Wells Fargo 2008 Annual Report Download - page 103

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Statement of Net Assets Acquired (at fair value)
(in millions) December 31, 2008
ASSETS
Cash and cash equivalents $109,534
Trading account assets 44,102
Securities 67,356
Loans 450,967
Allowance for loan losses (7,487)
Loans, net 443,480
Goodwill 8,802
Other intangible assets
Core deposit intangible 11,625
Brokerage relationship intangible 1,260
Other relationship intangibles 1,855
Other assets 18,507
Total assets 706,521
LIABILITIES
Deposits 426,126
Short-term borrowings 69,383
Other liabilities 27,962
Long-term debt 159,958
Total liabilities 683,429
Net assets acquired $ 23,092
Purchase Price and Goodwill
Purchase price:
Value of common shares $ 14,621
Value of preferred shares 8,409
Other (value of share based awards
and direct acquisition costs) 62
Total purchase price 23,092
Allocation of the purchase price:
Wachovia tangible stockholders’ equity,
less prior purchase accounting adjustments
and other basis adjustments eliminated in
purchase accounting 19,394
Adjustments to reflect assets acquired and
liabilities assumed at fair value:
Loans and leases, net (16,397)
Premises and equipment, net (456)
Intangible assets 14,740
Other assets (3,444)
Deposits (4,434)
Accrued expenses and other liabilities
(exit, termination and other liabilities) (1,599)
Long-term debt (190)
Deferred taxes 6,676
Fair value of net assets acquired 14,290
Goodwill resulting from the merger $ 8,802
(in millions, except per share data) Year ended December 31, 2008 Year ended December 31, 2007
Wells Wachovia Pro forma Pro forma Wells Wachovia Pro forma Pro forma
Fargo adjustments combined Fargo adjustments combined
Interest income $34,898 $ 36,867 $ (2,123) $ 69,642 $35,177 $42,231 $ (2,123) $75,285
Interest expense 9,755 18,329 (2,577) 25,507 14,203 24,101 (2,577) 35,727
Net interest income 25,143 18,538 454 44,135 20,974 18,130 454 39,558
Provision for credit losses (1) 15,979 22,431 — 38,410 4,939 2,261 — 7,200
Net interest income
(loss) after provision
for credit losses 9,164 (3,893) 454 5,725 16,035 15,869 454 32,358
Noninterest income 16,754 3,875 — 20,629 18,416 13,297 — 31,713
Noninterest expense (2) 22,661 49,017 2,464 74,142 22,824 20,393 2,464 45,681
Income (loss) before
taxes (benefit) 3,257 (49,035) (2,010) (47,788) 11,627 8,773 (2,010) 18,390
Income taxes (benefit) 602 (4,711) (746) (4,855) 3,570 2,461 (746) 5,285
Net income (loss) $ 2,655 $(44,324) $ (1,264) $(42,933) $ 8,057 $ 6,312 $ (1,264) $13,105
Net income (loss) applicable
to common stock $ 2,369 $(44,873) $ (1,264) $(43,768) $ 8,057 $ 6,312 $ (1,264) $13,105
Earnings (loss) per
common share $ 0.70 $ (21.50) $ — $ (11.54) $ 2.41 $ 3.31 $ — $ 3.52
Diluted earnings (loss)
per common share $ 0.70 $ (21.50) $ — $ (11.54) $ 2.38 $ 3.26 $ — $ 3.48
Average common
shares outstanding 3,378.1 2,087.4 (1,671.8) 3,793.7 3,348.5 1,907.2 (1,527.5) 3,728.2
Diluted average common
shares outstanding 3,391.3 2,097.4 (1,679.8) 3,808.9 3,382.8 1,934.2 (1,549.2) 3,767.8
(1) For 2008 includes $2.7 billion and $1.2 billion recorded by Wells Fargo and Wachovia, respectively, to conform credit reserve practices of both companies.
(2) For 2008 includes goodwill impairment of $24.8 billion recorded by Wachovia on a historical basis.
The pro forma purchase accounting adjustments related
to loans and leases, bank-owned life insurance, deposits and
long-term debt are being accreted or amortized into income
using methods that approximate a level yield over their
respective estimated lives. Purchase accounting adjustments
related to identifiable intangibles are being amortized and
recorded as noninterest expense over their respective
estimated lives using accelerated methods. The pro forma
consolidated condensed statements of income do not reflect
any adjustments to Wachovia’s historical provision for credit
losses and goodwill impairment charges.
Pro Forma Consolidated Condensed Statements of Income (Unaudited)