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SECURITIES AND EXCHANGE COMMISSION
THE SECURITIES EXCHANGE ACT OF 1934
(Exact name of registrant as specified in its charter)
Delaware | No. 41-0449260 | |
(State of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
Yesþ | Noo |
Yesþ | Noo |
Large accelerated filer | þ | Accelerated filero | ||
Non-accelerated filer | o(Do not check if a smaller reporting company) | Smaller reporting companyo |
Yeso | Noþ |
Shares Outstanding | ||||
October 30, 2009 | ||||
Common stock, $1-2/3 par value | 4,685,063,588 |
CROSS-REFERENCE INDEX
PART I | ||||||||
Item 1. | Financial Statements | Page | ||||||
62 | ||||||||
63 | ||||||||
64 | ||||||||
66 | ||||||||
67 | ||||||||
72 | ||||||||
73 | ||||||||
74 | ||||||||
83 | ||||||||
87 | ||||||||
88 | ||||||||
100 | ||||||||
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107 | ||||||||
115 | ||||||||
129 | ||||||||
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132 | ||||||||
133 | ||||||||
136 | ||||||||
144 | ||||||||
Item 2. | ||||||||
2 | ||||||||
3 | ||||||||
15 | ||||||||
17 | ||||||||
25 | ||||||||
29 | ||||||||
32 | ||||||||
54 | ||||||||
145 | ||||||||
147 | ||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 48 | ||||||
Item 4. | 61 | |||||||
PART II | ||||||||
Item 1. | 148 | |||||||
Item 1A. | 148 | |||||||
Item 2. | 148 | |||||||
Item 6. | 148 | |||||||
Signature | 148 | |||||||
Exhibit Index | 149 | |||||||
EX-12.(a) | ||||||||
EX-12.(b) | ||||||||
EX-31.(a) | ||||||||
EX-31.(b) | ||||||||
EX-32.(a) | ||||||||
EX-32.(b) | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
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Quarter ended | Nine months ended | |||||||||||||||||||
Sept. 30 | , | June 30 | , | Sept. 30 | , | Sept. 30 | , | Sept. 30 | , | |||||||||||
($ in millions, except per share amounts) | 2009 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||
For the Period | ||||||||||||||||||||
Wells Fargo net income | $ | 3,235 | 3,172 | 1,637 | 9,452 | 5,389 | ||||||||||||||
Wells Fargo net income applicable to common stock | 2,637 | 2,575 | 1,637 | 7,596 | 5,389 | |||||||||||||||
Diluted earnings per common share | 0.56 | 0.57 | 0.49 | 1.69 | 1.62 | |||||||||||||||
Profitability ratios (annualized): | ||||||||||||||||||||
Wells Fargo net income to average assets (ROA) | 1.03 | % | 1.00 | 1.06 | 1.00 | 1.21 | ||||||||||||||
Net income to average assets | 1.06 | 1.02 | 1.07 | 1.02 | 1.22 | |||||||||||||||
Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity (ROE) | 12.04 | 13.70 | 13.63 | 13.29 | 15.02 | |||||||||||||||
Net income to average total equity | 10.57 | 11.56 | 13.66 | 11.32 | 15.06 | |||||||||||||||
Efficiency ratio (3) | 52.0 | 56.4 | 53.0 | 54.9 | 51.8 | |||||||||||||||
Total revenue | $ | 22,466 | 22,507 | 10,377 | 65,990 | 32,400 | ||||||||||||||
Pre-tax pre-provision profit (PTPP) (4) | 10,782 | 9,810 | 4,876 | 29,791 | 15,612 | |||||||||||||||
Dividends declared per common share | 0.05 | 0.05 | 0.34 | 0.44 | 0.96 | |||||||||||||||
Average common shares outstanding | 4,678.3 | 4,483.1 | 3,316.4 | 4,471.2 | 3,309.6 | |||||||||||||||
Diluted average common shares outstanding | 4,706.4 | 4,501.6 | 3,331.0 | 4,485.3 | 3,323.4 | |||||||||||||||
Average loans | $ | 810,191 | 833,945 | 404,203 | 833,076 | 393,262 | ||||||||||||||
Average assets | 1,246,051 | 1,274,926 | 614,194 | 1,270,071 | 594,717 | |||||||||||||||
Average core deposits (5) | 759,319 | 765,697 | 320,074 | 759,668 | 318,582 | |||||||||||||||
Average retail core deposits (6) | 584,414 | 596,648 | 234,140 | 590,499 | 230,935 | |||||||||||||||
Net interest margin | 4.36 | % | 4.30 | 4.79 | 4.27 | 4.80 | ||||||||||||||
At Period End | ||||||||||||||||||||
Securities available for sale | $ | 183,814 | 206,795 | 86,882 | 183,814 | 86,882 | ||||||||||||||
Loans | 799,952 | 821,614 | 411,049 | 799,952 | 411,049 | |||||||||||||||
Allowance for loan losses | 24,028 | 23,035 | 7,865 | 24,028 | 7,865 | |||||||||||||||
Goodwill | 24,052 | 24,619 | 13,520 | 24,052 | 13,520 | |||||||||||||||
Assets | 1,228,625 | 1,284,176 | 622,361 | 1,228,625 | 622,361 | |||||||||||||||
Core deposits (5) | 747,913 | 761,122 | 334,076 | 747,913 | 334,076 | |||||||||||||||
Wells Fargo stockholders’ equity | 122,150 | 114,623 | 46,957 | 122,150 | 46,957 | |||||||||||||||
Total equity | 128,924 | 121,382 | 47,259 | 128,924 | 47,259 | |||||||||||||||
Tier 1 capital (7) | 108,785 | 102,721 | 45,182 | 108,785 | 45,182 | |||||||||||||||
Total capital (7) | 150,079 | 144,984 | 60,525 | 150,079 | 60,525 | |||||||||||||||
Capital ratios: | ||||||||||||||||||||
Wells Fargo common stockholders’ equity to assets | 7.41 | % | 6.51 | 7.54 | 7.41 | 7.54 | ||||||||||||||
Total equity to assets | 10.49 | 9.45 | 7.59 | 10.49 | 7.59 | |||||||||||||||
Average Wells Fargo common stockholders’ equity to average assets | 6.98 | 5.92 | 7.78 | 6.02 | 8.06 | |||||||||||||||
Average total equity to average assets | 9.99 | 8.85 | 7.83 | 8.98 | 8.11 | |||||||||||||||
Risk-based capital (7) | ||||||||||||||||||||
Tier 1 capital | 10.63 | 9.80 | 8.59 | 10.63 | 8.59 | |||||||||||||||
Total capital | 14.66 | 13.84 | 11.51 | 14.66 | 11.51 | |||||||||||||||
Tier 1 leverage (7) | 9.03 | 8.32 | 7.54 | 9.03 | 7.54 | |||||||||||||||
Book value per common share | $ | 19.46 | 17.91 | 14.14 | 19.46 | 14.14 | ||||||||||||||
Team members (active, full-time equivalent) | 265,100 | 269,900 | 159,000 | 265,100 | 159,000 | |||||||||||||||
Common stock price: | ||||||||||||||||||||
High | $ | 29.56 | 28.45 | 44.68 | 30.47 | 44.68 | ||||||||||||||
Low | 22.08 | 13.65 | 20.46 | 7.80 | 20.46 | |||||||||||||||
Period end | 28.18 | 24.26 | 37.53 | 28.18 | 37.53 | |||||||||||||||
(1) | Wells Fargo & Company (Wells Fargo) acquired Wachovia Corporation (Wachovia) on December 31, 2008. Because the acquisition was completed on December 31, 2008, Wachovia’s results are included in the income statement, average balances and related metrics beginning in 2009. Wachovia’s assets and liabilities are included in the consolidated balance sheet beginning on December 31, 2008. | |
(2) | On January 1, 2009, we adopted new accounting guidance on noncontrolling interests on a retrospective basis for disclosure and, accordingly, prior period information reflects the adoption. The guidance requires that noncontrolling interests be reported as a component of total equity. | |
(3) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). | |
(4) | Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful financial measure because it enables investors and others to assess the Company’s ability to generate capital to cover credit losses through a credit cycle. | |
(5) | Core deposits are noninterest-bearing deposits, interest-bearing checking, savings certificates, market rate and other savings, and certain foreign deposits (Eurodollar sweep balances). | |
(6) | Retail core deposits are total core deposits excluding Wholesale Banking core deposits and retail mortgage escrow deposits. | |
(7) | See Note 18 (Regulatory and Agency Capital Requirements) to Financial Statements in this Report for additional information. |
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• | Mortgage banking noninterest income of $3.1 billion in third quarter 2009; |
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– | $1.1 billion in revenue from mortgage loan originations/sales activities on $96 billion of new originations; | ||
– | Mortgage applications of $123 billion, with an unclosed application pipeline of $62 billion at quarter end; and | ||
– | $1.5 billion combined market-related valuation changes to MSRs and economic hedges (consisting of a $2.1 billion decrease in the fair value of the MSRs more than offset by a $3.6 billion economic hedge gain in the quarter), largely due to hedge-carry income reflecting the current low short-term interest rate environment (the low short-term interest rate environment is expected to continue into fourth quarter 2009); MSRs as a percentage of loans serviced for others reduced to 0.83%; average servicing portfolio note rate was only 5.72%. |
• | Trust and investment fees of $2.5 billion primarily reflecting an increase in client assets, bond origination fees, and higher brokerage revenue as we continued to build our retail securities brokerage business; client assets in Wealth, Brokerage and Retirement were up 8% from second quarter 2009 driven largely by the strong equity market recovery; | |
• | Card fees of $946 million reflecting seasonally higher purchase volumes and higher customer penetration rates; | |
• | Service charges on deposit accounts of $1.5 billion driven by continued strong checking account growth; and | |
• | Net losses on debt and equity securities totaling $11 million, including $396 million of OTTI write-downs and $120 million of realized gains on the sale of MBS in the third quarter. After having purchased over $34 billion of agency MBS in the second quarter of 2009 at yields more than 1% above the current market, we sold $23 billion of our lowest-yielding MBS after long-term interest rates declined in the third quarter. |
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• | FASB ASC 815-10,Derivatives and Hedging(FAS 161,Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133); | |
• | FASB ASC 810-10,Consolidation(FAS 160,Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51); | |
• | FASB ASC 805-10,Business Combinations(FAS 141R (revised 2007),Business Combinations); | |
• | FASB ASC 820-10,Fair Value Measurements and Disclosures(FASB Staff Position (FSP) FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly); | |
• | FASB ASC 320-10,Investments — Debt and Equity Securities(FSP FAS 115-2 and FAS 124-2,Recognition and Presentation of Other-Than-Temporary Impairments); and | |
• | FASB ASC 260-10,Earnings Per Share(FSP Emerging Issues Task Force (EITF) 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities). |
• | FASB ASC 825-10,Financial Instruments(FSP FAS 107-1 and APB Opinion 28-1,Interim Disclosures about Fair Value of Financial Instruments); and | |
• | FASB ASC 855-10,Subsequent Events(FAS 165,Subsequent Events). |
• | FASB ASC 105-10,Generally Accepted Accounting Principles(FAS 168,The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162). |
• | FAS 166,Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140; | |
• | FAS 167,Amendments to FASB Interpretation No. 46(R); | |
• | FASB ASC 715-20,Compensation — Retirement Benefits(FSP FAS 132(R)-1,Employers’ Disclosures about Postretirement Benefit Plan Assets); | |
• | Accounting Standards Update (ASU or Update) 2009-12,Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent); and | |
• | ASU 2009-5,Measuring Liabilities at Fair Value. |
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Incremental | Incremental | |||||||
GAAP | risk-weighted | |||||||
(in billions) | assets | assets | ||||||
Residential mortgage loans — nonconforming (1) (2) | $ | 28 | 18 | |||||
Other consumer loans | 6 | 3 | ||||||
Commercial paper conduit | 6 | — | ||||||
Investment funds | 8 | 4 | ||||||
Total | $ | 48 | 25 | |||||
(1) | Represents certain of our residential mortgage loans that are not guaranteed by government-sponsored entities (“nonconforming”). With the concurrence of our independent auditors, we have concluded that conforming residential mortgage loans involved in securitizations are not subject to consolidation under FAS 166 and FAS 167. | |
(2) | We are actively exploring the sale of certain interests we hold in securitized residential mortgage loans, which would reduce the amount of residential mortgage loans subject to consolidation under FAS 167. There is no assurance that we will be able to execute such sales prior to adoption of these accounting standards, although it is our intent to do so. |
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• | the allowance for credit losses; | |
• | PCI loans; | |
• | the valuation of residential mortgage servicing rights (MSRs); | |
• | the fair valuation of financial instruments; | |
• | pension accounting; and | |
• | income taxes. |
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Quarter ended September 30 | , | |||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||||
Average | Yields/ | income/ | Average | Yields/ | income/ | |||||||||||||||||||
(in millions) | balance | rates | expense | balance | rates | expense | ||||||||||||||||||
Earning assets | ||||||||||||||||||||||||
Federal funds sold, securities purchased under resale agreements and other short-term investments | $ | 16,356 | 0.66 | % | $ | 27 | 3,463 | 2.09 | % | $ | 18 | |||||||||||||
Trading assets | 20,518 | 4.29 | 221 | 4,838 | 3.72 | 46 | ||||||||||||||||||
Debt securities available for sale (3): | ||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | 2,545 | 3.79 | 24 | 1,141 | 3.99 | 11 | ||||||||||||||||||
Securities of U.S. states and political subdivisions | 12,818 | 6.28 | 204 | 7,211 | 6.65 | 124 | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Federal agencies | 94,457 | 5.34 | 1,221 | 50,528 | 5.83 | 731 | ||||||||||||||||||
Residential and commercial | 43,214 | 9.56 | 1,089 | 21,358 | 5.82 | 346 | ||||||||||||||||||
Total mortgage-backed securities | 137,671 | 6.75 | 2,310 | 71,886 | 5.83 | 1,077 | ||||||||||||||||||
Other debt securities (4) | 33,294 | 7.00 | 568 | 12,622 | 7.17 | 248 | ||||||||||||||||||
Total debt securities available for sale (4) | 186,328 | 6.72 | 3,106 | 92,860 | 6.06 | 1,460 | ||||||||||||||||||
Mortgages held for sale (5) | 40,604 | 5.16 | 524 | 24,990 | 6.31 | 394 | ||||||||||||||||||
Loans held for sale (5) | 4,975 | 2.67 | 34 | 677 | 6.95 | 12 | ||||||||||||||||||
Loans: | ||||||||||||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||||||||||
Commercial | 175,642 | 4.34 | 1,919 | 100,688 | 5.92 | 1,496 | ||||||||||||||||||
Real estate mortgage | 103,450 | 3.39 | 883 | 43,616 | 5.60 | 615 | ||||||||||||||||||
Real estate construction | 32,649 | 3.02 | 249 | 19,715 | 4.82 | 238 | ||||||||||||||||||
Lease financing | 14,360 | 9.14 | 328 | 7,250 | 5.48 | 100 | ||||||||||||||||||
Total commercial and commercial real estate | 326,101 | 4.12 | 3,379 | 171,269 | 5.69 | 2,449 | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 235,051 | 5.35 | 3,154 | 76,197 | 6.64 | 1,265 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 105,779 | 4.62 | 1,229 | 75,379 | 6.36 | 1,206 | ||||||||||||||||||
Credit card | 23,448 | 11.65 | 683 | 19,948 | 12.19 | 609 | ||||||||||||||||||
Other revolving credit and installment | 90,199 | 6.48 | 1,473 | 54,104 | 8.64 | 1,175 | ||||||||||||||||||
Total consumer | 454,477 | 5.73 | 6,539 | 225,628 | 7.52 | 4,255 | ||||||||||||||||||
Foreign | 29,613 | 3.61 | 270 | 7,306 | 10.28 | 188 | ||||||||||||||||||
Total loans (5) | 810,191 | 5.00 | 10,188 | 404,203 | 6.79 | 6,892 | ||||||||||||||||||
Other | 6,088 | 3.29 | 49 | 2,126 | 4.64 | 24 | ||||||||||||||||||
Total earning assets | $ | 1,085,060 | 5.20 | % | $ | 14,149 | 533,157 | 6.57 | % | $ | 8,846 | |||||||||||||
Funding sources | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Interest-bearing checking | $ | 59,467 | 0.15 | % | $ | 21 | 5,483 | 0.87 | % | $ | 12 | |||||||||||||
Market rate and other savings | 369,120 | 0.34 | 317 | 166,710 | 1.18 | 495 | ||||||||||||||||||
Savings certificates | 129,698 | 1.35 | 442 | 37,192 | 2.57 | 240 | ||||||||||||||||||
Other time deposits | 18,248 | 1.93 | 89 | 7,930 | 2.59 | 53 | ||||||||||||||||||
Deposits in foreign offices | 56,820 | 0.25 | 36 | 49,054 | 1.78 | 219 | ||||||||||||||||||
Total interest-bearing deposits | 633,353 | 0.57 | 905 | 266,369 | 1.52 | 1,019 | ||||||||||||||||||
Short-term borrowings | 39,828 | 0.35 | 36 | 83,458 | 2.35 | 492 | ||||||||||||||||||
Long-term debt | 222,580 | 2.33 | 1,301 | 103,745 | 3.43 | 892 | ||||||||||||||||||
Other liabilities | 5,620 | 3.30 | 46 | — | — | — | ||||||||||||||||||
Total interest-bearing liabilities | 901,381 | 1.01 | 2,288 | 453,572 | 2.11 | 2,403 | ||||||||||||||||||
Portion of noninterest-bearing funding sources | 183,679 | — | — | 79,585 | — | — | ||||||||||||||||||
Total funding sources | $ | 1,085,060 | 0.84 | 2,288 | 533,157 | 1.78 | 2,403 | |||||||||||||||||
Net interest margin and net interest income on a taxable-equivalent basis(6) | 4.36 | % | $ | 11,861 | 4.79 | % | $ | 6,443 | ||||||||||||||||
Noninterest-earning assets | ||||||||||||||||||||||||
Cash and due from banks | $ | 18,084 | 11,024 | |||||||||||||||||||||
Goodwill | 24,435 | 13,531 | ||||||||||||||||||||||
Other | 118,472 | 56,482 | ||||||||||||||||||||||
Total noninterest-earning assets | $ | 160,991 | 81,037 | |||||||||||||||||||||
Noninterest-bearing funding sources | ||||||||||||||||||||||||
Deposits | $ | 172,588 | 87,095 | |||||||||||||||||||||
Other liabilities | 47,646 | 25,452 | ||||||||||||||||||||||
Total equity | 124,436 | 48,075 | ||||||||||||||||||||||
Noninterest-bearing funding sources used to fund earning assets | (183,679 | ) | (79,585 | ) | ||||||||||||||||||||
Net noninterest-bearing funding sources | $ | 160,991 | 81,037 | |||||||||||||||||||||
Total assets | $ | 1,246,051 | 614,194 | |||||||||||||||||||||
(1) | Our average prime rate was 3.25% and 5.00% for the quarters ended September 30, 2009 and 2008, respectively, and 3.25% and 5.43% for the first nine months of 2009 and 2008, respectively. The average three-month London Interbank Offered Rate (LIBOR) was 0.41% and 2.91% for the quarters ended September 30, 2009 and 2008, respectively, and 0.83% and 2.98% for the first nine months of 2009 and 2008, respectively. | |
(2) | Interest rates and amounts include the effects of hedge and risk management activities associated with the respective asset and liability categories. | |
(3) | Yields are based on amortized cost balances computed on a settlement date basis. | |
(4) | Includes certain preferred securities. | |
(5) | Nonaccrual loans and related income are included in their respective loan categories. | |
(6) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities. The federal statutory tax rate was 35% for the periods presented. |
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Nine months ended September 30, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||||
Average | Yields/ | income/ | Average | Yields/ | income/ | |||||||||||||||||||
(in millions) | balance | rates | expense | balance | rates | expense | ||||||||||||||||||
Earning assets | ||||||||||||||||||||||||
Federal funds sold, securities purchased under resale agreements and other short-term investments | $ | 20,411 | 0.73 | % | $ | 111 | 3,734 | 2.59 | % | $ | 72 | |||||||||||||
Trading assets | 20,389 | 4.64 | 709 | 4,960 | 3.57 | 133 | ||||||||||||||||||
Debt securities available for sale (3): | ||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | 2,514 | 2.61 | 48 | 1,055 | 3.88 | 30 | ||||||||||||||||||
Securities of U.S. states and political subdivisions | 12,409 | 6.39 | 623 | 6,848 | 6.88 | 362 | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Federal agencies | 87,916 | 5.45 | 3,492 | 42,448 | 5.93 | 1,854 | ||||||||||||||||||
Residential and commercial | 41,070 | 9.05 | 3,150 | 21,589 | 5.92 | 1,010 | ||||||||||||||||||
Total mortgage-backed securities | 128,986 | 6.72 | 6,642 | 64,037 | 5.92 | 2,864 | ||||||||||||||||||
Other debt securities (4) | 31,437 | 7.01 | 1,691 | 12,351 | 6.78 | 670 | ||||||||||||||||||
Total debt securities available for sale (4) | 175,346 | 6.69 | 9,004 | 84,291 | 6.11 | 3,926 | ||||||||||||||||||
Mortgages held for sale (5) | 38,315 | 5.16 | 1,484 | 26,417 | 6.11 | 1,211 | ||||||||||||||||||
Loans held for sale (5) | 6,693 | 3.01 | 151 | 686 | 6.66 | 34 | ||||||||||||||||||
Loans: | ||||||||||||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||||||||||
Commercial | 186,610 | 4.10 | 5,725 | 95,697 | 6.29 | 4,509 | ||||||||||||||||||
Real estate mortgage | 104,003 | 3.44 | 2,677 | 40,351 | 5.91 | 1,788 | ||||||||||||||||||
Real estate construction | 33,660 | 2.92 | 734 | 19,288 | 5.29 | 763 | ||||||||||||||||||
Lease financing | 14,968 | 9.04 | 1,015 | 7,055 | 5.63 | 298 | ||||||||||||||||||
Total commercial and commercial real estate | 339,241 | 4.00 | 10,151 | 162,391 | 6.05 | 7,358 | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 240,409 | 5.51 | 9,926 | 74,064 | 6.77 | 3,761 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 108,094 | 4.81 | 3,894 | 75,220 | 6.78 | 3,820 | ||||||||||||||||||
Credit card | 23,236 | 12.16 | 2,118 | 19,256 | 12.11 | 1,749 | ||||||||||||||||||
Other revolving credit and installment | 91,240 | 6.60 | 4,502 | 54,949 | 8.84 | 3,637 | ||||||||||||||||||
Total consumer | 462,979 | 5.90 | 20,440 | 223,489 | 7.74 | 12,967 | ||||||||||||||||||
Foreign | 30,856 | 4.02 | 929 | 7,382 | 10.72 | 592 | ||||||||||||||||||
Total loans (5) | 833,076 | 5.05 | 31,520 | 393,262 | 7.10 | 20,917 | ||||||||||||||||||
Other | 6,102 | 3.02 | 137 | 1,995 | 4.55 | 68 | ||||||||||||||||||
Total earning assets | $ | 1,100,332 | 5.21 | % | $ | 43,116 | 515,345 | 6.81 | % | $ | 26,361 | |||||||||||||
Funding sources | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Interest-bearing checking | $ | 73,195 | 0.14 | % | $ | 77 | 5,399 | 1.31 | % | $ | 53 | |||||||||||||
Market rate and other savings | 339,081 | 0.42 | 1,072 | 162,792 | 1.45 | 1,765 | ||||||||||||||||||
Savings certificates | 150,607 | 1.14 | 1,280 | 38,907 | 3.23 | 940 | ||||||||||||||||||
Other time deposits | 21,794 | 1.97 | 321 | 6,163 | 2.87 | 133 | ||||||||||||||||||
Deposits in foreign offices | 50,907 | 0.29 | 111 | 49,192 | 2.13 | 785 | ||||||||||||||||||
Total interest-bearing deposits | 635,584 | 0.60 | 2,861 | 262,453 | 1.87 | 3,676 | ||||||||||||||||||
Short-term borrowings | 58,447 | 0.50 | 217 | 67,714 | 2.51 | 1,274 | ||||||||||||||||||
Long-term debt | 238,909 | 2.55 | 4,568 | 101,668 | 3.71 | 2,825 | ||||||||||||||||||
Other liabilities | 4,675 | 3.50 | 122 | — | — | — | ||||||||||||||||||
Total interest-bearing liabilities | 937,615 | 1.11 | 7,768 | 431,835 | 2.40 | 7,775 | ||||||||||||||||||
Portion of noninterest-bearing funding sources | 162,717 | — | — | 83,510 | — | — | ||||||||||||||||||
Total funding sources | $ | 1,100,332 | 0.94 | 7,768 | 515,345 | 2.01 | 7,775 | |||||||||||||||||
Net interest margin and net interest income on a taxable-equivalent basis(6) | 4.27 | % | $ | 35,348 | 4.80 | % | $ | 18,586 | ||||||||||||||||
Noninterest-earning assets | ||||||||||||||||||||||||
Cash and due from banks | $ | 19,218 | 11,182 | |||||||||||||||||||||
Goodwill | 23,964 | 13,289 | ||||||||||||||||||||||
Other | 126,557 | 54,901 | ||||||||||||||||||||||
Total noninterest-earning assets | $ | 169,739 | 79,372 | |||||||||||||||||||||
Noninterest-bearing funding sources | ||||||||||||||||||||||||
Deposits | $ | 169,187 | 86,676 | |||||||||||||||||||||
Other liabilities | 49,249 | 27,973 | ||||||||||||||||||||||
Total equity | 114,020 | 48,233 | ||||||||||||||||||||||
Noninterest-bearing funding sources used to fund earning assets | (162,717 | ) | (83,510 | ) | ||||||||||||||||||||
Net noninterest-bearing funding sources | $ | 169,739 | 79,372 | |||||||||||||||||||||
Total assets | $ | 1,270,071 | 594,717 | |||||||||||||||||||||
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Quarter ended Sept. 30 | , | Nine months ended Sept. 30 | , | |||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Service charges on deposit accounts | $ | 1,478 | 839 | 4,320 | 2,387 | |||||||||||
Trust and investment fees: | ||||||||||||||||
Trust, investment and IRA fees | 989 | 549 | 2,550 | 1,674 | ||||||||||||
Commissions and all other fees | 1,513 | 189 | 4,580 | 589 | ||||||||||||
Total trust and investment fees | 2,502 | 738 | 7,130 | 2,263 | ||||||||||||
Card fees | 946 | 601 | 2,722 | 1,747 | ||||||||||||
Other fees: | ||||||||||||||||
Cash network fees | 60 | 48 | 176 | 143 | ||||||||||||
Charges and fees on loans | 453 | 266 | 1,326 | 765 | ||||||||||||
All other fees | 437 | 238 | 1,312 | 654 | ||||||||||||
Total other fees | 950 | 552 | 2,814 | 1,562 | ||||||||||||
Mortgage banking: | ||||||||||||||||
Servicing income, net | 1,873 | 525 | 3,469 | 1,019 | ||||||||||||
Net gains on mortgage loan origination/sales activities | 1,125 | 276 | 4,910 | 1,419 | ||||||||||||
All other | 69 | 91 | 238 | 282 | ||||||||||||
Total mortgage banking | 3,067 | 892 | 8,617 | 2,720 | ||||||||||||
Insurance | 468 | 439 | 1,644 | 1,493 | ||||||||||||
Net gains from trading activities | 622 | 65 | 2,158 | 684 | ||||||||||||
Net gains (losses) on debt securities available for sale | (40 | ) | 84 | (237 | ) | 316 | ||||||||||
Net gains (losses) from equity investments | 29 | (509 | ) | (88 | ) | (149 | ) | |||||||||
Operating leases | 224 | 102 | 522 | 365 | ||||||||||||
All other | 536 | 193 | 1,564 | 593 | ||||||||||||
Total | $ | 10,782 | 3,996 | 31,166 | 13,981 | |||||||||||
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Quarter ended Sept. 30 | , | Nine months ended Sept. 30 | , | |||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Salaries | $ | 3,428 | 2,078 | 10,252 | 6,092 | |||||||||||
Commission and incentive compensation | 2,051 | 555 | 5,935 | 2,005 | ||||||||||||
Employee benefits | 1,034 | 486 | 3,545 | 1,666 | ||||||||||||
Equipment | 563 | 302 | 1,825 | 955 | ||||||||||||
Net occupancy | 778 | 402 | 2,357 | 1,201 | ||||||||||||
Core deposit and other intangibles | 642 | 47 | 1,935 | 139 | ||||||||||||
FDIC and other deposit assessments | 228 | 37 | 1,547 | 63 | ||||||||||||
Outside professional services | 489 | 206 | 1,350 | 589 | ||||||||||||
Insurance | 208 | 144 | 734 | 511 | ||||||||||||
Postage, stationery and supplies | 211 | 136 | 701 | 415 | ||||||||||||
Outside data processing | 251 | 122 | 745 | 353 | ||||||||||||
Travel and entertainment | 151 | 113 | 387 | 330 | ||||||||||||
Foreclosed assets | 243 | 99 | 678 | 298 | ||||||||||||
Contract services | 254 | 88 | 726 | 300 | ||||||||||||
Operating leases | 52 | 90 | 183 | 308 | ||||||||||||
Advertising and promotion | 160 | 96 | 396 | 285 | ||||||||||||
Telecommunications | 142 | 78 | 464 | 238 | ||||||||||||
Operating losses | 117 | 63 | 448 | 46 | ||||||||||||
All other | 682 | 359 | 1,991 | 994 | ||||||||||||
Total | $ | 11,684 | 5,501 | 36,199 | 16,788 | |||||||||||
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Expected | ||||||||||||
Fair | Net unrealized | remaining | ||||||||||
(in billions) | value | gain (loss) | maturity | |||||||||
At September 30, 2009 | $ | 132.9 | 3.6 | 3.7 | ||||||||
At September 30, 2009, assuming a 200 basis point: | ||||||||||||
Increase in interest rates | 123.4 | (5.9 | ) | 5.2 | ||||||||
Decrease in interest rates | 139.0 | 9.7 | 2.7 | |||||||||
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September 30, 2009 | December 31, 2008 | |||||||||||||||||||||||
All | All | |||||||||||||||||||||||
PCI | other | PCI | other | |||||||||||||||||||||
(in millions) | loans | loans | Total | loans | loans | Total | ||||||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||||||||||
Commercial | $ | 2,407 | 167,203 | 169,610 | 4,580 | 197,889 | 202,469 | |||||||||||||||||
Real estate mortgage | 5,950 | 97,492 | 103,442 | 7,762 | 95,346 | 103,108 | ||||||||||||||||||
Real estate construction | 4,250 | 27,469 | 31,719 | 4,503 | 30,173 | 34,676 | ||||||||||||||||||
Lease financing | — | 14,115 | 14,115 | — | 15,829 | 15,829 | ||||||||||||||||||
Total commercial and commercial real estate | 12,607 | 306,279 | 318,886 | 16,845 | 339,237 | 356,082 | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 39,538 | 193,084 | 232,622 | 39,214 | 208,680 | 247,894 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 425 | 104,113 | 104,538 | 728 | 109,436 | 110,164 | ||||||||||||||||||
Credit card | — | 23,597 | 23,597 | — | 23,555 | 23,555 | ||||||||||||||||||
Other revolving credit and installment | — | 90,027 | 90,027 | 151 | 93,102 | 93,253 | ||||||||||||||||||
Total consumer | 39,963 | 410,821 | 450,784 | 40,093 | 434,773 | 474,866 | ||||||||||||||||||
Foreign | 1,768 | 28,514 | 30,282 | 1,859 | 32,023 | 33,882 | ||||||||||||||||||
Total loans | $ | 54,338 | 745,614 | 799,952 | 58,797 | 806,033 | 864,830 | |||||||||||||||||
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Commercial, | ||||||||||||||||
Other | CRE and | |||||||||||||||
(in millions) | Pick-a-Pay | consumer | foreign | Total | ||||||||||||
Balance at December 31, 2008, with refinements | $ | (26,485 | ) | (4,082 | ) | (10,378 | ) | (40,945 | ) | |||||||
Release of nonaccretable difference due to: | ||||||||||||||||
Loans resolved by payment in full | — | — | 194 | 194 | ||||||||||||
Loans resolved by sales to third parties | — | 85 | 28 | 113 | ||||||||||||
Loans with improving cash flows reclassified to accretable yield | — | — | 21 | 21 | ||||||||||||
Use of nonaccretable difference due to: | ||||||||||||||||
Losses from loan resolutions and write-downs (1) | 8,320 | 1,796 | 3,552 | 13,668 | ||||||||||||
Balance at September 30, 2009 | $ | (18,165 | ) | (2,201 | ) | (6,583 | ) | (26,949 | ) | |||||||
