Wells Fargo 2005 Annual Report Download - page 113

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111
(in millions) December 31,
2005 2004
Carrying Estimated Carrying Estimated
amount fair value amount fair value
FINANCIAL ASSETS
Mortgages held for sale $ 40,534 $ 40,666 $ 29,723 $ 29,888
Loans held for sale 612 629 8,739 8,972
Loans, net 306,966 307,721 283,824 285,488
Nonmarketable equity investments 5,090 5,533 5,229 5,494
FINANCIAL LIABILITIES
Deposits 314,450 314,301 274,858 274,900
Long-term debt
(1)
79,654 78,868 73,560 74,085
(1) The carrying amount and fair value exclude obligations under capital leases of $14 million and $20 million at December 31, 2005 and 2004, respectively.
Financial Liabilities
DEPOSIT LIABILITIES
FAS 107 states that the fair value of deposits with no stated
maturity, such as noninterest-bearing demand deposits,
interest-bearing checking and market rate and other savings,
is equal to the amount payable on demand at the measurement
date. The amount included for these deposits in the following
table is their carrying value at December 31, 2005 and 2004.
The fair value of other time deposits is calculated based on
the discounted value of contractual cash flows. The discount
rate is estimated using the rates currently offered for like
wholesale deposits with similar remaining maturities.
SHORT-TERM FINANCIAL LIABILITIES
Short-term financial liabilities include federal funds pur-
chased and securities sold under repurchase agreements,
commercial paper and other short-term borrowings.
The carrying amount is a reasonable estimate of fair
value because of the relatively short time between the
origination of the instrument and its expected realization.
LONG-TERM DEBT
The discounted cash flow method is used to estimate the
fair value of our fixed-rate long-term debt. Contractual
cash flows are discounted using rates currently offered
for new notes with similar remaining maturities.
Derivatives
The fair values of derivatives are reported in Note 26.
Limitations
We make these fair value disclosures to comply with the
requirements of FAS 107. The calculations represent man-
agement’s best estimates; however, due to the lack of broad
markets and the significant items excluded from this disclosure,
the calculations do not represent the underlying value of the
Company. The information presented is based on fair value
calculations and market quotes as of December 31, 2005
and 2004. These amounts have not been updated since year
end; therefore, the valuations may have changed significantly
since that point in time.
As discussed above, some of our asset and liability financial
instruments are short-term, and therefore, the carrying amounts
in the Consolidated Balance Sheet approximate fair value.
Other significant assets and liabilities, which are not consid-
ered financial assets or liabilities and for which fair values
have not been estimated, include mortgage servicing rights,
premises and equipment, goodwill and other intangibles,
deferred taxes and other liabilities.
This table is a summary of financial instruments, as
defined by FAS 107, excluding short-term financial assets
and liabilities, for which carrying amounts approximate
fair value, and trading assets, securities available for sale
and derivatives, which are carried at fair value.