Wells Fargo March 2011

Transcript

Citigroup Financial Services Conference John Stumpf p Chairman and Chief Executive Officer March 10, 2011 © 2011 Wells Fargo & Company. All rights reserved. Forward-looking statements and additional information This presentation contains forward-looking statements about our future financial performance. These forward-looking statements include statements using words such as “believe,” “expect,” “anticipate,” “estimate,” “should,” “may,” “can,” “will,” “outlook,” “appears” or similar expressions. Forward-looking statements in this presentation include, among others, statements about: expected or estimated future losses in our loan portfolios, including our belief that quarterly provision expense and quarterly total credit losses have peaked and the allowance for loan losses is expected to decline; mortgage repurchase exposure; exposure related to foreclosure practices; estimated future expenses, including expected Wachovia integration costs and loan resolution/loss mitigation costs; and our expectations that we will be above a 7% Tier 1 common ratio under proposed Basel capital rules within the next few quarters. Investors are urged to not unduly rely on forward-looking statements as actual results could differ materially from expectations. Forwardlooking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events th t occur after that date. For more information about factors that could cause actual results to differ materially t that ft th t d t F i f ti b tf t th t ld t l lt t diff t i ll from expectations, refer to Wells Fargo’s reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2010 including the discussion under “Risk Factors” in that report. Loans that were acquired from Wachovia that were considered credit impaired were written down at acquisition date in purchase accounting to an amount estimated to be collectible and the related allowance for loan losses was not carried over to Wells Fargo’s allowance. In addition, such purchased credit-impaired loans are not classified as nonaccrual or nonperforming, and are not included in loans that were contractually 90+ days past due and still accruing. Any losses on such loans are charged against the nonaccretable difference established in purchase accounting and are not reported as charge-offs (until such difference is fully utilized). As a result of accounting for purchased loans with evidence of , p y p p credit deterioration, certain ratios of the combined company are not comparable to a portfolio that does not include purchased credit-impaired loans. In certain cases, the purchased credit-impaired loans may affect portfolio credit ratios and trends. Management believes that the presentation of information adjusted to exclude the purchased creditimpaired loans provides useful disclosure regarding the credit quality of the non-impaired loan portfolio. Accordingly, certain of the loan balances and credit ratios in this presentation have been adjusted to exclude the purchased creditimpaired loans. References to impaired loans mean the purchased credit-impaired loans. Please see pages 31-33 of the fourth quarter 2010 press release for additional information regarding the purchased credit-impaired loans credit impaired loans. 1 Wells Fargo vision “ We want to satisfy all our customers’ financial needs, help them succeed financially, be the premier provider of financial services in every one of our markets, and be known as one of America’s great companies America s companies. ” 2 3 Overview  Leading franchise  Strong, consistent and high-quality earnings  Broad-based revenue growth with additional opportunities  Significant improvement in credit quality  Loan growth  Strong capital position 4 Wells Fargo serves consumers and businesses in more communities than any other U.S. Bank ▪ ▪ ▪ ▪ ▪ 70+MM customers 9,000 t 9 000 stores 12,000 ATMs 57,000 salespeople 18MM online banking customers Wells Fargo Bank stores Wachovia Bank stores Wells Fargo Advisors offices Wells Fargo Home Mortgage stores As of 4Q10. 