(1) | Use of nonaccretable difference through June 30, 2009, was $8.5 billion (including $5.1 billion for Pick-a-Pay loans); revised from second quarter to include all losses due to resolution of loans and write-downs. |
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Sept. 30 | , | Dec. 31 | , | |||||
(in millions) | 2009 | 2008 | ||||||
Noninterest-bearing | $ | 165,260 | 150,837 | |||||
Interest-bearing checking | 60,214 | 72,828 | ||||||
Market rate and other savings | 371,298 | 306,255 | ||||||
Savings certificates | 119,012 | 182,043 | ||||||
Foreign deposits (1) | 32,129 | 33,469 | ||||||
Core deposits | 747,913 | 745,432 | ||||||
Other time deposits | 16,691 | 28,498 | ||||||
Other foreign deposits | 32,144 | 7,472 | ||||||
Total deposits | $ | 796,748 | 781,402 | |||||
(1) | Reflects Eurodollar sweep balances included in core deposits. |
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• | underwriting securities issued by SPEs and subsequently making markets in those securities; | |
• | providing liquidity to support short-term obligations of SPEs issued to third party investors; | |
• | providing credit enhancement to securities issued by SPEs or market value guarantees of assets held by SPEs through the use of letters of credit, financial guarantees, credit default swaps and total return swaps; | |
• | entering into other derivative contracts with SPEs; | |
• | holding senior or subordinated interests in SPEs; | |
• | acting as servicer or investment manager for SPEs; and | |
• | providing administrative or trustee services to SPEs. |
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September 30, 2009 | December 31, 2008 | |||||||||||||||||||||||
Total | Maximum | Total | Maximum | |||||||||||||||||||||
entity | Carrying | exposure | entity | Carrying | exposure | |||||||||||||||||||
(in millions) | assets | value | to loss | assets | value | to loss | ||||||||||||||||||
QSPEs | ||||||||||||||||||||||||
Residential mortgage loan securitizations (1): | ||||||||||||||||||||||||
Conforming (2) and GNMA | $ | 1,116,937 | 21,245 | 23,494 | 1,008,824 | 21,496 | 22,569 | |||||||||||||||||
Other/nonconforming | 280,304 | 9,291 | 9,593 | 313,447 | 9,483 | 9,909 | ||||||||||||||||||
Commercial mortgage securitizations | 384,716 | 2,835 | 6,341 | 355,267 | 3,060 | 6,376 | ||||||||||||||||||
Student loan securitizations | 2,675 | 167 | 167 | 2,765 | 133 | 133 | ||||||||||||||||||
Auto loan securitizations | 2,723 | 157 | 157 | 4,133 | 115 | 115 | ||||||||||||||||||
Other | 8,854 | 8 | 44 | 11,877 | 71 | 1,576 | ||||||||||||||||||
Total QSPEs | $ | 1,796,209 | 33,703 | 39,796 | 1,696,313 | 34,358 | 40,678 | |||||||||||||||||
Unconsolidated VIEs | ||||||||||||||||||||||||
Collateralized debt obligations (1) | $ | 58,280 | 14,200 | 17,543 | 54,294 | 15,133 | 20,443 | |||||||||||||||||
Wachovia administered ABCP (3) conduit | 6,536 | — | 6,667 | 10,767 | — | 15,824 | ||||||||||||||||||
Asset-based finance structures | 18,366 | 10,444 | 11,026 | 11,614 | 9,096 | 9,482 | ||||||||||||||||||
Tax credit structures | 27,636 | 3,837 | 4,506 | 22,882 | 3,850 | 4,926 | ||||||||||||||||||
Collateralized loan obligations | 22,531 | 3,668 | 4,154 | 23,339 | 3,326 | 3,881 | ||||||||||||||||||
Investment funds | 87,132 | 2,089 | 2,697 | 105,808 | 3,543 | 3,690 | ||||||||||||||||||
Credit-linked note structures | 1,846 | 1,116 | 1,884 | 12,993 | 1,522 | 2,303 | ||||||||||||||||||
Money market funds (4) | 7,469 | (9 | ) | 41 | 31,843 | 60 | 101 | |||||||||||||||||
Other | 8,056 | 3,564 | 3,821 | 1,832 | 3,806 | 4,699 | ||||||||||||||||||
Total unconsolidated VIEs | $ | 237,852 | 38,909 | 52,339 | 275,372 | 40,336 | 65,349 | |||||||||||||||||
(1) | For December 31, 2008, certain balances related to QSPEs involving residential mortgage loan securitizations and VIEs involving collateralized debt obligations have been revised to reflect current information. | |
(2) | Conforming residential mortgage loan securitizations are those that are guaranteed by government-sponsored entites. We have concluded that conforming mortgages are not subject to consolidation under FAS 166 and FAS 167. See the “Current Accounting Developments” section in this Report for our estimate of the nonconforming mortgages that may potentially be consolidated under FAS 166 and FAS 167. | |
(3) | Asset-backed commercial paper. | |
(4) | At September 30, 2009, excludes previously supported money market funds, to which the Company no longer provides non-contractual financial support. |
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September 30, 2009 | ||||||||||||||||||||||||
Real estate mortgage | Real estate construction | Total | ||||||||||||||||||||||
Oustanding | Nonaccrual | Oustanding | Nonaccrual | Oustanding | Nonaccrual | |||||||||||||||||||
(in millions) | balance | (1) | loans | balance | (1) | loans | balance | (1) | loans | |||||||||||||||
By state: | ||||||||||||||||||||||||
PCI loans: | ||||||||||||||||||||||||
Florida | $ | 1,090 | — | 954 | — | 2,044 | — | |||||||||||||||||
California | 1,195 | — | 172 | — | 1,367 | — | ||||||||||||||||||
North Carolina | 345 | — | 549 | — | 894 | — | ||||||||||||||||||
Georgia | 413 | — | 450 | — | 863 | — | ||||||||||||||||||
Virginia | 442 | — | 310 | — | 752 | — | ||||||||||||||||||
Other | 2,465 | — | 1,815 | — | 4,280 | (2) | — | |||||||||||||||||
Total PCI loans | $ | 5,950 | — | 4,250 | — | 10,200 | — | |||||||||||||||||
All other loans: | ||||||||||||||||||||||||
California | $ | 22,115 | 875 | 4,886 | 805 | 27,001 | 1,680 | |||||||||||||||||
Florida | 10,954 | 425 | 2,297 | 264 | 13,251 | 689 | ||||||||||||||||||
Texas | 6,837 | 121 | 2,818 | 232 | 9,655 | 353 | ||||||||||||||||||
North Carolina | 5,636 | 122 | 1,554 | 154 | 7,190 | 276 | ||||||||||||||||||
Georgia | 4,449 | 137 | 951 | 105 | 5,400 | 242 | ||||||||||||||||||
Virginia | 3,633 | 47 | 1,606 | 102 | 5,239 | 149 | ||||||||||||||||||
New York | 3,720 | 50 | 1,181 | 17 | 4,901 | 67 | ||||||||||||||||||
Arizona | 3,445 | 142 | 1,176 | 190 | 4,621 | 332 | ||||||||||||||||||
New Jersey | 3,060 | 89 | 644 | 16 | 3,704 | 105 | ||||||||||||||||||
Colorado | 2,104 | 58 | 951 | 88 | 3,055 | 146 | ||||||||||||||||||
Other | 31,539 | 790 | 9,405 | 738 | 40,944 | (3) | 1,528 | |||||||||||||||||
Total all other loans | $ | 97,492 | 2,856 | 27,469 | 2,711 | 124,961 | 5,567 | |||||||||||||||||
Total | $ | 103,442 | 2,856 | 31,719 | 2,711 | 135,161 | 5,567 | |||||||||||||||||
By property: | ||||||||||||||||||||||||
PCI loans: | ||||||||||||||||||||||||
Apartments | $ | 1,275 | — | 984 | — | 2,259 | — | |||||||||||||||||
Office buildings | 1,756 | — | 222 | — | 1,978 | — | ||||||||||||||||||
1-4 family land | 648 | — | 1,014 | — | 1,662 | — | ||||||||||||||||||
1-4 family structure | 150 | — | 740 | — | 890 | — | ||||||||||||||||||
Retail (excluding shopping center) | 510 | — | 365 | — | 875 | — | ||||||||||||||||||
Other | 1,611 | — | 925 | — | 2,536 | — | ||||||||||||||||||
Total PCI loans | $ | 5,950 | — | 4,250 | — | 10,200 | — | |||||||||||||||||
All other loans: | ||||||||||||||||||||||||
Office buildings | $ | 25,026 | 606 | 3,205 | 139 | 28,231 | 745 | |||||||||||||||||
Industrial/warehouse | 13,913 | 354 | 1,105 | 11 | 15,018 | 365 | ||||||||||||||||||
Real estate — other | 13,289 | 468 | 996 | 73 | 14,285 | 541 | ||||||||||||||||||
Retail (excluding shopping center) | 11,035 | 544 | 1,309 | 106 | 12,344 | 650 | ||||||||||||||||||
Apartments | 7,615 | 213 | 4,492 | 216 | 12,107 | 429 | ||||||||||||||||||
Land (excluding 1-4 family) | 3,252 | 123 | 6,431 | 456 | 9,683 | 579 | ||||||||||||||||||
Shopping center | 5,982 | 78 | 2,514 | 151 | 8,496 | 229 | ||||||||||||||||||
Hotel/motel | 5,091 | 67 | 1,165 | 93 | 6,256 | 160 | ||||||||||||||||||
1-4 family structure | 1,273 | 68 | 2,558 | 669 | 3,831 | 737 | ||||||||||||||||||
1-4 family land | 813 | 130 | 2,926 | 744 | 3,739 | 874 | ||||||||||||||||||
Other | 10,203 | 205 | 768 | 53 | 10,971 | 258 | ||||||||||||||||||
Total all other loans | $ | 97,492 | 2,856 | 27,469 | 2,711 | 124,961 | 5,567 | |||||||||||||||||
Total | $ | 103,442 | (4) | 2,856 | 31,719 | 2,711 | 135,161 | 5,567 | ||||||||||||||||
(1) | For PCI loans amounts represent carrying value. | |
(2) | Includes 42 states; no state had loans in excess of $675 million and $609 million at September 30 and June 30, 2009, respectively. | |
(3) | Includes 40 states; no state had loans in excess of $3,047 million and $3,116 million at September 30 and June 30, 2009, respectively. | |
(4) | Includes owner-occupied real estate loans of $43.6 billion and $44.6 billion at September 30 and June 30, 2009, respectively. |
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June 30, 2009 | ||||||||||||||||||||||||
Real estate mortgage | Real estate construction | Total | ||||||||||||||||||||||
Oustanding | Nonaccrual | Oustanding | Nonaccrual | Oustanding | Nonaccrual | |||||||||||||||||||
(in millions) | balance | (1) | loans | balance | (1) | loans | balance | (1) | loans | |||||||||||||||
By state: | ||||||||||||||||||||||||
PCI loans: | ||||||||||||||||||||||||
Florida | $ | 1,169 | — | 1,047 | — | 2,216 | — | |||||||||||||||||
California | 1,269 | — | 164 | — | 1,433 | — | ||||||||||||||||||
North Carolina | 369 | — | 558 | — | 927 | — | ||||||||||||||||||
Georgia | 410 | — | 473 | — | 883 | — | ||||||||||||||||||
Virginia | 450 | — | 357 | — | 807 | — | ||||||||||||||||||
Other | 2,159 | — | 1,696 | — | 3,855 | (2) | — | |||||||||||||||||
Total PCI loans | $ | 5,826 | — | 4,295 | — | 10,121 | — | |||||||||||||||||
All other loans: | ||||||||||||||||||||||||
California | $ | 21,809 | 601 | 5,215 | 802 | 27,024 | 1,403 | |||||||||||||||||
Florida | 11,113 | 278 | 2,465 | 207 | 13,578 | 485 | ||||||||||||||||||
Texas | 6,738 | 71 | 2,917 | 214 | 9,655 | 285 | ||||||||||||||||||
North Carolina | 5,797 | 83 | 1,605 | 47 | 7,402 | 130 | ||||||||||||||||||
Georgia | 4,595 | 57 | 980 | 42 | 5,575 | 99 | ||||||||||||||||||
Virginia | 3,520 | 55 | 1,613 | 82 | 5,133 | 137 | ||||||||||||||||||
New York | 3,675 | 46 | 1,135 | — | 4,810 | 46 | ||||||||||||||||||
Arizona | 3,309 | 121 | 1,335 | 132 | 4,644 | 253 | ||||||||||||||||||
New Jersey | 3,168 | 70 | 676 | — | 3,844 | 70 | ||||||||||||||||||
Colorado | 2,163 | 30 | 1,050 | 39 | 3,213 | 69 | ||||||||||||||||||
Other | 31,941 | 931 | 9,952 | 645 | 41,893 | (3) | 1,576 | |||||||||||||||||
Total all other loans | $ | 97,828 | 2,343 | 28,943 | 2,210 | 126,771 | 4,553 | |||||||||||||||||
Total | $ | 103,654 | 2,343 | 33,238 | 2,210 | 136,892 | 4,553 | |||||||||||||||||
By property: | ||||||||||||||||||||||||
PCI loans: | ||||||||||||||||||||||||
Apartments | $ | 1,596 | — | 207 | — | 1,803 | — | |||||||||||||||||
Office buildings | 1,227 | — | 1,112 | — | 2,339 | — | ||||||||||||||||||
1-4 family land | 675 | — | 1,080 | — | 1,755 | — | ||||||||||||||||||
1-4 family structure | 155 | — | 868 | — | 1,023 | — | ||||||||||||||||||
Land (excluding 1-4 family) | 639 | — | 276 | — | 915 | — | ||||||||||||||||||
Other | 1,534 | — | 752 | — | 2,286 | — | ||||||||||||||||||
Total PCI loans | $ | 5,826 | — | 4,295 | — | 10,121 | — | |||||||||||||||||
All other loans: | ||||||||||||||||||||||||
Office buildings | $ | 25,094 | 382 | 3,299 | 87 | 28,393 | 469 | |||||||||||||||||
Industrial/warehouse | 14,069 | 205 | 1,163 | 6 | 15,232 | 211 | ||||||||||||||||||
Real estate — other | 12,848 | 352 | 1,089 | 84 | 13,937 | 436 | ||||||||||||||||||
Retail (excluding shopping center) | 11,203 | 428 | 1,286 | 22 | 12,489 | 450 | ||||||||||||||||||
Apartments | 7,473 | 181 | 4,490 | 105 | 11,963 | 286 | ||||||||||||||||||
Land (excluding 1-4 family) | 3,474 | 65 | 6,562 | 359 | 10,036 | 424 | ||||||||||||||||||
Shopping center | 5,888 | 296 | 2,604 | 150 | 8,492 | 446 | ||||||||||||||||||
Hotel/motel | 4,911 | 43 | 1,308 | 59 | 6,219 | 102 | ||||||||||||||||||
1-4 family structure | 1,299 | 23 | 2,989 | 599 | 4,288 | 622 | ||||||||||||||||||
1-4 family land | 828 | 86 | 3,207 | 734 | 4,035 | 820 | ||||||||||||||||||
Other | 10,741 | 282 | 946 | 5 | 11,687 | 287 | ||||||||||||||||||
Total all other loans | $ | 97,828 | 2,343 | 28,943 | 2,210 | 126,771 | 4,553 | |||||||||||||||||
Total | $ | 103,654 | (4) | 2,343 | 33,238 | 2,210 | 136,892 | 4,553 | ||||||||||||||||
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September 30, 2009 | June 30, 2009 | |||||||||||||||
Outstanding | Nonaccrual | Outstanding | Nonaccrual | |||||||||||||
(in millions) | balance | (1) | loans | balance | (1) | loans | ||||||||||
PCI loans: | ||||||||||||||||
Real estate investment trust | $ | 418 | — | 523 | — | |||||||||||
Media | 376 | — | 378 | — | ||||||||||||
Leisure | 211 | — | 112 | — | ||||||||||||
Residential construction | 152 | — | 106 | — | ||||||||||||
Insurance | 132 | — | 141 | — | ||||||||||||
Investment funds & trust | 125 | — | 348 | — | ||||||||||||
Other | 993 | (2) | — | 1,059 | (2) | — | ||||||||||
Total PCI loans | $ | 2,407 | — | 2,667 | — | |||||||||||
All other loans: | ||||||||||||||||
Financial institutions | $ | 11,468 | 469 | 11,506 | 169 | |||||||||||
Oil and gas | 9,389 | 229 | 10,091 | 188 | ||||||||||||
Healthcare | 9,144 | 106 | 9,767 | 79 | ||||||||||||
Cyclical retailers | 8,458 | 93 | 9,393 | 82 | ||||||||||||
Industrial equipment | 8,409 | 136 | 9,148 | 131 | ||||||||||||
Food and beverage | 8,351 | 85 | 8,578 | 47 | ||||||||||||
Real estate — other | 6,974 | 137 | 7,366 | 78 | ||||||||||||
Business services | 6,960 | 189 | 7,548 | 124 | ||||||||||||
Transportation | 6,505 | 42 | 6,406 | 24 | ||||||||||||
Public administration | 5,869 | 19 | 6,160 | 22 | ||||||||||||
Technology | 5,826 | 100 | 6,065 | 25 | ||||||||||||
Utilities | 5,799 | 15 | 6,683 | — | ||||||||||||
Other | 88,166 | (3) | 3,077 | 95,214 | (3) | 2,071 | ||||||||||
Total all other loans | $ | 181,318 | 4,697 | 193,925 | 3,040 | |||||||||||
Total | $ | 183,725 | 4,697 | 196,592 | 3,040 | |||||||||||
(1) | For PCI loans amounts represent carrying value. | |
(2) | No other single category had loans in excess of $94 million and $100 million at September 30 and June 30, 2009, respectively. | |
(3) | No other single category had loans in excess of $5,380 million and $5,747 million at September 30 and June 30, 2009, respectively. |
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% of loans | ||||||||||||||||||||||||
two payments | Annualized loss rate | |||||||||||||||||||||||
Outstanding balances | or more past due | for quarter ended | ||||||||||||||||||||||
Sept. 30 | , | Dec. 31 | , | Sept. 30 | , | Dec. 31 | , | Sept. 30 | , | Dec. 31 | , | |||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | (2) | |||||||||||||||||
Core portfolio(3) | ||||||||||||||||||||||||
California | $ | 30,841 | 31,544 | 3.97 | % | 2.95 | 6.52 | 3.94 | ||||||||||||||||
Florida | 11,496 | 11,781 | 5.08 | 3.36 | 4.82 | 4.39 | ||||||||||||||||||
New Jersey | 8,119 | 7,888 | 2.22 | 1.41 | 1.41 | 0.78 | ||||||||||||||||||
Virginia | 5,736 | 5,688 | 1.60 | 1.50 | 1.22 | 1.56 | ||||||||||||||||||
Pennsylvania | 4,971 | 5,043 | 1.95 | 1.10 | 1.51 | 0.52 | ||||||||||||||||||
Other | 54,152 | 56,415 | 2.64 | 1.97 | 2.65 | 1.59 | ||||||||||||||||||
Total | 115,315 | 118,359 | 3.13 | 2.27 | 3.69 | 2.39 | ||||||||||||||||||
Liquidating portfolio | ||||||||||||||||||||||||
California | 3,406 | 4,008 | 8.75 | 6.69 | 18.22 | 12.32 | ||||||||||||||||||
Florida | 435 | 513 | 9.83 | 8.41 | 16.97 | 13.60 | ||||||||||||||||||
Arizona | 206 | 244 | 8.25 | 7.40 | 22.33 | 13.19 | ||||||||||||||||||
Texas | 161 | 191 | 1.68 | 1.27 | 2.15 | 1.67 | ||||||||||||||||||
Minnesota | 112 | 127 | 3.39 | 3.79 | 8.52 | 5.25 | ||||||||||||||||||
Other | 4,546 | 5,226 | �� | 4.68 | 3.28 | 7.14 | 4.73 | |||||||||||||||||
Total | 8,866 | 10,309 | 6.51 | 4.93 | 12.17 | 8.27 | ||||||||||||||||||
Total core and liquidating portfolios | $ | 124,181 | 128,668 | 3.37 | 2.48 | 4.31 | 2.87 | |||||||||||||||||
(1) | Consists of real estate 1-4 family junior lien mortgages and lines of credit secured by real estate from all groups, excluding PCI loans. | |
(2) | Loss rates for 2008 for the core portfolio reflect results for Wachovia (not included in the Wells Fargo reported results) and Wells Fargo. For fourth quarter 2008, the Wells Fargo core portfolio on a stand-alone basis, outstanding balances and related annualized loss rates were $29,399 million (3.81%) for California, $2,677 million (6.87%) for Florida, $1,925 million (1.29%) for New Jersey, $1,827 million (1.26%) for Virginia, $1,073 million (1.17%) for Pennsylvania, $38,934 million (1.77%) for all other states, and $75,835 million (2.71%) in total. | |
(3) | Includes equity lines of credit and closed-end second liens associated with the Pick-a-Pay portfolio totaling $1.9 billion at September 30, 2009, and $2.1 billion at December 31, 2008. |
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September 30, 2009 | ||||||||||||||||||||||||||||
PCI loans | All other loans | |||||||||||||||||||||||||||
Ratio of | ||||||||||||||||||||||||||||
carrying | ||||||||||||||||||||||||||||
Unpaid | Current | value to | Unpaid | Current | ||||||||||||||||||||||||
principal | LTV | Carrying | current | principal | LTV | Carrying | ||||||||||||||||||||||
(in millions) | balance | ratio | (1) | value | (2) | value | balance | ratio | (1) | value | (2) | |||||||||||||||||
California | $ | 39,034 | 150 | % | $ | 25,492 | 98 | % | $ | 24,447 | 95 | % | $ | 24,395 | ||||||||||||||
Florida | 5,929 | 144 | 3,532 | 85 | 5,166 | 108 | 5,117 | |||||||||||||||||||||
New Jersey | 1,676 | 101 | 1,309 | 78 | 3,017 | 82 | 3,021 | |||||||||||||||||||||
Texas | 452 | 81 | 395 | 71 | 2,031 | 66 | 2,039 | |||||||||||||||||||||
Arizona | 1,481 | 155 | 742 | 78 | 1,160 | 105 | 1,152 | |||||||||||||||||||||
Other states | 8,738 | 110 | 6,520 | 82 | 14,128 | 85 | 14,120 | |||||||||||||||||||||
Total Pick-a-Pay loans | $ | 57,310 | $ | 37,990 | $ | 49,949 | $ | 49,844 | ||||||||||||||||||||
(1) | The current LTV ratio is calculated as the unpaid principal balance plus the unpaid principal balance of any equity lines of credit that share common collateral divided by the collateral value. Collateral values are generally determined using automated valuation models (AVM) and are updated quarterly. AVMs are computer-based tools used to estimate market values of homes based on processing large volumes of market data including market comparables and price trends for local market areas. | |
(2) | Carrying value, which does not reflect the allowance for loan losses, includes purchase accounting adjustments, which, for PCI loans are the nonaccretable difference and the accretable yield, and for all other loans, an adjustment to mark the loans to a market yield at date of merger less any subsequent charge-offs. |
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• | the full and timely collection of interest or principal becomes uncertain; | |
• | they are 90 days (120 days with respect to real estate 1-4 family first and junior lien mortgages and auto loans) past due for interest or principal (unless both well-secured and in the process of collection); or | |
• | part of the principal balance has been charged off and no restructuring has occurred. |
Sept. 30 | , | June 30 | , | Dec. 31 | , | |||||||
(in millions) | 2009 | 2009 | 2008 | |||||||||
Nonaccrual loans: | ||||||||||||
Commercial and commercial real estate: | ||||||||||||
Commercial | $ | 4,540 | 2,910 | 1,253 | ||||||||
Real estate mortgage | 2,856 | 2,343 | 594 | |||||||||
Real estate construction | 2,711 | 2,210 | 989 | |||||||||
Lease financing | 157 | 130 | 92 | |||||||||
Total commercial and commercial real estate | 10,264 | 7,593 | 2,928 | |||||||||
Consumer: | ||||||||||||
Real estate 1-4 family first mortgage | 8,132 | 6,000 | 2,648 | |||||||||
Real estate 1-4 family junior lien mortgage | 1,985 | 1,652 | 894 | |||||||||
Other revolving credit and installment | 344 | 327 | 273 | |||||||||
Total consumer | 10,461 | 7,979 | 3,815 | |||||||||
Foreign | 144 | 226 | 57 | |||||||||
Total nonaccrual loans (1) (2) (3) | 20,869 | 15,798 | 6,800 | |||||||||
As a percentage of total loans | 2.61 | % | 1.92 | 0.79 | ||||||||
Foreclosed assets: | ||||||||||||
GNMA loans (4) | 840 | 932 | 667 | |||||||||
Other | 1,687 | 1,592 | 1,526 | |||||||||
Real estate and other nonaccrual investments (5) | 55 | 20 | 16 | |||||||||
Total nonaccrual loans and other nonperforming assets | $ | 23,451 | 18,342 | 9,009 | ||||||||
As a percentage of total loans | 2.93 | % | 2.23 | 1.04 | ||||||||
(1) | Includes nonaccrual mortgages held for sale and loans held for sale in their respective loan categories. | |
(2) | Excludes loans acquired from Wachovia that are accounted for as PCI loans. | |
(3) | Includes $9.0 billion and $3.6 billion at September 30, 2009, and December 31, 2008, respectively, of loans classified as impaired under FASB ASC 310 (FAS 114,Accounting by Creditors for Impairment of a Loan, an Amendment of FASB Statements No. 5 and 15) where the scope of this pronouncement encompasses nonaccrual commercial loans greater than $5 million and all consumer TDRs that are nonaccrual. See Note 5 to Financial Statements in this Report and Note 6 (Loans and Allowance for Credit Losses) to Financial Statements in our 2008 Form 10-K for further information on impaired loans. | |
(4) | Consistent with regulatory reporting requirements, foreclosed real estate securing Government National Mortgage Association (GNMA) loans is classified as nonperforming. Both principal and interest for GNMA loans secured by the foreclosed real estate are collectible because the GNMA loans are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA). | |
(5) | Includes real estate investments (contingent interest loans accounted for as investments) that would be classified as nonaccrual if these assets were recorded as loans, and nonaccrual debt securities. |
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• | $7.3 billion, have had $1.3 billion of loan impairments recorded for expected life-of-loan losses in accordance with impairment accounting standards; | ||
• | the remaining $3.0 billion have reserves as part of the allowance for loan losses; | ||
• | $9.5 billion (92%) are secured, of which $5.5 billion (53%) are secured by real estate, and the remainder secured by other assets such as receivables, inventory and equipment; | ||
• | over one-third of these nonaccrual loans are paying interest that is being applied to principal; and | ||
• | 23% have been written down by approximately 40%. |
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• | $1.8 billion of TDRs have had $288 million in life-of-loan loss impairment reserves; | ||
• | the remaining $8.7 billion have reserves as part of the allowance for loan losses; | ||
• | $10.5 billion (99%) are secured, substantially all by real estate; | ||
• | 24% have a combined loan to value of 80% or below; and | ||
• | $5.2 billion have had charge-offs totaling $1.5 billion; consumer loans secured by real estate are charged-off to the appraised value, less costs to sell, of the underlying collateral when these loans reach 180 days delinquent. |
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Sept. 30, 2009 | June 30, 2009 | March 31, 2009 | ||||||||||||||||||||||
As a | As a | As a | ||||||||||||||||||||||
% of | % of | % of | ||||||||||||||||||||||
total | total | total | ||||||||||||||||||||||
(in millions) | Balances | loans | Balances | loans | Balances | loans | ||||||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||||||||||
Legacy Wells Fargo | $ | 6,037 | 3.53 | % | $ | 5,260 | 3.02 | % | $ | 3,860 | 2.13 | % | ||||||||||||
Wachovia | 4,227 | 2.86 | 2,333 | 1.46 | 645 | 0.39 | ||||||||||||||||||
Total commercial and commercial real estate | 10,264 | 3.22 | 7,593 | 2.28 | 4,505 | 1.30 | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Legacy Wells Fargo | 6,293 | 2.90 | 5,687 | 2.59 | 4,970 | 2.22 | ||||||||||||||||||
Wachovia | 4,168 | 1.78 | 2,292 | 0.96 | 966 | 0.40 | ||||||||||||||||||
Total consumer | 10,461 | 2.32 | 7,979 | 1.74 | 5,936 | 1.27 | ||||||||||||||||||
Foreign | 144 | 0.48 | 226 | 0.75 | 75 | 0.24 | ||||||||||||||||||
Total nonaccrual loans | 20,869 | 2.61 | 15,798 | 1.92 | 10,516 | 1.25 | ||||||||||||||||||
Foreclosed assets: | ||||||||||||||||||||||||
Legacy Wells Fargo | 1,756 | 1,741 | 1,421 | |||||||||||||||||||||
Wachovia | 771 | 783 | 641 | |||||||||||||||||||||
Total foreclosed assets | 2,527 | 2,524 | 2,062 | |||||||||||||||||||||
Real estate and other nonaccrual investments | 55 | 20 | 34 | |||||||||||||||||||||
Total nonaccrual loans and other nonperforming assets | $ | 23,451 | 2.93 | % | $ | 18,342 | 2.23 | % | $ | 12,612 | 1.50 | % | ||||||||||||
Change from prior quarter | $ | 5,109 | $ | 5,730 | $ | 3,603 | ||||||||||||||||||
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Sept. 30 | , | Dec. 31 | , | |||||
(in millions) | 2009 | 2008 | (1) | |||||
Commercial and commercial real estate: | ||||||||
Commercial | $ | 458 | 218 | |||||
Real estate mortgage | 693 | 88 | ||||||
Real estate construction | 930 | 232 | ||||||
Total commercial and commercial real estate | 2,081 | 538 | ||||||
Consumer: | ||||||||
Real estate 1-4 family first mortgage (2) | 1,552 | 883 | ||||||
Real estate 1-4 family junior lien mortgage | 484 | 457 | ||||||
Credit card | 683 | 687 | ||||||
Other revolving credit and installment | 1,138 | 1,047 | ||||||
Total consumer | 3,857 | 3,074 | ||||||
Foreign | 76 | 34 | ||||||
Total | $ | 6,014 | 3,646 | |||||
(1) | The amount of real estate 1-4 family first and junior lien mortgage loan delinquencies as originally reported at December 31, 2008, included certain PCI loans previously classified as nonaccrual by Wachovia. The December 31, 2008, amounts have been revised to exclude those loans. | |
(2) | Includes mortgage loans held for sale 90 days or more past due and still accruing. |
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Quarter ended | ||||||||||||||||||||||||
Sept. 30, 2009 | June 30, 2009 | March 31, 2009 | ||||||||||||||||||||||
As a | As a | As a | ||||||||||||||||||||||
Net loan | % of | Net loan | % of | Net loan | % of | |||||||||||||||||||
charge- | average | charge- | average | charge- | average | |||||||||||||||||||
(in millions) | offs | loans | (1) | offs | loans | (1) | offs | loans | (1) | |||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||||||||||
Legacy Wells Fargo | $ | 862 | 1.96 | % | $ | 897 | 2.01 | % | $ | 667 | 1.48 | % | ||||||||||||
Wachovia | 602 | 1.57 | 246 | 0.61 | 30 | 0.07 | ||||||||||||||||||
Total commercial and commercial real estate | 1,464 | 1.78 | 1,143 | 1.35 | 697 | 0.80 | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Legacy Wells Fargo | 2,480 | 4.50 | 2,462 | 4.44 | 2,175 | 3.90 | ||||||||||||||||||
Wachovia | 1,107 | 1.87 | 735 | 1.22 | 341 | 0.56 | ||||||||||||||||||
Total consumer | 3,587 | 3.13 | 3,197 | 2.77 | 2,516 | 2.16 | ||||||||||||||||||
Foreign: | ||||||||||||||||||||||||
Legacy Wells Fargo | 43 | 3.00 | 43 | 3.05 | 45 | 3.13 | ||||||||||||||||||
Wachovia | 17 | 0.28 | 3 | 0.05 | — | — | ||||||||||||||||||
Total foreign | 60 | 0.79 | 46 | 0.61 | 45 | 0.56 | ||||||||||||||||||
Total Legacy Wells Fargo | 3,385 | 3.37 | 3,402 | 3.35 | 2,887 | 2.82 | ||||||||||||||||||
Total Wachovia | 1,726 | 1.66 | 984 | 0.92 | 371 | 0.34 | ||||||||||||||||||
Total net charge-offs | $ | 5,111 | 2.50 | % | $ | 4,386 | 2.11 | % | $ | 3,258 | 1.54 | % | ||||||||||||
(1) | Annualized. |
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• | assets and liabilities may mature or reprice at different times (for example, if assets reprice faster than liabilities and interest rates are generally falling, earnings will initially decline); | |
• | assets and liabilities may reprice at the same time but by different amounts (for example, when the general level of interest rates is falling, we may reduce rates paid on checking and savings deposit accounts by an amount that is less than the general decline in market interest rates); | |
• | short-term and long-term market interest rates may change by different amounts (for example, the shape of the yield curve may affect new loan yields and funding costs differently); or | |
• | the remaining maturity of various assets or liabilities may shorten or lengthen as interest rates change (for example, if long-term mortgage interest rates decline sharply, mortgage-backed securities held in the securities available-for-sale portfolio may prepay significantly earlier than anticipated — which could reduce portfolio income). |
• | to convert a major portion of our long-term fixed-rate debt, which we issue to finance the Company, from fixed-rate payments to floating-rate payments by entering into receive-fixed swaps; | |
• | to convert the cash flows from selected asset and/or liability instruments/portfolios from fixed-rate payments to floating-rate payments or vice versa; and | |
• | to hedge our mortgage origination pipeline, funded mortgage loans, MSRs and other interests held using interest rate swaps, swaptions, futures, forwards and options. |
