  September 30, 2002** |     | **Years  Ended December 31,** |     |
|-------------------------------------------|----------|-------------------------------|----------|
|                                      | **2001** |                          | **2000** |   | **1999** |   | **1998** |   | **1997** |   |
|                                      |     |                          |     |   |   |   |   |   |   |   |   |
| 1.80                                      |     | 1.61                          |     | 1.58 |   | 1.78 |   | 1.72 |   | 2.00 |   |

 

The ratios of earnings to fixed charges have been computed by dividingnet earnings plus fixed charges and income taxes by fixed charges.  Fixed charges consist of interest and debtexpense plus one-third of rentals (which is deemed representative of theinterest factor).

 

 

*Item6.  Exhibits and Reports on Form 8-K.*

 

(a)  Exhibits:

 
| Exhibit (12)   |   | Computation of ratios of earnings to fixed charges  for the years ended December  31, 2001, 2000, 1999, 1998 and 1997 and  the nine months ended September 30, 2002. |
|----------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   |                                                                                                                                                                      |
| Exhibit (99.1) |   | Certification of Periodic Financial Report by Chief  Executive Officer Pursuant to 18 U.S.C. § 1350.                                                                 |
|           |   |                                                                                                                                                                      |
| Exhibit (99.2) |   | Certification of Periodic Financial Report by Chief  Financial Executive Officer Pursuant to 18 U.S.C. § 1350.                                                       |

 

(b)  Reports on 8-K

 

On July 19, 2002, the Company filed a current report on Form 8-Krelated to the Company’s financial results for the six months ended June 30, 2002.

 

On October 22, 2002, the Company filed a current report on Form 8-Krelated to the guarantee of the outstanding debt of the Company by Wells Fargo& Company.

 

18

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S I G N A T U R E S

 

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 theundersigned thereunto duly authorized.

 
|                    | WELLS FARGO FINANCIAL, INC.           |   |
|-------------------------|---------------------------------------|--------|
|                    |                                  |   |
| Date: November 12, 2002 |                                  |   |
|                    |                                  |   |
|                    |                                  |   |
|                    | /s/ Eric Torkelson                    |   |
|                    | Eric Torkelson                        |   |
|                    | Senior Vice  President and Controller |   |
|                    | (Principal  Accounting Officer)       |   |

 

19

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**CERTIFICATIONS**

 

I, Daniel W. Porter,certify that:

 

1.   I have reviewed this quarterly report on Form10-Q of Wells Fargo Financial, Inc.;

 

2.   Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.   Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.   The registrant’s other certifying officersand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

 

a) designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisquarterly report is being prepared;

 

b) evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c) presented in thisquarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.   The registrant’s other certifying officersand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent function):

 

a) all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial data and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b) any fraud, whetheror not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

6.   The registrant’s other certifying officersand I have indicated in this quarterly report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 
| Date:  November 12, 2002 |                                   |   |
|--------------------------|----------------------------------------|--------|
|                     |                                   |   |
|                     | /s/  Daniel W. Porter                  |
|                     | Daniel  W. Porter                      |
|                     | Chairman,  and Chief Executive Officer |

 

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I, Dennis E. Young,certify that:

 

1.   I have reviewed this quarterly report on Form10-Q of Wells Fargo Financial, Inc.;

 

2.   Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.   Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.   The registrant’s other certifying officersand I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

 

a) designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which thisquarterly report is being prepared;

 

b) evaluated theeffectiveness of the registrant’s disclosure controls and procedures as of adate within 90 days prior to the filing date of this quarterly report (the“Evaluation Date”); and

 

c) presented in thisquarterly report our conclusions about the effectiveness of the disclosurecontrols and procedures based on our evaluation as of the Evaluation Date;

 

5.   The registrant’s other certifying officersand I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of registrant’s board of directors (or personsperforming the equivalent function):

 

a) all significantdeficiencies in the design or operation of internal controls which couldadversely affect the registrant’s ability to record, process, summarize andreport financial date and have identified for the registrant’s auditors anymaterial weaknesses in internal controls; and

 

b) any fraud, whetheror not material, that involves management or other employees who have asignificant role in the registrant’s internal controls; and

 

6.   The registrant’s other certifying officersand I have indicated in this quarterly report whether or not there weresignificant changes in internal controls or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 
| Date:  November 12, 2002 |                                                   |   |
|--------------------------|--------------------------------------------------------|--------|
|                     |                                                   |   |
|                     | /s/  Dennis E. Young                                   |
|                     | Dennis  E. Young                                       |
|                     | Executive  Vice President and  Chief Financial Officer |

 

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