5 Fulfilling our responsibility to our communities As of December 31, 2010 Credit extended since Wachovia merger g Residential real estate originations since Wachovia merger (1) $ 1,376 billion , $ 806 billion 635,000 , 272,200 (3) (2) Mortgage loan modifications since Wachovia merger Wells Fargo FTEs #2 Most generous corporate foundation in U.S. (2010) #1 Greenest Bank in U.S. (4) Wachovia merger completed on December 31, 2008. (1) Domestic lending commitments and origination activity. (2) As of January 31, 2011. (3) Source: Business Week. (4) 2010, Newsweek. 6 Breadth of product/business lines Deposits Residential mortgage #2 in U.S. (1) #1 Mortgage originator (2) #2 Mortgage servicing portfolio #1 #1 #1 #2 #2 #3 Small business banking (SBA lender) Commercial real estate lender (4) Used car lender (5) Arranger of asset-based finance (6) Education finance lender (private) Commercial loan syndications (7) (3) Lending Investment banking Insurance #1 Real estate loan syndications (lead arranger) #5 U.S. equity capital markets bookrunner (8) #1 Bank owned insurance brokerage Bank-owned #2 #2 #3 #4 (6) Wealth Management/Brokerage Banked-owned mutual fund family (9) Annuity distributor (based on sales) (10) Retail brokerage (based on FAs and client assets) Wealth management provider (based on AUM) (11) (13) Card Services #2 Debit card issuer (12) #1 U.S. bank managed remittance network overseas As of 4Q10. (1) FDIC data, June 2010. (2) Inside Mortgage Finance. (3) CRA data, 2009. (4) Mortgage Bankers Association. (5) AutoCount. (6) FY 2010, Thomson Reuters . (7) Bookrunner by number of transactions, FY 2010, Thomson Reuters. (8) SDC. (9) Strategic Insight. (10) SunLife Distributer Roundtable, May 2010. (11) Barron’s, September 2010. (12) Nielson Report. (13) Inter-American Dialogue. 7 Broad-based revenues and earnings (1) ($ in millions) 2010 Revenues 2010 Segment Net Income (1) Wholesale Banking $22,216 Community Banking Community Banking $7,118 WBR Wholesale Banking $5,773 $54,698 $11,730 $11 730 WBR $1,005 Community Banking Wholesale Banking Wealth, Wealth Brokerage & Retirement ROA 0.92% 1.55% 0.72% 0 72% (1) Segment net income after-tax excludes other net losses of $1,534 million in 2010 which includes Wachovia integration expenses and the elimination of items that are included in both Community Banking and Wealth, Brokerage & Retirement relating primarily to wealth management customers serviced, and products sold, in the stores. 8 Our distribution network is more extensive across the U.S. and reaches deeper into communities than any other U.S. financial institution Number of MSAs Wells Fargo Bank of America JPMorgan Chase 443 390 244 Deposit share of 100 largest MSAs Number of MSAs with Deposit Market Share over 15% 236 80 80 66 Deposit share of fastestgrowing MSAs Deposits per Store ($ in millions) 83 43 Wells Fargo ll Bank of k f America JPM Chase h Wells Fargo W ll F Bank f B k of America JPM Ch Chase Source: SNL Financial using FDIC data 6/30/2010. Caps deposits at $500mm in a single banking store. 9 Our business model has produced significantly higher operating margins than peer average NIM (10 year average 2001-2010) Net Interest Margin ROA (10 year average 2001-2010) Return on Assets 4.86 1.37 3.39 3.35 3.05 3 05 2.43 0.93 0.92 0.79 0.64 WFC All Peer Avg C BAC JPM WFC BAC All Peer Avg A C JPM All peer average includes Bank of America, BB&T, Citi, Fifth Third, JPM, Key Bank, PNC, Regions, SunTrust, US Bank. Source: SNL. Data through 4Q10. 