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• | MSRs valuation changes associated with interest rate changes are recorded in earnings immediately within the accounting period in which those interest rate changes occur, whereas the impact of those same changes in interest rates on origination and servicing fees occur with a lag and over time. Thus, the mortgage business could be protected from adverse changes in interest rates over a period of time on a cumulative basis but still display large variations in income from one accounting period to the next. | |
• | The degree to which the “natural business hedge” offsets changes in MSRs valuations is imperfect, varies at different points in the interest rate cycle, and depends not just on the direction of interest rates but on the pattern of quarterly interest rate changes. | |
• | Origination volumes, the valuation of MSRs and hedging results and associated costs are also impacted by many factors. Such factors include the mix of new business between ARMs and fixed-rated mortgages, the relationship between short-term and long-term interest rates, the degree of volatility in interest rates, the relationship between mortgage interest rates and other interest rate markets, and other interest rate factors. Many of these factors are hard to predict and we may not be able to directly or perfectly hedge their effect. | |
• | While our hedging activities are designed to balance our mortgage banking interest rate risks, the financial instruments we use may not perfectly correlate with the values and income being hedged. For example, the change in the value of ARMs production held for sale from changes in mortgage interest rates may or may not be fully offset by Treasury and LIBOR index-based financial instruments used as economic hedges for such ARMs. Additionally, the hedge-carry income we earn on our economic hedges for the MSRs may not continue if the spread between short-term and long-term rates decreases. |
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Sept. 30 | , | June 30 | , | |||||||
(in billions) | 2009 | 2009 | ||||||||
Total equity | $ | 128.9 | 121.4 | |||||||
Less: Noncontrolling interests | (6.8 | ) | (6.8 | ) | ||||||
Total Wells Fargo stockholders’ equity | 122.1 | 114.6 | ||||||||
Less: Preferred equity | (31.1 | ) | (31.0 | ) | ||||||
Goodwill and intangible assets (other than MSRs) | (37.5 | ) | (38.7 | ) | ||||||
Applicable deferred assets | 5.3 | 5.5 | ||||||||
Deferred tax asset limitation | — | (2.0 | ) | |||||||
MSRs over specified limitations | (1.5 | ) | (1.6 | ) | ||||||
Cumulative other comprehensive income | (4.0 | ) | 0.6 | |||||||
Other | (0.3 | ) | (0.3 | ) | ||||||
Tier 1 common equity | (A) | $ | 53.0 | 47.1 | ||||||
Total risk-weighted assets (2) | (B) | $ | 1,023.8 | 1,047.7 | ||||||
Tier 1 common equity to total risk-weighted assets | (A)/(B) | 5.18 | % | 4.49 | ||||||
(1) | Tier 1 common equity is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies, including the Federal Reserve in the SCAP, to assess the capital position of financial services companies. Tier 1 common equity includes total Wells Fargo stockholders’ equity, less preferred equity, goodwill and intangible assets (excluding MSRs), net of related deferred taxes, adjusted for specified Tier 1 regulatory capital limitations covering deferred taxes, MSRs, and cumulative other comprehensive income. Management reviews Tier 1 common equity along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity, because of current interest in such information on the part of market participants. | |
(2) | Under the regulatory guidelines for risk-based capital, on-balance sheet assets and credit equivalent amounts of derivatives and off-balance sheet items are assigned to one of several broad risk categories according to the obligor or, if relevant, the guarantor or the nature of any collateral. The aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. The resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. |
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• | we are on track to realize annual run-rate savings of $5 billion upon completion of the Wachovia integration; | |
• | we currently expect cumulative merger integration costs of approximately $5.5 billion; | |
• | we expect credit losses to remain elevated in the near term, but, assuming no further economic deterioration, current projections show credit losses peaking in the first half of 2010 in our consumer portfolios and later in 2010 in our commercial and commercial real estate portfolios; | |
• | short-term rates, for purposes of hedge-carry income, are likely to continue into fourth quarter 2009; | |
• | to the extent nonperforming loans return to accrual status, NPA growth should moderate; | |
• | we currently project, based on preliminary estimates, to add assets to our consolidated financial statements following the January 1, 2010, implementation of FAS 166 and FAS 167; | |
• | we currently estimate that recently announced overdraft policy changes will reduce our 2010 fee revenue by approximately $300 million (after tax); | |
• | we believe life-of-loan loss estimates in our Pick-a-Pay portfolio have decreased; | |
• | we believe there is little recast risk over the next three years in our Pick-a-Pay portfolio and we expect certain specified Pick-a-Pay loan balances to recast and/or start fully amortizing in the remaining quarter of 2009 and through 2012; | |
• | we expect nonperforming asset balances to continue to grow, and we will continue to increase staffing in our workout and collection organizations to ensure troubled borrowers receive the attention and help they need; |
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• | we believe the allowance for credit losses was adequate to cover credit losses inherent in our loan portfolio, including unfunded credit commitments at September 30, 2009; | |
• | we expect changes in the fair value of derivative financial instruments used to hedge outstanding derivative loan commitments will fully or partially offset the changes in fair value of the commitments; | |
• | we expect the closing of the Prudential put transaction to occur on or about January 1, 2010; | |
• | we expect to recover the entire amortized cost basis of certain specified securities; | |
• | we believe that we will fully collect the carrying value of securities on which we have recorded a non-credit-related impairment in OCI; | |
• | we believe the eventual outcome of certain legal actions against us will not, individually or in the aggregate, have a material adverse effect on our consolidated financial position or results of operations; | |
• | we expect that $212 million of deferred net gains on derivatives in OCI at September 30, 2009, will be reclassified as earnings during the next twelve months; and |
• | we expect actions taken with respect to the Wells Fargo qualified and supplemental Cash Balance Plans and the Wachovia Pension Plan will reduce pension cost in fourth quarter 2009 by approximately $188 million. |
• | current and future economic and market conditions, including credit markets, housing prices and unemployment; | |
• | the terms of capital investments or other financial assistance provided by the U.S. government; | |
• | our capital requirements and the ability to raise capital on favorable terms; | |
• | legislative proposals to allow mortgage cram-downs in bankruptcy or require other loan modifications; | |
• | legislative and regulatory developments relating to overdraft fees, credit cards, and other bank services, as well as changes to our overdraft practices, which could have a negative effect on our revenue and other financial results; | |
• | the extent of our success in our loan modification efforts; | |
• | our ability to successfully integrate the Wachovia merger and realize the expected cost savings and other benefits and the effects of any delays or disruptions in systems conversions relating to the Wachovia integration; | |
• | our ability to realize the efficiency initiatives to lower expenses when and in the amount expected; | |
• | the adequacy of our allowance for credit losses; | |
• | recognition of OTTI on securities held in our available-for-sale portfolio; | |
• | the effect of changes in interest rates on our net interest margin and our mortgage originations, mortgage servicing rights and mortgages held for sale; | |
• | hedging gains or losses; | |
• | disruptions in the capital markets and reduced investor demand for mortgage loans; | |
• | our ability to sell more products to our customers; | |
• | the effect of the economic recession on the demand for our products and services; | |
• | the effect of the fall in stock market prices on our investment banking business and our fee income from our brokerage, asset and wealth management businesses; | |
• | our election to provide support to our mutual funds for structured credit products they may hold; | |
• | changes in the value of our venture capital investments; | |
• | changes in our accounting policies or in accounting standards or in how accounting standards are to be applied or interpreted; | |
• | mergers, acquisitions and divestitures; |
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• | federal and state regulations; | |
• | reputational damage from negative publicity, fines, penalties and other negative consequences from regulatory violations; | |
• | the loss of checking and saving account deposits to other investments such as the stock market, and the resulting increase in our funding costs and impact on our net interest margin; and | |
• | fiscal and monetary policies of the Federal Reserve Board. |
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• | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets of the Company; | |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and | |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
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Quarter ended Sept. 30 | , | Nine months ended Sept. 30 | , | |||||||||||||
(in millions, except per share amounts) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Interest income | ||||||||||||||||
Trading assets | $ | 216 | 41 | 688 | 126 | |||||||||||
Securities available for sale | 2,947 | 1,397 | 8,543 | 3,753 | ||||||||||||
Mortgages held for sale | 524 | 394 | 1,484 | 1,211 | ||||||||||||
Loans held for sale | 34 | 12 | 151 | 34 | ||||||||||||
Loans | 10,170 | 6,888 | 31,467 | 20,906 | ||||||||||||
Other interest income | 77 | 42 | 249 | 140 | ||||||||||||
Total interest income | 13,968 | 8,774 | 42,582 | 26,170 | ||||||||||||
Interest expense | ||||||||||||||||
Deposits | 905 | 1,019 | 2,861 | 3,676 | ||||||||||||
Short-term borrowings | 32 | 492 | 210 | 1,274 | ||||||||||||
Long-term debt | 1,301 | 882 | 4,565 | 2,801 | ||||||||||||
Other interest expense | 46 | — | 122 | — | ||||||||||||
Total interest expense | 2,284 | 2,393 | 7,758 | 7,751 | ||||||||||||
Net interest income | 11,684 | 6,381 | 34,824 | 18,419 | ||||||||||||
Provision for credit losses | 6,111 | 2,495 | 15,755 | 7,535 | ||||||||||||
Net interest income after provision for credit losses | 5,573 | 3,886 | 19,069 | 10,884 | ||||||||||||
Noninterest income | ||||||||||||||||
Service charges on deposit accounts | 1,478 | 839 | 4,320 | 2,387 | ||||||||||||
Trust and investment fees | 2,502 | 738 | 7,130 | 2,263 | ||||||||||||
Card fees | 946 | 601 | 2,722 | 1,747 | ||||||||||||
Other fees | 950 | 552 | 2,814 | 1,562 | ||||||||||||
Mortgage banking | 3,067 | 892 | 8,617 | 2,720 | ||||||||||||
Insurance | 468 | 439 | 1,644 | 1,493 | ||||||||||||
Net gains (losses) on debt securities available for sale (includes impairment losses of $273 and $850, consisting of $314 and $1,889 of total other-than-temporary impairment losses, net of $41 and $1,039 recognized in other comprehensive income, for the quarter and nine months ended September 30, 2009, respectively) | (40 | ) | 84 | (237 | ) | 316 | ||||||||||
Net gains (losses) from equity investments | 29 | (509 | ) | (88 | ) | (149 | ) | |||||||||
Other | 1,382 | 360 | 4,244 | 1,642 | ||||||||||||
Total noninterest income | 10,782 | 3,996 | 31,166 | 13,981 | ||||||||||||
Noninterest expense | ||||||||||||||||
Salaries | 3,428 | 2,078 | 10,252 | 6,092 | ||||||||||||
Commission and incentive compensation | 2,051 | 555 | 5,935 | 2,005 | ||||||||||||
Employee benefits | 1,034 | 486 | 3,545 | 1,666 | ||||||||||||
Equipment | 563 | 302 | 1,825 | 955 | ||||||||||||
Net occupancy | 778 | 402 | 2,357 | 1,201 | ||||||||||||
Core deposit and other intangibles | 642 | 47 | 1,935 | 139 | ||||||||||||
FDIC and other deposit assessments | 228 | 37 | 1,547 | 63 | ||||||||||||
Other | 2,960 | 1,594 | 8,803 | 4,667 | ||||||||||||
Total noninterest expense | 11,684 | 5,501 | 36,199 | 16,788 | ||||||||||||
Income before income tax expense | 4,671 | 2,381 | 14,036 | 8,077 | ||||||||||||
Income tax expense | 1,355 | 730 | 4,382 | 2,638 | ||||||||||||
Net income before noncontrolling interests | 3,316 | 1,651 | 9,654 | 5,439 | ||||||||||||
Less: Net income from noncontrolling interests | 81 | 14 | 202 | 50 | ||||||||||||
Wells Fargo net income | $ | 3,235 | 1,637 | 9,452 | 5,389 | |||||||||||
Wells Fargo net income applicable to common stock | $ | 2,637 | 1,637 | 7,596 | 5,389 | |||||||||||
Per share information | ||||||||||||||||
Earnings per common share | $ | 0.56 | 0.49 | 1.70 | 1.63 | |||||||||||
Diluted earnings per common share | 0.56 | 0.49 | 1.69 | 1.62 | ||||||||||||
Dividends declared per common share | 0.05 | 0.34 | 0.44 | 0.96 | ||||||||||||
Average common shares outstanding | 4,678.3 | 3,316.4 | 4,471.2 | 3,309.6 | ||||||||||||
Diluted average common shares outstanding | 4,706.4 | 3,331.0 | 4,485.3 | 3,323.4 | ||||||||||||
Table of Contents
Sept. 30 | , | Dec. 31 | , | |||||
(in millions, except shares) | 2009 | 2008 | ||||||
Assets | ||||||||
Cash and due from banks | $ | 17,233 | 23,763 | |||||
Federal funds sold, securities purchased under resale agreements and other short-term investments | 17,491 | 49,433 | ||||||
Trading assets | 43,198 | 54,884 | ||||||
Securities available for sale | 183,814 | 151,569 | ||||||
Mortgages held for sale (includes $33,435 and $18,754 carried at fair value) | 35,538 | 20,088 | ||||||
Loans held for sale (includes $201 and $398 carried at fair value) | 5,846 | 6,228 | ||||||
Loans | 799,952 | 864,830 | ||||||
Allowance for loan losses | (24,028 | ) | (21,013 | ) | ||||
Net loans | 775,924 | 843,817 | ||||||
Mortgage servicing rights: | ||||||||
Measured at fair value (residential MSRs) | 14,500 | 14,714 | ||||||
Amortized | 1,162 | 1,446 | ||||||
Premises and equipment, net | 11,040 | 11,269 | ||||||
Goodwill | 24,052 | 22,627 | ||||||
Other assets | 98,827 | 109,801 | ||||||
Total assets | $ | 1,228,625 | 1,309,639 | |||||
Liabilities | ||||||||
Noninterest-bearing deposits | $ | 165,260 | 150,837 | |||||
Interest-bearing deposits | 631,488 | 630,565 | ||||||
Total deposits | 796,748 | 781,402 | ||||||
Short-term borrowings | 30,800 | 108,074 | ||||||
Accrued expenses and other liabilities | 57,861 | 50,689 | ||||||
Long-term debt | 214,292 | 267,158 | ||||||
Total liabilities | 1,099,701 | 1,207,323 | ||||||
Equity | ||||||||
Wells Fargo stockholders’ equity: | ||||||||
Preferred stock | 31,589 | 31,332 | ||||||
Common stock — $1-2/3 par value, authorized 6,000,000,000 shares; issued 4,756,071,429 shares and 4,363,921,429 shares | 7,927 | 7,273 | ||||||
Additional paid-in capital | 40,343 | 36,026 | ||||||
Retained earnings | 41,485 | 36,543 | ||||||
Cumulative other comprehensive income (loss) | 4,088 | (6,869 | ) | |||||
Treasury stock - 76,876,271 shares and 135,290,540 shares | (2,771 | ) | (4,666 | ) | ||||
Unearned ESOP shares | (511 | ) | (555 | ) | ||||
Total Wells Fargo stockholders’ equity | 122,150 | 99,084 | ||||||
Noncontrolling interests | 6,774 | 3,232 | ||||||
Total equity | 128,924 | 102,316 | ||||||
Total liabilities and equity | $ | 1,228,625 | 1,309,639 | |||||
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AND COMPREHENSIVE INCOME
Preferred stock | Common stock | |||||||||||||||
(in millions, except shares) | Shares | Amount | Shares | Amount | ||||||||||||
Balance December 31, 2007 | 449,804 | $ | 450 | 3,297,102,208 | $ | 5,788 | ||||||||||
Cumulative effect from change in accounting for postretirement benefits | ||||||||||||||||
Adjustment for change of measurement date related to pension and other postretirement benefits | ||||||||||||||||
Balance January 1, 2008 | 449,804 | 450 | 3,297,102,208 | 5,788 | ||||||||||||
Comprehensive income: | ||||||||||||||||
Net income | ||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Translation adjustments | ||||||||||||||||
Net unrealized losses on securities available for sale, net of reclassification of $107 million of net losses included in net income | ||||||||||||||||
Net unrealized losses on derivatives and hedging activities, net of reclassification of $115 million of net gains on cash flow hedges included in net income | ||||||||||||||||
Unamortized gains under defined benefit plans, net of amortization | ||||||||||||||||
Total comprehensive income | ||||||||||||||||
Noncontrolling interests | ||||||||||||||||
Common stock issued | 49,454,756 | |||||||||||||||
Common stock repurchased | (37,327,260 | ) | ||||||||||||||
Preferred stock issued to ESOP | 520,500 | 521 | ||||||||||||||
Preferred stock released to ESOP | ||||||||||||||||
Preferred stock converted to common shares | (344,860 | ) | (346 | ) | 11,988,925 | |||||||||||
Common stock dividends | ||||||||||||||||
Tax benefit upon exercise of stock options | ||||||||||||||||
Stock option compensation expense | ||||||||||||||||
Net change in deferred compensation and related plans | ||||||||||||||||
Other | ||||||||||||||||
Net change | 175,640 | 175 | 24,116,421 | — | ||||||||||||
Balance September 30, 2008 | 625,444 | $ | 625 | 3,321,218,629 | $ | 5,788 | ||||||||||
Balance December 31, 2008 | 10,111,821 | $ | 31,332 | 4,228,630,889 | $ | 7,273 | ||||||||||
Cumulative effect from change in accounting for other-than-temporary impairment on debt securities | ||||||||||||||||
Effect of change in accounting for noncontrolling interests | ||||||||||||||||
Balance January 1, 2009 | 10,111,821 | 31,332 | 4,228,630,889 | 7,273 | ||||||||||||
Comprehensive income: | ||||||||||||||||
Net income | ||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Translation adjustments | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
Unrealized losses related to factors other than credit | ||||||||||||||||
All other net unrealized gains, net of reclassification of $45 million of net gains included in net income | ||||||||||||||||
Net unrealized losses on derivatives and hedging activities, net of reclassification of $257 million of net gains on cash flow hedges included in net income | ||||||||||||||||
Unamortized gains under defined benefit plans, net of amortization | ||||||||||||||||
Total comprehensive income | ||||||||||||||||
Noncontrolling interests | ||||||||||||||||
Common stock issued | 451,324,822 | 654 | ||||||||||||||
Common stock repurchased | (3,353,597 | ) | ||||||||||||||
Preferred stock released to ESOP | ||||||||||||||||
Preferred stock converted to common shares | (41,280 | ) | (41 | ) | 2,593,044 | |||||||||||
Common stock dividends | ||||||||||||||||
Preferred stock dividends and accretion | 298 | |||||||||||||||
Tax benefit upon exercise of stock options | ||||||||||||||||
Stock option compensation expense | ||||||||||||||||
Net change in deferred compensation and related plans | ||||||||||||||||
Net change | (41,280 | ) | 257 | 450,564,269 | 654 | |||||||||||
Balance September 30, 2009 | 10,070,541 | $ | 31,589 | 4,679,195,158 | $ | 7,927 | ||||||||||
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Wells Fargo stockholders’ equity | |||||||||||||||||||||||||||||||||
Cumulative | Total | ||||||||||||||||||||||||||||||||
Additional | other | Unearned | Wells Fargo | ||||||||||||||||||||||||||||||
paid-in | Retained | comprensive | Treasury | ESOP | stockholders’ | Noncontrolling | Total | ||||||||||||||||||||||||||
capital | earnings | income | stock | shares | equity | interests | equity | ||||||||||||||||||||||||||
8,212 | 38,970 | 725 | (6,035 | ) | (482 | ) | 47,628 | 286 | $ | 47,914 | |||||||||||||||||||||||
(20 | ) | (20 | ) | (20 | ) | ||||||||||||||||||||||||||||
(8 | ) | (8 | ) | (8 | ) | ||||||||||||||||||||||||||||
8,212 | 38,942 | 725 | (6,035 | ) | (482 | ) | 47,600 | 286 | 47,886 | ||||||||||||||||||||||||
5,389 | 5,389 | 50 | 5,439 | ||||||||||||||||||||||||||||||
(20 | ) | (20 | ) | (20 | ) | ||||||||||||||||||||||||||||
(3,485 | ) | (3,485 | ) | (3,485 | ) | ||||||||||||||||||||||||||||
(6 | ) | (6 | ) | (6 | ) | ||||||||||||||||||||||||||||
3 | 3 | 3 | |||||||||||||||||||||||||||||||
1,881 | 50 | 1,931 | |||||||||||||||||||||||||||||||
— | (34 | ) | (34 | ) | |||||||||||||||||||||||||||||
(41 | ) | (300 | ) | 1,610 | 1,269 | 1,269 | |||||||||||||||||||||||||||
(1,162 | ) | (1,162 | ) | (1,162 | ) | ||||||||||||||||||||||||||||
30 | (551 | ) | — | — | |||||||||||||||||||||||||||||
(20 | ) | 366 | 346 | 346 | |||||||||||||||||||||||||||||
(46 | ) | 392 | — | — | |||||||||||||||||||||||||||||
(3,178 | ) | (3,178 | ) | (3,178 | ) | ||||||||||||||||||||||||||||
106 | 106 | 106 | |||||||||||||||||||||||||||||||
134 | 134 | 134 | |||||||||||||||||||||||||||||||
32 | (12 | ) | 20 | 20 | |||||||||||||||||||||||||||||
(59 | ) | �� | (59 | ) | (59 | ) | |||||||||||||||||||||||||||
136 | 1,911 | (3,508 | ) | 828 | (185 | ) | (643 | ) | 16 | (627 | ) | ||||||||||||||||||||||
8,348 | 40,853 | (2,783 | ) | (5,207 | ) | (667 | ) | 46,957 | 302 | $ | 47,259 | ||||||||||||||||||||||
36,026 | 36,543 | (6,869 | ) | (4,666 | ) | (555 | ) | 99,084 | 3,232 | $ | 102,316 | ||||||||||||||||||||||
53 | (53 | ) | — | ||||||||||||||||||||||||||||||
(3,716 | ) | (3,716 | ) | 3,716 | — | ||||||||||||||||||||||||||||
32,310 | 36,596 | (6,922 | ) | (4,666 | ) | (555 | ) | 95,368 | 6,948 | 102,316 | |||||||||||||||||||||||
9,452 | 9,452 | 202 | 9,654 | ||||||||||||||||||||||||||||||
63 | 63 | (5 | ) | 58 | |||||||||||||||||||||||||||||
(654 | ) | (654 | ) | (654 | ) | ||||||||||||||||||||||||||||
11,220 | 11,220 | 64 | 11,284 | ||||||||||||||||||||||||||||||
(189 | ) | (189 | ) | (189 | ) | ||||||||||||||||||||||||||||
570 | 570 | 570 | |||||||||||||||||||||||||||||||
20,462 | 261 | 20,723 | |||||||||||||||||||||||||||||||
21 | 21 | (435 | ) | (414 | ) | ||||||||||||||||||||||||||||
7,845 | (816 | ) | 1,907 | 9,590 | 9,590 | ||||||||||||||||||||||||||||
(80 | ) | (80 | ) | (80 | ) | ||||||||||||||||||||||||||||
(3 | ) | 44 | 41 | 41 | |||||||||||||||||||||||||||||
(42 | ) | 83 | — | — | |||||||||||||||||||||||||||||
(1,891 | ) | (1,891 | ) | (1,891 | ) | ||||||||||||||||||||||||||||
(1,856 | ) | (1,558 | ) | (1,558 | ) | ||||||||||||||||||||||||||||
9 | 9 | 9 | |||||||||||||||||||||||||||||||
180 | 180 | 180 | |||||||||||||||||||||||||||||||
23 | (15 | ) | 8 | 8 | |||||||||||||||||||||||||||||
8,033 | 4,889 | 11,010 | 1,895 | 44 | 26,782 | (174 | ) | 26,608 | |||||||||||||||||||||||||
40,343 | �� | 41,485 | 4,088 | (2,771 | ) | (511 | ) | 122,150 | 6,774 | $ | 128,924 | ||||||||||||||||||||||
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Nine months ended Sept. 30 | , | |||||||
(in millions) | 2009 | 2008 | ||||||
Cash flows from operating activities: | ||||||||
Net income before noncontrolling interests | $ | 9,654 | 5,439 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Provision for credit losses | 15,755 | 7,535 | ||||||
Changes in fair value of MSRs (residential), MHFS and LHFS carried at fair value | 1,366 | (1,301 | ) | |||||
Depreciation and amortization | 2,437 | 1,154 | ||||||
Other net gains | (2,261 | ) | (999 | ) | ||||
Preferred shares released to ESOP | 41 | 346 | ||||||
Stock option compensation expense | 180 | 134 | ||||||
Excess tax benefits related to stock option payments | (9 | ) | (104 | ) | ||||
Originations of MHFS | (321,098 | ) | (163,797 | ) | ||||
Proceeds from sales of and principal collected on mortgages originated for sale | 306,882 | 171,809 | ||||||
Originations of LHFS | (8,641 | ) | — | |||||
Proceeds from sales of LHFS | 15,937 | — | ||||||
Purchases of LHFS | (6,461 | ) | — | |||||
Net change in: | ||||||||
Trading assets | 13,834 | (1,360 | ) | |||||
Deferred income taxes | 4,835 | 1,146 | ||||||
Accrued interest receivable | 948 | 63 | ||||||
Accrued interest payable | (1,157 | ) | (176 | ) | ||||
Other assets, net | (6,159 | ) | (8,319 | ) | ||||
Other accrued expenses and liabilities, net | (833 | ) | 631 | |||||
Net cash provided by operating activities | 25,250 | 12,201 | ||||||
Cash flows from investing activities: | ||||||||
Net change in: | ||||||||
Federal funds sold, securities purchased under resale agreements and other short-term investments | 31,942 | (5,301 | ) | |||||
Securities available for sale: | ||||||||
Sales proceeds | 46,337 | 39,698 | ||||||
Prepayments and maturities | 28,746 | 15,879 | ||||||
Purchases | (89,395 | ) | (74,381 | ) | ||||
Loans: | ||||||||
Decrease (increase) in banking subsidiaries’ loan originations, net of collections | 44,337 | (32,006 | ) | |||||
Proceeds from sales (including participations) of loans originated for investment by banking subsidiaries | 4,569 | 1,843 | ||||||
Purchases (including participations) of loans by banking subsidiaries | (2,007 | ) | (4,329 | ) | ||||
Principal collected on nonbank entities’ loans | 10,224 | 15,462 | ||||||
Loans originated by nonbank entities | (7,117 | ) | (13,880 | ) | ||||
Net cash paid for acquisitions | (132 | ) | (590 | ) | ||||
Proceeds from sales of foreclosed assets | 2,708 | 1,299 | ||||||
Changes in MSRs from purchases and sales | (9 | ) | 71 | |||||
Net change in noncontrolling interests | (355 | ) | (34 | ) | ||||
Other, net | 4,951 | (1,341 | ) | |||||
Net cash provided (used) by investing activities | 74,799 | (57,610 | ) | |||||
Cash flows from financing activities: | ||||||||
Net change in: | ||||||||
Deposits | 15,212 | 7,370 | ||||||
Short-term borrowings | (77,274 | ) | 31,798 | |||||
Long-term debt: | ||||||||
Proceeds from issuance | 4,803 | 22,751 | ||||||
Repayment | (55,332 | ) | (15,439 | ) | ||||
Preferred stock: | ||||||||
Cash dividends paid | (1,616 | ) | — | |||||
Common stock: | ||||||||
Proceeds from issuance | 9,590 | 1,269 | ||||||
Repurchased | (80 | ) | (1,162 | ) | ||||
Cash dividends paid | (1,891 | ) | (3,178 | ) | ||||
Excess tax benefits related to stock option payments | 9 | 104 | ||||||
Net cash provided (used) by financing activities | (106,579 | ) | 43,513 | |||||
Net change in cash and due from banks | (6,530 | ) | (1,896 | ) | ||||
Cash and due from banks at beginning of period | 23,763 | 14,757 | ||||||
Cash and due from banks at end of period | $ | 17,233 | 12,861 | |||||
Supplemental cash flow disclosures: | ||||||||
Cash paid for interest | $ | 8,915 | 7,927 | |||||
Cash paid for income taxes | 2,834 | 2,431 | ||||||
66
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67
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• | FASB ASC 815-10,Derivatives and Hedging(FAS 161,Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133); |
• | FASB ASC 810-10,Consolidation(FAS 160,Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51); |
• | FASB ASC 805-10,Business Combinations(FAS 141R (revised 2007),Business Combinations); |
• | FASB ASC 820-10,Fair Value Measurements and Disclosures(FASB Staff Position (FSP) FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly); |
• | FASB ASC 320-10,Investments — Debt and Equity Securities(FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments); and |
• | FASB ASC 260-10,Earnings Per Share(FSP Emerging Issues Task Force (EITF) 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities). |
• | FASB ASC 825-10,Financial Instruments(FSP FAS 107-1 and APB Opinion 28-1,Interim Disclosures about Fair Value of Financial Instruments); and |
• | FASB ASC 855-10,Subsequent Events(FAS 165,Subsequent Events). |
• | FASB ASC 105-10,Generally Accepted Accounting Principles(FAS 168,The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162). |
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69
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70
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Nine months ended Sept. 30 | , | |||||||
(in millions) | 2009 | 2008 | ||||||
Transfers from trading assets to securities available for sale | $ | 845 | — | |||||
Transfers from securities available for sale to loans | 258 | — | ||||||
Transfers from MHFS to trading assets | 2,993 | — | ||||||
Transfers from MHFS to securities available for sale | — | 544 | ||||||
Transfers from MHFS to MSRs | 5,088 | 2,659 | ||||||
Transfers from MHFS to foreclosed assets | 125 | 105 | ||||||
Transfers from (to) loans (from) to MHFS | 60 | (507 | ) | |||||
Transfers from LHFS to loans | 6 | 677 | ||||||
Transfers from loans to foreclosed assets | 5,067 | 2,203 | ||||||
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Dec. 31, | ||||||||||||
2008 | Dec. 31, | |||||||||||
(in millions) | (refined) | Refinements | 2008 | |||||||||
