Wells Fargo 2007 Annual Report Download - page 87

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We regularly explore opportunities to acquire financial services
companies and businesses. Generally, we do not make a public
announcement about an acquisition opportunity until a
definitive agreement has been signed.
Note 2: Business Combinations
Business combinations completed in 2007, 2006 and
2005 are presented below.
For information on additional consideration related to
acquisitions, which is considered to be a guarantee, see Note 15.
84
When we discontinue hedge accounting because a deriva-
tive no longer qualifies as an effective fair value hedge, we
continue to carry the derivative in the balance sheet at its
fair value with changes in fair value included in earnings,
and no longer adjust the previously hedged asset or liability
for changes in fair value. Previous adjustments to the hedged
item are accounted for in the same manner as other compo-
nents of the carrying amount of the asset or liability.
When we discontinue cash flow hedge accounting because
the hedging instrument is sold, terminated, or no longer des-
ignated (de-designated), the amount reported in other com-
prehensive income up to the date of sale, termination or de-
designation continues to be reported in other comprehensive
income until the forecasted transaction affects earnings.
When we discontinue cash flow hedge accounting because
it is probable that a forecasted transaction will not occur, we
continue to carry the derivative in the balance sheet at its
fair value with changes in fair value included in earnings,
and immediately recognize gains and losses that were accu-
mulated in other comprehensive income in earnings.
In all other situations in which we discontinue hedge
accounting, the derivative will be carried at its fair value in
the balance sheet, with changes in its fair value recognized in
current period earnings.
We occasionally purchase or originate financial instru-
ments that contain an embedded derivative. At inception of
the financial instrument, we assess (1) if the economic char-
acteristics of the embedded derivative are not clearly and
closely related to the economic characteristics of the financial
instrument (host contract), (2) if the financial instrument
that embodies both the embedded derivative and the host
contract is not measured at fair value with changes in fair
value reported in earnings, and (3) if a separate instrument
with the same terms as the embedded instrument would meet
the definition of a derivative. If the embedded derivative
meets all of these conditions, we separate it from the host
contract by recording the bifurcated derivative at fair value
and the remaining host contract at the difference between
the basis of the hybrid instrument and the fair value of the
bifurcated derivative. The bifurcated derivative is carried as a
free-standing derivative at fair value with changes recorded
in current period earnings.
(in millions) Date Assets
2007
Placer Sierra Bancshares, Sacramento, California June 1 $ 2,644
Certain assets of The CIT Group/Equipment Financing, Inc., Tempe, Arizona June 29 2,888
Greater Bay Bancorp, East Palo Alto, California October 1 8,204
Certain Illinois branches of National City Bank, Cleveland, Ohio December 7 61
Other (1) Various 61
$13,858
2006
Secured Capital Corp/Secured Capital LLC, Los Angeles, California January 18 $ 132
Martinius Corporation, Rogers, Minnesota March 1 91
Commerce Funding Corporation, Vienna, Virginia April 17 82
Fremont National Bank of Canon City/Centennial Bank of Pueblo,
Canon City and Pueblo, Colorado June 7 201
Certain assets of the Reilly Mortgage Companies, McLean, Virginia August 1 303
Barrington Associates, Los Angeles, California October 2 65
EFC Partners LP (Evergreen Funding), Dallas, Texas December 15 93
Other (2) Various 20
$ 987
2005
Certain branches of PlainsCapital Bank, Amarillo, Texas July 22 $ 190
First Community Capital Corporation, Houston, Texas July 31 644
Other (3) Various 40
$ 874
(1) Consists of six acquisitions of insurance brokerage and third party health care payment processing businesses.
(2) Consists of seven acquisitions of insurance brokerage businesses.
(3) Consists of eight acquisitions of insurance brokerage and lockbox processing businesses.