10 Cross-sell, convenience and customer retention have produced a significant and sustainable advantage in core deposits Percent of funding from deposits (4Q10) (3Q 2010) Percent of Funding from Deposits Percent of deposits in2010) (FY checking/savings (3Q 2010) Average Cost of Deposits 67 1.00 49 45 44 44 0.70 0.35 0 35 0.39 0.40 WFC All Peer Avg A BAC C JPM WFC JPM BAC All Peer Avg C All peer average includes Bank of America, BB&T, Citi, Fifth Third, JPM, Key Bank, PNC, Regions, SunTrust, US Bank. Source: SNL. 11 Cross-sell and customer retention have produced greater fee income vs. peers Fee Income / Assets (FY 2010, Percentage) (10 Year Avg., 2001-2010, Percentage) Fee Income / Assets 3.30 3.24 2.52 2.58 2.41 2.35 All Peer Average 1.60 2.32 (1) 2.27 2.53 All Peer Average A (1) WFC JPM BAC C WFC JPM C BAC (1) All peer average includes Bank of America, BB&T, Citi, Fifth Third, JPM, Key Bank, PNC, Regions, SunTrust, US Bank. Source: SNL. 12 Lower credit losses versus peers have contributed to higher relative operating margins Charge-offs/ Loans (FY 2010, Percentage) (10 Year Avg. 2001-2010, Percentage) Charge-offs/ Loans 4.58 4 58 2.38 3.58 3.46 2.97 All Peer Average 2.30 1.67 (1) 1.51 1.25 1.27 All Peer Average (1) C BAC JPM WFC C JPM BAC WFC Wells Fargo’s charge-offs in part reflect reduced risk in the Wachovia portfolio due to PCI accounting performed for highest risk Wachovia loans. (1) All peer average includes Bank of America, BB&T, Citi, Fifth Third, JPM, Key Bank, PNC, Regions, SunTrust, US Bank. Source: SNL. 13 Pre-tax pre-provision profit (PTPP) (1)– a competitive advantage WFC PTPP / Charge-offs 2.8x 2009-2010 Average 2.2x 2.1x 2 1x 1.8x 1.8x 1.9x 2.1x 2 1x 2.1x 2 1x WFC BAC C JPM All Peers (2) 2.1 1.2 1.1 1.9 1.4 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Wells Fargo’s charge-offs in part reflect reduced risk in the Wachovia portfolio due to PCI accounting performed for highest risk Wachovia loans. (1) Pre-tax pre-provision profit (PTPP) is total revenue less noninterest expense. Management believes that PTPP is a useful measure because it enables investors and others to asses the company’s ability to generate capital to cover credit losses through a credit cycle. Wells Fargo’s charge-offs in part reflect reduced risk in the Wachovia portfolio due to PCI accounting performed for highest risk Wachovia loans. (2) All peers includes Bank of America, BB&T, Citi, Fifth Third, JPM, Key Bank, PNC, Regions, SunTrust, US Bank. 14 Record quarterly earnings in 4Q10 Net Income ($ in billions)  $3.4 billion record NIAT (1) in 4Q10, up 21% YoY, 9% linked quarter annualized (LQA)  $24.6 billion earned since Wachovia merger 3.3 3.1 3.4  $0 61 per share in 4Q10 $0.61 3.2 3.0 3.2 2.8 2.6 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 (1) Net income after tax. 15 Earnings growth driven by strong, broad-based revenue ($ in billions) Revenue  $21.5 billion revenue in 4Q10, up 12% linked quarter annualized (LQA)  60% of revenue in 4Q10 came from businesses Q growth with > 10% LQA g 22.5 21.0 22.5 22.7  Growth across the franchise in 4Q10: 21.4 21.4 20.9 21.5 - Period end loans up 2% LQA, up 6% LQA excluding $6.0 billion reduction in nonstrategic loans (1) - Mortgage originations up 27% - Checking/savings deposits up 17% annualized - Wealth, Brokerage and Retirement (WBR) client assets up 12% annualized - Trust and investment fees up 15% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Community Banking Revenue Wholesale Banking Revenue WBR Revenue Percent changes from 3Q10. (1) The non-strategic/liquidating loan portfolio includes the Pick-a-Pay, liquidating home equity, legacy WFF indirect auto, legacy WFF debt consolidation and Commercial and Commercial Real Estate PCI loan portfolios. 16 Retail bank cross-sell opportunities Retail Bank Household Cross-sell (1)(2) 14-16 7.2 5.1 5.7 6.1 East Combined Wells Fargo West Top Region g Avg. U.S. g Financial Servies Consumer (1) Number of products per household as of 4Q10. (2) Data used is for combined Wells Fargo. 