Purchase price: | ||||||||||||
Value of common shares | $ | 14,621 | — | 14,621 | ||||||||
Value of preferred shares | 8,409 | — | 8,409 | |||||||||
Other (value of share-based awards and direct acquisition costs) | 62 | — | 62 | |||||||||
Total purchase price | 23,092 | — | 23,092 | |||||||||
Allocation of the purchase price: | ||||||||||||
Wachovia tangible stockholders’ equity, less prior purchase accounting adjustments and other basis adjustments eliminated in purchase accounting | 19,390 | (4 | ) | 19,394 | ||||||||
Adjustments to reflect assets acquired and liabilities assumed at fair value: | ||||||||||||
Loans and leases, net | (17,921 | ) | (1,524 | ) | (16,397 | ) | ||||||
Premises and equipment, net | (695 | ) | (239 | ) | (456 | ) | ||||||
Intangible assets | 14,582 | (158 | ) | 14,740 | ||||||||
Other assets | (3,211 | ) | 233 | (3,444 | ) | |||||||
Deposits | (4,568 | ) | (134 | ) | (4,434 | ) | ||||||
Accrued expenses and other liabilities (exit, termination and other liabilities) | (2,586 | ) | (987 | ) | (1,599 | ) | ||||||
Long-term debt | (227 | ) | (37 | ) | (190 | ) | ||||||
Deferred taxes | 8,171 | 1,495 | 6,676 | |||||||||
Fair value of net assets acquired | 12,935 | (1,355 | ) | 14,290 | ||||||||
Goodwill resulting from the merger | $ | 10,157 | 1,355 | 8,802 | ||||||||
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Employee | Contract | Facilities | ||||||||||||||
(in millions) | termination | termination | related | Total | ||||||||||||
Balance, December 31, 2008 | $ | 57 | 13 | 129 | 199 | |||||||||||
Purchase accounting adjustments (1) | 327 | 20 | 13 | 360 | ||||||||||||
Cash payments / utilization | (220 | ) | — | (102 | ) | (322 | ) | |||||||||
Balance, September 30, 2009 | $ | 164 | 33 | 40 | 237 | |||||||||||
(1) | Certain purchase accounting adjustments have been refined during 2009 as additional information became available. |
Sept. 30 | , | Dec. 31 | , | |||||
(in millions) | 2009 | 2008 | ||||||
Federal funds sold and securities purchased under resale agreements | $ | 9,432 | 8,439 | |||||
Interest-earning deposits | 6,879 | 39,890 | ||||||
Other short-term investments | 1,180 | 1,104 | ||||||
Total | $ | 17,491 | 49,433 | |||||
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Gross | Gross | |||||||||||||||
unrealized | unrealized | Fair | ||||||||||||||
(in millions) | Cost | gains | losses | value | ||||||||||||
December 31, 2008 | ||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | 3,187 | 62 | — | 3,249 | |||||||||||
Securities of U.S. states and political subdivisions | 14,062 | 116 | (1,520 | ) | 12,658 | |||||||||||
Mortgage-backed securities: | ||||||||||||||||
Federal agencies | 64,726 | 1,711 | (3 | ) | 66,434 | |||||||||||
Residential | 29,536 | 11 | (4,717 | ) | 24,830 | |||||||||||
Commercial | 12,305 | 51 | (3,878 | ) | 8,478 | |||||||||||
Total mortgage-backed securities | 106,567 | 1,773 | (8,598 | ) | 99,742 | |||||||||||
Corporate debt securities | 7,382 | 81 | (539 | ) | 6,924 | |||||||||||
Collateralized debt obligations | 2,634 | 21 | (570 | ) | 2,085 | |||||||||||
Other (1) (2) | 21,363 | 14 | (602 | ) | 20,775 | |||||||||||
Total debt securities | 155,195 | 2,067 | (11,829 | ) | 145,433 | |||||||||||
Marketable equity securities: | ||||||||||||||||
Perpetual preferred securities | 5,040 | 13 | (327 | ) | 4,726 | |||||||||||
Other marketable equity securities | 1,256 | 181 | (27 | ) | 1,410 | |||||||||||
Total marketable equity securities | 6,296 | 194 | (354 | ) | 6,136 | |||||||||||
Total | $ | 161,491 | 2,261 | (12,183 | ) | 151,569 | ||||||||||
September 30, 2009 | ||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | 2,446 | 57 | (7 | ) | 2,496 | ||||||||||
Securities of U.S. states and political subdivisions | 13,202 | 839 | (411 | ) | 13,630 | |||||||||||
Mortgage-backed securities: | ||||||||||||||||
Federal agencies | 83,888 | 3,615 | — | 87,503 | ||||||||||||
Residential(2) | 32,958 | 2,881 | (1,747 | ) | 34,092 | |||||||||||
Commercial | 12,433 | 665 | (1,834 | ) | 11,264 | |||||||||||
Total mortgage-backed securities | 129,279 | 7,161 | (3,581 | ) | 132,859 | |||||||||||
Corporate debt securities | 8,400 | 932 | (130 | ) | 9,202 | |||||||||||
Collateralized debt obligations | 3,194 | 451 | (382 | ) | 3,263 | |||||||||||
Other(1) | 15,551 | 1,122 | (214 | ) | 16,459 | |||||||||||
Total debt securities | 172,072 | 10,562 | (4,725 | ) | 177,909 | |||||||||||
Marketable equity securities: | ||||||||||||||||
Perpetual preferred securities | 3,918 | 315 | (160 | ) | 4,073 | |||||||||||
Other marketable equity securities | 1,181 | 665 | (14 | ) | 1,832 | |||||||||||
Total marketable equity securities | 5,099 | 980 | (174 | ) | 5,905 | |||||||||||
Total | $ | 177,171 | 11,542 | (4,899 | ) | 183,814 | ||||||||||
(1) | Included in the “Other” category are asset-backed securities collateralized by auto leases with a cost basis and fair value of $8.6 billion and $9.0 billion, respectively, at September 30, 2009, and $8.3 billion and $7.9 billion, respectively, at December 31, 2008. Also included in the “Other” category are asset-backed securities collateralized by home equity loans with a cost basis and fair value of $2.5 billion and $2.7 billion, respectively, at September 30, 2009, and $3.2 billion and $3.2 billion, respectively, at December 31, 2008. The remaining balances primarily include asset-backed securities collateralized by credit cards and student loans. | |
(2) | Foreign residential mortgage-backed securities with a fair value of $3.3 billion are included in residential mortgage-backed securities at September 30, 2009. These instruments were included in other debt securities at December 31, 2008, and had a fair value of $6.3 billion. |
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Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
unrealized | Fair | unrealized | Fair | unrealized | Fair | |||||||||||||||||||
(in millions) | losses | value | losses | value | losses | value | ||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | — | — | — | — | — | — | |||||||||||||||||
Securities of U.S. states and political subdivisions | (745 | ) | 3,483 | (775 | ) | 1,702 | (1,520 | ) | 5,185 | |||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Federal agencies | (3 | ) | 83 | — | — | (3 | ) | 83 | ||||||||||||||||
Residential | (4,471 | ) | 9,960 | (246 | ) | 238 | (4,717 | ) | 10,198 | |||||||||||||||
Commercial | (1,726 | ) | 4,152 | (2,152 | ) | 2,302 | (3,878 | ) | 6,454 | |||||||||||||||
Total mortgage-backed securities | (6,200 | ) | 14,195 | (2,398 | ) | 2,540 | (8,598 | ) | 16,735 | |||||||||||||||
Corporate debt securities | (285 | ) | 1,056 | (254 | ) | 469 | (539 | ) | 1,525 | |||||||||||||||
Collateralized debt obligations | (113 | ) | 215 | (457 | ) | 180 | (570 | ) | 395 | |||||||||||||||
Other | (554 | ) | 8,638 | (48 | ) | 38 | (602 | ) | 8,676 | |||||||||||||||
Total debt securities | (7,897 | ) | 27,587 | (3,932 | ) | 4,929 | (11,829 | ) | 32,516 | |||||||||||||||
Marketable equity securities: | ||||||||||||||||||||||||
Perpetual preferred securities | (75 | ) | 265 | (252 | ) | 360 | (327 | ) | 625 | |||||||||||||||
Other marketable equity securities | (23 | ) | 72 | (4 | ) | 9 | (27 | ) | 81 | |||||||||||||||
Total marketable equity securities | (98 | ) | 337 | (256 | ) | 369 | (354 | ) | 706 | |||||||||||||||
Total | $ | (7,995 | ) | 27,924 | (4,188 | ) | 5,298 | (12,183 | ) | 33,222 | ||||||||||||||
September 30, 2009 | ||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | (7 | ) | 266 | — | — | (7 | ) | 266 | |||||||||||||||
Securities of U.S. states and political subdivisions | (6 | ) | 198 | (405 | ) | 3,474 | (411 | ) | 3,672 | |||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Federal agencies | — | — | — | — | — | — | ||||||||||||||||||
Residential | (201 | ) | 2,647 | (1,546 | ) | 10,591 | (1,747 | ) | 13,238 | |||||||||||||||
Commercial | (33 | ) | 514 | (1,801 | ) | 6,908 | (1,834 | ) | 7,422 | |||||||||||||||
Total mortgage-backed securities | (234 | ) | 3,161 | (3,347 | ) | 17,499 | (3,581 | ) | 20,660 | |||||||||||||||
Corporate debt securities | (30 | ) | 229 | (100 | ) | 645 | (130 | ) | 874 | |||||||||||||||
Collateralized debt obligations | (37 | ) | 329 | (345 | ) | 487 | (382 | ) | 816 | |||||||||||||||
Other | (82 | ) | 691 | (132 | ) | 85 | (214 | ) | 776 | |||||||||||||||
Total debt securities | (396 | ) | 4,874 | (4,329 | ) | 22,190 | (4,725 | ) | 27,064 | |||||||||||||||
Marketable equity securities: | ||||||||||||||||||||||||
Perpetual preferred securities | (11 | ) | 176 | (149 | ) | 542 | (160 | ) | 718 | |||||||||||||||
Other marketable equity securities | (14 | ) | 75 | — | — | (14 | ) | 75 | ||||||||||||||||
Total marketable equity securities | (25 | ) | 251 | (149 | ) | 542 | (174 | ) | 793 | |||||||||||||||
Total | $ | (421 | ) | 5,125 | (4,478 | ) | 22,732 | (4,899 | ) | 27,857 | ||||||||||||||
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• | the length of time and the extent to which the fair value has been less than the amortized cost basis; |
• | adverse conditions specifically related to the security, an industry, or a geographic area (for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, in the financial condition of the underlying loan obligors, including changes in technology or the discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security or changes in the quality of the credit enhancement); |
• | the historical and implied volatility of the fair value of the security; |
• | the payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future; |
• | failure of the issuer of the security to make scheduled interest or principal payments; |
• | any changes to the rating of the security by a rating agency; and |
• | recoveries or additional declines in fair value subsequent to the balance sheet date. |
• | remaining payment terms of the security (including as applicable, terms that require underlying obligor payments to increase in the future); |
• | current delinquencies and nonperforming assets of underlying collateral; |
• | expected future default rates; |
• | collateral value by vintage, geographic region, industry concentration or property type; and |
• | subordination levels or other credit enhancements. |
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Investment grade | Non-investment grade | |||||||||||||||
Gross | Gross | |||||||||||||||
unrealized | Fair | unrealized | Fair | |||||||||||||
(in millions) | losses | value | losses | value | ||||||||||||
December 31, 2008 | ||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | — | — | — | — | |||||||||||
Securities of U.S. states and political subdivisions | (1,464 | ) | 5,028 | (56 | ) | 157 | ||||||||||
Mortgage-backed securities: | ||||||||||||||||
Federal agencies | (3 | ) | 83 | — | — | |||||||||||
Residential | (4,574 | ) | 10,045 | (143 | ) | 153 | ||||||||||
Commercial | (3,863 | ) | 6,427 | (15 | ) | 27 | ||||||||||
Total mortgage-backed securities | (8,440 | ) | 16,555 | (158 | ) | 180 | ||||||||||
Corporate debt securities | (36 | ) | 579 | (503 | ) | 946 | ||||||||||
Collateralized debt obligations | (478 | ) | 373 | (92 | ) | 22 | ||||||||||
Other | (549 | ) | 8,612 | (53 | ) | 64 | ||||||||||
Total debt securities | (10,967 | ) | 31,147 | (862 | ) | 1,369 | ||||||||||
Perpetual preferred securities | (311 | ) | 604 | (16 | ) | 21 | ||||||||||
Total | $ | (11,278 | ) | 31,751 | (878 | ) | 1,390 | |||||||||
September 30, 2009 | ||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | (7 | ) | 266 | — | — | ||||||||||
Securities of U.S. states and political subdivisions | (314 | ) | 3,343 | (97 | ) | 329 | ||||||||||
Mortgage-backed securities: | ||||||||||||||||
Federal agencies | — | — | — | — | ||||||||||||
Residential | (284 | ) | 5,810 | (1,463 | ) | 7,428 | ||||||||||
Commercial | (1,512 | ) | 7,016 | (322 | ) | 406 | ||||||||||
Total mortgage-backed securities | (1,796 | ) | 12,826 | (1,785 | ) | 7,834 | ||||||||||
Corporate debt securities | (47 | ) | 165 | (83 | ) | 709 | ||||||||||
Collateralized debt obligations | (92 | ) | 367 | (290 | ) | 449 | ||||||||||
Other | (30 | ) | 432 | (184 | ) | 344 | ||||||||||
Total debt securities | (2,286 | ) | 17,399 | (2,439 | ) | 9,665 | ||||||||||
Perpetual preferred securities | (153 | ) | 690 | (7 | ) | 28 | ||||||||||
Total | $ | (2,439 | ) | 18,089 | (2,446 | ) | 9,693 | |||||||||
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The following table shows the gross realized gains and losses on sales from the securities available-for-sale portfolio, including marketable equity securities. Realized losses include OTTI write-downs.
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Gross realized gains | $ | 378 | 549 | 1,088 | 1,003 | |||||||||||
Gross realized losses | (300 | ) | (948 | ) | (1,018 | ) | (1,175 | ) | ||||||||
Net realized gains (losses) | $ | 78 | (399 | ) | 70 | (172 | ) | |||||||||
The following table shows the detail of total OTTI related to debt and equity securities available for sale, and nonmarketable equity securities.
Sept. 30, 2009 | ||||||||
Quarter | Nine months | |||||||
(in millions) | ended | ended | ||||||
OTTI write-downs (included in earnings) | ||||||||
Debt securities | $ | 273 | 850 | |||||
Equity securities: | ||||||||
Marketable equity securities | 4 | 74 | ||||||
Nonmarketable equity securities | 119 | 451 | ||||||
Total equity securities | 123 | 525 | ||||||
Total OTTI write-downs | $ | 396 | 1,375 | |||||
OTTI on debt securities | ||||||||
Recorded as part of gross realized losses: | ||||||||
Credit-related OTTI | $ | 251 | 821 | |||||
Securities we intend to sell | 22 | 29 | ||||||
Recorded directly to other comprehensive income for non-credit-related impairment (1) | 41 | 1,039 | ||||||
Total OTTI on debt securities | $ | 314 | 1,889 | |||||
(1) | Represents amounts recorded to OCI on debt securities (predominantly residential mortgage-backed securities) in periods OTTI write-downs have been incurred. Changes in fair value in subsequent periods on such securities, to the extent not subsequently impaired in those periods, is not reflected in this balance. |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Debt securities: | ||||||||||||||||
U.S. states and political subdivisions | $ | 1 | — | 6 | — | |||||||||||
Residential mortgage-backed securities | 134 | 26 | 526 | 99 | ||||||||||||
Commercial mortgage-backed securities | 67 | 23 | 78 | 23 | ||||||||||||
Corporate debt securities | 5 | 93 | 58 | 124 | ||||||||||||
Collateralized debt obligations | 25 | 120 | 121 | 124 | ||||||||||||
Other debt securities | 41 | — | 61 | — | ||||||||||||
Total debt securities | 273 | 262 | 850 | 370 | ||||||||||||
Marketable equity securities: | ||||||||||||||||
Perpetual preferred securities | 2 | 594 | 47 | 627 | ||||||||||||
Other marketable equity securities | 2 | 37 | 27 | 98 | ||||||||||||
Total marketable equity securities | 4 | 631 | 74 | 725 | ||||||||||||
Total OTTI losses recognized in earnings | $ | 277 | 893 | 924 | 1,095 | |||||||||||
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We recognize OTTI for debt securities classified as available for sale in accordance with FASB ASC 320, which requires that we assess whether we intend to sell or it is more likely than not that we will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell prior to recovery of our amortized cost basis, we separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and, therefore, is not required to be recognized as losses in the income statement, but is recognized in OCI. We believe that we will fully collect the carrying value of securities on which we have recorded a non-credit-related impairment in OCI.
Quarter ended | Nine months ended | |||||||
(in millions) | Sept. 30, 2009 | Sept. 30, 2009 | ||||||
Balance, beginning of period | $ | 1,012 | 471 | |||||
Additions (1): | ||||||||
Initial credit impairments | 124 | 537 | ||||||
Subsequent credit impairments | 127 | 284 | ||||||
Reductions: | ||||||||
For securities sold | (8 | ) | (31 | ) | ||||
Due to change in intent to sell or requirement to sell | — | (1 | ) | |||||
For increases in expected cash flows | — | (5 | ) | |||||
Balance, end of period | $ | 1,255 | 1,255 | |||||
(1) | Excludes $22 million and $29 million for the quarter and nine months ended September 30, 2009, respectively, of OTTI on debt securities we intend to sell. |
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Non-agency residential MBS – non-investment grade (1) | ||||||||
Quarter ended | Nine months ended | |||||||
September 30, 2009 | September 30, 2009 | |||||||
Expected remaining life of loan losses (2): | ||||||||
Range (3) | 0 - 57 | % | 0 - 58 | |||||
Credit impairment distribution (4): | ||||||||
0 - 10% range | 50 | 54 | ||||||
10 - 20% range | 9 | 28 | ||||||
20 - 30% range | 23 | 13 | ||||||
Greater than 30% | 18 | 5 | ||||||
Weighted average (5) | 12 | 12 | ||||||
Current subordination levels (6): | ||||||||
Range (3) | 0 - 44 | 0 - 44 | ||||||
Weighted average (5) | 9 | 8 | ||||||
Prepayment speed (annual CPR (7)): | ||||||||
Range (3) | 5 - 18 | 5 - 25 | ||||||
Weighted average (5) | 11 | 11 | ||||||
(1) | Total credit impairment losses in third quarter 2009 were $134 million, of which 96% were recorded on non-investment grade securities. Total credit impairment losses in the first nine months of 2009 were $537 million, of which 96% were recorded on non-investment grade securities. | |
(2) | Represents future expected credit losses on underlying pool of loans expressed as a percentage of total current outstanding loan balance. | |
(3) | Represents the range of inputs/assumptions based upon the individual securities within each category. | |
(4) | Represents distribution of credit impairment losses recognized in earnings categorized based on range of expected remaining life of loan losses. For example, 50% of credit impairment losses recognized in earnings in third quarter 2009 had expected remaining life of loan loss assumptions of 0 to 10%. | |
(5) | Calculated by weighting the relevant input/assumption for each individual security by current outstanding amortized cost basis of the security. | |
(6) | Represents current level of credit protection (subordination) for the securities, expressed as a percentage of total current underlying loan balance. | |
(7) | Constant prepayment rate. |
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The following table shows the remaining contractual principal maturities and contractual yields of debt securities available for sale. The remaining contractual principal maturities for mortgage-backed securities were determined assuming no prepayments. Remaining expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations before the underlying mortgages mature.
Remaining contractual principal maturity | ||||||||||||||||||||||||||||||||||||||||
Weighted- | After one year | After five years | ||||||||||||||||||||||||||||||||||||||
Total | average | Within one year | through five years | through ten years | After ten years | |||||||||||||||||||||||||||||||||||
(in millions) | amount | yield | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | 3,249 | 1.63 | % | $ | 1,720 | 0.02 | % | $ | 1,120 | 3.36 | % | $ | 395 | 3.54 | % | $ | 14 | 5.05 | % | ||||||||||||||||||||
Securities of U.S. states and political subdivisions | 12,658 | 6.80 | 189 | 5.77 | 672 | 6.84 | 1,040 | 6.74 | 10,757 | 6.82 | ||||||||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||||||||||
Federal agencies | 66,434 | 5.87 | 42 | 4.24 | 129 | 5.03 | 322 | 5.73 | 65,941 | 5.88 | ||||||||||||||||||||||||||||||
Residential | 24,830 | 5.57 | — | — | — | — | 47 | 4.95 | 24,783 | 5.57 | ||||||||||||||||||||||||||||||
Commercial | 8,478 | 5.32 | — | — | 5 | 1.57 | 135 | 6.13 | 8,338 | 5.31 | ||||||||||||||||||||||||||||||
Total mortgage-backed securities | 99,742 | 5.75 | 42 | 4.24 | 134 | 4.91 | 504 | 5.76 | 99,062 | 5.75 | ||||||||||||||||||||||||||||||
Corporate debt securities | 6,924 | 5.15 | 492 | 5.00 | 3,683 | 4.31 | 2,231 | 6.71 | 518 | 4.49 | ||||||||||||||||||||||||||||||
Collateralized debt obligations | 2,085 | 4.17 | — | — | 90 | 5.68 | 1,081 | 4.81 | 914 | 3.26 | ||||||||||||||||||||||||||||||
Other | 20,775 | 4.76 | 53 | 4.71 | 7,880 | 6.75 | 1,691 | 3.71 | 11,151 | 3.52 | ||||||||||||||||||||||||||||||
Total debt securities at fair value (1) (2) | $ | 145,433 | 5.56 | % | $ | 2,496 | 1.61 | % | $ | 13,579 | 5.79 | % | $ | 6,942 | 5.44 | % | $ | 122,416 | 5.62 | % | ||||||||||||||||||||
September 30, 2009 | ||||||||||||||||||||||||||||||||||||||||
Securities of U.S. Treasury and federal agencies | $ | 2,496 | 2.74 | % | $ | 552 | 0.61 | % | $ | 748 | 2.27 | % | $ | 1,190 | 4.01 | % | $ | 6 | 4.03 | % | ||||||||||||||||||||
Securities of U.S. states and political subdivisions | 13,630 | 6.57 | 84 | 7.48 | 667 | 6.94 | 1,102 | 6.58 | 11,777 | 6.54 | ||||||||||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||||||||||
Federal agencies | 87,503 | 5.52 | 16 | 4.52 | 68 | 5.88 | 494 | 5.65 | 86,925 | 5.52 | ||||||||||||||||||||||||||||||
Residential | 34,092 | 5.36 | 48 | 4.74 | 122 | 0.58 | 170 | 5.00 | 33,752 | 5.38 | ||||||||||||||||||||||||||||||
Commercial | 11,264 | 5.34 | 83 | 0.69 | 85 | 4.94 | 200 | 5.51 | 10,896 | 5.38 | ||||||||||||||||||||||||||||||
Total mortgage-backed securities | 132,859 | 5.47 | 147 | 2.43 | 275 | 3.24 | 864 | 5.49 | 131,573 | 5.47 | ||||||||||||||||||||||||||||||
Corporate debt securities | 9,202 | 5.63 | 531 | 4.41 | 4,014 | 5.55 | 3,810 | 6.13 | 847 | 4.52 | ||||||||||||||||||||||||||||||
Collateralized debt obligations | 3,263 | 2.11 | 10 | 6.73 | 161 | 5.01 | 1,454 | 2.81 | 1,638 | 1.17 | ||||||||||||||||||||||||||||||
Other | 16,459 | 4.18 | 755 | 5.84 | 7,554 | 6.17 | 1,247 | 3.31 | 6,903 | 1.98 | ||||||||||||||||||||||||||||||
Total debt securities at fair value (1) | $ | 177,909 | 5.34 | % | $ | 2,079 | 3.91 | % | $ | 13,419 | 5.73 | % | $ | 9,667 | 5.00 | % | $ | 152,744 | 5.35 | % | ||||||||||||||||||||
(1) | The weighted-average yield is computed using the contractual coupon of each security weighted based on the fair value of each security. | |
(2) | Information for December 31, 2008, has been revised to conform the determination of remaining contractual principal maturities and weighted-average yields to the current period methodology. |
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Sept. 30, 2009 | Dec. 31, 2008 | |||||||||||||||||||||||
All | All | |||||||||||||||||||||||
PCI | other | PCI | other | |||||||||||||||||||||
(in millions) | loans | loans | Total | loans | loans | Total | ||||||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||||||||||
Commercial | $ | 2,407 | 167,203 | 169,610 | 4,580 | 197,889 | 202,469 | |||||||||||||||||
Real estate mortgage | 5,950 | 97,492 | 103,442 | 7,762 | 95,346 | 103,108 | ||||||||||||||||||
Real estate construction | 4,250 | 27,469 | 31,719 | 4,503 | 30,173 | 34,676 | ||||||||||||||||||
Lease financing | — | 14,115 | 14,115 | — | 15,829 | 15,829 | ||||||||||||||||||
Total commercial and commercial real estate | 12,607 | 306,279 | 318,886 | 16,845 | 339,237 | 356,082 | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Real estate 1-4 family first mortgage | 39,538 | 193,084 | 232,622 | 39,214 | 208,680 | 247,894 | ||||||||||||||||||
Real estate 1-4 family junior lien mortgage | 425 | 104,113 | 104,538 | 728 | 109,436 | 110,164 | ||||||||||||||||||
Credit card | — | 23,597 | 23,597 | — | 23,555 | 23,555 | ||||||||||||||||||
Other revolving credit and installment | — | 90,027 | 90,027 | 151 | 93,102 | 93,253 | ||||||||||||||||||
Total consumer | 39,963 | 410,821 | 450,784 | 40,093 | 434,773 | 474,866 | ||||||||||||||||||
Foreign | 1,768 | 28,514 | 30,282 | 1,859 | 32,023 | 33,882 | ||||||||||||||||||
Total loans | $ | 54,338 | 745,614 | 799,952 | 58,797 | 806,033 | 864,830 | |||||||||||||||||
Sept. 30, | Dec. 31, | |||||||
(in millions) | 2009 | 2008 | ||||||
Impairment measurement based on: | ||||||||
Collateral value method | $ | 356 | 88 | |||||
Discounted cash flow method (1) | 14,129 | 3,552 | ||||||
Total (2) | $ | 14,485 | 3,640 | |||||
(1) | The September 30, 2009, balance includes $444 million of Government National Mortgage Association (GNMA) loans that are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs. Although both principal and interest are insured, the insured interest rate may be different than the original contractual interest rate prior to modification, resulting in interest impairment under a discounted cash flow methodology. | |
(2) | Includes $13,973 million and $3,468 million of impaired loans with a related allowance of $2,754 million and $816 million at September 30, 2009, and December 31, 2008, respectively. The remaining impaired loans do not have a related allowance. |
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Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Balance, beginning of period | $ | 23,530 | 7,517 | 21,711 | 5,518 | |||||||||||
Provision for credit losses | 6,111 | 2,495 | 15,755 | 7,535 | ||||||||||||
Loan charge-offs: | ||||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||
Commercial | (986 | ) | (305 | ) | (2,337 | ) | (897 | ) | ||||||||
Real estate mortgage | (215 | ) | (9 | ) | (398 | ) | (19 | ) | ||||||||
Real estate construction | (254 | ) | (36 | ) | (595 | ) | (93 | ) | ||||||||
Lease financing | (88 | ) | (19 | ) | (173 | ) | (44 | ) | ||||||||
Total commercial and commercial real estate | (1,543 | ) | (369 | ) | (3,503 | ) | (1,053 | ) | ||||||||
Consumer: | ||||||||||||||||
Real estate 1-4 family first mortgage | (1,015 | ) | (146 | ) | (2,229 | ) | (330 | ) | ||||||||
Real estate 1-4 family junior lien mortgage | (1,340 | ) | (669 | ) | (3,428 | ) | (1,476 | ) | ||||||||
Credit card | (691 | ) | (396 | ) | (2,025 | ) | (1,078 | ) | ||||||||
Other revolving credit and installment | (860 | ) | (586 | ) | (2,562 | ) | (1,617 | ) | ||||||||
Total consumer | (3,906 | ) | (1,797 | ) | (10,244 | ) | (4,501 | ) | ||||||||
Foreign | (71 | ) | (59 | ) | (181 | ) | (185 | ) | ||||||||
Total loan charge-offs | (5,520 | ) | (2,225 | ) | (13,928 | ) | (5,739 | ) | ||||||||
Loan recoveries: | ||||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||
Commercial | 62 | 27 | 153 | 90 | ||||||||||||
Real estate mortgage | 6 | 1 | 22 | 4 | ||||||||||||
Real estate construction | 5 | — | 11 | 2 | ||||||||||||
Lease financing | 6 | 3 | 13 | 9 | ||||||||||||
Total commercial and commercial real estate | 79 | 31 | 199 | 105 | ||||||||||||
Consumer: | ||||||||||||||||
Real estate 1-4 family first mortgage | 49 | 7 | 114 | 20 | ||||||||||||
Real estate 1-4 family junior lien mortgage | 49 | 28 | 119 | 63 | ||||||||||||
Credit card | 43 | 35 | 131 | 113 | ||||||||||||
Other revolving credit and installment | 178 | 117 | 580 | 363 | ||||||||||||
Total consumer | 319 | 187 | 944 | 559 | ||||||||||||
Foreign | 11 | 12 | 30 | 40 | ||||||||||||
Total loan recoveries | 409 | 230 | 1,173 | 704 | ||||||||||||
Net loan charge-offs (1) | (5,111 | ) | (1,995 | ) | (12,755 | ) | (5,035 | ) | ||||||||
Allowances related to business combinations/other | (2 | ) | 10 | (183 | ) | 9 | ||||||||||
Balance, end of period | $ | 24,528 | 8,027 | 24,528 | 8,027 | |||||||||||
Components: | ||||||||||||||||
Allowance for loan losses | $ | 24,028 | 7,865 | 24,028 | 7,865 | |||||||||||
Reserve for unfunded credit commitments | 500 | 162 | 500 | 162 | ||||||||||||
Allowance for credit losses | $ | 24,528 | 8,027 | 24,528 | 8,027 | |||||||||||
Net loan charge-offs (annualized) as a percentage of average total loans (1) | 2.50 | % | 1.96 | 2.05 | 1.71 | |||||||||||
Allowance for loan losses as a percentage of total loans (2) | 3.00 | 1.91 | 3.00 | 1.91 | ||||||||||||
Allowance for credit losses as a percentage of total loans (2) | 3.07 | 1.95 | 3.07 | 1.95 |
(1) | For PCI loans charge-offs are only recorded to the extent that losses exceed the purchase accounting estimates. | |
(2) | The allowance for loan losses and the allowance for credit losses include $233 million at September 30, 2009, and none for prior periods related to PCI loans acquired from Wachovia. Loans acquired from Wachovia are included in total loans net of related purchase accounting net write-downs. |
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Dec. 31, 2008 | ||||
(in millions) | (refined) | |||
Contractually required payments including interest | $ | 115,161 | ||
Nonaccretable difference (1) | (45,231 | ) | ||
Cash flows expected to be collected (2) | 69,930 | |||
Accretable yield | (10,492 | ) | ||
Fair value of loans acquired | $ | 59,438 | ||
(1) | Includes $40.9 billion in principal cash flows not expected to be collected, $2.0 billion of pre-acquisition charge-offs and $2.3 billion of future interest not expected to be collected. | |
(2) | Represents undiscounted expected principal and interest cash flows. |
Quarter ended | Nine months ended | |||||||
(in millions) | Sept. 30, 2009 | Sept. 30, 2009 | ||||||
Balance, beginning of period (refined) | $ | (9,452 | ) | (10,492 | ) | |||
Accretion | 892 | 1,952 | ||||||
