Wells Fargo 2015 Annual Report Download - page 103

Bank of Des Moines, and as of December 31, 2015, Wells Fargo
Bank, N.A. had outstanding advances of $37.1 billion across the
Federal Home Loan Bank System. In January 2016, Wells Fargo
Bank, N.A. executed an additional $12.5 billion in Federal Home
Loan Bank advances.
Credit Ratings Investors in the long-term capital markets, as
well as other market participants, generally will consider, among
other factors, a company’s debt rating in making investment
decisions. Rating agencies base their ratings on many
quantitative and qualitative factors, including capital adequacy,
liquidity, asset quality, business mix, the level and quality of
earnings, and rating agency assumptions regarding the
probability and extent of federal financial assistance or support
for certain large financial institutions. Adverse changes in these
factors could result in a reduction of our credit rating; however,
our debt securities do not contain credit rating covenants.
On October 5, 2015, Fitch Ratings, Inc. affirmed all the
ratings of Wells Fargo and its rated subsidiaries. On
December 2, 2015, Standard and Poor’s Ratings Services (S&P)
completed their assessment of whether to continue
incorporating the likelihood of extraordinary government
support into the ratings of eight bank holding companies,
including the Parent, in light of regulatory progress toward
Table 54: Credit Ratings as of December 31, 2015
developing a resolution regime that reduces the likelihood of
government support. S&P concluded that it was appropriate to
remove from its ratings the uplift created by the likelihood of
government support and, as a result, the ratings of all eight bank
holding companies, including the Parent, were lowered by one
notch. S&P also concluded that nondeferrable subordinated debt
issued by a bank should be treated as hybrid capital. As a result,
the nondeferrable subordinated debt of Wells Fargo Bank, N.A.,
and several other banks, was lowered one notch. Both the Parent
and Wells Fargo Bank, N.A. remain among the top-rated
financial firms in the U.S.
See the “Risk Management – Asset/Liability Management”
and “Risk Factors” sections in this Report for additional
information regarding our credit ratings as of December 31,
2015, and the potential impact a credit rating downgrade would
have on our liquidity and operations, as well as Note 16
(Derivatives) to Financial Statements in this Report for
information regarding additional collateral and funding
obligations required for certain derivative instruments in the
event our credit ratings were to fall below investment grade.
The credit ratings of the Parent and Wells Fargo Bank, N.A.
as of December 31, 2015, are presented in Table 54.
Wells Fargo & Company Wells Fargo Bank, N.A.
Senior debt
Short-term
borrowings
Long-term
deposits
Short-term
borrowings
Moody's A2 P-1 Aa1 P-1
S&P A A-1 AA- A-1+
Fitch Ratings, Inc. AA- F1+ AA+ F1+
DBRS AA R-1* AA** R-1**
* middle **high
FEDERAL HOME LOAN BANK MEMBERSHIP The Federal
Home Loan Banks (the FHLBs) are a group of cooperatives that
lending institutions use to finance housing and economic
development in local communities. We are a member of the
FHLBs based in Dallas, Des Moines and San Francisco. Each
member of the FHLBs is required to maintain a minimum
investment in capital stock of the applicable FHLB. The board of
directors of each FHLB can increase the minimum investment
requirements in the event it has concluded that additional
capital is required to allow it to meet its own regulatory capital
requirements. Any increase in the minimum investment
requirements outside of specified ranges requires the approval of
the Federal Housing Finance Board. Because the extent of any
obligation to increase our investment in any of the FHLBs
depends entirely upon the occurrence of a future event, potential
future payments to the FHLBs are not determinable.
Wells Fargo & Company
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