17 Legacy Wells Fargo cross-sell capability is built over 20 years and proven over time We continue to grow households… Retail Bank household growth 3.7% 3.1% 2.9% 3.0% 2.5% 3.5% (1)(2)(3) …and household cross-sell over time Retail Bank household cross-sell (1)(2)(3) 3.3% 4.35 4.57 4.82 5.21 5.53 5 53 5.73 5 73 5.95 5.47 5 47 5.70 5 70 Leg WF 2004 Leg WF 2005 Leg WF 2006 Leg WF 2007 Leg WF 2008 Leg WF 2009 Comb'd WF 2010 Leg WF Leg WF Leg WF Leg WF Leg WF Leg WF Leg WF 2003 2004 2005 2006 2007 2008 2009 Comb'd Comb'd WF 2009WF 2010 The more products our customers have, the more value we can provide p Total package penetration (3) (combined consumer and business) 81% The more we know our customers, the more we can satisfy their needs and remain relevant over time Retail Bank household cross-sell by tenure 2004 Legacy WF 2010 Com bined WF 2.9 3.7 3.7 4.4 4.3 (2) 6.7 67 5.4 5.1 5.6 7.1 26% Leg WF 2003 West 2010 <1 2 to 3 (1) Retail Bank Households for combined company for 2009 and 2010 periods (unless otherwise noted) (2) Period-ending results (3) Legacy WF includes legacy WF states (not Kansas), East includes WB stand alone states except for Kansas, and the West includes legacy WF states, including overlapping states and Kansas 5 to 6 10 to 20 Tenure in years 20+ 18 Retail bank staffing and deepening relationship opportunities Metric Retail households (1)(2) Retail Bank household product penetration (1)(2) East West East West Households / Store Household Cross-sell Households / Platform FTE 3,575 6.14 625 3,400 5.11 855 Retail Checking Debit Retail Savings Credit Card 91% 85% 73% 33% 9% 14% 89% 75% 66% 14% 4% 10% Solutions/Productivity Insurance 5.7 20,000 4.0 11,000 Mortgage Platform FTE / Store Platform FTE With our partners, we have opportunity to cross-sell new retail products to our Eastern customer bases (1) 4Q10. (2) Data used is for combined Wells Fargo. 19 Cross-sell, convenience and customer retention have produced a significant and sustainable advantage in core deposits Consumer Checking Account Net Gain WFC PPNR / Charge-Offs 7.5% 6.2% 5.8% 4.7% 4.7% 2006 2007 2008 2009 2010 2006-2008 are legacy Wells Fargo only. 2009 and 2010 are for the combined company. 20 WBR opportunities Client Assets ($ in trillions) $1.4 347,704 $1.3 $1 3 Key HH (2) with Envision Plan ® 418,221 2009 (1) 2010 (1) 2009 2010 Managed Accounts g ($ in billions) 235 Recurring Revenue as a % of Total Revenue 70% 65% 197 2009 2010 2009 2010 Period end balances. (1) Includes $50 billion and $48 billion of Wealth deposits for 2009 and 2010, respectively, previously not included in reported client assets. (2) Key households (HH) defined as those with $250,000 of assets with the company. 21 Wells Fargo Securities – Investment Banking opportunities  Wells Fargo Securities takes a client-centric,     relationship-based approach to investment banking We leverage our deep long-term client relationships across thousands of corporate and institutional clients We believe we take less risk than peers, we focus primarily on the U.S. and have a segregated credit culture We have complete distribution capabilities, including sales, trading and research Opportunities for growth include: Product and Industry Leadership League Table Leadership (1) Volume Rank Loan Syndications (2) Preferreds (3) High Yield (3) Equity Cap a Markets (4) qu y Capital a e s Municipals (5) #4 #1 #9 #9 9 #7 Market Share 9% 23% 6% 5% 6% # of Deals Rank #3 #1 #8 #5 5 #14 − Cross-sell • Investment banking revenue from commercial customers increased 44% in 2010 driven by strong growth in leveraged loan syndications, high yield originations and M&A advisory − Growing advisory business − Investing in and growing our talent base • Added more than 500 team members since the merger, with strategic hires in key sectors − Leveraging our retail brokerage network  Solidly profitable each quarter since the Wachovia merger (1) FY 2010, U.S. only. (2) Thomson Reuters. (3) Bloomberg. (4) SDC (IPOs and follow-ons). (5) Thomson Reuters, Municipal competitive bond issues. 