Increase in expected cash flows (1) | (5,663 | ) | (5,683 | ) | ||||
Balance, end of period | $ | (14,223 | ) | (14,223 | ) | |||
(1) | Represents increases in interest cash flows due to the impact of modifications incorporated into the quarterly assessment of expected future cash flows and/or changes in interest rates on variable rate loans and amounts reclassified from nonaccretable difference. |
Commercial, | ||||||||||||||||
CRE and | Other | |||||||||||||||
(in millions) | foreign | consumer | Pick-a-Pay | Total | ||||||||||||
Balance at December 31, 2008 | $ | — | — | — | — | |||||||||||
Provision for losses due to credit deterioration | 580 | — | — | 580 | ||||||||||||
Charge-offs | (347 | ) | — | — | (347 | ) | ||||||||||
Balance at September 30, 2009 | $ | 233 | — | — | 233 | |||||||||||
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Sept. 30, | Dec. 31, | |||||||
(in millions) | 2009 | 2008 | ||||||
Nonmarketable equity investments: | ||||||||
Cost method: | ||||||||
Private equity investments | $ | 2,771 | 3,040 | |||||
Federal bank stock | 6,163 | 6,106 | ||||||
Total cost method | 8,934 | 9,146 | ||||||
Equity method | 5,978 | 6,358 | ||||||
Principal investments (1) | 1,264 | 1,278 | ||||||
Total nonmarketable equity investments (2) | 16,176 | 16,782 | ||||||
Corporate/bank-owned life insurance | 19,387 | 18,339 | ||||||
Operating lease assets | 2,556 | 2,251 | ||||||
Accounts receivable | 18,610 | 22,493 | ||||||
Interest receivable | 4,705 | 5,746 | ||||||
Core deposit intangibles | 10,961 | 11,999 | ||||||
Customer relationship and other intangibles | 2,519 | 3,516 | ||||||
Net deferred tax assets | 4,091 | 13,864 | ||||||
Foreclosed assets: | ||||||||
GNMA loans (3) | 840 | 667 | ||||||
Other | 1,687 | 1,526 | ||||||
Due from customers on acceptances | 931 | 615 | ||||||
Other | 16,364 | 12,003 | ||||||
Total other assets | $ | 98,827 | 109,801 | |||||
(1) | Principal investments are recorded at fair value with realized and unrealized gains (losses) included in net gains (losses) from equity investments in the income statement. | |
(2) | Certain amounts in the above table have been reclassified to conform to the current presentation. | |
(3) | Consistent with regulatory reporting requirements, foreclosed assets include foreclosed real estate securing GNMA loans. Both principal and interest for GNMA loans secured by the foreclosed real estate are collectible because the GNMA loans are insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Net gains (losses) from private equity investments (1) | $ | (95 | ) | (24 | ) | (386 | ) | 340 | ||||||||
Net gains (losses) from principal investments | 6 | — | (9 | ) | — | |||||||||||
Net gains (losses) from all other nonmarketable equity investments | (37 | ) | 26 | (180 | ) | 36 | ||||||||||
Net gains (losses) from nonmarketable equity investments | $ | (126 | ) | 2 | (575 | ) | 376 | |||||||||
(1) | Net gains in 2008 include $334 million gain from our ownership in Visa, which completed its initial public offering in March 2008. |
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• | underwriting securities issued by SPEs and subsequently making markets in those securities; | |
• | providing liquidity facilities to support short-term obligations of SPEs issued to third party investors; | |
• | providing credit enhancement on securities issued by SPEs or market value guarantees of assets held by SPEs through the use of letters of credit, financial guarantees, credit default swaps and total return swaps; | |
• | entering into other derivative contracts with SPEs; | |
• | holding senior or subordinated interests in SPEs; | |
• | acting as servicer or investment manager for SPEs; and | |
• | providing administrative or trustee services to SPEs. |
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Transfers that | ||||||||||||||||||||
VIEs that we | VIEs | we account | ||||||||||||||||||
do not | that we | for as secured | ||||||||||||||||||
(in millions) | QSPEs | consolidate(1) | consolidate | borrowings | Total | |||||||||||||||
December 31, 2008 | ||||||||||||||||||||
Cash | $ | — | — | 117 | 287 | 404 | ||||||||||||||
Trading account assets | 1,261 | 5,241 | 71 | 141 | 6,714 | |||||||||||||||
Securities (2) | 18,078 | 15,168 | 922 | 6,094 | 40,262 | |||||||||||||||
Mortgages held for sale | 56 | — | — | — | 56 | |||||||||||||||
Loans (3) | — | 16,882 | 217 | 4,126 | 21,225 | |||||||||||||||
Mortgage servicing rights (4) | 15,146 | — | — | — | 15,146 | |||||||||||||||
Other assets | 345 | 5,022 | 2,416 | 55 | 7,838 | |||||||||||||||
Total assets | 34,886 | 42,313 | 3,743 | 10,703 | 91,645 | |||||||||||||||
Short-term borrowings | — | — | 307 | 1,440 | 1,747 | |||||||||||||||
Accrued expenses and other liabilities | 528 | 1,976 | 330 | 26 | 2,860 | |||||||||||||||
Long-term debt | — | — | 1,773 | 7,125 | 8,898 | |||||||||||||||
Noncontrolling interests | — | — | 121 | — | 121 | |||||||||||||||
Total liabilities and noncontrolling interests | 528 | 1,976 | 2,531 | 8,591 | 13,626 | |||||||||||||||
Net assets | $ | 34,358 | 40,337 | 1,212 | 2,112 | 78,019 | ||||||||||||||
September 30, 2009 | ||||||||||||||||||||
Cash | $ | — | — | 179 | 321 | 500 | ||||||||||||||
Trading account assets | 903 | 5,215 | 77 | 89 | 6,284 | |||||||||||||||
Securities(2) | 18,673 | 14,571 | 1,316 | 6,932 | 41,492 | |||||||||||||||
Mortgages held for sale | — | — | — | — | — | |||||||||||||||
Loans(3) | — | 16,455 | 582 | 2,785 | 19,822 | |||||||||||||||
Mortgage servicing rights | 14,906 | 7 | — | — | 14,913 | |||||||||||||||
Other assets | 235 | 5,658 | 2,578 | 63 | 8,534 | |||||||||||||||
Total assets | 34,717 | 41,906 | 4,732 | 10,190 | 91,545 | |||||||||||||||
Short-term borrowings | — | — | 399 | 2,128 | 2,527 | |||||||||||||||
Accrued expenses and other liabilities | 1,014 | 2,997 | 670 | 4,440 | 9,121 | |||||||||||||||
Long-term debt | — | — | 1,407 | 2,644 | 4,051 | |||||||||||||||
Noncontrolling interests | — | — | 76 | — | 76 | |||||||||||||||
Total liabilities and noncontrolling interests | 1,014 | 2,997 | 2,552 | 9,212 | 15,775 | |||||||||||||||
Net assets | $ | 33,703 | 38,909 | 2,180 | 978 | 75,770 | ||||||||||||||
(1) | Reverse repurchase agreements of $537 million are included in other assets at September 30, 2009. These instruments were included in loans at December 31, 2008, in the amount of $349 million. | |
(2) | Excludes certain debt securities related to loans serviced for the Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation (FHLMC) and GNMA. | |
(3) | Excludes related allowance for loan losses. | |
(4) | For December 31, 2008, the balance related to QSPEs involving mortgage servicing rights has been revised to reflect current information. |
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Other | ||||||||||||||||||||||||
Total | Debt and | commitments | ||||||||||||||||||||||
QSPE | equity | Servicing | and | Net | ||||||||||||||||||||
(in millions) | assets (1) | interests (2) | assets | Derivatives | guarantees | assets | ||||||||||||||||||
December 31, 2008 | Carrying value — asset (liability) | |||||||||||||||||||||||
Residential mortgage loan securitizations (3): | ||||||||||||||||||||||||
Conforming (4) and GNMA | $ | 1,008,824 | 10,207 | 11,715 | — | (426 | ) | 21,496 | ||||||||||||||||
Other/nonconforming | 313,447 | 7,262 | 2,276 | 30 | (85 | ) | 9,483 | |||||||||||||||||
Commercial mortgage securitizations | 355,267 | 1,452 | 1,098 | 524 | (14 | ) | 3,060 | |||||||||||||||||
Auto loan securitizations | 4,133 | 72 | — | 43 | — | 115 | ||||||||||||||||||
Student loan securitizations | 2,765 | 76 | 57 | — | — | 133 | ||||||||||||||||||
Other | 11,877 | 74 | — | (3 | ) | — | 71 | |||||||||||||||||
Total | $ | 1,696,313 | 19,143 | 15,146 | 594 | (525 | ) | 34,358 | ||||||||||||||||
Maximum exposure to loss | ||||||||||||||||||||||||
Residential mortgage loan securitizations (3): | ||||||||||||||||||||||||
Conforming (4) and GNMA | $ | 10,207 | 11,715 | — | 647 | 22,569 | ||||||||||||||||||
Other/nonconforming | 7,262 | 2,276 | 300 | 71 | 9,909 | |||||||||||||||||||
Commercial mortgage securitizations | 1,452 | 1,098 | 524 | 3,302 | 6,376 | |||||||||||||||||||
Auto loan securitizations | 72 | — | 43 | — | 115 | |||||||||||||||||||
Student loan securitizations | 76 | 57 | — | — | 133 | |||||||||||||||||||
Other | 74 | — | 1,465 | 37 | 1,576 | |||||||||||||||||||
Total | $ | 19,143 | 15,146 | 2,332 | 4,057 | 40,678 | ||||||||||||||||||
September 30, 2009 | Carrying value – asset (liability) | |||||||||||||||||||||||
Residential mortgage loan securitizations: | ||||||||||||||||||||||||
Conforming (4)and GNMA | $ | 1,116,937 | 9,685 | 12,298 | — | (738 | ) | 21,245 | ||||||||||||||||
Other/nonconforming | 280,304 | 7,627 | 1,691 | 17 | (44 | ) | 9,291 | |||||||||||||||||
Commercial mortgage securitizations | 384,716 | 1,691 | 865 | 299 | (20 | ) | 2,835 | |||||||||||||||||
Auto loan securitizations | 2,723 | 131 | — | 26 | — | 157 | ||||||||||||||||||
Student loan securitizations | 2,675 | 115 | 52 | — | — | 167 | ||||||||||||||||||
Other | 8,854 | 8 | — | — | — | 8 | ||||||||||||||||||
Total | $ | 1,796,209 | 19,257 | 14,906 | 342 | (802 | ) | 33,703 | ||||||||||||||||
Maximum exposure to loss | ||||||||||||||||||||||||
Residential mortgage loan securitizations: | ||||||||||||||||||||||||
Conforming (4)and GNMA | $ | 9,685 | 12,298 | — | 1,511 | 23,494 | ||||||||||||||||||
Other/nonconforming | 7,627 | 1,691 | 231 | 44 | 9,593 | |||||||||||||||||||
Commercial mortgage securitizations | 1,691 | 865 | 555 | 3,230 | 6,341 | |||||||||||||||||||
Auto loan securitizations | 131 | — | 26 | — | 157 | |||||||||||||||||||
Student loan securitizations | 115 | 52 | — | — | 167 | |||||||||||||||||||
Other | 8 | — | — | 36 | 44 | |||||||||||||||||||
Total | $ | 19,257 | 14,906 | 812 | 4,821 | 39,796 | ||||||||||||||||||
(1) | Represents the remaining principal balance of assets held by QSPEs using the most current information available. | |
(2) | Excludes certain debt securities held related to loans serviced for FNMA, FHLMC and GNMA. | |
(3) | For December 31, 2008, certain balances related to QSPEs involving residential mortgage loan securitizations have been revised to reflect current information. | |
(4) | Conforming residential mortgage loan securitizations are those that are guaranteed by government-sponsored entities (GSEs). |
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Quarter ended Sept. 30, 2009 | Nine months ended Sept. 30, 2009 | ||||||||||||||||
Other | Other | ||||||||||||||||
Mortgage | financial | Mortgage | financial | ||||||||||||||
(in millions) | loans | assets | loans | assets | |||||||||||||
Sales proceeds from securitizations (1) | $ | 103,033 | — | 304,378 | — | ||||||||||||
Servicing fees | 1,079 | 10 | 3,163 | 33 | |||||||||||||
Other interests held | 565 | 74 | 1,728 | 190 | |||||||||||||
Purchases of delinquent assets | 13 | — | 37 | — | |||||||||||||
Net servicing advances | 70 | — | 199 | — | |||||||||||||
(1) | Represents cash flow data for all loans securitized in the periods presented. |
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Other interests held (1) | |||||||||||||||||||||
Mortgage | Interest- | ||||||||||||||||||||
servicing | only | Subordinated | Senior | ||||||||||||||||||
(in millions) | rights | strips | bonds (2) | bonds (3) | |||||||||||||||||
Fair value of interests held | $ | 15,777 | 514 | 598 | 6,348 | ||||||||||||||||
Expected weighted-average life (in years) | 5.4 | 5.0 | 4.4 | 6.5 | |||||||||||||||||
Prepayment speed assumption (annual CPR) | 14.5 | % | 13.7 | 9.8 | 8.8 | ||||||||||||||||
Decrease in fair value from: | |||||||||||||||||||||
10% adverse change | $ | 715 | 16 | 2 | 34 | ||||||||||||||||
25% adverse change | 1,676 | 37 | 6 | 90 | |||||||||||||||||
Discount rate assumption | 8.8 | % | 20.5 | 14.0 | 8.5 | ||||||||||||||||
Decrease in fair value from: | |||||||||||||||||||||
100 basis point increase | $ | 688 | 14 | 18 | 246 | ||||||||||||||||
200 basis point increase | 1,320 | 26 | 35 | 468 | |||||||||||||||||
Credit loss assumption | 6.2 | % | 4.8 | ||||||||||||||||||
Decrease in fair value from: | |||||||||||||||||||||
10% higher losses | 22 | 8 | |||||||||||||||||||
25% higher losses | 40 | 20 | |||||||||||||||||||
(1) | Excludes securities retained in securitizations issued through GSEs such as FNMA, FHLMC and GNMA because we do not believe the value of these securities would be materially affected by the adverse changes in assumptions noted in the table. These GSE securities and other interests held presented in this table are included in debt and equity interests in our disclosure of our involvements with QSPEs shown on page 90. | |
(2) | Subordinated interests include only those bonds whose credit rating was below AAA by a major rating agency at issuance. | |
(3) | Senior interests include only those bonds whose credit rating was AAA by a major rating agency at issuance. |
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Net charge-offs | ||||||||||||||||||||
Total loans (1) | Delinquent loans (2) (3) | (recoveries) (3) | ||||||||||||||||||
Sept. 30, | Dec. 31, | Sept. 30, | Dec. 31, | Nine months ended | ||||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | Sept. 30, 2009 | |||||||||||||||
Commercial and commercial real estate: | ||||||||||||||||||||
Commercial | $ | 170,598 | 204,113 | 5,078 | 1,471 | 2,184 | ||||||||||||||
Real estate mortgage | 326,190 | 310,480 | 9,703 | 1,058 | 559 | |||||||||||||||
Real estate construction | 31,719 | 34,676 | 3,641 | 1,221 | 584 | |||||||||||||||
Lease financing | 14,115 | 15,829 | 157 | 92 | 160 | |||||||||||||||
Total commercial and commercial real estate | 542,622 | 565,098 | 18,579 | 3,842 | 3,487 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Real estate 1-4 family first mortgage | 1,273,320 | 1,165,456 | 16,529 | 6,849 | 3,050 | |||||||||||||||
Real estate 1-4 family junior lien mortgage | 108,002 | 115,308 | 2,541 | 1,421 | 3,325 | |||||||||||||||
Credit card | 23,597 | 23,555 | 683 | 687 | 1,894 | |||||||||||||||
Other revolving credit and installment | 100,449 | 104,886 | 1,574 | 1,427 | 2,070 | |||||||||||||||
Total consumer | 1,505,368 | 1,409,205 | 21,327 | 10,384 | 10,339 | |||||||||||||||
Foreign | 30,282 | 33,882 | 220 | 91 | 151 | |||||||||||||||
Total loans owned and securitized | 2,078,272 | 2,008,185 | 40,126 | 14,317 | 13,977 | |||||||||||||||
Less: | ||||||||||||||||||||
Securitized loans | 1,236,936 | 1,117,039 | ||||||||||||||||||
Mortgages held for sale | 35,538 | 20,088 | ||||||||||||||||||
Loans held for sale | 5,846 | 6,228 | ||||||||||||||||||
Total loans held | $ | 799,952 | 864,830 | |||||||||||||||||
(1) | Represents loans in the balance sheet or that have been securitized and includes residential mortgages sold to FNMA, FHLMC and GNMA and securitizations where servicing is our only form of continuing involvement. | |
(2) | Delinquent loans are 90 days or more past due and still accruing interest as well as nonaccrual loans. | |
(3) | Delinquent loans and net charge-offs exclude loans sold to FNMA, FHLMC and GNMA. We continue to service the loans and would only experience a loss if required to repurchase a delinquent loan due to a breach in original representations and warranties associated with our underwriting standards. |
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Loans, | ||||||||||||||||||||
debt | Other | |||||||||||||||||||
Total | securities | commitments | ||||||||||||||||||
VIE | and equity | and | Net | |||||||||||||||||
(in millions) | assets (1) | interests | Derivatives | guarantees | assets | |||||||||||||||
December 31, 2008 | Carrying value — asset (liability) | |||||||||||||||||||
Collateralized debt obligations (2) | $ | 54,294 | 14,080 | 1,053 | — | 15,133 | ||||||||||||||
Wachovia administered ABCP conduit | 10,767 | — | — | — | — | |||||||||||||||
Asset-based finance structures | 11,614 | 9,232 | (136 | ) | — | 9,096 | ||||||||||||||
Tax credit structures | 22,882 | 4,366 | — | (516 | ) | 3,850 | ||||||||||||||
Collateralized loan obligations | 23,339 | 3,217 | 109 | — | 3,326 | |||||||||||||||
Investment funds | 105,808 | 3,543 | — | — | 3,543 | |||||||||||||||
Credit-linked note structures | 12,993 | 50 | 1,472 | — | 1,522 | |||||||||||||||
Money market funds | 31,843 | 50 | 10 | — | 60 | |||||||||||||||
Other (3) | 1,832 | 3,983 | (36 | ) | (141 | ) | 3,806 | |||||||||||||
Total | $ | 275,372 | 38,521 | 2,472 | (657 | ) | 40,336 | |||||||||||||
Maximum exposure to loss | ||||||||||||||||||||
Collateralized debt obligations | $ | 14,080 | 4,849 | 1,514 | 20,443 | |||||||||||||||
Wachovia administered ABCP conduit | — | 15,824 | — | 15,824 | ||||||||||||||||
Asset-based finance structures | 9,346 | 136 | — | 9,482 | ||||||||||||||||
Tax credit structures | 4,366 | — | 560 | 4,926 | ||||||||||||||||
Collateralized loan obligations | 3,217 | 109 | 555 | 3,881 | ||||||||||||||||
Investment funds | 3,550 | — | 140 | 3,690 | ||||||||||||||||
Credit-linked note structures | 50 | 2,253 | — | 2,303 | ||||||||||||||||
Money market funds | 50 | 51 | — | 101 | ||||||||||||||||
Other (3) | 3,991 | 130 | 578 | 4,699 | ||||||||||||||||
Total | $ | 38,650 | 23,352 | 3,347 | 65,349 | |||||||||||||||
September 30, 2009 | Carrying value — asset (liability) | |||||||||||||||||||
Collateralized debt obligations | $ | 58,280 | 13,890 | 1,393 | (1,083 | ) | 14,200 | |||||||||||||
Wachovia administered ABCP conduit | 6,536 | — | — | — | - | |||||||||||||||
Asset-based finance structures | 18,366 | 10,512 | (68 | ) | — | 10,444 | ||||||||||||||
Tax credit structures | 27,636 | 4,497 | — | (660 | ) | 3,837 | ||||||||||||||
Collateralized loan obligations | 22,531 | 3,586 | 82 | — | 3,668 | |||||||||||||||
Investment funds | 87,132 | 2,089 | — | — | 2,089 | |||||||||||||||
Credit-linked note structures | 1,846 | 38 | 1,078 | — | 1,116 | |||||||||||||||
Money market funds (4) | 7,469 | — | (9 | ) | — | (9 | ) | |||||||||||||
Other(3) | 8,056 | 3,609 | — | (45 | ) | 3,564 | ||||||||||||||
Total | $ | 237,852 | 38,221 | 2,476 | (1,788 | ) | 38,909 | |||||||||||||
Maximum exposure to loss | ||||||||||||||||||||
Collateralized debt obligations | $ | 13,890 | 3,620 | 33 | 17,543 | |||||||||||||||
Wachovia administered ABCP conduit | — | 6,667 | — | 6,667 | ||||||||||||||||
Asset-based finance structures | 10,512 | 68 | 446 | 11,026 | ||||||||||||||||
Tax credit structures | 4,497 | — | 9 | 4,506 | ||||||||||||||||
Collateralized loan obligations | 3,586 | 82 | 486 | 4,154 | ||||||||||||||||
Investment funds | 2,089 | 500 | 108 | 2,697 | ||||||||||||||||
Credit-linked note structures | 38 | 1,846 | — | 1,884 | ||||||||||||||||
Money market funds (4) | — | 39 | 2 | 41 | ||||||||||||||||
Other(3) | 3,609 | 2 | 210 | 3,821 | ||||||||||||||||
Total | $ | 38,221 | 12,824 | 1,294 | 52,339 | |||||||||||||||
(1) | Represents the remaining principal balance of assets held by unconsolidated VIEs using the most current information available. For VIEs that obtain exposure to assets synthetically through derivative instruments, the remaining notional amount of the derivative is included in the asset balance. | |
(2) | For December 31, 2008, the total VIE assets for VIEs involving CDOs have been revised to reflect current information. | |
(3) | Contains investments in auction rate securities issued by VIEs that we do not sponsor and, accordingly, are unable to obtain the total assets of the entity. | |
(4) | Excludes previously supported money market funds, to which the Company no longer provides non-contractual financial support. |
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A CDO or CLO is a securitization where an SPE purchases a pool of assets consisting of asset-backed securities or loans and issues multiple tranches of equity or notes to investors. In some transactions a portion of the assets are obtained synthetically through the use of derivatives such as credit default swaps or total return swaps. Generally, CDOs and CLOs are structured on behalf of a third party asset manager that typically selects and manages the assets for the term of the CDO or CLO. Typically, the asset manager has some discretion to manage the sale of assets of, or derivatives used by the CDOs and CLOs.
We administer a multi-seller asset-backed commercial paper (ABCP) conduit that arranges financing for certain client transactions. We acquired the relationship with this conduit in the Wachovia merger. This conduit is a bankruptcy remote entity that makes loans to, or purchases certificated interests from SPEs established by our clients (sellers) and which are secured by pools of financial assets. The conduit funds
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Sept. 30, 2009 | Dec. 31, 2008 | |||||||||||||||
Funded | Total | Funded | Total | |||||||||||||
asset | committed | asset | committed | |||||||||||||
composition | exposure | composition | exposure | |||||||||||||
Auto loans | 22.3 | % | 21.9 | 34.1 | 26.7 | |||||||||||
Commercial and middle market loans | 50.2 | 46.0 | 27.6 | 32.6 | ||||||||||||
Equipment loans | 17.5 | 15.4 | 14.4 | 11.4 | ||||||||||||
Trade receivables | 4.3 | 10.8 | 8.8 | 10.9 | ||||||||||||
Credit cards | 0.4 | 2.2 | 7.0 | 7.9 | ||||||||||||
Leases | 2.7 | 1.9 | 6.1 | 7.0 | ||||||||||||
Other | 2.6 | 1.8 | 2.0 | 3.5 | ||||||||||||
Total | 100.0 | % | 100.0 | 100.0 | 100.0 | |||||||||||
Sept. 30, 2009 | Dec. 31, 2008 | |||||||||||||||
Funded | Total | Funded | Total | |||||||||||||
asset | committed | asset | committed | |||||||||||||
composition | exposure | composition | exposure | |||||||||||||
AAA | 0.4 | % | 2.2 | 9.4 | 10.4 | |||||||||||
AA | 8.5 | 7.3 | 8.3 | 11.7 | ||||||||||||
A | 47.3 | 55.4 | 52.2 | 51.5 | ||||||||||||
BBB/BB/B | 43.8 | 35.1 | 30.1 | 26.4 | ||||||||||||
Total | 100.0 | % | 100.0 | 100.0 | 100.0 | |||||||||||
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We engage in various forms of structured finance arrangements with VIEs that are collateralized by various asset classes including energy contracts, auto and other transportation leases, intellectual property, equipment and general corporate credit. We typically provide senior financing, and may act as an interest rate swap or commodity derivative counterparty when necessary. In most cases, we are not the primary beneficiary of these structures because we do not retain a majority of the variability in these transactions.
We make passive investments in affordable housing and sustainable energy projects that are designed to generate a return primarily through the realization of federal tax credits. In some instances, our investments in these structures may require that we fund future capital commitments at the discretion of the project sponsors. While the size of our investment in a single entity may at times exceed 50% of the outstanding equity interests, we do not consolidate these structures due to performance guarantees provided by the project sponsors giving them a majority of the variability.
At September 30, 2009, we had investments of $1.0 billion and lending arrangements of $537 million with certain funds managed by one of our majority owned subsidiaries compared with investments of $2.1 billion and lending arrangements of $349 million at December 31, 2008. In addition, we also provide a default protection agreement to a third party lender to one of these funds. Our involvements in these funds are either senior or of equal priority to third party investors. We do not consolidate the investment funds because we do not absorb the majority of the expected future variability associated with the funds’ assets, including variability associated with credit, interest rate and liquidity risks.
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We entered into a capital support agreement in first quarter 2008 for up to $130 million related to an investment in a structured investment vehicle (SIV) held by our AAA-rated non-government money market funds. We entered into this agreement in order to maintain a AAA credit rating and a net asset value of $1.00 for the funds. In third quarter 2008, we fulfilled our obligation under this agreement by purchasing the SIV investment from the funds. At September 30, 2009, we had remaining outstanding support agreements of $41 million to certain other funds to support the value of certain investments held by those funds. We recorded a loss of $50 million in the first nine months of 2009 and a liability of $9 million at September 30, 2009, in connection with support agreements. We do not consolidate these funds because we do not absorb the majority of the expected future variability associated with the fund’s assets. We are generally not responsible for investment losses incurred by our funds, and we do not have a contractual or implicit obligation to indemnify such losses or provide additional support to the funds. While we elected to enter into the capital support agreements for the funds, we are not obligated and may elect not to provide additional support to these funds or other funds in the future. In addition, in third quarter 2009, we purchased additional SIV investments from the AAA-rated non-government money market funds at an amortized cost of $38 million which, upon recording at fair value, resulted in a loss of $21 million. At September 30, 2009, the SIV investments were recorded as debt securities in our securities available-for-sale portfolio.
We enter into credit-linked note structures for two separate purposes. First and primarily, we structure transactions for clients designed to provide investors with specified returns based on the returns of an underlying security, loan or index. Second, in certain situations, we also use credit-linked note structures to reduce risk-weighted assets for determining regulatory capital ratios by structuring similar transactions that are indexed to the returns of a pool of underlying loans that we own. These transactions reduce our risk-weighted assets because they transfer a portion of the credit risk in the indexed pool of loans to the holders of the credit-linked notes. Both of these types of transactions result in the issuance of credit-linked notes and typically involve a bankruptcy remote SPE that synthetically obtains exposure to the underlying loans through a derivative instrument such as a written credit default swap or total return swap. The SPE issues notes to investors based on the referenced underlying securities or loans. Proceeds received from the issuance of these notes are usually invested in investment grade financial assets. We are typically the derivative counterparty to these transactions and administrator responsible for investing the note proceeds. We do not consolidate these SPEs because we typically do not hold any of the notes that they issue.
In August 2008, Wachovia reached an agreement to purchase at par auction rate securities (ARS) that were sold to third party investors by two of its subsidiaries. ARS are debt instruments with long-term maturities, but which reprice more frequently. Certain of these securities were issued by VIEs. At September 30, 2009, we held in our securities available-for-sale portfolio $3.1 billion of ARS issued by VIEs that we redeemed pursuant to this agreement, compared with $3.7 billion at December 31, 2008. At December 31, 2008, we had a liability on our balance sheet of $91 million for additional losses on anticipated future redemptions of ARS issued by VIEs. We did not have a liability related to this event at September 30, 2009. Were we to redeem all remaining ARS issued by VIEs that are subject to the agreement, our estimated maximum exposure to loss would have been $620 million at December 31, 2008; however, certain of these securities may be repaid in full by the issuer prior to redemption. We do not consolidate the VIEs that issued the ARS because we do not expect to absorb the majority of the expected future variability associated with the VIEs’ assets.
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In addition to the involvements disclosed in the following table, we had $18.9 billion of debt financing through the issuance of trust preferred securities at September 30, 2009. In these transactions, VIEs that we wholly own issue preferred equity or debt securities to third party investors. All of the proceeds of the issuance are invested in debt securities that we issue to the VIEs. In certain instances, we may provide liquidity to third party investors that purchase long-term securities that reprice frequently issued by VIEs. The VIEs’ operations and cash flows relate only to the issuance, administration and repayment of the securities held by third parties. We do not consolidate these VIEs because the VIEs’ sole assets are receivables from us. This is the case even though we own all of the VIEs’ voting equity shares, have fully guaranteed the VIEs’ obligations and may have the right to redeem the third party securities under certain circumstances. We report the debt securities that we issue to the VIEs as long-term debt in our consolidated balance sheet.
