Wells Fargo 2009 Annual Report Download - page 99

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Notes to Financial Statements
Wells Fargo & Company is a diversified financial services
company. We provide banking, insurance, investments, mortgage
banking, investment banking, retail banking, brokerage, and
consumer finance through banking stores, the internet and
other distribution channels to consumers, businesses and
institutions in all 50 states, the District of Columbia, and
in other countries. When we refer to “Wells Fargo,” “the
Company,” “we,” “our” or “us” in this Form 10-K, we mean
Wells Fargo & Company and Subsidiaries (consolidated).
Wells Fargo & Company (the Parent) is a financial holding
company and a bank holding company. We also hold a
majority interest in a retail brokerage subsidiary and a real
estate investment trust, which has publicly traded preferred
stock outstanding.
Our accounting and reporting policies conform with
U.S. generally accepted accounting principles (GAAP) and
practices in the financial services industry. To prepare the
financial statements in conformity with GAAP, management
must make estimates based on assumptions about future
economic and market conditions (for example, unemploy-
ment, market liquidity, real estate prices, etc.) that affect the
reported amounts of assets and liabilities at the date of the
financial statements and income and expenses during the
reporting period and the related disclosures. Although our
estimates contemplate current conditions and how we expect
them to change in the future, it is reasonably possible that in
2010 actual conditions could be worse than anticipated in
those estimates, which could materially affect our results of
operations and financial condition. Management has made
significant estimates in several areas, including the evaluation
of other-than-temporary impairment (OTTI) on investment
securities (Note 5), allowance for credit losses and purchased
credit-impaired (PCI) loans (Note 6), valuing residential
mortgage servicing rights (MSRs) (Notes 8 and 9) and
financial instruments (Note 16), pension accounting (Note 19)
and income taxes (Note 20). Actual results could differ from
those estimates. Among other effects, such changes could
result in future impairments of investment securities, increases
to the allowance for loan losses, as well as increased future
pension expense.
On December 31, 2008, Wells Fargo acquired Wachovia
Corporation (Wachovia). Because the acquisition was com-
pleted at the end of 2008, Wachovia’s results of operations
are included in the income statement and average balances
beginning in 2009. Wachovia’s assets and liabilities are
included in the consolidated balance sheet beginning on
December 31, 2008. The accounting policies of Wachovia have
been conformed to those of Wells Fargo as described herein.
On January 1, 2009, the Company adopted new accounting
guidance on noncontrolling interests on a retrospective basis
for disclosure as required in FASB Accounting Standards
Codification (ASC) 810, Consolidation. Accordingly, prior
period information reflects the adoption. The guidance
requires that noncontrolling interests be reported as a
component of total equity. In addition, the consolidated
income statement must disclose amounts attributable to
both Wells Fargo interests and the noncontrolling interests.
Effective July 1, 2009, the FASB established the Codification
as the source of authoritative GAAP for companies to use
in the preparation of financial statements. Securities and
Exchange Commission (SEC) rules and interpretive releases
are also authoritative GAAP for SEC registrants. The guidance
contained in the Codification supersedes all existing non-SEC
accounting and reporting standards. We adopted the Codification,
as required, in third quarter 2009. As a result, references to
accounting literature contained in our financial statement dis-
closures have been updated to reflect the new ASC structure.
References to superseded authoritative literature are shown
parenthetically below, and cross-references to pre-Codification
accounting standards are included at the end of this Report.
Note 1: Summary of Significant Accounting Policies
See the Glossary of Acronyms at the end of this Report for terms used throughout the Financial Statements and related Notes of this Form 10-K
and the Codification Cross Reference at the end of this Report for cross references from accounting standards under the recently adopted
Financial Accounting Standards Board (FASB) Accounting Standards Codification (Codification) to pre-Codification accounting standards.