22 Earnings growth reflects continued decline in charge-offs / provision expense Provision Expense ($ in billions)  $3.8 billion net charge-offs in 4Q10, down 29% from 4Q09 peak  Provision expense of $3.0 billion in 4Q10, down $ $456 million from 3Q10 ($256 million fewer Q ($ losses and $200 million higher reserve release) 6.11 5.91 1.00 5.09 4.56 4 56 0.50 5.33 3.99 3 99 (0.50) 3.45 (0.65) 2.99 (0.85)  Allowance for credit losses = $23.5 billion at 12/31/10 = 6.1x quarterly charge-offs  Remaining PCI nonaccretable at 12/31/10 = 29.5% 29 5% of remaining UPB (1) 0.70 0 70 1.30 5.11 4.39 3.26 5.41 5 41 5.33 4.49 4.10 3.84 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Net Charge-offs N t Ch ff Credit Reserve B ild C dit R Build Reserve Release (1) Unpaid principal balance for PCI loans that have not had a UPB charge-off. Wells Fargo’s charge-offs in part reflect reduced risk in the Wachovia portfolio due to PCI accounting performed for highest risk Wachovia loans. 23 Leading credit metrics point to continued credit improvement Nonperforming Assets ($ in billions) Nonperforming Loan Flows 34.6 6.3 31.5 27.6 23.5 23 5 18.3 12.6 2.1 10.5 15.8 2.5 20.9 24.4 27.3 2.6 3.2 32 4.2 32.9 5.1 32.4 6.2 ($ in billions) 4Q09 1Q10 2Q10 3Q10 4Q10 Commercial Inflows Outflows Ending balance Consumer Inflows Outflows Ending balance g 3.8 (2.5) (2 5) 11.7 2.8 (2.2) (2 2) 12.3 2.5 (2.6) (2 6) 12.2 2.8 (2.4) (2 4) 12.6 2.3 (3.6) (3 6) 11.3 27.8 28.3 26.2 5.6 (3.4) 12.7 6.1 (3.8) 15.0 4.8 (4.2) 15.6 4.9 (4.8) 15.7 4.3 (5.1) 14.9 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 (1) 4Q10 Nonperforming loans REO/Foreclosed assets/Other Loans 90+ DPD and Still Accruing ($ in billions) Early Stage Delinquencies – Retail Businesses (30+ days past due) 6.9 5.2 1.4 7.44% 6.0 2.0 6.0 2.1 2.6 6.0 2.3 6.69% 7.34% 7.18% 7.54% 7.21% 5.0 1.7 17 4.3 1.1 3.8 38 0.6 3.8 4.0 3.9 4.3 3.7 3.3 3.2 3.2 1Q09 2Q09 3Q09 4Q09 Consumer 1Q10 2Q10 3Q10 4Q10 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Commercial (1) Excludes FHA insured/VA guaranteed loans. The carrying value of PCI loans contractually 90 days or more past due was $11.6 billion in 4Q10, $13.0 billion in 3Q10, $15.1 billion in 2Q10, $16.8 billion in 1Q10 and $16.1 billion in 4Q09. These PCI loans are also excluded because they are considered to be accruing due to the existence of accretable yield and not based on contractual interest payments. Consumer includes mortgage loans held for sale 90 days or more past due and still accruing. 24 Expense discipline 4Q10 Actual $ Potential average quarterly expense level 2011 2012 (pre-tax, $ in millions) Wachovia integration costs Loan resolution/loss mitigation costs Wells Fargo Financial residual costs Charitable contribution to Wells Fargo Foundation Advertising/travel/equipment (LQ seasonally higher) Other expense Corporate-wide expense reduction focused on process p , p g , g improvements, improving time to market, reducing complexity and eliminating redundancies Total 4Q10 Noninterest expense 533 827 344 400 1,226 10,010 (1) 375 475 375-475 600-775 225-275 - 75 125 75-125 550-650 200-250 - TBD TBD TBD TBD $ 13,340 (1) Includes merger integration expense of $70 million for 4Q10. 25 Loans outstanding Period–end Loans Outstanding ($ in billions)  Loans increased $3.6 billion, or 0.5%, in 4Q10 from 3Q10 - C&I up $4.0 billion on new relationships; line 843.6 162.9 821.6 154.9 utilization relatively stable though lower than 1Q09 demand 800.0 149.2 782.8 142.0 781.4 135.3 766.3 753.7 128.1 121.7 757.3 115.7 - Foreign up $3.2 billion driven by trade finance - Real estate 1-4 family first mortgage up $2.2 billion reflecting strong mortgage originations  All other loans in 4Q10 up $9.6 billion, or 6% 680.7 LQA, excluding $6.0 billion decline in the nonstrategic portfolio (Pick-a-Pay, liquidating, home equity, indirect auto, debt consolidation, all other PCI loans) 666.7 650.8 640.8 646.1 638.2 632.0 641.6 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 (1) 4Q10 All other loans Non-strategic portfolio Period-end balances. (1) The non-strategic/liquidating portfolio includes the Pick-a-Pay, liquidating home equity, legacy WFF indirect auto, legacy WFF debt consolidation and Commercial and Commercial Real Estate PCI loan portfolios. 