Carrying value (1) | ||||||||||||||||
Total | Third | |||||||||||||||
VIE | Consolidated | party | Noncontrolling | |||||||||||||
(in millions) | assets | assets | liabilities | interests | ||||||||||||
December 31, 2008 | ||||||||||||||||
Secured borrowings: | ||||||||||||||||
Municipal tender option bond securitizations | $ | 6,358 | 6,280 | 4,765 | — | |||||||||||
Auto loan securitizations | 2,134 | 2,134 | 1,869 | — | ||||||||||||
Commercial real estate loans | 1,294 | 1,294 | 1,258 | — | ||||||||||||
Residential mortgage securitizations | 1,124 | 995 | 699 | — | ||||||||||||
Total secured borrowings | 10,910 | 10,703 | 8,591 | — | ||||||||||||
Consolidated VIEs: | ||||||||||||||||
Structured asset finance | 3,491 | 1,666 | 1,481 | 13 | ||||||||||||
Investment funds | 1,119 | 1,070 | 155 | 97 | ||||||||||||
Other | 1,007 | 1,007 | 774 | 11 | ||||||||||||
Total consolidated VIEs | 5,617 | 3,743 | 2,410 | 121 | ||||||||||||
Total secured borrowings and consolidated VIEs | $ | 16,527 | 14,446 | 11,001 | 121 | |||||||||||
September 30, 2009 | ||||||||||||||||
Secured borrowings: | ||||||||||||||||
Municipal tender option bond securitizations | $ | 7,197 | 7,045 | 6,565 | — | |||||||||||
Auto loan securitizations | 1,005 | 1,005 | 801 | — | ||||||||||||
Commercial real estate loans | 1,309 | 1,309 | 1,267 | — | ||||||||||||
Residential mortgage securitizations | 944 | 831 | 579 | — | ||||||||||||
Total secured borrowings | 10,455 | 10,190 | 9,212 | — | ||||||||||||
Consolidated VIEs: | ||||||||||||||||
Structured asset finance | 2,839 | 1,106 | 1,112 | 15 | ||||||||||||
Investment funds | 2,117 | 2,109 | 265 | 45 | ||||||||||||
Other | 1,809 | 1,517 | 1,099 | 16 | ||||||||||||
Total consolidated VIEs | 6,765 | 4,732 | 2,476 | 76 | ||||||||||||
Total secured borrowings and consolidated VIEs | $ | 17,220 | 14,922 | 11,688 | 76 | |||||||||||
(1) | Amounts exclude loan loss reserves, and total assets may differ from consolidated assets due to the different measurement methods used depending on the assets’ classifications. |
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Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Fair value, beginning of period | $ | 15,690 | 19,333 | 14,714 | 16,763 | |||||||||||
Purchases | — | 57 | — | 191 | ||||||||||||
Acquired from Wachovia (1) | — | — | 34 | — | ||||||||||||
Servicing from securitizations or asset transfers | 1,517 | 851 | 5,045 | 2,642 | ||||||||||||
Sales | — | — | — | (269 | ) | |||||||||||
Net additions | 1,517 | 908 | 5,079 | 2,564 | ||||||||||||
Changes in fair value: | ||||||||||||||||
Due to changes in valuation model inputs or assumptions (2) | (2,078 | ) | (546 | ) | (2,586 | ) | 1,788 | |||||||||
Other changes in fair value (3) | (629 | ) | (511 | ) | (2,707 | ) | (1,931 | ) | ||||||||
Total changes in fair value | (2,707 | ) | (1,057 | ) | (5,293 | ) | (143 | ) | ||||||||
Fair value, end of period | $ | 14,500 | 19,184 | 14,500 | 19,184 | |||||||||||
(1) | Reflects refinements to initial December 31, 2008, Wachovia purchase accounting adjustments. | |
(2) | Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. | |
(3) | Represents changes due to collection/realization of expected cash flows over time. |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Balance, beginning of period | $ | 1,205 | 442 | 1,446 | 466 | |||||||||||
Purchases (1) | — | 2 | 10 | 7 | ||||||||||||
Acquired from Wachovia (2) | — | — | (135 | ) | — | |||||||||||
Servicing from securitizations or asset transfers (1) | 21 | 8 | 43 | 17 | ||||||||||||
Amortization | (64 | ) | (19 | ) | (202 | ) | (57 | ) | ||||||||
Balance, end of period (3) | $ | 1,162 | 433 | 1,162 | 433 | |||||||||||
Fair value of amortized MSRs: | ||||||||||||||||
Beginning of period | $ | 1,311 | 595 | 1,555 | 573 | |||||||||||
End of period | 1,277 | 622 | 1,277 | 622 | ||||||||||||
(1) | Based on September 30, 2009, assumptions, the weighted-average amortization period for MSRs added during the third quarter and first nine months of 2009 was approximately 19.9 years and 17.7 years, respectively. | |
(2) | Reflects refinements to initial December 31, 2008, Wachovia purchase accounting adjustments. | |
(3) | There was no valuation allowance recorded for the periods presented. Commercial MSRs are evaluated for impairment purposes by the following asset classes: agency and non-agency commercial mortgage-backed securities (MBS), and loans. |
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Sept. 30, | Dec. 31, | |||||||
(in billions) | 2009 | 2008 | ||||||
Residential mortgage loans serviced for others (1) | $ | 1,419 | 1,388 | |||||
Owned loans serviced (2) | 260 | 268 | ||||||
Total owned servicing of residential mortgage loans | 1,679 | 1,656 | ||||||
Commercial mortgage loans serviced for others | 458 | 472 | ||||||
Total owned servicing of loans | 2,137 | 2,128 | ||||||
Sub-servicing | 21 | 26 | ||||||
Total managed servicing portfolio | $ | 2,158 | 2,154 | |||||
Ratio of MSRs to related loans serviced for others | 0.83 | % | 0.87 | |||||
(1) | Consists of 1-4 family first mortgage loans. | |
(2) | Consists of mortgages held for sale and 1-4 family first mortgage loans. |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Servicing income, net: | ||||||||||||||||
Servicing fees | $ | 1,039 | 980 | 2,945 | 2,903 | |||||||||||
Changes in fair value of residential MSRs: | ||||||||||||||||
Due to changes in valuation model inputs or assumptions (1) | (2,078 | ) | (546 | ) | (2,586 | ) | 1,788 | |||||||||
Other changes in fair value (2) | (629 | ) | (511 | ) | (2,707 | ) | (1,931 | ) | ||||||||
Total changes in fair value of residential MSRs | (2,707 | ) | (1,057 | ) | (5,293 | ) | (143 | ) | ||||||||
Amortization | (64 | ) | (19 | ) | (202 | ) | (57 | ) | ||||||||
Net derivative gains (losses) from economic hedges (3) | 3,605 | 621 | 6,019 | (1,684 | ) | |||||||||||
Total servicing income, net | 1,873 | 525 | 3,469 | 1,019 | ||||||||||||
Net gains on mortgage loan origination/sales activities | 1,125 | 276 | 4,910 | 1,419 | ||||||||||||
All other | 69 | 91 | 238 | 282 | ||||||||||||
Total mortgage banking noninterest income | $ | 3,067 | 892 | 8,617 | 2,720 | |||||||||||
Market-related valuation changes to MSRs, net of hedge results (1)+(3) | $ | 1,527 | 75 | 3,433 | 104 | |||||||||||
(1) | Principally reflects changes in discount rates and prepayment speed assumptions, mostly due to changes in interest rates. | |
(2) | Represents changes due to collection/realization of expected cash flows over time. | |
(3) | Represents results from free-standing derivatives (economic hedges) used to hedge the risk of changes in fair value of MSRs. See Note 11 — Free-Standing Derivatives in this Report for additional discussion and detail. |
Quarter ended Sept. 30, | Nine months ended Sept. 30, | |||||||||||||||
(in millions) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Contractually specified servicing fees | $ | 1,036 | 990 | 3,187 | 2,927 | |||||||||||
Late charges | 75 | 70 | 241 | 214 | ||||||||||||
Ancillary fees | 22 | 33 | 118 | 109 | ||||||||||||
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Sept. 30, 2009 | Dec. 31, 2008 | ||||||||||||||||
Gross | Gross | ||||||||||||||||
carrying | Accumulated | carrying | Accumulated | ||||||||||||||
(in millions) | value | amortization | value | amortization | |||||||||||||
Amortized intangible assets: | |||||||||||||||||
MSRs (1) | $ | 1,588 | 426 | 1,672 | 226 | ||||||||||||
Core deposit intangibles | 14,738 | 3,777 | 14,188 | 2,189 | |||||||||||||
Customer relationship and other intangibles | 3,347 | 842 | 3,988 | 486 | |||||||||||||
Total amortized intangible assets | $ | 19,673 | 5,045 | 19,848 | 2,901 | ||||||||||||
MSRs (carried at fair value)(1) | $ | 14,500 | 14,714 | ||||||||||||||
Goodwill | 24,052 | 22,627 | |||||||||||||||
Trademark | 14 | 14 | |||||||||||||||
(1) | See Note 8 in this Report for additional information on MSRs. |
Customer | ||||||||||||||||
Amortized | Core | relationship | ||||||||||||||
commercial | deposit | and other | ||||||||||||||
(in millions) | MSRs | intangibles | intangibles (1) | Total | ||||||||||||
Nine months ended September 30, 2009 (actual) | $ | 202 | 1,590 | 356 | 2,148 | |||||||||||
Estimate for year ended December 31, | ||||||||||||||||
2009 | $ | 264 | 2,114 | 474 | 2,852 | |||||||||||
2010 | 225 | 1,813 | 379 | 2,417 | ||||||||||||
2011 | 197 | 1,544 | 319 | 2,060 | ||||||||||||
2012 | 159 | 1,352 | 300 | 1,811 | ||||||||||||
2013 | 124 | 1,202 | 278 | 1,604 | ||||||||||||
2014 | 106 | 1,078 | 260 | 1,444 | ||||||||||||
(1) | Includes amortization of lease intangibles reported in occupancy expense of $6 million for the first nine months of 2009, and estimated amortization of $8 million for 2009, $7 million for 2010, $7 million for 2011, $7 million for 2012, $3 million for 2013, and $3 million for 2014. |
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Wealth, | ||||||||||||||||
Community | Wholesale | Brokerage and | Consolidated | |||||||||||||
(in millions) | Banking | Banking | Retirement | Company | ||||||||||||
December 31, 2007 | $ | 10,591 | 2,147 | 368 | 13,106 | |||||||||||
Reduction in goodwill related to divested businesses | — | (1 | ) | — | (1 | ) | ||||||||||
Goodwill from business combinations | 322 | 97 | — | 419 | ||||||||||||
Foreign currency translation adjustments | (4 | ) | — | — | (4 | ) | ||||||||||
September 30, 2008 | $ | 10,909 | 2,243 | 368 | 13,520 | |||||||||||
December 31, 2008 | $ | 16,810 | 5,449 | 368 | 22,627 | |||||||||||
Goodwill from business combinations | 926 | 493 | — | 1,419 | ||||||||||||
Foreign currency translation adjustments | 6 | — | — | 6 | ||||||||||||
September 30, 2009 | $ | 17,742 | 5,942 | 368 | 24,052 | |||||||||||
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Sept. 30, 2009 | Dec. 31, 2008 | ||||||||||||||||||||||||
Maximum | Non- | Maximum | Non- | ||||||||||||||||||||||
Carrying | exposure | investment | Carrying | exposure | investment | ||||||||||||||||||||
(in millions) | value | to loss | grade | value | to loss | grade | |||||||||||||||||||
Standby letters of credit | $ | 145 | 50,895 | 21,861 | 130 | 47,191 | 17,293 | ||||||||||||||||||
Securities lending and other indemnifications | 51 | 25,968 | 5,142 | — | 30,120 | 1,907 | |||||||||||||||||||
Liquidity agreements (1) | 76 | 9,670 | — | 30 | 17,602 | — | |||||||||||||||||||
Written put options (1)(2) | 894 | 8,125 | 4,708 | 1,376 | 10,182 | 5,314 | |||||||||||||||||||
Loans sold with recourse | 84 | 5,501 | 2,463 | 53 | 6,126 | 2,038 | |||||||||||||||||||
Residual value guarantees | 8 | 197 | — | — | 1,121 | — | |||||||||||||||||||
Contingent consideration | 9 | 142 | 101 | 11 | 187 | — | |||||||||||||||||||
Other guarantees | — | 68 | — | — | 38 | — | |||||||||||||||||||
Total guarantees | $ | 1,267 | 100,566 | 34,275 | 1,600 | 112,567 | 26,552 | ||||||||||||||||||
(1) | Certain of these agreements are related to off-balance sheet entities and, accordingly, are also disclosed in Note 7. | |
(2) | Written put options, which are in the form of derivatives, are also included in the derivative disclosures in Note 11. |
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Sept. 30, 2009 | Dec. 31, 2008 | |||||||||||||||||||||||
Notional or | Fair value | Notional or | Fair value | |||||||||||||||||||||
contractual | Asset | Liability | contractual | Asset | Liability | |||||||||||||||||||
(in millions) | amount | derivatives | derivatives | amount | derivatives | derivatives | ||||||||||||||||||
Qualifying hedge contracts(1) | ||||||||||||||||||||||||
Interest rate contracts (2) | $ | 134,050 | 8,263 | 1,771 | 191,972 | 11,511 | 3,287 | |||||||||||||||||
Foreign exchange contracts | 31,467 | 1,883 | 654 | 38,386 | 1,138 | 1,198 | ||||||||||||||||||
Total derivatives designated as qualifying hedging instruments | 10,146 | 2,425 | 12,649 | 4,485 | ||||||||||||||||||||
Derivatives not designated as hedging instruments | ||||||||||||||||||||||||
Free-standing derivatives (economic hedges) (1): | ||||||||||||||||||||||||
Interest rate contracts (3) | 742,002 | 6,418 | 5,798 | 750,728 | 12,635 | 9,708 | ||||||||||||||||||
Equity contracts | 39 | — | 9 | — | — | — | ||||||||||||||||||
Foreign exchange contracts | 7,657 | 197 | 61 | 4,208 | 150 | 325 | ||||||||||||||||||
Credit contracts — protection purchased | 627 | 324 | — | 644 | 528 | — | ||||||||||||||||||
Other derivatives | 4,534 | — | 67 | 4,458 | 108 | 71 | ||||||||||||||||||
Subtotal | 6,939 | 5,935 | 13,421 | 10,104 | ||||||||||||||||||||
Customer accommodation, trading and other free-standing derivatives (4): | ||||||||||||||||||||||||
Interest rate contracts | 2,818,642 | 71,511 | 70,033 | 3,752,656 | 142,739 | 141,508 | ||||||||||||||||||
Commodity contracts | 90,586 | 5,280 | 5,263 | 86,360 | 6,117 | 6,068 | ||||||||||||||||||
Equity contracts | 31,170 | 2,295 | 2,812 | 37,136 | 3,088 | 2,678 | ||||||||||||||||||
Foreign exchange contracts | 200,588 | 3,873 | 3,433 | 273,437 | 7,562 | 7,419 | ||||||||||||||||||
Credit contracts — protection sold | 126,915 | 1,452 | 12,774 | 137,113 | 349 | 20,880 | ||||||||||||||||||
Credit contracts — protection purchased | 133,061 | 12,808 | 1,573 | 140,442 | 22,100 | 1,281 | ||||||||||||||||||
Other derivatives | 1,329 | 571 | 229 | 1,490 | 28 | 150 | ||||||||||||||||||
Subtotal | 97,790 | 96,117 | 181,983 | 179,984 | ||||||||||||||||||||
Total derivatives not designated as hedging instruments | 104,729 | 102,052 | 195,404 | 190,088 | ||||||||||||||||||||
Subtotal | 114,875 | 104,477 | 208,053 | 194,573 | ||||||||||||||||||||
Netting(5) | (86,639 | ) | (95,208 | ) | (168,690 | ) | (182,435 | ) | ||||||||||||||||
Total | $ | 28,236 | 9,269 | 39,363 | 12,138 | |||||||||||||||||||
(1) | Represents asset/liability management hedges, which are included in other assets or other liabilities. | |
(2) | Notional amounts presented exclude $24.6 billion of basis swaps that are combined with receive fixed-rate / pay floating-rate swaps and designated as one hedging instrument. | |
(3) | Includes free-standing derivatives (economic hedges) used to hedge the risk of changes in the fair value of residential MSRs, MHFS, interest rate lock commitments and other interests held. | |
(4) | Customer accommodation, trading and other free-standing derivatives are included in trading assets or other liabilities. | |
(5) | Represents netting of derivative asset and liability balances, and related cash collateral, with the same counterparty subject to master netting arrangements under the accounting guidance covering the offsetting of amounts related to certain contracts. The amount of cash collateral netted against derivative assets and liabilities was $17.6 billion and $5.2 billion, respectively, at September 30, 2009, and $17.7 billion and $22.2 billion, respectively, at December 31, 2008. |
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Interest rate contracts hedging: | Foreign exchange contracts hedging: | |||||||||||||||||||
Securities | Securities | |||||||||||||||||||
available | Long-term | available | Short-term | Long-term | ||||||||||||||||
(in millions) | for sale | debt | for sale | borrowings | debt | |||||||||||||||
Quarter ended September 30, 2009 | ||||||||||||||||||||
Gains (losses) recorded in net interest income | $ | (84 | ) | 484 | (7 | ) | — | 94 | ||||||||||||
Gains (losses) recorded in noninterest income | ||||||||||||||||||||
Recognized on derivatives | (242 | ) | 1,292 | (1 | ) | — | 270 | |||||||||||||
Recognized on hedged item | 253 | (1,297 | ) | 1 | — | (266 | ) | |||||||||||||
Recognized on fair value hedges (ineffective portion) (1) | $ | 11 | (5 | ) | — | — | 4 | |||||||||||||
Nine months ended September 30, 2009 | ||||||||||||||||||||
Gains (losses) recorded in net interest income | $ | (196 | ) | 1,131 | (53 | ) | 28 | 248 | ||||||||||||
Gains (losses) recorded in noninterest income | ||||||||||||||||||||
Recognized on derivatives | 552 | (2,177 | ) | (1 | ) | — | 1,212 | |||||||||||||
Recognized on hedged item | (543 | ) | 2,086 | 1 | — | (1,217 | ) | |||||||||||||
Recognized on fair value hedges (ineffective portion) (1) | $ | 9 | (91 | ) | — | — | (5 | ) | ||||||||||||
(1) | None of the change in value of the derivatives was excluded from the assessment of hedge effectiveness. |
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Quarter ended | Nine months ended | |||||||
(in millions) | Sept. 30, 2009 | Sept. 30, 2009 | ||||||
Gains (after tax) recognized in OCI on derivatives (effective portion) | $ | 196 | 68 | |||||
Gains (pre tax) reclassified from cumulative OCI into net interest income (effective portion) | 129 | 408 | ||||||
Gains (pre tax) recognized in noninterest income on derivatives (ineffective portion) (1) | 27 | 38 | ||||||
(1) | None of the change in value of the derivatives was excluded from the assessment of hedge effectiveness. |
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�� | ||||||||
Quarter ended | Nine months ended | |||||||
(in millions) | Sept. 30, 2009 | Sept. 30, 2009 | ||||||
Free-standing derivatives (economic hedges) | ||||||||
Interest rate contracts (1) | ||||||||
Recognized in noninterest income: | ||||||||
Mortgage banking | $ | 1,780 | 4,836 | |||||
Other | 2 | 1 | ||||||
Foreign exchange contracts | 24 | 6 | ||||||
Equity contracts | — | 2 | ||||||
Credit contracts | (98 | ) | (212 | ) | ||||
Subtotal | 1,708 | 4,633 | ||||||
Customer accommodation, trading and other free-standing derivatives | ||||||||
Interest rate contracts (2) | ||||||||
Recognized in noninterest income: | ||||||||
Mortgage banking | 1,274 | 2,084 | ||||||
Other | 27 | 426 | ||||||
Commodity contracts | 14 | (25 | ) | |||||
Equity contracts | (48 | ) | (229 | ) | ||||
Foreign exchange contracts | 224 | 482 | ||||||
Credit contracts | (459 | ) | (557 | ) | ||||
Other | (10 | ) | (186 | ) | ||||
Subtotal | 1,022 | 1,995 | ||||||
Total | $ | 2,730 | 6,628 | |||||
(1) | Predominantly mortgage banking noninterest income including gains (losses) on the derivatives used as economic hedges of MSRs, interest rate lock commitments, loans held for sale and mortgages held for sale. | |
(2) | Predominantly mortgage banking noninterest income including gains (losses) on interest rate lock commitments. |
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Notional amount | ||||||||||||||||||||||||||||
Protection | Protection | |||||||||||||||||||||||||||
sold | purchased | Net | ||||||||||||||||||||||||||
non- | with | protection | Other | |||||||||||||||||||||||||
Fair value | Protection | investment | identical | sold | protection | Range of | ||||||||||||||||||||||
(in millions) | liability | sold (A) | grade | underlyings (B) | (A) - (B) | purchased | maturities | |||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||
Credit default swaps on: | ||||||||||||||||||||||||||||
Corporate bonds | $ | 9,643 | 83,446 | 39,987 | 31,413 | 52,033 | 50,585 | 2009-2018 | ||||||||||||||||||||
Structured products | 4,940 | 7,451 | 5,824 | 5,061 | 2,390 | 6,559 | 2009-2056 | |||||||||||||||||||||
Credit protection on: | ||||||||||||||||||||||||||||
Credit default swap index | 2,611 | 35,943 | 6,364 | 4,606 | 31,337 | 31,410 | 2009-2017 | |||||||||||||||||||||
Commercial mortgage- backed securities index | 2,231 | 7,291 | 2,938 | 1,521 | 5,770 | 3,919 | 2009-2052 | |||||||||||||||||||||
Asset-backed securities index | 1,331 | 1,526 | 1,116 | 235 | 1,291 | 803 | 2037-2046 | |||||||||||||||||||||
Loan deliverable credit default swaps | 106 | 611 | 592 | 281 | 330 | 1,033 | 2009-2014 | |||||||||||||||||||||
Other | 18 | 845 | 150 | 21 | 824 | — | 2009-2020 | |||||||||||||||||||||
Total credit derivatives | $ | 20,880 | 137,113 | 56,971 | 43,138 | 93,975 | 94,309 | |||||||||||||||||||||
September 30, 2009 | ||||||||||||||||||||||||||||
Credit default swaps on: | ||||||||||||||||||||||||||||
Corporate bonds | $ | 5,388 | 96,314 | 43,263 | 76,085 | 20,229 | 21,996 | 2009-2018 | ||||||||||||||||||||
Structured products | 4,420 | 6,359 | 4,108 | 5,109 | 1,250 | 3,839 | 2009-2056 | |||||||||||||||||||||
Credit protection on: | ||||||||||||||||||||||||||||
Default swap index | 354 | 16,221 | 4,522 | 16,176 | 45 | 150 | 2009-2017 | |||||||||||||||||||||
Commercial mortgage- backed securities index | 1,834 | 4,783 | 13 | 4,664 | 119 | 169 | 2049-2052 | |||||||||||||||||||||
Asset-backed securities index | 758 | 1,260 | 726 | 819 | 441 | 141 | 2037-2052 | |||||||||||||||||||||
Loan deliverable credit default swaps | 19 | 510 | 492 | 12 | 498 | 721 | 2010-2014 | |||||||||||||||||||||
Other | 1 | 1,468 | 841 | 12 | 1,456 | 100 | 2009-2020 | |||||||||||||||||||||
Total credit derivatives | $ | 12,774 | 126,915 | 53,965 | 102,877 | 24,038 | 27,116 | |||||||||||||||||||||
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• | Level 1 — Valuation is based upon quoted prices for identical instruments traded in active markets. | |
• | Level 2 — Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. | |
• | Level 3 — Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. |
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(in millions) | Level 1 | Level 2 | Level 3 | Netting (1) | Total | |||||||||||||||
Balance at December 31, 2008 | ||||||||||||||||||||
Trading assets (excluding derivatives) | $ | 911 | 16,045 | 3,495 | — | 20,451 | ||||||||||||||
Derivatives (trading assets) | 331 | 174,355 | 7,897 | (148,150 | ) | 34,433 | ||||||||||||||
Securities of U.S. Treasury and federal agencies | 3,177 | 72 | — | — | 3,249 | |||||||||||||||
Securities of U.S. states and political subdivisions | 1 | 11,754 | 903 | — | 12,658 | |||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||
Federal agencies | — | 66,430 | 4 | — | 66,434 | |||||||||||||||
Residential | — | 21,320 | 3,510 | — | 24,830 | |||||||||||||||
Commercial | — | 8,192 | 286 | — | 8,478 | |||||||||||||||
Total mortgage-backed securities | — | 95,942 | 3,800 | — | 99,742 | |||||||||||||||
Corporate debt securities | — | 6,642 | 282 | — | 6,924 | |||||||||||||||
Collateralized debt obligations | — | 2 | 2,083 | — | 2,085 | |||||||||||||||
Other | — | 7,976 | 12,799 | — | 20,775 | |||||||||||||||
Total debt securities | 3,178 | 122,388 | 19,867 | — | 145,433 | |||||||||||||||
Marketable equity securities: | ||||||||||||||||||||
Perpetual preferred securities | 886 | 1,065 | 2,775 | — | 4,726 | |||||||||||||||
Other marketable equity securities | 1,099 | 261 | 50 | — | 1,410 | |||||||||||||||
Total marketable equity securities | 1,985 | 1,326 | 2,825 | — | 6,136 | |||||||||||||||
Total securities available for sale | 5,163 | 123,714 | 22,692 | — | 151,569 | |||||||||||||||
Mortgages held for sale | — | 14,036 | 4,718 | — | 18,754 | |||||||||||||||
Loans held for sale | — | 398 | — | — | 398 | |||||||||||||||
Mortgage servicing rights (residential) | — | — | 14,714 | — | 14,714 | |||||||||||||||
Other assets (2) | 3,975 | 21,751 | 2,041 | (20,540 | ) | 7,227 | ||||||||||||||
Total | $ | 10,380 | 350,299 | 55,557 | (168,690 | ) | 247,546 | |||||||||||||
Other liabilities (3) | $ | (4,815 | ) | (187,098 | ) | (9,308 | ) | 182,435 | (18,786 | ) | ||||||||||
Balance at September 30, 2009 | ||||||||||||||||||||
Trading assets (excluding derivatives) | $ | 2,950 | 17,562 | 2,493 | — | 23,005 | ||||||||||||||
Derivatives (trading assets) | 366 | 91,842 | 5,792 | (77,807 | ) | 20,193 | ||||||||||||||
Securities of U.S. Treasury and federal agencies | 1,228 | 1,268 | — | — | 2,496 | |||||||||||||||
Securities of U.S. states and political subdivisions | 4 | 12,664 | 962 | — | 13,630 | |||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||
Federal agencies | — | 87,503 | — | — | 87,503 | |||||||||||||||
Residential | — | 31,686 | 2,406 | — | 34,092 | |||||||||||||||
Commercial | — | 9,404 | 1,860 | — | 11,264 | |||||||||||||||
Total mortgage-backed securities | — | 128,593 | 4,266 | — | 132,859 | |||||||||||||||
Corporate debt securities | — | 8,957 | 245 | — | 9,202 | |||||||||||||||
Collateralized debt obligations | — | — | 3,263 | — | 3,263 | |||||||||||||||
Other | — | 3,289 | 13,170 | — | 16,459 | |||||||||||||||
Total debt securities | 1,232 | 154,771 | 21,906 | — | 177,909 | |||||||||||||||
Marketable equity securities: | ||||||||||||||||||||
Perpetual preferred securities | 775 | 809 | 2,489 | — | 4,073 | |||||||||||||||
Other marketable equity securities | 1,475 | 344 | 13 | — | 1,832 | |||||||||||||||
Total marketable equity securities | 2,250 | 1,153 | 2,502 | — | 5,905 | |||||||||||||||
Total securities available for sale | 3,482 | 155,924 | 24,408 | — | 183,814 | |||||||||||||||
Mortgages held for sale | — | 29,561 | 3,874 | — | 33,435 | |||||||||||||||
Loans held for sale | — | 201 | — | — | 201 | |||||||||||||||
Mortgage servicing rights (residential) | — | — | 14,500 | — | 14,500 | |||||||||||||||
Other assets (2) | 2,357 | 15,084 | 1,888 | (8,832 | ) | 10,497 | ||||||||||||||
Total | $ | 9,155 | 310,174 | 52,955 | (86,639 | ) | 285,645 | |||||||||||||
Other liabilities (3) | $ | (7,064 | ) | (103,755 | ) | (7,855 | ) | 95,208 | (23,466 | ) | ||||||||||
(1) | Derivatives are reported net of cash collateral received and paid and, to the extent that the criteria of the accounting guidance covering the offsetting of amounts related to certain contracts are met, positions with the same counterparty are netted as part of a legally enforceable master netting agreement. | |
(2) | Derivative assets other than trading and principal investments are included in this category. | |
(3) | Derivative liabilities are included in this category. |
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Net unrealized | ||||||||||||||||||||||||||||
Total net gains | Purchases, | gains (losses) | ||||||||||||||||||||||||||
(losses) included in | sales, | Net | included in net | |||||||||||||||||||||||||
Other | issuances | transfers | income related | |||||||||||||||||||||||||
Balance, | compre- | and | into and/ | Balance, | to assets and | |||||||||||||||||||||||
beginning | Net | hensive | settlements, | or out of | end | liabilities held | ||||||||||||||||||||||
(in millions) | of period | income | income | net | Level 3 | (1) | of period | at period end | (2) | |||||||||||||||||||
Quarter ended September 30, 2008 | ||||||||||||||||||||||||||||
Trading assets (excluding derivatives) | $ | 547 | (90 | ) | — | (4 | ) | — | 453 | (72 | )(3) | |||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||||||
Securities of U.S. states and political subdivisions | 443 | (2 | ) | (18 | ) | (22 | ) | — | 401 | — | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||
Federal agencies | 7 | — | — | — | — | 7 | — | |||||||||||||||||||||
Residential | 450 | (29 | ) | (65 | ) | (10 | ) | 439 | 785 | (26 | ) | |||||||||||||||||
Commercial | — | (23 | ) | (19 | ) | (4 | ) | 343 | 297 | — | ||||||||||||||||||
Total mortgage-backed securities | 457 | (52 | ) | (84 | ) | (14 | ) | 782 | 1,089 | (26 | ) | |||||||||||||||||
Corporate debt securities | — | — | — | 101 | — | 101 | — | |||||||||||||||||||||
Collateralized debt obligations | — | (118 | ) | (68 | ) | 169 | 836 | 819 | — | |||||||||||||||||||
Other | 7,703 | (9 | ) | 151 | 858 | (1,162 | ) | 7,541 | — | |||||||||||||||||||
Total debt securities | 8,603 | (181 | ) | (19 | ) | 1,092 | 456 | 9,951 | (26 | ) | ||||||||||||||||||
Marketable equity securities: | ||||||||||||||||||||||||||||
Perpetual preferred securities | — | — | — | — | — | — | — | |||||||||||||||||||||
Other marketable equity securities | 1 | — | — | — | — | 1 | — | |||||||||||||||||||||
Total marketable equity securities | 1 | — | — | — | — | 1 | — | |||||||||||||||||||||
Total securities available for sale | $ | 8,604 | (181 | ) | (19 | ) | 1,092 | 456 | 9,952 | (26 | ) | |||||||||||||||||
Mortgages held for sale | $ | 5,276 | 14 | — | (76 | ) | (59 | ) | 5,155 | 12 | (4) | |||||||||||||||||
Mortgage servicing rights (residential) | 19,333 | (1,057 | ) | — | 908 | — | 19,184 | (546 | )(4) | |||||||||||||||||||
Net derivative assets and liabilities | (47 | ) | (41 | ) | 1 | (24 | ) | — | (111 | ) | (105 | )(4) | ||||||||||||||||
Other assets (excluding derivatives) | — | — | — | — | — | — | — | |||||||||||||||||||||
Other liabilities (excluding derivatives) | (357 | ) | (83 | ) | — | 28 | — | (412 | ) | (82 | ) | |||||||||||||||||
Quarter ended September 30, 2009 | ||||||||||||||||||||||||||||
Trading assets (excluding derivatives) | $ | 2,475 | 149 | — | (138 | ) | 7 | 2,493 | 100 | (3) | ||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||||||
Securities of U.S. states and political subdivisions | 905 | 2 | 32 | 1 | 22 | 962 | 3 | |||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||
Federal agencies | — | — | — | — | — | — | — | |||||||||||||||||||||
Residential | 5,913 | (25 | ) | 216 | (135 | ) | (3,563 | ) | 2,406 | (51 | ) | |||||||||||||||||
Commercial | 2,615 | (1 | ) | 181 | (28 | ) | (907 | ) | 1,860 | (44 | ) | |||||||||||||||||
Total mortgage-backed securities | 8,528 | (26 | ) | 397 | (163 | ) | (4,470 | ) | 4,266 | (95 | ) | |||||||||||||||||
Corporate debt securities | 286 | — | (12 | ) | 18 | (47 | ) | 245 | — | |||||||||||||||||||
Collateralized debt obligations | 2,748 | 17 | 369 | 129 | — | 3,263 | (16 | ) | ||||||||||||||||||||
Other | 15,718 | 44 | 238 | (428 | ) | (2,402 | ) | 13,170 | (33 | ) | ||||||||||||||||||
Total debt securities | 28,185 | 37 | 1,024 | (443 | ) | (6,897 | ) | 21,906 | (141 | ) | ||||||||||||||||||
Marketable equity securities: | ||||||||||||||||||||||||||||
Perpetual preferred securities | 2,716 | 10 | 54 | (322 | ) | 31 | 2,489 | — | ||||||||||||||||||||
Other marketable equity securities | 127 | — | (3 | ) | (32 | ) | (79 | ) | 13 | — | ||||||||||||||||||
Total marketable equity securities | 2,843 | 10 | 51 | (354 | ) | (48 | ) | 2,502 | — | |||||||||||||||||||
Total securities available for sale | $ | 31,028 | 47 | 1,075 | (797 | ) | (6,945 | ) | 24,408 | (141 | ) | |||||||||||||||||
