Capital

Wells Fargo reported an increase in capital ratios in 1Q11. The company implemented several capital actions including dividend increase, share repurchase program reinstatement and calling $3.2 billion of high-cost trust preferred securities that will be no longer counted as Tier 1 capital under Dodd-Frank and Basel III.

The Tier 1 leverage ratio was 9.3% as of March 31, 2011, up from 9.2% as of December 31, 2010. The company’s estimated Tier 1 common ratio was 7.2% as of March 31, 2011, under the Basel III capital proposals. Book value per share improved to $23.18 from $22.49 in the prior quarter and $20.76 in the prior-year quarter.

Outlook: One firm (Macquarie Research) believes that Wells Fargo’s internal capital generation positions the company to meet Basel III standards at the time for implementation.

According to another firm (R W. Baird), more aggressive capital deployment activity would drive upside for shares.

Wachovia Integration on Track

On May 16, 2011, Wells Fargo announced that it would complete the transition of the remaining Wachovia signs and systems into itself by mid-October 2011. Specifically, Wachovia’s stores at Virginia will be converted in August, those at Maryland, South Carolina, and Washington, D.C. in September, and finally North Carolina in October. The conversion of 868 stores and 1,487 ATMs in these states and the District of Columbia will put an end to the transition from Wachovia to Wells Fargo.

Wachovia merger integration remained on track, with the company converting retail banking stores in Connecticut, Delaware, New Jersey and New York in the first quarter of 2011. The company also completed conversion of one common retail brokerage platform.

In addition, Pennsylvania banking stores were converted on April 15. Florida locations will be converted in June and July of 2011. The company has also converted Wachovia stores in Alabama, Arizona, California, Colorado, Georgia, Illinois, Kansas, Mississippi, Nevada, Tennessee and Texas. Completed integrations included conversion of Wachovia Mortgage to Wells Fargo Home Mortgage and bringing brokerage operations under Wells Fargo Advisors.

Dividend Raise and Share Buyback

On March 18, 2011, Wells Fargo & Company’s board of directors approved a special first quarter 2011 cash dividend of $0.07 per share on its common stock. Combined with quarterly dividend of $0.05 per share declared in January 2011, the special dividend brings the total dividend to $0.12 per share. The increased dividend was paid on March 31, 2011 to shareholders of record as of March 28, 2011.

The board of directors also augmented Wells Fargo’s share repurchase by additional 200 million. In January 2011, Wells Fargo submitted a capital plan to the Federal Reserve Board, including dividend hike, common stock repurchases, the redemption of certain trust preferred capital securities, and the continued open market repurchases of common stock warrants.

Dividend

On May 20, 2011, Wells Fargo & Company announced dividends on two series of preferred stock.

• A quarterly cash dividend of $20.00 per share was declared on its 8.00% non-cumulative perpetual class A preferred stock, Series J, liquidation preference $1,000 per share. This dividend equals $0.50 per depositary share, each representing a 1/40th interest in a share of Series J preferred stock. The Series J dividend was paid on June 15, 2011, to stockholders of record as of the close of business on May 31, 2011.

• A quarterly cash dividend of $18.75 per share was declared on its 7.50% non-cumulative perpetual convertible class A preferred stock, Series L, liquidation preference $1,000 per share. The Series L dividend was paid on June 15, 2011, to stockholders of record as of the close of business on May 31, 2011.

On April 20, 2011, Wells Fargo & Company announced a common stock dividend of $0.12 per share for the second quarter. The dividend was paid on June 1, 2011, to stockholders of record as of May 6, 2011. The company has approximately 5.3 billion shares outstanding.

On March 15, 2011, Wells Fargo paid dividends on three series of preferred stock.

• A quarterly cash dividend of $20.00 per share was paid on its 8.00% non-cumulative perpetual class A preferred stock, Series J, liquidation preference $1,000 per share. This dividend equals $0.50 per depositary share, each representing a 1/40th interest in a share of Series J preferred stock. The Series J dividend was paid to holders of record as of February 28, 2011.

• A quarterly cash dividend of $18.75 per share was paid on its 7.50% non-cumulative perpetual convertible class A preferred stock, Series L, liquidation preference $1,000 per share. The Series L dividend was paid to holders of record as of February 28, 2011.

• Additionally, a semi-annual cash dividend of $39.90 per share was paid on its Fixed-to-Floating Rate non-cumulative perpetual Class A preferred stock, Series K, liquidation preference $1,000 per share. The Series K dividend was paid to holders of record as of February 28, 2011.

On March 1, 2011, Wells Fargo paid a quarterly common stock dividend of $0.05 per share to stockholders of record as of February 4, 2011.