26 Mortgage servicing Residential Mortgage Servicing Portfolio $1.8 Trillion (as of December 31, 2010) 16% 4Q10 Delinquency Performance (1) (Data as of December 31, 2010) 7% 7% 14% 12% 10% Foreclosure Rate Delinquency Rate 11.60% 14.30% 4.16% 11.25% 8.96% 8 96% 8.02% 2.74% 2.19% 4.29% 4 29% 3.63% 3 63% 20% 8% 6% 66% 4% 5.83% 6.22% 7.31% 10.14% 7.62% 7 62% 2% 0% Wells Fargo Citi JPM Chase Bank of America Industry (2) Agency Retained and acquired portfolio Non-agency securitizations of WFC originated loans Non-agency acquired servicing and private whole loan sales  Wells Fargo total delinquency and foreclosure ratio for 4Q10 was 8.02%, down from a peak of 8.96% in 4Q09 (1) Inside Mortgage Finance. (2) Industry is all large servicers ($6.7 trillion) including WFC, C, JPM and BAC. 27 Capital is strong and continued to grow internally  Tier 1 Common Equity Ratio   8.30% Internal capital generation in 4Q10 = 12% annualized ($3.5 billion) Tier 1 common +29 bps in 4Q10 Other O h capital ratios growing i l i i Tier 1 Capital = 11.16% Tier 1 Leverage = 9.19% - 2001-2007 Avg = 7.0% g 6.46% 5.18% 4.49% 7.61% 7.09% 8.01%  Expect to be above a 7% Tier 1 common equity ratio under B it ti d Basel III within the next l ithi th t few quarters Objective: increase dividend, repurchase shares, redeem callable TRUPS (1) $2.5 billion Wachovia Income Trust Securities (WITS) remarketed and proceeds will be used to purchase noncumulative perpetual preferred stock  3.12% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 See the appendix for more information on Tier 1 common equity. (1) Subject to regulatory approval and, with respect to the TRUPS, the satisfaction of any other applicable conditions. 28 Summary  Leading franchise  Strong, consistent and high-quality earnings  Broad-based revenue growth with additional opportunities  Significant improvement in credit quality  Loan growth  Strong capital position 29 Appendix 30 Tier 1 common equity reconciliation Wells Fargo & Company and Subsidiaries (1) TIER 1 COMMON EQUITY Quarter ended ($ in billions) Total equity Noncontrolling interests Total Wells Fargo stockholders' equity Adjustments: Preferred equity Goodwill d i t G d ill and intangible assets ( th than MSRs) ibl t (other th MSR ) Applicable deferred taxes Deferred tax asset limitation MSRs over specified limitations Cumulative other comprehensive income Other Tier 1 common equity (A) Total risk-weighted assets (2) Dec. 31, 2010 $ 127.9 (1.5) 126.4 (8.1) (35.5) (35 5) 4.3 (0.9) (4.6) (0.3) 81.3 8.30 % Sept. 30, 2010 125.2 (1.5) 123.7 (8.1) (36.1) (36 1) 4.7 (0.9) (5.4) (0.3) 77.6 968.4 8.01 June 30, 2010 121.4 (1.6) 119.8 (8.1) (36.7) (36 7) 5.0 (1.0) (4.8) (0.3) 73.9 970.8 7.61 Mar. 31, 2010 118.1 (2.0) 116.1 (8.1) (37.2) (37 2) 5.2 (1.5) (4.0) (0.3) 70.2 990.1 7.09 Dec. 31, 2009 114.4 (2.6) 111.8 (8.1) (37.7) (37 7) 5.3 (1.0) (1.6) (3.0) (0.2) 65.5 1,013.6 6.46 Sept. 30, 2009 128.9 (6.8) 122.1 (31.1) (37.5) (37 5) 5.3 (1.5) (4.0) (0.3) 53.0 1,023.8 5.18 June 30, 2009 121.4 (6.8) 114.6 (31.0) (38.7) (38 7) 5.5 (2.0) (1.6) 0.6 (0.3) 47.1 1,047.7 4.49 Mar. 31, 2009 107.1 (6.8) 100.3 (30.9) (38.6) (38 6) 5.7 (4.7) (1.2) 3.6 (0.8) 33.4 1,071.5 3.12 $ (B) (A)/(B) $ 980.0 Tier 1 common equity to total risk-weighted assets (1) T ier 1 common equity is a non-generally accepted accounting principle (GAAP) financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. T ier 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 T ier 1 regulatory capital limitations covering deferred taxes, MSRs, and cumulative other comprehensive income. Management reviews T ier 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 non GAAP information equity 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. T he aggregate dollar amount in each risk category is then multiplied by the risk weight associated with that category. T he resulting weighted values from each of the risk categories are aggregated for determining total risk-weighted assets. 31