Mortgages held for sale | $ | 4,099 | (64 | ) | — | (191 | ) | 30 | 3,874 | (67 | )(4) | |||||||||||||||||
Mortgage servicing rights (residential) | 15,690 | (2,707 | ) | — | 1,517 | — | 14,500 | (2,078 | )(4) | |||||||||||||||||||
Net derivative assets and liabilities | (206 | ) | 1,085 | (1 | ) | (952 | ) | (288 | ) | (362 | ) | 274 | (4) | |||||||||||||||
Other assets (excluding derivatives) | 1,226 | (9 | ) | — | 7 | — | 1,224 | (13 | )(4) | |||||||||||||||||||
Other liabilities (excluding derivatives) | (852 | ) | (137 | ) | — | (40 | ) | (8 | ) | (1,037 | ) | (144 | ) | |||||||||||||||
(1) | The amounts presented as transfers into and out of Level 3 represent fair value as of the beginning of the period presented. | |
(2) | Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time. | |
(3) | Included in other noninterest income in the income statement. | |
(4) | Included in mortgage banking in the income statement. |
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Net unrealized | ||||||||||||||||||||||||||||
Total net gains | Purchases, | gains (losses) | ||||||||||||||||||||||||||
(losses) included in | sales, | Net | included in net | |||||||||||||||||||||||||
Other | issuances | transfers | income related | |||||||||||||||||||||||||
Balance, | compre- | and | into and/ | Balance, | to assets and | |||||||||||||||||||||||
beginning | Net | hensive | settlements, | or out of | end | liabilities held | ||||||||||||||||||||||
(in millions) | of period | income | income | net | Level 3 | (1) | of period | at period end | (2) | |||||||||||||||||||
Nine months ended September 30, 2008 | ||||||||||||||||||||||||||||
Trading assets (excluding derivatives) | $ | 418 | 23 | — | 12 | — | 453 | �� | 93 | (3) | ||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||||||
Securities of U.S. states and political subdivisions | 168 | (2 | ) | (36 | ) | (7 | ) | 278 | 401 | — | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||
Federal agencies | — | — | — | — | 7 | 7 | — | |||||||||||||||||||||
Residential | 486 | (106 | ) | (90 | ) | 51 | 444 | 785 | (94 | ) | ||||||||||||||||||
Commercial | — | (23 | ) | (19 | ) | (4 | ) | 343 | 297 | — | ||||||||||||||||||
Total mortgage-backed securities | 486 | (129 | ) | (109 | ) | 47 | 794 | 1,089 | (94 | ) | ||||||||||||||||||
Corporate debt securities | — | — | — | 101 | — | 101 | — | |||||||||||||||||||||
Collateralized debt obligations | — | (118 | ) | (68 | ) | 169 | 836 | 819 | — | |||||||||||||||||||
Other | 4,726 | (9 | ) | (146 | ) | 2,689 | 281 | 7,541 | — | |||||||||||||||||||
Total debt securities | 5,380 | (258 | ) | (359 | ) | 2,999 | 2,189 | 9,951 | (94 | ) | ||||||||||||||||||
Marketable equity securities: | ||||||||||||||||||||||||||||
Perpetual preferred securities | — | — | — | — | — | — | — | |||||||||||||||||||||
Other marketable equity securities | 1 | — | — | — | — | 1 | — | |||||||||||||||||||||
Total marketable equity securities | 1 | — | — | — | — | 1 | — | |||||||||||||||||||||
Total securities available for sale | $ | 5,381 | (258 | ) | (359 | ) | 2,999 | 2,189 | 9,952 | (94 | ) | |||||||||||||||||
Mortgages held for sale | $ | 146 | (34 | ) | — | 714 | 4,329 | 5,155 | (33 | )(4) | ||||||||||||||||||
Mortgage servicing rights (residential) | 16,763 | (143 | ) | — | 2,564 | — | 19,184 | 1,796 | (4)(5) | |||||||||||||||||||
Net derivative assets and liabilities | 6 | (531 | ) | 1 | 413 | — | (111 | ) | (113 | )(4) | ||||||||||||||||||
Other assets (excluding derivatives) | — | — | — | — | — | — | — | |||||||||||||||||||||
Other liabilities (excluding derivatives) | (280 | ) | (184 | ) | — | 52 | — | (412 | ) | (184 | ) | |||||||||||||||||
Nine months ended September 30, 2009 | ||||||||||||||||||||||||||||
Trading assets (excluding derivatives) | $ | 3,495 | 191 | — | (1,536 | ) | 343 | 2,493 | 252 | (3) | ||||||||||||||||||
Securities available for sale: | ||||||||||||||||||||||||||||
Securities of U.S. states and political subdivisions | 903 | 20 | 45 | 47 | (53 | ) | 962 | (6 | ) | |||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||
Federal agencies | 4 | — | — | — | (4 | ) | — | — | ||||||||||||||||||||
Residential | 3,510 | (55 | ) | 1,100 | (723 | ) | (1,426 | ) | 2,406 | (202 | ) | |||||||||||||||||
Commercial | 286 | (119 | ) | 928 | 21 | 744 | 1,860 | (55 | ) | |||||||||||||||||||
Total mortgage-backed securities | 3,800 | (174 | ) | 2,028 | (702 | ) | (686 | ) | 4,266 | (257 | ) | |||||||||||||||||
Corporate debt securities | 282 | 2 | 44 | (5 | ) | (78 | ) | 245 | — | |||||||||||||||||||
Collateralized debt obligations | 2,083 | 72 | 558 | 233 | 317 | 3,263 | (71 | ) | ||||||||||||||||||||
Other | 12,799 | 73 | 1,302 | 1,229 | (2,233 | ) | 13,170 | (87 | ) | |||||||||||||||||||
Total debt securities | 19,867 | (7 | ) | 3,977 | 802 | (2,733 | ) | 21,906 | (421 | ) | ||||||||||||||||||
Marketable equity securities: | ||||||||||||||||||||||||||||
Perpetual preferred securities | 2,775 | 96 | 169 | (556 | ) | 5 | 2,489 | (1 | ) | |||||||||||||||||||
Other marketable equity securities | 50 | — | (4 | ) | 30 | (63 | ) | 13 | — | |||||||||||||||||||
Total marketable equity securities | 2,825 | 96 | 165 | (526 | ) | (58 | ) | 2,502 | (1 | ) | ||||||||||||||||||
Total securities available for sale | $ | 22,692 | 89 | 4,142 | 276 | (2,791 | ) | 24,408 | (422 | ) | ||||||||||||||||||
Mortgages held for sale | $ | 4,718 | (66 | ) | — | (662 | ) | (116 | ) | 3,874 | (77 | )(4) | ||||||||||||||||
Mortgage servicing rights (residential) | 14,714 | (5,293 | ) | — | 5,079 | — | 14,500 | (2,586 | )(4) | |||||||||||||||||||
Net derivative assets and liabilities | 37 | 1,079 | (1 | ) | (1,454 | ) | (23 | ) | (362 | ) | (252 | )(4) | ||||||||||||||||
Other assets (excluding derivatives) | 1,231 | (42 | ) | — | 35 | — | 1,224 | (40 | )(4) | |||||||||||||||||||
Other liabilities (excluding derivatives) | (638 | ) | (315 | ) | — | (74 | ) | (10 | ) | (1,037 | ) | (318 | ) | |||||||||||||||
(1) | The amounts presented as transfers into and out of Level 3 represent fair value as of the beginning of the period presented. | |
(2) | Represents only net gains (losses) that are due to changes in economic conditions and management’s estimates of fair value and excludes changes due to the collection/realization of cash flows over time. | |
(3) | Included in other noninterest income in the income statement. | |
(4) | Included in mortgage banking in the income statement. | |
(5) | Represents total unrealized gains of $1,788 million, net of losses of $8 million related to sales, in the first nine months of 2008. |
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Independent brokers | Third party pricing services | |||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Trading assets (excluding derivatives) | $ | 190 | 3,272 | 12 | 917 | 1,944 | 110 | |||||||||||||||||
Derivatives (trading and other assets) | 3,419 | 106 | 106 | 605 | 4,635 | — | ||||||||||||||||||
Securities available for sale | 181 | 8,916 | 1,681 | 3,944 | 109,170 | 8 | ||||||||||||||||||
Loans held for sale | — | 1 | — | — | 353 | — | ||||||||||||||||||
Other liabilities | 1,105 | 175 | 128 | 2,208 | 5,171 | 1 | ||||||||||||||||||
September 30, 2009 | ||||||||||||||||||||||||
Trading assets (excluding derivatives) | $ | 572 | 3,590 | — | 28 | 2,948 | 38 | |||||||||||||||||
Derivatives (trading and other assets) | — | 9 | 46 | — | 2,841 | 2 | ||||||||||||||||||
Securities available for sale | 496 | 2,104 | 441 | 1,666 | 117,275 | 777 | ||||||||||||||||||
Loans held for sale | — | — | — | — | 2 | — | ||||||||||||||||||
Derivatives (liabilities) | — | — | 70 | — | 2,912 | 4 | ||||||||||||||||||
Other liabilities | 296 | 732 | — | 10 | 2,817 | 46 | ||||||||||||||||||
Carrying value at period end | |||||||||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
December 31, 2008 | |||||||||||||||||||||||
Mortgages held for sale | $ | — | 521 | 534 | 1,055 | ||||||||||||||||||
Loans held for sale | — | 338 | — | 338 | |||||||||||||||||||
Loans (1) | — | 1,487 | 107 | 1,594 | |||||||||||||||||||
Private equity investments | 134 | — | 18 | 152 | |||||||||||||||||||
Foreclosed assets (2) | — | 274 | 55 | 329 | |||||||||||||||||||
Operating lease assets | — | 186 | — | 186 | |||||||||||||||||||
September 30, 2009 | |||||||||||||||||||||||
Mortgages held for sale | $ | — | 1,058 | 703 | 1,761 | ||||||||||||||||||
Loans held for sale | — | 489 | — | 489 | |||||||||||||||||||
Loans (1) | — | 4,383 | 251 | 4,634 | |||||||||||||||||||
Private equity investments | — | — | 39 | 39 | |||||||||||||||||||
Foreclosed assets (2) | — | 237 | 44 | 281 | |||||||||||||||||||
Operating lease assets | — | 127 | — | 127 | |||||||||||||||||||
(1) | Represents carrying value of loans for which adjustments are based on the appraised value of the collateral. The carrying value of loans fully charged-off, which includes unsecured lines and loans, is zero. | |
(2) | Represents the fair value of foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets. |
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Nine months ended Sept. 30 | , | |||||||
(in millions) | 2009 | 2008 | ||||||
Mortgages held for sale | $ | (12 | ) | (153 | ) | |||
Loans held for sale | 143 | (25 | ) | |||||
Loans (1) | (9,692 | ) | (4,167 | ) | ||||
Private equity investments | (89 | ) | (29 | ) | ||||
Foreclosed assets (2) | (125 | ) | (136 | ) | ||||
Operating lease assets | (12 | ) | (6 | ) | ||||
Total | $ | (9,787 | ) | (4,516 | ) | |||
(1) | Represents write-downs of loans based on the appraised value of the collateral. | |
(2) | Represents the losses on foreclosed real estate and other collateral owned that were measured at fair value subsequent to their initial classification as foreclosed assets. |
Sept. 30, 2009 | Dec. 31, 2008 | |||||||||||||||||||||||
Fair value | Fair value | |||||||||||||||||||||||
carrying | carrying | |||||||||||||||||||||||
amount | amount | |||||||||||||||||||||||
less | less | |||||||||||||||||||||||
Fair value | Aggregate | aggregate | Fair value | Aggregate | aggregate | |||||||||||||||||||
carrying | unpaid | unpaid | carrying | unpaid | unpaid | |||||||||||||||||||
(in millions) | amount | principal | principal | amount | principal | principal | ||||||||||||||||||
Mortgages held for sale reported at fair value: | ||||||||||||||||||||||||
Total loans | $ | 33,435 | 33,144 | 291 | (1) | 18,754 | 18,862 | (108 | )(1) | |||||||||||||||
Nonaccrual loans | 277 | 566 | (289 | ) | 152 | 344 | (192 | ) | ||||||||||||||||
Loans 90 days or more past due and still accruing | 63 | 73 | (10 | ) | 58 | 63 | (5 | ) | ||||||||||||||||
Loans held for sale reported at fair value: | ||||||||||||||||||||||||
Total loans | 201 | 194 | 7 | 398 | 760 | (362 | ) | |||||||||||||||||
Nonaccrual loans | 1 | 2 | (1 | ) | 1 | 17 | (16 | ) | ||||||||||||||||
(1) | The difference between fair value carrying amount and aggregate unpaid principal includes changes in fair value recorded at and subsequent to funding, gains and losses on the related loan commitment prior to funding, and premiums on acquired loans. |
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2009 | 2008 | |||||||||||||||||||
Mortgages | Loans | Other | Mortgages | Other | ||||||||||||||||
held | held | interests | held | interests | ||||||||||||||||
(in millions) | for sale | for sale | held | for sale | held | |||||||||||||||
Quarter ended September 30, | ||||||||||||||||||||
Mortgage banking noninterest income: | ||||||||||||||||||||
Net gains on mortgage loan origination/sales activities (1) | $ | 1,541 | — | — | 595 | — | ||||||||||||||
Other noninterest income | — | 1 | 4 | — | (88 | ) | ||||||||||||||
Nine months ended September 30, | ||||||||||||||||||||
Mortgage banking noninterest income: | ||||||||||||||||||||
Net gains on mortgage loan origination/sales activities (1) | $ | 3,834 | — | — | 1,444 | — | ||||||||||||||
Other noninterest income | — | 93 | 83 | — | 27 | |||||||||||||||
(1) | Includes changes in fair value of servicing associated with MHFS. |
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Sept. 30, 2009 | Dec. 31, 2008 | |||||||||||||||
Carrying | Estimated | Carrying | Estimated | |||||||||||||
(in millions) | amount | fair value | amount | fair value | ||||||||||||
Financial assets | ||||||||||||||||
Mortgages held for sale (1) | $ | 2,103 | 2,103 | 1,334 | 1,333 | |||||||||||
Loans held for sale (2) | 5,645 | 5,761 | 5,830 | 5,876 | ||||||||||||
Loans, net | 775,924 | 753,821 | 843,817 | 829,603 | ||||||||||||
Nonmarketable equity investments (cost method) | 8,934 | 9,002 | 9,146 | 9,262 | ||||||||||||
Financial liabilities | ||||||||||||||||
Deposits | 796,748 | 797,389 | 781,402 | 781,964 | ||||||||||||
Long-term debt (3) | 214,216 | 214,684 | 267,055 | 266,023 | ||||||||||||
(1) | Balance excludes mortgages held for sale for which the fair value option under ASC 825-10 was elected, and therefore includes nonprime residential and commercial mortgages held for sale. | |
(2) | Balance excludes loans held for sale for which the fair value option under ASC 825-10 was elected. | |
(3) | The carrying amount and fair value exclude obligations under capital leases of $76 million at September 30, 2009, and $103 million at December 31, 2008. |
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Sept. 30, 2009 | Dec. 31, 2008 | |||||||||||||||||||||||
Shares | ||||||||||||||||||||||||
issued and | Carrying | Carrying | ||||||||||||||||||||||
(in millions, except shares) | outstanding | Par value | value | Discount | value | Discount | ||||||||||||||||||
Series D(1) | ||||||||||||||||||||||||
Fixed Rate Cumulative Perpetual Preferred Stock, Series D, $1,000,000 liquidation preference per share, 25,000 shares authorized | 25,000 | $ | 25,000 | 23,039 | 1,961 | 22,741 | 2,259 | |||||||||||||||||
DEP Shares | ||||||||||||||||||||||||
Dividend Equalization Preferred Shares, $10 liquidation preference per share, 97,000 shares authorized | 96,546 | — | — | — | — | — | ||||||||||||||||||
Series J(1)(2) | ||||||||||||||||||||||||
8.00% Non-Cumulative Perpetual Class A Preferred Stock, Series J, $1,000 liquidation preference per share, 2,300,000 shares authorized | 2,150,375 | 2,150 | 1,995 | 155 | 1,995 | 155 | ||||||||||||||||||
Series K(1)(2) | ||||||||||||||||||||||||
7.98% Fixed-to-Floating Non-Cumulative Perpetual Class A Preferred Stock, Series K, $1,000 liquidation preference per share, 3,500,000 shares authorized | 3,352,000 | 3,352 | 2,876 | 476 | 2,876 | 476 | ||||||||||||||||||
Series L(1)(2) | ||||||||||||||||||||||||
7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L, $1,000 liquidation preference per share, 4,025,000 shares authorized | 3,968,000 | 3,968 | 3,200 | 768 | 3,200 | 768 | ||||||||||||||||||
Total | 9,591,921 | $ | 34,470 | 31,110 | 3,360 | 30,812 | 3,658 | |||||||||||||||||
(1) | Series D, J, K and L preferred shares qualify as Tier 1 capital. | |
(2) | In conjunction with the acquisition of Wachovia, at December 31, 2008, shares of Series J, K and L perpetual preferred stock were converted into shares of a corresponding series of Wells Fargo preferred stock having substantially the same rights and preferences. The carrying value is par value adjusted to fair value in purchase accounting. |
• | Series A – Non-Cumulative Perpetual Preferred Stock, Series A, $100,000 liquidation preference per share, 25,001 shares authorized | |
• | Series B – Non-Cumulative Perpetual Preferred Stock, Series B, $100,000 liquidation preference per share, 17,501 shares authorized | |
• | Series G – 7.25% Class A Preferred Stock, Series G, $15,000 liquidation preference per share, 50,000 shares authorized | |
• | Series H – Floating Class A Preferred Stock, Series H, $20,000 liquidation preference per share, 50,000 shares authorized |
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• | Series I – 5.80% Fixed to Floating Class A Preferred Stock, Series I, $100,000 liquidation preference per share, 25,010 shares authorized |
Shares issued and outstanding | Carrying value | |||||||||||||||||||||||
Adjustable | ||||||||||||||||||||||||
Sept. 30 | , | Dec. 31 | , | Sept. 30 | , | Dec. 31 | , | dividend rate | ||||||||||||||||
(in millions, except shares) | 2009 | 2008 | 2009 | 2008 | Minimum | Maximum | ||||||||||||||||||
ESOP Preferred Stock(1) | ||||||||||||||||||||||||
2008 | 127,418 | 156,914 | $ | 127 | 157 | 10.50 | % | 11.50 | ||||||||||||||||
2007 | 106,624 | 110,159 | 107 | 110 | 10.75 | 11.75 | ||||||||||||||||||
2006 | 80,572 | 83,249 | 81 | 83 | 10.75 | 11.75 | ||||||||||||||||||
2005 | 60,437 | 62,484 | 61 | 63 | 9.75 | 10.75 | ||||||||||||||||||
2004 | 44,425 | 45,950 | 44 | 46 | 8.50 | 9.50 | ||||||||||||||||||
2003 | 28,250 | 29,218 | 28 | 29 | 8.50 | 9.50 | ||||||||||||||||||
2002 | 18,249 | 18,889 | 18 | 19 | 10.50 | 11.50 | ||||||||||||||||||
2001 | 10,073 | 10,393 | 10 | 10 | 10.50 | 11.50 | ||||||||||||||||||
2000 | 2,572 | 2,644 | 3 | 3 | 11.50 | 12.50 | ||||||||||||||||||
Total ESOP Preferred Stock | 478,620 | 519,900 | $ | 479 | 520 | |||||||||||||||||||
Unearned ESOP shares (2) | $ | (511 | ) | (555 | ) | |||||||||||||||||||
(1) | Liquidation preference $1,000. Additional paid-in capital included $32 million at September 30, 2009, and $35 million at December 31, 2008, related to preferred stock. | |
(2) | We recorded a corresponding charge to unearned ESOP shares in connection with the issuance of the ESOP Preferred Stock. The unearned ESOP shares are reduced as shares of the ESOP Preferred Stock are committed to be released. |
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2009 | 2008 | |||||||||||||||||||||||
Pension benefits | Pension benefits | |||||||||||||||||||||||
Non- | Other | Non- | Other | |||||||||||||||||||||
(in millions) | Qualified | qualified | benefits | Qualified | qualified | benefits | ||||||||||||||||||
Quarter ended September 30, | ||||||||||||||||||||||||
Service cost | $ | 2 | — | 4 | 73 | 4 | 3 | |||||||||||||||||
Interest cost | 150 | 11 | 20 | 69 | 5 | 10 | ||||||||||||||||||
Expected return on plan assets | (160 | ) | — | (7 | ) | (119 | ) | — | (10 | ) | ||||||||||||||
Amortization of net actuarial loss (1) | 20 | — | — | — | 3 | — | ||||||||||||||||||
Amortization of prior service cost | — | — | (1 | ) | — | (1 | ) | (1 | ) | |||||||||||||||
Curtailment gain | — | — | — | — | — | — | ||||||||||||||||||
Net periodic benefit cost | $ | 12 | 11 | 16 | 23 | 11 | 2 | |||||||||||||||||
Nine months ended September 30, | ||||||||||||||||||||||||
Service cost | $ | 209 | 8 | 10 | 219 | 11 | 10 | |||||||||||||||||
Interest cost | 444 | 32 | 62 | 207 | 16 | 30 | ||||||||||||||||||
Expected return on plan assets | (483 | ) | — | (21 | ) | (358 | ) | — | (30 | ) | ||||||||||||||
Amortization of net actuarial loss (1) | 174 | 3 | 2 | — | 10 | — | ||||||||||||||||||
Amortization of prior service cost | — | (3 | ) | (3 | ) | — | (4 | ) | (3 | ) | ||||||||||||||
Curtailment gain | (32 | ) | (35 | ) | — | — | — | — | ||||||||||||||||
Net periodic benefit cost | $ | 312 | 5 | 50 | 68 | 33 | 7 | |||||||||||||||||
(1) | Net actuarial loss is generally amortized over five years. |
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Quarter ended Sept. 30 | , | Nine months ended Sept. 30 | , | |||||||||||||
(in millions, except per share amounts) | 2009 | 2008 | 2009 | 2008 | ||||||||||||
Wells Fargo net income (numerator) | $ | 3,235 | 1,637 | 9,452 | 5,389 | |||||||||||
Less: Preferred stock dividends and accretion | (598 | ) | — | (1,856 | ) | — | ||||||||||
Wells Fargo net income applicable to common stock (numerator) | $ | 2,637 | 1,637 | 7,596 | 5,389 | |||||||||||
Earnings per common share | ||||||||||||||||
Average common shares outstanding (denominator) | 4,678.3 | 3,316.4 | 4,471.2 | 3,309.6 | ||||||||||||
Per share | $ | 0.56 | 0.49 | 1.70 | 1.63 | |||||||||||
Diluted earnings per common share | ||||||||||||||||
Average common shares outstanding | 4,678.3 | 3,316.4 | 4,471.2 | 3,309.6 | ||||||||||||
Add: Stock options | 27.7 | 14.5 | 13.8 | 13.7 | ||||||||||||
Restricted share rights | 0.4 | 0.1 | 0.3 | 0.1 | ||||||||||||
Diluted average common shares outstanding (denominator) | 4,706.4 | 3,331.0 | 4,485.3 | 3,323.4 | ||||||||||||
Per share | $ | 0.56 | 0.49 | 1.69 | 1.62 | |||||||||||
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Community | Wholesale | Wealth, Brokerage | Consolidated | |||||||||||||||||||||||||||||||||||||
(income/expense in millions, | Banking | Banking | and Retirement | Other (3) | Company | |||||||||||||||||||||||||||||||||||
average balances in billions) | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||||||||
Quarter ended September 30, | ||||||||||||||||||||||||||||||||||||||||
Net interest income (1) | $ | 8,700 | 5,293 | 2,535 | 1,065 | 743 | 223 | (294 | ) | (200 | ) | 11,684 | 6,381 | |||||||||||||||||||||||||||
Provision for credit losses | 4,572 | 2,202 | 1,361 | 294 | 234 | 3 | (56 | ) | (4 | ) | 6,111 | 2,495 | ||||||||||||||||||||||||||||
Noninterest income | 6,443 | 3,209 | 2,381 | 631 | 2,223 | 458 | (265 | ) | (302 | ) | 10,782 | 3,996 | ||||||||||||||||||||||||||||
Noninterest expense | 6,802 | 3,982 | 2,630 | 1,329 | 2,314 | 498 | (62 | ) | (308 | ) | 11,684 | 5,501 | ||||||||||||||||||||||||||||
Income (loss) before income tax expense (benefit) | 3,769 | 2,318 | 925 | 73 | 418 | 180 | (441 | ) | (190 | ) | 4,671 | 2,381 | ||||||||||||||||||||||||||||
Income tax expense (benefit) | 1,046 | 764 | 325 | (30 | ) | 151 | 68 | (167 | ) | (72 | ) | 1,355 | 730 | |||||||||||||||||||||||||||
Net income (loss) before noncontrolling interests | 2,723 | 1,554 | 600 | 103 | 267 | 112 | (274 | ) | (118 | ) | 3,316 | 1,651 | ||||||||||||||||||||||||||||
Less: Net income from noncontrolling interests | 56 | 14 | 2 | — | 23 | — | — | — | 81 | 14 | ||||||||||||||||||||||||||||||
Net income (loss) (2) | $ | 2,667 | 1,540 | 598 | 103 | 244 | 112 | (274 | ) | (118 | ) | 3,235 | 1,637 | |||||||||||||||||||||||||||
Average loans | $ | 534.7 | 287.1 | 247.0 | 116.3 | 45.4 | 15.9 | (16.9 | ) | (15.1 | ) | 810.2 | 404.2 | |||||||||||||||||||||||||||
Average assets | 785.2 | 452.3 | 369.3 | 158.1 | 108.6 | 19.1 | (17.0 | ) | (15.3 | ) | 1,246.1 | 614.2 | ||||||||||||||||||||||||||||
Average core deposits | 530.3 | 252.8 | 146.9 | 64.4 | 116.4 | 23.5 | (34.3 | ) | (20.6 | ) | 759.3 | 320.1 | ||||||||||||||||||||||||||||
Nine months ended September 30, | ||||||||||||||||||||||||||||||||||||||||
Net interest income (1) | $ | 25,981 | 15,246 | 7,381 | 3,116 | 2,244 | 576 | (782 | ) | (519 | ) | 34,824 | 18,419 | |||||||||||||||||||||||||||
Provision for credit losses | 12,840 | 6,833 | 2,644 | 701 | 374 | 9 | (103 | ) | (8 | ) | 15,755 | 7,535 | ||||||||||||||||||||||||||||
Noninterest income | 17,922 | 10,328 | 7,680 | 3,170 | 6,347 | 1,422 | (783 | ) | (939 | ) | 31,166 | 13,981 | ||||||||||||||||||||||||||||
Noninterest expense | 21,625 | 12,187 | 7,968 | 4,031 | 6,822 | 1,480 | (216 | ) | (910 | ) | 36,199 | 16,788 | ||||||||||||||||||||||||||||
Income (loss) before income tax expense (benefit) | 9,438 | 6,554 | 4,449 | 1,554 | 1,395 | 509 | (1,246 | ) | (540 | ) | 14,036 | 8,077 | ||||||||||||||||||||||||||||
Income tax expense (benefit) | 2,734 | 2,265 | 1,590 | 385 | 531 | 193 | (473 | ) | (205 | ) | 4,382 | 2,638 | ||||||||||||||||||||||||||||
Net income (loss) before noncontrolling interests | 6,704 | 4,289 | 2,859 | 1,169 | 864 | 316 | (773 | ) | (335 | ) | 9,654 | 5,439 | ||||||||||||||||||||||||||||
Less: Net income (loss) from noncontrolling interests | 190 | 43 | 14 | 7 | (2 | ) | — | — | — | 202 | 50 | |||||||||||||||||||||||||||||
Net income (loss) (2) | $ | 6,514 | 4,246 | 2,845 | 1,162 | 866 | 316 | (773 | ) | (335 | ) | 9,452 | 5,389 | |||||||||||||||||||||||||||
Average loans | $ | 542.7 | 284.4 | 260.7 | 108.3 | 46.0 | 14.8 | (16.3 | ) | (14.2 | ) | 833.1 | 393.3 | |||||||||||||||||||||||||||
Average assets | 794.1 | 441.3 | 384.8 | 149.9 | 107.6 | 17.9 | (16.4 | ) | (14.4 | ) | 1,270.1 | 594.7 | ||||||||||||||||||||||||||||
Average core deposits | 537.4 | 250.2 | 141.2 | 65.8 | 110.9 | 22.3 | (29.8 | ) | (19.7 | ) | 759.7 | 318.6 | ||||||||||||||||||||||||||||
(1) | Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to other segments. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment. | |
(2) | Represents segment net income (loss) for Community Banking; Wholesale Banking; and Wealth, Brokerage and Retirement segments and Wells Fargo net income for the Consolidated Company. | |
(3) | Includes integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage and Retirement, largely representing wealth management customers serviced and products sold in the stores. |
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Quarter ended Sept. 30, 2009 | ||||||||||||||||||||
Other | ||||||||||||||||||||
consolidating | Consolidated | |||||||||||||||||||
(in millions) | Parent | WFFI | subsidiaries | Eliminations | Company | |||||||||||||||
Dividends from subsidiaries: | ||||||||||||||||||||
Bank | $ | 2,411 | — | — | (2,411 | ) | — | |||||||||||||
Nonbank | 200 | — | — | ( 200 | ) | — | ||||||||||||||
Interest income from loans | — | 827 | 9,346 | (3 | ) | 10,170 | ||||||||||||||
Interest income from subsidiaries | 480 | — | — | ( 480 | ) | — | ||||||||||||||
Other interest income | 104 | 27 | 3,662 | 5 | 3,798 | |||||||||||||||
Total interest income | 3,195 | 854 | 13,008 | (3,089 | ) | 13,968 | ||||||||||||||
Deposits | — | — | 917 | (12 | ) | 905 | ||||||||||||||
Short-term borrowings | 32 | 11 | 156 | ( 167 | ) | 32 | ||||||||||||||
Long-term debt | 761 | 304 | 592 | ( 356 | ) | 1,301 | ||||||||||||||
Other interest expense | — | — | 46 | — | 46 | |||||||||||||||
Total interest expense | 793 | 315 | 1,711 | ( 535 | ) | 2,284 | ||||||||||||||
Net interest income | 2,402 | 539 | 11,297 | (2,554 | ) | 11,684 | ||||||||||||||
Provision for credit losses | — | 463 | 5,648 | — | 6,111 | |||||||||||||||
Net interest income after provision for credit losses | 2,402 | 76 | 5,649 | (2,554 | ) | 5,573 | ||||||||||||||
Noninterest income | ||||||||||||||||||||
Fee income — nonaffiliates | — | 32 | 5,844 | — | 5,876 | |||||||||||||||
Other | 339 | 57 | 5,186 | (676 | ) | 4,906 | ||||||||||||||
Total noninterest income | 339 | 89 | 11,030 | ( 676 | ) | 10,782 | ||||||||||||||
Noninterest expense | ||||||||||||||||||||
Salaries and benefits | 29 | 42 | 6,442 | — | 6,513 | |||||||||||||||
Other | 110 | 179 | 5,589 | (707 | ) | 5,171 | ||||||||||||||
Total noninterest expense | 139 | 221 | 12,031 | ( 707 | ) | 11,684 | ||||||||||||||
Income (loss) before income tax expense (benefit) and equity in undistributed income of subsidiaries | 2,602 | (56 | ) | 4,648 | (2,523 | ) | 4,671 | |||||||||||||
Income tax expense (benefit) | (175 | ) | (18 | ) | 1,548 | — | 1,355 | |||||||||||||
Equity in undistributed income of subsidiaries | 458 | — | — | ( 458 | ) | — | ||||||||||||||
Net income (loss) before noncontrolling interests | 3,235 | (38 | ) | 3,100 | (2,981 | ) | 3,316 | |||||||||||||
Less: Net income from noncontrolling interests | — | 1 | 80 | — | 81 | |||||||||||||||
Parent, WFFI, Other and Wells Fargo net income (loss) | $ | 3,235 | (39 | ) | 3,020 | (2,981 | ) | 3,235 | ||||||||||||
136
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Quarter ended Sept. 30, 2008 | ||||||||||||||||||||
Other | ||||||||||||||||||||
consolidating | Consolidated | |||||||||||||||||||
(in millions) | Parent | WFFI | subsidiaries | Eliminations | Company | |||||||||||||||
Dividends from subsidiaries: | ||||||||||||||||||||
Bank | $ | 501 | — | — | (501 | ) | — | |||||||||||||
Nonbank | — | — | — | — | — | |||||||||||||||
Interest income from loans | — | 1,312 | 5,590 | (14 | ) | 6,888 | ||||||||||||||
Interest income from subsidiaries | 716 | — | — | (716 | ) | — | ||||||||||||||
Other interest income | 69 | 26 | 1,823 | (32 | ) | 1,886 | ||||||||||||||
Total interest income | 1,286 | 1,338 | 7,413 | (1,263 | ) | 8,774 | ||||||||||||||
Deposits | — | — | 1,128 | (109 | ) | 1,019 | ||||||||||||||
Short-term borrowings | 141 | 58 | 542 | (249 | ) | 492 | ||||||||||||||
Long-term debt | 686 | 443 | 157 | (404 | ) | 882 | ||||||||||||||
Total interest expense | 827 | 501 | 1,827 | (762 | ) | 2,393 | ||||||||||||||
Net interest income | 459 | 837 | 5,586 | (501 | ) | 6,381 | ||||||||||||||
Provision for credit losses | — | 648 | 1,847 | — | 2,495 | |||||||||||||||
Net interest income after provision for credit losses | 459 | 189 | 3,739 | (501 | ) | 3,886 | ||||||||||||||
Noninterest income | ||||||||||||||||||||
Fee income – nonaffiliates | — | 109 | 2,621 | — | 2,730 | |||||||||||||||
Other | (42 | ) | 39 | 1,697 | (428 | ) | 1,266 | |||||||||||||
Total noninterest income | (42 | ) | 148 | 4,318 | (428 | ) | 3,996 | |||||||||||||
Noninterest expense | ||||||||||||||||||||
Salaries and benefits | (82 | ) | 151 | 3,050 | — | 3,119 | ||||||||||||||
Other | 46 | 285 | 2,479 | (428 | ) | 2,382 | ||||||||||||||
Total noninterest expense | (36 | ) | 436 | 5,529 | (428 | ) | 5,501 | |||||||||||||
Income (loss) before income tax expense (benefit) and equity in undistributed income of subsidiaries | 453 | (99 | ) | 2,528 | (501 | ) | 2,381 | |||||||||||||
Income tax expense (benefit) | (49 | ) | (31 | ) | 810 | — | 730 | |||||||||||||
Equity in undistributed income of subsidiaries | 1,135 | — | — | (1,135 | ) | — | ||||||||||||||
Net income (loss) before noncontrolling interests | 1,637 | (68 | ) | 1,718 | (1,636 | ) | 1,651 | |||||||||||||
Less: Net income from noncontrolling interests | — | 1 | 13 | — | 14 | |||||||||||||||
Parent, WFFI, Other and Wells Fargo net income (loss) | $ | 1,637 | (69 | ) | 1,705 | (1,636 | ) | 1,637 | ||||||||||||
137
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Nine months ended Sept. 30, 2009 | ||||||||||||||||||||
Other | ||||||||||||||||||||
consolidating | Consolidated | |||||||||||||||||||
(in millions) | Parent | WFFI | subsidiaries | Eliminations | Company | |||||||||||||||
