Wells Fargo 2014 Annual Report Download - page 150

Note 1: Summary of Significant Accounting Policies (continued)
enforceability of the arrangement, it is our policy to present
derivatives balances and related cash collateral amounts net on
the balance sheet. Counterparty credit risk related to derivatives
is considered in determining fair value and our assessment of
hedge effectiveness.
Private Share Repurchases
During 2014 and 2013, we repurchased approximately
66 million shares and 40 million shares of our common stock,
respectively, under private forward repurchase contracts. We
enter into these transactions with unrelated third parties to
complement our open-market common stock repurchase
strategies, to allow us to manage our share repurchases in a
manner consistent with our capital plans, currently submitted
under the 2014 Comprehensive Capital Analysis and Review
(CCAR), and to provide an economic benefit to the Company.
Our payments to the counterparties for these private share
repurchase contracts are recorded in permanent equity in the
quarter paid and are not subject to re-measurement. The
classification of the up-front payments as permanent equity
assures that we have appropriate repurchase timing consistent
with our 2014 capital plan, which contemplated a fixed dollar
amount available per quarter for share repurchases pursuant to
Federal Reserve Board (FRB) supervisory guidance. In return,
the counterparty agrees to deliver a variable number of shares
based on a per share discount to the volume-weighted average
stock price over the contract period. There are no scenarios
where the contracts would not either physically settle in shares
or allow us to choose the settlement method.
In fourth quarter 2014, we entered into a private forward
repurchase contract and paid $750 million to an unrelated third
party. This contract settled in first quarter 2015 for 14.3 million
shares of common stock. At December 31, 2013, we had a
$500 million private forward repurchase contract outstanding
that settled in first quarter 2014 for 11.1 million shares of
common stock. Our total number of outstanding shares of
common stock is not reduced until settlement of the private
share repurchase contract.
SUPPLEMENTAL CASH FLOW INFORMATION Noncash
activities are presented below, including information on
transfers affecting MHFS, LHFS, and MSRs.
Year ended December 31,
(in millions) 2014 2013 2012
Trading assets retained from securitizations of MHFS
Capitalization of MSRs from sale of MHFS
Transfers from loans to MHFS
Transfers from loans to LHFS
Transfers from loans to foreclosed and other assets (1)
Transfers from available-for-sale to held-to-maturity securities
$ 28,604
1,302
11,021
9,849
4,094
1,810
47,198
3,616
7,610
274
4,470
6,042
85,108
4,988
7,584
143
6,114
—
(1) Includes $2.5 billion, $2.7 billion and $3.5 billion in transfers of government insured/guaranteed loans for the years ended December 31, 2014, 2013 and 2012,
respectively. During fourth quarter 2014, we adopted Accounting Standards Update (ASU) 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans Upon
Foreclosure, effective as of January 1, 2014, resulting in the transfer of these loans to accounts receivables for the year ended December 31, 2014.
SUBSEQUENT EVENTS We have evaluated the effects of events
that have occurred subsequent to December 31, 2014, and there
have been no material events that would require recognition in
our 2014 consolidated financial statements or disclosure in the
Notes to the consolidated financial statements.
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