Dividends from subsidiaries: | ||||||||||||||||||||
Bank | $ | 3,128 | — | — | (3,128 | ) | — | |||||||||||||
Nonbank | 409 | — | — | ( 409 | ) | — | ||||||||||||||
Interest income from loans | — | 2,679 | 28,800 | (12 | ) | 31,467 | ||||||||||||||
Interest income from subsidiaries | 1,711 | — | — | (1,711 | ) | — | ||||||||||||||
Other interest income | 331 | 80 | 10,704 | — | 11,115 | |||||||||||||||
Total interest income | 5,579 | 2,759 | 39,504 | (5,260 | ) | 42,582 | ||||||||||||||
Deposits | — | — | 2,894 | (33 | ) | 2,861 | ||||||||||||||
Short-term borrowings | 146 | 28 | 730 | ( 694 | ) | 210 | ||||||||||||||
Long-term debt | 2,650 | 1,010 | 2,074 | (1,169 | ) | 4,565 | ||||||||||||||
Other interest expense | — | — | 122 | — | 122 | |||||||||||||||
Total interest expense | 2,796 | 1,038 | 5,820 | (1,896 | ) | 7,758 | ||||||||||||||
Net interest income | 2,783 | 1,721 | 33,684 | (3,364 | ) | 34,824 | ||||||||||||||
Provision for credit losses | — | 1,486 | 14,269 | — | 15,755 | |||||||||||||||
Net interest income after provision for credit losses | 2,783 | 235 | 19,415 | (3,364 | ) | 19,069 | ||||||||||||||
Noninterest income | ||||||||||||||||||||
Fee income — nonaffiliates | — | 115 | 16,871 | — | 16,986 | |||||||||||||||
Other | 653 | 128 | 15,211 | (1,812 | ) | 14,180 | ||||||||||||||
Total noninterest income | 653 | 243 | 32,082 | (1,812 | ) | 31,166 | ||||||||||||||
Noninterest expense | ||||||||||||||||||||
Salaries and benefits | 311 | 92 | 19,329 | — | 19,732 | |||||||||||||||
Other | 373 | 550 | 17,385 | (1,841 | ) | 16,467 | ||||||||||||||
Total noninterest expense | 684 | 642 | 36,714 | (1,841 | ) | 36,199 | ||||||||||||||
Income (loss) before income tax expense (benefit) and equity in undistributed income of subsidiaries | 2,752 | (164 | ) | 14,783 | (3,335 | ) | 14,036 | |||||||||||||
Income tax expense (benefit) | (409 | ) | (53 | ) | 4,844 | — | 4,382 | |||||||||||||
Equity in undistributed income of subsidiaries | 6,291 | — | — | (6,291 | ) | — | ||||||||||||||
Net income (loss) before noncontrolling interests | 9,452 | (111 | ) | 9,939 | (9,626 | ) | 9,654 | |||||||||||||
Less: Net income from noncontrolling interests | — | 1 | 201 | — | 202 | |||||||||||||||
Parent, WFFI, Other and Wells Fargo net income (loss) | $ | 9,452 | (112 | ) | 9,738 | (9,626 | ) | 9,452 | ||||||||||||
138
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Nine months ended Sept. 30, 2008 | ||||||||||||||||||||
Other | ||||||||||||||||||||
consolidating | Consolidated | |||||||||||||||||||
(in millions) | Parent | WFFI | subsidiaries | Eliminations | Company | |||||||||||||||
Dividends from subsidiaries: | ||||||||||||||||||||
Bank | $ | 1,656 | — | — | (1,656 | ) | — | |||||||||||||
Nonbank | 11 | — | — | (11 | ) | — | ||||||||||||||
Interest income from loans | 2 | 4,058 | 16,894 | (48 | ) | 20,906 | ||||||||||||||
Interest income from subsidiaries | 2,286 | — | — | (2,286 | ) | — | ||||||||||||||
Other interest income | 163 | 81 | 5,141 | (121 | ) | 5,264 | ||||||||||||||
Total interest income | 4,118 | 4,139 | 22,035 | (4,122 | ) | 26,170 | ||||||||||||||
Deposits | — | — | 4,055 | (379 | ) | 3,676 | ||||||||||||||
Short-term borrowings | 397 | 197 | 1,475 | (795 | ) | 1,274 | ||||||||||||||
Long-term debt | 2,201 | 1,402 | 479 | (1,281 | ) | 2,801 | ||||||||||||||
Total interest expense | 2,598 | 1,599 | 6,009 | (2,455 | ) | 7,751 | ||||||||||||||
Net interest income | 1,520 | 2,540 | 16,026 | (1,667 | ) | 18,419 | ||||||||||||||
Provision for credit losses | — | 1,628 | 5,907 | — | 7,535 | |||||||||||||||
Net interest income after provision for credit losses | 1,520 | 912 | 10,119 | (1,667 | ) | 10,884 | ||||||||||||||
Noninterest income | ||||||||||||||||||||
Fee income — nonaffiliates | — | 329 | 7,630 | — | 7,959 | |||||||||||||||
Other | 325 | 139 | 6,902 | (1,344 | ) | 6,022 | ||||||||||||||
Total noninterest income | 325 | 468 | 14,532 | (1,344 | ) | 13,981 | ||||||||||||||
Noninterest expense | ||||||||||||||||||||
Salaries and benefits | (167 | ) | 635 | 9,295 | — | 9,763 | ||||||||||||||
Other | (14 | ) | 838 | 7,545 | (1,344 | ) | 7,025 | |||||||||||||
Total noninterest expense | (181 | ) | 1,473 | 16,840 | (1,344 | ) | 16,788 | |||||||||||||
Income (loss) before income tax expense and equity in undistributed income of subsidiaries | 2,026 | (93 | ) | 7,811 | (1,667 | ) | 8,077 | |||||||||||||
Income tax expense (benefit) | 47 | (19 | ) | 2,610 | — | 2,638 | ||||||||||||||
Equity in undistributed income of subsidiaries | 3,410 | — | — | (3,410 | ) | — | ||||||||||||||
Net income (loss) before noncontrolling interests | 5,389 | (74 | ) | 5,201 | (5,077 | ) | 5,439 | |||||||||||||
Less: Net income from noncontrolling interests | — | 1 | 49 | — | 50 | |||||||||||||||
Parent, WFFI, Other and Wells Fargo net income (loss) | $ | 5,389 | (75 | ) | 5,152 | (5,077 | ) | 5,389 | ||||||||||||
139
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Sept. 30, 2009 | ||||||||||||||||||||
Other | ||||||||||||||||||||
consolidating | Consolidated | |||||||||||||||||||
(in millions) | Parent | WFFI | subsidiaries | Eliminations | Company | |||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents due from: | ||||||||||||||||||||
Subsidiary banks | $ | 28,436 | 201 | — | (28,637 | ) | — | |||||||||||||
Nonaffiliates | — | 189 | 34,535 | — | 34,724 | |||||||||||||||
Securities available for sale | 4,908 | 2,702 | 176,204 | — | 183,814 | |||||||||||||||
Mortgages and loans held for sale | — | — | 41,384 | — | 41,384 | |||||||||||||||
Loans | 8 | 35,863 | 765,858 | (1,777 | ) | 799,952 | ||||||||||||||
Loans to subsidiaries: | ||||||||||||||||||||
Bank | 8,060 | — | — | (8,060 | ) | — | ||||||||||||||
Nonbank | 60,068 | — | — | (60,068 | ) | — | ||||||||||||||
Allowance for loan losses | — | (1,837 | ) | (22,191 | ) | — | (24,028 | ) | ||||||||||||
Net loans | 68,136 | 34,026 | 743,667 | (69,905 | ) | 775,924 | ||||||||||||||
Investments in subsidiaries: | ||||||||||||||||||||
Bank | 127,042 | — | — | (127,042 | ) | — | ||||||||||||||
Nonbank | 21,072 | — | — | (21,072 | ) | — | ||||||||||||||
Other assets | 12,494 | 1,473 | 198,945 | (20,133 | ) | 192,779 | ||||||||||||||
Total assets | $ | 262,088 | 38,591 | 1,194,735 | (266,789 | ) | 1,228,625 | |||||||||||||
Liabilities and equity | ||||||||||||||||||||
Deposits | $ | — | — | 821,672 | (24,924 | ) | 796,748 | |||||||||||||
Short-term borrowings | 1,522 | 11,179 | 54,172 | (36,073 | ) | 30,800 | ||||||||||||||
Accrued expenses and other liabilities | 6,080 | 1,438 | 71,697 | (21,354 | ) | 57,861 | ||||||||||||||
Long-term debt | 122,312 | 24,495 | 93,995 | (26,510 | ) | 214,292 | ||||||||||||||
Indebtedness to subsidiaries | 10,024 | — | — | (10,024 | ) | — | ||||||||||||||
Total liabilities | 139,938 | 37,112 | 1,041,536 | (118,885 | ) | 1,099,701 | ||||||||||||||
Parent, WFFI, other and Wells Fargo stockholders’ equity | 122,150 | 1,464 | 146,440 | (147,904 | ) | 122,150 | ||||||||||||||
Noncontrolling interests | — | 15 | 6,759 | — | 6,774 | |||||||||||||||
Total equity | 122,150 | 1,479 | 153,199 | (147,904 | ) | 128,924 | ||||||||||||||
Total liabilities and equity | $ | 262,088 | 38,591 | 1,194,735 | (266,789 | ) | 1,228,625 | |||||||||||||
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�� | ||||||||||||||||||||
Dec. 31, 2008 | ||||||||||||||||||||
Other | ||||||||||||||||||||
consolidating | Consolidated | |||||||||||||||||||
(in millions) | Parent | WFFI | subsidiaries | Eliminations | Company | |||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents due from: | ||||||||||||||||||||
Subsidiary banks | $ | 15,658 | 246 | — | (15,904 | ) | — | |||||||||||||
Nonaffiliates | — | 180 | 73,016 | — | 73,196 | |||||||||||||||
Securities available for sale | 4,950 | 2,130 | 144,494 | (5 | ) | 151,569 | ||||||||||||||
Mortgages and loans held for sale | — | — | 26,316 | — | 26,316 | |||||||||||||||
Loans | 9 | 45,930 | 827,242 | (8,351 | ) | 864,830 | ||||||||||||||
Loans to subsidiaries: | ||||||||||||||||||||
Bank | 21,745 | — | — | (21,745 | ) | — | ||||||||||||||
Nonbank | 68,527 | — | — | (68,527 | ) | — | ||||||||||||||
Allowance for loan losses | — | (2,359 | ) | (18,654 | ) | — | (21,013 | ) | ||||||||||||
Net loans | 90,281 | 43,571 | 808,588 | (98,623 | ) | 843,817 | ||||||||||||||
Investments in subsidiaries: | ||||||||||||||||||||
Bank | 105,721 | — | — | (105,721 | ) | — | ||||||||||||||
Nonbank | 24,094 | — | — | (24,094 | ) | — | ||||||||||||||
Other assets | 34,949 | 1,756 | 213,099 | (35,063 | ) | 214,741 | ||||||||||||||
Total assets | $ | 275,653 | 47,883 | 1,265,513 | (279,410 | ) | 1,309,639 | |||||||||||||
Liabilities and equity | ||||||||||||||||||||
Deposits | $ | — | — | 791,728 | (10,326 | ) | 781,402 | |||||||||||||
Short-term borrowings | 23,434 | 12,911 | 150,156 | (78,427 | ) | 108,074 | ||||||||||||||
Accrued expenses and other liabilities | 7,426 | 1,179 | 55,721 | (13,637 | ) | 50,689 | ||||||||||||||
Long-term debt | 134,026 | 31,704 | 137,118 | (35,690 | ) | 267,158 | ||||||||||||||
Indebtedness to subsidiaries | 11,683 | — | — | (11,683 | ) | — | ||||||||||||||
Total liabilities | 176,569 | 45,794 | 1,134,723 | (149,763 | ) | 1,207,323 | ||||||||||||||
Parent, WFFI, other and Wells Fargo stockholders’ equity | 99,084 | 2,074 | 127,573 | (129,647 | ) | 99,084 | ||||||||||||||
Noncontrolling interests | — | 15 | 3,217 | — | 3,232 | |||||||||||||||
Total equity | 99,084 | 2,089 | 130,790 | (129,647 | ) | 102,316 | ||||||||||||||
Total liabilities and equity | $ | 275,653 | 47,883 | 1,265,513 | (279,410 | ) | 1,309,639 | |||||||||||||
141
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Nine months ended Sept. 30, 2009 | ||||||||||||||||
Other | ||||||||||||||||
consolidating | ||||||||||||||||
subsidiaries/ | Consolidated | |||||||||||||||
(in millions) | Parent | WFFI | eliminations | Company | ||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net cash provided by operating activities | $ | 4,113 | 1,271 | 19,866 | 25,250 | |||||||||||
Cash flows from investing activities: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
Sales proceeds | 655 | 679 | 45,003 | 46,337 | ||||||||||||
Prepayments and maturities | — | 267 | 28,479 | 28,746 | ||||||||||||
Purchases | (346 | ) | (1,422 | ) | (87,627 | ) | (89,395 | ) | ||||||||
Loans: | ||||||||||||||||
Decrease (increase) in banking subsidiaries’ loan originations, net of collections | — | (646 | ) | 44,983 | 44,337 | |||||||||||
Proceeds from sales (including participations) of loans originated for investment by banking subsidiaries | — | — | 4,569 | 4,569 | ||||||||||||
Purchases (including participations) of loans by banking subsidiaries | — | — | (2,007 | ) | (2,007 | ) | ||||||||||
Principal collected on nonbank entities’ loans | — | 7,815 | 2,409 | 10,224 | ||||||||||||
Loans originated by nonbank entities | — | (3,886 | ) | (3,231 | ) | (7,117 | ) | |||||||||
Net repayments from (advances to) subsidiaries | 14,988 | — | (14,988 | ) | — | |||||||||||
Capital notes and term loans made to subsidiaries | (80 | ) | — | 80 | — | |||||||||||
Principal collected on notes/loans made to subsidiaries | 7,179 | — | (7,179 | ) | — | |||||||||||
Net decrease (increase) in investment in subsidiaries | (5,209 | ) | — | 5,209 | — | |||||||||||
Net cash paid for acquisitions | — | — | (132 | ) | (132 | ) | ||||||||||
Net change in noncontrolling interests | — | 1 | (356 | ) | (355 | ) | ||||||||||
Other, net | 22,486 | 147 | 16,959 | 39,592 | ||||||||||||
Net cash provided by investing activities | 39,673 | 2,955 | 32,171 | 74,799 | ||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Net change in: | ||||||||||||||||
Deposits | — | — | 15,212 | 15,212 | ||||||||||||
Short-term borrowings | (20,492 | ) | 2,740 | (59,522 | ) | (77,274 | ) | |||||||||
Long-term debt: | ||||||||||||||||
Proceeds from issuance | 3,665 | — | 1,138 | 4,803 | ||||||||||||
Repayment | (20,158 | ) | (7,002 | ) | (28,172 | ) | (55,332 | ) | ||||||||
Preferred stock: | ||||||||||||||||
Cash dividends paid | (1,616 | ) | — | — | (1,616 | ) | ||||||||||
Common stock: | ||||||||||||||||
Proceeds from issuance | 9,590 | — | — | 9,590 | ||||||||||||
Repurchased | (80 | ) | — | — | (80 | ) | ||||||||||
Cash dividends paid | (1,891 | ) | — | — | (1,891 | ) | ||||||||||
Excess tax benefits related to stock option payments | 9 | — | — | 9 | ||||||||||||
Other, net | (35 | ) | — | 35 | — | |||||||||||
Net cash used by financing activities | (31,008 | ) | (4,262 | ) | (71,309 | ) | (106,579 | ) | ||||||||
Net change in cash and due from banks | 12,778 | (36 | ) | (19,272 | ) | (6,530 | ) | |||||||||
Cash and due from banks at beginning of period | 15,658 | 426 | 7,679 | 23,763 | ||||||||||||
Cash and due from banks at end of period | $ | 28,436 | 390 | (11,593 | ) | 17,233 | ||||||||||
142
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Nine months ended Sept. 30, 2008 | ||||||||||||||||
Other | ||||||||||||||||
consolidating | ||||||||||||||||
subsidiaries/ | Consolidated | |||||||||||||||
(in millions) | Parent | WFFI | eliminations | Company | ||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net cash provided by operating activities | $ | 160 | 1,419 | 10,622 | 12,201 | |||||||||||
Cash flows from investing activities: | ||||||||||||||||
Securities available for sale: | ||||||||||||||||
Sales proceeds | 2,511 | 710 | 36,477 | 39,698 | ||||||||||||
Prepayments and maturities | — | 247 | 15,632 | 15,879 | ||||||||||||
Purchases | (2,770 | ) | (1,013 | ) | (70,598 | ) | (74,381 | ) | ||||||||
Loans: | ||||||||||||||||
Increase in banking subsidiaries’ loan originations, net of collections | — | (1,177 | ) | (30,829 | ) | (32,006 | ) | |||||||||
Proceeds from sales (including participations) of loans originated for investment by banking subsidiaries | — | — | 1,843 | 1,843 | ||||||||||||
Purchases (including participations) of loans by banking subsidiaries | — | — | (4,329 | ) | (4,329 | ) | ||||||||||
Principal collected on nonbank entities’ loans | — | 11,614 | 3,848 | 15,462 | ||||||||||||
Loans originated by nonbank entities | — | (11,085 | ) | (2,795 | ) | (13,880 | ) | |||||||||
Net repayments from (advances to) subsidiaries | (5,146 | ) | — | 5,146 | — | |||||||||||
Capital notes and term loans made to subsidiaries | (708 | ) | — | 708 | — | |||||||||||
Principal collected on notes/loans made to subsidiaries | 6,179 | — | (6,179 | ) | — | |||||||||||
Net decrease (increase) in investment in subsidiaries | (450 | ) | — | 450 | — | |||||||||||
Net cash paid for acquisitions | (427 | ) | — | (163 | ) | (590 | ) | |||||||||
Net change in noncontrolling interests | — | — | (34 | ) | (34 | ) | ||||||||||
Other, net | 430 | 11 | (5,713 | ) | (5,272 | ) | ||||||||||
Net cash used by investing activities | (381 | ) | (693 | ) | (56,536 | ) | (57,610 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||||||
Net change in: | ||||||||||||||||
Deposits | — | — | 7,370 | 7,370 | ||||||||||||
Short-term borrowings | 8,006 | 5,360 | 18,432 | 31,798 | ||||||||||||
Long-term debt: | ||||||||||||||||
Proceeds from issuance | 13,529 | 1,113 | 8,109 | 22,751 | ||||||||||||
Repayment | (13,678 | ) | (7,269 | ) | 5,508 | (15,439 | ) | |||||||||
Common stock: | ||||||||||||||||
Proceeds from issuance | 1,269 | — | — | 1,269 | ||||||||||||
Repurchased | (1,162 | ) | — | — | (1,162 | ) | ||||||||||
Cash dividends paid | (3,178 | ) | — | — | (3,178 | ) | ||||||||||
Excess tax benefits related to stock option payments | 104 | — | — | 104 | ||||||||||||
Net cash provided (used) by financing activities | 4,890 | (796 | ) | 39,419 | 43,513 | |||||||||||
Net change in cash and due from banks | 4,669 | (70 | ) | (6,495 | ) | (1,896 | ) | |||||||||
Cash and due from banks at beginning of period | 14,989 | 483 | (715 | ) | 14,757 | |||||||||||
Cash and due from banks at end of period | $ | 19,658 | 413 | (7,210 | ) | 12,861 | ||||||||||
143
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To be well capitalized | ||||||||||||||||||||||||||||||||||||||||
under the FDICIA | ||||||||||||||||||||||||||||||||||||||||
For capital | prompt corrective | |||||||||||||||||||||||||||||||||||||||
Actual | adequacy purposes | action provisions | ||||||||||||||||||||||||||||||||||||||
(in billions) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||||||
As of September 30, 2009: | ||||||||||||||||||||||||||||||||||||||||
Total capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||||
Wells Fargo & Company | $ | 150.1 | 14.66 | % | ³ | $ | 81.9 | ³ | 8.00 | % | ||||||||||||||||||||||||||||||
Wells Fargo Bank, N.A. | 53.5 | 11.82 | ³ | 36.2 | ³ | 8.00 | ³ | $ | 45.3 | ³ | 10.00 | % | ||||||||||||||||||||||||||||
Wachovia Bank, N.A. | 60.9 | 13.60 | ³ | 35.8 | ³ | 8.00 | ³ | 44.8 | ³ | 10.00 | ||||||||||||||||||||||||||||||
Tier 1 capital (to risk-weighted assets) | ||||||||||||||||||||||||||||||||||||||||
Wells Fargo & Company | 108.8 | 10.63 | ³ | 41.0 | ³ | 4.00 | ||||||||||||||||||||||||||||||||||
Wells Fargo Bank, N.A. | 38.1 | 8.41 | ³ | 18.1 | ³ | 4.00 | ³ | 27.2 | ³ | 6.00 | ||||||||||||||||||||||||||||||
Wachovia Bank, N.A. | 39.6 | 8.85 | ³ | 17.9 | ³ | 4.00 | ³ | 26.9 | ³ | 6.00 | ||||||||||||||||||||||||||||||
Tier 1 capital (to average assets) (Leverage ratio) | ||||||||||||||||||||||||||||||||||||||||
Wells Fargo & Company | 108.8 | 9.03 | ³ | 48.2 | ³ | 4.00 | (1) | |||||||||||||||||||||||||||||||||
Wells Fargo Bank, N.A. | 38.1 | 7.13 | ³ | 21.4 | ³ | 4.00 | (1) | ³ | 26.7 | ³ | 5.00 | |||||||||||||||||||||||||||||
Wachovia Bank, N.A. | 39.6 | 7.87 | ³ | 20.2 | ³ | 4.00 | (1) | ³ | 25.2 | ³ | 5.00 | |||||||||||||||||||||||||||||
(1) | The leverage ratio consists of Tier 1 capital divided by quarterly average total assets, excluding goodwill and certain other items. The minimum leverage ratio guideline is 3% for banking organizations that do not anticipate significant growth and that have well-diversified risk, excellent asset quality, high liquidity, good earnings, effective management and monitoring of market risk and, in general, are considered top-rated, strong banking organizations. |
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ABCP | Asset-backed commercial paper | |
AICPA | American Institute of Certified Public Accountants | |
ALCO | Asset/Liability Management Committee | |
AMTN | Australian medium-term note program | |
ARRA | American Recovery and Reinvestment Act of 2009 | |
ARS | Auction rate security | |
ASC | Accounting Standards Codification | |
ASU | Accounting Standards Update | |
ARM | Adjustable-rate mortgage | |
AVM | Automated valuation model | |
CDs | Certificates of deposit | |
CDO | Collateralized debt obligation | |
CLO | Collateralized loan obligation | |
CPP | Capital Purchase Program | |
CPR | Constant prepayment rate | |
CRE | Commercial real estate | |
EITF | Emerging Issues Task Force | |
ESOP | Employee Stock Ownership Plan | |
FAS | Statement of Financial Accounting Standards | |
FASB | Financial Accounting Standards Board | |
FDIC | Federal Deposit Insurance Corporation | |
FHA | Federal Housing Administration | |
FHLB | Federal Home Loan Bank | |
FHLMC | Federal Home Loan Mortgage Company | |
FICO | Fair Isaac Corporation (credit rating) | |
FNMA | Federal National Mortgage Association | |
FRB | Federal Reserve Board | |
FSP | FASB Staff Position | |
GAAP | Generally Accepted Accounting Principles | |
GNMA | Government National Mortgage Association | |
GSE | Government sponsored entity | |
IRA | Individual Retirement Account | |
LHFS | Loans held for sale | |
LIBOR | London Interbank Offered Rate | |
LTV | Loan-to-value | |
MBS | Mortgage-backed security | |
MHFS | Mortgages held for sale | |
MSR | Mortgage servicing right | |
NAV | Net asset value | |
NPA | Nonperforming asset | |
OCC | Office of the Comptroller of the Currency | |
OCI | Other comprehensive income | |
OTC | Over-the-counter | |
OTTI | Other-than-temporary impairment | |
PCI Loans | Purchased credit-impaired loans are acquired loans with evidence of credit deterioration accounted for under FASB ASC 310-30 (AICPA Statement of Position 03-3) | |
PTPP | Pre-tax pre-provision profit | |
QSPE | Qualifying special purpose entity |
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RBC | Risk-based capital | |
ROA | Wells Fargo net income to average total assets | |
ROE | Wells Fargo net income applicable to common stock to average Wells Fargo common stockholders’ equity | |
SAFS | Securities available for sale | |
SCAP | Supervisory Capital Assessment Program | |
SEC | Securities and Exchange Commission | |
S&P | Standard & Poors | |
SIV | Structured investment vehicle | |
SPE | Special purpose entity | |
TDR | Troubled debt restructuring | |
TLGP | Temporary Liquidity Guarantee Program | |
VA | Department of Veterans Affairs | |
VAR | Value-at-risk | |
VIE | Variable interest entity | |
WFFCC | Wells Fargo Financial Canada Corporation | |
WFFI | Wells Fargo Financial, Inc. and its wholly-owned subsidiaries |
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Codification Topic | Superseded Authoritative Accounting Literature | |
FASB ASC 260,Earnings Per Share | FAS 128,Earnings Per Share,and FSP EITF 03-6-1,Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities | |
FASB ASC 310,Receivables | FAS 114,Accounting by Creditors for Impairment of a Loan, an Amendment of FASB Statements No. 5 and 15,and AICPA SOP 03-3,Accounting for Certain Loans or Debt Securities Acquired in a Transfer | |
FASB ASC 320,Investments — Debt and Equity Securities | FSP FAS 115-2 and FAS 124-2,Recognition and Presentation of Other-Than-Temporary Impairments | |
FASB ASC 715,Compensation — Retirement Benefits | FSP FAS 132(R)-1,Employers’ Disclosures about Postretirement Benefit Plan Assets | |
FASB ASC 718,Compensation — Stock Compensation | FAS 123(R),Share-Based Payment | |
FASB ASC 805,Business Combinations | FAS 141(R),Business Combinations | |
FASB ASC 810,Consolidation | FAS 160,Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 | |
FASB ASC 815,Derivatives and Hedging | FAS 133,Accounting for Derivative Instruments and Hedging Activities,and FAS 161,Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133 | |
FASB ASC 820,Fair Value Measurements and Disclosures | FAS 157,Fair Value Measurements | |
FASB ASC 820-10,Fair Value Measurements and Disclosures | FSP FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly | |
FASB ASC 825,Financial Instruments | FAS 107,Disclosures about Fair Value of Financial Instruments,and FAS 159,The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115,and FSP FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial Instruments | |
FASB ASC 855,Subsequent Events | FAS 165,Subsequent Events | |
FASB ASC 860,Transfers and Servicing | FAS 156,Accounting for Servicing of Financial Assets — an amendment of FASB Statement No. 140 |
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Maximum number of | ||||||||||||
Total number | shares that may yet | |||||||||||
of shares | Weighted-average | be repurchased under | ||||||||||
Calendar month | repurchased | (1) | price paid per share | the authorizations | ||||||||
July | 50,617 | $24.37 | 11,574,348 | |||||||||
August | 449,403 | 28.00 | 11,124,945 | |||||||||
September | 121,822 | 28.77 | 11,003,123 | |||||||||
Total | 621,842 | |||||||||||
(1) | All shares were repurchased under the authorization covering up to 25 million shares of common stock approved by the Board of Directors and publicly announced by the Company on September 23, 2008. Unless modified or revoked by the Board, this authorization does not expire. |
Dated: November 6, 2009 | WELLS FARGO & COMPANY | |||
By: | /s/ RICHARD D. LEVY | |||
Richard D. Levy | ||||
Executive Vice President and Controller (Principal Accounting Officer) |
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Exhibit | ||||
Number | Description | Location | ||
3(a) | Restated Certificate of Incorporation. | Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed September 28, 2006. | ||
3(b) | Certificate of Designations for the Company’s 2007 ESOP Cumulative Convertible Preferred Stock. | Incorporated by reference to Exhibit 3(a) to the Company’s Current Report on Form 8-K filed March 19, 2007. | ||
3(c) | Certificate Eliminating the Certificate of Designations for the Company’s 1997 ESOP Cumulative Convertible Preferred Stock. | Incorporated by reference to Exhibit 3(b) to the Company’s Current Report on Form 8-K filed March 19, 2007. | ||
3(d) | Certificate of Designations for the Company’s 2008 ESOP Cumulative Convertible Preferred Stock. | Incorporated by reference to Exhibit 3(a) to the Company’s Current Report on Form 8-K filed March 18, 2008. | ||
3(e) | Certificate Eliminating the Certificate of Designations for the Company’s 1998 ESOP Cumulative Convertible Preferred Stock. | Incorporated by reference to Exhibit 3(b) to the Company’s Current Report on Form 8-K filed March 18, 2008. | ||
3(f) | Certificate of Designations for the Company’s Non-Cumulative Perpetual Preferred Stock, Series A. | Incorporated by reference to Exhibit 4.8 to the Company’s Current Report on Form 8-K filed May 19, 2008. | ||
3(g) | Certificate of Designations for the Company’s Non-Cumulative Perpetual Preferred Stock, Series B. | Incorporated by reference to Exhibit 4.8 to the Company’s Current Report on Form 8-K filed September 10, 2008. | ||
3(h) | Certificate of Designations for the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series D. | Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed October 30, 2008. | ||
3(i) | Certificate of Designations for the Company’s Dividend Equalization Preferred Shares. | Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed December 30, 2008. | ||
3(j) | Certificate of Designations for the Company’s Class A Preferred Stock, Series G. | Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed December 30, 2008. | ||
3(k) | Certificate of Designations for the Company’s Class A Preferred Stock, Series H. | Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed December 30, 2008. | ||
3(l) | Certificate of Designations for the Company’s Class A Preferred Stock, Series I. | Incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed December 30, 2008. | ||
3(m) | Certificate of Designations for the Company’s 8.00% Non-Cumulative Perpetual Class A Preferred Stock, Series J. | Incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed December 30, 2008. | ||
3(n) | Certificate of Designations for the Company’s Fixed-to-Floating Rate Non-Cumulative Perpetual Class A Preferred Stock, Series K. | Incorporated by reference to Exhibit 4.6 to the Company’s Current Report on Form 8-K filed December 30, 2008. | ||
3(o) | Certificate of Designations for the Company’s 7.50% Non-Cumulative Perpetual Convertible Class A Preferred Stock, Series L. | Incorporated by reference to Exhibit 4.7 to the Company’s Current Report on Form 8-K filed December 30, 2008. | ||
3(p) | Certificate Eliminating the Certificate of Designations for the Company’s 1999 ESOP Cumulative Convertible Preferred Stock. | Incorporated by reference to Exhibit 3(a) to the Company’s Current Report on Form 8-K filed April 13, 2009. |
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Exhibit | ||||||||||||||||||||||
Number | Description | Location | ||||||||||||||||||||
3(q) | By-Laws. | Incorporated by reference to Exhibit 3 to the Company’s Current Report on Form 8-K filed December 4, 2006. | ||||||||||||||||||||
4(a) | See Exhibits 3(a) through 3(q). | |||||||||||||||||||||
4(b) | The Company agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of senior and subordinated debt of the Company. | |||||||||||||||||||||
12(a) | Computation of Ratios of Earnings to Fixed Charges: | Filed herewith. | ||||||||||||||||||||
Quarter ended | Nine months ended | |||||||||||||||||||||
Sept. 30 | , | Sept. 30 | , | |||||||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
Including interest on deposits | 2.90 | 1.97 | 2.70 | 2.01 | ||||||||||||||||||
Excluding interest on deposits | 4.05 | 2.65 | 3.62 | 2.89 | ||||||||||||||||||
(Computation is based on Wells Fargo net income.) | ||||||||||||||||||||||
12(b) | Computation of Ratios of Earnings to Fixed Charges and Preferred Dividends: | Filed herewith. | ||||||||||||||||||||
Quarter ended | Nine months ended | |||||||||||||||||||||
Sept. 30 | , | Sept. 30 | , | |||||||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
Including interest on deposits | 2.15 | 1.97 | 2.03 | 2.01 | ||||||||||||||||||
Excluding interest on deposits | 2.59 | 2.65 | 2.39 | 2.89 | ||||||||||||||||||
(Computation is based on Wells Fargo net income.) | ||||||||||||||||||||||
31(a) | Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | ||||||||||||||||||||
31(b) | Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Filed herewith. | ||||||||||||||||||||
32(a) | Certification of Periodic Financial Report by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350. | Furnished herewith. | ||||||||||||||||||||
32(b) | Certification of Periodic Financial Report by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and 18 U.S.C. § 1350. | Furnished herewith. |
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Exhibit | ||||
Number | Description | Location | ||
101* | Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009, is formatted in XBRL interactive data files: (i) Consolidated Statement of Income for the three months and nine months ended September 30, 2009 and 2008; (ii) Consolidated Balance Sheet at September 30, 2009, and December 31, 2008; (iii) Consolidated Statement of Changes in Equity and Comprehensive Income for the nine months ended September 30, 2009 and 2008; (iv) Consolidated Statement of Cash Flows for the nine months ended September 30, 2009 and 2008; and (v) Notes to Financial Statements, tagged as blocks of text. | Furnished herewith. |
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